Chapter 2: CUSTOMER-BASED BRAND EQUITY

Customer-based brand equity: The CBBE is formally defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. There are three key ingredients to this definition: Differential effect: Differences in consumer response Brand knowledge: A result of consumers knowledge about the brand Consumer response to marketing: Choice of a brand Recall of copy points from an ad Response to a sales promotion Evaluations of a proposed brand extension

Quarter of a million people went to the 100 year anniversary meet in Milwaukie. Harley Davidson is more than a motorcycle, its an experience, and attitude, a lifestyle, and a vehicle to express who one is.

Marketing advantages of strong brands: Improved perceptions of product performance. Greater loyalty. Less vulnerability to competitive marketing actions. Less vulnerability to marketing crises. Larger margins. More inelastic consumer response to price increases. More elastic consumer response to price decreases. Greater trade cooperation and support. Increased marketing communication effectiveness. Possible licensing opportunities. Additional brand extension opportunities.

BRAND EQUITY AS A BRIDGE

Reflection of past investments in the marketing of a brand The quality of the investment in brand building is the most critical factor, not necessarily the quantity of investment, beyond some minimal threshold amount. Direction for future marketing actions or program Consumers will decide, based on their brand beliefs, attitudes and so on, where they think the brand should go and grant permission (or not) to any marketing action or program.

MAKING A BRAND STRONG: BRAND KNOWLEDGE Brand knowledge is the key to creating brand equity. Brand knowledge consists of a brand node in memory with a variety of associations linked to it. Brand knowledge has two components: 1. BRAND AWARENESS: It is related to the strength of the brand node or trace in memory, as reflected by consumers ability to identify the brand under different conditions. BRAND IMAGE: Perceptions about a brand as reflected by the brand associations held in consumer memory is called brand image.

2.

Sources of Brand Equity

1. 2. Customer based brand equity occurs when the consumer: Has a high level of awareness and familiarity with the brand Holds some strong favourable, and unique brand associations in memory

Brand awareness: a) Brand recognition: It relates to consumers ability to confirm prior exposure to the brand when given the brand as a cue. b) Brand recall: It relates to consumers ability to retrieve the brand from memory when given the product category, the needs fulfilled by the category, or a purchase or usage situation as a cue. Eg: Kellog s Corn Flakes.

BRAND AWARENESS ADVANTAGES Learning advantages Register the brand in the minds of consumers Consideration advantages Likelihood that the brand will be a member of the consideration set

Choice advantages - Affect choices among brands in the consideration set. Reducescognitive load

1. Learning advantages: The first way that brand awareness affects consumer decision making is by influencing the formation and strength of the brand associations that make up the brand image. 2. Consideration advantages: Raising brand awareness increases the likelihood that the brand will be a member of the consideration set, the handful of brands that receive serious consideration for purchase. 3. Choice advantages: Brand awareness can affect choices among brands in the consideration set, even if there are essentially no other associations to those brands.

Elaboration-likelihood model: This is one influential model of attitude change and persuasion, which is consistent with the notion that consumers may make choices based on brand awareness considerations when they have low involvement. a) Consumer purchase motivation: gasoline b) Consumer purchase ability: telecommunications equipment involving state-of-the-art features.

ESTABLISHING BRAND AWARENESS:

Anything that causes consumers to experience a brand name, symbol, logo, character, packaging or slogan can potentially increase familiarity and awareness of that brand element. Example- Intel. Increasing the familiarity of the brand through repeated exposure (for brand recognition) Forging/creating strong associations with the appropriate product category or other relevant purchase or consumption cues (for brand recall)

REPEATED EXPOSURE: CONSISTENCY

Brand Image:
A positive brand image is created by marketing programs that link strong, favorable and unique associations to the brand in the memory. Example: The Body Shop. Assume forever, so get it right.

Strength of brand associations: Two factors facilitating the strength of association to any piece of information are the personal relevance of the information and the consistency with which this information is presented over time. Brand attributes: These are those descriptive features that characterize a product or service. Brand benefits: These are the personal value and meaning that consumers attach to the product or service attributes.

Favorability of brand associations: Favorable brand associations are those associations that are desirable to consumers and are successfully delivered by the product and conveyed by the supporting marketing program for the brand. Example: such that the brand is seen as highly convenient, effective efficient, colorful and so on. Desirability depends on three factors: 1. How relevant 2. How distinctive 3. How believable Need to be favorable, strong, and unique Some product associations are shared in a category

Deliverability also depends on three factors: 1. The actual or potential ability of the product to perform 2. The current or future prospects of communicating that performance 3. The sustainability of the actual and communicated performance over time Uniqueness of brand associations: In many categories, non-product-related attributes, such as user type or usage situation, may more easily create unique associations. Example: Marlboro cigarettes, Virginia Slims brand.

THE FOUR STEPS OF BRAND BUILDING 1. Ensure identification of the brand with customers and an association of the brand in customers minds 2. Establish the totality of brand meaning in the minds of consumers 3. Elicit the proper customer responses to the brand identification and brand meaning 4. Convert brand response to create an intense, active loyalty relationship between customers and the brand

Four Questions Customers ask of Brands

1. Who are you? (brand identity) 2. What are you? (brand meaning) 3. What about you? What do I think or feel about you? (brand responses) 4. What about you and me? What kind of association and how much of a connection would I like to have with you? (brand relationships)

CustomerCustomer-Based Brand Equity Pyramid

4. RELATIONSHIPS = RESONANCE What about you and me?

3. RESPONSE = JUDGMENTS FEELINGS What about you?

2. MEANING = PERFORMANCE IMAGERY What are you?

1. IDENTITY =

SALIENCE

Who are you?

SubSub-Dimensions of CBBE Pyramid

LOYALTY ATTACHMENT COMMUNITY ENGAGEMENT

QUALITY CREDIBILITY CONSIDERATION SUPERIORITY

WARMTH FUN EXCITEMENT SECURITY SOCIAL APPROVAL SELF-RESPECT

PRIMARY CHARACTERISTICS & SECONDARY FEATURES PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY SERVICE EFFECTIVENESS, EFFICIENCY & EMPATHY STYLE AND DESIGN PRICE CATEGORY IDENTIFICATION NEEDS SATISFIED

USER PROFILES PURCHASE & USAGE SITUATIONS PERSONALITY & VALUES HISTORY, HERITAGE & EXPERIENCES

1.Brand Salience: Brand salience relates to aspects of the awareness of the brand, example: How often and easily the brand is evoked under various situations or circumstances. Breadth and depth of awareness: The depth of brand awareness concerns
Ease of recognition and recall Strength and clarity of category membership

The breadth of brand awareness concerns

Purchase consideration Consumption consideration

Product category structure: In consumers minds, a product hierarchy often exists, with product class information at the highest level, product category information at the second highest level, product type information at the next level, and brand information at the lowest level. Example: beverages.

Strategic Implications: In many cases it is not only the depth of awareness that matters but also the breadth of awareness. It is important that the brand not only be top-of-mind and have sufficient mind share , but it must also do so at the right times and places. Example: H & R Block- year round financial service provider Campbell s Soup -never underestimate the power of soup 2. Brand performance: It relates to the ways in which the product or service attempts to meet customers more functional needs. There are five important types of attributes and benefits that often underlie brand performance, as follows: 2.1) Primary ingredients and supplementary features. 2.2) Product reliability, durability and serviceability. 2.3) Service effectiveness, efficiency and empathy. 2.4) Style and design. 2.5) Price.

Some attributes are essential ingredients necessary for a product to work, whereas other attributes are supplementary features that allow for customization and more versatile, personalized usage. These types of attributes vary by product or service category: Few ingredients or features: Bread Many essential ingredients but few features: Toaster oven Numerous ingredients and features: Portable tape player Reliability refers to the consistency of performance over time and from purchase to purchase. Durability refers to the expected economic life of the product. Serviceability refers to the ease of servicing the product if it needs repair.

Service effectiveness refers to how completely the brand satisfies customers service requirements. Service efficiency refers to the manner by which these services are delivered in terms of speed, responsiveness and so forth. Service empathy refers to the extent to which service providers are seen as trusting, caring and having the customer s interests in mind.

3. Brand imagery: Many kinds of intangibles can be linked to a brand, but four categories can be highlighted: 3.1) User profiles. 3.2) Purchase and usage situations. 3.3) Personality and values. 3.4) History, heritage and experiences.

4. Brand judgments: Brand judgments focus on customers personal opinions and evaluations with regard to the brand. In terms of creating a strong brand, four types of summary brand judgments are particularly important: 4.1) Brand quality: Brand attitudes are defined in terms of consumers overall evaluations of a brand. Value and Satisfaction

4.2) Brand credibility: Brand credibility refers to the extent to which the brand as a whole is seen as credible in terms of three dimensions: a) Competent, innovative and a market leader (brand expertise) b) Dependable and keeping customer interests in mind (brand trustworthiness) c) Fun, interesting and worth spending time with (brand likeability) 4.3) Brand consideration: Brand consideration depends in large part on the extent to which strong and favorable brand associations can be created as part of the brand image. Relevance 4.4) Brand superiority: Superiority relates to the extent to which customers view the brand as unique and better than other brands. Differentiation

5. Brand feelings: Brand feelings are customers emotional responses and reactions with respect to the brand. The following are six important types of brandbuilding feelings: 5.1) Warmth: Sentimental, warmhearted, affectionate. 5.2) Fun: Amused, lighthearted, joyous, playful, cheerful.

5.3) Excitement: Sense of elation, of being alive . 5.4) Security: Safety, comfort, self-assurance.

5.5) Social approval: Reactions of others, look favorably on their appearance, behavior. 5.6) Self-respect: Pride, accomplishment or fulfillment.

6. Brand Resonance: the depth of psychological bonds 6.1 Behavioral Loyalty Repeat Purchase, A loyal General Motor Customer can be worth of $276000 over life time 6.2 Attitudinal Attachment Mere satisfaction is not enough, Xerox, should be on long run, research may not shows the real one 6.3 Sense of community Harley Davidson, Harley Owners Group, free one year membership, Magazine Hog tales 6.4 Active engagement Brand related chat room, visit webpage, customer invest time, energy, money

CustomerCustomer-Based Brand Equity Model

ConsumerBrand Resonance
INTENSE, ACTIVE LOYALTY

Consumer Judgments

Consumer Feelings

RATIONAL & EMOTIONAL REACTIONS

Brand Performance

Brand Imagery

POINTS-OFPARITY & POINTS-OFDIFFERENCE

Brand Salience

DEEP, BROAD BRAND AWARENESS

Brand Building Implications: 1) Customers own brands: To recognize the power of the brand and its ultimate value to the firm resides with customers. 2) Don t take shortcuts with brands: The amount of time it takes to create sufficient awareness and understanding so that firmly held and felt beliefs and attitudes about the brand are formed that can serve as the foundation for brand equity. 3) Brands should have a duality: Strong brands blend product, performance and imagery to create a rich, varied but complementary set of consumer responses to the brand. Head and the heart 4) Brands should have richness: Brands should not necessarily be expected to score highly on all the various dimensions and categories making up each core brand value. 5) Brand resonance provides important focus: Brand resonance is the pinnacle of the CBBE model and provides important focus and priority for decision making regarding marketing. May not go in all dimension.