Customer-Based Brand Equity

Part 1

Chapter 2

Lilly Beil, Jennifer Butler, Emily Huang

Customer-Based Brand Equity

CBBE Model: incorporates theoretical advances and

managerial practices in understanding and influencing

consumer behavior.

Aka: understanding the needs or wants of the customer

CBBE Basic Premise

The power of a brand lies in what consumers have learned,

felt, seen, and heard about the brand as a result of their

experiences.

3 Ingredients to CBBE Model

Differential effect

Brand Knowledge

Consumer response to marketing

Differential Effect

Brand equity arises from differences in consumer

response

No differences = Commodity

If a commodity, competition becomes based on price

Examples: Who has the better french fries? McDonalds or

Burger King?

Brand Knowledge

Drives brand equity

Associative network memory model: views memory as a

network of nodes and links, in which nodes represent

stored information or concepts

Knowledge about the brand changes the consumer’s

perception of the brand

For example: Apple

Brand Knowledge cont.

Can be characterized in terms of 2 components:

Brand awareness: strength of the brand node or trace in

memory; ability to identify brand under different conditions

Brand image: perceptions about a brand held in consumer’s

memory

Examples: Apple user friendly, creative, iPhone, iPad

Class activity

What is the association that comes to

mind with these brands?

What is the association that comes to

mind with these brands?

What is the association that comes to

mind with these brands?

What is the association that comes to

mind with these brands?

What is the association that comes to

mind with these brands?

Consumer Response to

Marketing

How does a company’s marketing techniques effect the

consumer?

What kind of feelings are stirred in their marketing

techniques?

Sources of Brand Equity

Reminder: CBBE occurs when the consumer has a high

level of awareness and familiarity with the brand and

holds in their memory some strong, favorable, and unique

brand associations

Key to Branding: Consumers must not think that all brands

in the category are the same!

Brand Awareness

Brand recognition: relates to customers’ ability to confirm exposure to the brand when given the brand as a cue

Can consumers correctly identify a brand?

If a consumer is aware of a specific brand, it is put into a “consideration set”.

Sometimes if a consumer is only aware of one brand of a certain product or service, they will only consider that one brand

Class question: Is there a specific brand you always choose because it’s the only brand you are aware of? For example: medicine

3 main reasons brand awareness is

important in consumer behavior:

Learning advantages

Creation of a brand image brand node has been established in memory

Consideration advantages

Increase of brand awareness, increase of consideration set

Choice advantages

Brand awareness increases association even if there isn’t any other associations to those brands

When consumers have low involvement in purchasing decisions, they will choose the brand they are most aware of

Brand awareness cont.

Develop a slogan, jingle, or ad that creatively pairs the

brand and the appropriate category

Video:

https://www.youtube.com/watch?v=VBAwXN8lS88

Brand Image

Ways brand associations can be created:

Direct experience

Information communication

Word of mouth

Assumptions from the brand itself

Identification of the brand with a company, country, channel of distribution, particular person, particular place, and particular event

Brand image cont.

Word of mouth is very important for restaurants,

entertainment, banking, and personal services

See Figure 2.4 page 63

Favorable brand associations: created by convincing

consumers that the brand possesses attributes and

benefits that satisfy their needs and wants

Brand Desirability

Depends on three factors:

How relevant consumers find the brand

association

How distinctive consumers find the brand

association

How believable consumers find the brand

association

Deliverability

Creating a favorable association also requires that the firm be able to deliver on the desired association

What would be the cost or investment necessary and the length of time involved to create or change the desired association?

Depends on 3 factors:

The actual or potential ability of the product to perform

The prospects of communicating that performance

The sustainability of the actual and communicated performance over time

4 Steps to Building a Brand1. Identify the brand with customers and associate the brand in

customers’ minds with a specific product class or customer needWho are you?

2. Establish the totality of brand meaning in the minds of customers by strategically linking a host of tangible and intangible brand associations with certain propertiesWhat are you?

3. Elicit the proper customer responses to this brand identification and brand meaningWhat about you? What do I think or feel about you?

4. Convert brand response to create an intense, active loyal relationship between customers and the brandWhat about you and me? What kind of association and how much of a connection would I like to have with you?

Brand Building Blocks

Resonance

FeelingsJudgements

Performance Imagery

Breadth and depth of awareness

Breadth: the range of purchase and usage situations in

which the brand element comes to mind

Depth: the likelihood that a brand element will come to

mind and the ease with which it does so

Brand Performance

Ways a brand tries to meet needs

5 important types of attributes and benefits that often

underlie brand performance:

Primary ingredients and supplementary features

Product reliability, durability, and serviceability

Service effectiveness, efficiency and empathy

Style and design

Price

Brand Imagery

Extrinsic properties of the product or service, including

the ways in which it attempts to meet customer’s

psychological or social needs

Customers will be targeted demographically and

psychographically

Brand Personality

Personality traits can be shown through product

animation techniques or celebrities used in ads

Tone is important

Personality needs to be consistent with the brand

Watch ad here

https://www.youtube.com/watch?v=kPK8B7IiHTo

What kind of personality is CoverGirl trying to portray?

Brand Judgements

Focus on customers’ personal opinions and evaluations

In terms of creating a strong brand, four types of

summary brand judgments are particularly important:

Quality

Credibility

Consideration

Superiority

Brand Feelings

What emotions are evoked when the consumer sees the

brand?

Is there…

Warmth

Fun

Excitement

Security

Social approval

Self-respect

Brand Resonance

Intensity or psychological depth/bond with the brand

Behavioral loyalty

Attitudinal attachment

Sense of community

See Harley Davidson Video:

https://www.youtube.com/watch?v=iOF7aAVZMqA

Active engagement

Brand Salience

Relates to aspects of the awareness of the brand

How often and easily is the brand evoked under various

situations or circumstances

To what extent is the brand easily recalled or

recognized?

Brand awareness is more than just recognizing the company! Watch this video

https://www.youtube.com/watch?v=L7iLi76BcCc

Creating Customer Value

Customer-brand relationships are the foundation of

brand resonance and building a strong brand. CBBE model: Power of a brand resides in the minds of

consumers and customers.

Achieve Customer Value by Putting Customers First

Creating Customer Value

Putting Customers First

1. Is the company looking for ways to take care of you?

2. Does the company know its customers well enough

to differentiate between them?

3. Is someone accountable for customers?

4. Is the company managed for shareholder value?

5. Is the company testing new customer offers and

learning from the results?

Case Study

Had a remarkable revival in the 1990s with 50% growth for 7 years

Turn of the century took a turn for the worst.

2005: Stagnant Sales & losing money in US market

Culprit? CEO says VW was not customer-focused

Focused too much on technology advancement

« How does it help the customer and will the customer pay for it? »

Case Study

Google Glass

Google announced in January that Glass would be going away “as we know it.”

Hyped up product

Time Magazine named it one of the “Best Inventions of the Year”

Comedic Punch Line: The Simpsons, Saturday Night Live, The Colbert Report.

Tumblr account “White Men Wearing Google Glass”

The Marketing Advantages of Strong

Brands

Greater loyalty and less vulnerability to competitive

marketing

Larger margins

Greater trade co-operation and support

Increased marketing communication effectiveness

Licensing opportunities

Additional brand extension opportunities

Which brands do you have

the most resonance with?

Why?

Things to Remember:

Customer-based brand equity has 3 ingredients:

Differential effect

Brand knowledge

Consumer response to marketing

The power of a brand lies in what the consumers have

experienced with your brand!

Good brand positioning helps guide your marketing strategy.

Part 2

Chapter 3: Brand Positioning

Identifying and Establishing Brand

Positioning

“The heart of the marketing strategy”

Brand Positioning: the act of designing the company’s

offer and image so that it occupies a distinct and valued

place in the target customer’s mind.

Good brand positioning helps guide marketing strategy

Can you identify the Target Markets

of these Companies?

“upscale homeless person, who has a slight degree of angst and is probably in the life stage of 18 to 26”

From traditional homes and advantage, but this offers them the benefit of rebellion

The Urban shopper “leads a pretty cloistered existence.”

“Although they deem themselves worldly, they believe the way they see things personally is the correct way and everyone else feels exactly the same way.”

“…Probably when they were little, they saw the older kids do something they thought was really cool, and they weren’t allowed to do it and now that they’re adults, it’s sort of like ice cream for breakfast, they can do whatever they want now. They’re out on their own, independent. So one thing that actually Urban Outfitters is selling now is Beavis and Butthead tees, which sort of surprised me because I was no fan of it, but maybe I was little bit older then, but that was in 1992 … They undoubtedly probably don’t know anything about Beavis and Butthead but simply remember that being something the older cool kids did and something, clearly, they were denied.” Urban Outfitters Executive Director Sue Otto

The Anthropologie customer is a bit more polished, a bit more older and she has much less angst … She tends to be a homeowner and she tends to be in a relationship and more likely than not, married with children.”

We say that this is the customer you want to have at a dinner table. She’s an optimist. She’s aware of what’s going on in the world, but she chooses to focus on the positives, not the negatives … She shops at J.Crew, she shops at Nordstrom, she shops at boutiques … She may go to Banana Republic for a basic pant, but she’s not buying her wardrobe there. She’s not shopping at Ann Taylor. She’s certainly not shopping at Chico’s.”

The Anthropologie customer is dressing for respectability in her community, with her friends and family.”

“The Free People customer is happy. She loves life. She is

independent yet loves being with her friends, her family,

and her mate. She travels every spring to festivals, Coachella and Wanderlust being her favorite. She runs and

practices yoga to stay fit and balanced. She is influenced

by fashion but yet seeks inspiration from all over the world

to put together a look that is her own. She is a mix of sweet,

cool, and boho and everything in between. We target age

26…” — Meg Hayne, Free People president

Segmentation bases

Business-to-Business segmentation bases

Segmentation bases

Consumer Segmentation

bases

Nature of Competition

Deciding to target a certain type of consumer defines

the nature of competition because certain other firms

have also decided to target that segment or consumers

in that segment may already look to certain brands.

Some products and brands are likely to be seen as close

substitutes

Points of Difference associations

Points of difference are strong, favorable and unique

associations for a brand

They may be based on almost any type of attribute or

benefit association that consumers strongly associate

with a brand, positively evaluate and believe that they

could not find to the same extent with a competitive

brand.

Gives consumers a compelling reason to buy a product that competitors could not match

Points of Parity associations

Associations that may be shared with other brands

2 forms: category and competitive

Category points of parity: associations that consumers view as being necessary

Competitive points of parity: associations designed to negate competitor’s point of difference

If a brand can ‘break even’ in areas where its competitors are trying to find an advantage and can achieve advantages in some other areas, the brand should be in a strong position.

Points of Parity vs. Points of Difference

Points of parity are usually easier to achieve because they’re more basic

Points of difference are what demonstrates a brand’s superiority

Which is more important?

Positioning Guidelines

Guided by points of difference and points of parity

Two Issues

Defining and communicating the competitive frame of

reference

Choosing and establishing points of parity and points of

difference

Defining and Communicating the

Competitive Frame of Reference

Determine category membership

Products that the brand competes with

Helps make customers aware of that brand’s products

Customer awareness must happen before they will look at the POD’s and POP’s

Some companies straddle two frames – BMW

Three ways to convey category membership

1. Communicate category benefits – product attributes and POP’s

2. Compare with Exemplars

3. Relying on Product Descriptors – convey category origin

Choosing Points of Parity and Points

of Difference

Consumers must find POD’s desirable and believe the firm can deliver them

Criteria of desirability

1. Relevance

2. Distinctiveness

3. Believability

Criteria of Deliverability

1. Feasibility – product performs at stated level

2. Communicability – create and strengthen desired associations

3. Sustainability – performance over time

Establishing Points of Parity and Points

of Difference

Attributes of POP’s are negatively correlated with attributes of POD’s

How to deal with negative correlation:

1. Separate the attributes – two marketing campaigns

2. Exploit Equity of Another Entity – link brand to a person, other brand, or event and steal equity

3. Redefine the relationship – convince consumers they are positively correlated

https://m.youtube.com/watch?v=0nBxcMImubk

Updating Positioning Over Time

Two Issues

Laddering – how to deepen brand and tap into core brand associations

Maslow’s Hierarchy

Means end chain: attributes lead to benefits, which lead to values

When brands become associated with more products they move up the product hierarchy

Reacting – how to respond to competitive challenges that threaten the brand’s current position

Competitors take actions to eliminate POD’s and make the POP’s or establish new POD’s

Three options when this happens:

1. Do nothing – if competitive actions are unlikely to capture the POD

2. Go on defense – strengthen your POD’s and POP’s

3. Go on offensive – reposition your brand by launching a product extension

Defining and Establishing Brand

Mantras

Brands span product categories and have several

positionings

Want to establish a relationship between core brand

associations and the brand mantra

Core Brand Associations

Attributes and benefits that charactereize the 5-10 most

important aspects of the brand

Mental maps

Starbucks Example

Brand Mantras

State the core brand promise/essence in 3-5 words

Helps internal employees and external marketing partners understand what the brand represents to the consumer so they can adjust their own strategies

Three terms of mantras

1. Function – nature of product and benefits it will provide

2. Descriptive modifier – describe nature of the business function –Nike

3. Emotional modifier – how the brand provides benefits – Disney

No other brand should excel in all areas of another brand’s mantra

Only captures POD’s – reinforce POP’s another way

Helps determine which categories the brand should extend to

Implementing a Brand Mantra

Should develop mantra at the same time positioning is determined

When creating a mantra consider: Communicate – mantra should define the brand category and

the uniqueness of the brand

Simplify – mantras should be short and memorable

Inspire – relevant to employees

The brand position is directly related to creating a strong brand

Want internal staff members to participate in branding

More motivated to serve and attract customers, which increases the overall brand equity

Things to Remember:

Strong brands exhibit more points of difference

Your brand mantra should correlate with your core brand

associations!

Achieve customer value by putting customers first!