CUSTOMER BASED BRAND EQUITY
Customer-Based Brand Equity
• The differential effect that brand
knowledge has on consumer response to
the marketing of that brand.
Customer-Based Brand Equity
There are three ingredients of Brand Equity
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
Brand Equity
. Brand Awareness
Brand Image / Brand salience
Awareness
Brand Experiences /
Brand Users
Brand loyalty
Brand Equity as a “Bridge”
Brand as a reflection of past
. investments in the marketing
Brand as a direction for future
marketing actions or programs
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.
It has two components:
.
• Brand Awareness
• Brand Image
Component of Brand Knowledge/
Source of Brand Equity
Brand Awareness
It. consists of the performance of brand
recognition & brand recall
• Brand Recognition: Ability of consumer
to confirm prior exposure to the brand
when given brand as a cue
. • Brand Recall: Ability of consumer to
retrieve the brand from memory when
given product category as cue
•Brand recognition /
Equity
•Brand Preference /
.
Loyalty
•Brand Insistence
_________________
•Brand Awareness
. •Brand Association
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
Establishing Brand Awareness
Increasing the familiarity of the
.
brand through repeated exposure
(for brand recognition)
Forging strong associations with the
appropriate product category or
. other relevant purchase or
consumption cues (for brand recall)
Component of Brand Knowledge/
Source of Brand Equity
Brand image
.
A positive image is created by
marketing programs that link strong,
favorable, & unique associations to
the brand in memory
. • Strength of Brand Association
• favorability of Brand Association
• uniqueness of Brand Association
Creating a Positive Brand
Image
Brand Associations
.
• Does not matter which source of brand
association
• Need to be favorable, strong, and unique
• Marketers should recognize the influence
of these other sources of information by
both managing them as well as possible
. and by adequately accounting for them in
designing communication strategies.
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)
Brand Resonance Pyramid
Resonance refers to the relationship that a brand builds with its
customers, and how the customers identify it.
Salience Dimensions
• Depth of brand awareness
. – Ease of recognition and recall
– Strength and clarity of category
membership
• Breadth of brand awareness
– Purchase consideration
– Consumption consideration
.
Depth and Breadth Importance
• The product category hierarchy
.
shows us not only the depth of
awareness matters but also the
breadth.
• The brand must not only be top-of-
. mind and have sufficient “mind
share,” but it must also do so at the
right times and places.
Product Category Structure
• To fully understand brand recall, we
.
need to appreciate product category
structure, or how product categories
are organized in memory.
Performance Dimensions
• Primary characteristics and
. supplementary features
• Product reliability, durability, and
serviceability
• Service effectiveness, efficiency, and
empathy
.
• Style and design
• Price
Imagery Dimensions
• User profiles
Demographic and psychographic characteristics
Actual or aspirational
. Group perceptions—popularity
• Purchase and usage situations
Type of channel, specific stores, ease of purchase
Time (day, week, month, year, etc.), location, and
context of usage
• Personality and values
Sincerity, excitement, competence, sophistication,
. and ruggedness
• History, heritage, and experiences
Nostalgia
Memories
Judgment Dimensions
• Brand quality • Brand consideration
Value Relevance
. Satisfaction
• Brand credibility
Expertise • Brand superiority
Trustworthiness Differentiation
Likeability
Feelings Dimensions
• Warmth
•. Fun
• Excitement
• Security
• Social Approval
• Self-respect
Resonance Dimensions
• Behavioral loyalty
– Frequency and amount of repeat purchases
• Attitudinal attachment
.
– Love brand (favorite possessions; “a little
pleasure”)
– Proud of brand
• Sense of community
– Kinship
– Affiliation
• Active engagement
. – Seek information
– Join club
– Visit website, chat rooms
Brand Building Implications
• Customers own brands.
• Don’t take shortcuts
.
with brands.
• Brands should have a
duality.
• Brands should have
richness.
• Brand resonance
provides important
focus.
Creating Customer Value
• Customer-brand relationships are
.
the foundation of brand resonance
and building a strong brand.
• The customer-based brand equity
model certainly puts that notion
front and center.
Is a company consumer-
centric?
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?
Customer Relationship
Management (CRM)
• Uses a company’s data systems and
.
applications to track consumer
activity and manage customer
interactions with the company
Customer Equity
• Blattberg and Deighton (1996) offer eight guidelines as
. a means of maximizing customer equity:
– Invest in highest-value customers first
– Transform product management into customer management
– Consider how add-on sales and cross-selling can increase
customer equity
– Look for ways to reduce acquisition costs
– Track customer equity gains and losses against marketing
programs
– Relate branding to customer equity
. – Monitor the intrinsic retainability of your customer
– Consider writing separate marketing plans—or even building
two marketing organizations—for acquisition and retention
efforts
Customer Equity
• The sum of lifetime values of all
customers
.
• Customer lifetime value (CLV) is
affected by revenue and by the cost
of customer acquisition, retention,
and cross-selling
• Consists of three components:
– Value equity
. – Brand equity
– Relationship equity
Relationship of Customer
Equity to Brand Equity
• Customers drive the success of brands
. but brands are the necessary touch point
that firms have to connect with their
customers.
• Customer-based brand equity maintains
that brands create value by eliciting
differential customer response to
marketing activities.
.• The higher price premiums and increased
levels of loyalty engendered by brands
generate incremental cash flows.