CHAPTER 2: CUSTOMER-BASED BRAND EQUITY

Krishna UnadkatMEFGI

2.1

Customer-Based Brand Equity

“The differential effect that brand knowledge has on consumer response to the marketing of that brand.”

Keller, 1993

2.2

Differential effect Differences in consumer response

Brand knowledge A result of consumers’ knowledge about the

brand

Consumer response to marketing Choice of a brand Response to a sales promotionEvaluations of a proposed brand extension

2.3

Brand Equity as a “Bridge”Reflection of past investments in the

marketing of a brandDirection for future marketing actions or

programs

2.4

Making a Brand Strong: Brand KnowledgeBrand 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: brand awareness and brand image.

2.5

Brand awarenessBrand recognition : Can you distinguish the

brand from its competitors ?Brand recall : If the product category is

mentioned, do you think of the brand ?

2.6

Brand Image

Brand Image – The customer’s net extract from the brandBrand Associations Anything which is deep seated about the

brand in the minds of consumersNeed to be favorable, strong, and unique

2.7

2.8

Brand Awareness AdvantagesLearning 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

2.9

Customer EquityCustomer lifetime value (CLV) :The sum of lifetime values of all

customer is affected by revenue and by the cost of customer acquisition, retention, and cross-selling.

Brand Equity is defined as value and strength of the Brand that decides its worth whereas Customer Equity is defined in terms of lifetime values of all customers.

2.10

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?

2.11

Sources: Larry Selden and Geoffrey Colvin, 2004.

The Four Steps of Brand Building 1. Identity2. Meaning3. Response4. Relationship

2.12

Four Questions Customers ask of Brands1. 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)

2.13

2.14

Customer Based Brand Equity Model

Sub-Dimensions of CBBE Pyramid

LOYALTYATTACHMENTCOMMUNITYENGAGEMENT

QUALITY CREDIBILITYCONSIDERATIONSUPERIORITY

WARMTHFUNEXCITEMENTSECURITYSOCIAL APPROVALSELF-RESPECT

CATEGORY IDENTIFICATIONNEEDS SATISFIED

PRIMARY CHARACTERISTICS &SECONDARY FEATURES

PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY

SERVICE EFFECTIVENESS, EFFICIENCY & EMPATHY

STYLE AND DESIGN PRICE

USER PROFILESPURCHASE & USAGE

SITUATIONSPERSONALITY &

VALUESHISTORY, HERITAGE & EXPERIENCES

Salience DimensionsDepth of brand awareness

Ease of recognition and recallStrength and clarity of category membership

Breadth of brand awarenessPurchase considerationConsumption consideration

2.16

Performance Dimensions Primary characteristics and supplementary

features

Product reliability

Service effectiveness

Style and design

Price

2.17

Imagery Dimensions

User profilesPurchase and usage situationsPersonality and valuesHistory, heritage, and experiences

2.18

Judgment Dimensions

Brand quality

Brand credibility

Brand consideration

Brand superiority

2.19

Feelings Dimensions

WarmthFunExcitementSecuritySocial ApprovalSelf-respect

2.20

Resonance Dimensions

Behavioral loyaltyAttitudinal attachmentSense of communityActive engagement

2.21

Customer-Based Brand Equity Model

Consumer-BrandResonance

Brand Salience

Consumer Judgments

Consumer Feelings

BrandPerformance

BrandImagery

INTENSE, ACTIVE LOYALTY

INTENSE, ACTIVE LOYALTY

RATIONAL & EMOTIONAL REACTIONS

RATIONAL & EMOTIONAL REACTIONS

POINTS-OF-PARITY &

POINTS-OF-DIFFERENCE

POINTS-OF-PARITY &

POINTS-OF-DIFFERENCE

DEEP, BROAD BRAND

AWARENESS

DEEP, BROAD BRAND

AWARENESS

Application:Identify the Key Drivers of

Brand Equity

0.17 0.66

0.24

0.65

P-2

P-2

PerformancePerformance

P-1P-1

P-10 P-10

P-7

P-7

P-8P-8

P-9P-9

P-3P-3

P-4P-4

P-6P-6

P-5P-5

P-11 P-11 P-

12

P-12

I-2I-2

I-9I-9

ImageryImagery

I-1I-1

I-3I-3

I-6I-6

I-5I-5

I-10 I-10

I-7I-7

I-8I-8

I-11

I-11 I-12

I-12

I-4I-4

F-2

F-2

FeelingsFeelings

F-1F-1

F-3F-3

F-4F-4

F-6F-6

F-5F-5

F-7

F-7

F-8F-8

F-9F-9

F-11 F-11 F-

12

F-12

F-10F-10

J-2J-2

JudgmentJudgment

J-1J-1

J-3J-3

J-4J-4

J-6J-6

J-5J-5

J-10J-10

J-7J-7

J-8J-8

J-9J-9

J-11

J-11 J-1

2J-1

2

R-2R-2

ResonanceResonance

R-1R-1

R-3R-3

R-4R-4

R-6

R-6

R-5R-5

R-10 R-10

R-7

R-7

R-8

R-8

R-9R-9

R-11 R-11 R

-12

R-1

2

0.58

0.49

Brand Building ImplicationsCustomers own brands. Don’t take shortcuts with brands. Brands should have a duality. Brands should have richness. Brand resonance provides important focus.

2.24