Chapter 02

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
AwarenessBrand 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.

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CUSTOMER BASED BRAND

 Consumer response to marketing

Brand Image / Brand salience

 Brand as a direction for future marketing

It has two components:

• Brand Recognition: Ability of consumer to confirm

 Increasing the familiarity of the brand through

 Forging strong associations with the

• Strength of Brand Association

2. Establish the totality of brand meaning in the minds of

3. Elicit the proper customer responses to the brand

. 2. What are you? (brand meaning)

3. What about you? What do I think or feel about

4. What about you and me? What kind of

• Breadth of brand awareness

• The brand must not only be top-of-mind and

• Product reliability, durability, and serviceability

• Purchase and usage situations

• Uses a company’s data systems and

• Blattberg and Deighton (1996) offer eight guidelines as a means

– Invest in highest-value customers first

have to connect with their customers.

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