CHAPTER 2:

CUSTOMER--BASED BRAND EQUITY

CUSTOMER

D S Hwang
From Kevin Lane Keller

2.1
 Customer--Based Brand Equity
Customer

„ “The differential effect that brand knowledge

has on consumer response to the marketing of
that brand.”

Keller 1993
Keller,

2.2
 Customer--Based Brand Equity
Customer
„ Differential
ff l effect
ff
„ Differences in consumer response
„ Brand knowledge
„ A result of consumers
consumers’ knowledge about the brand
„ Consumer response to marketing
„ Ch i off a b
Choice brandd
„ Recall of copy points from an ad
„ Response to a sales promotion
„ Evaluations of a proposed brand extension

2.3
 Brand Equity as a “Bridge
Bridge””
„ Reflection of past investments in the marketing of
a brand
„ Direction for future marketing actions or
programs

2.4
 Making a Brand Strong:
Brand Knowledge
„ Brand knowledge is the key to creating brand
equity.
q y
„ Brand knowledge consists of a brand node in
memory with a variety of associations linked to
it.
„ Brand knowledge has two components: brand
awareness
awa e ess and
a d brand
b a d image.
age.

2.5
 Sources of Brand Equity
„ Brand awareness
„ Brand recognition
g
„ Brand recall

„ B d image
Brand i
„ Strong, favorable, and unique brand associations

2.6
 Brand Awareness Advantages
„ Learning advantages
„ Register
g the brand in the minds of consumers
„ Consideration advantages
„ Lik lih d that
Likelihood h the
h brand
b d will
ill b
be a member
b off the
h
consideration set
„ Choice advantages
„ Affect choices among brands in the consideration
set

2.7
 Establishing Brand Awareness
„ Increasing the familiarity of the brand through
repeated
p exposure
p ((for brand recognition)
g )
„ Forging strong associations with the appropriate
product category or other relevant purchase or
consumption cues (for brand recall)

2.8
Creating a Positive Brand Image
„ Brand Associations
„ Does not matter which source of brand association
„ Need to be favorable, strong, and unique

„ Marketers sho
should
ld recognize the infl
influence
ence of these
other sources of information by both managing them
as well
ell as possible and by adequately
adeq ately accounting for
them in designing communication strategies.

2.9
 The Four Steps of Brand Building
1
1. Ensure identification of the brand with customers and
an association of the brand in customers’ minds
2. E bli h the
Establish h totality
li off b
brand
d meaning
i iin the
h minds
i d off
consumers
3. Elicit the proper customer responses to the brand
identification and brand meaning
4. Convert brand response to create an intense, active
loyalty
y y relationshipp between customers and the brand

2.10
Four Questions Customers ask of Brands

1. Who are you? (brand identity)

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

2.11
Customer--Based Brand Equity Pyramid
Customer

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?

2.12
Sub--Dimensions of CBBE Pyramid
Sub y

LOYALTY
ATTACHMENT
COMMUNITY
ENGAGEMENT

WARMTH
QUALITY FUN
CREDIBILITY EXCITEMENT
CONSIDERATION SECURITY
SUPERIORITY SOCIAL APPROVAL
SELF-RESPECT

PRIMARY CHARACTERISTICS & USER PROFILES

SECONDARY FEATURES PURCHASE & USAGE
PRODUCT RELIABILITY, SITUATIONS
DURABILITY & SERVICEABILITY PERSONALITY &
SERVICE EFFECTIVENESS,, VALUES
EFFICIENCY & EMPATHY HISTORY, HERITAGE
STYLE AND DESIGN & EXPERIENCES
PRICE

CATEGORY IDENTIFICATION
NEEDS SATISFIED
 Salience Dimensions
„ Depth of brand awareness
„ Ease of recognition
g and recall
„ Strength and clarity of category membership

„ Breadth of brand awareness

„ Purchase consideration
„ Consumption consideration

2.14
 Depth and Breadth Importance
„ The product category hierarchy shows us not
onlyy the depth
p of awareness matters but also the
breadth.
„ The brand must not only be top
top--of
of--mind and have
sufficient “mind share,” but it must also do so at
the right times and places.

2.15
 Product Category Structure
„ To fully understand brand recall, we need to
appreciate
pp pproduct category
g y structure,, or how
product categories are organized in memory.

2.16
 Performance Dimensions
„ Pi
Primary characteristics
h i i andd supplementary
l features
f
„ Product reliability,
reliability durability,
durability and serviceability
„ Service effectiveness,
effectiveness efficiency,
efficiency and empathy
„ Stylee and
Sty a d design
des g
„ Price

2.17
 Imagery
g Dimensions
„ User profiles
„ Demographic and psychographic characteristics
„ Actual or aspirational
„ Groupppperceptions
perceptions—
p —p popularity
p y
„ Purchase and usage situations
„ Type of channel,
channel specific stores,
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
g
„ Memories
2.18
 Judgment Dimensions
„ Brand quality „ Brand consideration
„ Value „ Relevance
„ Satisfaction

„ Brand credibility
„ Brand superiority
„ E
Expertise
i „ Differentiation
„ Trustworthiness
„ Likeability

2.19
 Feelings Dimensions
„ Warmth
„ Fun
„ Excitement
„ Security
S it
„ Social Approval
pp
„ Self--respect
Self

2.20
 Resonance Dimensions
„ Behavioral loyalty
„ Frequency and amount of repeat purchases
„ Attitudinal attachment
„ Love brand
L b d (f(favorite
i possessions;
i “a
“ little
li l pleasure”)
l ”)
„ Proud of brand
„ S
Sense off community
i
„ Kinship
„ Affiliation
„ Active engagement
„ S k information
Seek i f i
„ Join club
„ Visit website
website, chat rooms
2.21
Customer--Based Brand Equity
Customer q y Model

Consumer- INTENSE, ACTIVE

LOYALTY
Brand
d
Resonance

RATIONAL &
Consumer Consumer EMOTIONAL
Judgments Feelings REACTIONS

POINTS-OF-
PARITY &
Brand Brand POINTS-OF-
Performance Imagery DIFFERENCE

DEEP, BROAD
DEEP
Brand Salience BRAND
AWARENESS
 Application:
Identify the Key Drivers of Brand Equity

P f
Performance J d
Judgment
0.65
0.49

Resonance
0.17 0.66

0.58
0.24
Imagery Feelings
 Brand Building Implications
„ Customers own brands.
brands
„ Don’t take shortcuts with brands.
„ Brands should have a duality.
„ B d should
Brands h ld hhave richness.
i h
„ Brand resonance pprovides important
p focus.

2.24
 Creating Customer Value
„ Customer-brand relationships are the
Customer-
foundation of brand resonance and buildingg a
strong brand.
„ The customer
customer--based brand equity model
certainly puts that notion front and center.

2.25
Is a company consumer-
consumer-centric?
1. Is the company looking for ways to take care of
you?
2. Does the company know its customers well
enough
g to differentiate between them?
3. Is someone accountable for customers?
4
4. Is the company managed for shareholder value?
5. Is the company testing new customer offers and
learning
l i from
f the
th results?
lt ?

Sources: Larry Selden and Geoffrey Colvin, 2004.

2.26
Customer Relationship Management
(CRM)
„ Uses a company’s data systems and applications
to track consumer activity and manage customer
interactions with the company

2.27
 Customer Equity

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

of maximizingg customer equity:
q y

„ Invest in highest
highest--value customers first
„ Transform product management into customer management
„ Consider how add-
add-on sales and cross-
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
i theh iintrinsic
i i retainability
i bili off your customer
„ Consider writing separate marketing plans—
plans—or even building two
marketing organizations
organizations— —for acquisition and retention efforts

2.28
 Customer Equity
„ The sum of lifetime values of all customers
„ Customer lifetime value (CLV) is affected by
revenue and d by
b the
h cost off customer acquisition,
iii
retention, and cross-
cross-selling
„ Consists of three components:
„ Value equity
q y
„ Brand equity
„ Relationship equity

Rust,
Rust Zeithamal & Lemon,
Lemon 2004

2.29
Relationship of Customer Equity to
Brand Equity
„ Customers drive
d the
h success off brands
b d b but
brands are the necessary touchpoint that firms
have to connect with their customers.
„ Customer--based brand equity
Customer q y maintains that
brands create value by eliciting differential
customer response
p to marketingg activities.
„ The higher price premiums and increased levels
of loyalty engendered by brands generate
incremental cash flows.

2.30