Customer-Based Brand

Equity

What is a Brand?
A brand is a perceptual entity

Resides in the minds of the consumer

Rooted in reality

Differentiated product that satisfies

needs and wants

Created by the Firm

With Strategic Brand Management the impetus for brand creation

The New Concept of

Customer-based brand
Customer-Based
Brand
equity is the Differential
effect of the brand which
Equity
(CBBE)

generates a Differential in Customer

Response to brand marketing activities
This is because of Customer Brand
knowledge

CBBE Concept Elaborated

CBBE - 3 key ingredients elaborated
Differential effect of brand marketing activities
causes...
Differential in customer response to brand
marketing activities - Sales Promotions, Brand
Extensions, etc. The response is reflected in

consumer perception
preference and
behavior towards brand

This is caused by customer brand knowledge previous marketing efforts create brand knowledge
and experience. Which results in CBBE

Concept of CBBE Elaborated

Customer-based brand equity can be positive
or negative based on Brand Knowledge

Positive CBBE - evokes positive response

from consumers to the brands marketing
programs and activities e.g Maggi before the
led crisis

Negative CBBC evokes negative response

e.g Maggi after the led crisis

CBBE Determinant is Brand

Knowledge

Brand Knowledge (BK) is key to the differential

effect and response to brand marketing
activities
The associative network memory model

BK is a node in memory with a variety of associations

Brand associations are the other nodes that are linked to the
brand-node in memory (about the product, and other imagery
aspects)

CBBE Determinant is Brand

Knowledge

Brand Knowledge (BK) is key to the differential

effect and response to brand marketing

Brand associations are categorized by their level Brand awareness and familiarity strength of the memory

1.

2.

Ability to recognize the brand

Ability to recall the brand under many different purchase and
consumption conditions

Brand Image Perception about the brand as created by

different brand associations type of users, usage, history,
brand personality

Brand associations, level of awareness varies by

groups

Brand Knowledge Effects

Non-Product-Related
Non-Product-Related
(e.g.,
(e.g.,Price,
Price,Packaging,
Packaging,
User
and
Usage
User and UsageImagery)
Imagery)

Brand
Brand
Recognition
Recognition
Brand
Brand
Awareness
Awareness

Brand
Brand
Knowledge
Knowledge

Brand
Brand
Image
Image

Brand
Brand
Recall
Recall

Attributes
Attributes

Types
Typesof
of
Brand
Associations
Brand Associations

Benefits
Benefits

Strength,
Strength,
Favorability,
Favorability,and
and
Uniqueness
of
Uniqueness of
Brand
BrandAssociation
Association

Overall
Overall
Evaluation
Evaluation
(Attitude)
(Attitude)

Product-Related
Product-Related
(e.g.,
(e.g.,color,
color,size,
size,
design
features)
design features)

Functional
Functional
Symbolic
Symbolic
Experiential
Experiential

CBBE Determinant Awareness

CBBE occurs when there is a high level of

awareness and familiarity 2 levels

Brand recognition brand as the cue

confirms prior exposure to the brand

Repeated exposure to the brand is necessary

Brand recall - brand association cues

enables the ability to retrieve the brand from
memory (the cues - product category, needs
met, purchase situations, etc.)

To be recalled brand associations have to be

Strong, Favorable, Unique

CBBE Determinant Awareness

Relative importance of Recognition & Recall

depends on whether - product related decision
is taken with product present or absent

Recognition - important when decisions are made

in-store when the brand is present
Recall - important when decisions are made when
brand is not present, but has to be actively sought on
/ off-line, critical services, etc.

Recognition is easier to achieve than

Recall Recall requires cognitive processing of
brand associations

CBBE Determinant Awareness

Brand awareness advantages and

consequences

Awareness plays an important role in

consumer decision making for 3 reasons
1.

2.

3.

Learning Advantage formation of new brand

associations e,g Maggie health over and above
convenience
Consideration advantage puts brand on the
Consideration Set at the time of purchase
Choice advantage particularly with Low
Involvement goods

CBBE Determinant Awareness

Brand awareness
Advantages and consequences
1. Learning Advantages influences formation of
new brand associations that make up the brand
image
The nature of the brand node, affects different kinds
of associations to become attached in memory

Choice of Brand Elements and brand marketing activities

can make the process of awareness easier or more difficult

CBBE Determinant Awareness

Brand awareness
Advantages and consequences
2. Consideration Advantages thinking
of the brand when making purchase
decisions (the brand is an acceptable option)
Raising awareness increases the likelihood of
the brand being on the consideration set

Sources of BE - Determinants
of CBBE
Brand
awareness
Advantages and consequences
3. Choice advantage Low-involvement situations

BE affects choice in the consideration set even when there

are no other brand associations.

Minimum levels of brand awareness is adequate to produce

choice even in the absence of well formed attitudes.

Low-involvement situations are when consumers

1.

Lack motivation - does not care about the product

gasoline

2.

Lack ability to judge product quality. Heuristics (shortcut

decision making approaches) used, and a familiar brand
is chosen)

CBBE Determinant Awareness

Establishing brand awareness requires

Repeated exposure through IMC generates

Brand Recognition needs brand familiarity

Repeated brand exposure is needed to build familiarity

Brand Recall - requires more linkages in memory

Effect of Repeated brand exposure

Reinforces brand name with all the brand elements

Reinforces different brand associations in the

Product category context

Situational cues - purchase or consumption situations

(creatively done with slogan or jingle, etc )

CBBE Determinant - Brand

Image
Brand Image - consists of Brand
Associations in memory Consumer
Beliefs about Brand
CBBE occurs when brand associations
are:

1.

strong

2.

favorable

3.

unique

Associations are formed in many ways and

have varying degrees of strength -

CBBE Determinant - Brand

Image

Brand Image = Consumer s Brand

Beliefs i.e. brand associations in memory
Formation of consumer beliefs about brand
attributes - many ways with varying degrees of
strength

Personal experience - the strongest association of

brand attributes and benefit

WOM and other non-commercial sources of info. the next strongest associations

Company created sources of info. - weakest

associations (advertising)

CBBE Determinant - Brand

Image
Brand Image Strong Associations
Strength of brand associations depends
on -

Quantity of processing number of times

Quality of processing - caused by brand

experiences as affected by marketing
programs

More deeply a person thinks about brand information

and

Relates it to existing brand knowledge, stronger the

associations

CBBE Determinant - Brand

Image
Brand Salience and Recall- strength of
brand associations impacts
Salience - context in which the brand is
recalled various purchase and consumption
situations

Retrieval cues - brand reminder communication

at the purchase and consumption locations are
useful

Brand Recall - 2 factors are key to strong

associations

n
n

Relevance of the information

Consistency with which the information is
presented repeatedly over time and space

CBBE Determinant - Brand

Image
Building Strong Brand Associations
Through Marketing programs that affect
brand experience through a variety of
means which

Ensure brand relevance to consumer needs

Maintain consistency - marketing activities

must be related to existing brand associations

Relate brand information to existing

knowledge through creative communication

Repeat exposure over time and space retrieval cues at appropriate locations act as
reminders

CBBE Determinant - Brand

Image
Brand Image Favorability of Brand Associations
are desirable to the consumer, are delivered
effectively by the Firm

Desirability depends on

How relevant consumers find the brand associations

How distinctive they find the association from competition

How believable they find the associations

Deliverability depends on 3 factors

Ability - actual and potential, product to perform at promised level

Sustainability at communicated performance level

Profitability

Effectively delivered - Cost and Time of delivery to create /

change desired associations must also be considered

CBBE Determinant - Brand

Image
Brand Image Unique associations
Unique brand associations must
consider both POPs and PODs
Points of parity (POP) be as good as the
competition on other associations ( for category
membership and to negate the potential points of
difference of competitors)
and .
Points of difference (POD) is the reason to
choose the brand. Hence the USP must be
meaningful points of difference

CBBE Determinant - Brand

Image
Brand Image Unique Associations must be a
competitive advantage that is sustainable
POPs - shared associations with competition to establish
Category membership

Category attitude - specific beliefs and attitudes towards the category to

become brand associations and

Scope of the competition

PODs (USP) basis of choice. Can be either /both

Product related (attributes or benefits) ,

Non product related (user type, usage situations)

USP can be Communicated either

Explicitly - by direct comparison with competitors, or

Implicitly - highlighted without a competitive point of reference

CBBE Determinant - Brand

Image
Brand Image Valuation of unique
brand associations can vary

All associations are not viewed as important

(Color of Blue Dart)

All associations are not valued across all

purchase or consumption occasions

Varies by consumer goals

Situation and context dependent

All consumers may not view same

associations as important

Building CCBE Through

Strategic Brand Management
Strategic Brand Management generates
brand knowledge through marketing
programs / activities which results in CBBE
4 key steps of SBM that create brand knowledge

Establish Brand Positioning and Brand Values

Choose Brand Elements

Plan supporting marketing programs and activities

Other associations to build equity (that indirectly

get transferred to the brand by linking it to some
other entities) should be carefully chosen

Building CBBE with

Kellers Pyramid Model
Kellers CBBE model lists a series of steps for
building a strong brand
1.Establish the proper brand identity
2.Create the appropriate brand meaning
3.Elicit the right brand responses
4.Forge appropriate brand relationships

27

CUSTOMERBASEDBRANDEQUITYPYRAMID

RESONANCE

JUDGMENTS

PERFORMANCE

FEELINGS

IMAGERY

SALIENCE

4.RELATIONSHIPS=
4.RELATIONSHIPS=
Whataboutyou&me?
Whataboutyou&me?

3.RESPONSE=
3.RESPONSE=
Whataboutyou?
Whataboutyou?

2.MEANING=
2.MEANING=
Whatareyou?
Whatareyou?

1.IDENTITY=
1.IDENTITY=
28
Whoareyou?
Whoareyou?

Kellers Customer-Based Brand Equity

Model
RELATIONSHIP
RELATIONSHIP
INTENSE,ACTIVE
INTENSE,ACTIVE
LOYALTY
LOYALTY

Consumer
Brand
Resonance

Consumer
Judgments

Brand
Performance

Consumer
Feelings

Brand
Imagery

BrandSalience

RESPONSE
RESPONSE
REACTIONS
REACTIONS
RATIONAL&
RATIONAL&
EMOTIONAL
EMOTIONAL

MEANING
MEANING
POINTSOFPARITY&
POINTSOFPARITY&
POINTSOF
POINTSOF
DIFFERENCE
DIFFERENCE

IDENTITY
IDENTITY
BRANDAWARENESS
BRANDAWARENESS

Sub-Dimensions of CBBE
Pyramid
LOYALTY
ATTACHMENT
COMMUNITY
ENGAGEMENT

CONSIDERATION
SUPERIORITY
QUALITY
CREDIBILITY

PRIMARYCHARACTERISTICS&
SECONDARYFEATURES
PRODUCTRELIABILITY,DURABILITY
&SERVICEABILITY
SERVICEEFFECTIVENESS,
EFFICIENCY,&EMPATHY
STYLEANDDESIGN
PRICE

WARMTH
FUN
EXCITEMENT
SECURITY
SOCIALAPPROVAL
SELFRESPECT

USERPROFILES
PURCHASE&USAGE
SITUATIONS
PERSONALITY&
VALUES
HISTORY,HERITAGE,
&EXPERIENCES

CATEGORYIDENTIFICATION,NEEDSSATISFIED

The Key Drivers of Brand Equity

Performance

Judgment

Resonance

Imagery

Feelings

Salience Dimensions
Brand Salience requires both

Depth of brand awareness

Ease of recognition and recall

Strength and clarity of category membership

Breadth of brand awareness

Recall of brand in

Varied purchase considerations

Varied consumption considerations

Performance Dimensions

Product characteristics primary

characteristics supplementary features

Product reliability, durability, serviceability

Price good value

Service effectiveness, efficiency, empathy

Style and design

Imagery Dimensions

User profiles
Actual or aspirational - demographic and psychographic
characteristics
Group perceptions popularity

Usage and purchase situations

Time (day, week, month, year, etc.), location, context of
usage
Type of channel / specific stores, ease of purchase

Brand Personality and values

Sincerity, excitement, competence, sophistication,
ruggedness

History, heritage, and experiences

Nostalgia, Memories

Judgment Dimensions

Brand consideration
Relevance

Brand superiority
Differentiation
Brand quality
Value
Satisfaction

Brand credibility
Expertise
Trustworthiness
Likability

Feelings Dimensions

Warmth
external
Fun
Excitement
Security
Social approval internal
Self-respect

Resonance Dimensions

Behavioral loyalty
Frequency and amount of repeat purchases

Attitudinal attachment
Love for the brand (favorite possessions; a little
pleasure)
Proud of the brand

Sense of community
Kinship
Affiliation

Active engagement
Seek information
Join the brand club
Visit web site, chat rooms

Resonance Dimensions
Foundation of brand resonance Customer-brand relationship
Customer Relationship Management (CRM)
Uses a companys data systems and applications
to track consumer activity and manage customer
interactions with the company

Motivation for Using

Customer-Based Brand Equity
Model
The CBBE model is an approach to brand
building

comprehensive and cohesive

well-grounded and up-to-date
Actionable approach

Building blocks logically constructed

building blocks lead to a strong brand
Branding ladder - a series of brand building
steps

Motivation for Using

Customer-Based Brand Equity
Model

CBBC model is useful as -

Road map /guidance for brand building

Guide for Marketing Research
Yardstick to assess brand progress / weaknesses and
strengths

It reinforces a number of branding tenets

Customers own brands

Brands should have a duality rational and emotional
Brands should have richness and resonance
Brand resonance provides an important focus
Short cuts cannot be taken with building brands

CBBE is a Bridge
Customer knowledge (BE) provides a vital
bridge from the past to the future

BE is a reflection of the past marketing

programs - brand investment in creating brand
knowledge (good or bad)
Quality of investment is more important than quantity
(can over spend if the money is not spent wisely)

BE is the direction for the future consumers

decide where the brand can go and where it
cannot, based on the brand knowledge that has
been created over time - dictates the future
direction for the brand
True value and future prospects of the brand
rests with the consumer

Customer Equity
Rust, Zeithamal & Lemon,
2004

The sum of lifetime value of all

customers
Consists of three components:

Value equity
Brand equity
Relationship equity

Customer lifetime value (CLV) is

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

Building Customer Equity - 8

Guidelines
Blattberg
Invest in highest-value customers
first and Deighton
Transform product management into customer
(1996)
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 plansor even
building two marketing organizationsfor acquisition and
retention efforts

Brand Building Implications

Dont take shortcuts with brands.
Brands should have a duality.
Brands should have richness.
Brand resonance provides important focus.
Customers own brands.