Customer-Based Brand Equity

Chapter 2

Quiz

Develop the product category structure for Beverages.

Customer Based Brand EquityDefinition:

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

There are three ingredients to this definition:

1.1. Differential effectDifferential effect: brand equity arises from differences in consumer response. If no differences occur then brand name product can essentially be classified as commodity

2.2. Brand knowledge:Brand knowledge: these differences in response are result of of consumer knowledge about the brand. Brand equity ultimately depends on what resides in the mind of the consumer

3.3. Differential response by consumerDifferential response by consumer that makes up the brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand

Making A Brand Strong :Brand Knowledge

The associative The associative network memory modelnetwork memory model

Memory consists of network of nodes and connecting links where :

1. Nodes represent stored information or concepts

2. Links represent the strength of association between this information or concepts

Any type of information can be stored in the memory network ( verbal, visual, abstract or contextual)

Recall or retrieval of information occurs through a concept called spreading activationspreading activation

At any point in time an information node may be source of activation because it is either presented external information ( e,g. when a person reads or hear a word ( e,g. when a person reads or hear a word or phrase)or phrase) or retrieve internal information information currently being processed ((e.g. when a person thinks e.g. when a person thinks about some concept).about some concept).

A particular node in memory is activated, and activation spreads from that node to other nodes connected to it in memory.

When activation of a particular node exceeds its threshold level, the contents of that node are recalled

The spread of activation depends on the number and strength of the links connected to the activated node:

Concepts connected to the activated node whose linkages have the greatest strength will receive the most activation

Brand knowledge is conceptualized as consisting of a brand node with variety of association linked to it.

As a result of spreading activation, the strength and organization of these brand association will be important determinants of the information that can be recalled about the brand to influence consumer response and brand related decisions

Brand knowledge can be characterized in terms of two components: Brand awareness and Brand Image

Possible Apple computer associations

User friendly

Educationalfun

Desktop publishing

Friendly

Powerbook

Graphicscreative

cool

Applelogo

Innovative

Macintosh

Multi-MediaMix

Situation

Places

Mood

Attitudes to

Advertising

Attention

! Time Budget

s

New Media

Activities

Sources of Brand Equity

Brand Awareness:

The strength of brand node, as reflected by consumers’ ability to identify the brand under different conditions

Brand awareness is created by increasing the familiarity of the brand through repeated exposure( for brand recognition) and strong association with the appropriate product category or other relevant purchase or consumption cues (Brand Recall)

Brand Awareness can be characterized by Brand Awareness can be characterized by depth and breadthdepth and breadth

a.a. DepthDepth of brand awareness relates to the likelihood that the brand could be recognized or recalled

b.b. BreadthBreadth of brand awareness relates to the variety of purchase and consumption situations in which brand comes to the mind

Consequences of Brand Awareness

1.1. Learning Advantages:Learning Advantages: Influencing the formation and strength of

brand association that make up brand image

The First step in building brand equity is to register the brands in the minds of consumers.

2.2. Consideration advantages: Consideration advantages:

> Increases the likelihood that that a brand will be a member of consideration set

1.1. Learning Advantages:Learning Advantages: Influencing the formation and strength of

brand association that make up brand image

The First step in building brand equity is to register the brands in the minds of consumers.

2.2. Consideration advantages: Consideration advantages:

> Increases the likelihood that that a brand will be a member of consideration set

3.3. Choice AdvantagesChoice Advantages Can affect choices among brands in

consideration set, even if there are no other brand associations

Eg Low involvement decision settings: minimum level of brand awareness is enough for product choice.

Low involvement results when consumers lack either purchase motivation( don’t care about the product) or purchase ability( do not know anything else about the brands in a category.- young male student going grocery shopping )

Consumer may buy only more familiar, well established brands

Establishing Brand Awareness

1. Increasing familiarity of the brand through repeated exposure

2. The more a consumer, “ experiences” the brand by seeing it, hearing it, or thinking about it, the more likely the brand is registered in the memory

3. Any thing that causes consumer to experience a brand name, symbol, logo, character, packaging, slogan can potentially increase familiarity and awareness of that brand element

Strategies to increase brand awareness

1. Visually and verbally reinforce the brand name with a full complement of reinforcing brand elements

Develop a slogan or jingle that creatively pairs the brand and the appropriate category, purchase, or consumption cues ( and ideally, the brand positioning as well, in terms of also building a positive brand image)

Additional use can be made of other brand elements – logos, symbols, characters, and packaging

2. Creatively pair the brand with its corresponding category or other appropriate cues through a wide range of communication options ( advertising, promotion, sponsorship, and public relations).

The way the brand and its product category are paired( eg advertising slogan)will help in determining the strength of the product category links .

For brands with strong category associations, eg Lipton tea, the distinction between brand recognition and brand recall may not matter much-consumers thinking of the category are likely to think of the brand.

Brand image:

Consumer perception of a brand as reflected by brand association held in consumer memory.

Brand associations are other informational nodes linked to the brand node in memory and contains the meaning of the brand for consumers

A positive brand image is created when there are strong, favorable , unique associations links of the brand in memory

Brand associations can also be created through:

1. Direct experience

2. Information communicated about the brand from other commercial, non partisan sources- media vehicles

3. Word of mouth

4. Assumptions or inferences from the brand itself( name, logo)

Identification of a brand with company, country, person, place , event.

 

How Body shop built brand equity:

Strong associations to personal care and environmental concern happened through their:

Products( natural ingredients, no animal testing)

Packaging(simple, refillable, recyclable)

Merchandising ( detailed point of sale posters, brochures, displays)

Staff( encouraged to be enthusiastic, and informative regarding environmental issues

Sourcing policies( using small local producers around the world)

Social action program( requiring each franchisee to to run a local community program

Strength of Brand Associations

Associations to be linked sufficiently strong to the brand will depend on how the marketing program and other factors affect consumer’s brand experience

Strength is a function of both the amount or quantity of processing that information receives and the nature or quality of that processing

The more deeply a person thinks about about product information and relates it to existing brand knowledge, the stronger are the resulting brand association

Strength of Brand Associations

Two factors facilitating the strength of association to any any piece of information are the personal relevancepersonal relevance of the information and the consistencyconsistency with which this information is presented over time

Associations that are recalled depend not only on strength of association but also in context in which brand is recalled

Favorability of Brand Association

Favorable associations for the brand are desirable to consumers and are successfully delivered by the product and conveyed by the supporting marketing programs for the brand

Desirability depends on 3 factorsDesirability depends on 3 factors

1. How relevant consumers find the brand association

2. How distinctive consumers find the brand association

How believable consumers find the brand association

Favorable brand associations come in Favorable brand associations come in variety of forms.variety of forms.

a.a. Intrinsic Intrinsic product related factors

b.b. Abstract non productAbstract non product related imagery related to desirable users or usage situations for the brand

Not all brand association will be deemed important viewed favorably by the consumers, nor will they be equally valued across different purchase or consumption situations

Uniqueness of Brand Associations

Unique brand associations are distinct associations not shared by competing brands

Beliefs about unique attributes and benefits valued more favorably by consumers as compared to competitive offerings can lead to more favorable brand evaluation and greater likelihood of choice

It is important to associate unique, meaningful “ points of difference” to a brand to provide a competitive advantage and a reason why consumers should buy it

It may be sufficient that some brand associations are seen as roughly equal in favorability with competing brand associations.

These associations should function as “point of parity” in consumer’s mind to negate points of difference for competitors.

These associations are designed to provide, “ no reason why not” for consumers to choose the brand

Eg Fedex vs Postal Service express mailEg Fedex vs Postal Service express mail

Fed Ex- leading overnight delivery service. It may be fast, dependable, convenient – which are important in consumer choice under certain situations-

Someone may desire these benefits only when meeting a important deadline.

If Someone needs a delivery “as soon as possible” than other less expensive options can be considered

Product/service category Product/service category associationsassociations

Can be characterized by set of associations Can be characterized by set of associations including specific beliefs about any member in the including specific beliefs about any member in the

category, and overall attitudes toward all category, and overall attitudes toward all members.members.

- E.g. some attributes are prototypical, essential to all brands, and a specific brand can be considered to be the best and most representative- a running shoe should provide support, comfort, and be enduring, Nike best represents a running shoe.

Building a Strong BrandBuilding a Strong BrandBuilding a Strong BrandBuilding a Strong Brand

1.1. Ensure identification of the brand with customers and an Ensure identification of the brand with customers and an association of the brand in customer’s minds with a specific association of the brand in customer’s minds with a specific product class or customer needproduct class or customer need

Who are you? (Brand Identity)2.2. Firmly establish totality of brand meaning in the minds of Firmly establish totality of brand meaning in the minds of

customers by strategically linking a host of tangible and customers by strategically linking a host of tangible and intangible brand associations with certain prospectsintangible brand associations with certain prospects

What are you? ( Brand Meaning)

3.3. Elicit proper customer responses to this brand identification and Elicit proper customer responses to this brand identification and brand meaningbrand meaning

What about you? What o I think and feel about you? ( Brand Responses)

4.4. Convert brand responses to create intense, active loyalty Convert brand responses to create intense, active loyalty relationship between customers and brandrelationship between customers and brand

>> What a about you and me? What kind of association and how What a about you and me? What kind of association and how much of a connection would I like to have with you ( Brand much of a connection would I like to have with you ( Brand Relationship)Relationship)

CUSTOMER-BASED BRAND EQUITY PYRAMID

RESONANCE

SALIENCE

JUDGMENTS FEELINGS

PERFORMANCE IMAGERY

4. RELATIONSHIPS =

What about you & me?

3. RESPONSE =

What about you?

2. MEANING =

What are you?

1. IDENTITY =

Who are you?

Brand Building blocks

Brand Salience

Brand salience refers to aspects of the awareness of the brand, eg:

1. How often and easily is the brand evoked under various situations or circumstances.

2. To what extent is the brand top-of-mind and easily recalled or recognized?

3. What types of cues are necessary?

Salience DimensionsDepthDepth of brand awareness- of brand awareness- likelihood that a brand element will come to mind, and the ease with which it does so.Eg a brand that can be easily recalled has

a deeper level of brand awareness, than one that can only be recognized.

BreadthBreadth of brand awareness- of brand awareness- concerns the range of purchase and usage situations in which the brand element comes to mind

Depends on organization of product knowledge In memory

Tropicana Juice- “Its not just for Breakfast anymore”

Consumers should recognize the brand is presented or exposed to them.

Should think of Tropicana whenever they think of orange juice, especially when considering purchase in that category( increase depth)

Would ideally think of Tropicana whenever they decide which beverage to drink, especially when seeking a “tasty but healthy” beverage

Thus they should think of Tropicana in terms of satisfying a certain set of needs.

Marketing challenge is to link the product to usage situations outside traditional usage( increase breath)

Product category structure

How product categories are organized in consumers mind.

Hierarchy of levels in consumers Hierarchy of levels in consumers mindmind

Product class information

Product category information

Product information

Brand Information

Beverage Category Hierarchy

Water Flavored

Beverage

Non-alcoholic

Hot BeverageSoft Drinks

Milk JuicesJuices

Alcoholic

Top down descisionTop down descisionSoft drinks have Soft drinks have greatest breathgreatest breath

Strategic ImplicationStrategic Implication

In terms of building awareness it is not only the depth of awareness that matters but also the breadth of awareness and properly linking the brand to various categories and cues in consumers’ minds

It is important that the brand not only be top-of-mind and have sufficient “ mind share” but also do so at the right times and places

For many brands, the key question not whether consumers can recall the brand but where they think of the brand, and how easily and often they think of the brand

In some cases the best route for improving sales of a brand is not by changing the attitudes of a brand but by increasing the breadth of awareness and situations in which consumer would consider using the brand-Campbell soup- “Mmm Mmm Good”to versatile and contemporary

For many brands, the key question not whether consumers can recall the brand but where they think of the brand, and how easily and often they think of the brand

In some cases the best route for improving sales of a brand is not by changing the attitudes of a brand but by increasing the breadth of awareness and situations in which consumer would consider using the brand-Campbell soup- “Mmm Mmm Good”to versatile and contemporary

Brand PerformanceRelates to the ways in which the product or service meets customers’ more functional needs

Brand performance refers to the properties of the brand in terms of inherent product or service characteristics

How well the brand rates on objective assessments of quality?

To what extent does the brand satisfy utilitarian, aesthetic, economic customer needs and wants in the product or service category

Any of the performance dimensions can relate to brand differentiation

Performance Dimensions

Primary characteristics & supplementary Primary characteristics & supplementary featuresfeatures

Customers often have beliefs about the levels at which the primary ingredients of the product operate- soap

They may have beliefs about the special features or secondary elements of a product that may complement these primary ingredients -Microwave

Some attributes are essential ingredients necessary for the product to work, whereas other attributes are supplementary features that allow for customization and more versatile, personalized usage -BoomBox

Product reliability, durability, and Product reliability, durability, and serviceabilityserviceability

Reliability refers to the consistency of performance over time and from purchase to purchase

Durability refers to the expected economic life of the product

Serviceability refers to the ease of servicing the product if it needs repairs

Service effectiveness, efficiency, and Service effectiveness, efficiency, and empathyempathy

Service effectiveness refers to how completely the brand satisfies customers’ service requirements

Service efficiency refers to the manner by which these services are delivered in terms of speed, responsiveness etc.

Service empathy refers to the extent to which service providers are seen as trusting , caring, and having the customers’ interest in mind

Style and designStyle and design

> Performance may also depend on sensory aspects how the products looks and feels, what it sounds or smells like

PricePrice

Price is a important performance association because consumers often have strong beliefs about the price value of a brand and may organize their product category knowledge in terms of tiers of different brands ( price value relationship)

Brand ImageryDeals with extrinsic properties of the product or service, including the ways in which the brand meets customers’ psychological or social needs

Brand imagery is how people think about a brand how people think about a brand abstractly,( intangible aspects)abstractly,( intangible aspects) rather than what they think the brand actually does.

Imagery associations can formed :1. Directly ( from a customer’s own experiences, and

contact with the product, brand, target market, or usage situations)

2. Indirectly ( brand advertisement, word of mouth)

• may result in a profile/mental image of actual or aspirational users.

Deals with extrinsic properties of the product or service, including the ways in which the brand meets customers’ psychological or social needs

Brand imagery is how people think about a brand how people think about a brand abstractly,( intangible aspects)abstractly,( intangible aspects) rather than what they think the brand actually does.

Imagery associations can formed :1. Directly ( from a customer’s own experiences, and

contact with the product, brand, target market, or usage situations)

2. Indirectly ( brand advertisement, word of mouth)

• may result in a profile/mental image of actual or aspirational users.

Imagery DimensionsUser profiles Demographic characteristics-(brand gender ,

age , race, income) Psychographic characteristics( attitudes

towards life, careers, possessions, social issues-brand user may be seen as traditional, conservative)

Actual or aspirational- Group perceptions – popularity-market leaders

Purchase & usage situations Type of channel, specific stores, ease of purchase Time (day, week, month, year, etc.), location, and

context of usage, type of activity

Imagery Dimensions

Personality & values Sincerity (down to earth, honest, cheerful,

wholesome), excitement( daring, imaginative, up to date), competence (reliable, intelligent, successful), sophistication (upper class, charming), & ruggedness( outdoorsy, tough)

History, heritage, & experiences-

Nostalgia Memories

more broad based, may be related to the marketing program( color, packaging, company, country of origin, type of store, endorsers)

Brand JudgmentsFocus on customers’ personal opinions and evaluation with regard to the brandInvolve how customers put together all different performance and imagery associations of the brand to form different kinds of opinionsIn creating a strong brand four types of brand judgments are important:

1. Quality –perceived quality attitude, perceptions of value, satisfaction

2. Credibility-3 dimensions-• Perceived expertise( is the brand seen as competent, innovative, market

leader)• Trustworthiness( dependable, keeping customer interests in mind)• Likeability ( fun, interesting, worth spending time with)

3. Consideration-depends on how personally relevant consumers find the brand and the likelihood that it will be included in the set of probable options,

4. Superiority- extent to which customers find the brand as unique and better than competitors

Brand Feelings

Customers’ emotional responses and reactions with respect to the brand

What feelings are evoked by the marketing program for he brand or by other means

How the brand affect customers’ feelings about themselves and their relationship with others? (mild or intense, can be positive or negative )

Emotions evoked can be so strongly associated, they are accessible during product consumption

Feelings DimensionsWarmth –Soothing feelings (consumer feel sentimental, warm hearted, or affectionate for the brand)

Fun –Upbeat feelings ( amused, lighthearted, joyous, playful, cheerful)

Excitement -Energizing( sense of elation, of “being alive”, being cool sexy, etc)

Security- ( safety, comfort, and self assurance

Social approval ( positive feelings about the approval of others-they feel that others favorably on their appearance)

Self-respect ( feel better about themselves, sense of pride, accomplishment, fulfillment)

Brand ResonanceRefers to the nature of relationship and the extent to which customers feel that they are “in-sync” with the brandCharacterized in terms of:Characterized in terms of:

intensity, or the depth of the psychological bond that customers

Level of activity engendered by this loyalty ( repeat purchase rates, extent to which customers seek brand information)

• Brand Resonance can be broken into four Brand Resonance can be broken into four componentscomponents

1. Behavioral loyalty2. Attitudinal attachment3. Sense of community4. Active engagement

Resonance Dimensions Behavioral loyalty Frequency and amount of repeat purchases

( share of category requirements)

Attitudinal attachment Love brand (favorite possessions; “a little

pleasure”) Proud of brand

Sense of community Kinship and Affiliation with other people

associated to it ( Harley Davidson)

Active engagement Join club centered on a brand( get updates) Visit web site, chat rooms