2.1

CHAPTER 3

BRAND RESONANCE AND

BRAND VALUE CHAIN

Kevin Lane Keller

Tuck School of Business

Dartmouth College

Review from previous chapter

Chapter 2 outlined the concept of CBBE and

introduced a brand positioning model based on

the concepts of point-of-parity and point-of-

difference

This chapter will elaborate two other model; the

brand resonance model and brand value chain

model, which all together make up the brand

planning system

2.2

Brand Resonance and

Brand Value Chain Model

Brand Resonance: describe how to create

intense, active loyalty relationship with

customers – considers how brand positioning

affects what customer think, feel and do and the

degree to which they resonance/connected

Brand Value Chain: by which marketers can

trace the value creation process for their brand

to better understand the financial impact of their

marketing expenditures and investments

2.3

2.4

The Brand Resonance Model

The Four Steps of Brand Building CBBE model looks at building a brand as a sequence of steps, each of

which is contigent on successfully achieving the objectives of the

previous one:

1. Ensure identification of the brand with customers and an

association of the brand in customers’ minds with a specific

product class/consumer need

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

consumers by strategically linking a host of tangible and intangibla

brand associations with certain properties

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

2.5

Four Questions Customers ask of Brands

The previous steps represent a set of fundamental

questions that customers invariably ask about the

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)

Customer-Based Brand Equity Pyramid and

its sub-dimensions (rational – emotional)

http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg

The ordering steps in brand

laddering

Cannot establish meaning unless we have

created identity

Responses cannot occur unless we have

developed the right meaning

Cannot forge relationship unless we have

elicited the proper responses

2.7

2.8

Level 1 Salience Dimensions Brand salience measures awareness of the brand:

“how often andeasily the brand is evoked under the various situation?”

Depth of brand awareness

Ease of recognition and recall (how likely for brand element to

come to mind, brand with high recall is stronger than only

recognition)

Strength and clarity of category idenification/ membership

Breadth of brand awareness

The range if Purchase and Usage/Consumption consideration

Brand Salience

2.9

It’s important to understand how critical brand salience is to the

branding process. Brand salience relates to awareness of your

organization and its importance to your audience. This, of

course, translates to the importance of marketing, advertising,

and public relations in your ongoing communications efforts as

they help generate awareness and communicate an organization’s

relative importance, value proposition, and differentiation.

Source: http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg

2.10

Salience: 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.

To fully understand brand recall, we need to appreciate product

category structure, or how product categories are organized in

memory.

The product category hierarchy plays important role in customer

decision making

High brand salience: customer make sufficient purchase as well

as always think of the brand accross variety of setting

Example Drinks Category Hierarchy/Structure

2.11

Level 1

Product Class

Level 2

Product Category

Level 3

Product Type Information

Level 4

Product Info (specific) or

Brand

Product category structure: how product categories are organized in memory

After meal only...

in to other consumption

situation beyond meals ...

(gathering, rilex, thirsty, etc)

2.13

Level 2 Brand Meaning

In brand salience – (e.g. Aware of the brand by knowing the

product category) - is important but not sufficient because the

meaning/image of the brand might also considered

Creating brand meaning includes establishing a brand image – what the

brand is characterized by and should stand for in the minds of

customer

Two major categories of associations in brand meaning:

performance and imagery

Those two categories can be formed directly from customer

experience, advertising, WOM, etc

2.14

Level 2 A Performance Dimensions

“the product” itself is at the heart of Brand Equity

Brand performance: how well the product meets its functional needs,

how well its quality, what extent does the brand satisfy utilitarian asthetic

and economics?

Five types of Brand Attributes and Benefits (that underlie brand performance)

1. Primary characteristics and supplementary features

2. Product reliability (consistency performance over time), durability (expected

economic life of the product), and serviceability the ease of repairing the

product if needed)

3. Service effectiveness(how well it satisfies), efficiency (speed and

responsiveness of services), and empathy (the extent of service providers are

seen as trusting, caring, and having cust. Interest)

4. Style and design (go beyond its functional aspect: e.g. Size, material/sensory)

5. Price (how relative expensive/inexpensive the brand?frequent discount?)

Example : Ads that emphasize on Brand Performance

2.15

2.16

Level 2 B Imagery Dimensions Depends on the extrinsic properties of the product, incl. The attempts to meet

customer’s psychological and social needs (more intangible)

Many kind intangibles - the way customer think the abstract aspect of the brand – instead

of the brand actually does - can be link to the brand, such as:

User Profiles/Imagery: the type of person or organization who uses the brand

Demographic characteristics (e.g. gender, age, race, income)

Psychographic characteristics (e.g. attitude toward, careers, possessions, social issues)

(in B2B context): e.g. size/type of organization

Purchase and usage Imagery: what conditions/situations they can/should buy the brand

Type of channel (e.g. supermarket, specialty stores, internet), specific stores, ease of purchase

Time (day, week, month, year, etc.), location, and context of usage/type activity (formal/informal)

Brand Personality and values

Sincerity (down-to-earth, honest, wholesome and cheerful), excitement (daring, spirited, imaginative and up-to-date), competence (reliable, intelligent, successful), sophistication (upper class and charming), and ruggedness (outdoor and tough)

History, heritage, and experiences: associations to their past and certain noteworthy events in the brand’s history

Nostalgia

Memories

Example Imagery

2.17

Performance & Imagery

This level of the pyramid is all about features and visual

representation. That is, everyone who experiences your

brand, regardless of whether it’s a product, service,

individual, etc., will experience and evaluate it based on

a variety of characteristics. Succesfull result of the:

strength, favourability and uniqueness dimension and

sufficient knowledge about brand meaning produce the

most positive brand response. From these experiences,

users will begin to form judgments and feelings about

your brand, which is the next level up on the pyramid.

2.18 Source: http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg

2.19

Level 3 A Judgment Dimensions Brand Judgement: Personal opinions about and evaluation of a brand which consumers

form by putting together all the different brand performance and imagery associations

Four types of Brand Judgement

Brand quality: Judgement of the quality will determine brand attitudes or overall evaluation

of a brand

Value and Satisfaction

Brand credibility (judgement about the the company/organization behind a brand)

Expertise (competent, innovative and market leader?)

Trustworthiness (dependable and keeping customer interest in mind)

Likeability (fun, interesting, and worth spending time with)

Brand consideration

Attitude and perception will not enough if the customer do not consider about the brand from

the very beggining, i.e. how personally relevant customer find the brand? – the extent to which

strong and favorable brand associations can be created as part of the brand image

Brand superiority

The extent to which customer view the brand as uique and better than other brand i.e.

Differentiation

2.20

Level 3 B Feelings Dimensions

Customers’ emotional responses and reactions to

the brand: what feeling are evoked by marketing programs (e.g. Ads)?

Warmth: make customer feel a sense of calm/peacefulness

Fun: upbeat type of feelings; amused, lighearted, joyous etc

Excitement: make customers feel energized, excited

Security: produces feeling of safety, comfort, self-assurance

Social Approval: other looks favourably on their appearance

Self-respect: make consumers feel better about themselves

Judgment & Feeling

the transition level. It’s a critical one because it’s the bridge

between the feature and resonance levels. In this level, users of

your brand form important judgments and feelings about your

brand based on its performance and imagery. If your brand’s

performance is sub-par, your users’ judgments and feelings will

reflect that, never allowing you to achieve brand resonance in

their minds. From a branding, marketing, and public relations

standpoint, much of what you do is based on helping those who

experience your brand to form the judgments and feelings you

desire to help achieve brand resonance.

2.21

2.22

Level 4 Resonance Dimensions

Ultimate relationship, the extent cust feel “in sync” with the brand: two dimensions; Intensity (depth of the physcological bound) and activity engendered by this

loyalty – both divided into four categories:

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 (willing to invest time, energy, money, etc) Seek information

Join club

Visit website, chat rooms

Become brand ambassador/evangelist

Example Brand Resonance

Loyalty: lifetime value of diapers

customers?

1 baby RM100/month x 24-30months =

RM3,000!

Atachment

Sense of community

Engaged

2.23

Resonance

A key difference, however, is that brand resonance

involves two entities, not just one. It is characterized by

incredibly strong connections with a brand, resulting in

intense loyalty by a brand’s users and a stronger ability

of the brand to resist competitive actions taken by

another brand, whether they are financially-based,

related to advertising and marketing, etc. In essence,

brand resonance is like achieving brand nirvana.

2.24

2.25 Source: http://thecadburychocolatier.files.wordpress.com/2012/01/cbbe-sbm-final.jpg

Example: Cadbury CBBE Pyramid

Application:

Identify the Key Drivers of Brand Equity

0.17 0.66

0.24

0.65 Performance

Imagery Feelings

Judgment

Resonance

0.58

0.49

2.27

Brand Building Implications

Customers own brands. (the measure of the

brand-strength is the way consumer think, feel

and act with respect to the brand)

Don’t take shortcuts with brands.

Brands should have a duality. (appeals both heart

and head. Rational and Emotional aspects)

Brands should have richness

Brand resonance provides important focus for

their brand-related marketing activities.

The Brand Value Chain

Developing a strong positioning and building brand

resonance are crucial, but to better understand the ROI

of marketing investment, the BVC tool is necessary

BVC: structured approach to assesing the source and

outcomes of brand equity and the manner by which

marketing activities create brand value

BVC profides insights to support bran managers, chief

marketing officers, managing directors, and CEO

2.28

Brand Value Chain Model

2.29

Value Stages

Stage 1 Marketing Program investment

Stage 2 Customer Mindset as reflected in Brand

Resonance

Stage 3 Market/Brand Performance

Stage 4 Sharehorder Value

With three moderating multipliers:

1. Program Quality multiplier

2. Marketplace condition multiplier

3. Investor sentiment multiplier

2.30

Stage 1 Marketing Program Investment

Any marketing program/investment (product research,

direct/interactive marketing, publicity, etc) can contribute to the

brand value development

It depends on qualitative aspects of the program and program

quality multiplier, i.e.:

Distinctinevess: how unique/creative/differentiating?

Relevance: how meaningful?

Integrated: How well integrated the marketing program, past, present,

future?

Value: how much short/long-run value created? Will it build sales (s/r) or

brand equity (l/r)?

Excellence: is the individual marketing activity designed to satisfy the

highest standard?

Fulfillling all the criteria is likely to achive greater ROI 2.31

Stage 2: Customer Mind-Set

The 5As of customer mind-set (BR) that influence the Brand value:

Deep, Broad brand Awareness,

Favourable, unique and strong POP and POD Associations,

Positive Brand Attitudes (Judgements and Feelings),

Intense brand Attachment and

High degree of Brand Activity

Marketplace Condition Multipliers:

1. Competitive superiority

2. Channel and other intermediary support

3. Customer size and profile

The value in customer’s mind-set will be translated into favorable

performance if no significant threat from competitor, support from

distribution channels and sizable profitable customers that are attracted to

the brand - exist

2.32

Stage 3: Market Performance

The customer mind-set affects customer’s reactions

Price premiums and demand elasticity of the brand

Brand sales leads to market share

The ability to expand the brand (brand extension or new-brand into

related categories)

Cost structure (due to reduces marketing expenditures)

All factors above lead to Brand Profitability

The ability of the brand value to reach the final stage (stock market valuation)

depends on the Investor sentiment multiplier

1. Market dynamic (interest rates, supply of capital, etc)

2. Growth potential (prospects of the brand at the current industry)

3. Risk profile (how vulnerable the brand?)

4. Brand contribution (how important is the brand to the firm portfolio?)

2.33

Stage 4: Shareholder Value

Based on current and forecasted information

about a brand as well as many other

considerations, the financial marketplace

formulates assessments and opinion that have

very direct implications for the brand value

Three important indicators

1. Stock price

2. Price/earnings multiple, and

3. Market capitalization for the firm

2.34

Implications of BVC

According to BVC, marketers create value first by making

shrewd investments in their marketing program and then

maximising, as much as possible, the program, customer, and

market multiplier that translate the investment into financial

benefits

Implications of BVC:

1. Value creation begins with the marketing program investment – should

be well-funded, well-designed, well-implemented

2. Value creation require more than marketing invest,ent, because each of

the three multipliers can increase/decrease market value

3. This BVC provides a detailed road map for tracking value creation that

make marketing research and marketing intelligence efforts easier

2.35

The Brand Planning Model

2.36

POPs PODs

1. Brand Positioning Model

2. Brand Resonance Model

3. Brand Value Chain Model

2.37

Customer Equity

Other than CRM, some Marketing observers encourage firm to formally define and manage the value of their customers

CE: 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 (Rust, Zeithamal & Lemon, 2004)

Value equity (objective assessment benefit minus cost)

Brand equity (subjective assessment, above & beyond value)

Relationship equity (cust tendency to stick with the brand, above and beyond subjective assesment)

2.38

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

2.39

Relationship of Customer Equity to

Brand Equity

One way to reconcile the two is to combine both into a matrix, manade and decide the optimal marketing solutions/combinations

Brand and Customer Management: CUSTOMERS

Segment1 Segment2 Segment N

B

R

A

N

D

Brand 1

Brand 2

Brand M

Brand Equity vs Customer Equity:

Differences between the two points of view

2.40

Reconciling the two points of

views Customers drive the success of brands but brands are

the necessary touch-point that firms have to connect

with their customers.

CBBE maintains that brands create value by eliciting

differential consumer response to marketing activities

In practice; CE and BE are complementary notions

with different emphasis: BE emphasizes on “front end”

of marketing program and intangible value potentially

created by Marketing Program; CE emphasis on “back

end” of marketing programs and the realized value of

marketing activities in term of revenue 2.41

CLASS DISCUSSION:

PRODUCT TEAM CIALIS

2.42

Background: Viagra

Pfizer launched Viagra 1998

Treatment of erectile dysfunction (ED) (male impotence)

150 million men worldwide suffer (50% of all between age 40 and 70)

Immediate success - 600 000 prescriptions filled in first month

Viagra set back - deaths reported

Viagra regained confidence

$ 1.8 billion sales (2007)

2.43

New Entrants: Competition

3.44

Cialis from Lilly ICOS LLC

Levitra from Bayer

The Cialis case

How to segment the market and position a follower product

Viagra well positioned and well-known

Cialis unknown

How to communicate to target audience

Patients

Partners

Doctors

How to price the new product

Competitive response from Pfizer

2.45

Segmentation criteria

Demographics

Age

Income

Education

Viagra usage status

Current Viagra users

Viagra dropouts

Never tried Viagra

Benefit of duration

2.46

Segmentation: Age

Strong correlate between age and reason

for not seeking treatment

Young patients: Temporary condition

Old patients: Natural aging process

The rest: Embarrassed and temporary

condition

2.47

Segmentation: Usage status

Current Viagra users

Experience with ED

Good grasp of duration attribute

Most willing to try new drugs that offer improvement in key dimension

Smallest segment

Viagra dropouts Some experience with ED

Duration probably not key dimension for dropout

Maybe hard to treat group

Viagra never used Very large segment, but no usage familiarity

Duration not important, but safety important

2.48

Positioning and Pricing

Vertical positioning

36 is much better than 4?

Horizontal positioning

Attitude towards sex: Wild, naughty activity vs. romance

Viagra is priced at $10 (without health coverage)

Pay more for better performance?

If benefit is positioned more horizontally than vertically, unclear if higher charge is

appropriate

If affluent consumer are targeted, higher price OK

If going for broad appeal, consider lower price

2.49

Communication strategy

Communicate to whom?

Patients

Partners

Doctors

Insurance companies

Regulators

Media

2.50

Cialis Ads

3.51

Case Study: Cialis

3.52

Viagra Ads

3.53

Levitra Ads

3.54