CHAPTER:2

Customer-based Equity
PART I-Developing a Brand Strategy
Chapter 2 Customer-based Brand Equity and Brand Positioning
Chapter 3 Brand Resonance and the Brand Value Chain

PART II-Designing and Implementing Brand Marketing Programs

Chapter 4 Choosing Brand Elements to Build Brand Equity
Chapter 5 Designing Marketing Programs to Build Brand Equity
Chapter 6 Integrating Marketing Communications to Build Brand Equity
Chapter 7 Branding in the Digital Era
Chapter 8 Leveraging Secondary Brand Associations to Build Brand Equity

PART III- Measuring and Interpreting Brand Performance

Chapter 9 Developing a Brand Equity Measurement and Management
System
Chapter 10 Measuring Sources of Brand Equity: Capturing Customer Mind-
Set
Chapter 11 Measuring Outcomes of Brand Equity: Capturing Market
Performance

PART IV- Growing and Sustaining Brand Equity

Chapter 12 Designing and Implementing Branding Architecture Strategies
Chapter 13 Introducing and Naming New Products and Brand Extensions
Chapter 14 Managing Brands Over Time
Chapter 15 Managing Brands Over Geographic Boundaries and Market
Segments
Hitachi and General Electric (GE) jointly
owned a factory in UK that made identical
televisions for the two companies.

The only difference was the brand name

on the television.

Nevertheless, the Hitachi televisions sold

for a $75 premium over the GE
televisions. Moreover, Hitachi sold twice
as many sets as GE despite the higher
price.
Customer-Based Brand Equity

Defining Customer-based Brand Equity

Brand Equity as a Bridge

 Brand equity
Brand Equity is a set of assets (and liabilities)
linked to a brand’s name and symbol that
adds to (or subtracts from) the value
provided by a product or service to a firm
and/or a firm’s customers.

Measurement of brand equity

-Customer based brand equity
-Customer based brand equity for B2B brands
-Financial brand equity
 Defining Customer-based Brand
Equity (CBBE)

• Power of a brand lies in what customers have

learned, felt, seen, and heard about the brand as a
result of their experiences over time and what resides
in the minds and hearts of customers.

• Positive customer-based brand equity -When

consumers react more favorably to a product and the
way it is marketed when the brand is identified than
when it is not (say, when the product is attributed to
a fictitious name or is unnamed).
 Defining Customer-based Brand
Equity (CBBE)

• Thus, customers might be more accepting of a new

brand extension for a brand with positive customer
based brand equity, less sensitive to price increases
and withdrawal of advertising support, or more willing
to seek the brand in a new distribution channel.

• Negative customer-based brand equity - When

consumers react less favourably to marketing activity
for the brand compared with an unnamed or fictitiously
named version of the product.
 Defining Customer-based Brand
Equity (CBBE)

• The three key ingredients of CBBE:

• Differential
effect
• Brand knowledge
• Consumer response to marketing
Defining Customer-based Brand
Equity (CBBE)
• Differential effect-If no difference occur, then
the brand-name product can essentially be
classified as a commodity or a generic version of
the product.

• Competition, most likely, would then just be

based on price.

• Brand knowledge- What customer learned, felt,

seen, and heard about the brand as a result of
their experience over time.
 Defining Customer-based Brand
Equity (CBBE)
• Consumer response to marketing-Perception,
preference , and behaviour related to all aspects of
brand marketing, for example, choice of a brand ,
Ad recall, response to sales promotion, brand
extension.

• When consumers report different opinions about

branded and unbranded versions of identical
products—which almost invariably happens—it must
be the case that knowledge about the brand.

• https://www.youtube.com/watch?v=JFXmIh4P2dM
 Brand Equity as a Bridge

Brand as a reflection of the past

• Marketers should consider the money spent in brand
building as an “ investment”.

• On the basis of the past experience, what consumers

saw, heard, learned, felt, and experienced about the
brand should be analysed.

• The quality of the investment in brand building is the

most critical factor, not the quantity.
 Brand Equity as a Bridge
Brand as a direction to the future
• Brand knowledge that marketers create over time,
which allows them to determine appropriate and
inappropriate future directions for the brand.

• Brand equity offers focus and guidance, provides a

means to interpret past marketing performance
and design future marketing programs.
Brand Equity as a Bridge
Brand Equity as a Bridge
Brand Equity as a Bridge
Brand Equity as a Bridge
Associative Network Memory Model

Views memory as a network of nodes and

connecting links.

• Nodes: Represent stored information or

concepts.
• Links: Represent the strength of association
between the nodes.

Brand associations are informational nodes linked

to the brand node in memory.
Brand Knowledge
Possible Apple Computer Associations
 Sources of Brand Equity

Brand Awareness

Brand Image
 Brand Awarness
• Brand awareness: Related to the strength of the
brand node or trace in memory.
• Brand recognition: Consumers’ ability to
confirm prior exposure to the brand when given
the brand as a cue. Especially in-store situation

• Brand recall: Consumers’ ability to retrieve the

brand from memory when given the product
category, the needs fulfilled by the category, or a
purchase or usage situation as a cue. In non-store
situations.
xbox
Bacardi
IRCTC
Shell
johnnie walker
Rolex
Disney
Unicef
ISRO
Singapore Airlines
 Brand Image
• More deeply a person thinks
Strength of about product information and
Brand relates it to existing brand
Associations knowledge, stronger is the
resulting brand association.

Favorability of • Is higher when a brand possesses

Brand relevant attributes and benefits
that satisfy consumer needs and
Associations wants.

Uniqueness of • “Unique selling proposition” of the

product.
Brand • Provides brands with sustainable
Associations competitive advantage.
Strength of Brand Associations

https://www.youtube.com/watch?v=E9oKEJ1pXPw
Favourability of Brand Associations
Uniqueness of Brand Associations
 Brand positioning
• Theplace a product/ service occupies in customer’s
mind relative to competing products/ services.

Brand position is based on the brand identity

• Brand Position is the part of the brand identity and

value proposition that is to be actively communicated
to the target audience and that demonstrates an
advantage over competing brands.

• ‘“Volvo. For life.”’ – VOLVO

• ‘We are number two, so we try harder’ - Avis
 Points of Parity and Points of
Difference
Points-of-difference associations

• Attributes or benefits that consumers strongly associate with

a brand, positively evaluate, and believe that:
• They cannot be found to the same extent with a
competitive brand.

• Functional-performance related considerations.

• Abstract-imagery related considerations.

• Swedish retailer Ikea took a luxury product—home

furnishings and furniture—and made it a reasonably priced
alternative for the mass market. IKEA Effect.
 Points of Parity and Points of
Difference
Points- of-parity associations
• Attributes shared with other brands.
• Three types of associations are:
• Category points- of-parity: Necessary conditions for
brand choice. Example- Banking Services

• Competitive points-of-parity: Associations designed to

negate competitors’ points-of-difference.

• Correlational points-of-parity: Potential negative

associations that arise from the existence of other, more
positive associations for the brand. For example, consumers
might find it hard to believe a brand is “inexpensive” and at
the same time “of the highest quality.”
Low price vs. high quality
Taste vs. low calories
Nutritious vs. good tasting
Efficacious vs. mild
Powerful vs. safe
Strong vs. refined
Ubiquitous vs. exclusive
Varied vs. simple
 Points of Parity and Points of
Difference
Points-of-parity versus points-of-difference

• Unless certain points-of-parity can be achieved to

overcome potential weaknesses, points-of-
difference may not even matter.

• There is a “zone” or “range of tolerance or

acceptance” with points-of-parity.

• Points-of-parity are easier to achieve than points-

of-differences.
 Positioning Guidelines
Defining and Communicating the Competitive
Frame of Reference

Choosing Points-of-Difference

Establishing Points-of-Parity and Points-of-

Difference

Straddle Positions

Updating Position Overtime

Developing a Good Positioning

 Positioning Guidelines
Defining and communicating the competitive frame of
reference
1. Communicating category benefits - Marketers use product
benefits to announce category membership. Example- Industrial
motors might claim to have power, and analgesics might
announce their efficacy.

2. Exemplars - Well-known, noteworthy brands in a category can

also be used as exemplars to specify a brand’s category
membership. Example- Tommy Hilfiger was an unknown
designer, advertising announced its membership as a great
American designer by associating him with Geoffrey Beene,
Stanley Blacker, Calvin Klein etc

3. Product descriptor - The product descriptor that follows the

brand name is often a very compact means of conveying
category origin. Example –USAir changed its name to US Airways
 Positioning Guidelines
Choosing points- of-difference
1. Desirability criteria-Target consumers must find the POD
personally relevant and important. Example- Gillette Mach
Series Blade

2. Deliverability criteria- The deliverability of an attribute or

benefit brand association depends on both a company’s actual
ability to make the product or service (feasibility) as well as
their effectiveness in convincing consumers
(communicability).Example- Coronil by Patanjali.

3. Differentiating criteria- When marketers are entering a

category in which there are established brands, the challenge is
to find a viable, long-term basis for differentiation. Example-
One Plus
 Positioning Guidelines
Establishing points-of-parity and points-of-difference
In creating both POPs and PODs, one of the challenges in
positioning is the inverse relationships that may exist in the
minds of many consumers.

1. Separate the attributes- An expensive but sometimes

effective approach is to launch two different marketing
campaigns, each devoted to a different brand attribute or
benefit. Example- Head & Shoulders (Dandruff & Beautiful
Hair).
 Positioning Guidelines
Establishing points-of-parity and points-of-difference

2. Leverage equity of another entity-Brands can link themselves

to any kind of entity that possesses the right kind of equity—a
person, other brand, event, and so forth—as a means to
establish an attribute or benefit as a POP or POD. Examples-
Boost Energy Drink.

3.Redefine the relationship-Marketers can achieve this by

providing consumers with a different perspective and
suggesting that they may be overlooking or ignoring certain
factors or other considerations. Apple offers another classic
example. https://www.youtube.com/watch?v=VtvjbmoDx-I
 Positioning Guidelines

Straddle positions
• Type of positioning where a company is able to straddle two
frames of reference with one set of points-of-difference and
points-of-parity.

• The points-of-difference in one category become points-of-

parity in the other and vice-versa for points-of-parity.

• Disadvantage - If the points-of-parity and points-of-difference

with respect to both categories are not credible, consumers
may not view the brand as a legitimate player in either
category.
 Positioning Guidelines
Example-BMW was able to simultaneously achieve
(1) a point-of-difference on performance and a point-of-parity on
luxury with respect to luxury cars.

(2) A point-of-difference on luxury and a point-of-parity on

performance with respect to performance cars.

The clever slogan, “The Ultimate Driving Machine,” effectively

captured the newly created umbrella category—luxury
performance cars.
 Positioning Guidelines
Updating positions overtime
1. Laddering
• Once the target market attains a basic understanding of how
the brand relates to alternatives in the same category, it may
be necessary to deepen the meanings associated with the
brand positioning.

• Failure to move up the ladder may reduce the strategic

alternatives available to a brand.

• For example, P&G introduced Dash detergent to attract

consumers who used front-loading washing machines. Many
years of advertising Dash in this manner made this position
impenetrable by other brands. Dash was so associated with
front-loaders, however, that when this type of machine went
out of fashion, so did Dash.
 Positioning Guidelines
Updating positions overtime
2. Reacting
• When a competitor challenges an existing POD or attempts
to overcome a POP, there are essentially three main
options for the target brand:

• Do nothing- If the competitive actions seem unlikely to

recapture a POD or create a new POD

• Go on the defensive-Add some reassurance in the

product or advertising to strengthen POPs and PODs

• Go on the offensive- Product Extension

 Brand Mantra
Brand mantra
• Short, three-to five-word phrase that captures the irrefutable
essence or spirit of the brand positioning.

• It’s similar to “brand essence” or “core brand promise,” and its

purpose is to ensure that all employees and external
marketing partners understand what the brand most
fundamentally is to represent to consumers so they can adjust
their actions accordingly.

• McDonald’s brand philosophy of “Food, Folks, and Fun” nicely

captures its brand essence and core brand promise.
 Brand Mantra
Designing a brand mantra

• A good brand mantra should provide:

• Emotional modifier: Determines how a brand provides
benefits and in what ways.
• Descriptive modifier: Combined with brand functions,
helps delineate the brand boundaries.
• Brand functions: Nature of the product or service or the
type of experiences or benefits the brand provides.
 Brand Mantra

Emotional Modifier Descriptive Modifier Brand Function

NIKE AUTHENTIC ATHELETC PERFORMANCE

Disney FUN FAMILY ENTERTAINMENT

McDonald FUN FAMILY/FOLKS FOOD

Nike’s brand mantra has even affected product

development. Over the years, Nike has expanded its
brand meaning from “running shoes” to “athletic
shoes” to “athletic shoes and apparel” to “all things
associated with athletics (including equipment).”
 Brand Mantra NIKE
Nike’s revolutionary moisture-wicking technology of their Dri-Fit
apparel line left athletes drier and more comfortable as they
sweat.

At the same time, the company has been careful to avoid using
the Nike name to brand products that did not fit with the brand
mantra, like casual “brown” shoes.

In Europe, Nike experienced several false starts until realizing

that “authentic athletic performance” has a different meaning
over there and, in particular, has to involve soccer in a major
way.
 Brand Mantra Disney
Disney incredible growth was result of its licensing and product
development.

In late 1980s, Disney characters were selling everything from

diapers to cars to McDonald’s hamburgers.

Consumers reported that they resented some of these

endorsements because they felt that they had a special, personal
relationship with the characters and with Disney that should not
be handled so carelessly.

Disney moved quickly to establish a brand equity team to better

manage the brand franchise and more carefully evaluate licensing
and other third-party promotional opportunities.

Opportunities that were not consistent with the brand mantra—no

matter how appealing—were rejected. Example – Mutual Fund
Thank you.