1. Ashesi University COURSE TITLE : STRATEGIC BRAND MANAGEMENT
SEMESTER : SECOND, 2010/2011
MODULE 2: Customer Based Brand Equity
Lecturer: Ebow Spio

2. Learning Outcomes Explain the concept of customer based brand equity
Understand what makes a strong brand
Learn how to build a strong brand
Appreciate what it entails to create value for customers.

3. Customer-Based Brand Equity
“The differential effect that brand knowledge has on consumer response to the marketing of that brand.”
Keller, 1993
The basic premise of the CBBE model is that the power of a brand lies in what customers have learned, felt, seen and heard about the brand as a result of the experiences over time. In other words, the power of a brand a lies in what resides in the minds of customer. 12

4. Customer-Based Brand Equity
Differential effect
Differences in consumer response
Brand knowledge
A result of consumers’ knowledge about the brand
Consumer response to marketing
Choice of a brand
Recall of copy points from an ad
Response to a sales promotion
Evaluations of a proposed brand extension
A brand has positive customer-based brand equity when consumers react more favourably to the product and the way it is marketed when the brand is identified than when it is not.
Knowledge of a brand, created by whatever means somehow changed their product perceptions
On the other hand, a brand has a negative customer-based brand equity if consumers react less favourably to marketing activity for the brand compared with an unnamed or fictitiously named version of the product.

5. Brand Equity as a “Bridge”
Reflection of past investments in the marketing of a brand
Direction for future marketing actions or programs
Consumer knowledge drives the differences that manifest themselves in terms of brand equity. Everything the firm does can help to enhance or detract from brand equity. The brand knowledge that marketers create over time dictates appropriate and inappropriate future directions for the brand. 7 7

6. Making a Brand Strong: Brand Knowledge
Brand knowledge is the key to creating brand equity.
Brand knowledge consists of a brand node in memory with a variety of associations linked to it.
Brand knowledge has two components: brand awareness and brand image.
The associative network memory model views memory as consisting of a network of nodes and connecting links, in which nodes represent stored information or concepts, and links represent the strength of association between the information or concepts. Any type of information can be stored in the memory network, including verbal, visual, abstract or contextual information.

7. Sources of Brand Equity
Brand awareness
Brand recognition
Brand recall
Brand image : Consumer’s perception of a brand
Strong, favorable, and unique brand associations
Brand awareness is related to the strength of the brand node or trace in memory, which we can measure as the consumer’s ability to identify the brand under different conditions.
Brand Image is consumer’s perceptions about a brand, as reflected by the brand associations held in consumer memory. Image emanates from associations held by the consumer of the brand. Associations come in all forms and reflect characteristics of the product or aspects of the independent product.
Customer-based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand holds some strong, favourable and unique brand associations in memory.
Brand recognition is consumers’ ability to confirm prior exposure to the brand when given the brand as a cue. In other words when they go to the store, will they be able to recognize the brand as one to which they have already been exposed.
Brand recall is 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. 7 7

8. Brand Awareness Advantages
Learning advantages
Register the brand in the minds of consumers
Consideration advantages
Likelihood that the brand will be a member of the consideration set ( the handful of brands that receive serious consideration for purchase)
Choice advantages
Affect choices among brands in the consideration set
Brand awareness influences the formation and strength of the associations that make up the brand image. The first step in building brand equity is to register the brand in the minds of consumers. If the right brand elements are chosen, the task becomes easier.
In low involvement decision settings, a minimum level of brand awareness may be sufficient for product choice, even in the absence of a well-informed attitude.

9. Establishing Brand Awareness
Increasing the familiarity of the brand through repeated exposure (for brand recognition)
Forging strong associations with the appropriate product category or other relevant purchase or consumption cues (for brand recall)
Anything that causes consumers to experience a brand name, symbol, logo, character, packaging, or slogan-including advertising, promotion, sponsorship and event marketing, publicity and public relations, outdoor advertising- can increase familiarity and awareness of the brand. Repetition increases recognizability, but improving brand recall requires linkages in memory to appropriate product categories or other purchase or consumption cues.

10. Creating a Positive Brand Image
Brand Associations
Does not matter which source of brand association
Need to be favorable, strong, and unique
Marketers should recognize the influence of these other sources of information by both managing them as well as possible and by adequately accounting for them in designing communication strategies.
Customers form brand associations in variety of ways other than marketing activities: from direct experience, consumer reports, word of mouth inferences from consumers about brand itself, its name, logo, channel of distribution, identification with the company.

11. Creating a Positive Brand Image
Strength of Brand Association : The more deeply a person thinks about product information and relates to its existing knowledge, the stronger the resulting brand association will be.
- Personal Relevance and consistency with which is presented over time.
Favourability of Brand Associations: Those associations that are desirable to consumers (convenient, reliable, effective, efficient, colourful) successfully delivered by the product, and conveyed by the supporting marketing programme.
Uniqueness of Brand Associations: Associations not shared with competing brands
Desirability depends on how relevant, how distinctive and how believable consumers find the brand association.

12. The Four Steps of Brand Building
Ensure identification of the brand with customers and an association of the brand in customers’ minds
Establish the totality of brand meaning in the minds of consumers
Elicit the proper customer responses to the brand identification and brand meaning
Convert brand response to create an intense, active loyalty relationship between customers and the brand
Customer- Based Brand Equity model looks at building a brand as a sequence of steps, each of which is contingent on successfully achieving the objectives of the of the previous one.

13. Four Questions Customers ask of Brands
Who are you? (brand identity)
What are you? (brand meaning)
What about you? What do I think or feel about you? (brand responses)
What about you and me? What kind of association and how much of a connection would I like to have with you? (brand relationships)
The order of steps in this “ branding ladder” from identity to meaning to responses to relationships.

14. Customer-Based Brand Equity Pyramid
RESONANCE
SALIENCE
JUDGMENTS
FEELINGS
PERFORMANCE
IMAGERY
4. RELATIONSHIPS =
What about you and me?
3. RESPONSE =
What about you?
2. MEANING =
What are you?
1. IDENTITY =
Who are you?
Brand Salience measures awareness of the brand, e.g. how often and how easily the brand is evoked under various situations or circumstances. To what extent is the brand top-of-mind and easily recalled or recognized ? What type of cues or reminders are necessary? How pervasive is the brand awareness?
Breadth and Depth Awareness : Brand awareness thus gives the product and identity by linking brand elements to product category and associated purchase and usage consumption or usage situations. The depth of brand awareness measures how likely it is for a brand element to come to mind, and the ease with which it does so.
The breadth of brand awareness measures the range of purchase and usage situations in which the brand element come to mind and depends to a large extend on the organization of brand and product knowledge in memory.

15. Sub-Dimensions of CBBE Pyramid
LOYALTY
ATTACHMENT
COMMUNITY
ENGAGEMENT
QUALITY CREDIBILITY
CONSIDERATION
SUPERIORITY
WARMTH
FUN
EXCITEMENT
SECURITY
SOCIAL APPROVAL
SELF-RESPECT
CATEGORY IDENTIFICATION
NEEDS SATISFIED
PRIMARY CHARACTERISTICS &
SECONDARY FEATURES
PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY
SERVICE EFFECTIVENESS, EFFICIENCY & EMPATHY
STYLE AND DESIGN
PRICE
USER PROFILES
PURCHASE & USAGE SITUATIONS
PERSONALITY & VALUES
HISTORY, HERITAGE
& EXPERIENCES

16. Salience Dimensions Depth of brand awareness
Ease of recognition and recall
Strength and clarity of category membership
Breadth of brand awareness
Purchase consideration
Consumption consideration

17. 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.
The depth of brand will influence the likelihood that the brand comes to mind, whereas the breadth of brand awareness describes the different types of situations in which the brand might come to mind.

18. Product Category Structure
To fully understand brand recall, we need to appreciate product category structure, or how product categories are organized in memory.
A highly salient brand is one that has both depth and breadth of brand awareness, such that customers always make sufficient purchases as well as always think of the brand across a variety of settings in which it could possibly be employed or consumed.

19. Brand Performance Dimensions
Brand Performance: How well the product or service meets customer’s more functional needs (e.g. utilitarian, aesthetic & economic needs).
Primary characteristics and supplementary features
Product reliability, durability, and serviceability
Service effectiveness, efficiency, and empathy
Style and design
Price
NB: Often, the strongest brand positioning relies on performance advantages of some kind, and it is rare that a brand can overcome severe performance deficiencies.
Creating brand meaning includes establishing a brand image- what the brand is characterized by and should stand for in the minds of customers. Brand meaning is made up of two major categories of associations related to performance and imagery.
Price is a particularly important performance association because consumers may organize their product category knowledge in terms of price tiers of different brands .
Designing and delivering a product that fully satisfies consumer needs and wants is a prerequisite for successful marketing, regardless of whether the product is a tangible good, service, organization or person. To create brand loyalty and resonance, marketers must ensure that consumers’ experiences with the product at least meet, if not actually surpass, their expectations. 23

20. Imagery Dimensions User profiles Purchase and usage situations
Demographic and psychographic characteristics
Actual or aspirational
Group perceptions—popularity
Purchase and usage situations
Type of channel, specific 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
Memories
Brand Imagery depends on the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers’ psychological or social needs It is the way people think about a brand abstractly, rather than what they think the brand actually does. It refers to more intangible aspects of the brand and consumers can form imagery associations directly from their own experience or indirectly through advertising or by some source of information, such as word of mouth.

21. Brand Judgment Dimensions
Brand Judgments are customers’ personal opinions about and evaluations of the brand, which consumers form by putting together all the different brand performance and imagery associations. It is more rational or about the HEAD
Brand consideration
Relevance
Brand superiority
Differentiation (extent to which it is unique and better than other brands)
Brand quality
Value
Satisfaction
Brand credibility
Expertise (competent, innovative and market leader)
Trustworthiness (dependable and keeping customer interest in mind)
Likeability (fun, interesting and worth spending time with)
Brand attitudes are consumers’ overall evaluations of a brand and often form the basis for brand choice. Brand attitudes generally depend on specific attributes and benefits.

22. Brand Feelings Dimensions
Brand feelings are customers’ emotional responses and reactions
to the brand. Feeling also relates to the social currency evoked by
the brand
Types of Brand-Building Feelings
Warmth
Fun
Excitement
Security
Social Approval
Self-respect

23. Brand Resonance Dimensions
Brand Resonance is the ultimate relationship and level of identification that the
customer has with the brand. Resonance is characterized in terms of intensity,
or the depth of the psychological bond that customers have with the brand, as
well as the level of activity engendered by this loyalty
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
Seek information
Join club
Visit website, chat rooms

24. Customer-Based Brand Equity Model
Consumer-
Brand
Resonance
Brand Salience
Consumer Judgments
Consumer Feelings
Performance
Imagery
INTENSE, ACTIVE LOYALTY
RATIONAL & EMOTIONAL REACTIONS
POINTS-OF-PARITY & POINTS-OF-DIFFERENCE
DEEP, BROAD BRAND AWARENESS

25. Application: Identify the Key Drivers of Brand Equity
Performance
P-1
P-10
P-7
P-8
P-9
P-3
P-4
P-6
P-5
P-11
P-12
I-2
I-9
Imagery
I-1
I-3
I-6
I-5
I-10
I-7
I-8
I-11
I-12
I-4
F-2
Feelings
F-1
F-3
F-4
F-6
F-5
F-7
F-8
F-9
F-11
F-12
F-10
J-2
Judgment
J-1
J-3
J-4
J-6
J-5
J-10
J-7
J-8
J-9
J-11
J-12
0.17
0.66
0.24
0.65
R-2
Resonance
R-1
R-3
R-4
R-6
R-5
R-10
R-7
R-8
R-9
R-11
R-12
0.58
0.49

26. Brand Building Implications
Customers own brands : The strongest brands are those which consumers become so attached and passionate about that in effect, become evangelists. The power of the brand and its ultimate value to the firm reside with customers.
Don’t take shortcuts with brands : A great brand is not built by accident but is the product of carefully accomplishing a series of logically linked steps with consumers.
Brands should have a duality : A strong brand appeals to both the head and the heart. It blends product performance and imagery to create a rich, varied but complementary set of consumer responses to the brand.
Brands should have richness : There are number of possible ways to create meaning with consumers and range of possible avenues to elicit consumer responses.
Brand resonance provides important focus : Pinnacle of effort to build a strong brand should engage the attention of marketers in decision making.
CBBE model provides a road map and guidance for brand building, yardstick by which brands can assess their progress in the brand building efforts as well as a guide for marketing research initiatives.

27. Creating Customer Value
Customer-brand relationships are the foundation of brand resonance and building a strong brand.
The customer-based brand equity model certainly puts that notion front and center.
The power of a brand resides in the minds of consumers and customers.

28. Is a company consumer-centric?
Is the company looking for ways to take care of you?
Does the company know its customers well enough to differentiate between them?
Is someone accountable for customers?
Is the company managed for shareholder value?
Is the company testing new customer offers and learning from the results?
Sources: Larry Selden and Geoffrey Colvin, 2004.

29. Customer Relationship Management (CRM)
Customer relationship management (CRM) is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction
Uses a company’s data systems and applications to track consumer activity and manage customer interactions with the company

30. Customer Relationship Management (CRM)
CRM consists of sophisticated software and analytical tools that integrate customer information from all sources, analyze it in depth, and apply the results to build stronger customer relationships.
CRM is heavily dependent on a technique called data warehousing, a way of integrating disparate information about customers from different parts of the organization and putting it together in a huge IT “warehouse”

31. Customer Equity 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:
Value equity : Customer’s objective assess of the utility of a brand. Drivers are quality, price and convenience.
Brand equity : Customers’ subjective and intangible assessment of the brand above and beyond its objectively perceived value. Drivers are customer brand awareness, customer brand attitudes and customer perception of brand ethic
Relationship equity : Customers tendency to stick with the brand over and above objective and subjective assessments of the brand. Drivers are loyalty programmes, special recognition and treatment programmes, community building programmes and knowledge-building programmes.
Rust, Zeithamal & Lemon, 2004
Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage.
Customer equity is the total combined customer lifetime values of all of the company’s customers

32. 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

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

34. Key Points
Customer-based brand equity is the differential effect of brand knowledge on consumer response to the marketing of a brand.
Positive brand equity results when consumers are familiar with the brand and have strong, favorable and unique associations for it.
The power of the brand and its ultimate value to the firm resides with customers.

35. Tutorials
Pick a brand. Attempt to identify its sources of brand equity. Assess its level of brand awareness and the strength, favorability, and uniqueness of its associations.
Pick a brand. Assess the extent to which the brand is achieving the various benefits of brand equity.
3. Bring in or have students bring in examples of consumer sales promotions. Analyze each in terms of its ability to build or bash brand equity. Suggest alternative promotion ideas. Pick the best and worst of the lot and explain what makes them good or bad.