PART II Developing a Brand Strategy

CHAPTER 2
CUSTOMER-BASED BRAND EQUITY AND
BRAND POSITIONING

Instructor: Imran Khan

 CHAPTER OBJECTIVES
1. Define customer-based brand equity.

2. Outline the sources and outcomes of customer-based brand equity.

3. Identify the four components of brand positioning.

4. Describe the guidelines in developing a good brand positioning.

5. Explain brand mantra and how it should be developed

 Brand Planning
Great brands are not accidents. They are a result of thoughtful and imaginative
planning. Anyone building or managing a brand must carefully develop and
implement creative brand strategies. To aid in that planning, three tools or models
are helpful.
1. Brand positioning model describes how to establish competitive advantages in
the minds of customers in the marketplace;
2. Brand resonance model describes how to take these competitive advantages and
create intense, active loyalty relationships with customers for brands; and
3. Brand value chain model describes how to trace the value creation process to
better understand the financial impact of marketing expenditures and investments
to create loyal customers and strong brands.
 CHAPTER 2:
CUSTOMER-BASED BRAND EQUITY

Two questions often arise in brand marketing:

1. What makes a brand strong?
2. How do you build a strong brand?
To help answer both, Marketers introduce the concept of Customer-Based Brand
Equity (CBBE).
The CBBE concept approaches brand equity from the perspective of the consumer—
whether the consumer is an individual or an organization or an existing or
prospective customer.
 CHAPTER 2:
CUSTOMER-BASED BRAND EQUITY

Customer-Based Brand Equity

CBBE is defined as the differential effect that brand knowledge

has on consumer response to the marketing of that brand.
Keller, 1993
A brand has 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).
COFFFE ………………..
ToothPaste ……………
Television…………….
Mobile………………….
IceCream
Starbucks’ unique brand positioning helped to fuel its phenomenal growth
The Benefits of Strong Brand
 Brand Equity as a Bridge

• Reflection of past investments in the marketing of a brand

• Direction for future marketing actions or programs
 Brand Equity as a Bridge
• 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
 MAKING A BRAND STRONG: BRAND KNOWLEDGE
From the perspective of the CBBE concept, brand knowledge is the
key to creating brand equity, because it creates the differential
effect that drives brand equity. What marketers need, then, is an
insightful way to represent how brand knowledge exists in
consumer memory. An influential model of memory developed by
psychologists is helpful for this purpose
 The associative network memory model
This Model views memory as a network of nodes and connecting
links, in which nodes represent stored information or concepts,
and links represent the strength of association between the nodes.
Any type of information—whether it’s verbal, abstract, or
contextual—can be stored in the memory network.
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.
It is a necessary, but not always a sufficient, step in building brand
equity. Other considerations, such as the image of the brand, often
come into play.
 The associative network memory model
Brand image has long been recognized as an important concept in
marketing.
Although marketers have not always agreed about how to measure
it, one generally accepted vieis that, consistent with our associative
network memory model, brand image is consumers’ perceptions
about a brand, as reflected by the brand associations held in
consumer memory.
In other words, brand associations are the other informational
nodes linked to the brand node in memory and contain the
meaning of the brand for consumers. Associations come in all
forms and may reflect characteristics of the product or aspects
independent of the product.
CEREAL Product………………?
Gasoline………………..?
Juices…………………..?
Laptop…………..??
Pizza……………..?
FastFood…………….??
Bread……………??
Resturant…………………??
Café………………….??
Singer…………………??
Movie……………..??
The associative network memory model
 The associative network memory model
Apple Association when ask about Apple Brand
 SOURCES OF BRAND EQUITY
What causes for BE to exist and How do Marketers Create it?
Customer-based brand equity occurs when the consumer has a high level of
awareness and familiarity with the brand and holds some strong, favorable,
and unique brand associations in memory.
In some cases, brand awareness alone is enough to create favorable
consumer response; for example, in low-involvement decisions when
consumers are willing to base their choices on mere familiarity.
In most other cases, however, the strength, favorability, and uniqueness of
brand associations play a critical role in determining the differential
response that makes up brand equity.
If customers perceive the brand as only representative of the product or
service category, then they’ll respond as if the offering were unbranded.
Brand Awareness
• 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.
In other words, consumers’ recall of Kellogg’s Corn Flakes will
depend on their ability to retrieve the brand when they think of
the cereal category or of what they should eat for breakfast or a
snack, whether at the store when making a purchase or at home
when deciding what to eat.
Advantages of Brand Awareness.
• Learning Advantages: Brand awareness influences the formation and strength of the
associations that make up the brand image.
• Consideration Advantages: Consumers must consider the brand whenever they are
making a purchase for which it could be acceptable or fulfilling a need it could satisfy.
Choice Advantages: The third advantage of creating a high level of brand awareness is
that it can affect choices among brands in the consideration set, even if there are
essentially no other associations to those brands.
One influential model of attitude change and persuasion, the elaboration-likelihood model, is consistent
with the notion that consumers may make choices based on brand awareness considerations when they
have low involvement
1. Consumer Purchase motivation
2. Consumer purchase ability
Brand Image
Creating brand awareness by increasing the familiarity of the brand
through repeated exposure (for brand recognition) and forging
strong associations with the appropriate product category or other
relevant purchase or consumption cues (for brand recall) is an
important first step in building brand equity.
Creating a positive brand image takes marketing programs that link
strong, favorable, and unique associations to the brand in memory.
Brand associations may be either brand attributes or benefits.
Brand attributes are those descriptive features that characterize a
product or service.
Brand benefits are the personal value and meaning that consumers
attach to the product or service attributes.
 Strength of Brand Associations.

Strength of Brand Associations.

The more deeply a person thinks about product information and relates it to
existing brand knowledge, the stronger the resulting brand associations will
be.
Two factors that strengthen association to any piece of information are its
personal relevance and the consistency with which it is presented over time.
Favorability of Brand Associations.
Marketers create favorable brand associations by convincing consumers that
the brand possesses relevant attributes and benefits that satisfy their needs
and wants, such that they form positive overall brand judgments.
TCS……………Tehzeeb Bakers…………..Rahat Bakers………….NADRA VS..??????
 Uniqueness of Brand Associations.
Uniqueness of Brand Associations.
The essence of brand positioning is that the brand has a sustainable competitive advantage
or “unique selling proposition” that gives consumers a compelling reason why they should
buy it.
Marketers can make this unique difference explicit through direct comparisons with
competitors, or they may highlight it implicitly. They may base it on performance-related or
non-performance-related attributes or benefit.
Consumers may consider certain attributes or benefits prototypical and essential to all brands in the
category, and a specific brand an exemplar and most representative.
For example, they might expect a running shoe to provide support and comfort and to be built well enough
to withstand repeated wearing, and they may believe that Asics, New Balance, or some other leading brand
best represents a running shoe.
Similarly, consumers might expect an online retailer to offer easy navigation, a variety of offerings,
reasonable shipping options, secure purchase procedures, responsive customer service, and strict privacy
guidelines, and they may consider L.L. Bean or some other market leader to be the best example of an
online retailer
 BRAND Positioning.

Brand Positioning
Is at the heart of the marketing strategy
“. . . the act of designing the company’s offer and image so that it
occupies a distinct and valued place in the target customer’s
minds.”

Philip Kotler
 Determining a frame of reference

What are the ideal points-of-parity and points of-difference brand

associations vis-à-vis the competition?
Marketers need to know:
• Who the target consumer is
• Who the main competitors are
• How the brand is similar to these competitors
• How the brand is different from them
 Target Market

A market is the set of all actual and potential buyers who have
sufficient interest in, income for, and access to a product.
Market segmentation
divides the market into distinct groups of homogeneous
consumers who have similar needs and consumer behavior, and
who thus require similar marketing mixes.
Market segmentation requires making tradeoffs between costs and
benefits.
 Four main segments:
Sensory:
Seeking flavor and product appearance
Sociables:
Seeking brightness of teeth
Worriers:
Seeking decay prevention
Independent:
Seeking low price
 Criteria for Segmentation

Identifiability: Can we easily identify the segment?

Size:
Is there adequate sales potential in the segment?
Accessibility:
Are specialized distribution outlets and communication media available to
reach the segment?
Responsiveness
: How favorably will the segment respond to a tailored marketing
program?
 Nature of Competition
Deciding to target a certain type of consumer often defines the
nature of competition
InDirect Competition:
Do not define competition too narrowly
Ex: a luxury good with a strong hedonic benefit like stereo equipment
may compete as much with a vacation as with other durable goods like
furniture.
Leading clothing makers may be better off considering the points-of-differences of their
offerings not so much against other clothing labels as against other discretionary purchases.
 Multiple FrameS of Reference
As another example, Starbucks can define very distinct sets of competitors, which would
suggest very different POPs and PODs as a result:
1. Quick-serve restaurants and convenience shops (McDonald’s and Dunkin’ Donuts).
Intended PODs might be quality, image, experience, and variety;
intended POPs might be convenience and value.
2. Supermarket brands for home consumption (Nescafé and Folger’s). Intended PODs might
be quality, image, experience, variety, and freshness; intended POPs might be convenience
and value.
3. Local cafés. Intended PODs might be convenience and service quality; intended POPs
might be quality, variety, price, and community.
 Points-of-Parity and Points-of-Difference

Points-of-difference
(PODs) are attributes or benefits that consumers strongly associate with
a brand, positively evaluate, and believe that they could not find to the
same extent with a competitive brand.
Points-of-parity associations
(POPs), on the other hand, are not necessarily unique to the brand but
may in fact be shared with other brands.
 Points-of-Parity and Points-of-Difference

Points-of-difference
PODs are generally defined in terms of consumer benefits. These benefits often have
important underlying “proof points” or reasons to believe (RTBs). These proof points can
come in many forms: functional design concerns (a unique shaving system technology,
leading to the benefit of a “closer electric shave”); key attributes (a unique tread design,
leading to the benefit of “safer tires”); key ingredients (contains fluoride, leading to the
benefit of “prevents dental cavities”); or key endorsements (recommended by more audio
engineers, leading to the benefit of “superior music fidelity”).
Having compelling proof points and RTBs are often critical to the deliverability aspect of a
POD.
 Points-of-Parity Associations

Points-of-parity associations (POPs), on the other hand, are not necessarily unique to the
brand but may in fact be shared with other brands.
There are three types:
Category points-of-parity represent necessary—but not necessarily sufficient—conditions for
brand choice. They exist minimally at the generic product level and are most likely at the
expected product level. Bank services
Competitive points-of-parity are those associations designed to negate competitors’ points
of-difference. In other words, if a brand can “break even” in those areas where its competitors
are trying to find an advantage and can achieve its own advantages in some other areas, the
brand should be in a strong—and perhaps unbeatable—competitive position.
Correlational points-of-parity are those potentially negative associations that arise from the
existence of other, more positive associations for the brand. One challenge for marketers is
that many of the attributes or benefits that make up their POPs or PODs are inversely relate
Straddle Positioning (One Point of refernce for both POP n POD
Updating Positioning Evolutionary Process……
Laddering
Reacting
Communicate: A good brand mantra should both define the category (or
categories) of the business to set the brand boundaries and clarify what is
unique about the brand.
• Simplify: An effective brand mantra should be memorable. That means it
should be short, crisp, and vivid. A three-word mantra is ideal because it is the
most economical way to convey
the brand positioning.
• Inspire: Ideally, the brand mantra should also stake out ground that is
personally meaningful and relevant to as many employees as possible. Brand
mantras can do more than inform and guide; they can also inspire, if the brand
values tap into higher-level meaning with employees as well as consumers.