CHAPTER:2 CUSTOMER-BASED EQUITY AND BRAND POSITIONING

Learning Objectives Define customer-based brand equity Outline the sources and outcomes of customer based brand equity Identify the four components of brand positioning Describe the guidelines in developing a good brand positioning Explain brand mantra and how it should be developed

Customer-Based Brand Equity Defining Customer-Based Brand Equity Brand Equity as a Bridge

Defining Customer Based Brand Equity (CBBE) The differential effect that brand knowledge has on consumer response to the marketing of that brand Positive CBBE consumers react more favorably to a product and the way it is marketed when the brand is identified than when it is not.

Defining Customer Based Brand Equity (CBBE) Three key ingredients: 1) Differential Effect If there is no difference, the brand name can be classified as a commodity. Competition is based on prices 2) Brand Knowledge What consumers have learned, felt, seen, and heard about the brand as a result of their experiences over time. What are in the minds and hearts of consumers? 3) Consumer Response to Marketing The way consumers behave choice of a brand, recall of copy points from an ad, response to a sales promotion, and evaluations of a proposed brand extension.

Defining Customer Based Brand Equity (CBBE) Approaches brand equity from the perspective of the consumer Stresses that the power of a brand lies in what resides in the minds and hearts of customers Differential effect that brand knowledge has on consumer response to the marketing of that brand

Figure 2.1- Marketing Advantages of Strong Brands

Results of a blind taste test Brands were exposed to consumers Blind taste test (brands were not exposed to consumers)

Brand Equity as a Bridge Brand as a Reflection of the Past Quality of the investment in brand building is the most critical factor. Marketers have to know what consumers saw, heard, learned, felt and experienced about the brand. Brand as a Direction for the Future The true value and future prospects of a brand rest with consumers and their knowledge about the brand.

To Sum up... Consumers perception of the brand plays a key role in determining the worth of the brand Brand equity offers guidance to interpret past marketing performance and design future marketing programs Other factors that influence brand success and equity are: Employees, suppliers, channel members, media and government

Brand Knowledge Key to create brand equity Creates the differential effect that drives brand equity Marketers need an insightful way to represent how brand knowledge exists in consumer memory

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

Figure2.2 - Possible Apple Computer Associations

Possible Associations?

Fazer association

Possible Associations?

Sources of Brand Equity Brand Awareness It 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 It is the consumers perception about a brand, as reflected by the brand associations held in consumer memory.

Brand Awareness Brand recognition Brand recall Consumers ability to confirm prior exposure to the brand when given the brand as cue. Can you recognize the brand? Consumers ability to retrieve the brand from memory when given the product category as a cue. Consumer s recall will depend on their ability to retrieve the brand when they think of the category. (e.g. Cheerios related to cereal category and breakfast)

Advantages of Brand Awareness Learning The first step is to register the brand in the minds of consumers. Marketers must first establish a brand node in memory, the nature of which affects how easily the consumer learns and stores brand associations. Consideration Consumers should make sure the brand is part of the consideration set of other brands in the category. Choice It is to create a high level of brand awareness that can affect choices among brands in the consideration set.

To Sum up... Creating brand awareness means increasing the familiarity of the brand through repeated exposure, although this is generally more effective for brand recognition than for brand recall. The more a consumer experiences the brand by seeing it, hearing it, or thinking about it, the more likely he or she is to strongly register the brand in memory.

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.

The Body Shop Products (natural ingredients only, never tested on animals), packaging (simple, refillable, recyclable), merchandising (detailed point-of-sale posters, brochures, and displays), staff (encouraged to be enthusiastic and informative concerning environmental issues), sourcing policies (using small local producers from around the world), social action program (requiring each franchisee to run a local community program), and public relations programs and activities (taking visible and sometimes outspoken stands on various issues).

Brand Image Strength of Brand Associations Favorability of Brand Associations Uniqueness of Brand Associations More deeply a person thinks about product information and relates it to existing brand knowledge, stronger is the resulting brand association personal relevance and the consistency with which it is presented over time 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 Unique selling proposition (USP) of the product a compelling reason why I should buy it Provides brands with sustainable competitive advantage

To Sum up... To create brand equity, marketers should: Create favorable consumer response i.e. brand awareness Create positive brand image though brand associations that are strong, favorable, and unique

Identifying and Establishing Brand Positioning Basic Concepts Target Market Nature of Competition Points-of-Parity and Points-of-Difference

Basic Concepts Brand positioning Act of designing the company s offer and image so that it occupies a distinct and valued place in the target customers minds Finding the proper location in the minds of consumers or market segment Allows consumers to think about a product or service in the right perspective Good brand positioning helps guide marketing strategy by clarifying what a brand is all about, how it is unique and how it is similar to competitive brands, and why consumers should purchase and use it.

Brand Positioning Marketers need to know: (1) who the target consumer is, (2) who the main competitors are, (3) how the brand is similar to these competitors, (4) how the brand is different from them.

Target Market Market segmentation: Divides the market into distinct groups of homogeneous consumers who have similar needs and consumer behavior Involves identifying segmentation bases and criteria Criteria Identifiability Can be easily to 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?

Target Market

Figure 2.3 - Consumer Segmentation Bases

Figure 2.4 - Business-to-Business Segmentation Bases Standard Industrial Classification

Nature of Competition Competitive analysis Indirect competition Multiple frames reference It occurs when the same function can be performed by different types of product (e.g. Canon EOS Rebel x other digital cameras and cell phones).

Points of Parity and Points of Difference Points-of-difference (PODs) associations 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 (POPs) associations not necessarily unique to the brand but may in fact be shared with other brands

Points of Parity and Points of Difference Points-of-parity versus points-of-difference

Points of Parity and Points of Difference Video Professor Kevin Keller (00:44 to 04:11)

To Sum up To appropriately position a brand, marketers should: Identify their target customers Analyze the type of competition they might face in the identified market base Identify product features and associations that are different or similar to their competitors

Positioning Guidelines Defining and Communicating the Competitive Frame of Reference Choosing Points-of-Difference Establishing Points-of-Parity and Points-of-Difference Straddle Positions BMW only automobile with both luxury and performance Updating Position Overtime (Means-end chain Attributes Benefits Value) Developing a Good Positioning

Means-end chain

To Sum up... Brand positioning describes how a brand can effectively compete against a specified set of competitors A good product positioning should: Have a foot in the present and a foot in the future Identify all relevant points-of-parity Reflect a consumer point of view in terms of the benefits that consumers derive Contain points-of-difference and points-of-parity that appeal both to the head and the heart

Brand Mantra Designing a Brand Mantra Implementing a Brand Mantra

Brand Mantra The brand functions term describes the nature of the product or service or the type of experiences or benefits the brand provides. The descriptive modifier further clarifies its nature. Nike s performance is not just any kind (not artistic performance, for instance) but only athletic performance; Disney s entertainment is not just any kind (not adult-oriented) but only family entertainment (and magical, could add even more distinctiveness) The emotional modifier provides another qualifier how exactly does the brand provide benefits and in what ways?

Brand Mantra

To Sum up... A good brand mantra should: Communicate the category of the business to set the brand boundaries and clarify what is unique about the brand Be simple, crisp, and vivid Stake out ground that is personally meaningful and relevant to as many employees as possible

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