VALUE PERCEPTION AND

BRAND EQUITY: CBBE

CONCEPTUALIZATION
LITERATURE REVIEW

Keywords
[Value, Customer Perceived Value, Brand Equity, Customer-Based Brand Equity]

Lucchin, Gianluca
ID 3615402
1 Introduction
In nowadays competitive market environment, characterized by an overflow of information and
over-educated consumers who are able to maximize value by selecting the best perceived offering,
its mandatory for marketers to know how value is perceived and how changes onto the brand
architecture can ultimately affect that value. The aim of this literature review is to examine the
concepts of Customer Perceived Value and Brand Equity by exploring academic theoretical
frameworks and to observe how the two concepts relate to each other when considering the
Customer-Based Brand Equity construct.

2 Customer Perceived Value

As stated by Marketing Science Institute in 2014 in its biannual Research Priorities One of the
most important tasks in marketing is to create and communicate value to customers to drive their
satisfaction, loyalty, and profitability. Any insights in this area have significant implications for the
long-term financial health of an organization. It truly is at the heart of what marketing is all about.
(Marketing Science Institute 2014)
The purpose of a healthy business in this scenario is, firstly, to create value for consumers and, then,
to extract some of that value in the form of revenues, thereby creating value for the brand(Kumar &
Reinartz 2016). In order to be successful, firms have to create added-value for customers.

Starting from the same assumptions Morar (2013) gathered different definitions and
conceptualization regarding value perceived by consumers using the theoretical notion of Customer
Perceived Value.

Perceived value is composed of all factors; qualitative and quantitative, objective and subjective,
that jointly form a consumers buying experience. (Schechter, 1984 in Zeithaml, 1988 (cited in
Snoj et al., 2004: 158) cited by Morar 2013)

The consumers assessment of the value that has been created for them by a supplier given the
trade-off between all relevant benefits and sacrifices in a specific use situation (Flint et al.,
2002,cited by Morar 2013)

Starting from this definitions its possible to observe how firms can actually deliver value to
consumers. Firms can create consumers value by enhancing their own capacity, by answering
customers perception and value demand, and by underlining a competitive advantage through
diversification strategies (Morar 2013).
Measuring customer perceptions of value involves three key tasks: (1) measuring overall perceived
value, (2) measuring the associated underlying attributes and benefits, and (3) determining the
relative weights of the attributes/benefits linked to overall perceived value (Morar 2013).
For the firms/decision makers the ultimate task is to combine resources spent on marketing mixes
and consumers in a way that can generate value both to and from customers. An asset for delivering
value both to and from customers can be found in the brand equity concept.
3 Brand Equity

Brand equity is a concept used in marketing to describe the importance of having a strong brand,
based on the idea that owning of a well-known brand name can generate competitive advantage and
greater profitability simply by recognition (Kotler, 2011).
A brand is a name, term, design, symbol, or any other feature that identifies one sellers good or
service as distinct from those of other sellers (American Marketing Association). In the academic
literature, the concept has been studied from different angles: a cognitive psychology approach
focusing on consumer behavior and a financial perspective focusing on actual economic value of
the brand itself . According to consumer behavior, brand equity match consumers awareness of
brand elements, identities and associations, which lead to judgement and meaning attributions.
According to financial perspective, a valuable brand architecture implies credibility, quality,
trustworthiness and ultimately generates sales and profitability by positioning.
For the purpose of this review we will focus on the psychology perspective summarizing the most
relevant academic works related to the concept.

3.1 FARQUHAR - Embryonal conceptualization of Brand Equity

The author define brand as an asset that enhance the value of a product beyond its functional
purpose and depending on which perspective is considered , the brand can have added value to the
firm the trade or the consumer (Farquhar 1989). This added value is the central asset with which a
given brand endows a product offering, ultimately producing different outcomes for the firm and
the customers(cf. Jones 1986; Leuthesser 1988; quoted by Farquhar 1989). If we consider this
added value as an embryonal conceptualization of brand equity we can better understand Farquhar
contribute to literature. In particular, three elements are crucial to build this added value which
resonates with consumers: a positive brand evaluation, an accessible brand attitude, and a consistent
brand image (Farquhar 1989).
A firm must offer a quality product that reinforce a distinctive positive performance, to enhance
positive evaluation in consumer's memory(Farquhar 1989).
A firm must deliver a clear and accessible brand attitude allowing the consumers to quickly retrieve
information and built attributions in memory.
Lastly a firm must propose a consistent brand image that facilitate a positive and continuous
relationship between the personality of a brand and the personality of the consumer (Berry 1988,
quoted by Farquhar 1989).

3.2 AAKER - How Brand Equity creates value

 Figura 1 Aaker Brand Equity model (1992)

In his famous Brand Equity model David A. Aaker (1992) studied the concept in order to understand
how equity and added value actually relate to each other. Similarly to Farquhar, Aaker (1992) defines
brand equity as a continuum of brand assets and elements linked to the brand that ultimately add (or
subtract) value to a product offering. Following this basic definition, five assets are identified by
Aaker (1992) as the primary sources of the added value created: brand loyalty, brand awareness,
perceived quality, brand associations and other proprietary assets.
Brand loyalty express all the factors that make consumers loyal to a particular brand offer.
Brand awareness is the extent to which a brand is known among the public.
Perceived quality is referred to the capacity of a brand to deliver superior performance adding
distinctive quality to the product offering.
Brand associations are consumers mental responses triggered by a particular brand name or image.
Other proprietary assets element is related to firms competitive advantages along the supply and
distribution chain.
Following this scheme brand equity assets create value in different ways: brand loyalty can
generate value by reducing marketing expenditures; brand awareness, can stimulate consumers
recognition capabilities; perceived quality provides a reason to buy, differentiating the brand; brand
associations help the brand to build meanings into consumer mind and connect to their personality
(Aaker 1992).
3.3 KELLER - Brand Equity and Brand Knowledge

Following Keller (1993) analysis, brand equity can be identified as the sum of all marketing effects
occurring for a particular product offering that has an exact brand name, identity and image. The
author advise to carefully study brand equity and all its strategic implications to predict those
marketing effects and address productivity and profitability. Pursuing this strategy require a deep
understanding of consumer behavior as a base to build tailored marketing mixes . Perhaps a firm's
most valuable asset for improving marketing productivity is the knowledge that has been created
about the brand in consumers' minds from the firm's investment in previous marketing programs
(Keller 1993). Following this direction the concept of Brand Knowledge is underpinned by Keller
as a crucial point into the whole brand equity framework. Brand Knowledge is the sum of all brand
components and brand identities elements that make up consumer minds and memories during the
evaluation and purchase process.
The importance of knowledge in consumer decision making has a long academic tradition (Alba,
Hutchinson, and Lynch 1991, quoted by Keller 1993). Considering an associative network memory
model, brand knowledge can be conceptualized as a brand node in consumers memory with
connections to many attributions and perceptions(Keller 1993).

Figura 2 Keller Brand Knowledge model (1993)

Brand awareness is the first crucial dimension for brand knowledge understanding. Its related to
the resilience of a brand node in memory, and is reflected by consumers' ability to recognize and
recall the brand under different conditions (Rossiter and Percy 1987, quoted by Keller 1993). Brand
awareness consists of brand recognition and brand recall performances. Brand recognition relates to
consumers' ability to confirm prior exposures to a particular brand when they interact again with it.
Brand recall relates to consumers' ability to retrieve memories and experience connected to a
particular brand when considering a product category, the needs fulfilled by the category, or some
other choice or evaluation processes.
Brand image can be defined as perceptions about a brand as reflection of brand associations held in
consumers memories ( Herzog 1963, Newman 1957, quoted by Keller 1993). Brand associations are
other nodes linked to the brand node in memory and contain a synthesis of consumers evaluation of
the brand (Keller 1993). Following this network of connected associations at higher levels of
specificity its possible to identify consumers answers to all the products attributes, marketing
mixes, explicit and implicit meanings.

4 Consumer-based Brand Equity

A way to integrate customer perceived value and brand equity can be found in Aaker with reference
to the fact that brand equity is the main asset for influencing consumer perceptions, in Lassar with a
theoretical propose that basically compare brand equity to consumer value perception and in Keller
with the formal theory of Consumer-Based Brand Equity.

4.1 AAKER- Brand Equity influence on consumers

If we go back to Aaker brand equity model (1992) we can observe three main implications that
somehow anticipate the concept of CBBE (Keller 1993):
Brand equity help a customer interpret, process, store, and retrieve a huge quantity of
information about products and brands thus guiding consumers value perception process (Aaker
1992).
Brand equity affects confidence during the purchase process reducing uncertainty (Aaker
1992)
Brand equity elements like perceived quality and brand associations ultimately deliver value
to customers boosting satisfaction and loyalty (Aaker 1992).

4.2 LASSAR- Brand Equity as consumer perception

For Lassar et al (1995) a brand real value measure is strictly related to consumer perceptions rather
than any objective indicators. On this basis brand equity has been operationalized as an
enhancement in perceived utility/desirability a brand name confers to a product offering
(Lassar,1995). Great emphasis is put on consumers (value) perception of the overall superiority of
a product carrying a particular brand name when compared to others. Lassar model for brand equity
includes 5 elements that resemble Aaker (1992) classic model: Performance, Social image, Price
value, Trustworthiness, Identification/attachement.

4.3 KELLER- Customer-Based Brand Equity conceptualization

The CBBE (Customer-based Brand Equity) concept approaches brand equity from consumer point
of view. The key assumption of the CBBE theory is that the true strength of a brand lies in what
customers have experienced (felt, memorized, listened and seen) about the brand during a certain
period of time: the crucial step for marketers to build a strong brand is ensure that consumers have a
determined type of experiences with every product offering and marketing program so that a set of
desired perceptions consisting of attributions, feelings, opinion and beliefs are ultimately linked to a
certain brand. (Keller ,Strategic Brand Management, 2013).
This is the way perceived value is linked to cbbe (Kumar & Reinartz)
A formal definition identifies CBBE as the differential effect that brand knowledge structures have
on consumer mindset and responses to the marketing of that brand (Keller 1993). The differential
effect is connected to the variable nature of consumers response to marketing of branded product
when compared to un-branded or fictitious product. Brand knowledge as previously described
consist of brand awareness and brand image and the interaction between these associations.
Consumer response is defined as the sum of consumer perceptions, choices, and attitudes when
exposed to certain marketing mixes. Brand knowledge is central to this definition: the occurency,
severity, and uniqueness of these brand associations is crucial to determine that differential
response. High levels of brand awareness can increase probability of brand choice as well as
enhancing consumer loyalty and decrease risk for firms in the competitive scenario; a positive brand
image can enable the brand to obtain larger margins and be more inelastic in response to price
increase (Keller 1993). Summarizing we can say that customer-based brand equity is enhanced by
creating favorable response to pricing, distribution, advertising, and promotion activity for the
brand.
Building customer-based brand equity consist in the creation of a recognizable brand that collects
positive and determinant brand associations(Keller 1993). This can depend on initial brand identity
choices like brand name, logo, symbol, and advertising campaigns.
Regarding the measuring of CBBE we can relate to two basic approaches: the direct approach
assesses the impact of brand knowledge onto consumer response to marketing stimuli; the indirect
approach focus itself on the measurement of brand knowledge itself by investigating brand
awareness and brand image constructs (Keller 1993).
The indirect and direct approaches are complementary: the former is used to understand what
elements of brand knowledge are responsible for the differential response that originate CBBE; the
latter is useful to determine the nature of this differential response (Keller 1993).
Referring to Keller original definition regarding that differential effect, we see that no number or
exact measure can capture brand equity. Rather than trying to measure it as an unidimensional
object it should be considered as a multidimensional one depending on brand knowledge structures
in consumer memories and what plan or strategy the firm can adopt to capitalize on those
discovered knowledge structures (Keller 1993).
For the purpose of finding this multidimensionality Keller (1993) provide six general guidelines to
help marketers managing CBBE: first a broad view on marketing decisions should be adopted
considering the impact of every element of marketing mix on consumer mindset; second, a clear
knowledge structure must be defined in order to transfer that knowledge to consumer memory;
third, marketing communications can positively affect knowledge structures; fourth, a long-term
view must be adopted in establishing marketing strategies and directions; fifth, tracking studies are
crucial to evaluate consumer perceptions; and sixth, brand extensions should be evaluate as
elements that critically affect consumer feedbacks and the perceived core-image (Keller 1993).

If we accept the common points of view between the different theoretical frameworks presented we
can see that the real added-value a brand can claim actually resides in consumers knowledge and
perceptions about the brand itself. CBBE framework could be seen as the ideal point of encounter
between customer perceived value and brand equity (Keller, Strategic Brand Management 2013).

CONCLUSION
What is clear from the above literature review is that the concepts of Customer Perceived Value and
Brand Equity are crucial aspect of the marketing process. Considering that there are no brands
without customers and no customers without brands, the brand itself serve as the ultimate value
creating tool to attract customers and exchange value with them in the form of sales and continuous
relations ( Leone et al 2006). Customers basically serve as a tangible profit engine for brands as
they allow the latter to monetize their expressed value (Kumar 2015).
This mutual relation consisting of circular exchange of value between firms and consumers is the
key of the whole modern economic scenario. Being able to connect customer perceived value to
brand equity, means to surpass past concepts like push or pull marketing and accept a more fluid
process of exchange. CBBE theory and concepts proposed by Keller (1993) are valuable tool to
assess the entity of this exchanged value by shifting the perspective to consumers. This approach
allow marketers to effectively connect firm and consumer perspective. Even if it is not possible to
exactly measure CBBE or Customer Perceived Value, further progress into the marketing research
department will allow specialists to finally grasp an exact and quantitatively accurate measure of the
essence of marketing: value.

Reference
Academic Journals, Papers

V. Kumar & Werner Reinartz, (2016) Creating Enduring Customer Value, Journal of
Marketing: AMA/MSI Special Issue ISSN: 0022-2429 (print) Vol. 80 (November 2016), 3668

Debra Grace, Joseph Lo Iacono, (2015) "Value creation: an internal customers perspective",
Journal of Services Marketing, Vol.29 Issue: 6/7, pp.560-570

Jorge Vera, (2015) "Perceived brand quality as a way to superior customer perceived value
crossing by moderating effects", Journal of Product & Brand Management, Vol. 24 Issue: 2,
pp.147-156

Doriana Dumitrela MORAR, (2013) An overview of the consumer value literature -perceived
value, desired value, International Conference Marketing from information to decision 6th
Edition 2013 169

Leone, Robert P., Vithala R. Rao, Kevin Lane Keller, Anita Man Luo, Leigh McAlister and
Rajendra K. Srivastava. (2006) Linking Brand Equity to Customer Equity. Journal of Service
Research 9 (2): 125-138

Walfried Lassar, Banwari Mittal, Arun Sharma, (1995) "Measuring customerbased brand
equity", Journal of Consumer Marketing, Vol. 12 Issue: 4, pp.11-19

Keller, Kevin Lane, (1993) Conceptualizing, measuring, and managing customer-based brand
equity, Journal of Marketing; Jan 1993; 57, 1

David A. Aaker, (1992) "The Value of Brand Equity", Journal of Business Strategy, Vol. 13
Issue: 4, pp.27-32

Farquhar P, (1989) Managing Brand Equity, Marketing Research, September 1989

Textbooks

Keller, Kevin Lane (2013) Strategic Brand Management (13th edition), Pearson

Kotler, Keller, (2011) Marketing Management, Pearson