Unit 2

Brand Strategy : Developing Brand

Equity

Dr. Joanna Pritchard

Learning 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. Understand how to design marketing strategy to build brand
equity

Recommended Reading – Chapter 12 Marketing Management Kotler

et al.
Customer-Based Brand Equity

Defining Customer-Based Brand

Equity

Brand Equity as a Bridge

Defining Customer Based Brand Equity (CBBE)
– Keller’s Brand Equity Model
• 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
• Helps to describe the differential effect that brand knowledge has on consumer response
to the marketing of that brand

The three key ingredients of CBBE:

• Differential effect
• Brand knowledge
• Consumer response to marketing

“Strategic Brand Management” by Kevin Lane Keller

Brand Equity

The concept behind the Brand Equity Model is simple: in order to build a strong
brand, you must shape how customers think and feel about your product.

You have to build the right type of experiences around your brand, so that
customers have specific, positive thoughts, feelings, beliefs, opinions, and
perceptions about it.

When you have strong brand equity, your customers will buy more from you,
they'll recommend you to other people, they're more loyal, and you're less likely
to lose them to competitors.
 Keller’s Brand Equity model

• Resonance – relationship customers

have with the brand and the extent to
which they feel ‘in sync’ with it
• Feelings – customers’ emotional
responses and reactions to brand
• Judgements –Customers’ personal
opinions and evaluations
• Imagery – extrinsic properties of the
product or service
• Performance – how well the brand
meets the customers’ functional needs
• Salience – how often and how easily
customers think of the brand under
various purchase or consumption
situations

Page 401 of Marketing Management Kotler et al.

Example using Audi
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 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

• Ultimately, the power of a brand lies in the minds of consumers

or customers, in what they have experienced and learned about
the brand over time.

• Consumer knowledge is really at the heart of brand equity.

• This realization has important managerial implications.

https://hbr.org/2000/01/the-brand-report-card
Brand Knowledge

• Key to creating 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 Memory Network Model – Brand
Concept Map
• Views long-term 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
• This model allows us to think of consumer brand
knowledge as a node in memory with a variety of
linked associations.
• The strength and organisation of these associations
will be important determinants of the information
we can recall about the brand
• Brand associations consist of all brand-related
thoughts, feelings, perceptions, images, experiences,
beliefs, attitudes and so on that become linked to a
brand node. John et al (2006) Brand Concept Maps: A Methodology for Identifying Brand Association Networks.
Journal of Marketing Research American Marketing Association ISSN. XLIII. 549-563. 10.1509/jmkr.43.4.549.

Pg 208 and 209 “Marketing Management” Kotler et al

Sources of Brand Equity
• Brand recognition: Consumers’ ability to confirm
prior exposure to the brand when given the brand
Brand Awareness as a cue.
• Brand recall: Consumers’ ability to retrieve the
brand from memory when given the product
Brand awareness: Related to category, the needs fulfilled by the category, or a
the strength of the brand purchase or usage situation as a cue.
node or trace in memory.
Advantages of brand awareness
• Learning advantages
• Consideration advantages
• Choice advantages
• The elaboration - likelihood model
• Consumer purchase motivation
• Consumer purchase ability
Brand Equity
• More deeply a person thinks about
Strength of product information and relates it to
existing brand knowledge, stronger is the
Brand resulting brand association
Associations
Favorability of • Is higher when a brand possesses
Brand relevant attributes and benefits that
Associations satisfy consumer needs and wants

Uniqueness of • “Unique selling proposition” of the

Brand product
Associations • Provides brands with sustainable
competitive advantage
Strategic Brand Management Process
Identifying and Establishing the Brand
Positioning

Basic Concepts

Target Market

Nature of Competition

Points-of-Parity and
Points-of-Difference
Basic Concepts
Brand positioning Market segmentation
• Act of designing the company’s offer and • Divides the market into distinct
image so that it occupies a distinct and groups of homogeneous consumers
valued place in the target customers’ who have similar needs and consumer
minds behaviour
• Finding the proper “location” in the • Involves identifying segmentation bases
minds of consumers or market and criteria
segment • Criteria
• Allows consumers to think about a • Identifiability
product or service in the “right”
• Size
perspective
• Accessibility
• Responsiveness
Major Segmentation Variables for Europe
Geographic Education
Eastern Europe Primary, secondary, college, university
Northern Europe Religion
Southern Europe Catholic, Protestant, Jewish, Muslim, Hindu, other
City or metro size Race
100,000–250,000; 250,000–500,000; 500,000–1,000,000; White, Black, Asian, Arab
1,000,000–4,000,000; over 4,000,000 Generation
Location Baby boomers, Generation Xers
Urban, suburban, rural Nationality
Demographic E.g. Danish, German, Italian
Age Social class
Under 5, 5–10, 11–19, 20–34, 35–49, 50–64, over 65 Lower, middle, upper middle, aristocrat
Family unit size Psychographic lifestyle
1–2, 3–4, 5 and over Culture orientated, outdoor orientated, sports orientated
Family life cycle Personality
Young, single; young, married, no children; young, married, youngest child Introverted, extroverted
under 5; young, married, youngest child 6 or over; older, married, with Behavioural
children; older, married, no children under 18; older, single; other Benefits sought
Gender Quality, service, economy, speed, value
Male, female User status
Income Non-user, ex-user, potential user, first-time user, regular user
Under €10,000; €10,000–20,000; €21,000–29,000; €30,000–39,000; € Usage rate
40,000–49,000; €50,000–59,000; €60,000–69,000; €70,000–79,000; € Light, medium, heavy
80,000–89,000; €90,000–99,000; over €100,000 Loyalty status
Occupation None, medium, strong, absolute
Professional and technical; managers, officials and proprietors; clerical Readiness stage
sales; craftspeople; operatives; supervisors; retired; students; homemakers; Unaware, aware, informed, interested, desirous, intending to buy
farmers; unemployed Attitude to market offer
Enthusiastic, positive, indifferent, negative, hostile
Consumer
personas
Business-to-Business
Segmentation
Nature of Competition
Competitive analysis
• Considers resources, capabilities and likely intentions of other firms.
• Allows marketers to choose markets where consumers can be profitably
served.

Indirect competition
• Even if a brand does not face direct competition in its product category,
and thus does not share performance related attributes with other
brands, it can still share more abstract associations and face indirect
competition in a more broadly defined product category.

Multiple frames of reference

• Result of broader category competition or the intended future growth of
a brand.
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.

Points- of-parity associations

Attributes shared with other brands.
Three types of associations are:
• Category points- of-parity: Necessary conditions for brand choice.
• 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.
Brand 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

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
• Also known as “brand essence” and often confused with a strapline, slogan or promise due to its short and snappy
nature

• Used first and foremost as an internal brand alignment tool that uses individual words to state what the brand stands for
and strives for in a short, concise and truthful manner.

• A brand essence expresses emotional and intangible associations that try to inspire a connection between the customer
and a brand, which can take the form of the general sentiment that the brand inspires.

• It’s as a single-focused message that displays the brands differentiation, focus, purpose and customer expectancy.

Eg. Nike’s Brand Mantra

– Authentic – Athletic – Performance

MacDonald’s
- Fun – Family – Food

Holiday Inn
- Service – Comfort - Value
Integrated Marketing
Personalizing marketing
• The rapid expansion of the Internet and continued fragmentation of
mass media have brought the need for personalized marketing into
sharp focus.
• Modern economy celebrates the power of the individual consumer.
• To adapt to the increased consumer desire for personalization, marketers
have embraced concepts such as experiential marketing and relationship
marketing.

Reconciling the different marketing approaches

• The different approaches of personalizing marketing help reinforce a
number of important marketing concepts and techniques.
• According to the customer-based brand equity (CBBE) model these
different approaches emphasize different aspects of brand equity.
Personalizing Marketing

Experiential
Marketing

Relationship
Marketing
Brand Experience Scale
Relationship Marketing

Mass Customization

One-to-One
Marketing

Permission Marketing
Product Strategy

Perceived
Quality

Aftermarketing
Pricing Strategy

Consumer Price Perceptions

Setting Prices to Build Brand Equity

Pricing Strategies
5 common pricing strategies:

Pricing a product is one of the most important aspects of your marketing

strategy. Generally, pricing strategies include the following five strategies.

1. Cost-plus pricing —simply calculating your costs and adding a mark-up

2. Competitive pricing—setting a price based on what the competition charges
3. Value-based pricing—setting a price based on how much the customer
believes what you’re selling is worth
4. Price skimming—setting a high price and lowering it as the market evolves
5. Penetration pricing—setting a low price to enter a competitive market and
raising it later
Channel Strategy

Channel Design
Indirect Channels

Direct Channels

Online Strategies
Brand Reinforcement Strategies

Pg 397 “Marketing Management” Kotler et al.

Brand Revitalization Strategies

Pg 397 “Marketing Management” Kotler et al.