MODULE 2

CUSTOMER-BASED BRAND EQUITY

and BRAND POSITIONING
Strategic Brand Management Process
Step 1: Identifying and Developing Brand Plans
TOPICS
Customer-based Brand Equity
Making a Brand Strong: Brand Knowledge
Sources of Brand Equity
Identifying and Establishing Brand Positioning
Positioning Guidelines
Brand Mantra
 TOPICS OVERVIEW
•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. The three models are interconnected and in turn become larger in scope: the
first model is a component in the second model; the second model, in turn, is a component in the third. Combined, the three models
provide crucial micro and macro perspectives on successful brand building. These are the three models:

•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.

•Collectively, these three models help marketers devise branding strategies and tactics to maximize profits and long-term brand equity and
track their progress along the way. Module 2 develops the brand positioning model and reviews the brand resonance and brand value
chain models.
 LEARNING OUTCOMES
After this presentation, the students should be able to:

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.
CUSTOMER-BASED BRAND EQUITY
(CBBE)
 CUSTOMER-BASED BRAND EQUITY
“The power of a brand lies in what resides in the minds and
hearts of customers.”
The challenge for marketers in building a strong brand is
ensuring that customers have the right type of experiences with
products and services and their accompanying marketing programs
so that the desired thoughts, feelings, images, beliefs, perceptions,
opinions, and experiences become linked to the brand.
 CUSTOMER-BASED BRAND EQUITY
“The differential effect that brand knowledge has on consumer response
to the marketing of that brand.”

-Keller, 1993
A brand has positive CBBE when consumers react more favorably to a
product and the way it is marketed when the brand is identified.

A brand has negative CBBE if consumers react less favorably to

marketing activity for the brand compared with an unnamed or
fictitiously named version of the product.
 CUSTOMER-BASED BRAND EQUITY
“The differential effect that brand knowledge has on consumer
response to the marketing of that brand.”

-Keller, 1993

Three ingredients:
(1) “differential effect,” (2) “brand knowledge,” and
(3) “consumer response to marketing.”
 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
 MAKING A BRAND STRONG:
BRAND KNOWLEDGE
•Brand knowledge is the key to creating brand equity.

•Associative Network Memory 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.

•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.
 MAKING A BRAND STRONG:
BRAND KNOWLEDGE
•Brand awareness is where we can measure 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.
 MAKING A BRAND STRONG:
BRAND KNOWLEDGE
•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.
 MAKING A BRAND STRONG:
BRAND KNOWLEDGE
•Example:
•If someone asked you what
came to mind when you
thought of Apple computers,
what would you say?
 SOURCES OF BRAND EQUITY
•Brand awareness
◦ Brand recognition
◦ Brand recall

•Brand image
◦ Strong, favorable, and unique brand associations
 SOURCES OF BRAND EQUITY
Brand Awareness

◦ Brand recognition is consumers’ ability to confirm

prior exposure to the brand when given the brand
as a cue.

◦ 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.
 ADVANTAGES OF BRAND AWARENESS
•Learning advantages
➢Register the brand in the minds of consumers.

•Consideration advantages
➢Likelihood that the brand will be a member of the consideration set

•Choice advantages
➢Affect choices among brands in the consideration set
 ESTABLISHING BRAND AWARENESS
•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)
 SOURCES OF BRAND EQUITY
•Brand awareness
◦ Brand recognition
◦ Brand recall

•Brand image
◦ Strong, favorable, and unique brand associations
 SOURCES OF BRAND EQUITY
Brand Image

◦ Brand image is consumer perceptions of a brand as reflected by the

brand associations held in consumers’ memory.

◦ Types of Brand Associations

◦ Favorability of Brand Associations
◦ Strength of Associations
◦ Uniqueness of Brand Associations
Types of Brand Associations
 Types of Brand Associations
Attributes are descriptive features characterizing a product or a service.
•Product-related attributes are associations directly associated with the
product or the service. It could be the physical appearance of a car and
the feel of driving it.
•Non-product-related attributes are external aspects related to its
purchase or the consumption of it. There are four groups of non-product-
related attributes that are taken into account: price information,
packaging, user imagery (an impression of the type of person that
consumes the brand) and use image (impressions of the context of brand
use).
 Types of Brand Associations
Benefits are personal values attached to the brand by the consumer. They are
idiosyncratic evaluations or expectations of what the brand can do for the consumer.
•Functional benefits are personal expectations of what the product can do for
consumers. They correspond to the product-related features but are more personal
evaluations; the functional benefits are thus less objective than the product-related
attributes.
•Experiential benefits relate to the sensory experience of using the brand. What does it
feel like to use the brand? What kind of pleasure will I obtain from consuming the
brand? This aspect provides variety for the consumer and satisfies hedonic consumption
needs.
•Symbolic benefits are about self-expression and the way we signal to others by means
of consumption objects.
 Types of Brand Associations
Brand attitudes are the last class of brand associations in the map of
brand image. Brand attitudes are consumers’ overall evaluations of the
brand. This overall evaluation is very important as it often guides brand
choice.
 Favorable, Strong and Unique
Brand Associations
•Favorability of brand associations corresponds to whether the
consumer’s overall brand associations are more or less favorable
than those associated with competing brands.
•Strength of brand associations corresponds to the way associations
spread in the associative web activated by the brand as node. Strong
associations appear fast and demand attention.
•Uniqueness of associations. A brand with desirable customer-based
brand equity can also claim some unique associations. Some central
associations should ideally not be shared by competing brands.
Unique associations are the unique selling point of the brand.
IDENTIFYING AND ESTABLISHING
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. It requires
making tradeoffs between costs and benefits.
 Segmentation Bases

Consumer Segmentation Bases Business to Business Segmentation Bases

 Example of the toothpaste market
Four main segments:
1. Sensory: Seeking flavor and product appearance
2. Sociable: Seeking brightness of teeth
3. Worriers: Seeking decay prevention
4. Independent: Seeking low price
 Segmentation Bases

Hypothetical Examples of Funnel Stages and Transitions

For the purposes of brand building, marketers want to understand both (1)
the percentage of target market that is present at each stage and (2) factors
facilitating or inhibiting the transition from one stage to the next.
 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.
•Competition often occurs at the benefit level rather than the attribute
level.
•Ex1: 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.
•Ex2: a maker of educational software products may be implicitly
competing with all other forms of education and entertainment, such
as books, videos, television, and magazines.
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.

•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; key attributes; key ingredients; or key endorsements.
POINTS-OF-PARITY AND POINTS-OF-DIFFERENCE
•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
•Competitive points-of-parity
•Correlational points-of-parity
POINTS-OF-PARITY AND POINTS-OF-DIFFERENCE
•Points-of-parity associations (POPs)

•Category points-of-parity - It exist minimally at the generic product level

and are most likely at the expected product level.

•Example: A consumers might not consider a bank truly a “bank” unless it

offered a range of checking and savings plans; provided safety deposit
boxes, traveler’s checks, and other such services; and had convenient
hours and automated teller machines (ATMs).
POINTS-OF-PARITY AND POINTS-OF-DIFFERENCE
•Points-of-parity associations (POPs)

•Competitive points-of-parity - are those associations designed to negate

competitors’ points-of-difference.
POINTS-OF-PARITY AND POINTS-OF-DIFFERENCE
•Points-of-parity associations (POPs)

•Correlational points-of-parity - are those

potentially negative associations that arise
from the existence of other, more positive
associations for the brand.

•Example: Consumers might find it hard to

believe a brand is “inexpensive” and at the
same time “of the highest quality.”
POINTS-OF-PARITY AND POINTS-OF-DIFFERENCE
•Example of POPs and PODs:

•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). PODs-quality, image, experience, and variety; POPs-convenience and
value.
•2. Supermarket brands for home consumption (Nescafé and Folger’s). PODs-
quality, image, experience, variety, and freshness; POPs-convenience and value.
•3. Local cafés. PODs-convenience and service quality; POPs-quality, variety,
price, and community.
 POSITIONING GUIDELINES
Two key issues in arriving at the optimal competitive brand positioning
are:
◦ Defining and communicating the competitive frame of reference
◦ Choosing and establishing points-of-parity and points-of-difference
 POSITIONING GUIDELINES
• Defining and communicating the competitive frame of reference

• Defining a competitive frame of reference for a brand positioning is to

determine category membership.
• Example: Consumers may be aware that Sony produces computers,
but they may not be certain whether Sony Vaio computers are in
the same “class” as Dell, HP, and Lenovo.
• The preferred approach to positioning is to inform consumers of a
brand’s membership before stating its point of difference in relationship
to other category members.
 POSITIONING GUIDELINES
•Choosing and establishing points-of-parity and points-of-difference
Desirability criteria (consumer perspective)
◦ Personally relevant
◦ Distinctive and superior
◦ Believable and credible
Deliverability criteria (firm perspective)
◦ Feasibility
◦ Communicability
Differentiation criteria (competitors perspective)
 DEFINING A BRAND MANTRA
•An articulation of the “heart and soul” of the brand.

•A brand mantra is a short three- to five-word phrases that capture the

irrefutable essence or spirit of the brand positioning. It is similar to
“brand essence” or “core brand promise”, and its purpose is to ensure
that all employees and external marketing partners understand what the
brand most fundamentally is to represent to consumers so they can
adjust their actions accordingly.
DEFINING A BRAND MANTRA
 DESIGNING A BRAND MANTRA
•Good brand mantra is normally composed of following three (3)
aspects:

•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.
•The emotional modifier specifies how exactly does the brand
provide benefits and in what ways.
 term describes the nature of
specifies how exactly does
the product or service or the
BRAND the brand provide benefits further clarifies its nature.
type of experiences or
and in what ways.
benefits the brand provides.
 IMPLEMENTING A BRAND MANTRA
•Here are the three key criteria for a brand mantra:
•Communicate. A good brand mantra should define the category (or
categories) of business for the brand and set the brand boundaries. It
should also clarify what is unique about the brand.
•Simplify. An effective brand mantra should be memorable. For that, it
should be short, crisp, and vivid in meaning.
•Inspire. Ideally, the brand mantra should also stake out ground that is
personally meaningful and relevant to as many employees as possible.
THANK YOU!