Chapter 2 New

CHAPTER:2
CUSTOMER-BASED EQUITY
AND BRAND POSITIONING
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

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)
 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

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
2.5
Figure 2.1- Marketing Advantages of
Strong Brands

Brand Equity as a Bridge
Brand as a
Reflection of the Past
Brand as a Direction
for the Future

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, and channel members
 Media and government

Making a Brand Strong: 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

Sources of Brand Equity
• What causes brand equity to exist?

• How do marketers create it ?
CBBE occurs when consumer has a high level of awareness and

familiarity with the brand and hold strong, favorable, and
unique association in memory.

Brand Awareness
Brand Image

 Brand Awareness
 Brand recognition is the consumers’ ability to conform 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 purchase or usage situation a cue.
2.14
Brand Awareness Advantages
 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
2.15
Establishing Brand Awareness
 Increasing the familiarity of the brand through

repeated exposure (for brand recognition)
 Forging strong associations with the appropriate
product category or other relevant purchase or
consumption cues (for brand recall)
2.16
Brand Image
Brand Image- Strong, favorable, and unique brand associations
• More deeply a person thinks about product

Strength of Brand information and relates it to existing brand
Associations knowledge, stronger is the resulting brand
association
Favorability of • Is higher when a brand possesses relevant

attributes and benefits that satisfy consumer
Brand Associations needs and wants
Uniqueness of • “Unique selling proposition” of the product

• Provides brands with sustainable competitive
Brand Associations 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

Identifying and Establishing Brand Positioning
Basic Concepts
 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

Basic Concepts
 Brand positioning
 According to consumer based brand equity model, designing on
a positioning requires
 determining a frame of reference and
 Identifying the optimal points-of-parity and points- of-

differences
 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

Market Targeting
 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
 Involves identifying segmentation bases and criteria
 Criteria
 Identifiability
 Size
 Accessibility
 Responsiveness Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Figure 2.3 - Consumer Segmentation
Bases

Figure 2.4 - Business-to-Business
Segmentation Bases

Figure 2.5 - Hypothetical Examples
of Funnel Stages and Transitions

Nature of Competition
 Competitive analysis
 Targeting the same segments
 Other base –channel of distribution
 Indirect competition
 Many firm narrowly define the competition
 Competition occurs at benefit level rather than attribute level
 Marketers can define the competition at different level
 Multiple frames reference

Points of Parity and Points of Difference
 Points-of-difference associations
 Points-of-parity associations
 Points-of-parity versus 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.
 POD comes from either functional, performance related, abstract or
imagery associations.
 Concepts of POD are:
 USP: Give compelling reasons to buy the product. Ad communicate a
distinct, unique product benefits
 Sustainable competitive advantage: Ability to achieve advantage
in delivering superior value in the marketplace for a prolong period
of time. 3.29
 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. They are three types:
 Category point of Parity: Represents necessary condition for brand
choice. They exist mainly generic and most likely expected product
level.
 Competitive Point of Parity: Associations designate to negate
competitors point of differences. If the brand breakeven in those
areas its competitors are trying to find advantages.
 Correlational points-of-parity: are those potentially negative
associations that arise from the existence of other, more positive
associations for the brand 3.30
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
Updating Position Overtime
Developing a Good Positioning

Brand 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
3.33
Defining and Communicating the Competitive Frame of Reference

 Defining a competitive frame of reference for a brand positioning is to
determine category membership with which products or sets of
products does the brand compete.
 Who is familiar with the brand
WOLLOO
3.34

 Product category membership tells consumers about the goals they
might achieve by using a product or service.
 There are many situations in which it is important to inform consumers
of brand category membership.
 Sometimes consumers know about the brand’s category membership
but may not be convinced the brand is a true, valid member category.
 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.
3.35
 There are three ways to convey a brand’s category
membership:
 Communicating Category Benefits: to reassure consumers that a
brand will deliver on the fundamental reason for using a category.
Marketers frequently use benefits to announce category
membership.
 Comparing to Exemplars: Well-Known, noteworthy brand in a
category- can also be used to specify a brand’s category
membership.
 Rely on Product Descriptor: the product descriptor that follows the
brand name is often a very compact means of conveying category
3.36
origin. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Choosing Point of Difference
Three most important considerations in choosing PODs are that consumers find the POD
desirable, deliverable and that differentiable. If both these considerations are
satisfied, the POD has the potentials to be a strong, favorable and unique brand
associations.
 Desirability criteria (consumer perspective)
 Personally relevant
 Distinctive and superior
 Believable and credible
 Deliverability criteria (firm perspective)
 Feasible -----------Mountain Due energizing than others soft drink
 Communicability
 Differentiable criteria (relative to competitors)
 Is the positioning preemptive, defensible and difficult to attack
3.37
Establishing POP and POD
Challenge for marketers that the attributes or benefits that make POPs and POD ate
negatively correlated; i.e. inexpensive at the same time high quality.
 Price and quality
 Convenience and quality
 Taste and low calories
 Efficacy and mildness
 Power and safety
 Ubiquity and prestige
 Comprehensiveness (variety) and simplicity
 Strength and refinement
Moreover individual attributes or benefits often have both positive and negative aspect;
i.e, a long heritage.
Consumers typically want to maximize both negatively correlated attributes and
benefits. 3.38
Establishing POP and POD

Three ways exist to address the negatively correlated POPs
and Pods:
 Separate the attributes
 Leverage equity of another entity
 Redefine the relationship
3.39
Straddle Positions
A company will be able to straddle two frame of reference
with one set of
 Points-of-difference and
 Points-of-parity
3.40
Updating Positioning over Time
 The established brands have to face question how often to update the
positioning.
 Updating positioning raise two important issues:
 Laddering: How to deepen the meaning of the brand to tap into core
brand associations or other more abstract considerations. It is often
useful to explore underlying consumer motivation in a product category
to uncover relevant associations. For example, Maslow’s hierarchy
maintains that consumers have different priorities and levels of needs.
 Physiological Needs: Food, water, air, shelter
 Safety and security needs: protection, order, stability
 Social needs: affection, friendship, self-respect
 Ego needs: prestige, status, self-respect 3.41
 Self-Actualization: Self-fulfillment.
 Marketers needs to consider the higher level of needs.
 Means-End-Chains have been devised as a way of understanding higher level
meaning of brand characteristics
 Means-End-Chains takes the following structure
Means-End-Chains Example
Attributes Attribute- Cheesy Burger, More testy
Benefit Benefit/Consequence- Get fat, better figure
Value Value- Enhance Self-Esteem

3.42
Updating positioning raise two important issues:
 Reacting: How to respond to competitive challenges that threaten an
existing positioning. Competitive actions are often directed at

eliminating points of difference to make them points of parity or to
strengthen or establish new points of difference. Competitive
advantages exist for only short period of time before competitors
attempt to match them.
3.43
Reacting
When competitors challenge an existing Pod or attempts to overcome a
POP, there are three main options for the target brand-
 Do nothing: if competitive actions seem unlikely to recapture POD or
create a new POD, then the best reaction is probably to just stay the
course and continue brand building efforts.
 Go on defensive: if competitive actions appear to have the potentials
to disrupt the market, then it may be necessary to take a defensive

action.
 Go on to offensive: if competitive actions seem potentially damaging,
then it might be necessary to take a more aggressive stance and

3.44
reposition the brand to address the threat.
Developing Good Positioning- Few consideration for good positioning

 A good positioning has a “foot in the present” and a “foot in the
future”
 A good positioning is careful to identify all relevant points-of-parity
 A good positioning should reflect a consumer point of view in terms of
the benefit consumers derive from the brand

 A duality exists in the positioning of a brand
3.45
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

Defining and Establishing Brand Mantras
 As brand evolve and expand across categories, marketers will want to define
a set of core brand associations to capture the important dimensions of the
brand meaning and what the brand represents.
 They may also synthesize the core brand associations to a core brand
promise or brand mantra that reflects the essential “heart and soul” of the
brand.
 Core Brand Associations: Set of abstract concepts or phrases that
characterize the five to ten most important dimensions of a brand. Relate to
points-of-parity and points-of-difference. How do marketers identify core
brand associations?
 Mental map  Core brand values  Brand mantra
 Mental Map: Accurately portrays in detail all 3.48 salient brand associations and
response for a particular
Copyrighttarget market.
© 2013 Pearson Education, Inc. Publishing as Prentice Hall.
3.49
3.50
3.51
Brand Mantras
 An articulation of the “heart and soul” of the brand similar to “brand

essence” or “core brand promise”
 Short three- to five-word phrases that capture the irrefutable essence
or spirit of the brand positioning and brand values.
 Designing a Brand Mantra:

 Brand Functions/Functional Modifier: term describe the nature of the
product or service or type of experiences or benefits that the brand
provides. It can range from concrete language that reflects the product
category itself.
 Descriptive Modifier: further clarifies its nature.
 Emotional Modifiers: Provide another qualifiers- how exactly does the
brand provide benefits and what ways?
3.52
Brand Mantras
 Designing a Brand Mantra:
Emotional Modifier Descriptive Modifier Brand Function
Nike Authentic Athletic Performance
Disney Fun Family Entertainment
3.53
Implementing a Brand Mantra
 Brand mantras should be developed at the same time as the brand

positioning. Marketers can summarize the brand positioning in a few
sentences or a short paragraph that suggests the ideal core brand
associations consumer should hold. Based on these core brand
associations, a brain storming session can attempt to identify different
brand mantra candidates.
 Following consideration should come into play:
 Communicate
 Simplify
 Inspire
3.54
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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retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
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Publishing as Prentice Hall

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CHAPTER:2

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Defining Customer-Based Brand

Brand Equity as a Bridge

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

 Key to create brand equity

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

 Views memory as a network of nodes and

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

• What causes brand equity to exist?

CBBE occurs when consumer has a high level of awareness and

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Brand Awareness Advantages

Establishing Brand Awareness

 Increasing the familiarity of the brand through

Brand Image- Strong, favorable, and unique brand associations

• More deeply a person thinks about product

Favorability of • Is higher when a brand possesses relevant

Uniqueness of • “Unique selling proposition” of the product

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Points-of-Parity and Points-of-Difference

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

 Act of designing the company’s offer and image so that

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

 Identifying the optimal points-of-parity and points- of-

 Who the main competitors are

 How the brand is similar to these competitors

 How the brand is different from them

 A market is the set of all actual and potential buyers who

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

 Points-of-difference (PODs) are attributes or benefits that

 Points-of-parity associations (POPs), on the other hand, are

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Establishing Points-of-Parity and Points-of-Difference

Updating Position Overtime

Developing a Good Positioning

 Two key issues in arriving at the optimal competitive

Defining and Communicating the Competitive Frame of Reference

Defining and Communicating the Competitive Frame of Reference

Establishing POP and POD

 Leverage equity of another entity

 Redefine the relationship

Attributes Attribute- Cheesy Burger, More testy

Benefit Benefit/Consequence- Get fat, better figure

Value Value- Enhance Self-Esteem

existing positioning. Competitive actions are often directed at

to disrupt the market, then it may be necessary to take a defensive

then it might be necessary to take a more aggressive stance and

Developing Good Positioning- Few consideration for good positioning

 A good positioning should reflect a consumer point of view in terms of

the benefit consumers derive from the brand

 Reflect a consumer point of view in terms of the