1. How Brand Equity Develops?

2. Customer Based Brand Equity

Prepared by Rameez Mansoor Jalali

How Brand Equity Develops?
Brand equity develops and grows as a result of a customer’s experiences with
the brand.

The process typically involves that customer or consumer’s natural relationship with
the brand that unfolds following a predictable model:
Awareness:
The brand is introduced to its target audience, often with advertising in a way that gets
it noticed.

Recognition:
Customers become familiar with the brand and recognize it in a store or elsewhere.
 
Trial:
Now that they recognize the brand and know what it is or stands for, they try it. 
Preference:
When the consumer has a good experience with the brand, it becomes the preferred
choice. 

Loyalty:
After a series of good brand experiences, users not only recommend it to others, it
becomes the only one they will buy and use in that category.
They think so highly of it that any product associated with the brand benefits from its
positive glow.
Customer Based Brand Equity
Defining Customer-Based Brand Equity

The CBBE concept approaches brand equity from the perspective of the consumer
whether the consumer is an individual or an organization or an existing or prospective
customer.

Understanding the needs and wants of consumers and organizations and devising
products and programs to satisfy them are at the heart of successful marketing.
Marketers mostly face two fundamentally important questions when it comes to
CBBE:

1. What do different brands mean to consumers?

2. How does the brand knowledge of consumers affect their response to

marketing activity?
The basic premise of the CBBE concept is that the power of a brand lies in what customers have
learned, felt, seen, and heard about the brand as a result of their experiences over time.

In other words, 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.
We formally define customer-based brand equity as the differential effect that brand knowledge has on
consumer response to the marketing of that brand.

A brand has positive customer-based brand equity when consumers react more favorably to a product and
the way it is marketed when the brand is identified than when it is not.
Thus, customers might be more accepting of a new brand extension for a brand with positive customer
based brand equity, less sensitive to price increases and withdrawal of advertising support, or more willing
to seek the brand in a new distribution channel.

On the other hand, a brand has negative customer-based brand equity if consumers react less favorably to
marketing activity for the brand compared with an unnamed or fictitiously named version of the product.