CHAPTER:2

Customer-based
Equity and Brand
Positioning
 Customer-Based Brand Equity
• Two questions often arise in brand marketing:
• What makes a brand strong?
• How do you build a strong brand?
• These questions are understood through 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 as a result of what they have
experienced/learned about brand over time.
• Differential effect that brand knowledge has on consumer response to
the marketing of that brand.
 Defining CBBE Contd of slide….

There are three key ingredients to this definition.

First, brand equity arises from differences. If no differences occur, then the brand
name product can essentially be classified as a commodity or generic version of
the product. Competition would then be probably be based on price.
Secondly, it is reflected in attitudes, perceptions, preferences and behavior
related to all aspects of the marketing of a brand.
Thirdly , these differences in response are a result of consumer’s knowledge about
the brand .

Brand knowledge consists of all the thoughts, feelings, images, experiences,

beliefs, and so on that become associated with the brand.
Brand Knowledge = Brand awareness + brand image/associations ( detail later )
Positive Vs Negative CBBE
• Positive customer-based brand equity - When consumers react
more favorably to a brand and the way it is marketed when the
brand is identified than when it is not.
• Strong positive brand equity is about deep and broad awareness;
higher perceived quality; positive, varied, unique associations;
intense loyalty; and other assets like distribution equity , patents ,
trademarks etc (David Aaker)
• Negative customer-based brand equity - When consumers react less
favorably to marketing activity for the brand compared with an
unnamed or fictitiously named version of the product.
Figure 2.1: Marketing Advantages of Strong
Brands
Brand Equity as a Bridge

Brand as a Reflection of the Past- Mkters consider brand building

spends as investment .Quality more imp than quantity investment
beyond a threshold eg Parachute vs Vicco . On the basis of the past
experience, what consumers saw, heard, learned, felt, and
experienced about the brand should be analysed through research .

Brand as a Direction for the Future-Brand equity as guidance for

interpreting past marketing performance and design future mktg
programs
Note
• Other factors can influence brand success in mktplace apart from
brand equity eg Saffola seed (Kardi production problems) price,
availability
• Brand equity has meaning for other constituents besides customers
such as follows:
• Employees , suppliers, and channel members.
• Media and Government.
Brand Knowledge
• Creates the differential effect that drives brand equity.
• Brand knowledge has two components- brand awareness and
brand image/associations (see later slides )
• Thus Brand Knowledge is about what consumers have learnt
,seen, heard as also what they think and feel about the brand as
a result of their experiences over time
• Marketers use The associative network memory model” to
understand how brand knowledge exists in consumer memory. (see
next slide )
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.

• Any type of information – verbal ,abstract, contextual (user and

and usage situations ) can be stored in the memory network
• Brand associations are informational nodes linked to the brand
node in memory.
Figure 2.2: Possible Apple Computer
Associations
Making a strong brand through brand
knowledge

Brand Awareness-measure of consumer’s ability to identify brand

under different conditions. Necessary but not sufficient condition

Brand Image- Perception of brand as reflected by brand associations

held in consumer memory
Brand awareness
• Brand awareness: Related to the strength of the brand node or trace in memory.
• Brand recognition ( Aided recall ): Consumers’ ability to confirm prior exposure to the brand when given the
brand element as a cue. More imp during point of purchase decisions
• Brand recall (Unaided recall including Top Of Mind): 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. More important when decisions made away from point of purchase
Strong brand awareness is established through repetition of brand elements and marketing mix elements
• Sometimes , Shock advertising is used to create brand awareness- may fail to create strong links and also
create illwill eg Mc Bc Zomato
• Advantages of brand awareness
• Research shows correlation with mkt share
• Learning advantages-of new additional information of associations
• Consideration advantages
• Choice advantages- In low involvement product, may be sufficient condition
Explained by The elaboration- likelihood model
• Consumer purchase motivation ( high involvement product with high perceived risk)
• Consumer ability - Simple heuristic of familiar, aware as highly visible, must be popular
 Brand image
• Consumers’ perceptions about a brand.
• Positive brand image - Requires strong ,favourable, and unique brand
associations ( see next slide )
• Marketer's task is to forge strong associations with the appropriate product
category through
• Forms of brand associations:
• Brand attributes: Descriptive features that characterize a product or service.
• Brand benefits: The personal value and meaning that consumers attach to the product or
service attributes.
Note, Consumers can form brand associations in many ways other than mktg activities – from direct experience,
online surfing, consumer reports, influencers ,WOM, inferences consumers make.
Marketers need to manage them and to account for them in designing communication strategies
Brand Image
• More deeply a person thinks about product
information and relates it to existing brand
knowledge, stronger is the resulting brand
Strength of Brand association. Also depends on retrieval cues
Associations present and context in which we consider
the brand. Strongest is direct experience and
weakest is advtg. Marketer uses repetition
and convincing claims through proof points

• Is higher when a brand possesses relevant

Favorability of Brand attributes and benefits that satisfy consumer
needs and wants. Value is situation or
Associations context dependent

• Provides brands with sustainable competitive

advantage and consumers a compelling
Uniqueness of Brand reason to buy
Associations • “Unique selling proposition” of the product
not unique proposition .
Tools or models of brand building planning
• Great and strong brands are not accidents
• To build and manage a brand it is important to develop and
implement creative brand strategies
• To aid in that planning , three tools or models are very helpful.( see
next slide )
• Each model is a component in the next model
• Combined , the three models provide micro and macro perspectives
on successful brand building
Identifying and Developing Brand Plans

Brand Positioning Model-describes how to establish competitive

advantages in customer minds

Brand Resonance Model-describes how to take these competitive

advantages to create intense, active loyalty relationships with customers

Brand Value Chain-describes how to trace the value creation process to

understand the financial impact of brand mktg expenditures and
investments
Identifying and Establishing Brand
Positioning
Basic Concepts

Target Market

Nature of Competition

Points-of-Parity and Points-of-Difference

Basic Concepts

• The Segmentation exercise is followed by selection of the target market

• The target market selected will determine the possible positioning
alternatives ( What customers want but is unmet by competition)
• Positioning is the act of designing the company’s offer and image so that it
occupies a distinct and valued place in the target customers’ minds.
• Deciding on a positioning to a target mkt thus automatically determines a
category membership and competitive frame of reference (nature of
competition) .Positioning also involves arriving at optimal POP and POD
Positioning Guidelines
Defining and Communicating the Category membership and
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

Positioning guidelines( contd)

• Defining category membership. Means defining which category the brand belongs to . Very
Important in new products .
• Three ways to convey a brand’s category membership are
• Product descriptor - The product descriptor that follows the brand name is often a very compact
means of conveying category origin.eg soft drink , detergent
• Communicating category benefits - Marketers use product benefits to announce category
membership eg EZEE
• Exemplars - Well-known, noteworthy brands in a category can also be used as exemplars to specify
a brand’s category membership eg Top Ramen it is a smoodle( smoother noodle vs Maggie )
Nature of Competition- competitive frame of reference

• Types of competition are

• 1) Brand eg Coke vs Pepsi,
• 2) Form eg cola vs orange vs lime ,
• 3) Category eg soft drink vs sherbet /Thanda and tea/coffee in home serving
segment
• 4) Desire /Budget competition eg drink or eat in the lmted money customer has

• Important not to define competition too narrowly

• Because competition occurs at benefit rather than attribute level , a company can
face indirect competition in a more broadly defined product category.
Multiple frames of reference
• Result of a company defining the brand in terms of broader uses and hence in terms
of broader category competition or the intended future growth of a brand. Eg
chocolates for sometimes to everytime indulgence , hunger appeaser, gifting,sweet
 Points of Parity
• Marketer first definitely needs to build point of parity to be recognised as
belonging to a category. Only then will customers know when/in what
situations to consider your brand
• Unless certain points-of-parity are achieved, points-of-difference may not even
matter
• However , it is only a necessary but not a sufficient condition for consideration
• There is a “zone” or “range of tolerance or acceptance” with points-of-parity.
• Points- of-parity associations-Attributes shared with other brands.
• Three types of associations are:
• Category points- of-parity: Necessary conditions for brand consideration
choice eg refrigerator has to have freezer and fridge
• 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. Eg taste vs
health , quality vs price
Points of Difference
•Points-of-parity are easier to achieve than points-of-differences
• 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- attributes and benefits.
•Abstract-imagery related considerations.
•PODS will have to be backed by proof points or reason to believe ( RTB) eg design , ingredients , imagery,
endorsements etc .
Choosing points- of-difference
•Desirability criteria- from consumer point of view (favourable )
•Differentiating criteria- relative to competitors ( unique )
•Deliverability criteria- from company point of view ( strong )
•Feasibility- actual ability to make the product or service
•Communicability- factual verifiable proof points? Eg Marico’s Colorfix , Ponds blackhead remover . Will
consumers believe coming from this company ? Eg Manikchand Ganga
.
Positioning guidelines( contd)
• Establishing points-of-parity and points-of-difference
• To addresss the problem of negatively correlated POP and POD-Redefine the
relationship and convince why possible
Straddle positions
• A company sometimes straddles two frames of reference with one set of points-
of-difference and points-of-parity.
• The points-of-difference in one category become points-of-parity in the other
and vice-versa eg McD (tasty fastfood and also healthy )
• Disadvantage - If the points-of-parity and points-of-difference with respect to
both categories are not credible, consumers may not view the brand as a
legitimate player in either category.
Positioning guidelines( contd)
• Updating positions overtime
• Laddering- It may be necessary to deepen the meanings associated with the brand
positioning over time ( eg using Maslow’s need hierarchy. Also means – end chain from
attributes to benefits to abstract values ,motivations ) eg Dove, Maggie
• Also Broadening of needs or broadening of mkt segments – eg Cadbury
• Failure to move up the ladder may reduce the strategic alternatives available to a brand.
A good positioning
• Should:

• Establish relevant POPs before a POD

• POD should be strong , favorable and unique
• Favourable means reflects a consumer point of view in terms of the benefits
that consumers derive.
• Points-of-difference should appeal both to the “head” and the “heart”.
• Unique should be USP ,not just Unique proposition eg - Biggest selling gasoline
in the world (does the customer really care ??????)
• Positioning should have a “foot in the present” and a “foot in the future”.
Positioning cannot be so removed from reality that it is essentially unbelievable,
not feasible to be deliverable . At the same time ,USP should give long term
sustainable advantage.
From positioning to framing the subcategory
• Brand positioning is all about how my brand is better than yours
• Framing has a bigger agenda .It aims to change the way people
perceive , discuss , feel about a subcategory or category and can
change the way people are buying and which brands are relevant to
that purchase
• Thus framing makes competitors less relevant or even irrelevant eg
Dove , Apple, Tesla
 Creating ‘must haves’ rendering competition irrelevant
• When the POD becomes a ‘must have’ it means it defines a new subcategory or a new category ,
rendering competitors irrelevant
• A must have is a transformational or substantial innovation and not an incremental innovation
( like to have) Must have is better strategy as my brand is better than yours , rarely changes the
marketplace
• A must have may be a feature , benefit , appealing design, system offering , new technology ,
product , dramatically low price point .A must have may also be something not involving the
product but outside it eg shared interest, personality , passion ,organizational values
• Common errors are presuming an incremental innovation as a must have (rosy picture bias) and
gloomy picture bias ( flawed assumption that innovation will not succeed or too small a mkt
eg Coke Aquafina )
• The firm not only creates the must have but also mkts it well n builds barriers to competitors –
proprietary technology protected by patents , trademarks , copy rights . Also become a moving
target ( eg Apple ,Gillette) Also create branded differentiators ( see next slide )
• Timing matters, not important to be pioneer eg Sony before Apple iPod and Microsoft tablet
ten years before iPad
• Ideas for must haves may be unmet customer needs , underserved
mkts , unintended applications (Arm & Hammer baking soda being a
deodorizer in refridgerators ) , competitor weakness, mkt trends ,
channel dynamics , role models in other countries or industries or new
technologies ,brand touchpoints, brand journey ( touchpoint
consolidation).Also by mistake eg 3M post it ,P& G Ivory soap it floats
Branded differentiator
• By branding an innovation we create a branded differentiator ,that
creates a meaningful, impactful point of differentiation for a branded
offering over an extended period of time
• A branded differentiation does not mean just slipping a name on an
innovation
• Types of branded differentiators are – branded feature eg Westin
hotel heavenly bed mattress ( 1999) ;Oral B indicator, branded
ingredient eg Intel , branded technology eg DTS , branded service eg
Google ad words , branded programs eg healthy lifestyle programs
,Harley Davidson ride planner
The organization and its higher purpose
differentiate
• While a competitor brand can copy you , what it cannot copy is an
organization- its people, culture , heritage programs ,assets, capabilities,
values – because that is unique
• Organizational values eg perceived quality, innovation , concern for
customers ,success/size, going local , environment programs , social
programs
• Support a value proposition eg quality or concern for customers
• Act as basis of relationship with customers ( liking)