CHAPTER:2
CUSTOMER-BASED EQUITY
AND BRAND POSITIONING
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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
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Customer-Based Brand Equity
Defining Customer-Based Brand
Equity
Brand Equity as a Bridge
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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
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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
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Figure 2.1- Marketing Advantages of
Strong Brands
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Brand Equity as a Bridge
Brand as a
Reflection of the Past
Brand as a Direction
for the Future
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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
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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
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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
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Figure2.2 - Possible Apple Computer
Associations
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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.
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Sources of Brand Equity
Brand Awareness
Brand Image
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Sources of Brand Equity
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
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Sources of Brand Equity
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
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Sources of Brand Equity
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
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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
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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
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Identifying and Establishing Brand
Positioning
Basic Concepts
Target Market
Nature of Competition
Points-of-Parity and Points-of-Difference
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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
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Identifying and Establishing Brand Positioning
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
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Identifying and Establishing Brand Positioning
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
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Figure 2.4 - Business-to-Business
Segmentation Bases
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Figure 2.5 - Hypothetical Examples
of Funnel Stages and Transitions
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Identifying and Establishing Brand Positioning
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
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Points of Parity and Points of Difference
Points-of-difference associations
Points-of-parity associations
Points-of-parity versus points-of-difference
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Points of Parity and Points of Difference
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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.
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
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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. 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
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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
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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
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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
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Brand 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 with which products or sets of
products does the brand compete.
Who is familiar with the brand
WOLLOO
3.34
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Brand Positioning Guidelines
Defining and Communicating the Competitive Frame of Reference
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
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Brand Positioning Guidelines
Defining and Communicating the Competitive Frame of Reference
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
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Brand Positioning Guidelines
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
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Brand Positioning Guidelines
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
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Brand Positioning Guidelines
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
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Brand Positioning Guidelines
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
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Brand Positioning Guidelines
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.
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Brand Positioning Guidelines
Updating Positioning over Time
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
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Brand Positioning Guidelines
Updating Positioning over Time
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
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Brand Positioning Guidelines
Updating Positioning over Time
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.
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Brand Positioning Guidelines
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
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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”
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Brand Mantra
Designing a Brand Mantra
Implementing a Brand
Mantra
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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.
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Defining and Establishing Brand Mantras
3.49
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Defining and Establishing Brand Mantras
3.50
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Defining and Establishing Brand Mantras
3.51
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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
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Brand Mantras
Designing a Brand Mantra:
Emotional Modifier Descriptive Modifier Brand Function
Nike Authentic Athletic Performance
Disney Fun Family Entertainment
3.53
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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
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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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Publishing as Prentice Hall
