Chapter 2

Customer-Based Brand
Equity and Brand
Positioning

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Customer-Based Brand Equity

The concept:
• 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
• Stresses on the differential effect that brand knowledge
has on consumer response to the marketing of that brand

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Marketing Advantages of Strong
Brands
Improved perceptions of product performance
Greater loyalty
Less vulnerability to competitive marketing actions
Less vulnerability to marketing crises
Larger margins
More inelastic consumer response to price increases
More elastic consumer response to price decreases
Greater trade cooperation and support
Increased marketing communication effectiveness
Possible licensing opportunities
Additional brand extension opportunities

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Equity as a Bridge

• Customer knowledge drives the differences that manifest

themselves in terms of brand equity:

Provides marketers with a vital strategic bridge from their

past to their future

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand as a reflection of the past:
• Marketers should consider the money spent in brand building as an “

investment.”
• On the basis of the past experience, what consumers saw, heard,

learned, felt, and experienced about the brand should be analyzed.

• The quality not quantity of the investment in brand building is key.

Brand as a direction to the future:

• Brand knowledge that marketers create over time impacts future

directions for the brand.

• Brand equity offers focus and guidance to design future marketing
programs.

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Making a Brand Strong: Brand
Knowledge (1 of 3)

• From the perspective of the CBBE concept, brand

knowledge is the key to creating brand equity:
– It creates the differential effect that drives brand equity

• Marketers need an insightful way to represent how brand

knowledge exists in consumer memory

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Making a Brand Strong: Brand
Knowledge (2 of 3)
• The 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

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Making a Brand Strong: Brand
Knowledge (3 of 3)
• Brand knowledge has two components:
– Brand awareness:
▪ Related to the strength of the brand node or trace
in memory
▪ Often a step in building brand equity

– Brand image:
▪ Consumers’ perceptions about a brand, as reflected
by the brand associations held in consumer
memory

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Possible Associations
with the Apple Brand Name

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Thus, Sources of Brand Equity are:
• Brand Awareness
• Brand Image

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Awareness (1 of 3)
• Brand awareness consists of brand recognition and brand
recall performance:
– Brand recognition:
▪ Consumer’s ability to confirm prior exposure to the
brand when given the brand as a cue
– Brand recall:
▪ 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

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Awareness (2 of 3)
• Advantages of brand awareness:
– Learning advantages:
▪ brand awareness influences the formation and strength of the
associations that make up the brand image.
– Consideration advantages
– Choice advantages:
▪ Consumer purchase motivation
▪ Consumer purchase ability
▪ Consumer purchase opportunity

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Awareness (3 of 3)
• Experience of one of a brand’s element can increase
familiarity and awareness of that element:
– Name, symbol, logo, character, packaging, or slogan,
including advertising and promotion, sponsorship and
event marketing, publicity and public relations, and
outdoor advertising
• Repetition increases recognizability:
– But improving brand recall also requires linkages in
memory to product aspects

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Image (1 of 2)
• Once a sufficient level of brand awareness is created:
– Marketers can put more emphasis on crafting a brand
image
• Creating a positive brand image:
– Takes marketing programs that link strong, favorable,
and unique associations to the brand in memory
• Brand associations may be either brand attributes or
benefits

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Image (2 of 2)
• Strength of Brand Associations
– More deeply a person thinks about product information
and relates it to existing brand knowledge, stronger is
the resulting brand association
• Favorability of Brand Associations
– Is higher when a brand possesses relevant attributes
and benefits that satisfy consumer needs and wants
• Uniqueness of Brand Associations
– “Unique selling proposition” of the product
– Provides brands with sustainable competitive
advantage
Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Identifying and Establishing Brand
Positioning

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Basic Concepts
• Brand positioning:
– 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

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Target Market
• 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: adequate sales potential
▪ Accessibility: dist & comm
▪ Responsiveness of segment

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Consumer Segmentation Bases
Behavioral Psychographic
User status Values, opinions, and attitudes
Usage rate Activities and lifestyle
Usage occasion Geographic
Brand loyalty International
Benefits sought Regional
Demographic
Income
Age
Gender
Race
Family

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
B2B Segmentation Bases
Nature of Good
Kind
Where used
Type of buy

Buying Condition
Purchase location
Who buys
Type of buy

Demographic
SIC code
Number of employees
Number of production workers
Annual sales volume
Number of establishments

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Nature of Competition
• A competitive analysis considers an array of factors:
– Resources, capabilities, and likely intentions of various
other firms
– This competitive analysis helps marketers to choose
markets for their own products or services

• When choosing a market, marketers must consider:

– Indirect competition
– Multiple frames reference

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Points of Parity and Points of Difference
• A marketer must arrive at the proper positioning:
– This requires establishing the correct points-of-
difference and points-of-parity associations:

▪ Points-of-difference (PODs):
– Formally defined as attributes or benefits that
consumers strongly associate with a brand

▪ Points-of-parity associations:
– Not necessarily unique to the brand but may be
shared with other brands

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Points-of-difference associations:
• Attributes or benefits that consumers strongly associate with a brand,
positively evaluate, and believe that cannot be found to the same extent
with a competitive brand
• Functional-performance related considerations

• Abstract-imagery related considerations

• Proof points or Reasons to believe key to deliverability of POD

Points- of-parity associations:

• Attributes shared with other brands
• Category points-of-parity:

• 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

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
• McDonald’s had a competitive parity problem when it began losing customers
concerned with healthy eating. They were vetoing the brand altogether. So, they
began to offer grilled chicken sandwiches, a variety of salads, fruit smoothies, a
choice of apples in the kids’ Happy Meals and started making their signature fries
with dramatically reduced “bad” fat. The goal was not to make McDonald’s a
destination for the healthy-eating segment but to create enough parity to reduce
the number of customers who wouldn’t even consider the brand.

• They then ran into another competitive parity problem. The success of Starbucks
was a serious threat to their breakfast and other off-hours business. But it was
also an opportunity. The advent of McCafé in 2007, with a line that included
cappuccinos and lattés, changed the competitive landscape. McDonald’s was not
aspiring to be better than Starbucks; the goal was to be close enough to the
Starbucks experience to create a point of parity with respect to quality and
variety. The result was that a segment of the Starbucks base started to include
McDonald’s in their consideration set.

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
POPs Vs. PODs

• Unless certain points-of-parity can be achieved to

overcome potential weaknesses, points-of-difference may
not even matter.

• There is a “zone” or “range of tolerance or acceptance” with

points-of-parity.

• Points-of-parity are easier to achieve than points-of-

differences.

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Examples of Negatively Correlated
Attributes and Benefits
Low price versus high quality
Taste versus low calories
Nutritious versus good tasting
Efficacious versus mild
Powerful versus safe
Strong versus refined
Ubiquitous versus exclusive
Varied versus simple

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Positioning Guidelines
• Defining and Communicating the Competitive Frame of
Reference
• Establishing Points-of-Parity and Points-of-Difference
• Straddle Positions
• Updating Position Overtime
• Developing a Good Positioning

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Defining and Communicating the Competitive
Frame of Reference
• Communicating category benefits:
– Marketers use product benefits to announce category
membership
• Exemplars:
– Well-known, noteworthy brands in a category can also
be used as exemplars to specify a brand’s category
membership
• Product descriptor:
– Product descriptor that follows a brand name is often a
very compact means of conveying category origin

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Choosing Points-of-Difference
• A brand must offer a compelling and credible reason for
choosing it over the other options:
– What attribute or benefit can serve as point-of-
difference?
▪ Desirability criteria
▪ Deliverability criteria: Feasibility and Communicability
▪ Differentiation criteria

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Establishing Points-of-Parity and
Points-of-Difference
• The key to branding success is to establish both points-of-
parity and points-of-difference
• At times, an inverse relationship between POP and POD
may exist in the minds of consumers:
– Approaches to address the problem of negatively
correlated POPs and PODs include:
▪ Separating the attributes
▪ Leveraging equity of another entity
▪ Redefining the relationship

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Straddle Positions
• Type of positioning where a company is able to straddle
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 for points-of-parity

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Updating Positions over Time (1 of 2)
• Generally, positioning should be fundamentally changed
very infrequently:
– And only when circumstances significantly reduce the
effectiveness of existing POPs and PODs
• Yet, positioning will evolve to better reflect market
opportunities or challenges
• POD or POP may be refined, added, or dropped as
situations dictate

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Updating Positions over Time (2 of 2)
• Laddering:
– Deepening the meaning of a brand to permit further
expansion
– Often useful to explore underlying consumer motivations
• Reacting:
– Responding to competitive actions 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

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Developing a Good Positioning
• A good positioning:
– Has a foot in the present and a foot in the future:
▪ Needs to be somewhat aspirational so that the brand
has room to grow and improve
– Is careful to identify all relevant points-of-parity:
▪ Don’t overlook or ignore crucial areas where the brand
is potentially disadvantaged
– Should reflect a consumer point of view in terms of the
benefits
▪ Recognizes that a duality exists in the positioning of a
brand:
▪ Rational and emotional components

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Mantra
• Short, three-to five-word phrase:
– reflects the essential heart and soul of the brand
– Captures the irrefutable essence or spirit of the brand positioning.
– Purpose is to ensure that employees, external mktg stakeholders
are aligned as to what the brand represents to the consumers

• Provides guidance about:

– What products to introduce under the brand
– What ad campaigns to run
– Where and how the brand should be sold

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Repositioning

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Brand Repositioning

Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved
Copyright © 2020, 2013, 2008 Pearson Education, Inc. All Rights Reserved