CHAPTER:2

CUSTOMER-BASED EQUITY
AND BRAND POSITIONING

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Defining Customer Based Brand Equity
(CBBE)

 The power of a brand lies in what customers have

learned, felt, seen, heard about the brand as a
result of their experiences over time.
 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
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 Customer-Based Brand Equity

For successful brand building, 3 models will

provide macro and micro perspectives to
the managers.

These models are like matryoshka dolls.

They are interconnected with each other.

1. Brand Positioning model (How to establish and maximize Competitive Advantage in the
minds of customers)
2. Brand Resonance model (How to create intense and actively loyal customers; Customer
Loyalty)
3. Brand Value Chain model (How to trace the value creation process to better understand
the Financial Impact of marketing expenditures and investments)

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CBBE Example: Tiffany & Co.
The Tiffany’s brand has enough equity that a price premium isn’t just accepted, it’s
expected.

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Figure 2.1- Marketing Advantages of
Strong Brands

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To Sum up with an example.. TextBook page 69

Brand equity is the differential effect that brand knowledge has on consumer
response to the marketing of that brand.

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Identify and
differentiate…REMEMBER!
 According to AMA (American Marketing Association)

 A brand is “ name, term, sign, symbol, or design or

a combination of them intended to identify the
goods and services of one seller or group of sellers
and to differentiate them from those of
competition”

 2 tricky words: identify and differentiate

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Building strong brands: 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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Figure2.2 - Possible Apple Computer
Associations

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Sources of Brand Equity

Brand Awareness
Consumers’ ability to identify the brand
under different conditions; it is the
familiarity of the brand to the consumer

Brand Image
Consumers’s perceptions about the
brand

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Does CC need brand awareness???

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Brand Awareness & Advantages
• Brand awareness: Related to the strength of the
brand node or trace in memory.
• Brand recognition: Consumers’ ability to confirm prior
exposure to the brand when given the brand as a cue.
• (example: watching the battery ad on TV, buy it the other
day on the supermarket)
• 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.
• (example: when I talk premium cars or when I talk fast food)

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Brand Image
Strength of • More deeply a person thinks about product
information and relates it to existing brand
Brand knowledge, stronger is the resulting brand
Associations association

Favorability of • Is higher when a brand possesses relevant

Brand attributes and benefits that satisfy
Associations consumer needs and wants

Uniqueness of • “Unique selling proposition” of the product

Brand • Provides brands with sustainable
competitive advantage
Associations
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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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Example: Body Shop Brand İmage

A succesfull global brand image without using conventional advertising. Strong

associations
to personal care and environmental concern through products (natural ingredients, no
parabens, no animal testing, packaging (simple refillable rcycled), merchandising
(brochures, displays), supply policy (working with local producers), PR (visible and
outspoken), CSR (requiring each franchisee to run a local program), etc.

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Example: The Body Shop Website

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Identifying and Establishing Brand
Positioning
 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
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Positioning examples

City Brands
NewYork (city that never sleeps)
Paris (city of romance)
Car Brands
BMW (ultimate driving machine)
VW ( das auto)
Axe ad:
https://www.youtube.com/watch?v=
OHCRWfV1q5A
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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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 Market Segmentation & Target
Market

 Market segmentation: Divides the market into

distinct groups of homogeneous consumers who have
similar needs and consumer behavior

 For axe, it is ordinary, young 15-40 males.

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Figure 2.3 - Consumer Segmentation
Bases

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Nature of Competition
 Competitive analysis
 Multiple frames of reference: Positioning requires a
frame of reference (identifying the target market
and the nature of competition)
 BMW: ???
 Who the target consumer is?
 Who the main competitors are?
 How the brand is similar to those competitors?
 How the brand is different from them?

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Points of Parity and Points of
Difference
• 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.

 Points-of-parity associations: Attributes shared with other brands.

 Points-of-parity versus points-of-difference: Unless
certain points-of-parity can be achieved to overcome potential weaknesses, points-
of-difference may not even matter. Example: BMW vs Mercedes crash safety
ratings. Points-of-parity are easier to achieve than points-of-differences. People
should believe the brand is good enough.

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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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To Sum up ...
 Brand positioning describes how a brand can
effectively compete against a specified set of
competitors
 A good product positioning should:
 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
A brand mantra; short, three-to five-word phrase that captures the
irrefutable essence or spirit of the brand positioning.
• Provides guidance about:
• What products to introduce under the brand.
• What ad campaigns to run.
• Where and how the brand should be sold.

Disney’ mantra: Fun Family Entertainment

Nike’s mantra: Authentic Athletic Performance

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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

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Levels of Competition: positioning
matters

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