CHAPTER 2: CUSTOMER-BASED BRAND EQUITY

1. CHAPTER 2: CUSTOMER-BASED BRAND EQUITY Lecture 3

2. Customer-Based Brand Equity Pyramid 4. RELATIONSHIPS = What about you and me? RESONANCE 3. RESPONSE = What about you? FEELINGS JUDGMENTS 2. MEANING = What are you? PERFORMANCE IMAGERY 1. IDENTITY = Who are you? SALIENCE

3. Sub-Dimensions of CBBE Pyramid LOYALTY ATTACHMENT COMMUNITY ENGAGEMENT WARMTH FUN EXCITEMENT SECURITY SOCIAL APPROVAL SELF-RESPECT QUALITY CREDIBILITY CONSIDERATION SUPERIORITY PRIMARY CHARACTERISTICS & SECONDARY FEATURES PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY SERVICE EFFECTIVENESS, EFFICIENCY & EMPATHY STYLE AND DESIGN PRICE USER PROFILES PURCHASE & USAGE SITUATIONS PERSONALITY & VALUES HISTORY, HERITAGE & EXPERIENCES CATEGORY IDENTIFICATION NEEDS SATISFIED

4. Salience Dimensions • Depth of brand awareness • Ease of recognition and recall • Strength and clarity of category membership • Breadth of brand awareness • Purchase consideration • Consumption consideration

5. Depth and Breadth Importance • The product category hierarchy shows us not only the depth of awareness matters but also the breadth. • The brand must not only be top-of-mind and have sufficient “mind share,” but it must also do so at the right times and places.

6. Product Category Structure • To fully understand brand recall, we need to appreciate product category structure, or how product categories are organized in memory.

7. Performance Dimensions • Primary characteristics and supplementary features • Product reliability, durability, and serviceability • Service effectiveness, efficiency, and empathy • Style and design • Price

8. Imagery Dimensions • User profiles • Demographic and psychographic characteristics • Actual or aspirational • Group perceptions—popularity • Purchase and usage situations • Type of channel, specific stores, ease of purchase • Time (day, week, month, year, etc.), location, and context of usage • Personality and values • Sincerity, excitement, competence, sophistication, and ruggedness • History, heritage, and experiences • Nostalgia • Memories

9. Judgment Dimensions • Brand quality • Value • Satisfaction • Brand credibility • Expertise • Trustworthiness • Likeability • Brand consideration • Relevance • Brand superiority • Differentiation

10. Feelings Dimensions • Warmth • Fun • Excitement • Security • Social Approval • Self-respect

11. Resonance Dimensions • Behavioral loyalty • Frequency and amount of repeat purchases • Attitudinal attachment • Love brand (favorite possessions; “a little pleasure”) • Proud of brand • Sense of community • Kinship • Affiliation • Active engagement • Seek information • Join club • Visit website, chat rooms

12. Customer-Based Brand Equity Model INTENSE, ACTIVE LOYALTY Consumer- Brand Resonance RATIONAL & EMOTIONAL REACTIONS Consumer Judgments Consumer Feelings POINTS-OF-PARITY & POINTS-OF-DIFFERENCE Brand Performance Brand Imagery DEEP, BROAD BRAND AWARENESS Brand Salience

13. P-1 J-1 P-12 J-12 P-2 J-2 P-11 J-11 P-3 J-3 Performance Judgment P-10 J-4 0.65 P-4 J-10 0.49 R-2 R-1 R-12 P-5 J-5 P-9 J-9 R-11 J-8 J-6 P-8 P-6 R-3 J-7 P-7 Resonance R-10 R-4 0.66 0.17 I-1 R-5 I-12 F-1 R-9 I-2 F-12 F-2 I-11 R-8 R-6 F-11 I-3 R-7 F-3 0.58 Imagery 0.24 Feelings I-10 F-4 I-4 F-10 I-5 I-9 F-5 F-9 I-8 I-6 F-8 F-6 I-7 F-7 Application:Identify the Key Drivers of Brand Equity

14. Brand Building Implications • Customers own brands. • Don’t take shortcuts with brands. • Brands should have a duality. • Brands should have richness. • Brand resonance provides important focus.

15. Creating Customer Value • Customer-brand relationships are the foundation of brand resonance and building a strong brand. • The customer-based brand equity model certainly puts that notion front and center.

16. Is a company consumer-centric? • Is the company looking for ways to take care of you? • Does the company know its customers well enough to differentiate between them? • Is someone accountable for customers? • Is the company managed for shareholder value? • Is the company testing new customer offers and learning from the results? Sources: Larry Selden and Geoffrey Colvin, 2004.

17. Customer Relationship Management (CRM) • Uses a company’s data systems and applications to track consumer activity and manage customer interactions with the company

18. Customer Equity • Blattberg and Deighton (1996) offer eight guidelines as a means of maximizing customer equity: • Invest in highest-value customers first • Transform product management into customer management • Consider how add-on sales and cross-selling can increase customer equity • Look for ways to reduce acquisition costs • Track customer equity gains and losses against marketing programs • Relate branding to customer equity • Monitor the intrinsic retainability of your customer • Consider writing separate marketing plans—or even building two marketing organizations—for acquisition and retention efforts

19. Customer Equity • The sum of lifetime values of all customers • Customer lifetime value (CLV) is affected by revenue and by the cost of customer acquisition, retention, and cross-selling • Consists of three components: • Value equity • Brand equity • Relationship equity Rust, Zeithamal & Lemon, 2004

20. Relationship of Customer Equity to Brand Equity • Customers drive the success of brands but brands are the necessary touchpoint that firms have to connect with their customers. • Customer-based brand equity maintains that brands create value by eliciting differential customer response to marketing activities. • The higher price premiums and increased levels of loyalty engendered by brands generate incremental cash flows.