CHAPTER:2

CUSTOMER-BASED EQUITY
AND BRAND POSITIONING

PREPARED & PRESENTED BY:

DR. MARWAN WAHBI

DOCTOR OF BUSINESS ADMINISTRATION (DBA)
CERTIFIED IN RESEARCH IN MANAGEMENT SCIENCES
PROFESSIONAL CERTIFIED MARKETER (PCM) – AMA
CERTIFIED DIGITAL MARKETING PROFESSIONAL (CDMP) – DMI
 Learning Objectives
2

1. Define customer-based brand equity

2. Outline the sources and outcomes of customer-based brand equity
3. Identify the four components of brand positioning
4. Describe the guidelines for developing a good brand positioning
5. Explain brand mantra and how it should be developed
 Three Models Provide Crucial Micro- and Macro-
Perspectives on Successful Brand Building
3

describes how to trace the value creation process

Brand to better understand the financial impact of
Value marketing expenditures and investments to create
Chain loyal customers and strong brands
Model
Describes how to take these
competitive advantages and
Brand
create intense, active, loyalty Resonance
relationships with customers for Model
brands
Brand Positioning
Model
Describes how to establish
competitive advantages in
the minds of customers in
the marketplace
 Positioning
4

 Positioning requires defining our desired or ideal brand knowledge structures and
establishing points-of-difference and points-of-parity to establish the right brand
identity and brand image in the customers’ minds vs. competitors.
Points-of-difference (PODs) provide a competitive advantage and the “reason why” consumers
should buy the brand.
Some brand associations can be roughly as favorable as those of competing brands, so they
function as points-of-parity (POPs) in consumers’ minds – and negate potential points-of-
difference for competitors.
 These associations are designed to provide “no reason why not” for consumers to choose the brand.
 Customer-Based Brand Equity
5

Defining Customer-
Based Brand Equity

Brand Equity as a
Bridge
 Defining Customer Based Brand Equity (CBBE) – 1
6

 Approaches brand equity from the perspective of the customer

 Understanding the needs and wants of consumers and organizations and devising
products and programs to satisfy them are at the heart of successful marketing.
 Marketers face two fundamentally important questions:
• What do different brands mean to consumers?
• How does the brand knowledge of consumers affect their response to marketing activity?
 Stressesthat the power of a brand lies in what customers have learned, felt, seen, and
heard about the brand as a result of their experiences over time.
 The challenge for marketers in building a strong brand is
ensuring that customers have the right type of experiences
with products and services and their accompanying marketing
programs so that the desired thoughts, feelings, images,
beliefs, perceptions, opinions, and experiences become linked
to the brand.

7
 Defining Customer Based Brand Equity (CBBE) – 2
8

 CBBE Defined: Differential effect that brand knowledge has on consumer response
to the marketing of that brand.
A brand has positive CBBE when consumers react more favorably to a product and the way it is
marketed when the brand is identified than when it is not.
A brand has negative CBBE if consumers react less favorably to marketing activity for the brand
compared with an unnamed or fictitiously named version of the product.
 Defining Customer Based Brand Equity (CBBE) – 3
9

Differential
effect

Brand Consumer
knowledge response to
marketing
 Marketing Advantages of Strong Brands
10
 Brand Equity as a Bridge
11

Brand as a Brand as a
Reflection of Direction for
the Past the Future
 To Sum up…
12

 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
 Brand Knowledge
13

 Key to create brand equity

Creates the differential effect that drives brand equity

 Marketersneed an insightful way to represent how brand knowledge exists in

consumer memory
 Associative Network Memory Model
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 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
 Possible Apple Computer Associations
15
 Sources of Brand Equity
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Brand Awareness Brand Image

• is related to the strength • is consumers’ perceptions

of the brand node or about a brand, as
trace in memory, which reflected by the brand
we can measure as the associations held in
consumer’s ability to consumer memory.
identify the brand under
different conditions.
 Brand Awareness
17

Brand recognition
• Consumers’ 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
 Advantages of Brand Awareness
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 Learning advantage
Brand awareness influences the formation and strength of the associations that make up the
brand image

 Consideration advantage
Consumers must consider the brand whenever they are making a purchase for which it could be
acceptable or fulfilling a need it could satisfy

 Choice advantage
Brand awareness affects choices among brands in the consideration set
 APPLICATION: Elaborative-likelihood Model (ELM)
19

 Consumers may make choices based on brand awareness considerations when they
have low involvement

 Low involvement results when consumers lack either

Purchase motivation (they don’t care about the product or service), or
Purchase ability (they don’t know anything else about the brands in a category)
 Establishing Brand Awareness
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 Creatingbrand awareness means increasing the familiarity of the brand through

repeated exposure
This is generally more effective for brand recognition than for brand recall
 The more a consumer experiences the brand by seeing it, hearing it, or thinking about
it, the more likely he or she is to strongly register the brand in memory.
 Anything that causes consumers to experience one of a brand’s element — its name,
symbol, logo, character, packaging, or slogan, including advertising and promotion,
sponsorship and event marketing, publicity and public relations, and outdoor
advertising — can increase familiarity and awareness of that brand element.
 The more elements the marketers can reinforce, usually the better.
 Brand Image
21

 Creatinga 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
Brand attributes are those descriptive
features that characterize a product or
service.
Brand benefits are the personal value
and meaning that consumers attach to
the product or service attributes.
 Brand Image
22

Strength of Brand • The more deeply a person thinks about product information
and relates it to existing brand knowledge, the stronger is
Associations the resulting brand associations will be.

Favorability of • Is higher when a brand possesses relevant attributes and

Brand Associations benefits that satisfy consumer needs and wants

Uniqueness of • “Unique selling proposition” of the product

Brand Associations • Provides brands with sustainable competitive advantage
 To Sum up…
23

 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
 Identifying and Establishing Brand Positioning
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Basic Concepts

Target Market

Nature of Competition

Points-of-Parity and Points-of-Difference

 Basic Concepts
25

 Brand positioning
The act of designing the company’s offer and image so that it occupies a distinct and
valued place (i.e., image) in the target customers’ minds versus competitors
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
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
 Target Market
26

 Market segmentation: Divides the market into

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

 Involves identifying segmentation bases and

criteria
Identifiability: Can we easily identify the
segment?
Size: Is there adequate sales potential in the
segment?
Accessibility: Are specialized distribution outlets
and communication media available to reach the
segment?
Responsiveness: How favorably will the segment
respond to a tailored marketing program?
 Consumer vs. Business-to-Business Segmentation Bases
27

Consumer Business-to-
Segmentation Business
Bases Segmentation
Bases
 Nature of Competition
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 Competitive analysis
E.g., resources, capabilities, strategies
Allows marketers to choose markets where
consumers can be profitably served.

 Indirect competition
Even if a brand does not face direct
competition in its product category, and
thus does not share performance related
attributes with other brands, it can still
share more abstract associations and face
indirect competition in a more broadly
defined product category.
 Multiple Frames of Reference
29

A Frame of Reference refers to the category or context within which consumers place
a particular brand to understand its value proposition and relevance.
 Essentially, it's the mental category or 'box' that consumers associate a brand with,
helping them comprehend its purpose and benefits compared to other alternatives.
 The frame of reference enables us to compare a product or service with offerings
from rival brands.
 By understanding the target market of a specific company, potential stakeholders can
assess how a brand stands in relation to its competitors.
 This comparison helps identify areas for brand growth, potential substitute products,
and other competitive threats.
 Points-of-Difference Associations (PODs) – 1
30

 Points-of-differenceAssociations
(PODs): 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-Difference Associations (PODs) – 2
31

 Criteria to consider when developing PODs:

Desirability: relevant and important to customers
Deliverability: feasible and communicable by the company
Differentiation:
 On performance attribute (e.g., Tesla’s autopilot can change lanes without driver’s assistance)
 On performance benefit (e.g., Apple products have unique retina display that ensures picture clarify)
 On imagery (e.g., the luxury and status imagery of Louis Vuitton)
 On performance and imagery (e.g., Singapore Airlines advertising itself as a “A Great Way to Fly”)
 Points-of-Difference Associations (PODs) – 3
32

 PODs are generally defined in terms of consumer benefits. These benefits often have
important underlying proof points or reasons to believe (RTBs).
 These proof points can come in many forms:
Functional design concerns (a unique shaving system technology, leading to the benefit of a
closer electric shave);
Key attributes (a unique tread design, leading to the benefit of safer tires);
Key ingredients (contains fluoride, leading to the benefit of prevents dental cavities); or
Key endorsements (recommended by more audio engineers, leading to the benefit of superior
music fidelity).
 Having compelling RTBs are often critical to the deliverability aspect of a POD.
 Points-of-Parity Associations (POPs)
33

 Points-of-Parity (POPs) Associations are not necessarily unique to the brand but
may, in fact, be shared with other brands.

 There are three types of POPs:

Category POP: represent necessary – but not necessarily sufficient – conditions for a brand
choice (e.g., a bank offering checking and saving plans, ATMs, and safety deposit boxes).
Competitive POP: those associations designed to negate competitors’ POD (e.g., a new
software brand that provides the same user experience as a leading brand)
Correlational POP: potentially negative associations that arise from the existence of other,
more positive associations of the brand (e.g., consumers might find it hard to believe a brand is
inexpensive and at the same time of the highest quality one.)
 Zone of Tolerance: POPs vs. PODs
34

 POPs are important because they can undermine PODs; unless certain POPs can be
achieved to overcome potential weaknesses, PODs may not even matter.
 For the brand to achieve a POP on a particular attribute or benefit, enough
consumers must believe that the brand is good enough on that dimension.
 There is a Zone of Tolerance (i.e., range of or acceptance) with POPs. The brand
does not have to be seen as literally equal to competitors, but consumers must feel
that it does sufficiently well on that attribute or benefit so that they do not consider it
to be a negative or a problem.
 Assuming consumers feel that way, they may then be willing to base their evaluations
and decisions on other factors potentially more favorable to the brand.
 EXAMPLE: Starbucks’ PODs and POPs vs. Competitors
35

Competitors Examples PODs POPs

Quick-serve McDonalds Quality, Convenience
restaurants and Dunkin’ image, and value
and experience,
convenience and variety
shops
Supermarket Nescafé and Quality, Convenience
brands for Maxwell image, and value
home Coffee experience,
consumption variety, and
freshness
Local cafés Various Convenience Quality, variety,
and service price, and
quality community
 To Sum up…
36

 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
 Positioning Guidelines
37

1. Defining and Communicating the Competitive Frame of Reference

Communicating category Associating with exemplars Using product descriptors
benefits

2. Choosing Points-of-Difference
Desirability Deliverability Differentiation

3. Establishing Points-of-Parity and Points-of-Difference

Communicating them Communicating them Leveraging equity of Redefining the
together separately another entity relationship
 Positioning Guidelines
38

4. Straddle Positions
Spanning two frames of reference with one set of POD in one category becomes POP in the other
PODs and POPs and vice-versa for POP

5. Updating Position Overtime

Laddering: deepening the meaning of the brand Reacting: responding to competitive actions that
to permit expansion threaten and existing position

6. Developing a Good Positioning

Striking a balance between the POPs are crucial for PODs to Catering to both rational and
present and the future matter and effective positioning emotional components
 EXAMPLE: Launching the 6 Series Gran Coupe in the
39
USA
 Positioned the brand as being the only
automobile that offered both luxury and
performance.
 At that time, U.S. luxury cars like Cadillac were
seen by many as lacking performance, and
U.S. performance cars like the Chevy Corvette
were seen as lacking luxury.
 Relying on the design of its cars, its German
heritage, and other aspects of a well-designed
marketing program, BMW was able to
simultaneously achieve:
1. A POD on performance and a POP on luxury
with respect to luxury cars
2. A POD on luxury and a POP on performance
with respect to performance cars
 To Sum up…
40

 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”
 Brand Mantra
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What a Brand Mantra is:

• A 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.
• Helps the brand present a consistent image
• Communicates what the brand is and what it is not
 Designing a Brand Mantra
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Brand Describe the nature of the product or service or the

Functions: type of experiences or benefits the brand provides.

Descriptive Combined with brand functions, helps outline the

Modifier: brand boundaries and clarify its nature.

Emotional Determines how a brand provides benefits and in

Modifier: what ways.
 Implementing a Brand Mantra
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• A good brand mantra should both define the category

Communicate (or categories) of the business to set the brand
boundaries and clarify what is unique about the brand.

Simplify • An effective brand mantra should be memorable. That

means it should be short, crisp, and vivid.

• A brand mantra should also stake out ground that is

Inspire personally meaningful and relevant to as many
customers as possible.
 To Sum up…
44

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
45 End of Chapter.
CHAPTER 2: Customer-Based Equity And Brand Positioning