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Chapter 2
Customer-Based Brand Equity and Brand Positioning
Learning Objectives
1. Dene 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 in developing a good brand positioning.
5. Explain brand mantra and how it should be developed.
Overview
This chapter denes the concept that is the focus of the book.
Customer-based brand equity (CBBE) is the di+erential e+ect that
brand knowledge has on consumer response to the marketing of that
brand. Brand knowledge is a function of awareness, which relates to
consumers’ ability to recognize or recall the brand, and image, which
consists of consumers’ perceptions of, and associations for the brand.
Building awareness requires repeatedly exposing consumers to the
brand as well as linking the brand in consumer memory to its product
category and to purchase, usage and consumption situations. Creating
a positive brand image requires establishing strong, favorable, and
unique associations for the brand.
The chapter outlines the important contribution of brand knowledge to
brand equity. Brand knowledge is composed of brand awareness, which
is itself a function of recognition and recall, and brand image, which
re/ects the associations consumers hold for the brand in memory.
Brand awareness is important because: 1) it is a necessary condition
for inclusion in the set of brands being considered for purchase, 2) in
low-involvement decision settings, it can be a su1cient condition for
choice, and 3) it in/uences the nature and strength of associations that
comprise the brand image. Awareness can be heightened by increasing
consumer exposure to the brand and by linking the brand to product
category, consumption and usage situations.
A brand’s image re/ects all the associations consumers have for a
brand in memory. The strength, favorability, and uniqueness of the
associations a+ect the responses consumers will have to the brand and
to its supporting marketing activities. Associations can be about
attributes and benets of the brand, or attitudes toward it. Attributes,
which are descriptive features of a brand, can relate to the actual
physical components and ingredients of a brand (product-related), or
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
to such things as the price, imagery, feelings, experiences, and
personality associated with the brand (non-product-related).
Benets derived from a brand may relate to the functional advantages
it provides, the symbolic information it conveys, or the experiential
feelings it produces. Attitudes, which represent the highest level of
brand associations, re/ect consumers’ overall evaluations of a brand
and, consequently, often determine their behavior toward it.
The strength of associations depends upon the relevance of
information consumers encounter about the brand and the consistency
with which the information is presented over time. Favorability is a
function of the desirability or value of the associations in attitude
formation and decision-making, and of their deliverability or
performance probability.
The chapter then moves onto discuss brand position and asserts that,
deciding on a positioning requires determining a frame of reference,
the ideal points-of-parity and points-of-di+erence brand associations,
and an overall brand mantra as a summary. Marketers need to
understand consumer behavior and the consideration sets that
consumers adopt in making brand choices. Points-of-di+erence are
those associations that are unique to the brand, strongly held, and
favorably evaluated by consumers. Points-of-parity are those
associations that are not necessarily unique to the brand but may in
fact be shared with other brands.
Finally, the chapter concludes by discussing brand mantra, which is an
articulation of the “heart and soul” of the brand, a three- to ve-word
phrase that captures the irrefutable essence or spirit of the brand
positioning and brand values.
Brand Focus 2.0 details the marketing advantages of creating a strong
brand. These include greater loyalty and less vulnerability to
competitive marketing actions and crises; larger margins; greater trade
cooperation and support; increased marketing communication
e+ectiveness; possible licensing opportunities; and a number of other
advantages.
Science of Branding
THE SCIENCE OF BRANDING 2-1
BRAND CRITICS
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
In her book No Logo, Naomi Klein details the aspects of global
corporate growth that have led to consumer backlash against brands.
Klein cites marketing campaigns that exist within schools and
universities, among other examples of advertising encroaching on
traditionally ad-free space. She cautions that an inherent danger of
building a strong brand is that the public will be all the more eager to
see the brand tarnished once unseemly facts surface.
Klein highlights movements that have arisen to protest the growing
power of corporations as “culture jamming” and “ad-busting.” Klein
also observes that the issues of corporate conduct are now highly
politicized. Besides Klein, Jonathan Baskin, in his book Branding
Only Works on Cattle, argues that branding is no longer e+ective
because it relies on the status quo and is not keeping up with
consumers’ needs. He faults current brand techniques.
In 2007, British writer Neil Boorman started a blog and then published
a book called Bonre of the Brands that detailed the breaking of his
brand obsession. Boorman refers to himself as a member of “a
generation that has been sold to from the day it was born” and calls
brands “nothing but an expensive con.”
THE SCIENCE OF BRANDING 2-2
BRANDING INSIDE THE ORGANIZATION
Brand mantras point out the importance of internal branding—making
sure that members of the organization are properly aligned with the
brand and what it represents. For service companies especially, it’s
critical that all employees have an up-to-date and deep understanding
of the brand.
Companies need to engage in continual open dialogue with their
employees. Branding should be perceived as participatory. Some rms
have pushed B2E (business-to-employee) programs through corporate
intranets and other means. In short, for both motivating employees
and attracting external customers, internal branding is a critical
management priority.
Branding Briefs
BRANDING BRIEF 2-1
POSITIONING POLITICIANS
The importance of marketing has not been lost on politicians and one
way to interpret campaign strategies is from a branding perspective.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
The last three decades of presidential campaigns are revealing about
the importance of properly positioning a politician.
George H. W. Bush ran a textbook presidential campaign in 1988. The
objective was to move the candidate to the center of the political
spectrum and make him a “safe” choice, and to move his Democratic
opponent, Massachusetts governor Michael Dukakis, to the left and
make him seem more liberal and a “risky” choice.
In 1992, the new Democratic candidate, Bill Clinton, was a erce
campaigner who ran a focused e+ort to create a key point-of-di+erence
on one main issue—the economy. Rather than attempting to achieve a
point-of-parity on this issue, Bush, who was running for reelection,
campaigned on other issues such as family values.
The 2008 presidential election was another textbook application of
branding as Barack Obama ran a very sophisticated and modern
marketing campaign. Republican candidate John McCain attempted to
create a point-of-di+erence on experience and traditional Republican
values; Obama sought to create a point-of-di+erence on new ideas and
hope. The Obama campaign team e+ectively hammered home his
message. Multimedia tactics combined oGine and online media as well
as free and paid media. Even Obama’s slogans and campaign posters
became iconic symbols, and Obama breezed to victory.
BRANDING BRIEF 2-2
NIKE BRAND MANTRA
Nike has a rich set of associations with consumers, revolving around
such considerations as its innovative product designs, its sponsorships
of top athletes, its award-winning advertising, its competitive drive,
and its irreverent attitude. In Nike’s eyes, its entire marketing program
—its products and how they are sold—must re/ect the key brand
values conveyed by the brand mantra.
In the words of ex-Nike marketing gurus Scott Bedbury and Jerome
Conlon, Nike’s brand mantra provided the “intellectual guard rails” to
keep the brand moving in the right direction and to make sure it did
not get o+ track somehow. Nike’s brand mantra has even a+ected
product development. Each step of the way it has been guided by its
“authentic athletic performance” brand mantra. At the same time, the
company has been careful to avoid using the Nike name to brand
products that did not t with the brand mantra, like casual “brown”
shoes.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
When Nike has experienced problems with its marketing program, they
have often been a result of its failure to gure out how to translate its
brand mantra to the marketing challenge at hand.
BRANDING BRIEF 2-3
DISNEY BRAND MANTRA
Disney developed its brand mantra in response to its incredible growth
through licensing and product development during the mid-1980s. In
the late 1980s, Disney became concerned that some of its characters,
like Mickey Mouse and Donald Duck, were being used inappropriately
and becoming overexposed. To investigate the severity of the problem,
Disney undertook an extensive brand audit. Disney also launched a
major consumer research study—a brand exploratory—to investigate
how consumers felt about the Disney brand.
The results of the brand inventory revealed some potentially serious
problems: the Disney characters were on so many products and
marketed in so many ways that in some cases it was di1cult to discern
the rationale behind the deal, to start with. The consumer study only
heightened Disney’s concerns. Because of the broad exposure of the
characters in the marketplace, many consumers had begun to feel that
Disney was exploiting its name. In some cases, consumers felt that the
characters added little value to products and, worse yet, involved
children in purchase decisions that they would typically ignore.
Disney learned in the consumer study, however, that consumers did
not di+erentiate between all the product endorsements. “Disney was
Disney” to consumers, whether they saw the characters in lms,
records, theme parks, or consumer products. Consequently, all
products and services that used the Disney name or characters had an
impact on Disney’s brand equity. Consumers reported that they
resented some of these endorsements because they felt that they had
a special, personal relationship with the characters and with Disney
that should not be handled so carelessly.
As a result of the brand audit, Disney moved quickly to establish a
brand equity team to better manage the brand franchise and more
carefully evaluate licensing and other third-party promotional
opportunities. One of the mandates of this team was to ensure that a
consistent image for Disney—reinforcing its key brand associations—
was conveyed by all third-party products and services. To facilitate this
supervision, Disney adopted an internal brand mantra of “fun family
entertainment” to serve as a screening device for proposed ventures.
Opportunities that were not consistent with the brand mantra were
rejected.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Brand Focus
BRAND FOCUS 2.0
THE MARKETING ADVANTAGES OF STRONG BRANDS
Customer-based brand equity occurs when consumer response to
marketing activity di+ers, when consumers know the brand, and when
they do not. A number of benets can result from a strong brand, both
in terms of greater revenue and lower costs. Some of the benets to
the rm of having brands with a high level of awareness and a positive
brand image:
Greater Loyalty and Less Vulnerability to Competitive Marketing
Actions and Crises— Research shows that di+erent types of
favorable brand associations can a+ect consumer product
evaluations, perceptions of quality, and purchase rates.
Moreover, familiarity with a brand has been shown to increase
consumer condence, attitude toward the brand, and purchase
intention, and to mitigate the negative impact of a poor trial
experience. One characteristic of brands with a great deal of
equity is that consumers feel great loyalty to them. A brand with
a positive brand image also is more likely to successfully weather
a brand crisis or downturn in the brand’s fortunes. E+ective
handling of a marketing crisis requires swift and sincere action,
an immediate admission that something has gone wrong, and
assurance that an e+ective remedy will be put in place. Even
absent a crisis, a strong brand o+ers protection in a marketing
downturn or when the brand’s fortunes fall.
Larger Margins— Brands with positive customer-based brand
equity can command a price premium. Consumers should also
have a fairly inelastic response to price increases and elastic
responses to price decreases or discounts for the brand over
time. Research has shown that consumers loyal to a brand are
less likely to switch in the face of price increases and more likely
to increase the quantity of the brand purchased in the face of
price decreases.
Greater Trade Cooperation and Support— Wholesalers, retailers,
and other middlemen in the distribution channel play an
important role in the selling of many products. Their activities
can thus facilitate or inhibit the success of the brand. If a brand
has a positive image, retailers and other middlemen are more
likely to respond to the wishes of consumers and actively
promote and sell the brand. Channel members are also less likely
to require any marketing push from the manufacturer and will be
more receptive to manufacturers’ suggestions to stock, reorder,
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
and display the brand, as well as to pass through trade
promotions, demand smaller slotting allowances, give more
favorable shelf space or position, and so on. Given that many
consumer decisions are made in the store, the possibility of
additional marketing push by retailers is important.
Increased Marketing Communication E+ectiveness— A host of
advertising and communication benets may result from creating
awareness of and a positive image for a brand. One
well-established view of consumer response to marketing
communications is the hierarchy of e+ects models. A brand with
a great deal of equity already has created some knowledge
structures in consumers’ minds, increasing the likelihood that
consumers will pass through various stages of the hierarchy.
Familiar, well-liked brands are less susceptible to “interference”
and confusion from competitive ads, are more responsive to
creative strategies such as humor appeals, and are less
vulnerable to negative reactions due to concentrated repetition
schedules. Because strong brand associations exist, lower levels
of repetition may be necessary. Similarly, because of existing
brand knowledge structures, consumers may be more likely to
notice sales promotions, direct mail o+erings, or other
sales-oriented marketing communications and respond favorably.
Possible Licensing and Brand Extension Opportunities— A strong
brand often has associations that may be desirable in other
product categories. To capitalize on this value, a rm may choose
to license its name, logo, or other trademark item to another
company for use on its products and merchandise. Academic
research has shown that well-known and well-regarded brands
can extend more successfully and into more diverse categories
than other brands. In addition, the amount of brand equity has
been shown to be correlated with the highest or lowest-quality
member in the product line for vertical product extensions.
Research has also shown that positive symbolic associations may
be the basis of these evaluations, even if overall brand attitude
itself is not necessarily high. Brands with varied product category
associations through past extensions have been shown to be
especially extendable.
Other Benets— Brands with positive customer-based brand
equity may provide other advantages to the rm not directly
related to the products themselves, such as helping the rm to
attract or motivate better employees, generate greater interest
from investors, and garner more support from shareholders.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Discussion questions
1. Apply the categorization model to a product category other than
beverages. How do consumers make decisions whether or not to
buy the product, and how do they arrive at their nal brand
decision? What are the implications for brand equity management
for the brands in the category? How does it a&ect positioning, for
example?
2. Pick a category basically dominated by two main brands. Evaluate
the positioning of each brand. Who are their target markets? What
are their main points-of-parity and points-of-di&erence? Have they
dened their positioning correctly? How might it be improved?
3. Consider a book store in your area. What competitive frames of
reference does it face? What are the implications of those frames
of reference for its positioning?
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
AACSB: Analytic Skills
4. Can you think of any negatively correlated attributes and benets
other than those listed in Figure 2-6? Can you think of any other
strategies to deal with negatively correlated attributes and
benets?
5. What do you think of Naomi Klein’s positions as espoused in No
Logos? How would you respond to her propositions? Do you agree
or disagree about her beliefs on the growth of corporate power?
Exercises and assignments
1. Have students conduct a Coke-Pepsi taste test, either in or out of
the class, and discuss the results and the reasons behind consumer
preferences. It might be useful to have half the class do a blind
taste test, and half the class do a “sighted” taste test, and compare
the results.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
2. Ask students to pick two brands in each of three or four di+erent
product categories, and then compare the sources of brand equity
for each pair. This exercise is a good way to demonstrate the
stronger positioning strategies and franchises that some brands
enjoy relative to their competition. Focal brands might include:
3. Bring in or have students bring in examples of consumer sales
promotions. Analyze each in terms of its ability to build or bash
brand equity. Suggest alternative promotion ideas. Pick the best and
worst of the lot and explain what makes them good or bad.
4. Have students develop a brand of their own for a given product
category such as beverages, automobiles, and art supplies. The
students may then be asked to arrive at the optimal competitive
brand positioning. This will help the students to dene and
communicate the competitive frame of reference and choose and
establish POPs and PODs.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Key take-away points
1. The power of the brand and its ultimate value to the rm resides
with customers.
2. Customer-based brand equity is the di+erential e+ect of brand
knowledge on consumer response to the marketing of a brand.
3. Positive brand equity results when consumers are familiar with the
brand and have strong, favorable, and unique associations for it.
4. A brand has negative customer-based brand equity if consumers
react less favorably to marketing activity for the brand compared
with an unnamed or ctitiously named version of the product.
5. The quality of the investment in brand building is the most critical
factor, not the quantity beyond some minimal threshold amount.
6. Brand awareness is the consumers’ ability to identify the brand
under di+erent conditions and brand image is consumers’
perceptions about a brand.
7. Brand recognition is consumers’ ability to conrm prior exposure to
the brand when given the brand as a cue and brand recall is
consumers’ ability to retrieve the brand from memory when given
the product category, the needs fullled by the category, or a
purchase or usage situation as a cue.
8. Brand attributes are those descriptive features that characterize a
product or service, and brand benets are the personal value and
meaning that consumers attach to the product or service attributes.
9. Brand positioning is the act of designing the company’s o+er and
image, so that it occupies a distinct and valued place in the target
customer’s minds.
10. The key to branding success is to establish both points-of-parity
and points-of-di+erence.
11. PODs are attributes or benets that consumers strongly
associate with a brand, positively evaluate, and believe that they
could not nd to the same extent with a competitive brand.
12. POPs are not necessarily unique to the brand but may in fact be
shared with other brands.
13. A brand mantra is a short, three- to ve-word phrase that
captures the irrefutable essence or spirit of the brand positioning.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
