978-0132664257 Chapter 2 Solution Manual

Unlock access to all the studying documents.

View Full Document

Chapter 2

Customer-Based Brand Equity and Brand Positioning

Learning Objectives

1. Dene 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 denes 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 benets 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

to such things as the price, imagery, feelings, experiences, and

personality associated with the brand (non-product-related).

Benets 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

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 Bonre 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.

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.

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.

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 benets can result from a strong brand, both

in terms of greater revenue and lower costs. Some of the benets 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 condence, 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,

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 benets 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 Benets— 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.

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

dened 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?

AACSB: Analytic Skills

4. Can you think of any negatively correlated attributes and benets

other than those listed in Figure 2-6? Can you think of any other

strategies to deal with negatively correlated attributes and

benets?

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.

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 dene and

communicate the competitive frame of reference and choose and

establish POPs and PODs.

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 conrm 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 fullled 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 benets 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 benets 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.