978-0132664257 Chapter 3 Solution Manual

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Chapter 3

Brand Resonance and the Brand Value Chain

Chapter Objectives

1. Dene brand resonance.

2. Describe the steps in building brand resonance.

3. Dene the brand value chain.

4. Identify the stages in the brand value chain.

5. Contrast brand equity and customer equity.

Overview

This chapter deals in greater detail with two interlinking models, which,

along with the brand positioning model, make up the brand planning

system.

The chapter rst discusses the brand resonance model, which

describes how to create intense, active loyalty relationships with

customers. The model considers how brand positioning a%ects what

consumers think, feel, and do and the degree to which they resonate

or connect with a brand.

The chapter begins by presenting the four steps to building a strong

brand. This will help students consider brand salience, performance,

imagery, judgments, feelings, and resonance as brand building blocks.

The chapter talks in detail about each of these characteristics including

the attributes and benets that underlie brand performance. The

chapter also highlights the types of brand judgments, namely,

judgments about quality, credibility, consideration, and superiority.

Resonance is characterized in terms of intensity, or the depth of the

psychological bond that customers have with the brand, as well as the

level of activity engendered by this loyalty.

Next, the chapter presents some of the main implications of the brand

resonance model and moves on to confer how brand resonance and

these loyalty relationships, in turn, create brand equity or value.

The brand value chain model is discussed next. It is a means by which

marketers can trace the value creation process for their brands to

better understand the nancial impact of their marketing expenditures

and investments. Based in part on the customer-based brand equity

(CBBE) concept, it o%ers a holistic, integrated approach to

understanding how brands create value.

The chapter points out that brand value is created at a stage when

customers have (1) deep, broad brand awareness; (2) appropriately

strong, favorable, and unique points-of-parity and points-of-di%erence;

(3) positive brand judgments and feelings; (4) intense brand

attachment and loyalty; and (5) a high degree of brand activity.

The chapter then moves on to discuss the implications of the brand

value chain model and concludes by reviewing both the models and

then throwing light on customer equity by calling it the sum of lifetime

values of all customers. Several di%erent concepts and approaches

relevant to the topic of customer equity have been discussed.

Brand Focus 3.0 at the end of the chapter provides a detailed overview

of the topic of customer equity.

Science of Branding

THE SCIENCE OF BRANDING 3-1

LUXURY BRANDING

Brand and its image are often competitive terms and, hence, luxury

brands are one of the purest examples of branding. A number of

characteristics dene luxury branding and suggest strategic and

tactical guidelines such as:

Maintaining and controlling a premium, prestige image with

luxury branding is crucial and a priority.

Luxury branding often relies on an aspirational image that

benets from a trickle-down e%ect to a broader audience via PR

and word-of-mouth.

To ensure pleasurable purchase and consumption experiences,

marketers of luxury brands must control all aspects of the

marketing program.

Distribution for luxury brands should be carefully controlled via a

selective distribution strategy.

Luxury brands are enhanced by a premium pricing strategy and

few discounts.

Brand architecture for luxury brands must be managed very

carefully with only selective, strategic licensing and extensions.

Brand hierarchies and portfolios must be employed.

Luxury brands can sometimes benet from secondary

associations with linked personalities, events, and countries.

Brand elements can be important drivers of brand equity for

luxury brands.

Luxury brands can compete with luxury brands from other

categories for discretionary consumer dollars.

Luxury brands must legally protect all trademarks and

aggressively combat counterfeits.

THE SCIENCE OF BRANDING 3-2

PUTTING CUSTOMERS FIRST

According to authors Larry Selden and Geo%rey Colvin, a few

companies, such as Dell, Best Buy, and Royal Bank of Canada, have

been solid stocks for shareholders through the years because of their

customer-centric approach. Customer-centricity means that all

employees understand how their actions a%ect share price.

Selden and Colvin maintain that customer-centric companies are a

good bet for investors because they hold an advantage that can lead

to a jump in share price. To determine whether a company is truly

customer-focused, Selden and Colvin suggest customers ask

themselves the following ve questions:

Is the company looking for ways to take care of you? Only a few

companies identify customer needs rst, and then create ways to

meet them. Too many companies try to make customers buy the

products and services they already o%er.

Does the company know its customers well enough to

di%erentiate between them? True di%erentiation means knowing

who your various customer segments are, what each group

wants, where the groups are shopping, and how to serve the

customers individually.

Is someone accountable for customers? At most companies,

various departments own pieces of customer segments, but no

one owns any specic one. At companies with customer-centric

approaches, however, things are di%erent.

Is the company managed for shareholder value? If a company is

managed for shareholder value, employees know about earning

a return on invested capital that exceeds the cost of capital, plus

investing increasing amounts of capital at that positive spread

and maintaining that spread for as long as possible.

Customer-centric companies apply those criteria to customer

segments.

Is the company testing new customer o%ers and learning from

the results? Constant learning about what customers want and a

formal process for sharing it are critical to customer-centricity.

Branding Briefs

BRANDING BRIEF 3-1

BUILDING BRAND COMMUNITIES

Apple

Apple encourages owners of its computers to form local Apple user

groups, many of which o%er monthly meetings, an informative

newsletter, member discounts, special interest groups, classes, and

one-on-one support. The user groups provide Apple owners with

opportunities to learn more about their computers, share ideas,

friendships with fellow Apple users, as well as sponsor special activities

and events and perform community service. A visit to Apple’s Web site

helps customers nd nearby user groups.

Harley-Davidson

The rst-time buyer of a Harley-Davidson motorcycle gets a free

one-year membership. HOG benets include a magazine called Hog

Tales, a touring handbook, emergency road service, a specially

designed insurance program, theft reward service, discount hotel rates,

and a Fly & Ride program enabling members to rent Harleys while on

vacation. The company also maintains an extensive Web site devoted

to HOG, which includes information about club chapters and events

and features a special members-only section.

Jeep

Jeep owners can convene with their vehicles in wilderness areas across

the United States as part of the company’s oBcial Jeep Jamborees and

Jeep Rocks and Road. Jeep Jamborees bring Jeep owners and their

families together for two-day o%-road adventures in more than 30

di%erent locations throughout the United States from spring through

autumn each year. Promising to be “every bit as muddy,” the 2010

Jeep Rocks and Road tour hit 11 di%erent venues across the country to

allow existing and prospective Jeep owners to put the 2011 vehicle

lineup through their paces on- and o%-road.

Brand Focus

BRAND FOCUS 3.0

CREATING CUSTOMER VALUE

Customer–brand relationships are the foundation of brand resonance

and building a strong brand. Many rms are now more carefully

dening the nancial value of prospective and actual customers and

devising marketing programs to optimize that value.

Marketers have long recognized the importance of adopting a strong

consumer and customer orientation. The customer-based brand equity

concept makes it clear that the power of a brand resides in the minds

of consumers and customers. However, too many rms still nd

themselves paying the price for lacking a customer focus.

Discussion questions

1. Pick a brand. Attempt to identify its sources of brand equity. Assess

its level of brand awareness and the strength, favorability, and

uniqueness of its associations.

2. Which brands do you have the most resonance with? Why?

3. Can every brand achieve resonance with its customers? Why or why

not?

4. Pick a brand. Assess the extent to which the brand is achieving the

various bene#ts of brand equity.

5. Which companies do you think do a good job managing their

customers? Why?

Exercises and assignments

1. Have students pick a brand of their choice. Then have them answer

how they would go about establishing the six brand building blocks

with customers if the brand was their own. The students may then

compare the steps taken by them with the steps taken by the

company to establish loyalty relationships with customers.

2. Tell students to imagine they are sitting in a room with two doors.

When a knock sounds at each, the butler (!) announces that a

particular brand is at one entrance to the room (e.g., Target), while

another brand is at the other (e.g., Wal-Mart). Ask students to

describe each brand in terms of what it would look like, what it

would be wearing, what it would say when you went to the door,

and what its reason for visiting was. (Alternatively, you can have

students conduct this assignment outside of class by talking to

consumers.)

3. Have students create mental maps for several well-known brands.

Have them use these mental maps to develop brand mantras that

capture the core values and attributes of the brands. Then have the

students compare the mantras they generated with the actual

brand mantras. Are they similar? Why or why not? Possible

companies include Nike (Authentic Athletic Performance), and

Disney (Fun Family Entertainment).

4. Provide the students with examples of brands (E.g. Budweiser,

California Milk Processor Board, Minute Maid, and 7UP) and discuss

why their marketing programs were a success or failure. Have the

students be in the shoes of a marketer and have them design a

well-integrated marketing program for any of these brands. The

students must consider factors such as distinctiveness, relevance,

integration, value, and excellence of the program. This activity will

help the students better understand the concept of program quality

multiplier.

Key take-away points

1. Brand planning is aided by three interlocking models that can both

qualitatively guide and interpret possible marketing actions as well

as quantitatively measure marketing e%ects

2. Building a strong brand involves establishing brand salience,

performance, imagery, judgments, feelings, and resonance with

customers.

3. Building brand awareness helps customers understand the product

or service category in which the brand competes and what products

or services are sold under the brand name.

4. A highly salient brand is one that has both depth and breadth of

brand awareness.

5. Brand performance describes how well the product or service meets

customers’ more functional needs.

6. Brand imagery refers to more intangible aspects of the brand, and

consumers can form imagery associations directly from their own

experience or indirectly through advertising.

7. Brand meaning is what helps produce brand responses, or what

customers think or feel about the brand.

8. Warmth, fun, excitement, security, social approval, and self-respect

are the important types of brand feelings.

9. The power of the brand and its ultimate value to the rm reside with

customers.

10. Brand value creation begins with marketing activity by the rm.

11. Modications to the brand value chain can expand its relevance

and applicability.