İstanbul Nişantaşı University

Brand Management
Ass’t Prof. Dr. Mehmet Çiçek, PhD CPA

Customer-Based Brand Equity

and Brand Positioning
Learning Objectives
2.1 Define customer-based brand equity
2.2 Outline the sources and outcomes of customer based
brand equity
2.3 Identify the four components of brand positioning
2.4 Describe the guidelines in developing a good brand
positioning
2.5 Explain brand mantras and how they should be
developed

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Customer-Based Brand Equity
• Defining Customer-Based Brand Equity
• Brand Equity as a Bridge

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Defining Customer-Based Brand
Equity
• Approaches brand equity from the perspective of the
consumer
• Stresses that the power of a brand lies in what resides in
the minds and hearts of customers
• Differential effect that brand knowledge has on consumer
response to the marketing of that brand

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Figure 2.1
Marketing Advantages of Strong Brands

Improved perceptions of product performance

Greater loyalty
Less vulnerability to competitive marketing actions
Less vulnerability to marketing crises
Larger margins
More inelastic consumer response to price increases
More elastic consumer response to price decreases
Greater trade cooperation and support
Increased marketing communication effectiveness
Possible licensing opportunities
Additional brand extension opportunities
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Brand Equity as a Bridge
• Customer knowledge drives the differences that manifest
themselves in terms of brand equity:
– Provides marketers with a vital strategic bridge from
their past to their future
– The brand knowledge that marketers create over time
dictates appropriate and inappropriate future
directions for the brand

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Making a Brand Strong: Brand
Knowledge (1 of 3)
• From the perspective of the CBBE concept, brand
knowledge is the key to creating brand equity:
– It creates the differential effect that drives brand
equity
• Marketers need an insightful way to represent how brand
knowledge exists in consumer memory

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Making a Brand Strong: Brand
Knowledge (2 of 3)
• The associative network memory model:
– 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

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Making a Brand Strong: Brand
Knowledge (3 of 3)
• Brand knowledge has two components:
– Brand awareness:
▪ Related to the strength of the brand node or trace
in memory
▪ Often a step in building brand equity
▪ Often come into play
– Brand image:
▪ Consumers’ perceptions about a brand, as
reflected by the brand associations held in
consumer memory

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Figure 2.2
Possible Associations with the Apple Brand Name

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Sources of Brand Equity
• Brand Awareness
• Brand Image

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Brand Awareness (1 of 3)
• Brand awareness consists of brand recognition and
brand recall performance:
– Brand recognition:
▪ Consumer’s 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

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Brand Awareness (2 of 3)
• Advantages of brand awareness:
– Learning advantages
– Consideration advantages
– Choice advantages:
▪ Consumer purchase motivation
▪ Consumer purchase ability
▪ Consumer purchase opportunity

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Brand Awareness (3 of 3)
• Anything that causes consumers to experience one of a
brand’s element can increase familiarity and awareness
of that brand element:
– Name, symbol, logo, character, packaging, or slogan,
including advertising and promotion, sponsorship and
event marketing, publicity and public relations, and
outdoor advertising
• Repetition increases recognizability:
– But improving brand recall also requires linkages in
memory to product aspects

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Brand Image (1 of 2)
• Once a sufficient level of brand awareness is created:
– Marketers can put more emphasis on crafting a brand
image
• Creating a 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

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Brand Image (2 of 2)
• Strength of Brand Associations
– More deeply a person thinks about product
information and relates it to existing brand knowledge,
stronger is the resulting brand association
• Favorability of Brand Associations
– Is higher when a brand possesses relevant attributes
and benefits that satisfy consumer needs and wants
• Uniqueness of Brand Associations
– “Unique selling proposition” of the product
– Provides brands with sustainable competitive
advantage

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Identifying and Establishing Brand
Positioning
• Basic Concepts
• Target Market
• Nature of Competition
• Points-of-Parity and Points-of-Difference

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Basic Concepts
• Brand positioning:
– Act of designing the company’s offer and image so
that it occupies a distinct and valued place in the
target customers’ minds
– 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

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Target Market
• Market segmentation: Divides the market into distinct
groups of homogeneous consumers who have similar
needs and consumer behavior
• Involves identifying segmentation bases and criteria:
– Criteria:
▪ Identifiability
▪ Size
▪ Accessibility
▪ Responsiveness

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Figure 2.3
Consumer Segmentation
Bases

Behavioral Psychographic
User status Values, opinions, and attitudes
Usage rate Activities and lifestyle
Usage occasion
Geographic
Brand loyalty
International
Benefits sought
Regional
Demographic
Income
Age
Sex
Race
Family

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Figure 2.4
Business-to-Business Segmentation Bases
Nature of Good
Kind
Where used
Type of buy

Buying Condition
Purchase location
Who buys
Type of buy

Demographic
S I C code
Number of employees
Number of production workers
Annual sales volume
Number of establishments
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Figure 2.5
Hypothetical Examples of Funnel Stages and Transitions

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Nature of Competition
• A competitive analysis considers an array of factors:
– Resources, capabilities, and likely intentions of
various other firms
– This competitive analysis helps marketers to choose
markets for their own products or services
• When choosing a market, marketers must consider:
– Indirect competition
– Multiple frames reference

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Points of Parity and Points of
Difference
• A marketer must arrive at the proper positioning:
– This requires establishing the correct points-of-
difference and points-of-parity associations:
▪ Points-of-difference (PODs):
– Formally defined as attributes or benefits that
consumers strongly associate with a brand
▪ Points-of-parity associations:
– Not necessarily unique to the brand but may be
shared with other brands

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Figure 2.6
Examples of Negatively Correlated Attributes and Benefits

Low price versus high quality

Taste versus low calories
Nutritious versus good tasting
Efficacious versus mild
Powerful versus safe
Strong versus refined
Ubiquitous versus exclusive
Varied versus simple

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Positioning Guidelines
• Defining and Communicating the Competitive Frame of
Reference
• Choosing Points-of-Difference
• Establishing Points-of-Parity and Points-of-Difference
• Straddle Positions
• Updating Position Overtime
• Developing a Good Positioning

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Defining and Communicating the
Competitive Frame of Reference
• Communicating category benefits:
– Marketers use product benefits to announce category
membership
• Exemplars:
– Well-known, noteworthy brands in a category can
also be used as exemplars to specify a brand’s
category membership
• Product descriptor:
– Product descriptor that follows a brand name is often
a very compact means of conveying category origin

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Choosing Points-of-Difference
• A brand must offer a compelling and credible reason for
choosing it over the other options:
– What attribute or benefit can serve as point-of-
difference?
▪ Desirability criteria
▪ Deliverability criteria
▪ Differentiation criteria

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Establishing Points-of-Parity and
Points-of-Difference
• The key to branding success is to establish both points-
of-parity and points-of-difference
• At times, an inverse relationship between POP and POD
may exist in the minds of consumers:
– Approaches to address the problem of negatively
correlated POP s and PODs include:
▪ Separating the attributes
▪ Leveraging equity of another entity
▪ Redefining the relationship

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Straddle Positions
• Type of positioning where a company is able to straddle
two frames of reference:
– With one set of points-of-difference and points-of-
parity
– The points-of-difference in one category:
▪ Become points-of-parity in the other
▪ And vice-versa for points-of-parity

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Updating Positions over Time (1 of 2)
• Generally, positioning should be fundamentally changed
very infrequently:
– And only when circumstances significantly reduce the
effectiveness of existing POP s and PODs
• Yet, positioning will evolve to better reflect market
opportunities or challenges
• POD or POP may be refined, added, or dropped as
situations dictate

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Updating Positions over Time (2 of 2)
• Laddering:
– Deepening the meaning of a brand to permit further
expansion
– Often useful to explore underlying consumer
motivations
• Reacting:
– Responding to competitive actions that threaten an
existing positioning
– Competitive actions are often directed at eliminating
points-of-difference to make them points-of-parity:
▪ Or to strengthen or establish new points-of-
difference

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Developing a Good Positioning
• A good positioning:
– Has a foot in the present and a foot in the future:
▪ Needs to be somewhat aspirational so that the brand
has room to grow and improve
– Is careful to identify all relevant points-of-parity:
▪ Don’t overlook or ignore crucial areas where the brand
is potentially disadvantaged
– Should reflect a consumer point of view in terms of the
benefits that consumers derive from the brand
– Recognizes that a duality exists in the positioning of a
brand:
▪ Rational and emotional components

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Defining a Brand Mantra
• Brands may span multiple product categories and may
have multiple distinct—yet related—positionings
• As brands evolve and expand across categories:
– Marketers will want to craft a brand mantra that
reflects the essential heart and soul of the brand

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Brand Mantra
• Short, three-to five-word phrase:
– 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

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Thank You

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