CHAPTER 2:

CUSTOMER-BASED BRAND EQUITY

Kevin Lane Keller

Tuck School of Business
Dartmouth College

2.1

Customer-Based Brand
Equity

The differential effect that brand

knowledge has on consumer
response to the marketing of that
brand.
Keller, 1993

2.2

Customer-Based Brand
Equity

Differential effect

Brand knowledge

Differences in consumer response

A result of consumers knowledge about the
brand

Consumer response to marketing

Choice of a brand
Recall of copy points from an ad
Response to a sales promotion
Evaluations of a proposed brand extension

2.3

Brand Equity as a Bridge

Reflection of past investments in the

marketing of a brand
Direction for future marketing
actions or programs

2.4

Making a Brand Strong:

Brand Knowledge

Brand knowledge is the key to

creating brand equity.
Brand knowledge consists of a brand
node in memory with a variety of
associations linked to it.
Brand knowledge has two
components: brand awareness and
brand image.
2.5

Sources of Brand Equity

Brand awareness
Brand recognition
Brand recall

Brand image

Strong, favorable, and unique brand

associations

2.6

Brand Awareness
Advantages

Learning advantages

Consideration advantages

Register the brand in the minds of

consumers
Likelihood that the brand will be a
member of the consideration set

Choice advantages

Affect choices among brands in the

consideration set
2.7

Establishing Brand
Awareness

Increasing the familiarity of the

brand through repeated exposure
(for brand recognition)
Forging strong associations with the
appropriate product category or
other relevant purchase or
consumption cues (for brand recall)

2.8

Creating a Positive
Brand Image

Brand Associations
Does not matter which source of brand
association
Need to be favorable, strong, and unique
Marketers should recognize the influence
of these other sources of information by
both managing them as well as possible
and by adequately accounting for them in
designing communication strategies.

2.9

The Four Steps of Brand

Building
1.

2.

3.

4.

Ensure identification of the brand with

customers and an association of the brand
in customers minds
Establish the totality of brand meaning in
the minds of consumers
Elicit the proper customer responses to the
brand identification and brand meaning
Convert brand response to create an
intense, active loyalty relationship between
customers and the brand
2.10

Four Questions Customers ask

of Brands
1.
2.
3.

4.

Who are you? (brand identity)

What are you? (brand meaning)
What about you? What do I think or
feel about you? (brand responses)
What about you and me? What kind
of association and how much of a
connection would I like to have
with you? (brand relationships)
2.11

Customer-Based Brand Equity

Pyramid
RESONANCE

JUDGMENTS

PERFORMANCE

FEELINGS

IMAGERY

SALIENCE

4.RELATIONSHIPS=
4.RELATIONSHIPS=
Whataboutyouandme?
Whataboutyouandme?

3.RESPONSE=
3.RESPONSE=
Whataboutyou?
Whataboutyou?

2.MEANING=
2.MEANING=
Whatareyou?
Whatareyou?

1.IDENTITY=
1.IDENTITY=

Whoareyou?
2.12Whoareyou?

Sub-Dimensions of CBBE
Pyramid
LOYALTY
ATTACHMENT
COMMUNITY
ENGAGEMENT

QUALITY
CREDIBILITY
CONSIDERATION
SUPERIORITY

PRIMARYCHARACTERISTICS&
SECONDARYFEATURES
PRODUCTRELIABILITY,DURABILITY
&SERVICEABILITY
SERVICEEFFECTIVENESS,
EFFICIENCY&EMPATHY
STYLEANDDESIGN
PRICE

WARMTH
FUN
EXCITEMENT
SECURITY
SOCIALAPPROVAL
SELFRESPECT

USERPROFILES
PURCHASE&USAGE
SITUATIONS
PERSONALITY&
VALUES
HISTORY,HERITAGE
&EXPERIENCES

CATEGORYIDENTIFICATION
NEEDSSATISFIED

Salience Dimensions

Depth of brand awareness

Ease of recognition and recall
Strength and clarity of category
membership

Breadth of brand awareness

Purchase consideration
Consumption consideration

2.14

Depth and Breadth

Importance

The product category hierarchy

shows us not only the depth of
awareness matters but also the
breadth.
The brand must not only be top-ofmind and have sufficient mind
share, but it must also do so at the
right times and places.
2.15

Product Category
Structure

To fully understand brand recall, we

need to appreciate product category
structure, or how product categories
are organized in memory.

2.16

Performance Dimensions

Primary characteristics and

supplementary features

Product reliability, durability, and

serviceability

Service effectiveness, efficiency, and

empathy

Style and design

Price

2.17

Imagery Dimensions

User profiles

Purchase and usage situations

Type of channel, specific stores, ease of purchase

Time (day, week, month, year, etc.), location, and context of
usage

Personality and values

Demographic and psychographic characteristics

Actual or aspirational
Group perceptionspopularity

Sincerity, excitement, competence, sophistication, and

ruggedness

History, heritage, and experiences

Nostalgia
Memories

2.18

Judgment Dimensions

Brand quality

Value
Satisfaction

Brand credibility

Expertise
Trustworthiness
Likeability

Brand
consideration

Relevance

Brand superiority

Differentiation

2.19

Feelings Dimensions

Warmth
Fun
Excitement
Security
Social Approval
Self-respect

2.20

Resonance Dimensions

Behavioral loyalty

Attitudinal attachment

Love brand (favorite possessions; a little

pleasure)
Proud of brand

Sense of community

Frequency and amount of repeat purchases

Kinship
Affiliation

Active engagement

Seek information
Join club
Visit website, chat rooms

2.21

Customer-Based Brand Equity

Model
INTENSE,ACTIVE
INTENSE,ACTIVE
LOYALTY
LOYALTY

Consumer
Brand
Resonance

Consumer
Judgments

Brand
Performance

Consumer
Feelings

Brand
Imagery

BrandSalience

RATIONAL&
RATIONAL&
EMOTIONAL
EMOTIONAL
REACTIONS
REACTIONS
POINTSOF
POINTSOF
PARITY&
PARITY&
POINTSOF
POINTSOF
DIFFERENCE
DIFFERENCE
DEEP,BROAD
DEEP,BROAD
BRAND
BRAND
AWARENESS
AWARENESS

J-2

J-1

2
J-1

J-

P3

11
J-

P-2

Judgment

Resonance

P-10

R-10
F-2

F3

F-1

11
F-

I- 3

I-1

I-12

I-2

0
F-1

1
I-1

R-4

5
R-

F-4

R-6

Feelings

R-7

R-8

I-4

R9

0.58

0.24

Imagery

2
F-1

0.66

0.17

R3

J-6

J-7

J-8

5
J-

J9

P-6

P-7

P-8

5
P-

P9

0.49

R-2

J-4

R-1

0.65

2
R-1

P-4

11
R-

P-1

2
P-1

Performance

0
J-1

11
P-

Application:
Identify the Key Drivers of
Brand Equity

F-6

F-7

F-8

5
F-

F9

I- 6

I-7

I- 8

I-5

I-10
I- 9

Brand Building
Implications

Customers own brands.

Dont take shortcuts with brands.
Brands should have a duality.
Brands should have richness.
Brand resonance provides important
focus.

2.24

Creating Customer Value

Customer-brand relationships are

the foundation of brand resonance
and building a strong brand.
The customer-based brand equity
model certainly puts that notion
front and center.

2.25

Is a company consumercentric?
1.

2.

3.
4.

5.

Is the company looking for ways to take

care of you?
Does the company know its customers
well enough to differentiate between
them?
Is someone accountable for customers?
Is the company managed for shareholder
value?
Is the company testing new customer
offers and learning from the results?
Sources: Larry Selden and Geoffrey Colvin, 2004.

2.26

Customer Relationship
Management (CRM)

Uses a companys data systems and

applications to track consumer
activity and manage customer
interactions with the company

2.27

Customer Equity

Blattberg and Deighton (1996) offer eight guidelines as

a means of maximizing customer equity:

Invest in highest-value customers first

Transform product management into customer management
Consider how add-on sales and cross-selling can increase
customer equity
Look for ways to reduce acquisition costs
Track customer equity gains and losses against marketing
programs
Relate branding to customer equity
Monitor the intrinsic retainability of your customer
Consider writing separate marketing plansor even building two
marketing organizationsfor acquisition and retention efforts

2.28

Customer Equity

The sum of lifetime values of all

customers
Customer lifetime value (CLV) is affected
by revenue and by the cost of customer
acquisition, retention, and cross-selling
Consists of three components:
Value equity
Brand equity
Relationship equity

Rust, Zeithamal & Lemon, 2004

2.29

Relationship of Customer
Equity to Brand Equity

Customers drive the success of brands but

brands are the necessary touchpoint that
firms have to connect with their
customers.
Customer-based brand equity maintains
that brands create value by eliciting
differential customer response to
marketing activities.
The higher price premiums and increased
levels of loyalty engendered by brands
generate incremental cash flows.
2.30