Advanced Marketing 4

Advanced Marketing / Chapter 4: Brand Equity

CHART 1

christian.bluemelhuber@ulb.ac.be

Euromarketing // ULB

ADVANCED MARKETING

BRAND EQUITY!Brand definition

!Driver, dimensions, and consequences of brand equity

!Brand management: brand architcture, positioning,

understanding brand representations

!How to measure brand equity

CHART 2

Euromarketing // ULBSource: Prof. Susan Fournier

Branding Benefits ...

! Aids in decision making

" Reduces search costs

" Provides information

" Reduces risk(psychological & financial)

" Simplifies of decisionmaking

! Transforms the consumption

experience

" Provides predictablequality

" Provides comfort andreassurance

" Provides a "badge"

!Source of sustainable competitive

advantage

" Differentiation

" Price premiums

" Channel power

" Increased effectiveness ofmarketing programs

" Increased efficiency of marketingprograms

!Scale and scope economies in customeracquisition and retention

" Encourages trial of new products,cross sales

!Asset with market value

!Employee attraction/retention

… the Customer… the Firm

CHART 3

WHEN BRAND EQUITY MATTERS MOST

!When there are purchases requiring only low levels of

involvement and simple decision processes

!When product/service is highly visible to others

!When experiences associated with the product/service can be

passed from one individual or generation to the next

!When it is difficult to evaluate the quality of a product or

service prior to consumption

CHART 4

KEY DRIVERS OF BRAND EQUITY

RUST/ZEITHAML/LEMON

BRANDAWARENESS

CUSTOMERATTITUDE

TW. BRAND

PERCEPTION OFBRAND ETHICS/

BEHAVIOR

BRANDEQUITY

BRAND KNOWLEDGE

DRIVER

CHART 5

Source:

Business Week,

August/2/2004,

p. 69.

THE WORLDs STRONGEST BRANDSINTERBRAND

CHART 6

Esch, F.-R./Wicke, A.: Herausforderungen und Aufgaben desMarkenmanagements, in: Esch: Moderne Markenführung, 1999, p. 7.

51% 44%

prefer

preference

prefer

preference

brandedtest

THE REAL „PEPSI TEST“...

CHART 7

Source: Sattler, H./Högl, S., Hupp, O.: Evaluation of the Financial Value of Brands, in: ESOMAR - The World

As-sociation of Research Professionals (Hrsg.): Excellence in International Research, Vol. 4, 2003, p. 75-96.

SHARE OF BRAND VALUES IN THE TOTALCOMPANY VALUE OF DIFF. INDUSTRIES

Fast movingconsumer

Durableconsumer

Services Industrialgoods

CHART 8

you can´t be expected to knoweverything about every product.If the label LANDS´END is in it,that´s all you really need toknow.Gary Comer, Founder of Land´s End

A REALLY STRONG BRAND: LANDS´ END

CHART 9

DEFINITIONS

Brand: A name, term, sign, symbol or design, or a combination of them which

is intended to identify the goods or services of one seller or group of sellers

to differentiate them from those of competitors!

AMA 1960

Brands are „simply a collection of perceptions held in the

mind of the consumer“.

Fournier 1998

Source: Fournier, Susan: Consumers and Their Brands, in: Journal of Consumer Research, Vol. 24, March 1998, S. 345.

CHART 10

TWO MORE IDEAS:

BLUEMELHUBER/MEYER

A brand is a (produced and controlled) schemata which can be recalled via

specific symbols (signs).

BRAND BRICOLAGE

BRANDS ARE… # SCHEMATA (Customer´s interpretation count)

# INDIVIDUAL

# TEMPORARY (updating of brand)

# HIJCAKED (consumers seizing control)

CHART 11

Marketing

Program

Investment

Customer

Mindset

Market

PerformanceShareholder

value stages

Investor

Sentiment

Marketplace

Conditions

Program

Quality

Quelle: Keller, K.L.: Strategic Brand Management, 3rd ed., Upper Saddle River 2003, S. 391

BRAND VALUE CHAIN

multiplier

CHART 12

BRANDBRAND-

„Benefits“BRAND-

„input“

! Brand Elements

! Positioning/ Identity

! Marketing Programs

! Customer Input

! Brand as asset

! Brand Benefits for

Customer

! Benefits for Company

KNOWLEDGE

AWARENESS

THE BRAND SYSTEM

Brand Equity

CHART 13

BRAND EQUITY: DEFINITIONS

“…brand equity stems from the greater confidence that

consumers place in a brand then they do in its competitors. This

confidence translates into consumer´s loyalty and their

willingness to pay a premium price for the brand”

Walfried Lassar et al.., Measuring customer-based brand equity, Journal of Consumer

Marketing, Vol. 12, No. 4, 1995, S. 11.

“…brand equity is the incremental value of a product due to the

brand”e.g., Boonghee Yoo & Naveen Donthu: Developing and validating a multidimensional

consumer-based brand equity scale, Journal of Business Research, 52, 2000, S.2f.

CHART 14

Brand Equity

Brand Awareness

Brand Loyalty

Perceived Quality

Brand Associations

Other Brand Assets (Comp.Adv.)

Provides Value to customer

by enhancing customers´:

Interpretation, processing of

information

Confidence in the purchase decision

Use satisfaction

Provides Value to firm by

enhancing:

Efficiency and effectiveness of

marketing programs,

Brand loyalty, Prices, margins,

Brand extension,Trade leverage,

Competetive advantage

Quelle: Aaker, D.A.: Building Strong Brands, New York 2003

BRAND EQUITY MODEL BY DAVID A. AAKER

CHART 15

Brand-Building Toolsand Objectives

Consumer KnowledgeEffects Branding Benefits

Brand Awareness

Brand Associations

Possible

OutcomesBrand Elements

Marketing

Programs

Secondary

Assoc.

Breadth

Strong

Favorable

Unique

Quelle: Keller, K.L.: Strategic Brand Management, 3rd ed., Upper Saddle River 2003, S. 46

BRAND EQUITY MODEL BY KEVINE L. KELLER

CHART 16

Build Awareness and Attract

Customers

Build Emotional Connections with

Customers

Reminds Customers to Repurchase

HOW BRAND EQUITY WORKS

CHART 17

KEY DRIVERS OF BRAND EQUITYRUST/ZEITHAML/LEMON

BRANDAWARENESS

CUSTOMERATTITUDETW. BRAND

PERCEPTION OFBRAND ETHICS/BEHAVIOR

"Communications Mix

"Media

"Message

"Brand Extensions

"Brand Partners

"Product Placement & Endorsers

"Policy and Standards

"Hiring Practices

"Guarantees

CHART 18

MEASURES

BRAND AWARENESS

Recall

Recognition

“…degree to which consumers automatically think of a

brand when a given category is mentioned”(Netemeyer et al., 2004, S. 210)

BREADTH

// top-of-mind awareness

Prerequisite fur success

CHART 19

BRAND ATTITUDES

! are understood as a predisposition to respond in a consitent

manner to a stimulus

! Tendency to act or behave on some predictable way

! Attitudes are usually represented as beeing" positive or negative

" favorable or unfavorable

! A are formed as a result of personal experience, reasoning or

information, communicated expereince of others

! A are a major outcome of learning processes

! 3 components of attitudes.

CHART 20

ATTITUDES AND BEHAVIOR

Attitudes Behavior

INFORMATION

REASON

EXPERIENCEBELIEFS AFFECT INTENSIONS BEHAVIOR

Attitudes Behavior!ATTITUDE-BAHAVIOR CONSISTENCY

" Acc. To Festingers view that humans strive toward the reduction of

dissonance:

" pressure to reconcile attitude with actions by modifying the former

CHART 21

IMAGE / ATTITUDES TW. THE BRAND

Stimuli:

Products, situations,

retail outlets, sales

personnel,

advertisements, and

other attitude objects

Overall

orientation

toward object

AFFECTIVE

BEHAVIORAL

COGNITIVE

Emotions or feelings about

specific attributes or overall

object

Beliefs about specific

attributes or overall object

Behavioral intentions with

respect to specific attributes or

overall object

Initiator Component Component manifestation Attitude

CHART 22

MULTIATTRIBUTE ATTITUDE MODELS

! A consumer´s attitude (evaluation) toward attitude object (Ao) depends on the beliefs heor she has about several attributes of the objectconceptal fluency

" Attributes: Characteristibs of object

" Beliefs: cognitions about specific Ao; extent to which consumer percieves taht abrand posseses a particular attribute

" Importance weights: relative importance of an attribute to a consumer

! Fishbein ModelAjik = !ßijk Iik

i attribute

j brand

k consumer

I importance weight

ß belief

A attitude score

CHART 23

ATTRIBUTE

beliefs (1-10)

SOLVAY INSEAD VLEUSMITHimportance

Academic reputation 5 5 9 3 2

Library facilities 4 3 6 3 8

Party atmosphere 3 7 2 3 10

Quality of teaching 5 8 8 2 3

Cost 2 7 3 9 9

Woman (share) 2 8 8 4 5

Attitude score 128 137 72 115

THE SOLVAY STRATEGY?

EXAMPLE

CHART 24

CHANGE ATTITUDES: PERSUASION

Persuasionuse of communication to change attitudes in order to change behavior(definition by Foxall, Goldsmith & Brown, p. 117)

determine impact of comm

message andreciever

source andchannel

!main source characteristics: credibility,attractiveness, power

!source forgetting, source amnesia

!channel: non-marketer dominated andformal, marketer-dominated

!2step flow of communication hypothesis

!Specific information that the marketerbelieves will change consumer´s attitude:encoding and decoding

!Often used: social consequences (fear),humor

!one- or two-side appeal?

!repetition and frequency

!receiver: amount of existing knowledge,strength with which att. are held, lifestyle,norms, etc.

!experts vs. novices

CHART 25

Culture

Subcultures

Social class

Family

Friends

Institutions

Personal

experiences

Advertising

Mass media

Learning

!Associations

!Values

!Attitudes

!Tastes

!Preferences

!Skills

!Feelings

!Products/brandfeatures

!Symbolicmeanings

!Behaviors

Purchase

and use

behaviors

BRANDS ARE LEARNED!

CHART 26

BRAND ASSOCIATIONS

" nodes: brand, product, association

" links between associations

" Number of associations

" Strengths of associations

" Valence of associations (positive, negative)

" Uniqueness of associations

" “Origin”” o f association

STRONG BRANDS SHOW

" More associations

" Positive associations.

" Unique associations

" Associations from direct experience and WOM

CHART 27

LEARNING

Cognitive Learning Behavioral Learning

!Classical conditioning

!Instrumental learning

!Rote or verbal learning

!Social or vicariouslearning

!Information processingor reasoning

Changes that take place within the content or

organization of LTM

Outcome is determined by the receiver´sintellectual functioning and rationalprocessing of information

learning by experience

CHART 28

COGNITIVE LEARNING

!Rote Learning" Customers are repeatedly exposed to information, which they simply

memorize without paying much attention

" Incidental learning: in addition to simply being stored in memory, theselearned bits may become associated with other chunks in the mind,forming weak beliefs and feelings about the brand

!Learning Vicarious" Observational learning, imitate behavior of others

" Eg., shopping interaction with sales clerks, brand consumption

CHART 29

INFORMATION PROCESSING

EXPOSURE PREATTENTION FOCAL ATT. COMPREHENSION ELABORATION

MEMORY

containing:"Beliefs

"Feelings

"Associations

"Schemata

"Scripts

Centralroute

Peripheralroute

"Contact with stimulus

"Limitations of consumers

"Attention = amount of mental effort

or cognitive capacity allocated by

individual to stimulus

"Content is deciphered

"Mind retrieves info from memory and

uses it to assign meaning to elements of

contents, forming new representations

"Mental network

"Cognitive structure

Elaboration likelihood

CHART 30

INVOLVEMENT

TYPES OF INVOLVEMENT

!Situational involvement - i as a process" Communication involvement

" Situational involvement

" Response involvement

!Enduring involvement - i as a state" Ego involvement

" Commitment

" Produt enthusiasm

InvolvementThe relative importance of perceived consequences of the

purchase to the consumer

CHART 31

SOME DEFINITIONS / CONCEPTS

Decision processesLow-involvement purchase High-involvement purchase

Nominal decision making Limited decision making Extended decision making

Problem Recognition:

Selective

Generic

Information Search:

Limited internal

Information Search:

Internal / Limited external

Information Search:

Internal / External

Alternative evaluation:

Few attributes / few

alternative / simple rules

Alternative evaluation:

many attributes / many

alternative / complex rules

Postpurchase:

No dissonance / very limited

evaluation

Postpurchase:

No dissonance / limited

evaluation

Postpurchase:

Dissonance / complex

evaluation

CHART 32

CLASSICAL CONDITIONING

NEUTRAL

STIMULUS (NS)

UNCONDITIONED

STIMULUS (US)

KONDIT.

INITIALLY

UNCONDITIONED

REACTION (UR)

NEUTRAL

STIMULUS (NS)

UNCONDITIONED

REACTION (UR)

CONDITIONED

REACTION (UR)

UNCONDITIONED

STIMULUS (US)

CHART 33

CLASSICAL CONDITIONING

!Repetition" Neutral (conditioned. CS) and unconditional stimuli must have been paired a

number of times

!Stimulus generalization" Tendency of stimuli similar to a CS to evoke similar, conditioned responses

" Me-too products, extensions, etc.

!Stimulus discrimination" Occurs when a UCS does not follow a stimulus similar to a CS

" Reactions are weakend and will soon disappear

" Cheap imitations

CHART 34

LEARNING INSTRUMENTALLY:OPERANT CONDITIONING

!Behavior is explained in terms or the individual´s learning history: the kinds ofrespones he or she has performed and their reinforcing and punishingconsequences.

SD DISCRIMINATIVE

STIMULIR RESPONSE SR REINFORCING

STIMULI

!NEGATIVE REINFORCEMENT: remove or avoid a consequence

!POSITIVE REINFORCEMENT: reinforcers are accepted

!PRIMARY REINFORCERS: unconditioned or unlearned

!SECONDARY REINFORCERS: learned or conditioned

CHART 35

EXPLICIT, DECLARATIVE MEMORY

semanticmemory

episodicmemory

source: Tulving // Lee 2002

MEMORY SYSTEMS (LTM)

conceptualpriming

perceptualpriming

IMPLICIT, PROCEDURAL MEMORY

skills

CHART 36

TWO TYPES OF LONG TERM MEMORY

! Semantic Memory! things people recall without any sense of when they learned them

! includes knowledge about terminology, specific brands and products, and the

rules to use when evaluating a brand

! cognitive differentiation: ability to make distinctions between different

stimulus objects.

! Episodic Memory! includes memories that come tagged with information about when and where

they happened.

! brand image: perceptions about a brand as reflected by the associations held in

consumer memory.

CHART 37

PRIMING

! Subject is given a cue -- eg, a brand name -- that is related to the target. Prime facilitatesthe recognition of the target

! More or less automatic activation of existing pathways. People are ore likely to useinformation they have been recently exposed to.

! Priming: enhanced performance as a result of prior exposure.

! Consequence: Increased fluency

! Perceptual priming" When person is exposed to stimulus, this representation of physical features is

activated and becomes temporarily strengthened

" Enhancement in perceptual fluency of stimulus

! Conceptual priming" Reflects temporarily enhancement of the conceptual fluency

" Stimulus more accessible in memory

CHART 38

ASSOCIATION NETWORK

Swoosh

Michael

Jordan

Durability

Goddness

Athletic

Expensive

Exercise

Running

Reebok

Aerobic

CHART 39

NETWORK THEORIES

! Existing knowledge influences new information

! Updating of a network through new information

Learning through adding new information! Integration of new information into network

! Broadening the evoked set

! Only few repetitions necessary

CARSBRAND

„There is a newcar-brandcalled SMART“

CHART 40

Learning through adjusting the network! Modification of the variables range of values

! More complex, higher processing depth, more repetitions.

LENGTH

DESIGN

BODYPANELS

ETC.„This new brandcalled SMART has anew design and isshorter than 2,5 m.“

NETWORK THEORIES

CHART 41

Learning through reorganization of the network! Seldom, due to high cognitive effort

CITICAR

LENGTH

<2,5 m

„There are differentcar concepts“

_CATEGORY

_CONCEPT-

BRANDING

NETWORK THEORIES

CHART 42

BRAND EQUITY EFFECTS

EFFECTIVENESS

EFFICIENCY

BRANDEQUITY

Brand Exploitation via

Globalisation, Line, and Brand Extensions

Price Premium

Brand Loyalty

Purchase Intention

CHART 43

BRAND LOYALTY

Purchase Related Aspects

Attitudinal Aspects!Commitment

!Idiosyncrasy Credit

!Repeat Purchase

CHART 44

BEHAVIOR/ATTITUDE MATRIX

ATTITUDINAL LOYALTY

MEDIUM

MEDIUM HIGH

RealLoyals

(Stability)

Prospects

VulnerableAllan Baldinger & Joel

Rubinson: Brand Loyalty,

JA 1996, S. 32

CHART 45

Capabilities &

Resources

Business

Portfolio

Brand Architecture

Brand Portfolio

(Overt and latent

demands of current and

potential consumers)

Market

Demands

define drives influences

Resource-based View (RBV) Market-based View (MBV)

A STRATEGIC QUESTION

CHART 46

! Create strong and powerful

brands

! Create synergy

! Achieve clarity and

differentiation of offerings

! Leverage existing brand equity

! Identify current and future

growth opportunities

! A systematic way of organizing a

portfolio – its brands, sub-brands

and platforms and products –

acting as a strategic blueprint for

the future

! Brand architecture is defined by

five dimensions

!Source of Strength

!Brand Scope

!Strategic Logic

!Brand Platforms

!Implementation

Brand Architecture Today Objectives

…from not only a framework for organizing current products/services,but also to a tool that helps lay the foundation for growth opportunities

ROLE OF BRAND ARCHITECTURE TODAY

CHART 47

BRANDED HOUSE HOUSE OF BRANDSSUBBRANDS

ENDORSED BRANDS

BRAND ARCHITECTURE

CHART 48

Invisible Master Brand(House of Brands)

Endorsed Brands

!Master brand

plays a minor

driver role to

transfer

credibility and

positive

associations to

the endorsed

Sub-brands Undera Master Brand

!Both the

master brand

and subbrand

play a driver

role in the

consumer

purchase

process

Dominant Master B.(Branded House)

!The master

brand plays the

dominant role

and drives the

purchase and

experience

!The brands are

independent of the

master brand

!Stand-alone

brands play the

main role in the

consumer’s

purchase decision

!Master brand

plays no role in

this context

STRATEGIES

CHART 49

TOWARDS A BRANDED HOUSE TOWARDS A HOUSE OF B.

BRAND ARCHITECTURE

Unterstützung durch master brand?

" Assoziationen, die den Wert erhöhen

" Glaubwürdigkeit

" Sichtbarkeit

" Kommunikationseffizienz

Wird auch die master brand gestärkt?

Braucht es separate Marken?

" Eigene Assoziationen nötig

" Assoziationen sollen vermieden

werden

" Channel-Konlikte?

" Markenbeziehung nicht gefährden!

Effektivität und Effizienz der Führung

einer neuen Marke

CHART 50

CremeNivea

Hair Care

for Men

Shower

Visage

nurturing products

care as added benefit

Higher Dynamics

Innovation New Target Groups

Strengthening the

Brand Equity

BRAND ARCHITECTURE NIVEA

CHART 51

POTENTION OF A BRAND

brand schema

Brand- Product Schema FIT

strong

highlow

Unique brand

schema

Brand schema

shapes

product schema

Brand schema em-

brances attributes

of competing

products

Brand schema

conform with

product schema

Potential BIG Potential SMALL

Potential NO Potential NOEsch et al

CHART 52

BRAND ZONES ACC. TO KAPFERER

Inner core:

line extension

Outer core:

spontaneous ass.

Brand stretching zone

latent possibilities

FORBIDDEN ZONE:

threat for brand equity

CHART 53

BRAND EXTENSION

Lineextension Categoryextension

Advantages !Facilitate New Product Acceptance(Improve Brand Image, Reduce risk, Increase profitability, Reduce costs

!Provide Feedback Benefits to Parent BrandClarify brand meaning, Bring new customers in, Revitalize the brand

Disadv. !Can Confuse and frustrate

!Can encounter retailer resistance

!Can fail and hurt parent brand image

!Can succeed but cannibalize

!Can succeed but diminish identification

!Can dilute brand meaning

CHART 54

… is a technique in which marketers try to

create associations for a product, brand or

company. It is the place a brand occupies in

a given market as perceived by the target

market. A brand´s position is how potential

buyers see the brand.

POSTIONING

WHAT IS IT?

BE CAREFUL IN INTERPRETING POSITIONING-GRAPHS

CHART 55

POSITIONING 1

CHART 56

AVOID THE FOLLOWING ERRORS

!!UnderpositioningUnderpositioningFailing to present a strong central benefit or reason to buy this brand

!!OverpositioningOverpositioningAdopting such a narrow positioning that some potential customers may overlook

the brand

!!Confused positioningConfused positioningClaiming two or more benefits that contradict each other

!!Irrelevant positioningIrrelevant positioningClaiming a benefit which few prospects care about

!!Doubtful positioningDoubtful positioningClaiming a benefit that people will doubt the brand or company can really deliver

CHART 57

Miller Lite

Colt 45Budweiser

GuinnessCoors

Taste perceptions of six beer brands when the drinker

does NOT know what he/she is drinking.

EXAMPLE: A BEER TEST

A / BLIND TEST

CHART 58

Miller Lite

PabstColt 45

Budweiser

Guinness

Taste perceptions of six beer brands when the drinker

knows what he/she is drinking.

EXAMPLE: A BEER TEST

B / OPEN TEST

CHART 59

POINTS OF PARITY AND

POINTS OF DIFFERENCE

!No reason why not

!may be shared with other brands (Schema, Expectation,

Must-be dimension) to be a credible and legitimate

offering

!Competitive PoP´s

!Competitive advantage

!Reason-why

CHART 60

STARBUCKSPOSITIONING

POP POD

Fast Food Chain

Local Cafe

Supermarket Brand

!Convenience

!Value for money

!Quality

!Image

!Experience

!Freshness

!Convenience!Quality

!Experience

!Price

!Community

CHART 61

STAYING RELEVANT

unawareof trends

drivingtrends

aware of trends andresponsive to them

!all-too common firm

!wake up in surprise

!Firms that closly track

trends and evolution of

Advanced Marketing 4

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