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Strategic Brand Management - Keller
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2.1
CHAPTER 3
BRAND RESONANCE AND
BRAND VALUE CHAIN
Kevin Lane Keller
Tuck School of Business
Dartmouth College
Review from previous chapter
Chapter 2 outlined the concept of CBBE and
introduced a brand positioning model based on
the concepts of point-of-parity and point-of-
difference
This chapter will elaborate two other model; the
brand resonance model and brand value chain
model, which all together make up the brand
planning system
2.2
Brand Resonance and
Brand Value Chain Model
Brand Resonance: describe how to create
intense, active loyalty relationship with
customers – considers how brand positioning
affects what customer think, feel and do and the
degree to which they resonance/connected
Brand Value Chain: by which marketers can
trace the value creation process for their brand
to better understand the financial impact of their
marketing expenditures and investments
2.3
2.4
The Brand Resonance Model
The Four Steps of Brand Building CBBE model looks at building a brand as a sequence of steps, each of
which is contigent on successfully achieving the objectives of the
previous one:
1. Ensure identification of the brand with customers and an
association of the brand in customers’ minds with a specific
product class/consumer need
2. Establish the totality of brand meaning in the minds of
consumers by strategically linking a host of tangible and intangibla
brand associations with certain properties
3. Elicit the proper customer responses to the brand identification
and brand meaning
4. Convert brand response to create an intense, active loyalty
relationship between customers and the brand
2.5
Four Questions Customers ask of Brands
The previous steps represent a set of fundamental
questions that customers invariably ask about the
brands
1. Who are you? (brand identity)
2. What are you? (brand meaning)
3. What about you? What do I think or feel about you?
(brand responses)
4. What about you and me? What kind of association
and how much of a connection would I like to have
with you? (brand relationships)
Customer-Based Brand Equity Pyramid and
its sub-dimensions (rational – emotional)
http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg
The ordering steps in brand
laddering
Cannot establish meaning unless we have
created identity
Responses cannot occur unless we have
developed the right meaning
Cannot forge relationship unless we have
elicited the proper responses
2.7
2.8
Level 1 Salience Dimensions Brand salience measures awareness of the brand:
“how often andeasily the brand is evoked under the various situation?”
Depth of brand awareness
Ease of recognition and recall (how likely for brand element to
come to mind, brand with high recall is stronger than only
recognition)
Strength and clarity of category idenification/ membership
Breadth of brand awareness
The range if Purchase and Usage/Consumption consideration
Brand Salience
2.9
It’s important to understand how critical brand salience is to the
branding process. Brand salience relates to awareness of your
organization and its importance to your audience. This, of
course, translates to the importance of marketing, advertising,
and public relations in your ongoing communications efforts as
they help generate awareness and communicate an organization’s
relative importance, value proposition, and differentiation.
Source: http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg
2.10
Salience: 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-of-mind and have sufficient “mind
share,” but it must also do so at the right times and places.
To fully understand brand recall, we need to appreciate product
category structure, or how product categories are organized in
memory.
The product category hierarchy plays important role in customer
decision making
High brand salience: customer make sufficient purchase as well
as always think of the brand accross variety of setting
Example Drinks Category Hierarchy/Structure
2.11
Level 1
Product Class
Level 2
Product Category
Level 3
Product Type Information
Level 4
Product Info (specific) or
Brand
Product category structure: how product categories are organized in memory
After meal only...
in to other consumption
situation beyond meals ...
(gathering, rilex, thirsty, etc)
2.13
Level 2 Brand Meaning
In brand salience – (e.g. Aware of the brand by knowing the
product category) - is important but not sufficient because the
meaning/image of the brand might also considered
Creating brand meaning includes establishing a brand image – what the
brand is characterized by and should stand for in the minds of
customer
Two major categories of associations in brand meaning:
performance and imagery
Those two categories can be formed directly from customer
experience, advertising, WOM, etc
2.14
Level 2 A Performance Dimensions
“the product” itself is at the heart of Brand Equity
Brand performance: how well the product meets its functional needs,
how well its quality, what extent does the brand satisfy utilitarian asthetic
and economics?
Five types of Brand Attributes and Benefits (that underlie brand performance)
1. Primary characteristics and supplementary features
2. Product reliability (consistency performance over time), durability (expected
economic life of the product), and serviceability the ease of repairing the
product if needed)
3. Service effectiveness(how well it satisfies), efficiency (speed and
responsiveness of services), and empathy (the extent of service providers are
seen as trusting, caring, and having cust. Interest)
4. Style and design (go beyond its functional aspect: e.g. Size, material/sensory)
5. Price (how relative expensive/inexpensive the brand?frequent discount?)
2.16
Level 2 B Imagery Dimensions Depends on the extrinsic properties of the product, incl. The attempts to meet
customer’s psychological and social needs (more intangible)
Many kind intangibles - the way customer think the abstract aspect of the brand – instead
of the brand actually does - can be link to the brand, such as:
User Profiles/Imagery: the type of person or organization who uses the brand
Demographic characteristics (e.g. gender, age, race, income)
Psychographic characteristics (e.g. attitude toward, careers, possessions, social issues)
(in B2B context): e.g. size/type of organization
Purchase and usage Imagery: what conditions/situations they can/should buy the brand
Type of channel (e.g. supermarket, specialty stores, internet), specific stores, ease of purchase
Time (day, week, month, year, etc.), location, and context of usage/type activity (formal/informal)
Brand Personality and values
Sincerity (down-to-earth, honest, wholesome and cheerful), excitement (daring, spirited, imaginative and up-to-date), competence (reliable, intelligent, successful), sophistication (upper class and charming), and ruggedness (outdoor and tough)
History, heritage, and experiences: associations to their past and certain noteworthy events in the brand’s history
Nostalgia
Memories
Performance & Imagery
This level of the pyramid is all about features and visual
representation. That is, everyone who experiences your
brand, regardless of whether it’s a product, service,
individual, etc., will experience and evaluate it based on
a variety of characteristics. Succesfull result of the:
strength, favourability and uniqueness dimension and
sufficient knowledge about brand meaning produce the
most positive brand response. From these experiences,
users will begin to form judgments and feelings about
your brand, which is the next level up on the pyramid.
2.18 Source: http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg
2.19
Level 3 A Judgment Dimensions Brand Judgement: Personal opinions about and evaluation of a brand which consumers
form by putting together all the different brand performance and imagery associations
Four types of Brand Judgement
Brand quality: Judgement of the quality will determine brand attitudes or overall evaluation
of a brand
Value and Satisfaction
Brand credibility (judgement about the the company/organization behind a brand)
Expertise (competent, innovative and market leader?)
Trustworthiness (dependable and keeping customer interest in mind)
Likeability (fun, interesting, and worth spending time with)
Brand consideration
Attitude and perception will not enough if the customer do not consider about the brand from
the very beggining, i.e. how personally relevant customer find the brand? – the extent to which
strong and favorable brand associations can be created as part of the brand image
Brand superiority
The extent to which customer view the brand as uique and better than other brand i.e.
Differentiation
2.20
Level 3 B Feelings Dimensions
Customers’ emotional responses and reactions to
the brand: what feeling are evoked by marketing programs (e.g. Ads)?
Warmth: make customer feel a sense of calm/peacefulness
Fun: upbeat type of feelings; amused, lighearted, joyous etc
Excitement: make customers feel energized, excited
Security: produces feeling of safety, comfort, self-assurance
Social Approval: other looks favourably on their appearance
Self-respect: make consumers feel better about themselves
Judgment & Feeling
the transition level. It’s a critical one because it’s the bridge
between the feature and resonance levels. In this level, users of
your brand form important judgments and feelings about your
brand based on its performance and imagery. If your brand’s
performance is sub-par, your users’ judgments and feelings will
reflect that, never allowing you to achieve brand resonance in
their minds. From a branding, marketing, and public relations
standpoint, much of what you do is based on helping those who
experience your brand to form the judgments and feelings you
desire to help achieve brand resonance.
2.21
2.22
Level 4 Resonance Dimensions
Ultimate relationship, the extent cust feel “in sync” with the brand: two dimensions; Intensity (depth of the physcological bound) and activity engendered by this
loyalty – both divided into four categories:
Behavioral loyalty Frequency and amount of repeat purchases
Attitudinal attachment Love brand (favorite possessions; “a little pleasure”)
Proud of brand
Sense of community Kinship
Affiliation
Active engagement (willing to invest time, energy, money, etc) Seek information
Join club
Visit website, chat rooms
Become brand ambassador/evangelist
Example Brand Resonance
Loyalty: lifetime value of diapers
customers?
1 baby RM100/month x 24-30months =
RM3,000!
Atachment
Sense of community
Engaged
2.23
Resonance
A key difference, however, is that brand resonance
involves two entities, not just one. It is characterized by
incredibly strong connections with a brand, resulting in
intense loyalty by a brand’s users and a stronger ability
of the brand to resist competitive actions taken by
another brand, whether they are financially-based,
related to advertising and marketing, etc. In essence,
brand resonance is like achieving brand nirvana.
2.24
2.25 Source: http://thecadburychocolatier.files.wordpress.com/2012/01/cbbe-sbm-final.jpg
Example: Cadbury CBBE Pyramid
Application:
Identify the Key Drivers of Brand Equity
0.17 0.66
0.24
0.65 Performance
Imagery Feelings
Judgment
Resonance
0.58
0.49
2.27
Brand Building Implications
Customers own brands. (the measure of the
brand-strength is the way consumer think, feel
and act with respect to the brand)
Don’t take shortcuts with brands.
Brands should have a duality. (appeals both heart
and head. Rational and Emotional aspects)
Brands should have richness
Brand resonance provides important focus for
their brand-related marketing activities.
The Brand Value Chain
Developing a strong positioning and building brand
resonance are crucial, but to better understand the ROI
of marketing investment, the BVC tool is necessary
BVC: structured approach to assesing the source and
outcomes of brand equity and the manner by which
marketing activities create brand value
BVC profides insights to support bran managers, chief
marketing officers, managing directors, and CEO
2.28
Value Stages
Stage 1 Marketing Program investment
Stage 2 Customer Mindset as reflected in Brand
Resonance
Stage 3 Market/Brand Performance
Stage 4 Sharehorder Value
With three moderating multipliers:
1. Program Quality multiplier
2. Marketplace condition multiplier
3. Investor sentiment multiplier
2.30
Stage 1 Marketing Program Investment
Any marketing program/investment (product research,
direct/interactive marketing, publicity, etc) can contribute to the
brand value development
It depends on qualitative aspects of the program and program
quality multiplier, i.e.:
Distinctinevess: how unique/creative/differentiating?
Relevance: how meaningful?
Integrated: How well integrated the marketing program, past, present,
future?
Value: how much short/long-run value created? Will it build sales (s/r) or
brand equity (l/r)?
Excellence: is the individual marketing activity designed to satisfy the
highest standard?
Fulfillling all the criteria is likely to achive greater ROI 2.31
Stage 2: Customer Mind-Set
The 5As of customer mind-set (BR) that influence the Brand value:
Deep, Broad brand Awareness,
Favourable, unique and strong POP and POD Associations,
Positive Brand Attitudes (Judgements and Feelings),
Intense brand Attachment and
High degree of Brand Activity
Marketplace Condition Multipliers:
1. Competitive superiority
2. Channel and other intermediary support
3. Customer size and profile
The value in customer’s mind-set will be translated into favorable
performance if no significant threat from competitor, support from
distribution channels and sizable profitable customers that are attracted to
the brand - exist
2.32
Stage 3: Market Performance
The customer mind-set affects customer’s reactions
Price premiums and demand elasticity of the brand
Brand sales leads to market share
The ability to expand the brand (brand extension or new-brand into
related categories)
Cost structure (due to reduces marketing expenditures)
All factors above lead to Brand Profitability
The ability of the brand value to reach the final stage (stock market valuation)
depends on the Investor sentiment multiplier
1. Market dynamic (interest rates, supply of capital, etc)
2. Growth potential (prospects of the brand at the current industry)
3. Risk profile (how vulnerable the brand?)
4. Brand contribution (how important is the brand to the firm portfolio?)
2.33
Stage 4: Shareholder Value
Based on current and forecasted information
about a brand as well as many other
considerations, the financial marketplace
formulates assessments and opinion that have
very direct implications for the brand value
Three important indicators
1. Stock price
2. Price/earnings multiple, and
3. Market capitalization for the firm
2.34
Implications of BVC
According to BVC, marketers create value first by making
shrewd investments in their marketing program and then
maximising, as much as possible, the program, customer, and
market multiplier that translate the investment into financial
benefits
Implications of BVC:
1. Value creation begins with the marketing program investment – should
be well-funded, well-designed, well-implemented
2. Value creation require more than marketing invest,ent, because each of
the three multipliers can increase/decrease market value
3. This BVC provides a detailed road map for tracking value creation that
make marketing research and marketing intelligence efforts easier
2.35
The Brand Planning Model
2.36
POPs PODs
1. Brand Positioning Model
2. Brand Resonance Model
3. Brand Value Chain Model
2.37
Customer Equity
Other than CRM, some Marketing observers encourage firm to formally define and manage the value of their customers
CE: 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 (Rust, Zeithamal & Lemon, 2004)
Value equity (objective assessment benefit minus cost)
Brand equity (subjective assessment, above & beyond value)
Relationship equity (cust tendency to stick with the brand, above and beyond subjective assesment)
2.38
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 plans—or even building two marketing organizations—for acquisition and retention efforts
2.39
Relationship of Customer Equity to
Brand Equity
One way to reconcile the two is to combine both into a matrix, manade and decide the optimal marketing solutions/combinations
Brand and Customer Management: CUSTOMERS
Segment1 Segment2 Segment N
B
R
A
N
D
Brand 1
Brand 2
Brand M
Reconciling the two points of
views Customers drive the success of brands but brands are
the necessary touch-point that firms have to connect
with their customers.
CBBE maintains that brands create value by eliciting
differential consumer response to marketing activities
In practice; CE and BE are complementary notions
with different emphasis: BE emphasizes on “front end”
of marketing program and intangible value potentially
created by Marketing Program; CE emphasis on “back
end” of marketing programs and the realized value of
marketing activities in term of revenue 2.41
Background: Viagra
Pfizer launched Viagra 1998
Treatment of erectile dysfunction (ED) (male impotence)
150 million men worldwide suffer (50% of all between age 40 and 70)
Immediate success - 600 000 prescriptions filled in first month
Viagra set back - deaths reported
Viagra regained confidence
$ 1.8 billion sales (2007)
2.43
The Cialis case
How to segment the market and position a follower product
Viagra well positioned and well-known
Cialis unknown
How to communicate to target audience
Patients
Partners
Doctors
How to price the new product
Competitive response from Pfizer
2.45
Segmentation criteria
Demographics
Age
Income
Education
Viagra usage status
Current Viagra users
Viagra dropouts
Never tried Viagra
Benefit of duration
2.46
Segmentation: Age
Strong correlate between age and reason
for not seeking treatment
Young patients: Temporary condition
Old patients: Natural aging process
The rest: Embarrassed and temporary
condition
2.47
Segmentation: Usage status
Current Viagra users
Experience with ED
Good grasp of duration attribute
Most willing to try new drugs that offer improvement in key dimension
Smallest segment
Viagra dropouts Some experience with ED
Duration probably not key dimension for dropout
Maybe hard to treat group
Viagra never used Very large segment, but no usage familiarity
Duration not important, but safety important
2.48
Positioning and Pricing
Vertical positioning
36 is much better than 4?
Horizontal positioning
Attitude towards sex: Wild, naughty activity vs. romance
Viagra is priced at $10 (without health coverage)
Pay more for better performance?
If benefit is positioned more horizontally than vertically, unclear if higher charge is
appropriate
If affluent consumer are targeted, higher price OK
If going for broad appeal, consider lower price
2.49
Communication strategy
Communicate to whom?
Patients
Partners
Doctors
Insurance companies
Regulators
Media
2.50