1. 2.1
CHAPTER 2:CHAPTER 2:
CUSTOMER-BASED BRAND EQUITYCUSTOMER-BASED BRAND EQUITY
Kevin Lane KellerKevin Lane Keller
Tuck School of BusinessTuck School of Business
Dartmouth CollegeDartmouth College

2. 2.2
Customer-Based Brand EquityCustomer-Based Brand Equity
 ““The differential effect that brand knowledge hasThe differential effect that brand knowledge has
on consumer response to the marketing of thaton consumer response to the marketing of that
brand.”brand.”
Keller, 1993Keller, 1993

3. 2.3
Customer-Based Brand EquityCustomer-Based Brand Equity
 Differential effectDifferential effect
 Differences in consumer responseDifferences in consumer response
 Brand knowledgeBrand knowledge
 A result of consumers’ knowledge about the brandA result of consumers’ knowledge about the brand
 Consumer response to marketingConsumer response to marketing
 Choice of a brandChoice of a brand
 Recall of copy points from an adRecall of copy points from an ad
 Response to a sales promotionResponse to a sales promotion
 Evaluations of a proposed brand extensionEvaluations of a proposed brand extension

4. 2.4
Brand Equity as aBrand Equity as a ““BridgeBridge””
 Reflection ofReflection of pastpast investments in the marketing ofinvestments in the marketing of
a branda brand
 Direction forDirection for futurefuture marketing actions ormarketing actions or
programsprograms

5. 2.5
Making a Brand Strong:Making a Brand Strong:
Brand KnowledgeBrand Knowledge
 Brand knowledge is the key to creating brandBrand knowledge is the key to creating brand
equity.equity.
 Brand knowledge consists of a brand node inBrand knowledge consists of a brand node in
memory with a variety of associations linked tomemory with a variety of associations linked to
it.it.
 Brand knowledge has two components: brandBrand knowledge has two components: brand
awareness and brand image.awareness and brand image.

6. 2.6
Sources of Brand EquitySources of Brand Equity
 Brand awarenessBrand awareness
 Brand recognitionBrand recognition
 Brand recallBrand recall
 Brand imageBrand image
 Strong, favorable, and unique brand associationsStrong, favorable, and unique brand associations

7. 2.7
Brand Awareness AdvantagesBrand Awareness Advantages
 Learning advantagesLearning advantages
 Register the brand in the minds of consumersRegister the brand in the minds of consumers
 Consideration advantagesConsideration advantages
 Likelihood that the brand will be a member of theLikelihood that the brand will be a member of the
consideration setconsideration set
 Choice advantagesChoice advantages
 Affect choices among brands in the considerationAffect choices among brands in the consideration
setset

8. 2.8
Establishing Brand AwarenessEstablishing Brand Awareness
 Increasing the familiarity of the brand throughIncreasing the familiarity of the brand through
repeated exposure (for brand recognition)repeated exposure (for brand recognition)
 forging strong associations with the appropriateforging strong associations with the appropriate
product category or other relevant purchase orproduct category or other relevant purchase or
consumption cues (for brand recall)consumption cues (for brand recall)

9. 2.9
Creating a Positive Brand ImageCreating a Positive Brand Image
 Brand AssociationsBrand Associations
 Does not matter which source of brand associationDoes not matter which source of brand association
 Need to be favorable, strong, and uniqueNeed to be favorable, strong, and unique
 Marketers should recognize the influence of theseMarketers should recognize the influence of these
other sources of information by bothother sources of information by both managingmanaging themthem
as well as possible and by adequatelyas well as possible and by adequately accounting foraccounting for
them in designing communication strategies.them in designing communication strategies.

10. 2.10
The Four Steps of Brand BuildingThe Four Steps of Brand Building
1.1. Ensure identification of the brand with customers andEnsure identification of the brand with customers and
an association of the brand in customers’ mindsan association of the brand in customers’ minds
2.2. Establish the totality of brand meaning in the minds ofEstablish the totality of brand meaning in the minds of
consumersconsumers
3.3. Elicit the proper customer responses to the brandElicit the proper customer responses to the brand
identification and brand meaningidentification and brand meaning
4.4. Convert brand response to create an intense, activeConvert brand response to create an intense, active
loyalty relationship between customers and the brandloyalty relationship between customers and the brand

11. 2.11
Four Questions Customers ask of BrandsFour Questions Customers ask of Brands
1.1. Who are you? (brand identity)Who are you? (brand identity)
2.2. What are you? (brand meaning)What are you? (brand meaning)
3.3. What about you? What do I think or feel aboutWhat about you? What do I think or feel about
you? (brand responses)you? (brand responses)
4.4. What about you and me? What kind ofWhat about you and me? What kind of
association and how much of a connectionassociation and how much of a connection
would I like to have with you? (brandwould I like to have with you? (brand
relationships)relationships)

12. 2.12
Customer-Based Brand Equity PyramidCustomer-Based Brand Equity Pyramid
RESONANCE
SALIENCE
JUDGMENTS FEELINGS
PERFORMANCE IMAGERY
4. RELATIONSHIPS =
What about you and me?
4. RELATIONSHIPS =
What about you and me?
3. RESPONSE =
What about you?
3. RESPONSE =
What about you?
2. MEANING =
What are you?
2. MEANING =
What are you?
1. IDENTITY =
Who are you?
1. IDENTITY =
Who are you?

13. Sub-Dimensions of CBBE PyramidSub-Dimensions of CBBE Pyramid
LOYALTY
ATTACHMENT
COMMUNITY
ENGAGEMENT
QUALITY
CREDIBILITY
CONSIDERATION
SUPERIORITY
WARMTH
FUN
EXCITEMENT
SECURITY
SOCIAL APPROVAL
SELF-RESPECT
CATEGORY IDENTIFICATION
NEEDS SATISFIED
PRIMARY CHARACTERISTICS &
SECONDARY FEATURES
PRODUCT RELIABILITY,
DURABILITY & SERVICEABILITY
SERVICE EFFECTIVENESS,
EFFICIENCY & EMPATHY
STYLE AND DESIGN
PRICE
USER PROFILES
PURCHASE & USAGE
SITUATIONS
PERSONALITY &
VALUES
HISTORY, HERITAGE
& EXPERIENCES

14. 2.14
Salience DimensionsSalience Dimensions
 DepthDepth of brand awarenessof brand awareness
 Ease of recognition and recallEase of recognition and recall
 Strength and clarity of category membershipStrength and clarity of category membership
 BreadthBreadth of brand awarenessof brand awareness
 Purchase considerationPurchase consideration
 Consumption considerationConsumption consideration

15. 2.15
Depth and Breadth ImportanceDepth and Breadth Importance
 The product category hierarchy shows us notThe product category hierarchy shows us not
only the depth of awareness matters but also theonly the depth of awareness matters but also the
breadth.breadth.
 The brand must not only beThe brand must not only be top-of-mindtop-of-mind and haveand have
sufficient “mind share,” but it must also do sosufficient “mind share,” but it must also do so atat
the right times and places.the right times and places.

16. 2.16
Product Category StructureProduct Category Structure
 To fully understand brand recall, we need toTo fully understand brand recall, we need to
appreciateappreciate product category structure,product category structure, or howor how
product categories are organized in memory.product categories are organized in memory.

17. 2.17
Performance DimensionsPerformance Dimensions
 Primary characteristics and supplementary featuresPrimary characteristics and supplementary features
 Product reliability, durability, and serviceabilityProduct reliability, durability, and serviceability
 Service effectiveness, efficiency, and empathyService effectiveness, efficiency, and empathy
 Style and designStyle and design
 PricePrice

18. 2.18
Imagery DimensionsImagery Dimensions
 User profilesUser profiles
 Demographic and psychographic characteristicsDemographic and psychographic characteristics
 Actual or aspirationalActual or aspirational
 Group perceptionsGroup perceptions——popularitypopularity
 Purchase and usage situationsPurchase and usage situations
 Type of channel, specific stores, ease of purchaseType of channel, specific stores, ease of purchase
 Time (day, week, month, year, etc.), location, and context of usageTime (day, week, month, year, etc.), location, and context of usage
 Personality and valuesPersonality and values
 Sincerity, excitement, competence, sophistication, and roughnessSincerity, excitement, competence, sophistication, and roughness
 History, heritage, and experiencesHistory, heritage, and experiences
 NostalgiaNostalgia
 MemoriesMemories

19. 2.19
Judgment DimensionsJudgment Dimensions
 Brand qualityBrand quality
 ValueValue
 SatisfactionSatisfaction
 Brand credibilityBrand credibility
 ExpertiseExpertise
 TrustworthinessTrustworthiness
 LikeabilityLikeability
 Brand considerationBrand consideration
 RelevanceRelevance
 Brand superiorityBrand superiority
 DifferentiationDifferentiation

20. 2.20
Feelings DimensionsFeelings Dimensions
 WarmthWarmth
 FunFun
 ExcitementExcitement
 SecuritySecurity
 Social ApprovalSocial Approval
 Self-respectSelf-respect

21. 2.21
Resonance DimensionsResonance Dimensions
 Behavioral loyaltyBehavioral loyalty
 Frequency and amount of repeat purchasesFrequency and amount of repeat purchases
 Attitudinal attachmentAttitudinal attachment
 Love brand (favorite possessions; “a little pleasure”)Love brand (favorite possessions; “a little pleasure”)
 Proud of brandProud of brand
 Sense of communitySense of community
 KinshipKinship
 AffiliationAffiliation
 Active engagementActive engagement
 Seek informationSeek information
 Join clubJoin club
 Visit website, chat roomsVisit website, chat rooms

22. Customer-Based Brand Equity ModelCustomer-Based Brand Equity Model
Consumer-
Brand
Resonance
Brand Salience
Consumer
Judgments
Consumer
Feelings
Brand
Performance
Brand
Imagery
INTENSE, ACTIVE
LOYALTY
INTENSE, ACTIVE
LOYALTY
RATIONAL &
EMOTIONAL
REACTIONS
RATIONAL &
EMOTIONAL
REACTIONS
POINTS-OF-
PARITY &
POINTS-OF-
DIFFERENCE
POINTS-OF-
PARITY &
POINTS-OF-
DIFFERENCE
DEEP, BROAD
BRAND
AWARENESS
DEEP, BROAD
BRAND
AWARENESS

23. Application:Application:
Identify the Key Drivers of Brand EquityIdentify the Key Drivers of Brand Equity
0.17 0.66
0.24
0.65
P-2
PerformancePerformance
P-1
P-10
P-7
P-8
P-9
P-3
P-4
P-6
P-5
P-11
P-12
I-2
I-9
ImageryImagery
I-1
I-3
I-6
I-5
I-10
I-7
I-8
I-11
I-12
I-4
F-2
FeelingsFeelings
F-1
F-3
F-4
F-6
F-5
F-7
F-8
F-9
F-11
F-12
F-10
J-2
JudgmentJudgment
J-1
J-3
J-4
J-6
J-5
J-10
J-7
J-8
J-9
J-11
J-12
R-2
ResonanceResonance
R-1
R-3
R-4
R-6
R-5
R-10
R-7
R-8
R-9
R-11
R-12
0.58
0.49

24. 2.24
Brand Building ImplicationsBrand Building Implications
 Customers own brands.Customers own brands.
 Don’t take shortcuts with brands.Don’t take shortcuts with brands.
 Brands should have a duality.Brands should have a duality.
 Brands should have richness.Brands should have richness.
 Brand resonance provides important focus.Brand resonance provides important focus.

25. 2.25
Creating Customer ValueCreating Customer Value
 Customer-brand relationships are theCustomer-brand relationships are the
foundation of brand resonance and building afoundation of brand resonance and building a
strong brand.strong brand.
 The customer-based brand equity modelThe customer-based brand equity model
certainly puts that notion front and center.certainly puts that notion front and center.

26. 2.26
Is a company consumer-centric?Is a company consumer-centric?
1.1. Is the company looking for ways to take care ofIs the company looking for ways to take care of
you?you?
2.2. Does the company know its customers wellDoes the company know its customers well
enough to differentiate between them?enough to differentiate between them?
3.3. Is someone accountable for customers?Is someone accountable for customers?
4.4. Is the company managed for shareholder value?Is the company managed for shareholder value?
5.5. Is the company testing new customer offers andIs the company testing new customer offers and
learning from the results?learning from the results?
Sources: Larry Selden and Geoffrey Colvin, 2004.

27. 2.27
Customer Relationship ManagementCustomer Relationship Management
(CRM)(CRM)
 Uses a company’s data systems and applicationsUses a company’s data systems and applications
to track consumer activity and manage customerto track consumer activity and manage customer
interactions with the companyinteractions with the company

28. 2.28
Customer EquityCustomer Equity
 Blattberg and Deighton (1996) offer eight guidelines as a meansBlattberg and Deighton (1996) offer eight guidelines as a means
of maximizing customer equity:of maximizing customer equity:
 Invest in highest-value customers firstInvest in highest-value customers first
 Transform product management into customer managementTransform product management into customer management
 Consider how add-on sales and cross-selling can increase customer equityConsider how add-on sales and cross-selling can increase customer equity
 Look for ways to reduce acquisition costsLook for ways to reduce acquisition costs
 Track customer equity gains and losses against marketing programsTrack customer equity gains and losses against marketing programs
 Relate branding to customer equityRelate branding to customer equity
 Monitor the intrinsic retain ability of your customerMonitor the intrinsic retain ability of your customer
 Consider writing separate marketing plans—or even building twoConsider writing separate marketing plans—or even building two
marketing organizations—for acquisition and retention effortsmarketing organizations—for acquisition and retention efforts

29. 2.29
Customer EquityCustomer Equity
 The sum of lifetime values of all customersThe sum of lifetime values of all customers
 Customer lifetime value (CLV) is affected byCustomer lifetime value (CLV) is affected by
revenue and by the cost of customer acquisition,revenue and by the cost of customer acquisition,
retention, and cross-sellingretention, and cross-selling
 Consists of three components:Consists of three components:
 Value equityValue equity
 Brand equityBrand equity
 Relationship equityRelationship equity
Rust, Zeithamal & Lemon, 2004Rust, Zeithamal & Lemon, 2004

30. 2.30
Relationship of Customer Equity toRelationship of Customer Equity to
Brand EquityBrand Equity
 Customers drive the success of brands butCustomers drive the success of brands but
brands are the necessary touchpoint that firmsbrands are the necessary touchpoint that firms
have to connect with their customers.have to connect with their customers.
 Customer-based brand equity maintains thatCustomer-based brand equity maintains that
brands create value by eliciting differentialbrands create value by eliciting differential
customer response to marketing activities.customer response to marketing activities.
 The higher price premiums and increased levelsThe higher price premiums and increased levels
of loyalty engendered by brands generateof loyalty engendered by brands generate
incremental cash flows.incremental cash flows.