Customer-based brand equity = the differential effect of brand knowledge on consumer response to
the marketing of the brand. A brand is said to have positive (negative) customer-based brand equity
when consumers react more (less) favorably to an element of the marketing mix for the brand than
they do to the same marketing mix element when it is attributed to an unnamed version of the
product or service.
- Occurs when the consumer is familiar with the brand an holds some favorable, strong, and
unique brand associations (brand awareness and brand image) in memory
- Involves consumers’ reactions to an element of the marketing mix for a brand
Two general motivations for studying brand equity
1. Financially based motivation: estimate the value of a brand more precisely for accounting
purposes, merger, acquisition or divestiture purposes
2. Strategy-based motivation: improve marketing productively (due to higher costs, greater
competition and flattening demand in many markets)
o Marketers need more understanding of consumer behavior as a basis for making
better strategic decisions about target market definition and product positioning as
well as better tactical decisions about specific marketing mix actions
o Most valuable asset for improving marketing productivity: knowledge that has been
created about the brand in consumers’ minds from the firm’s investment in previous
marketing programs
Conceptualizing brand equity
1. Marketers should take a broad view of marketing activity for a brand and recognize the
various effects it has on brand knowledge + how changes in brand knowledge affect more
traditional outcome measures (sales)
2. Marketers must realize that the long-term success of all future marketing programs for a
brand is greatly affected by the knowledge about the brand in memory (that has been
established by the firm’s short-term marketing efforts)
BRAND KNOWLEDGE
= Defined in terms of two components: brand awareness and brand image.
- Brand awareness: brand recall and recognition performance by consumers
- Brand image: the set of associations linked to the brand that consumers hold in memory
Brand: a name, term, sign, symbol, or design, or combination of them which intended to identify the
goods and services of one seller/group of sellers and to differentiate them from competitors
individual brand components = brand identities & their totality = the brand.
Associative network memory model: views semantic memory or knowledge as consisting of a set of
nodes (= stored information connected by links that very in strength) and links. Spreading activation
process from node to node determines the extent of retrieval in memory. The strength of association
between the activated node and all linked nodes determines the extent of spreading activation and
the particular information that can be retrieved from memory. (While considering a soft drink
purchase, a consumer may think of Pepsi because of its strong association with the product category.
Consumer knowledge most strongly linked to Pepsi should also then come to mind, such as taste
perceptions, sugar and caffeine content, or recalled images from an advertising campaign).
What properties do the brand node and brand associations have? Relevant dimensions that
distinguish brand knowledge and affect consumer response:
- Awareness of the brand (in terms of brand recall and recognition)
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