Customer Based Brand Equity

Imagine walking in aisle of a typical super market (Shaw’s, Costco etc) to purchase salt, there are many offerings but choice is “Morton”. It is a simple example but a great situation to understand brand and brand equity. Companies already know that identity of product created over period of time through strategic marketing is brand, but now what is “Brand Equity”.

From customer’s point of view, association created which results in favorable and positive action towards a brand, in context with other product can be referred as brand equity. If that action is in favor of any brand than is positive brand equity and that action is not favorable than its negative brand equity. Therefore in the above example, action of consumer in purchasing “Morton” is suggesting positive brand equity. And since this brand equity is from customer’s perspective, Customer Based Brand Equity.

Brand equity is a good barometer to understand past action and future course of action for marketers, who are active in formulating strategies for a given brand. If in present, customer has developed favorable attitude towards the brand then it is a clear indication that past investment (time, money, etc) have found there mark. The present also leads the way how marketers should plan future course, as to achieve desired results. But one aspect is absolutely clear that brand knowledge is a key factor in establishing brand equity.

To further stress point of brand knowledge, an experiment was conducted by Larry Percy with respect to brand equity using Beer as product. Aim was to understand consumer response for the same brands under two different set ups. The first set up was where consumer had no knowledge about the brand and in the second next set up, brand name was not disclosed. Result showed that consumer were highly critical of preferred beer when they were not aware of brand. A favorable response was recorded after brand disclosure, leading to conclusion that brand knowledge contributes a lot in understanding customer based brand equity.

Brand knowledge which is crucial in evolution of brand equity consists of brand awareness and brand image. Here brand awareness means the ability created by brand with which consumer can recall and recognize in any given environment.

On the other hand brand image are visuals, logo, style etc with which brand is associated. Customer based brand equity results in creation of strong brand and this is achieved when brand awareness and image are at high level. But how to create a strong brand based brand equity ?

A thing to understand here is that brand equity resides in the mind of the customer, so conviction has to be brought in strategy as to permanently occupy consumer mind space. The process is like climbing a ladder, one step at a time. And at each step an objective is achieved creating leading to a strong brand.

  1. First step is to establish a relation between customer need and product offering, meaning for given product the brand is the best customer can get. This is done by appropriate brand awareness and image.

  2. Second step is connection, by churning out predictable, reliable and quality performance during each purchase. This establishes imprint in customer’s mind which further can be cemented by visual, logos, packaging, quality, customer service, warranty, etc.

  3. Next create emotional connection with customer using brand offering and brand image as to generate response from the customer. The emotional level response in form of positive reaction or opinion brand creates long term, sustainable and healthy relationship.

    A classic example here would be of “Google” and “Apple”. Both these brands have become synonymous with search engine and entertainment in mind of customers.

When brand is able to achieve sense of oneness with its consumer then it can be said that strong brand has been created.

Companies tend to benefit a lot, in terms loyalty as consumer will stick to the brand no matter what price premium they have to shell out. These consumers become sort of brand ambassador and recommending usage of brand. There by creating consumer based brand equity.

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Customer Relationship Management