Customer-based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable, and unique brand associations in memory. In some cases, brand awareness alone is sufficient to result in more favorable consumer response, for example, in low-involvement decision settings in which consumers lack motivation or ability and are willing to base their choices merely on familiar brands. In other cases, the strength, favorability, and uniqueness of the brand associations help determine the differential response making up the brand equity. The dimensions of brand associations depend on three factors:

1. Strength: The strength of a brand association is a function of both the amount, or quantity, of processing that information initially receives, and the nature, or quality, of the processing. The more deeply a person thinks about brand information and relates it to existing brand knowledge, the stronger the resulting brand associations. The personal relevance of the information and the consistency with which the consumer sees it over time both strengthen the association.

2. Favorability: Favorable associations for a brand are those that are desirable to customers, successfully delivered by the product, and conveyed by the supporting marketing program. They can relate to the product or to intangible, non-product-related aspects like usage or user imagery. However, consumers will not deem all brand associations important or view them all favorably, nor will they value them equally across different purchase or consumption situations.

3. Uniqueness: To create the differential response that leads to customer-based brand equity, marketers need to associate unique, meaningful points-of-difference to the brand that provide a competitive advantage and a “reason why” consumers should buy it. For other brand associations, however, being comparable or roughly equal in favorability to competing associations might be enough. The brand’s associations function as points-of-parity in consumers’ minds to establish category membership and negate potential points-of-difference for competitors. In other words, they are designed to provide “no reason why not” to choose the brand.

Figure 15-2 summarizes these broad conceptual guidelines for creating desired brand knowledge structures.

Assuming we can create a positive brand image, with marketing programs that register the brand in memory and link it to strong, favorable, and unique associations, we can realize a number of benefits for the brand, as follows:

• Improved perceptions of product performance

• Greater customer loyalty

• Less vulnerability to competitive marketing actions

• Less vulnerability to marketing crises

• Higher margins

• More inelastic consumer response to price increases

• More elastic consumer response to price decreases

• Greater trade cooperation and support

• Increased marketing communication effectiveness

• Possible licensing opportunities

• Additional brand extension opportunities

Tactically, we can build brand equity in three major ways: (1) through the initial choice of the brand elements making up the brand, (2) through marketing activities and the design of the marketing program, and (3) through the leverage of secondary associations that link the brand to other entities like a company, geographic region, other brand, person, or event. Guidelines emerged in Chapters 4 –7 for each of these approaches, as summarized in Figures 15-3 and 15-4.

We can gauge brand equity indirectly by measuring its potential sources, and directly by measuring its possible outcomes. This means measuring aspects of brand awareness and brand image leading to the differential customer response that creates brand equity: breadth and depth of brand awareness; the strength, favorability, and uniqueness of brand associations; the valence of brand responses; and the nature of brand relationships. Measuring outcomes requires us to estimate the various benefits from creating these sources of brand equity. The brand value chain depicts this relationship more broadly by considering how marketing activity affects these sources of brand equity, and how the resulting outcomes influence the investment community, as well as how various filters or multipliers intervene between the stages.

Marketers need to properly design and implement a brand equity measurement system, a set of research procedures designed to provide timely, accurate, and actionable information for

marketers about their brands. Implementing a brand equity measurement system has three steps: (1) conducting brand audits, (2) designing brand tracking studies, and (3) establishing a brand equity management system.

Guidelines for each of these areas are summarized in Figure 15-5.

Finally, managing brand equity requires taking a broad, long-term perspective of brands. A broad view of brand equity is critically important, especially when firms are selling multiple products and brands in multiple markets. Here, brand hierarchies must define common and distinct brand elements among various nested products. New product and brand extension strategies also must ensure that we have optimal brand and product portfolios. Finally, we need to manage these brands and products effectively over geographic boundaries and target market segments by creating brand awareness and a positive brand image in each market in which the brand is sold.

We need a long-term view of brand equity because changes in current marketing programs and activities and in the marketing environment can affect consumers’ brand knowledge structures and thus their response to future marketing programs and activities. Managing brands over time requires reinforcing the brand meaning and adjusting the branding program as needed. For brands whose equity has eroded over time, we rely on a number of revitalization strategies.

Figures 15-6 and 15-7 highlight some important guidelines for managing brand equity.

Multiple segments and sub-segments of consumers typically make up a customer franchise for a brand. We define these segments using many dimensions; some of the most challenging are cultures and geographies. A multicultural perspective in branding is a necessity in today’s diverse world in order to directly affect all types of target consumers or groups. It also helps marketers focus on the overall relevance of their brand and how they can effectively adapt it to all segments in their target market.

In recognition of customer diversity and increasing segmentation, marketing pundits have introduced concepts such as permission marketing, one-to-one marketing, and brand journalism (defined below). These concepts all reinforce the fact that any brand franchise has multiple constituents we need to understand and address in the marketplace.

We need to apply these concepts with care, however. Brand journalism, for example, suggests that—just as journalists tell many facets of a story to capture the interests of diverse groups of readers—marketers should communicate different messages to different market segments. However, this concept may overstate the case for highly distinctive branding segmentation and differentiation. For strong brands, the common core of the brand promise is found in virtually all aspects of the marketing program. Ritz-Carlton’s brand mantra of “ladies and gentlemen serving ladies and gentlemen” affects how the hotel chain delivers service to gall its guests as they come into contact with the brand.

Much has been made of the newly empowered consumer. One of the driving factors behind this trend is the greater transparency that now prevails in the marketing environment. The emergence of the Internet and social media—as well as the expansion and pervasiveness of traditional media—have given consumers the ability, for better or worse, to seek information and arrive at what they feel is “the truth” about products, services, and brands like never before. By merely being observant or proactive, consumers can find out and judge how well a product or service works or what a company is doing (or not doing) to the environment or their local community. Information and opinions can now travel around the world in mere minutes. Marketers must anticipate that any actions they take or claims they make will be scrutinized, deemed truthful or not, and shared with others almost instantaneously.

With this new transparency, consumers can undoubtedly be more actively involved in the fortunes of brands than ever before. But the reality is that only some of the consumers want to get involved with some of the brands they use and, even then, only some of the time. For consumers who do choose to become engaged at a deeper level, marketers must do everything they can to encourage them with social media and other marketing tools. But many consumers will choose not to do so, and it is crucially important to understand how to best market a brand given such diversity in consumer propensities, interests, and activity levels.

Moreover, even consumers who choose to become more engaged with a brand have undefined, ambiguous, or even conflicting preferences. They may need guidance and assistance in forming and conveying their preferences to firms. “Participation marketing” may then be a more appropriate concept for marketers to employ, because marketers and consumers need to work together to find out how the firm can best satisfy consumer goals. In participation marketing, consumers and firms freely exchange information to arrive at mutually beneficial solutions.7 A highly successful premium brand, King Arthur Flour, has created a loyal online brand community by recognizing that baking is an activity consumers want to learn about and discuss with other consumers and company experts.

As more consumers spend more time on the Internet, it is crucial to use online, interactive communications to affect consumers directly at all stages of the consumer decision funnel and thus to reinforce offline marketing efforts. An online, interactive communications programs typically includes some or all of the following: a well-designed Web site (with customer-generated content and feedback); e-mails; banner, rich media, or other forms of electronic ads; search advertising; and social media. Of these, the newest and most challenging component is social media.

Social media programs—encompassing online communities, forums, blogs (including Sugar, Gawker, and others) and a presence on Web sites such as Facebook, Twitter, and YouTube—provide an effective means to creative active engagement and involvement with consumers. By offering the right online information, experiences, and platforms for brands, marketers can help consumers learn from each other about a brand as well as express their brand loyalty and observe that of others. However, engaging and involving consumers brings potential dangers as well, such as subversive behavior by a small group of consumers or undeservedly negative feedback. Undesirable branding effects can occur with or without a social media campaign, of course, although being online and providing a positive point of view may help counterbalance or even overcome them. Adopting a “thick-skin” stance online is imperative, given that a caustic comment or unpleasant review is only one consumer click away and some negativity is to be expected and tolerated.

Fortunately, an increasingly robust and detailed set of online metrics exist by which marketers can track the nature, extent, and valence of public sentiment. By monitoring online buzz and activities in this way, marketers can more effectively assess and determine the proper response to any potentially damaging online or even offline episode. When Accenture was debating what to do with its corporate spokesperson, Tiger Woods, after his sex scandal, the company closely followed the buzz online. An upset and outraged public was an important consideration when the firm decided to drop its long-time endorser.

A good brand architecture defines brand “boundaries”: what products or services the brand could represent, what benefits it could supply, and what needs it could satisfy. It provides “guardrails” for appropriate—and inappropriate—line and category extensions. It clarifies the meaning and promise of the brand to consumers and helps consumers choose the right version of the product or service for themselves.

Understanding the brand promise and how it should best be translated and adapted to different products and markets is challenging, but critical. Every product or service sharing the brand name should deliver on the unique brand promise. If you can replace the specific brand in any of its marketing with a competitive brand, and its marketing would still essentially make sense and “work” with consumers, then the marketing is probably not aligned sharply enough with the brand promise and meaning.

By adhering to the brand promise and growing the brand carefully through little steps, marketers can cover a lot of ground. For example, as Chapter 11 described, when Crayola

transformed its brand from essentially “crayons only” to all kinds of “colorful arts and crafts for kids,” a whole new product world opened up. Markers, clay, paint, chalk, and many other new products all helped the brand deliver its promise and achieve its potential in a meaningful way.

The vast majority of new products are extensions, and the vast majority of new products fail. In other words, too many brand extensions fail. Why? They are not creating sufficient relevance and differentiation in their new product or service categories. An increasingly competitive marketplace will be even more unforgiving to poorly positioned and marketed extensions in the years to come. To succeed, marketers must be rigorous and disciplined in analyzing and developing brand extensions.

We’ve looked at some of the academic research on brand extensions. Based on this and other inputs, Brand Focus 12.0 presented a scorecard with criteria for evaluating a proposed brand extension. The specifications there are intended to offer a starting point; particular items or the weights applied to them can be adjusted to the specific marketing context. The key point is that, by adopting some type of formal model or scorecard, we can apply systematic thinking to judging the merits of a proposed extension and increase its likelihood of success.

The third aspect in a brand architecture strategy encompasses the name, look, and other branding elements applied to new products. A key concept here is the proper use of sub-branding. By combining new brand elements with existing parent brand elements, we can use sub-branding effectively to signal the intended similarity or fit of a new extension with its parent brand. Consumers are very literal. For example, putting the parent brand name before a new, individual name makes it more like the parent brand than putting it second. Marriott’s Courtyard is seen as much more of a Marriott hotel than Courtyard by Marriott by virtue of having the corporate name first.

A good sub-branding strategy can facilitate access to associations and attitudes to the company or family brand as a whole, while allowing for the creation of new brand beliefs to position the extension in the new category. Moreover, sub-branding can also help protect or shield the parent brand from any negative feedback that might be associated with an extension. In a carefully researched study, the sudden acceleration problems experienced by the Audi 5000 a number of years ago were found to significantly hurt the sales of its sibling Audi 4000, but they had a much less pronounced effect on sales of the Audi Quattro in part because of its more distinctive sub-branding.

To realize the benefits of association, however, sub-branding typically requires significant investments and disciplined and consistent marketing to establish the proper brand meanings with consumers. Without such financial commitments, marketers may be well advised to adopt the simplest brand hierarchy possible, such as using the company or family brand name with product descriptors.8

Brand marketers must embrace social responsibility and ethically and morally proper behavior at all times. In particular, they need to find win–win solutions with cause marketing programs and other activities that allow them to enhance the welfare of consumers, society, or the environment while still profitably running their businesses. Effective cause marketing programs can accomplish a number of objectives for a brand: build brand awareness, enhance brand image, establish brand credibility, evoke brand feelings, create a sense of brand community, and elicit brand engagement.

A classic example of a successful cause marketing program is supplied by Tesco, a leading U.K. retailer.9 Its “Tesco for Schools and Clubs” program dovetails well with its overall corporate brand positioning of “Every Little Bit Helps.” Customers receive one voucher for every £10 spent, which they can donate to any school of their choice or any registered amateur club catering for children under the age of 18. In 2009, the company gave away 540,000 items worth £13.4 million. Tesco also gives vouchers for inkjet cartridges that are recycled and old working phones that are donated.

Doing the right things with brands sometimes means doing something even simpler and more straight-forward: protecting and respecting the brand promise and meaning to consumers. Pepsi’s recent packaging redesigns for Gatorade, Pepsi, and especially Tropicana, for example, were all criticized to varying degrees as not being faithful to the equity of those brands. When Tropicana dropped the familiar straw-in-the-orange image on the front of its packaging, negative public feedback forced the company to revert to its original packaging.

Overexposing, overextending, overmodernizing, overdiscounting—there are many ways to take advantage of a brand. The best and most widely admired marketers treat their brands with understanding and respect and a clear sense of commercial and social purpose. They take their brands on a well-mapped-out journey that allows them to profitably grow while preserving close bonds with consumers and benefits to society as a whole. Disney launched an internal brand mantra of “fun family entertainment” to help employees judge whether any marketing or other action was “on brand.” The worry was not that any single decision would be fatal or even damaging to the brand, but that a number of little concessions and compromises would eventually add up to significantly erode the equity of the Disney brand.

Increasingly, marketers have had to do more with less in their marketing budgets and persuasively justify all marketing expenditures. One challenge in achieving brand accountability is that brand marketing activities are intended to have long-term, broad, and varied effects. Any particular marketing activity may increase the breadth or depth of brand awareness; establish or strengthen performance-related or imagery-related brand associations; elicit positive judgments or feelings; create stronger ties or bonds with the brand; initiate brand-related actions such as search, word-of-mouth, and purchase; or many or even all the above. And its effects may be enduring as well as short-term.

Marketers must adopt comprehensive, cohesive, and actionable models to help them develop ROI insights and interpretations. As an example, three linked, interlocking models in Chapters 2 and 3 that marketers can use in brand planning, tracking, and measurement are:

1. The brand positioning model describes how to establish competitive advantages via points-of-difference (associations unique to the brand that are also strongly held and favorably evaluated by consumers) and points-of-parity (associations shared with other brands that are designed to negate competitors’ points-of-difference, overcome perceived vulnerabilities of the brand, or establish category credentials).

2. The brand resonance model considers how intense, active loyalty relationships are created with customers. The basic premise is that building a strong brand requires a series of steps as part of a “branding ladder” and a set of logically constructed “brand building blocks.” Brand resonance occurs when consumers feels completely “in synch” with the brand. The second level of the model is where the output from the brand positioning model appears, in terms of which points-of-parity and points-of-difference are to be created with which performance and/or imagery associations.

3. The brand value chain model describes how to trace the value creation process to better understand the financial impact of marketing expenditures and investments. The model examines four different stages in the value creation process for a brand. It considers how marketing activities affect the customer mind-set—as measured by all the building blocks in the brand resonance model—which, in turn, creates various marketplace outcomes and ultimately shareholder value.

The specific components of these three models are not as important as their purpose and scope. The models can both assist planning and measurement, and they can capture a full range of marketing activities for any type of brand. In particular, by tracing the effects of marketing activities through the customer mind-set, and on to various marketplace outcomes such as price premiums, loyalty, sales, market share and profitability, marketers can gain a clearer picture of how well their marketing is doing and why.

Branding is clearly a complex marketing endeavor. To better grasp all its dimensions, we adopt a multidisciplinary view to interpret branding effects and more completely understand brands, the value they have created, and how they should be managed as a result. We can develop marketing guidelines for branding from a variety of different perspectives, including economic, psychological, and sociological.

Fundamentally, marketing should help create or enhance the equity and value of a brand to all its various constituents. The stronger the brand, the more power brand marketers have with distributors and retailers, and the easier it is to implement marketplace programs to capitalize on brand equity. Extracting proper price premiums that reflect the value of the brand—and not over- or underpricing—is one of the most critical financial considerations for branding.

To find the branding sweet spot, managers must reconcile trade-offs in brand management and strike the balance between simplicity and complexity in all brand decision-making and activity. Trade-offs are pervasive in marketing a brand—short-run sales versus long-run brand equity, global control vs. local customization, retaining vs. acquiring customers, to name just a few.

The art and science of modern brand marketing is to fully understand and creatively address these significant branding trade-offs. To do so, companies have employed a variety of strategies: breakthrough product or service innovations, improved business models, expanded or leveraged resources, enhanced or embellished marketing, perceptual framing to overcome misperceptions, or just sheer creativity and inspiration.

For example, the trade-off between sales-generating and brand-building activities requires that marketing communications affect both the short run (sales) and the long run (brand building). Firms have addressed this in different ways: California’s “Got milk?” campaign entertained consumers and sold milk; P&G’s Ivory promotional campaign challenged consumers to find one of the few bars that was weighted to sink in the bathtub, reinforcing the key attribute of floating; the BMW film series, The Hire developed equity building communications by highlighting BMW performance aspects in short videos created by leading filmmakers.

Another trade-off focuses on points-of-difference and points-of-parity. To be effectively positioned, the brand must have points-of-difference (PODs) where it excels, and at least points-of-parity versus competitors where it may be seen as inferior. Volvo and Quicken approached this challenge by developing unique PODs (safety and ease of use, respectively), as well as parity with competitors on key points (for Volvo, style; for Quicken, performance). When the first Apple computer launched, it was so easy to use the market thought it must not be powerful. Apple reframed that negative perception by redefining the idea of power: power is not what is inside the computer, but what you can do with it.

In developing solutions to achieve balance in branding, it is important: (1) not to oversimplify branding so that all the richness is stripped away but, at the same time; (2) not to overcomplicate branding such that marketers and other employees are overwhelmed by the complexity. The optimal branding approach recognizes that many different aspects of branding matter; the imperatives we’ve discussed above point the way to the most critical.

We’ll make one final observation, based on the need to better reconcile marketing trade-offs in branding: the talents and abilities of brand managers have necessarily evolved. Marketers require more skills in their toolkits than were necessary only 10 years ago.

Today’s brand marketers must know all the usual marketing fundamentals but also embellish those skills in important ways. For example, they must at least have cultural skills to understand the diversity of the new consumer; fluency in working with design techniques and designers; IT and Internet skills to understand Web-related marketing activities; an appreciation of new branding models and formal qualitative and quantitative measurement methods; and creativity to devise holistic solutions. These are challenging requirements, but also very exciting opportunities as marketers adopt higher standards in brand management excellence.