CHAPTER 3 BRAND RESONANCE AND BRAND VALUE CHAIN

Kevin Lane Keller Tuck School of Business Dartmouth College

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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-ofdifference 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
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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
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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
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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)
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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

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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

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Brand Salience
Its 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 organizations relative importance, value proposition, and differentiation.

Source: http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg

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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
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Example Drinks Category Hierarchy/Structure

Product category structure: how product categories are organized in memory

Level 1 Product Class Level 2 Product Category

Level 3 Product Type Information Level 4 Product Info (specific) or Brand

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in to other consumption situation beyond meals ... (gathering, rilex, thirsty, etc)

After meal only...

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

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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?)
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Example : Ads that emphasize on Brand Performance

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Level 2 B Imagery Dimensions

Depends on the extrinsic properties of the product, incl. The attempts to meet customers 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 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) 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)

Purchase and usage Imagery: what conditions/situations they can/should buy the brand

Brand Personality and values

History, heritage, and experiences: associations to their past and certain noteworthy events in the brands history

Nostalgia Memories

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Example Imagery

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Performance & Imagery

This level of the pyramid is all about features and visual representation. That is, everyone who experiences your brand, regardless of whether its 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.
Source: http://www.vizual.net/blog/wp-content/uploads/2012/04/brand_pyramid_CBBE1.jpg

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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 Expertise (competent, innovative and market leader?) Trustworthiness (dependable and keeping customer interest in mind) Likeability (fun, interesting, and worth spending time with) 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 The extent to which customer view the brand as uique and better than other brand i.e. Differentiation
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Brand credibility (judgement about the the company/organization behind a brand)

Brand consideration

Brand superiority

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

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Judgment & Feeling

the transition level. Its a critical one because its 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 brands 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.

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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 Love brand (favorite possessions; a little pleasure) Proud of brand Kinship Affiliation

Attitudinal attachment

Sense of community

Active engagement (willing to invest time, energy, money, etc)

Seek information Join club Visit website, chat rooms Become brand ambassador/evangelist
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Example Brand Resonance

Loyalty: lifetime value of diapers customers?

1 baby RM100/month x 24-30months = RM3,000!

Atachment Sense of community Engaged

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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 brands 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.

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Example: Cadbury CBBE Pyramid

Source: http://thecadburychocolatier.files.wordpress.com/2012/01/cbbe-sbm-final.jpg

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Application: Identify the Key Drivers of Brand Equity

Performance Judgment
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Resonance

Imagery

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Feelings

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) Dont 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.
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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

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Brand Value Chain Model

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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

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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?
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Fulfillling all the criteria is likely to achive greater ROI

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 Competitive superiority Channel and other intermediary support Customer size and profile

Marketplace Condition Multipliers:

1.

2.
3.

The value in customers 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
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Stage 3: Market Performance

The customer mind-set affects customers 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?)
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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. 2. 3.

Stock price Price/earnings multiple, and Market capitalization for the firm
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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.

2.

3.

Value creation begins with the marketing program investment should be well-funded, well-designed, well-implemented Value creation require more than marketing invest,ent, because each of the three multipliers can increase/decrease market value This BVC provides a detailed road map for tracking value creation that make marketing research and marketing intelligence efforts easier
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The Brand Planning Model

3. Brand Value Chain Model

2. Brand Resonance Model

1. Brand Positioning Model

POPs

PODs
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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)

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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 plansor even building two marketing organizationsfor acquisition and retention efforts
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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 Brand 1 Segment2 Segment N

B R A N D

Brand 2

Brand M

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Brand Equity vs Customer Equity: Differences between the two points of view

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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
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CLASS DISCUSSION: PRODUCT TEAM CIALIS

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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)

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New Entrants: Competition

Cialis from Lilly ICOS LLC Levitra from Bayer

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The Cialis case

How to segment the market and position a follower product

Viagra well positioned and well-known Cialis unknown Patients Partners Doctors

How to communicate to target audience

How to price the new product Competitive response from Pfizer

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Segmentation criteria

Demographics

Age Income Education

Viagra usage status

Current Viagra users Viagra dropouts Never tried Viagra

Benefit of duration
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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

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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

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Positioning and Pricing

Vertical positioning

36 is much better than 4? Attitude towards sex: Wild, naughty activity vs. romance

Horizontal positioning

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

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Communication strategy

Communicate to whom?

Patients Partners Doctors Insurance companies Regulators Media

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Cialis Ads

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Case Study: Cialis

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Viagra Ads

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Levitra Ads

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