Page 267 - Marketing Management

244 PART 4 BUILDING STRONG BRANDS

To reinforce its luxury image,
Louis Vuitton uses iconic
celebrities such as legendary
Rolling Stones rocker Keith
Richards in print and outdoor
advertising.

Customer-based brand equity is thus the differential effect brand knowledge has on consumer
response to the marketing of that brand. 17 A brand has positive customer-based brand equity
when consumers react more favorably to a product and the way it is marketed when the brand is
identified, than when it is not identified. A brand has negative customer-based brand equity if
consumers react less favorably to marketing activity for the brand under the same circumstances.
There are three key ingredients of customer-based brand equity.
1. Brand equity arises from differences in consumer response. If no differences occur, the brand-
name product is essentially a commodity, and competition will probably be based on price. 18
2. Differences in response are a result of consumers’ brand knowledge, all the thoughts, feelings,
images, experiences, and beliefs associated with the brand. Brands must create strong, favorable,
and unique brand associations with customers, as have Toyota (reliability), Hallmark (caring),
and Amazon.com (convenience).
3. Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the
marketing of a brand. Stronger brands lead to greater revenue. 19 Table 9.1 summarizes
some key benefits of brand equity.
The challenge for marketers is therefore ensuring customers have the right type of experiences with
products, services, and marketing programs to create the desired brand knowledge. In an abstract
sense, we can think of brand equity as providing marketers with a vital strategic “bridge” from their
20
past to their future.

TABLE 9.1 Marketing Advantages of Strong Brands
Improved perceptions of product performance Greater trade cooperation and support
Greater loyalty Increased marketing communications effectiveness
Less vulnerability to competitive marketing actions Possible licensing opportunities
Less vulnerability to marketing crises Additional brand extension opportunities
Larger margins Improved employee recruiting and retention
More inelastic consumer response to price increases Greater financial market returns
More elastic consumer response to price decreases