What is Customer Based Brand Equity? Consumer Decision Process

What is Customer Based Brand Equity?

Customer–based brand equity (CBBE) model incorporates recent theoretical advances and managerial practices in understanding and influencing consumer behavior.

The basic premise of the CBBE model is that the power of a brand lies in what Customers have learned, felt, seen and heard about the brand as a result of their experiences over time. In other words, the power of a brand lies in what resides in the Minds of customers.

Customer-based brand equity is formally defined as the differential effect that brand knowledge has on consumer response to the marketing of That brand. Determining the desired brand knowledge structures involves positioning a brand.

According to the CBBE model, deciding on positioning requires determining a frame of reference. It is necessary to decide:

  • who the target consumer is,

  • who the main competitors are,

  • how the brand is similar to these competitors,

  • how the brand is different from these competitors.

Target Market

Behavioral segmentation bases are often the most valuable Different consumers may have different brand knowledge. The perceptions and preferences for the brand differ from one consumer to another consumers. So it is important to identify the consumer target.

Without this understanding, it may be difficult to be able to state which brand associations should be strongly held, favorable and unique in understanding branding issues because they have clearer strategic implications. A market consists of all consumers with sufficient motivation, ability and opportunity to buy a product.

Market segmentation involves dividing the market into distinct groups of homogeneous consumers who have similar needs and consumer behavior.

Segmentation Bases: In general, the bases for segmentation can be classified as descriptive or customer-oriented versus behavioral or product oriented.

  • Behavioral: User status, Usage rate, Usage occasion, Brand loyalty, Benefits sought

  • Demographic: Income, Age, Sex, Race and family

  • Psychographic: Values, opinions and attitudes, activities and lifestyle

  • Geographic: International, Regional

Often, the underlying concept for descriptive segmentation bases involves behavioural considerations. For example, marketers may choose to segment a market on the basis of age and target a certain age group because that particular age group people may be the heavy users of the product.

Behavioral segmentation bases are often most valuable in understanding branding issues because they have clearer strategic implications.

Defining a benefit segment makes it clear what should be the desired benefit with which to establish the positioning. For example take the toothpaste market. One research study reveals four main segments.

  • The Sensory Segment: Seeks flavor and product appearance.

  • The Sociables: Seeks brightness of teeth.

  • The Worriers: Seeks decay prevention.

  • The Independent Segment: Seeks low price.

Criteria: Several criteria have been offered to guide segmentation and target market decisions, such as the following:

  • Identifiability: Can segment identification be easily determined?

  • Size: Is there adequate sales potential in the segment?

  • Accessibility: Are specialized distribution outlets and communication media available to reach the segment?

  • Responsiveness: How favorably will the segment respond to a tailored marketing program?

Nature of Competition

Deciding to target a certain type of consumer often, defines the nature of competition because certain firms have also decided to target that segment in the past or plan to do so in the future. The nature of competition may depend on the channels of distribution chosen.

The competitive analysis considers a whole host of factors including the resources, capabilities, and likely intentions of various other firms-to choose markets where consumers can be profitably serviced.

Points of Parity and Points of Difference

The basis of the positioning is defined by fixing the appropriate competitive frame of reference by defining the customer target market and nature of competition. A proper positioning requires establishing the correct points-of-difference and points-of-parity associations.

Points-of-Difference Associations

Points of difference (PODs) are strong, favorable and unique brand associations for a brand. They may be based on virtually any type of attribute or benefit association.

PODs are attributes or benefits that consumers strongly associate with a brand, positively evaluate and believe that they could not find to the same extent with a competitive brand. The concept of POD is similar to the notion of Unique Selling Proposition (USP).

Points of Difference may involve performance attributes (e.g. the fact that Medimix soap has an ayurvedic medicinal mix) or performance benefits (e.g. the charging capacity of Nokia cell phones).

Points of Parity Associations

Points of parity (pops), on the other hand are those associations that are not necessarily unique to the brand but may infact be shared with other brands. These types of associations come in two basic forms: category and competitive.

Category points of parity are those associations that consumers view as being necessary to be a legitimate and credible offering within a certain product or service category.

Competitive points of parity associations are those associations designed to negate competitors’ points of difference.

Consumer Decision Process

Consumer behavior does not consist of discrete acts but is a process. A woman who joins a slimming center first recognizes the need to reduce her obesity. She then seeks information about various methods of slimming down and chooses a slimming center as the best alternative for her.

She then decides in favor of a particular center, considering the cost of the total slimming plan, its credibility and the track record. After choosing the center, she may or may not be satisfied with the results. All this is a part of the purchase decision process.

The following diagram shows a simplified model of the consumer purchase decision process. The Consumer Decision Process.

The five stages in the buying decision process are:

  1. Problem Recognition

  2. Information seeking

  3. Evaluation of Alternatives

  4. Buying Decision

  5. Post-purchase Evaluation

Problem Recognition

Problem recognition is the beginning of the buying process. It is a matter of perception. We realize what we should ideally have and what we have at present. The decision to buy a two-in-one music system is triggered by the gift amount received on the occasion of the birthday. Mrs. Y may go in for a fridge because Mrs. X has already got it.

A perfume bottle may be purchased when one sees it in the window of a shop. Problem recognition is generally a slow process, but can occur fast when purchase are made impulsively.

Information seeking

This follows the problem recognition stage. The search is mostly directed towards the products that are consistent with our needs. A housewife buying a mixed might start visiting the shops selling appliances and might start discussing the need with her friends. She is interested in knowing which brands are on offer and their features.

Information seeking starts with cognitive internal search-recalling information stored in memory. This may lead to further stages of buying decision process. Alternatively, the consumer may start external search: seeking information from sources other than memory.

The major external sources are peers, friends, colleagues, and relatives.

Evaluation of Alternatives

When, the consumer sees information, he realizes the alternative choices available to him and gets the background against, which these choices can be judged. The brands, which a consumer considers while making a purchase, decision, form an evoked set, which is a small proportion of the total available brands.

Each brand in the evoked set is evaluated against some chosen criteria. For example a consumer buying a mixie considers the following criteria:

  • Brand name
  • Price
  • Functions performed
  • Appearance
  • Attachments like a juicer
  • Reputation of the company marketing it
  • Warranty
  • Technical specifications
  • After-sales service available.

Buying Decision

After the alternative choices are evaluated the brands are ranked and the top-ranking brand may be purchased. The ultimate buying decision may undergo a change, if the preferred brand is not available. In such a situation, the second-ranked brand may be bought.

Post-purchase Evaluation

In this stage the product has been bought and consumed. It is the stage for post-purchase evaluation. The consumers may either be satisfied or dissatisfied. A satisfied consumer stores the product information in his memory and uses it next time at the time of problem recognition stage. A dissatisfied consumer may go in for another brand next time he is out to buy.

  • U. C. Mathur, Product and Brand Management, Excel Books, New Delhi.
  • Harsh V. Verma, Brand Management, Excel Books, New Delhi.
  • Tapan K Panda, Building Brands in the Indian Market, Excel Books, New Delhi. Kapferer, Strategic Brand Management, Kogan Page, New Delhi.
  • Kevin Lane Killer, Strategic Brand Management, Pearson, New Delhi.

Brand Management Topics

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$199 for 12 months (regularly $399). Offer valid till Jan 31st.

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