What is Customer-Based Brand Equity (And Why Should You Care)?

The Upfront Analytics TeamEducation, Strategy3 Comments

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What is Customer-Based Brand Equity (And Why Should You Care)?

Market researchers are sometimes overly fond of charts, models, and graphs–but for good reason. Charts break down some of the complexities of marketing data so they’re easier to explain to and apply to businesses.

Take customer-based brand equity, for example: It’s a mouthful, but it actually depicts just how powerful a customer’s attitude toward a brand can be to that brand’s success. Usually designed as a pyramid, customer-based brand equity shows businesses how to lay the foundation that creates a positive attitude toward a brand, and how to capitalize on attitudes and loyalties of their customers.

Breaking down customer-based brand equity means understanding your customers’ wants and needs, even before they vocalize or demonstrate them with their dollars. Here are the basics.

Keller’s Model

The most common model for customer-based brand equity is the one created by marketing professor Kevin Lane Keller in his book, Strategic Brand Management. Keller puts the model in a four-level pyramid, with the middle two layers being divided equally between two factors.

Level One: Salience

Salience could be more accurately described using the question, “Who are we?” It looks at the brand from the customer point of view and wonders what words buyers associate when they hear a specific brand name. In short, it quantifies both the depth and the breadth of customer awareness of a brand.

Level Two: Performance and Imagery

Breaking the second level into two categories allows a business to better consider brand reputation. Performance encompasses factors such as customer service and satisfaction with a product. It also calls product functionality into question, with reliability, durability, and price as factors for customer opinion.

Imagery is slightly different (but no less important) in creating meaning behind a brand. Imagery revolves around how customers’ needs are met both socially and psychologically. While this can occur with customer interactions with the product, imagery can also be the work of targeted marketing and word-of-mouth.

Level Three: Judgement and Feelings

The third level of Keller’s model–judgement and feelings–are so closely related that it’s difficult to separate the two. In fact, the third level might be more accurately broken into four categories:

  • Either actual or perceived.
  • Created through a customer’s measure of trust for a brand and its products.
  • A judgement based on the relevancy of a product to each individual’s circumstances.
  • Customers deciding where one brand falls in comparison to another.

Judgement and feelings take into account personal opinions to decipher how customers think and feel about a brand–whether it’s based on actual interaction or perceived reputation.

Level Four: Resonance

The likelihood that a customer remains loyal to one brand is considered the pinnacle of Keller’s model. To become loyal customers, buyers assess their relationship and interactions with a brand to decide that it is superior to other brands. Many factors go into creating resonance with customers, including price, products, customer service, and previous experience with the brand. A good measure for this can be used with the Net Promoter Score system.

Building customer-based brand equity doesn’t happen overnight, which is why Keller’s model is so succinct. By starting at the bottom and letting customers get to know your business little by little, you create a trustworthy, likeable, and ultimately successful brand.

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