Building Customer-Based Brand Equity: A Blueprint for ...

1 < strong >Buildingstrong > < strong >Customer-Basedstrong > < strong >Brandstrong > < strong >Equity:strong > A < strong >Blueprintstrong > for < strong >creatingstrong > strong BrandsKevin Lane KellerMARKETING SCIENCE INSTITUTEWORKING PAPER SERIESWORKING PAPER REPORT NO. 01-107 2001 < strong >Buildingstrong > < strong >Customer-Basedstrong > < strong >Brandstrong > < strong >Equity:strong > A < strong >Blueprintstrong > for < strong >creatingstrong > strong BrandsKevin Lane KellerMARKETING SCIENCE INSTITUTEWORKING PAPER SERIESWORKING PAPER REPORT NO. 01-107 2001 This research was sponsored in part by Grey Advertising and Knowledge Networks. Thanks to Grey Advertising s Barbara Feigin and Bob Berenson, and KnowledgeNetworks Jean Durall, K. K. Davey, Doss Struse, and others at both organizations for their support and valuable input. Special thanks to Grey Advertising s Ben Arnowho suggested the term < strong >Brandstrong > resonance. Additional thanks to workshop participants at Duke University and Dartmouth was established in 1961 as a not-for profit institute with the goal of bringing together business leaders and academics to create knowledge that will improve business performance.

2 The primary mission was to provide intellectual leadership in marketing and its allied fields. Over the years, MSI s global network of scholarsfrom leading graduate schools of management and thought leaders from sponsoring corporations has expanded to encompass multiple business functions and disci-plines. Issues of key importance to business performance are identified by the Board of Trustees, which represents MSI corporations and the academic supports studies by academics on these issues and disseminates the results through conferences and workshops, as well as through its publications report, prepared with the support of MSI, is being sent to you for your information and review. It is not to be reproduced or published, in any form or by anymeans, electronic or mechanical, without written permission from the Institute and the views expressed in this report are not necessarily those of the Marketing Science 2001 Kevin Lane KellerMARKETINGSCIENCEINSTITUTE Report Summary # 01-107 < strong >Buildingstrong > < strong >Customer-Basedstrong > BrandEquity: A < strong >Blueprintstrong > for CreatingStrong BrandsKevin Lane KellerBuilding a strong < strong >Brandstrong > has been shown to provide numerous financial rewards tofirms, and has become a top priority for many organizations.

3 In this report, authorKeller outlines the < strong >Customer-Basedstrong > < strong >Brandstrong > < strong >equitystrong > (CBBE) model to assist manage-ment in their < strong >Brandstrong > - < strong >Buildingstrong > to the model, < strong >Buildingstrong > a strong < strong >Brandstrong > involves four steps: (1) establish-ing the proper < strong >Brandstrong > identity, that is, establishing breadth and depth of brandawareness, (2) < strong >creatingstrong > the appropriate < strong >Brandstrong > meaning through strong , favorable,and unique < strong >Brandstrong > associations, (3) eliciting positive, accessible < strong >Brandstrong > responses,and (4) forging < strong >Brandstrong > relationships with customers that are characterized byintense, active loyalty. Achieving these four steps, in turn, involves establishing sixbrand- < strong >Buildingstrong > blocks < strong >Brandstrong > salience, < strong >Brandstrong > performance, < strong >Brandstrong > imagery, brandjudgments, < strong >Brandstrong > feelings, and < strong >Brandstrong > most valuable < strong >Brandstrong > - < strong >Buildingstrong > block, < strong >Brandstrong > resonance, occurs when all theother < strong >Brandstrong > - < strong >Buildingstrong > blocks are established. With true < strong >Brandstrong > resonance, customersexpress a high degree of loyalty to the < strong >Brandstrong > such that they actively seek means tointeract with the < strong >Brandstrong > and share their experiences with others.

4 Firms that are ableto achieve < strong >Brandstrong > resonance should reap a host of benefits, for example, greaterprice premiums and more efficient and effective marketing programs. The CBBE model provides a yardstick by which brands can assess their progress intheir < strong >Brandstrong > - < strong >Buildingstrong > efforts as well as a guide for marketing research , a set of candidate measures for the six < strong >Brandstrong > - < strong >Buildingstrong > blocks isincluded in the appendix. In addition, a critical application of the CBBE model isin planning, implementing, and interpreting < strong >Brandstrong > strategies. The model providesa comprehensive means of covering important branding topics, as well as usefulinsights and guidelines to help marketers set strategic direction and inform theirbrand-related decisions. To provide perspective, the paper also relates the CBBE model to other leading models of < strong >Brandstrong > < strong >equitystrong > . Kevin Lane Keller is E. B. Osborn Professor of Marketing at the Amos Tuck School ofBusiness, Dartmouth Massachusetts Avenue Cambridge, MA 02138 USA.

5 3 The Four Steps of < strong >Brandstrong > < strong >Buildingstrong > ..5 < strong >Brandstrong > - < strong >Buildingstrong > Identity ..8 Key Criteria for < strong >Brandstrong > Identity ..9 < strong >Brandstrong > Criteria for < strong >Brandstrong > Meaning ..12 < strong >Brandstrong > Criteria for < strong >Brandstrong > Responses ..15 < strong >Brandstrong > Criteria for < strong >Brandstrong > Relationships ..16 < strong >Brandstrong > - < strong >Buildingstrong > Implications .. to Other Models ..25 Appendix: Candidate Measures of < strong >Brandstrong > - < strong >Buildingstrong > 1. < strong >Customer-Basedstrong > < strong >Brandstrong > < strong >equitystrong > Pyramid ..7 Figure 2. Subdimensions of < strong >Brandstrong > - < strong >Buildingstrong > 3. CBBE Pyramid for Southwest Airlines ..20 Figure 4. CBBE Pyramid Diagnosis for Levi s ..21 Figure 5. CBBE Pyramid for Amazon ..233 IntroductionBuilding a strong < strong >Brandstrong > is the goal of many organizations. < strong >Buildingstrong > a strong brandwith significant < strong >equitystrong > is seen as providing a host of possible benefits to a firm,including greater customer loyalty and less vulnerability to competitive marketingactions and marketing crises, larger margins as well as more favorable customerresponse to price increases and decreases, greater trade or intermediary cooperationand support, increased marketing communication effectiveness, and licensing andbrand-extension opportunities.

6 With this keen interest in < strong >Brandstrong > < strong >Buildingstrong > , two questions often arise: (1) Whatmakes a < strong >Brandstrong > strong ? and (2) How do you build a strong < strong >Brandstrong > ? To help answerboth of these questions, this paper develops a model of < strong >Brandstrong > < strong >Buildingstrong > called theCustomer-Based < strong >Brandstrong > < strong >equitystrong > model. Although a number of useful perspectivesconcerning < strong >Brandstrong > < strong >equitystrong > have been put forth, the < strong >Customer-Basedstrong > < strong >Brandstrong > Equitymodel provides a unique perspective on what < strong >Brandstrong > < strong >equitystrong > is and how it shouldbest be built, measured, and managed. The development of the < strong >Customer-Basedstrong > < strong >Brandstrong > < strong >equitystrong > model was driven by threegoals. First, the model had to be logical, well-integrated, and grounded. The modelneeded to reflect state-of-the-art thinking about branding from both an academicand industry point of view. Second, the model had to be versatile and applicable toall possible kinds of brands and industry settings. As more diverse applications ofbranding continued to emerge for products, services, organizations, people, places,and so forth, the model needed to have far-ranging relevance.

7 Third, the model hadto be comprehensive with enough breadth to cover important branding topics aswell as enough depth to provide useful insights and guidelines. The model neededto help marketers set strategic direction and inform their < strong >Brandstrong > -related decisions. With this broad set of objectives in mind, the < strong >Customer-Basedstrong > < strong >Brandstrong > Equitymodel was developed. The basic premise of the model is that the power of a brandlies in what customers have learned, felt, seen, and heard about the < strong >Brandstrong > overtime. In other words, the power of a < strong >Brandstrong > resides in the minds of customers. Thechallenge for marketers in < strong >Buildingstrong > a strong < strong >Brandstrong > is ensuring that customers havethe right type of experiences with products and services and their accompanyingmarketing programs so that the desired thoughts, feelings, images, beliefs, percep-tions, opinions, and so on become linked to the < strong >Brandstrong > . The remainder of thepaper outlines in detail how this < strong >Brandstrong > knowledge should be created and howthe < strong >Brandstrong > - < strong >Buildingstrong > process should be handled.

8 5 The Four Steps of BrandBuildingBuilding a strong < strong >Brandstrong > , according to the < strong >Customer-Basedstrong > < strong >Brandstrong > < strong >equitystrong > model,can be thought of in terms of a sequence of steps, in which each step is contingentupon the successful completion of the previous step. All steps involve accomplish-ing certain objectives with customers, both existing and potential. The first step isto ensure identification of the < strong >Brandstrong > with customers and an association of thebrand in customers minds with a specific product class or customer need. The sec-ond step is to firmly establish the < strong >Brandstrong > meaning in the minds of customers bystrategically linking a host of tangible and intangible < strong >Brandstrong > associations. The thirdstep is to elicit the proper customer responses to this < strong >Brandstrong > identity and brandmeaning. The fourth and final step is to convert < strong >Brandstrong > response to create anintense, active loyalty relationship between customers and the < strong >Brandstrong > . These four steps represent a set of fundamental questions that customers invariablyask about brands, implicitly if not explicitly:Who are you?

9 ( < strong >Brandstrong > identity)What are you? ( < strong >Brandstrong > meaning)What about you? What do I think or feel about you? ( < strong >Brandstrong > responses)What about you and me? What kind of association and how much of a con-nection would I like to have with you? ( < strong >Brandstrong > relationships)There is an obvious sequence in this branding ladder, that is, meaning cannot beestablished unless identity has been created; responses cannot occur unless theright meaning has been developed; and a relationship cannot be forged unless theproper responses have been elicited. 7 < strong >Brandstrong > - < strong >Buildingstrong > BlocksEnacting the four steps to create the right < strong >Brandstrong > identity, < strong >Brandstrong > meaning, brandresponses, and < strong >Brandstrong > relationships is a complicated and difficult process. To pro-vide some structure, it is useful to think of six < strong >Brandstrong > - < strong >Buildingstrong > blocks to accom-plish the four steps necessary to create a strong < strong >Brandstrong > . To connote the sequencinginvolved, these < strong >Buildingstrong > blocks can be assembled as a < strong >Brandstrong > pyramid.

10 < strong >creatingstrong > sig-nificant < strong >Brandstrong > < strong >equitystrong > involves reaching the pinnacle of the pyramid and will onlyoccur if the right < strong >Brandstrong > - < strong >Buildingstrong > blocks are in place. The corresponding brandsteps represent different levels of the pyramid as illustrated in Figure 1. Figure 2examines each of the < strong >Buildingstrong > blocks in detail. Figure 1. < strong >Customer-Basedstrong > < strong >Brandstrong > < strong >equitystrong > PyramidConsumerBrandResonanceConsumer JudgmentsBrand PerformanceBrand ImageryBrand Salience4. Relationships = What about you and me?3. Responses =What about you?2. Meaning = What are you?1. Identity =Who are you?Intense, ActiveRelationshipsPositive, AccessibleResponsesStrong, Favorable, &Unique < strong >Brandstrong > AssociationsDeep, Broad BrandAwarenessConsumer Feelings8 Figure 2. Subdimensions of < strong >Brandstrong > - < strong >Buildingstrong > BlocksBrand IdentityBrand the right < strong >Brandstrong > identity involves < strong >creatingstrong > < strong >Brandstrong > saliencerelates to aspects of customer awareness of the < strong >Brandstrong > . How easilyand often is the < strong >Brandstrong > evoked under various situations or circumstances?