Customer based brand equity is a valuable framework that describes how consumers perceive brands and how brand equity is created. It treats brand equity as a product of brand awareness and brand image in consumers’ minds.
Customer based brand equity is one of the most popular representations of the added value of a brand.
In his seminal paper, Kevin Keller defines customer based brand equity (CBBE) as “the differential effect of brand knowledge on consumer response to the marketing of the brand”.
In other words, the added value of a brand is made up of consumer reactions to marketing stimuli and how effectively they are processed and stored in memory. The differential effect is the difference in this process when applied to a branded versus an unbranded object.
A favourable and strong brand association in the customer’s mind will result in customer based brand equity on a given brand touchpoint.
If this answers your question, great! If you want to dig into the specifics of the model then read on.
Brands as knowledge in associative memory networks
The CBBE model builds on cognitive psychology theories and is depicted as an associative memory network. In this context, brand knowledge is a node in memory that serves as a point of reference towards the brand.
This reference point is formed and reinforced through associative memory networks consisting of brand related thoughts, images, feelings and experiences.
Associative network models arise from theories about how the brain works. The premise is that we create chunks of information here and there that link together from a complicated hierarchy stemming from some node of origin – the brand node.
If you want to learn more about how this works check out this Khan Academy video.
Brand awareness can be thought of as a simple status check: Do consumers know my brand?
If the answer is yes, you can ask yourself about the extent of the awareness. Can consumers recognize or even recall your brand?
Recognition means being able to recognize a brand when prompted with some sort of a cue. The cue can be a slogan, logo, sound, smell or any other element that enables the consumer to confirm prior exposure to the brand. This can be as simple as recognizing a bottle of beer in the background of the show you are currently watching.
The consumer is more than aware of the brand at this stage and has the ability to match stimuli to prior brand experiences thus resulting in a stronger brand node.
Brand recall on the other hand requires the consumer to recall the brand without any help. In other words, it is unaided whereas brand recognition is aided. This can for example be if Mercedes pops up in your head when thinking of cars or Coca Cola when thinking about drinks.
The brand awareness dimension reflects the strength of brand memories, i.e. brand knowledge. The stronger they are, the better able the consumer is to recognize a brand from prior encounters and recall the brand node from the associate memory network.
Brand awareness, if present, determines the strength of the brand node which in turn influences how prevalent consumer hold certain associations about the brand.
This brings us to the second dimension: brand image.
Brand image is concerned with what consumers think of the brand.
It is reflected through various brand associations that each obtain a node in consumer memory and relate to the brand node in one way or another. This accounts for the perceived brand meaning for consumers.
How a brand association contributes to brand equity depends on its nature, favourability, strength and uniqueness.
The nature of brand associations is further described through attributes, benefits and attitudes.
Attributes are the characteristics involved in purchasing and consuming a product as seen from the consumers’ perspective. This can either relate directly to the product’s physique and the requirement to deliver the promised value, or more external elements such as user stereotypes (user imagery), perceptions about in which scenarios the product is used (usage imagery), price and packaging. Although price and packaging, for example, may seem like product-related attributes, they are not considered a necessary ingredient for value delivery.
Brand associations also arise from the benefits consumers associate with the product or service. First, consumers may consider the product as offering mainly functional benefits. Usually, this means we are talking about a product-related attribute; e.g. fuel economy on a hybrid car or battery life of a laptop.
Experience is another type of benefit directly related to the product. This has to do with the experiential aspects of consuming the product. This tends to play a larger role in service settings.
Last, benefits are also based on self-extension, self-expression or social approval. These are symbolic benefits. Symbolic benefits help consumers make sense of themselves and their role in society. Thus, a consumer may buy Patagonia clothing to conform with societal pressure of consuming sustainably or to express the inner hiker-outdoorsman of the self.
Attitudes are consumer beliefs about the brand. This dimension overlaps with benefits and attributes and is only included in the model to capture narratives that the other dimensions fail to cover.
Put together it looks like this:
All elements work from the right to left and impact customer based brand equity. If the brand association is favourable, the impact is positive. A negative brand association equals a negative impact.
The model is quite robust. Thus, it is no coincidence that it is popular within organizations around the world. The CBBE is a great framework for thinking about how your brand is represented in consumer minds.
That being said, it shouldn’t be applied as some unmoving truth.
Because of how much it draws on cognitive psychology it is very cognitive in its approach. Nothing surprising here. As such, it only encompasses consumer conscious cognitions about brands.
Decisions are often made unconsciously and there is always an unconscious process that affects how people consciously decide on things.
This usually has to do with feelings that happen below the threshold of awareness which the CBBE can not reveal, at least not directly. How feelings affect memory is another area of discussion that could fill in some blanks left by the CBBE.
Granted, accounting for these things is not easy and would require a combination of neuroimaging, biometric and some self-reported measures. This is out of reach in the cases of smaller businesses, nor is it really necessary as long as you keep them in mind.