What is Customer- Based Brand Equity?

Customer-based brand equity (CBBE) is built on the concept that to build a strong brand – it is important to understand how the customers think and feel about your product. For a customer to love your product, you must build pleasant experiences around your brand. If they experience positive thoughts, opinions, feelings, and perceptions about your product, then it signals positive brand equity.

Customer-based brand equity shows the power of a customer’s attitude towards a brand, and how it can lead to the success or failure of a brand.  It emphasizes laying a strong foundation that can create a positive attitude towards a brand.

Customer‐based brand equity is built on five important elements:  value, performance, trust, social image, and commitment. It is important to understand that these elements are in the minds of customers, and hence, brands should build strategies to build these permanently in the minds of customers. It should start by establishing a relationship with the customer’s needs and the product offering. When a customer feels that the product is the best for his needs, the relationship starts. This can be built to be raising awareness about your product.

Once the customer knows about your product, it is important to deliver quality and reliable performance every time. This is important to get deep-rooted imprint about your brand in the customer’s mind. Once this is achieved, it can be further enhanced by using attractive packing, excellent customer service, a colorful logo, and visual advertising.

The final stage is to create an emotional bond with the customers by giving special offers and discounts. This increases emotional response, thereby creating a strong relationship with the brand.

Customer-Based Brand Equity Model

The most popular CCBE model is the Keller Model, which was designed by Kevin Lane Keller, Professor of Marketing, and was published in his book, Strategic Brand Management.

The CBBE model is based on a pyramid that explains ways to build strong brand equity by focusing on understanding customers and designing their strategies based on customers. When there is a strong connection between a brand and its customers, it gives rise to positive brand equity.

The Keller model uses a pyramid to show the different levels of building brand equity where the company has to understand the customers and shaping their strategies accordingly.

The below image is the brand equity pyramid that is divided into four levels:

Level 1: Brand Identity

This is the first stage where you need to create brand awareness. In this stage, people do not identify your brand and cannot distinguish your brand from other brands. Hence it is necessary to build a strong identity by telling people about your brand.

Since it is the most significant step, it forms the base of the pyramid. This shows that it is important to build a very strong identity from the start so that you can build upon it.

Level 2: Brand Meaning

After a brand has been able to capture the attention of the consumers, it is the next step for the brand to provide more information about the product to its users. Consumers want to know more about the usage, the problems that it can solve, how to use the product, etc. In this stage, the customer wants to know more about the brand.

Brand performance and brand imagery are the two parts of brand meaning.

Brand performance is the most important aspect that can break or build a brand. Many famous brands, such as Apple, Google, Bosch, etc. have built great brand equity due to their extraordinary performance.

Brand imagery is the image that customers perceive about a brand. Customers have a picture of a brand, and this comes due to how they want the product to be. For example, customers expect a car brand to be luxurious and comfortable, while for a cosmetic brand, the customer perceives it to be glamorous and beautiful. 

There are various models to analyze customer behavior most popular being the Kano Model and Critical to Quality Tree. Insights from the analysis can be used to build a high-performing product.

Level 3: Brand Response

Customers have a certain expectations from a brand, and when it meets expectations, the customer is happy and shows positive feelings. In case the brand is able to go beyond the expectations of a customer, the brand will be able to create delight in the mind of customers. This will lead to recommendations that will spread the word in the market.

It is important to know what factors delight a customer. This will help a brand to work further on these factors to gain an edge over the competition.

Level 4: Brand Resonance

The final and the most difficult stage is brand resonance. This is a stage where the brand the customer has built a strong relationship. This is a stage where customers are highly engaged with the brand, and they are ready to participate in online forums, social media, similar communities, and any events relating to the brand.

Customers are ready to recommend the brand to their friends and family, and they are not ready to accept any other product other than the brand. This is the most difficult stage to achieve.

For example, people who use Apple products do not switch to any other brand as they feel deeply associated with it. Even when the prices are high, they still stick to their favorite brand and advocate the brand. 

Benefits of Customer-Based Brand Equity

One of the most valuable assets for a company is something that you can’t see or touch, but can be only felt- it’s the brand. A brand is critical for the success of a company as it depicts the customer’s feelings towards a product.

A strong brand brings huge benefits to the company:

• A strong brand creates strong brand equity as it allows a company to charge a premium price for its products
• Products that have generated strong brand equity can also command greater respect in the market
• Strong brand equity brings the advantage of easier product expansion with higher confidence
• Customer-based brand equity drives higher financial gains to the company
• Marketing campaigns rolled out by a strong CCBE brand is very likely to get a greater response
• Increases loyalty as customers are ready to stay by the company due to the trust they have on the company
• Strong customer-based brand equity will help in higher negotiating power with vendors and distributors which will lower the cost of production.