Branding and Brand Positioning / Marketing Management By Kotler Keller
Keller sbm3 10
1. CHAPTER 10:
MEASURING OUTCOMES OF BRAND EQUITY:
CAPURING MARKET PERFORMANCE
Kevin Lane Keller
Tuck School of Business
Dartmouth College
10.1
2. Measuring Brand Equity
Multi-dimensional concept
Many different measures required
The ultimate value of a brand depends on the
underlying components of brand knowledge and
sources of brand equity
10.2
4. Brand-Based Approaches
The marketing element under consideration is
fixed.
Consumer response is examined based on changes
in brand identification.
Application example: Blind testing
Advantage: Isolates the value of the brand
Disadvantage: The totality of what is learned depends
on how many applications are examined.
10.4
5. Marketing-Based Approaches
The brand is held fixed and consumer response is
examined based on changes in marketing programs.
Applications: Explore price premiums’ effect on
switching, consumer evaluations of marketing
activities, brand extensions, etc.
Advantage: Ease of implementation
Disadvantage: Difficult to determine whether
consumer responses are caused by brand
knowledge or generic product knowledge
10.5
6. Conjoint Analysis
A survey-based multivariate technique that enables
marketers to profile the consumer decision process with
respect to products and brands
Helps researchers determine the trade-offs consumers
make between brand attributes
Applications: Assess advertising effectiveness and brand
value; analyze brand/price trade-off
Advantage: Allows for different brands or different aspects
of the product to be analyzed simultaneously
Disadvantage: May violate consumers’ expectations based on
what they already know about brands
10.6
7. Holistic Methods
Attempt to place an overall value on the brand
in either abstract utility terms or concrete financial
terms
Net out various considerations to determine the
unique contribution of the brand
Holistic methods:
Residual approaches
Valuation approaches
10.7
8. Residual Approaches
Examine the value of the brand by subtracting
consumers’ preferences based on physical product
attributes alone from their overall brand
preferences
Advantage: Useful benchmark for interpreting
brand equity, especially from a financially oriented
perspective
Disadvantage: Static view. Limited diagnostic value
for strategic decision making
10.8
9. Valuation Approaches
Attempt to place a financial value on brand equity
for accounting purposes
Useful in cases of mergers and acquisitions, brand
licensing, fund raising, and brand management
decisions
Valuation approaches:
Accounting background
Historical perspectives
General approaches
Interbrand’s brand valuation methodology
10.9
10. Accounting Background
Intangible assets are typically lumped under the
heading of goodwill and include things such as
patents, trademarks, and licensing agreements,
as well as “softer” considerations such as the
skill of the management and customer relations.
In an acquisition, the goodwill item often
includes a premium paid to gain control, which,
in certain instances, may even exceed the value
of tangible and intangible assets.
10.10
11. Historical Perspectives
In Australia Rupert Murdoch’s News Corporation
included a valuation of some of its magazines on its
balance sheets in 1984.
British firms used brand values primarily to boost their
balance sheets.
In the United States, generally accepted accounting
principles (blanket amortization principles) mean that
placing a brand on the balance sheet would require
amortization of that asset for up to 40 years. Such a
charge would severely hamper firm profitability; as a
result, firms avoid such accounting maneuvers.
10.11
12. General Approaches
In determining the value of a brand in an acquisition or
merger, firms can choose from three main approaches:
Cost approach: Brand equity is the amount of money that
would be required to reproduce or replace the brand
Market approach: The present value of the future economic
benefits to be derived by the owner of the asset
Income approach: The discounted future cash flow from the
future earnings stream for the brand
10.12
13. Interbrand’s Brand Valuation
Assumes that brand value is the present worth of the
benefits of future ownership
Follows five valuation steps:
Market segmentation
Financial (role of branding) analysis
Demand (brand strength) analysis
Competitive benchmarking
Brand value calculation
Brand value calculation : Calculate the brand value as the
net present value (NPV) of the forecast brand earnings,
discounted by the brand discount rate
10.13