Brand valuation 050510(4)

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Brand valuation 050510(4)

  1. 1. Evaluating Brand Equity Presented by Peter Harris National President Australian Market and Social Research Society MD Vision Critical ANZ @peteraharris
  2. 2. Peter Harris AUDITOR marketing RESEARCH Family man AMSRS aussie NEW MEDIA building relationships CRICKET TRAGIC
  3. 3. In this session  The value contribution of brand  Measurement approaches  The looming brand bubble
  4. 4. Why should we care about a brand? Source: Interbrand
  5. 5. Intangibles are a key source of corporate value albeit weakening Market Capitalisation 100% 15% 28% 80% 38% 38% 62% 60% 95% Tangibles 85% Intangibles 40% 72% 62% 62% 20% 38% 0% 5% 1978 1982 1992 1998 2004 2007 Brookings Institute, 1994, Baruch Lev: Analysis of S&P 500 companies, 2000, Fortune, 1978 and 2004, Brand Finance 2007 Source: Interbrand
  6. 6. Highly valued brands create superior returns… Strongest brands outperform the market
  7. 7. So what exactly is brand equity?
  8. 8. ―Latent value in the mind of customers that is exhibited through its impact on behavior. Positive equity results in behavior that benefits the brand through purchase frequency, brand loyalty, price insensitivity, willingness to recommend and more.‖ -- Dr. Tom Reynolds & Carol Phillips, ―In Search of True Brand Equity Metrics: All Market Share Ain‘t Created Equal‖, paper in review, Journal of Advertising Research
  9. 9. Loyal Psychological Behavior Preference
  10. 10. Every brand could benefit from having the core group represent a larger share of its total franchise. – Dr. Tom Reynolds
  11. 11. How do we measure it?
  12. 12. Brand valuation is one type of measure and a relatively new one It has risen in prominence as the brand‘s contribution to the market capitalisation of an organisation is appreciated. http://www.slideshare.net/pjcollings/measuring-brand-value-patrick-collings
  13. 13. What the Experts say (in terms of measuring brand value) Equi- Inter- Equi- Inter- Aaker Keller Y&R Trend brand Aaker Keller Y&R Trend brand Associations x x Market Trend x Awareness x x Mktng Support x Org. Brand Trend x Associations Perceived Differentiation x Quality x x xx Dist. Coverage x Perceived Value x Esteem x Personality x x International x Price Premium xx Knowledge x Relevance x Leadership x xx Salience x Legal User Protect’n x Sat./Loyalty x x xx Market Share x Stability x Sources: D. Aaker, Building Strong Brands, 1996; K. Keller, Strategic Brand Management, 2003
  14. 14. BrandAsset Valuator (BAV) is Young & Rubicam's comprehensive global database of consumer perceptions of brands: 350,000 consumers,19,500 brands, 44 countries, 173 studies since 1993 The BAV research is based on four key pillars: differentiation, relevance, esteem and knowledge
  15. 15. A Better Approach • Linking customer perceptions and market performance to impact on financial value to assess ROMI. Activity & Customer Perceptions Market Program Metrics & Behavior Performance ROMI Financial Value
  16. 16. A Better Approach • Multiple measures at different levels of the value chain, benchmarked and tracked consistently over time: Activity & Customer Perceptions Market Program Metrics & Behavior Performance •Marketing Investment •Brand awareness •Sales •Program Quality •Brand familiarity/associations •Market share •Clarity •Brand evaluations/attitudes •Price premium •Relevance •Customer acquisition/ •Profitability •Distinctiveness conversion •Price elasticity •Consistency •Customer retention •Expansion success •Channel expansion •Attachment/Loyalty
  17. 17. A Better Approach Activity & Customer Perceptions Market Program Metrics & Behavior Performance ROMI Financial Value •Stock price •P/E ratio •Market capitalization •Brand contribution (i.e., CoreBrand index)
  18. 18. Brand Equity vs Value ―(For most companies) the question is less what their brand is worth than what their brand could do for them in terms of revenue and profit. …gaining an understanding of the causal activities related to the changes would make brand equity measures more actionable.‖ --Dr. Tom Reynolds & Carol Phillips, ―In Search of True Brand Equity Metrics: All Market Share Ain‘t Created Equal‖, paper in review, Journal of Advertising Research See also: ―The Best Global Brands‖, Businessweek, August 4, 2004; ―Microsoft, GE top brand equity study, BtoB, 1.19.04. and ―Don‘t Waste Time with Brand Valuation‖, MarketingNPV.com, October 2004
  19. 19. http://vimeo.com/2013701
  20. 20. New Ideas in Measurement • Net Promoter Score — Fred Reichfeld, The Loyalty Effect • Customer Equity — Roland Rust — Sum of the lifetime values of current and future customers • Customer Income Flows — Don Schultz
  21. 21. Key Takeaways • There Is No Silver Bullet — Each company may require unique measures • Use a mix of measures — Include perceptual (knowledge), financial impact and behavioral (loyalty) measures — Tie measures to strategy – what behaviors and attitudes drive brand value for customers and investors? • Consistency is Key — Movies work better than ‗snapshots‘ — Build knowledge over time • Prioritize — More likely to suffer from too much data than from too little
  22. 22. Peter.Harris@VisionCritical.com Twitter.com/PeterAHarris

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