Brand equity

DEVELOPING A BRAND
EQUITY MEASUREMENT AND
MANAGEMENT SYSTEM

Brand Equity Measurement
System
 A brand equity measurement system is a set of
research procedures that is designed to provide
timely, accurate, and actionable information
for marketers so that they can make the best
possible tactical decisions in the short run and
strategic decisions in the long-run.

Brand Equity Measurement System
 Implementing this system involves:
 Conducting brand audits.
 Brand Inventory
 Brand Exploratory
 Developing tracking procedures.
 Designing a brand equity management system
 Brand Equity Charters
 Brand Equity Reports
 Brand Equity Overseers

The New Accountability
 Virtually every marketing dollar spent today
must be justified as both effective and
efficient in terms of “return of marketing
investment” (ROMI).
 Some observers believe that up to 70% (or
even more) of marketing expenditures may be
devoted to programs and activities that
cannot be linked to short-term incremental
profits, but yet can be seen as improving
brand equity.

The Brand Value Chain
 Broader perspective than just the
CBBE model
 The brand value chain is a
structured approach to
assessing the sources and
outcomes of brand equity and
the manner by which marketing
activities create brand value.

 The brand value chain has
several basic premises.
Fundamentally, it assumes that
the value of a brand ultimately
resides with customers.

 Based on this insight, the model next
assumes that the brand value creation
process begins when the firm invests
in a marketing program targeting actual
or potential customers.
 The marketing activity associated with
the program then affects the customer
mindset with respect to the brand –
what customers know and feel about
the brand.

 This mindset, across a broad group of customers,
then results in certain outcomes for the brand in
terms of how it performs in the marketplace – the
collective impact of individual customer actions
regarding how much and when they purchase, the
price that they pay, and so forth.
 Finally, the investment community considers this
market performance and other factors such as
replacement cost and purchase price in acquisitions
to arrive at an assessment of shareholder value in
general and a value of the brand in particular

 The model also assumes that a number of linking
factors intervene between these stages.
 These linking factors determine the extent to
which value created at one stage transfers or
“multiplies” to the next stage.
 Three sets of multipliers moderate the transfer
between the marketing program and the
subsequent three value stages: the program
quality multiplier, the marketplace conditions
multiplier, and the investor sentiment multiplier.

Brand Value Chain
Program
Multiplier
Marketing
Program
Investment
Customer
Mindset
Market
Performance
Shareholder
ValueVALUE
STAGES
- Product
- Communications
- Trade
- Employee
- Other
- Awareness
- Associations
- Attitudes
- Attachment
- Activity
- Price premiums
- Price elasticity
- Market share
- Expansion success
- Cost structure
- Profitability
- Stock price
- P/E ratio
- Market capitalization
Consumer
MultiplierFILTERS
- Clarity
- Relevance
- Distinctiveness
- Consistency
- Channel support
- Consumer size and profile
- Competitive reactions
- Market dynamics
- Growth potential
- Risk profile
- Brand contribution
Market
Multiplier

Value Stages
 Marketing program investment
 Any marketing program that can be attributed to
brand value development
 Customer mindset
 In what way have customers been changed as a
result of the marketing program?
 Market performance
 How do customers respond in the marketplace?
 Shareholder value

Marketing Program Investment
 Any marketing program investment that potentially
can be attributed to brand value development, either
intentional or not, falls into this first value stage.
 Specifically, some of the bigger marketing
expenditures relate to product research,
development, and design; trade or intermediary
support; marketing communications (e.g.,
advertising, promotion, sponsorship, direct and
interactive marketing, personal selling, publicity, and
public relations); and employee training.

Marketing Program Investment
 The extent of financial investment committed to
the marketing program, however, does not
guarantee success in terms of brand value
creation. Many marketers have spent billions of
dollars in marketing activities and programs but
due to questionably strategic and tactically
ineffective campaigns., have seen competitors
steal key market positions. The ability of a
marketing program investment to transfer or
multiply farther down the chain will thus depend
on qualitative aspects of the marketing program
via the program quality multiplier.

Program Quality Multiplier
 The ability of the marketing program to affect the
customer mindset will depend on the quality of that
program investment. There are a number of different
means to judge the quality of a marketing program
and many different criteria may be employed. To
illustrate, four particularly important factors are as
follows:

Multipliers
8.16
 Program quality multiplier
 The ability of the marketing program to affect
customer mindset
 Must be clear, relevant, distinct, and consistent
 Customer multiplier
 The extent to which value created in the minds of
customers affects market performance
 It depends on factors such as competitive
superiority, channel support, and customer size and
profile
 Market multiplier
 The extent to which the value generated through
brand market performance is manifested in
shareholder value
 It depends on factors such as market dynamics,
growth potential, risk profile, and brand contribution

Program Quality Multiplier
1. Clarity: How understandable is the marketing program?
Do consumers properly interpret and evaluate the
meaning conveyed by brand marketing?
2. Relevance: How meaningful is the marketing program to
customers? Do consumers feel that the brand is one that
should receive serious consideration?
3. Distinctiveness: How unique is the marketing program
from those offered by competitors? How creative or
differentiating is the marketing program?
4. Consistency: How cohesive and well integrated is the
marketing program? Do all aspects of the marketing
program combine to create the biggest impact with
customers? Does the marketing program relate effectively
to past marketing programs and properly balance
continuity and change, evolving the brand in the right
direction?

Customer Mindset
 A judicious marketing program investment could result
in a number of different customer related outcomes.
Essentially, the issue is,
 in what ways have customers been changed as a result of the
marketing program?
 How have those changes manifested themselves in the
customer mindset?
 Remember that the customer mindset includes everything
that exists in the minds of customers with respect to a
brand: thoughts, feelings, experiences, images,
perceptions, beliefs, attitudes, and so forth. Understanding
customer mindset can have important implications for
marketing programs.

19
Customer Mind-Set
Awareness
Associations (Image)
Attitude (Intention; Acceptability)
Attachment (Loyalty; Addiction)
Activity (WOM)

Customer Mindset
A host of different approaches and measures are available to
assess value at this stage. One simple way to reduce the
complexity of the brand resonance model into a simpler,
more memorable structure is in terms of five key
dimensions. The “5 A’s” are a way to highlight key
dimensions of the brand resonance model within the brand
value chain model as particularly important measures of
the customer mindset:
1. Brand awareness The extent and ease with which
customers recall and recognize the brand and thus the
salience of the brand at purchase and consumption.
2. Brand associations The strength, favorability, and
uniqueness of perceived attributes and benefits for the
brand in terms of points-of-parity and points-of-difference
in performance and imagery.
3. Brand attitudes Overall evaluations of the brand in terms of
the judgments and feelings it generates.

Customer Mindset
4. Brand attachment How intensely loyal the customer feels
toward the brand. A strong form of attachment, adherence,
refers to the consumer’s resistance to change and the ability of
a brand to withstand bad news (e.g., a product or service
failure). In the extreme, attachment can even become addiction.
5. Brand activity The extent to which customers are actively
engaged with the brand such that they use the brand, talk to
others about the brand, seek out brand information, promotions,
and events, and so on.

Customer Mindset
 An obvious hierarchy exists in these five dimensions of the
brand resonance model: Awareness supports associations,
which drive attitudes that lead to attachment and activity.
According to the brand resonance model, brand value is
created at this stage when customers have
1. deep, broad brand awareness;
2. appropriately strong and favorable points-of-parity and
points-of-difference;
3. positive brand judgments and feelings;
4. intense brand attachment and loyalty; and
5. a high degree of brand engagement and activity.

Marketplace Conditions
Multiplier
The extent to which value created in the minds of customers
affects market performance depends on various contextual
factors external to the customer. Three such factors are as
follows:
1. Competitive superiority: How effective are the quantity and
quality of the marketing investment of other competing
brands.
2. Channel and other intermediary support: How much brand
reinforcement and selling effort is being put forth by
various marketing partners.
3. Customer size and profile: How many and what types of
customers (e.g., profitable or not) are attracted to the
brand.

Marketplace Conditions
Multiplier
 The competitive context faced by a brand can have a
profound effect on its fortunes.
 For example, both Nike and McDonald’s have benefited in
the past from the prolonged marketing woes of their main
rivals, Reebok and Burger King, respectively.
 Both of these latter brands have suffered from numerous
repositionings and management changes.
 On the other hand, MasterCard has had to contend for the
past decade with two strong, well-marketed brands in Visa
and American Express and consequently has faced an
uphill battle gaining market share despite its well-received
“Priceless” ad campaign.

Market Performance
 The customer mindset affects how customers react or
respond in the marketplace in a six main ways.
 The first two outcomes relate to price premiums and price
elasticities. How much extra are customers willing to pay
for a comparable product because of its brand? And how
much does their demand increase or decrease when the
price rises or falls?
 A third outcome is market share, which measures the
success of the marketing program to drive brand sales.
Taken together, the first three outcomes determine the
direct revenue stream attributable to the brand over time.
Brand value is created with higher market shares, greater
price premiums, and more elastic responses to price
decreases and inelastic responses to price increases.

Market Performance
 The fourth outcome is brand expansion, the success of the
brand in supporting line and category extensions and new
product launches into related categories. Thus, this
dimension captures the ability to add enhancements to the
revenue stream.
 The fifth outcome is cost structure or, more specifically,
savings in terms of the ability to reduce marketing program
expenditures because of the prevailing customer mindset.
In other words, because customers already have favorable
opinions and knowledge about a brand, any aspect of the
marketing program is likely to be more effective for the
same expenditure level; alternatively, the same level of
effectiveness can be achieved at a lower cost because ads
are more memorable, sales calls more productive, and so
on.
 When combined, these five outcomes lead to brand

Investor Sentiment Multiplier
 The extent to which the value engendered by the
market performance of a brand is manifested in
shareholder value depends on various contextual
factors external to the brand itself. Financial analysts
and investors consider a host of factors in arriving at
their brand valuations and investment decisions.
Among these considerations are the following:

Investor Sentiment Multiplier
1. Market dynamics What are the dynamics of the financial markets
as a whole (e.g., interest rates, investor sentiment, or supply of
capital)?
2. Growth potential What are the growth potential or prospects for
the brand and the industry in which it operates? For example,
how helpful are the facilitating factors and how inhibiting are the
hindering external factors that make up the firm’s economic,
social, physical, and legal environment?
3. Risk profile What is the risk profile for the brand? How
vulnerable is the brand likely to be to those facilitating and
inhibiting factors?
4. Brand contribution How important is the brand as part of the
firm’s brand portfolio and all the brands it has?

Shareholder Value
 Based on all available current and forecasted information about
a brand as well as many other considerations, the financial
marketplace then formulates opinions and makes various
assessments that have very direct financial implications for the
brand value.
 Three particularly important indicators are the stock price, the
price/earnings multiple, and overall market capitalization* for the
firm. Research has shown that not only can strong brands
deliver greater returns to stockholders, they can do so with less
risk.
* Market capitalization (often market cap) is a measurement of size
of a business enterprise (corporation) equal to the share price
times the number of shares outstanding (shares that have been
authorized, issued, and purchased by investors) of a publicly
traded company.

System
 A set of research procedures that is designed
to provide timely, accurate, and actionable
information for marketers so that they can make
the best possible tactical decisions in the short
run and strategic decisions in the long run

System
 Conducting brand audits
 Developing tracking procedures
 Designing a brand equity management system

Designing Brand Tracking
Studies
 Tracking studies involve information collected
from consumers on a routine basis over time
 Often done on a “continuous” basis
 Provide descriptive and diagnostic information

What to Track
 Customize tracking surveys to address the
specific issues faced by the brand
 Product-brand tracking
 Corporate or family brand tracking
 Global tracking

How to Conduct Tracking Studies
 Who to track (target market)
 When and where to track (how frequently)
 How to interpret brand tracking

Sample Brand Tracking Survey-
McDonald’s
BRAND AWARENESS- Recall (unaided)
a) What brands of quick service restaurant chains are you
aware of?
b) At which brands of quick service restaurant chains would
you consider using?
c) Have you eaten in a quick service restaurant chain in the
last week? Which ones?
d) If you were to eat in a quick service restaurant
tomorrow for lunch, which one would you go to?
e) What if instead it were for dinner? Where would you
go?
f) What if instead it were for breakfast? Where would
you go?
g) Which are your favorite quick serve restaurant
chains?

Sample Brand Tracking Survey-
McDonald’s
BRAND AWARENESS
Recognition
Now, we want to ask you some questions about a
particular quick service restaurant chain,
McDonald’s.
a) Have you heard of this restaurant? [Establish
familiarity]
b) Have you eaten at this restaurant? [Establish trial]
c) When I say McDonald’s, what are the first
associations that come to your mind? Anything else?
[List all]

Brand Tracking Survey-McDonald’s
BRAND IMAGE
What are the top five words that come to mind when you think of
"McDonalds" (This should take less than 30 seconds)
Brand Attributes
How well do the following words describe McDonalds? (1= not at all, 5 =
very much)?
McDonald’s ...
a) Is convenient to eat at
b) Provides quick, efficient service
c) Has clean facilities
d) Is for the whole family
e) Has delicious food
f) Has healthy food
g) Has a varied menu
h) Has friendly, courteous staff
i) Offers fun promotions
j) Has a stylish and attractive look
k) Has good prices

Brand Personality (note this might also include user
imagery, usage imagery as breakout questions)
How well do the following traits describe McDonalds
(1= not at all, 5 = very much)?
 Sincere
 Exciting
 Competent
 Sophisticated
 Rugged
 Peaceful
 Passionate

Judgments of Quality
 What is your overall opinion of McDonald’s?
 What is your assessment of the product quality of McDonald’s?
 How good a value is this McDonald’s?
 Is McDonald’s worth a premium price?
 What do you like best about McDonald’s?
Judgments of Credibility
 How innovative is McDonald’s?
 How much do you admire McDonald’s?
 How much do you respect McDonald’s?
Judgments of Consideration
 How likely would you be to recommend McDonald’s to others?
 To what extent does McDonald’s offer advantages that other brands
cannot?
 How personally relevant is McDonald’s to you?

Judgments of Superiority
 How unique is McDonald’s?
 To what does McDonald’s offer advantages that other
brands cannot?
 To what extent is McDonald’s superior to other brands in
the quick service restaurant category?
Feelings
Does McDonald’s give you a feeling of … (1= not at all, 5 =
very much)
 Warmth
 Excitement
 Trust
 Awe
 Fear
 Calm
 Intensity

RELATIONSHIP
If McDonalds came to life as a person, what type of
person would she/he be? This should take less than 30
seconds.
If McDonalds came to life as a person and was at a party
with you, what would she/he say to you? This should
take less than 30 seconds.
Loyalty
 I consider myself loyal to McDonalds.
 I eat at McDonalds whenever I can.
 This is the one brand of fast‐food restaurant I would
most prefer to visit.
 If McDonalds were not an option, it would make little
difference to me if I had to eat elsewhere.
 I would go out of my way to go to McDonalds

Brand Equity Management
System
 A brand equity management
system is a set of organizational
processes designed to improve the
understanding and use of the
brand equity concept within a firm:
Brand equity charter
Brand equity report
Brand equity responsibilities

Brand Equity Charter
 Provides general guidelines to marketing
managers within the company as well as key
marketing partners outside the company
 Should be updated annually

Brand Equity Charter Components
 Define the firm’s view of the brand equity
 Describe the scope of the key brands
 Specify actual and desired equity for the
brand
 Explain how brand equity is measured
 Suggest how brand equity should be
measured
 Outline how marketing programs should be
devised
 Specify the proper treatment for the brand in
terms of trademark usage, packaging, and

Brand Equity Report
 Assembles the results of the tracking survey and
other relevant performance measures
 To be developed monthly, quarterly, or annually
 Provides descriptive information as to what is
happening with the brand as well as diagnostic
information on why it is happening

Brand Equity Report
 In particular, one section of the report should
summarize consumer perceptions on key
attribute or benefit associations, preferences,
and reported behavior as revealed by the
tracking study. Another section of the report
should include more descriptive market level
information such as

Brand Equity Report
1) Product shipments and movement through
channels of distribution.
2) Relevant cost breakdowns.
3) Price and discount schedules where
appropriate.
4) Sales and market share information broken
down by relevant factors, e.g., geographic
region, type of retail account or customer, etc.
5) Profit assessments.

Brand Equity Responsibilities
 Organizational responsibilities and processes
that aim to maximize long-term brand equity
 Establish position of VP or Director of Equity
Management to oversee implementation of Brand
Equity Charter and Reports
 Ensure that, as much as possible, marketing of
the brand is done in a way that reflects the spirit
of the charter and the substance of the report

Internal Branding
 Internal brand management makes sure that
employees and partners appreciate and
understand basic branding notions and how
these can affect the equity of the brands that
they are working with. The ultimate goal is to
make everyone in the organization, from the
CEO to the trainees, to become passionate
brand advocates.
 This can be achieved, by following a three
step course: “Hear It, Believe It, Live It”. To
get employees to “live the brand”,

Brand Assimilation Process-Scott Davis
Principle 1: Make the Brand Relevant
One of most critical principles is to make sure the brand is
relevant to employees. Each employee in each functional group
or unit of the company must understand not just what the brand
stands for, but how they as individuals can embrace its meaning
and represent it publicly. Only employees who understand the
brand can help support it and use it to guide decision making.
Principle 2: Make the Brand Accessible
If employees are to live and breathe the organization’s brand,
they must be equipped with the information and tools they need
to understand it. Giving employees the ability to make brand-
supporting decisions means that they must have ready access to
answers to questions. Without creating that kind of access, the
organization risks creating employees who are disinterested or
frustrated with the task.

Principle 3: Reinforce the Brand Continuously
For brand to become a cultural underpinning of the
organization, employees must be continuously exposed to
its meaning, far beyond the initial rollout of the internal
branding program.Take Southwest Airlines as an example.
In seeking to internally apply the attributes of its brand
promise,“A symbol of freedom,” Southwest’s people (or
HR) department teamed with other such departments as
public relations and marketing to create an internal
branding campaign around employee freedom. As part of
the campaign, support was fostered through tactics such
as having the carrier’s in-house publication highlight
employee freedoms, having employees write about how
they personally took advantage of freedoms, and renaming
the intranet site “Freedom Net.”

Principle 4: Make Brand Education an Ongoing
Program
It’s particularly important that new employees are
grounded in the brand culture and inspired to
believe in what the brand represents. Putting these
processes in place helps newcomers better
understand the brand’s role and impact on the
business, and it gives them the tools and the
frameworks they need for their day-to-day
decision-making. Additionally, the investment the
company makes in training new employees speaks
volumes about its level of commitment to them

Principle 5: Reward On-Brand Behaviors
An incentive system rewarding employees for
exceptional support of the brand strategy should
be tied to the rollout of the internal branding
program. This not only helps create and maintain
excitement in the program, but it underscores,
through individual recognition, the kinds of
behaviors that need to be supported. Rewards also
help demonstrate the organization’s commitment
to the brand and the program while creating a
tangible model that helps employees better
understand how they, too, perform on-brand.

Principle 6: Align Hiring Practices
Because the success of a brand assimilation
program hinges on employees’ ability and capacity
to embody the brand spirit, it’s also important that
HR and marketing work together to develop basic
screening procedures that ensure new hires will fit
with and support the company’s brand culture.
This can be accomplished through a variety of
tactics, starting with the incorporation of the core
and extended brand identity elements into the
process of evaluating prospective employees.
Over time, job descriptions should be rewritten to
incorporate these same brand identity traits into
the list of expected employee behaviors.

Brand Audit
 Externally, consumer-focused assessement
 A comprehensive examination of a brand involving
activities to assess the health of the brand,
uncover its sources of equity, and suggest ways
to improve and leverage that equity
 It includes brand vision, mission, promise, values,
position, personality, and performance

Importance of Brand Audits
 Understand sources of brand equity
 Firm perspective
 Consumer perspective
 Set strategic direction for the brand
 Recommend marketing programs to maximize
long-term brand equity

Brand Audit
 To learn what consumers know about brands/
products so that the company can make informed
strategic positioning decision, marketers should
first conduct a brand audit to profile consumer
knowledge structures.
 Brand audit is comprehensive examination of a
brand to discover its sources of brand equity
 Brand audit can set strategic direction for the brand
- Are the current sources of brand equity
satisfactory?
- Do certain brand associations need to be
strengthened?
- Does the brand lack uniqueness?
- What brand opportunities/ potential challenges
exist?
 Brand audit consists 2 steps:
1. Brand inventory
2. Brand exploratory

Brand Inventory
 A current comprehensive profile of how all the
products and services sold by a company are
branded and marketed:
 Brand elements
 Supporting marketing programs
 Profile of competitive brands
 POPs and PODs
 Brand mantra

Brand Inventory
 Provides current/ comprehensive profile of
how all products/ services sold by a company
are marketed/ branded
 Requires to catalogue names, logos,
symbols, characters, packaging, slogans,
trademarks, product attributes, pricing,
communications, distribution and any other
relevant marketing activity related to the
brand in visual and written form
 It helps to suggest what consumers’ current
perceptions may be based on
 A thorough brand inventory should be able to
reveal the extent of brand consistency
 Brand inventory may help to uncover
undesirable overlap that could lead to
consumer/ retailer confusion

Brand Inventory (Cont.)
 Suggests the bases for positioning the brand
 Offers insights to how brand equity may be better
managed
 Assesses consistency in message among
activities, brand extensions, and sub-brands in
order to avoid redundancies, overlaps, and
consumer confusion

Brand Exploratory
 Provides detailed information as to how
consumers perceive the brand:
 Awareness
 Favorability
 Uniqueness of associations
 Helps identify sources of customer-based brand
equity
 Uncovers knowledge structures for the core brand
as well as its competitors

Brand Exploratory
 Brand exploratory is research directed to
understanding what consumers think/ feel
about the brand
 A number of prior research studies may exist
in company archives and be relevant
 It is also useful to interview internal personal
to gain an understanding of their beliefs
about consumer perceptions for the brand
and competitive brands
 Finally, qualitative research is suggestive, but
a more definitive assessment of the depth/
breadth of brand awareness and the strength/
favorability/ uniqueness of brand
associations often requires a quantitative

Suggested Brand Audit Outline
 Brand audit objectives, scope, and approach
 Background about the brand (self-analysis)
 Background about the industries
 Consumer analysis (trends, motivation,
perceptions, needs, segmentation, behavior)
 Brand inventory
 Elements, current marketing programs, POPs, PODs
 Branding strategies (extensions, sub-brands, etc.)
 Brand portfolio analysis
 Competitors’ brand inventory
 Strengths and weaknesses

Brand Audit Outline (Cont.)
 Brand exploratory
 Brand associations
 Brand positioning analysis
 Consumer perceptions analysis (vs. competition)
 Summary of competitor analysis
 SWOT analysis
 Brand equity evaluation
 Strategic brand management recommendations

Brand equity

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Brand equity

Similar to Brand equity (20)

Recently uploaded

Recently uploaded (20)

Brand equity