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1. LIEBERMAN RESEARCH WORLDWIDE
1900 Avenue of the Stars, 15th floor
Los Angeles, CA 90067
Tel: (310) 553-0550 • Fax: (310) 553-4607
www.lrwonline.com
A Practical Guide to Measuring Brand Equity

2. Marketers attempting to measure brand equity should understand:
¶ How is brand equity defined and what are its component parts?
¶ Why would it be important to measure brand equity?
¶ What are the research methods and approaches that will be most effective?
¶ Once obtained, how can these measures be used to greatest advantage?
Introduction
The purpose of this document is to provide a practical guide for marketers interested in measuring and more effectively
managing brand equity. The framework attempts to identify all of the components of brand equity and the recommended
approaches for measuring each. In application, of course, the measurement approach and process should be customized to
best meet the clients’ needs.

3. Components
The Marketing
Effect That Is
Uniquely
Attributable to
the Brand
The Marketing
Effect That Is
Uniquely
Attributable to
the Brand
Brand Equity
What Is Brand Equity?
Brand equity can be defined as the marketing effect that is uniquely attributable to the brand. More specifically, it can be
characterized as franchises, or constituencies, who possess leverageable attitudes and beliefs that can be translated into
greater demand for branded products and services.
A customer franchise/constituency of some determined size and
quality ---
A customer franchise/constituency of some determined size and
quality ---
Who have leverageable associations with, and attitudes toward,
the brand ---
Who have leverageable associations with, and attitudes toward,
the brand ---
Which result in a greater willingness to consider, and pay a
premium price for, products and services with the brand name.
Which result in a greater willingness to consider, and pay a
premium price for, products and services with the brand name.
BRAND EQUITY DEFINED

4. REASONS TO MEASURE EQUITY
What’s The Motivations For Measuring Brand Equity
Typically, management is interested in measuring brand equity for one of two reasons: To establish a value for
financial/accounting purposes, or to increase the productivity of the brand by managing it more effectively.
• The company that owns the
brand is being sold/merging
• The brand itself is being sold
• Licensing or co-marketing
activities are being
considered/undertaken with
business partners
• The company that owns the
brand is being sold/merging
• The brand itself is being sold
• Licensing or co-marketing
activities are being
considered/undertaken with
business partners
• The brand is under-performing
and diagnostic input is needed
• The brand is performing at
acceptable levels, but not
optimally
• There may be unrealized line
or brand extension potential
• The brand is under-performing
and diagnostic input is needed
• The brand is performing at
acceptable levels, but not
optimally
• There may be unrealized line
or brand extension potential
Establish a Value
for the Brand
Provide Direction to
Improve Productivity

5. Key Measures Brand Equity Components
Key Measures of Brand Equity
To obtain an estimate of overall brand equity, each of the primary components must be evaluated. This process includes
determining the size and nature of the franchise, identifying the positive images and associations that define the brand and
measuring the degree of marketing leverage the brand provides.
• Market penetration of the brand
• Profile of the customer franchise
• Brand loyalty and satisfaction levels,
i.e., how strong is your grasp
• Market penetration of the brand
• Profile of the customer franchise
• Brand loyalty and satisfaction levels,
i.e., how strong is your grasp
• Words/phrases, symbols,
products and concepts associated
with the brand
• Brand imagery
• Perceived performance
• Words/phrases, symbols,
products and concepts associated
with the brand
• Brand imagery
• Perceived performance
• Price elasticity (brand/price
trade-off)
• Brand extendibility/stretch
• Price elasticity (brand/price
trade-off)
• Brand extendibility/stretch
Customer franchise of some
determined size and quality ---
Customer franchise of some
determined size and quality ---
Who have leverageable associations
with and attitudes toward the brand ---
Who have leverageable associations
with and attitudes toward the brand ---
Which result in a greater willingness
to consider, and pay a premium for,
products and services with the
brand name
Which result in a greater willingness
to consider, and pay a premium for,
products and services with the
brand name

6. INTERVIEW CONTENT
Recommended Methodology
It is possible to obtain all of the key measures of brand equity from a single survey among a representative sample of category
users. The interview will typically be 25 - 45 minutes long. It should be conducted in-person either via intercept or by pre-
recruiting to a central location. In both cases the sample needs to be stratified and weighted to ensure representativeness.
Marketing LeverageMarketing LeverageAttitude and ImageryAttitude and ImageryCustomer FranchiseCustomer Franchise
Penetration
• Brand awareness
• Advertising awareness
• Trial and usage
Penetration
• Brand awareness
• Advertising awareness
• Trial and usage
Price Elasticity/Premium
• Brand/price trade-off exercise
• Premium price commanded by
the brand
Price Elasticity/Premium
• Brand/price trade-off exercise
• Premium price commanded by
the brand
Brand Associations
• Advertising recall
• Words/phrases, symbols
• Products and services
• Etc.
Brand Associations
• Advertising recall
• Words/phrases, symbols
• Products and services
• Etc.
Profiling
• Demographics
• Psychographics
• Lifestyle
• Usage patterns
Profiling
• Demographics
• Psychographics
• Lifestyle
• Usage patterns
Brand Extendibility
• Acceptance (i.e., appropriateness
and purchase interest) of “close-in”
products and services
• Acceptance of “farther out”
products
Brand Extendibility
• Acceptance (i.e., appropriateness
and purchase interest) of “close-in”
products and services
• Acceptance of “farther out”
products
Attribute Importance
• Objective product attributes
• Brand image
Attribute Importance
• Objective product attributes
• Brand image
Loyalty/Commitment
• Primary/exclusive usage
• Purchase intent (next time)
• Overall satisfaction
Loyalty/Commitment
• Primary/exclusive usage
• Purchase intent (next time)
• Overall satisfaction
Attribute Performance
• Product attributes
• Image attributes
Attribute Performance
• Product attributes
• Image attributes

7. Penetration -- Sizing the Franchise
The primary purpose of the penetration measures is to provide an estimate of the size of the customer franchise. They also
provide an understanding of the brand dynamics which is helpful in developing strategies to improve overall performance.
Brand Penetration
and Dynamics
Awareness
Trial
Current
Usage
Primary
Usage
Exclusive
Usage
Brand awareness
— Unaided
— Aided
Advertising awareness
— Unaided
— Aided
Usage
— Ever tried
— Current usage
— Primary usage
— Exclusive usage
— Purchased last time
*All key competitors
Brand awareness
— Unaided
— Aided
Advertising awareness
— Unaided
— Aided
Usage
— Ever tried
— Current usage
— Primary usage
— Exclusive usage
— Purchased last time
*All key competitors
Data Needs*

8. Profiling the Franchise
Demographics, psychographics, usage and lifestyle information provide the input to create an in-depth profile of the
customer franchise. CHAID analysis is used to synthesize these inputs into a summary profile and a discriminant function
analysis identifies key characteristics for targeting.
Demographics
— Age
— Income
— Ethnicity
— Education
— Household composition
— Etc.
Lifestyle
— Home Ownership
— Travel patterns
— Etc.
Psychographics
— (Appropriate to category)
Usage patterns
— (Appropriate to category)
Demographics
— Age
— Income
— Ethnicity
— Education
— Household composition
— Etc.
Lifestyle
— Home Ownership
— Travel patterns
— Etc.
Psychographics
— (Appropriate to category)
Usage patterns
— (Appropriate to category)
Data Needs
• Males 18-34 years old
• Completed college
• Own home
• Believe price is best indicator of quality
• Prefer IBM compatible to MAC platform
• Not brand loyal
• Males 18-34 years old
• Completed college
• Own home
• Believe price is best indicator of quality
• Prefer IBM compatible to MAC platform
• Not brand loyal
• Prefer IBM compatible to MAC
• Have laptop PC
• Use PC for work and at home
• Use 10+ hours/week
• Prefer IBM compatible to MAC
• Have laptop PC
• Use PC for work and at home
• Use 10+ hours/week
CHAID (Illustrative)
Discriminant Function Analysis
(Illustrative)

9. Profiling the Franchise
Demographics, psychographics, usage and lifestyle information provide the input to create an in-depth profile of the
customer franchise. CHAID analysis is used to synthesize these inputs into a summary profile and a discriminate function
analysis identifies key characteristics for targeting.
Trial & usage
— Ever tried
— Current usage
— Primary usage
— Exclusive usage
Purchase interest
— (Next time)
Overall satisfaction
Trial & usage
— Ever tried
— Current usage
— Primary usage
— Exclusive usage
Purchase interest
— (Next time)
Overall satisfaction
Data Needs
50%
30%
20%
10%
Ever
tried
Current
usage
Primary
usage
Exclusive
usage
Definitely
Not
Probably
Not
Might
Probably
Definitely
Very
Dissatisfied
Somewhat
Dissatisfied
Neutral
Somewhat
Dissatisfied
Very
Satisfied
Overall Purchase
Satisfaction Interest
Loyalty Funnel

10. Brand Associations
The products and services associated with a brand are one important measure of its fundamental meaning in the market.
Other associations such as slogans, logos, trademarks, etc. are important indicators of the brand’s communication power
and profile. LRW uses several special techniques such as clutter logo recognition and write/draw exercises to measure
these associations.
Products and services
Advertising recall
— Unaided
— Aided
Associated words/phrases
— Slogans
— Taglines
Associated symbols
— Logos
— Signatures
— Trademarks
Characters
— Founder/management
— Spokesperson
— Continuing character
Concepts/ideas
Products and services
Advertising recall
— Unaided
— Aided
Associated words/phrases
— Slogans
— Taglines
Associated symbols
— Logos
— Signatures
— Trademarks
Characters
— Founder/management
— Spokesperson
— Continuing character
Concepts/ideas
Data Needs
• Write/draw recall exercises (assess colors,
words, symbols)
• Both open-end and aided recall
• Correct brand association within a competitive
context
• Logo and symbol recognition within
competitive clutter
• Write/draw recall exercises (assess colors,
words, symbols)
• Both open-end and aided recall
• Correct brand association within a competitive
context
• Logo and symbol recognition within
competitive clutter
Special Techniques

11. Brand Imagery Performance
An extensive battery of both product and image attributes are rated on their importance and all of the competing brands are
rated on their performance on the same attributes. The analysis includes importance vs. performance grids to identify
strengths and weaknesses and perceptual brand maps to identify the strength of the associations for each brand.
Attribute Importance
— Product attributes
— Image attributes
Brand Performance Ratings
— Product attributes
— Image attributes
Competitive Performance
Ratings
Attribute Importance
— Product attributes
— Image attributes
Brand Performance Ratings
— Product attributes
— Image attributes
Competitive Performance
Ratings
Data Needs Perceptual Brand
Map
Importance vs. Performance
Brand A
• Trust-
worthy
• Reliable
• Convenient
• Low
Price
• Service
• Warranty
• Quality
• Consulting
• Brand A
• Brand B

Service
• Brand C

Quality

Value
High
Low
Importance
High LowPerformance

Price

12. Pricing Leverage -- Brand/Price Trade-Off
A purchase decision exercise in which respondents systematically trade-off brand vs. price, combined with a conjoint
analysis, is used to provide measures of price elasticity. The result is the specific price premium the brand commands
relative to an unbranded or competitively branded version of the same product.
Brand I
Attributes:
— A
— B
— C
Price: High
Brand I
Attributes:
— A
— B
— C
Price: High
Purchase Decision Trade-Off
- Conjoint Analysis -
Price Premium vs.
Unbranded Product
Brand I
Attributes:
— A
— B
— C
Price: High
Brand I
Attributes:
— A
— B
— C
Price: High
Brand I
Attributes:
— A
— B
— C
Price: High
Brand I
Attributes:
— A
— B
— C
Price: High
$17.00
$11.50
$5.00
$23.50
$0 $5 $10 $15 $20 $25
Brand I
Brand II
Brand III
Brand IV

13. Brand/Category Appropriateness
Two Monadic Cells
Appropriateness Map
Brand Extendibility
The ability of a brand to stretch into other product or service categories is a key measure of its marketing leverage. LRW
recommends monadic cells to separate “close-in” new product ideas from “farther out” ideas to eliminate cross-influences.
We also recommend the use of stimulus such as branded packages or products when possible. The results are plotted on an
appropriateness map which illustrates the relative potential of competing brands in each product category.
Cell #1: Cell #2:
Close In Farther Out
Product Competitors Competitors
Category B1 B2 B3 B1 B2 B3
A 8 6 5 8 5 9
B 7 5 6 6 4 7
C 6 5 6 5 6 7
D 4 6 7 6 8 9
E 8 9 9 6 4 4
F 9 5 6 4 7 7
G 5 10 4 5 9 5
H 4 4 7 4 5 8
I 7 2 2 7 5 7
J 10 7 4 7 4 3
Cell #1: Cell #2:
Close In Farther Out
Product Competitors Competitors
Category B1 B2 B3 B1 B2 B3
A 8 6 5 8 5 9
B 7 5 6 6 4 7
C 6 5 6 5 6 7
D 4 6 7 6 8 9
E 8 9 9 6 4 4
F 9 5 6 4 7 7
G 5 10 4 5 9 5
H 4 4 7 4 5 8
I 7 2 2 7 5 7
J 10 7 4 7 4 3
• H
• A
• D
• F
• B
CompaqIB
Xerox
• I
• E
• C
• G

14. Customer Franchise
• 14 MM households aware with moderate to very positive overall
impressions
• 11 MM households that use at least occasionally
• 6 MM loyal/highly satisfied user households
• Most loyal users are upper income males who value status and prestige
and spend heavily on luxury goods
Associations, Imagery and
Performance
Marketing Leverage
Typical Brand Equity Summary
The output from LRW’s brand equity audit includes the size and profile of the customer franchise, the attitude and image assets
associated with the brand, and its marketing leverage.
Executive SummaryEquity Components
• The brand commands a $14 premium vs. and unbranded product with
identical attributes
• There is a good opportunity to extend existing lines, but little
opportunity to extend the brand beyond the current category
• Brand is strongly associated with good value and reliability and
weakly associated with status
• Logo, package and advertising spokespersons all have very high
recognition
Illustrative

15. Key Measures Brand Equity Components
Channel Equity
In addition to measuring equity with end-customers, for many products and services it is also important to measure equity
in the distribution channels, e.g., supermarkets, electronics distributors, etc. The components of channel brand equity are
very similar, but the key measures are slightly different.
• Penetration of primary and secondary channels
• Profile of primary distributors
• Overall satisfaction levels
• Penetration of primary and secondary channels
• Profile of primary distributors
• Overall satisfaction levels
• Performance on key attributes
• Performance on key attributes
• Margins (net of promotional spending)
• Promotional support
• Extendibility
• Margins (net of promotional spending)
• Promotional support
• Extendibility
Extent and quality of distribution networkExtent and quality of distribution network
Attitudes and perceived performanceAttitudes and perceived performance
Ability to command a premium price and sell-in
new products
Ability to command a premium price and sell-in
new products

16. PARTIAL LIST OF CLIENTS
Why Select LRW for Brand Equity Research?
LRW has conducted a large number of brand equity projects, many for large blue-chip clients. Some have been full brand equity audits
while others have had a more limited scope.
ITT HartfordITT Hartford
AT&TAT&T
Kellogg’sKellogg’s
Eli LillyEli Lilly
Eddie BauerEddie Bauer
TurnerTurner
Chicago TribuneChicago Tribune
Blue CrossBlue Cross
Bank of AmericaBank of America
BarclaysBarclays
Macy’sMacy’s
Taco BellTaco Bell
Discovery ChannelDiscovery Channel
Callaway GolfCallaway Golf
Warner Bros.Warner Bros.
MicrosoftMicrosoft
Brooklyn Union GasBrooklyn Union Gas
SunbeamSunbeam