measuring-brand-equity-1226676362976116-9

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MeasuringBrand Equity

May 2010

BrandAmplitude, LLCAll Rights Reserved


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Brand Strategy Process

Target & Insight

Brand Execution

BrandElements

CompetitiveAssessment

BrandInventory

EquityPyramid

Positioning

Objectives & Metrics

Personality

CommunicationsStrategy

Brand Experience Map

Brand Audit

CRM &Community

Building

Points of Parity and Difference

2


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3

Equity Makes a Brand StrongBrand equity is a set of assets (and liabilities) linked

to a brands name and symbol that adds to (or

subtracts from) the value provided by a product or service to a firm and/or that firms customers .---David Aaker, 1996


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Differential effect ofknowledge onresponse tomarketing

Customer Based Brand Equity (CBBE)


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Perceptions Impact Behavior

Now which box would you choose?

$5 $5,000$500$50



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Kellers Brand Equity Framework:Sources of Brand Equity

BrandKnowledge

Brand Image

BrandAwareness Brand

Recognition

Brand Recall

Types of brandassociations

Favorability of associations

Strength of associations

Uniqueness of associations

(Familiarity)

Building Blocks

Points of parityPoints of difference

RelevanceBelievability

Personalrelevance


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Which jar would you choose?

$1.89$2.49

$2.29

http://images.google.com/imgres?imgurl=http://chronicle.augusta.com/images/headlines/020200/Prego_Sauce.jpg&imgrefurl=http://profile.myspace.com/index.cfm%3Ffuseaction%3Duser.viewprofile%26friendid%3D189769&h=400&w=244&sz=25&hl=en&start=10&tbnid=aGZ5W0m2_4qmAM:&tbnh=124&tbnw=76&prev=/images%3Fq%3Dprego%2Bsauces%26svnum%3D10%26hl%3Den%26rls%3DGGLJ,GGLJ:2006-39,GGLJ:en


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8Source: Brand Amplitude, proprietary research Sept., 2005

n=417 male and female primary grocery shoppers who purchased spaghetti sauce in past 3 months

?

57% rate qualitysuperior; 44% say cost

is not a barrier topurchase.





Price & Quality Perceptions Drive Brand Choice

Price Brands


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Which ideas are most relevant? Which are drivers?It can be difficult to determine what are the most relevant choice drivers.But Underlying Decision Drivers Can Be Hard to Discern


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CBBE can be thought of as a bridge.

What if everyone thought(and acted) like

Our Best Customers ?


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Why Measure Brand Equity?

Understand drivers of brandvalue in order to support strategicdecision making.

To evaluate efficacy of brandvalue building programs -- ROMI.

Why Measure Brand Equity?

If you dont know where you are, itshard to decide how to get there.

If you dont know where youre going,any road will get you there.


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Understandingcustomers decisiondrivers gives

companies insightsabout how toinfluence customerchoices.

Customer Values,Self-Image &

Goals

Choice BChoice A

Understand Decision Drivers


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The health of your brand is a prime indicator of the

health of your companyThe most effective way tomonitor your brand is to combine consistent real-world

research with the use of quantitative models tomeasure, and even predict, change in key variables.

Jim Gregory, The Best of Branding, 2004, p 57

Assess Marketing Efficacy


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What Are the Key Measures?


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Source: ANA, State of ROMI Measurement, 2007

Changes in brand awareness 81%

Changes in market share 79%

Changes in consumer attitude toward the brand 73%

Changes in purchase intent 59%

Return on objective 36%

Lifetime customer value 23%

Changes in the financial value of brand equity 20%

Most commonly used metrics:

The Usual Approaches


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Whats Wrong With These Metrics?


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There is no consistent definition of ROI," noted onerespondent. Marketing organizations are instead using"surrogate" metrics, ranging from input-related metrics suchas awareness and brand image in financial services to market share and growth in consumer packaged goods companies.

Source: ANA/Booz Allen online survey of over 370 marketing and non-marketing managers of mostly publiclytraded companies. October, 2004. About 80% of the respondents were senior or middle managers representing 14

industries, with over 90% of the respondents distributed evenly between Consumer Packaged Goods, FinancialServices, Retail, Technology, Telecommunications, Manufacturing, Health, Auto and Professional Services

industries.

Measuring Brand Equity

Need to begin with a clear definition of the construct we want tomeasure.


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30%

13%13% 13%13%

9%

4% 4%

0%

5%

10%15%

20%

25%

30%

How Do You Prove ROI?

Profit/Revenue

Marketing Mix Model

Common Metrics Across OrganizationCurrently Creating ROI Model

Not Able

Source: The Capre Group,Other/none of the above6%

Increase in customer lifetime value17%

Changes in the financial value of brand equity19%

Post buy analysis comparing media plan to actual media delivery21%Cost per sale generated23%

Gross rating points delivered25%

Reach and frequency achieved30%

Cost per lead generated34%

Ratio of advertising costs to sales revenue34%

Number of leads generated40%

Changes in market share49%

Changes in attitudes toward the brand51%

Changes in purchase intention55%

Total sales revenue generated by marketing activities55%

Changes in brand awareness57%

Incremental sales revenue generated by marketing activities66%

Other/none of the above6%

Increase in customer lifetime value17%

Changes in the financial value of brand equity19%

Post buy analysis comparing media plan to actual media delivery21%Cost per sale generated23%

Gross rating points delivered25%

Reach and frequency achieved30%

Cost per lead generated34%

Ratio of advertising costs to sales revenue34%

Number of leads generated40%

Changes in market share49%

Changes in attitudes toward the brand51%

Changes in purchase intention55%

Total sales revenue generated by marketing activities55%

Changes in brand awareness57%

Incremental sales revenue generated by marketing activities66%

Source: ANA/Forrester Survey of 300 executives,http://www.ana.net/news/2004/07_19_04.cfm

Definitions of Marketing ROI

Measuring Brand Equity


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Brand Loyalty Underlies Brand Equity

The mechanism that underlies (equity) is agreed to be a 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 Aint Created Equal, paper in review, Journal of Advertising Research

Brand Equity Defined

Loyal Behavior Psychological Preference


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Brand equity can be measured by determining loyal users contributionto category profits (ideally) and to brand sales (realistically).

PremiumBrand?

PriceBrand?

Loyalty Contribution by BrandCustomers who devote 80% or more of requirements to the brand

28.0%

34.5%

37.4%

Brand A Brand B Brand C

76% Sales 56% Sales 40% Sales

Every brand could benefit from having the core group represent a larger share of its total franchise.

Dr. Tom Reynolds

Brand Equity Defined


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Now , what Are the Key Measures?


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Aaker Keller Y&REqui-Trend

Inter-brand Aaker Keller Y&R

Equi-Trend

Inter-brand

Associations x x Market Trend x

Awareness x x Mktng Support x

Brand Trend x

Org.

AssociationsDifferentiation x

PerceivedQuality x x xx

Dist.Coverage x

PerceivedValue x

Esteem x Personality x x

International x Price Premium xx

Knowledge x Relevance x

Leadership x xx Salience xLegalProtectn x

UserSat./Loyalty x x xx

Market Share x Stability xSources: D. Aaker, Building Strong Brands, 1996; K. Keller, Strategic Brand Management, 2003

What The Experts Say


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Financial Value

The Right Approach

Activity &Program Metrics

MarketPerformance

Customer Perceptions& Behavior

Linking customer perceptions and market performance toimpact on financial value to assess ROMI.

You cant put attitudes in the bank!

ROMI


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Multiple measures at different levels of the value chain,benchmarked and tracked consistently over time:


MarketPerformance


The Right Approach

Marketing InvestmentProgram Quality

ClarityRelevanceDistinctivenessConsistency

Channel expansion

Brand awarenessBrand familiarity/associationsBrand evaluations/attitudesCustomer acquisition/ conversionCustomer retentionAttachment/Loyalty

SalesMarket sharePrice premiumProfitabilityPrice elasticityExpansion success


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Financial Value

The Right Approach

Stock priceP/E ratioMarket capitalizationBrand contribution (i.e.,CoreBrand index)


MarketPerformance


Linking customer perceptions and market performance toimpact on financial value to assess ROMI.

ROMI


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Customer Based Brand Metrics Based on CBBE model Traditional marketing and communications tracking Examples: Millward Brown BrandDynamics, Y&R Brand Asset Valuator

Incremental Brand Performance Short term incremental sales volume, premium pricing, other outcomes Historical modeling and predictive modeling

Branded Business Value

Financial value of intangible assets Measure increases or decreases in brand asset value over time

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The Right Approach

Measuring Brand Value, Don E. Schultz & Heidi F. Schultz, Kellogg on Branding, 2005


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Examples

Soft Drink Which brand of soft-drink do I consume most often? Which is my first preference of soft drink brands Top two boxes purchase intent or which brand do I expect to consume

on my next consumption occasion?

Wireless Brand owned/used Intention to Switch in next 3, 6, 12 months? What brands would I consider purchasing?

Packaged Food Price and Quality perceptions Number of purchases of last 10 allocated to each brand Future intent to buy

Equity Measure Examples


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Brand Valuation andMeasurement Firms

FinancialValue

StrategicValue

Measurement Firms

Are Brand Equity and Brand Valuation the Same?


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Brand Equity vs. Value

See also: The Best Global Brands, Businessweek , August 4, 2004; Microsoft, GE top brand equity study,

BtoB , 1.19.04. and Dont Waste Time with Brand Valuation, MarketingNPV.com, October 2004.

(For most companies) the operative 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 Aint Created Equal, paper in review, Journal of Advertising Research


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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

Royalty Rate

Share Tiering

New Equity Measure Ideas


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Share Tiering

Objective:

Relate changes in consumer behavior andperceptions to changes in financial

performance.

Consumer Measures:

1) Relative barrier of price2) Brand Quality perceptions3) Brand purchase loyalty4) Self-report future brand purchase

trend

In Search of True Brand Equity Metrics: All Market Share Aint Created Equal ,Journal of Advertising Research, June 2005, Tom Reynolds and Carol Phillips

Loyalty Contribution by BrandCustomers who devote 80% or more of requirements to the brand

28.0%

34.5% 37.4%

Brand A Brand B Brand C

76% Sales 56% Sales 40% Sales


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Base= 164 Male and Female Primary Shoppers 24-64 Who purchased spaghetti sauce at a grocery store, supermarket or club store in past 3 mos. (Sept 2005)

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3P1 122.0 36.8 5.2 P1 27.0 25.8 13.2 P1 17.6 15.8 2.8 P1 32.2 41.8 4.0

P2 84.2 42.0 20.0 P2 58.2 39.3 0.8 P2 0.0 4.8 0.8 P2 27.4 30.0 3.2P3 1.6 4.4 5.8 P3 4.2 4.8 6.8 P3 0.0 0.0 0.8 P3 0.0 12.8 8.0

322.0 180.1 42.6 159.4

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3P1 37.9% 11.4% 1.6% P1 15.0% 14.3% 7.3% P1 41.3% 37.1% 6.6% P1 20.2% 26.2% 2.5%P2 26.1% 13.0% 6.2% P2 32.3% 21.8% 0.4% P2 0.0% 11.3% 1.9% P2 17.2% 18.8% 2.0%P3 0.5% 1.4% 1.8% P3 2.3% 2.7% 3.8% P3 0.0% 0.0% 1.9% P3 0.0% 8.0% 5.0%

100.0% 100.0% 100.0% 100.0%

Base = Those who do say they intend to purchase less in the future.

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3P1 97.6 24.2 4.0 P1 15.4 8.0 12.0 P1 9.6 3.0 0.6 P1 25.0 27.6 1.6P2 71.4 6.4 0 P2 30.0 4.2 4.0 P2 0 0.8 0 P2 20.0 18.6 2.4P3 0 0 0.4 P3 0.0 0.0 4.8 P3 0 0 0 P3 0 10.0 0

204.0 78.4 14 105.2

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3P1 80.0% 65.8% 76.9% P1 57.0% 31.0% 90.9% P1 54.5% 19.0% 21.4% P1 77.6% 66.0% 40.0%P2 84.8% 15.2% 0.0% P2 51.5% 10.7% 500.0% P2 0.0% 0.0% 0.0% P2 73.0% 62.0% 75.0%P3 0.0% 0.0% 0.0% P3 0.0% 0.0% 0.0% P3 0.0% 0.0% 0.0% P3 0.0% 78.1% 0.0%

Ragu Loyalty Share Prego Loyalty Share Store Brand Loyalty Share Other Brand Loyalty Share

Ragu Loyalty Servings Prego Loyalty Servings Store Brand Loyalty Servings Other Brand Loyalty Servings

Share of Ragu Volume Share of Prego Volume Share of Store Brand Volume Share of Other Brand Volume

Ragu Volume Prego Volume Store Brand Volume Other Brand Volume

OtherBrands
http://images.google.com/imgres?imgurl=http://chronicle.augusta.com/images/headlines/020200/Prego_Sauce.jpg&imgrefurl=http://profile.myspace.com/index.cfm%3Ffuseaction%3Duser.viewprofile%26friendid%3D189769&h=400&w=244&sz=25&hl=en&start=10&tbnid=aGZ5W0m2_4qmAM:&tbnh=124&tbnw=76&prev=/images%3Fq%3Dprego%2Bsauces%26svnum%3D10%26hl%3Den%26rls%3DGGLJ,GGLJ:2006-39,GGLJ:en


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TotalVolume

MarketShare

LoyaltyVolume(Volume

attributable to loyal

users*)

EquityShare

(Share ofloyal uservolume*)

TopBox

Volume

LoyaltyContribution

(LoyaltyVolume as

Percent ofBrand

Volume)

Top BoxContribution

(Top Box

Volume asPercent Brand

Volume)

Ragu 322.0 45.7% 204.0 50.8% 97.6 63.4% 30.3%Prego 180.1 25.6% 78.4 19.5% 15.4 43.5% 8.6%Store 42.6 6.1% 14.0 3.5% 9.6 32.9% 22.5%Other 159.4 22.6% 105.2 26.2% 25.0 66.0% 15.7%

OTAL 704.1 100.0% 401.6 100.0% 147.6 57.0% 21.0%

*Top Box = respondents rating brand Q1/P1

*Loyal users are defined as respondents who indicate they devote 4 or 5 out of last five purchases to one brand.

Volume is expressed in units of jars, cans or tubs.

Share Tiering Measures


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Companies Clueless On Brand Value, Evaluations Neededby Karlene Lukovitz, Tuesday, Oct 28, 2008 3:15 PM ET

Now that The Brand Bubble has spelled out that most brands--and their

companies--are greatly overvalued by the financial markets, we find out that thoseon the inside do not have a clear idea of what their brands are worth, either.

More than half (55%) of senior marketing executives lack a quantitativeunderstanding of brand value within their organizations, according to a recentsurvey by the Association of National Advertisers and global branding consultancy

Interbrand.

Further, because brand value's effect on corporate value is not clearly quantified, itisn't being incorporated in decision-making: 64% of the 118 marketing officers andsenior marketing executives polled said that brands do not influence decisionsmade at their organizations.

Measuring Brand Value


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Among those who said brands don't influence corporate decisions,the underlying causes cited include:

Incentives that don't support brand importance (51%);

Inability to prove the brand's financial benefit (49%);

Existing branding expertise is not widely accepted (40%);

Metrics do not support the brand's importance (39%);

Budgets are focused on communications activities (32%);

Brand is not included in the "sphere of influence" (28%);

Branding expertise does not yet exist (15%).

Measuring Brand Value

Companies Clueless On Brand Value, Evaluations Neededby Karlene Lukovitz, Tuesday, Oct 28, 2008 3:15 PM ET


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What Are the Key Measures?


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There Is No Silver Bullet Each firm requires unique measures MSI Report Tim Ambler

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 forcustomers 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

Key Takeaways


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Recommended Resources

Brand Vitals: Essential Principles for Monitoring Brand Health, Carol Phillips and JudyHopelain, 2008 http://www.brandamplitude.com/whitepapers/Brand%20Vitals%20vF.pdf

In Search of True Brand Equity Metrics: All Market Share Aint Created Equal, TomReynolds and Carol Phillips, Journal of Advertising Research, 2005http://www.brandamplitude.com/whitepapers/all_market_share_aint_created_equal.pdf

On Track: The Next Generation of Brand Tracking, Judy Hopelain, AMAs MarketingManagement, October, 2005http://www.brandamplitude.com/whitepapers/on_track.pdf

Measuring Brand Value, Don E. Schultz and Heidi F. Schultz, Kellogg on Branding, 2005,Ch 13

Make a Case for Your Brand, Susan Fournier, Advertising Age, November 26, 2007

Brand Metrics: good, bad and dont bother, Scott Davis, Strategy, January, 26, 2004
http://www.brandamplitude.com/whitepapers/Brand%20Vitals%20vF.pdfhttp://www.brandamplitude.com/whitepapers/all_market_share_aint_created_equal.pdfhttp://www.brandamplitude.com/whitepapers/on_track.pdfhttp://www.brandamplitude.com/whitepapers/on_track.pdfhttp://www.brandamplitude.com/whitepapers/all_market_share_aint_created_equal.pdfhttp://www.brandamplitude.com/whitepapers/Brand%20Vitals%20vF.pdf

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