Brand Equity

March 2005
 Brand Equity Drives Brand Value

o Brand Value is measured by the value of future cash flows generated by a

brand i.e. an asset which is valued on the basis of it producing profit in the
future.
o A brand that contributes $1,000,000 worth of profit (in today’s dollars) over the period
is worth $1,000,000.

Brand Equity

o Brand Equity (like company equity) is the set of brand assets and liabilities
linked to a brand that add or subtract from the brand value.
Source Aaker

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 Five Major Drivers Of Brand Equity

1. Name Awareness

2. Perceived Quality

3. Brand Loyalty

4. Positive Associations

5. Other Assets

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 Five Major Drivers Of Brand Equity

1. Name Awareness
o Share of mind
2. Perceived Quality
o Seen as better / best fit for me (functionality, trust, long lasting)
3. Brand Loyalty
o Enduring preference
4. Positive Associations
o Sponsorships, admired people using the product, corporate citizenship
5. Other Assets
o Trade marks, exclusive channels, merchandising systems

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 Example Of Calculation

o Firstly while we propose five generic drivers of value as equity levers,

each brand has its own specific set. In the case of professional firms
such as ours culture / people is the main driver.
o Aaker’s suggestion of these five have been chosen to suit the needs of a
clothing brand. This is a starting point only.
o On that basis we have created an example, based on a real case, that
demonstrates how managers can drive value up by firstly understanding
the contribution that each of the five makes and then how they might be
manipulated in order to gain the greatest impact on value.

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 ABC Brand Shirts Brand Equity
Calculator

Metric Score Weighting Share Revenue Mark-Up Cont Value

% of buyers aware 33 & '$(

Best fit rating 1- 5 3 40

Preference rating 1 - 5 4 30 24.75 $1,237,500 60% 464,062.50 $1,059,559.16

Influence on appeal 1- 5 4 5 38.56 $192,775,000 60% 72,290,625.00 $165,055,771
$$ effect 4 25
Market Value $5,000,000 ! " # $ %

! !

! "

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 Moving The Brand Strength Up

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Market Transactions / person # of Transactions $$$ @ 30

Total Market 1000 Average five
)* + Aware 750 0
, Interested 375 0
)- . + , Try 188 1 188 $5,625
!
% / 0/1 ! Casual 94 2 188 $5,625
% 2 222 Regular 47 3 141 $4,219
Loyal 23 5 117 $3,516
3 -.
Value 633 $18,984
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!

Market Transactions / person # of Transactions $$$ @ 30

Total Market 1000 Average five
Aware 750 0
5 6 Interested 563 0
Try 422 1 422 $12,656
Casual 316 2 633 $18,984
Regular 237 3 712 $21,357
! Loyal 178 5 890 $26,697
.+ 2+ Value 2656 $79,695

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 Factors To Influence Equity

Awareness Association Loyalty

Sponsorship
Advertising Relationship to essence
Other ABC Products
Merchandising Service
Aspirational Group Users
Support
Sponsorship
Activity / time
Word Of Mouth
Brand Equity
Design Look Unique Design

Functional Performance Preferred Supplier

Value For Money Category Management 7 6

Sponsorships

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Quality Assets

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 Checklist For Weak Management
OR……………
Opportunities To Improve

o Managers cannot identify associations and their strength

o Low knowledge of awareness
o Low measures of satisfaction and loyalty
o No indicators of brand performance tied to long term success
o No person charged with protecting brand equity
o Weak measurement of brand performance
o No understanding of how equity elements affect brand performance
o No measurement of promotions
o No long term strategy

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