BRAND MANAGEMENT

L8: Brand Equity Measurement

 Learning Objectives

• Describe the new accountability in terms of ROMI

• Outline the two steps in conducting a brand audit
• Describe how to design, conduct, and interpret a
tracking study
• Identify the steps in implementing a brand equity
management system

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 The New Accountability

• Marketing budget must be

justified as effective &
efficient in terms of Return
of Marketing Investment
(ROMI)
• Marketers need new tools
& procedures to justify the
value of their expenditures
as follow

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 Conducting Brand Audits

• Brand audit: Comprehensive examination of a

brand to discover its sources of brand equity
• Marketing audit: Independent examination of a
company’s marketing environment, objectives,
strategies, and activities
– agreement on objectives, scope, and approach
– data collection
– report preparation and presentation

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 Brand Inventory
 
• Comprehensive profile of how all the products and
services of a company are marketed and branded
• Profiling requires marketers to catalogue:
– Visual and written form for each product or
service sold
– The inherent product attributes or
characteristics of the brand
– Pricing, communications, and distribution policies

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 Brand Positioning and the
Supporting Marketing Program

• Ideal brand positioning aims to achieve

congruence between:
– What customers currently believe about the
brand
– What customers will value in the brand
– What the firm is currently saying about the
brand
– Where the firm would like to take the brand

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 Brand Value Chain
 
• Structured approach to assess the sources & outcomes
of brand equity & marketing activities used to create
brand value.
• Stage 1 – brand value creation process begin with firm
invests in marketing program targeting actual &
potential customers.
• Stage 2 – these marketing activities will affect customer
mind-set – what they know & feel about the brand
• Stage 3 – this mind set, produces a brand’s
performance in marketplace – how much & when
customer purchase, the price they pay etc.

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 Brand Value Chain
 
• Stage 4 – the investment community consider this
market performance to arrive at an assessment of
shareholder value in general & a brand value in
specific.
• Three set of multiplier moderate the value stages:
– Program quality – clarity & consistency of the programs
– Marketplace conditions – competitors, customers &
channel members
– Investor sentiment – growth & potential of the market &
investor risk profile.

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 Brand Value Chain

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 Brand Value Chain
 
1) Marketing Program Investment
• Marketing activities i.e. product R&D, intermediary
support, marcom activities i.e. A&P, DM, PS, PR
• The ability of marketing program investment to transfer
or multiply farther down the chain depends on:
• 1) qualitative aspect of marketing program
• 2) program quality multiplier
– Clarity (how understandable is the brand marketing program?)
– Relevance (how meaningful is the program to customers?)
– Distinctiveness (how unique, creative & different if the program)
– Consistency (how cohesive & well integrated is the program?)

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 Brand Value Chain
 
2) Customer Mind-Set
• Everything that exists in the
mind of customers with
respect to a brand –
thought, feeling,
experience, perceptions,
belief & attitudes – in what
way customers been
changed as a result of the
marketing program?

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 Brand Value Chain
 
Customer Mind-Set
• Five dimensions as important measures for
customer mind-set
• 1) Brand awareness – the extent & ease with which
customers recall & recognize the brand
• 2) Brand associations – the strength, favorability,
& uniqueness of perceived attributes & benefits.
• These represent the key sources of brand value –
the means by which consumers feel brands
satisfy their needs

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 Brand Value Chain
 
Customer Mind-Set
• 3) Brand attitudes – overall evaluation of the brand in
terms of quality & the satisfaction it generates
• 4) Brand attachment – degree of loyalty the customer
feels toward the brand
• 5) Brand activity – the extent to which customers use the
brand, talk to others about the brand, seek out brand info
& promotions & so on
• Brand value is created when customers have – (1) deep
& broad awareness; (2) strong, favorable & unique
point of parity; (3) positive brand feeling; (4) intense
attachment & loyalty; (5) high degree of brand activity.

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 Brand Value Chain
 
Customer Mind-Set
• Marketplace conditions multiplier: the extent to which
value created in customer’s mind affects market
performance – depend on three factors:
• 1) competitive superiority – how effective are the
marketing investment of competing brands?
• 2) channel & intermediary support – how much selling
effort being put forth by various marketing partners?
• 3) Customer size & profile – how many & what type of
customers are attracted to the brand?

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 Brand Value Chain
 
3) Market Performance
• Customer mind-set affect how customers react in the
marketplace in six way:
• 1) Price premium – how much extra are customers
willing to pay for the brand?
• 2) Price elasticities - how much the demand increase
or decrease when the price rises or fall?
• 3) Market share – the success of marketing program in
driving sales
• 4) Brand expansion – the success of brand in support
line & category extensions.

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 Brand Value Chain
 
Market Performance
• 5) Cost structure – reduced in marketing program
expenditures thanks to prevailing customer mind-set.
• When customers already have favorable knowledge
about the brand, marketing program is likely to be
more effective for the same expenditure level.
• 6) Profitability – combined the fix outcomes lead to
brand profitability

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 Brand Value Chain
 
Market Performance
• Investor sentiment multiplier - investor consider a
host factor in arriving their brand valuations &
investment decisions as follow:
• 1) market dynamic – the dynamics of financial market a
whole (interest rates, supply of capital)
• 2) growth potential – of the brand & industry
• 3) risk profile – how vulnerable is the brand?
• 4) brand contribution – how important is the brand to
the firm’s brand portfolio?

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 Brand Value Chain
 
4) Shareholder Value
• Financial implication and assessment that have direct impact for the brand
value.
• Three indicators : stock price, price/earning multiple & overall market
capitalization
• Strong brand can deliver greater returns to stockholders & also deliver the
value in lesser risk.

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 Brand Value Chain
 
Brand Value Chain Analysis - Starbucks

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 Brand Value Chain
 
Implication
• Marketers create value first by making investment in marketing program & then maximizing the
program, customer & market multiplier that translate that investment into bottom-line financial
benefits
• Brand value chain provides a detailed road map for tracking value creation - Managers need to
understand where & how value is created & where to improve the
• Value creation required more than the initial marketing investment – also three multiplier can
moderate the market value as it move from stage to stage & some of the factors are out of the
marketer control

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 Designing Brand Tracking Studies  

• Tracking studies – collect info from customers on a routine basis over time, thro
quantitative measures of brand performance on the key dimensions in brand audit.
• To monitor the health of the brand & its equity so that marketers can make
adjustment if necessary
• Provide consistent info to facilitate day-to-day decision making – category dynamics,
consumer behavior, competitive position & opportunities & marketing effectiveness &
efficiency

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 Designing Brand Tracking Studies

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 Designing Brand Tracking Studies  

What to Track – Product-Brand Tracking

• Measuring brand awareness & image using recall & recognition measures
– Ask consumers what brands come in mind in certain situations; ask for recall the brands on the
basis of various product category cues
• Measuring brand image – ask consumer’s on the brand meaning to consumers;
asking for consumer knowledge structure about the brand
• Assess the key brand associations that make up the potential source of brand equity

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 Designing Brand Tracking Studies  

What to Track – Product-Brand Tracking

• Measuring benefit associations that predict consumer future behavior as follow
criteria:
• 1) functional performance of product / service
• 2) convenience & ease of accessing the product
• 3) brand personality
• 4) pricing & value components

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 Designing Brand Tracking Studies  

What to Track – Corporate or Family Brand Tracking

• Measure corporate credibility
• Measure corporate brand associations
– How well managed in Toyota?
– How easy is it doing business with Toyota?
– How concerned is Toyota with its customers?
• Tracking the level of experience that customers have with the company
• When brand is identified with multiple products – asking which particular product the brand reminds
consumers of

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 Designing Brand Tracking Studies  
Whom to Track
• Tracking focuses on current customers, but also monitor nonusers of the brand or product
category.
• Track those customers loyal to the brand against those loyal to other brands or against those
switch brands
• Besides end users, also track other customers group – channel members & other
intermediaries – understand their perceptions & actions toward the brand.
• Also track employees i.e. salespeople - to understand their beliefs about the brand
especially in service firms as employees play profound roles in affecting equity.

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 Designing Brand Tracking Studies  

When & Where to Track

• How often should we collect tracking info? – continuous tracking – provide more accurate
measures
• Frequency of tracking – depend on frequency of product purchase (track durable goods less
frequent compare to FMCG) & on consumer behavior & marketing activity in the product category
• When the brand has more stable associations, tracking on a less frequent basis can be enough
• The stage of PLC also affect frequency of tracking – new product track frequently compare to
mature stage

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 Designing Brand Tracking Studies  

How to Interpret Tracking Studies

• To develop sensitive tracking measures – phrase questions in a
comparative way -”compare to other brands, how much….” or
“compare to one month or one year ago, how much…”
• Deciding on appropriate benchmarks – appropriately defined &
tested targets can help to justify benchmark against competitors

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 Designing Brand Tracking Studies  

How to Interpret Tracking Studies

• Identify the determinants of brand equity – which brand associations
actually influence consumer behavior & create brand value?
• Identify the real value drivers for a brand – tangibles & intangibles points
of difference that influence consumer’s brand choices
• Identify marketing activities that the most effective impact on consumer’s
brand knowledge

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 Brand Equity Management

Brand Equity Charter

• Formalizes the company view of brand equity into a document -
Provides relevant guidelines to marketing managers and key
marketing partners
• Should be updated on an annual basis to provide decision
makers with a current brand profile

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 Brand Equity Management
Brand equity charter – should have the following
• Define the firm’s view of brand equity concept & explain why it
is important
• Describe the scope of key brands & the manner which they
have been branded & marketed
• Specify the actual & desired equity for a brand at all level of
the brand hierarchy i.e. corporate or individual product level
• Explain how to measure the brand equity in tracking study
• Suggest how marketers should manage brand equity with
some general guidelines i.e. clarity, relevance, innovative &
consistency
• Specify the proper treatment of the brand in term of trademark
usage, packaging & communication
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 Brand Equity Management
Brand equity Responsibility
• Brand management system aim to maximize long-term
brand equity – brand need constant, consistent
nurturing to grow – firms must clearly defined
organizational responsibilities & process in managing
brand equity

• 1) Overseeing Brand equity – appoint a person

responsible for overseeing & coordinating brand
management activities.
• Even strong brand need careful watching to prevent the
mistake that will affect brand equity.
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 Brand Equity Management
Brand equity Responsibility
• The following activities needed brand development
review:
– Review brand-sensitive material – review tracking studies,
brand audits & focus group
– Review the status of key brand initiatives – review the SWOT
in the brand to explore an opportunity to grow the brand
– Review new product & distribution strategies with respect to
core brand values – i.e expand the non-traditional distribution
channel thro internet..
– Review brand positioning conflict – identify & resolve any
inconsistencies in positioning across channels & markets

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 Brand Equity Management
Brand equity Responsibility
• 2) Organizational design & structures – organize the
marketing function to optimize brand equity. Example:
form a brand management dept to manage the brand;
intro brand manager into the organization
• Whole organization to commit to a focus on customer &
brands will become a means to the end
• I.T will be a tool for maintaining large-scale customer &
consumer interaction & conversation
• Attempt to redesign marketing organization to better
reflect the important of branding in strategic plan

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 Brand Equity Management
Brand equity Responsibility
• 3) Managing marketing partners – manage a good
relationship with suppliers & marketing partners
• Consolidating marketing partnership & reducing the
number of outside suppliers.
• Other marketing partners like channel members &
retailers – help in enhancing brand equity & designed
better push programs – win-win businesses.

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 Quantitative Measurement
• Quantitative research – employs various types of scale
questions to draw numerical conclusions.

Brand awareness:
• Measure consumer ability to identify various brand
elements under different conditions
• 1) Recognition - test on identification of any of the
brand elements, example: test recognition of brand
name with missing letters.
• Also test recognition on the visibility of package design
– when consumer is f2f with package or at certain level
of distance
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 Quantitative Measurement
Brand awareness:
•2) Recall - consumer retrieve the actual brand element
from memory when given some related cue.
•Aided recall – use various types of cues to help consumer
recall, example, product class, product category – Think
about fast food, which brand come first?
•Ask about product attributes or usage – Think about
healthy snack, which brand come to mind?
•Combined, measures of recall based on attributes,
category or usage cues – give indication of breath &
depth of recall.

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 Quantitative Measurement
Measure of brand awareness - Implication
•Aided recall measures the insight into how brand
knowledge is organized in memory & what cues may be
necessary for consumers to be able to retrieve the brand.

•Understand the category structure that exist in

consumers’ minds – can have implications for consumer
choice & marketing strategy – as reflected in brand recall
performance

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 Quantitative Measurement
Brand Image
•Reflected the consumer perception specific attributes
and benefits, & overall judgment, feeling & relationship.
•Belief – descriptive thought a person hold about
something.
•Brand assoc. belief – specific attribute & benefit link to
brand & its competitors. Example, consumer belief Sony
Playstation video game is “fun & exciting” with “variety of
software titles” in comparison with Nintendo.

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 Quantitative Measurement
Brand Image
•Belief association ban be assess on three key dimension –
strength, favorability & uniqueness.
•1) What are the strongest assoc. you have to the brand?
What comes to mind when you think of the brand?
(Strength)
•2) What is good about the brand? What do you like /
dislike about the brand? (Favorability)
•3) What is unique about the brand? What features does
the brand share with other brands (Uniqueness)

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 Quantitative Measurement
Brand Responses
•Measure how consumers combine all the specific elements
of performance & imagery to form different types of brand
responses & evaluations
•Purchase intention - measure related to brand attitudes
& consideration – likelihood of buying the brand or
switching to another brand
•Purchase intentions are more likely to predict actual
purchase on the correspondence in the following:
– Action (buying for own use or give as gift)
– Context (in where, base on what price)
– Time (within a week, month or year)
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 Quantitative Measurement
Brand Relationship
•Can be measures on the 4 brand resonance dimensions
– behavioral loyalty, attitudinal attachment, sense of
community & active engagement.
•Behavioral loyalty - reported brand usage i.e. % of their
last purchase in the category went to the brand (past
purchase) or % of their planned next purchase will go to
the brand (intended future purchase). Example:
– Which brand of batteries do you usually buy?
– Which brand of batteries did you buy last time?
– Which brand of batteries you will buy next time?

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 Quantitative Measurement
Brand Relationship
•Brand Substitutability – two questions scale used:
– 1) Which brand did you buy last time?
– 2) If the brand not available, what would you done (waited, gone to
another store or bought another brand)?
•The key indicator the following:
•1) how many people who bought a particular brand last time
would buy it again this time –
– The higher repeat rate, the greater the brand equity.
– The less people willing to accept substitute brands, the more they
are likely to repeat buy.

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 Quantitative Measurement
Brand Relationship
•Others – sense of community & active engagement:
•Engagement – measure could explore word-of-mouth
behavior & online behavior.
•Example: the extent of customer-initiated vs firm-initiated
interactions; the extent of customer sharing/teaching other
customers.

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 Quantitative Measurement
Brand Relationship
•Fournier’s Brand Relationship Research:
•Six main dimensions of brand relationship – to define the
strength, depth & durability of customer-brand relational bond.
•1) Interdependence – the degree to which the brand is
ingrained in customer’s daily living – thro purchase, use,
dependency & addiction.
•2) Self-concept connection – the degree to which brand
deliver important identity or themes, expressing a significant
part of self-concept.

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 Quantitative Measurement
Brand Relationship
•Fournier’s Brand Relationship Research:
•3) Commitment – professed faithfulness & loyalty to other,
inclusive of irretrievable investment or cost, that pose barriers to
exit.
•4) Love/passion – adoration of brand, the believe that brand is
irreplaceable & uniquely qualified as relationship partner.
•5) Intimacy – deep familiarity & as a partner in the consumer-
brand relationship.
•6) Partner quality – (1) emphatic toward others (2) character
of reliability & dependability (3) trust & faith toward the brand.

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 To Sum up...

• The company view of brand equity should be

formalized into a document
• The results of the tracking surveys should be
assembled into a brand equity report
• Senior management must be assigned to oversee
brand equity within the organization.
• Quantitative research can be use to measure the
brand equity using various scale.

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