Brand Equity Measurement and Management System

The Brand Value Chain

BVC is the manner in which marketing activities create Band Value. BVC is therefore the structured approach to assessing the sources and outcomes of BE It also helps Understand the Band Management System Provides insights to support brand managers

Brand Value Chain

VALUE STAGES

Marketing Program Investment

- Product - Trade - Communications - Employee - Other

Customer Mindset
- Awareness - Associations - Attitudes - Attachment - Activity

Market Performance
- Price premiums - Price elasticities - Market share - Expansion success - Cost structure - Profitability

Shareholder Value
- Stock price - P/E ratio - Market capitalization

FILTERS

Program Multiplier
- Clarity - Relevance - Distinctiveness - Consistency

Consumer Multiplier
-Consumer size & profile - Channel support -Competitive reactions

Market Multiplier
- Market dynamics - Growth potential - Risk profile - Brand contribution

The Basic Premise of Brand Value Chain

BVC resides in the minds of the consumer

The process begins with investing in marketing programs targeting consumers These marketing activities affect the consumer mindset with respect to the brand know & feel The mindset across a broad group of customers results in brand performance - outcomes in terms of amount of purchase, price they pay, etc. The investment community considers market performance and replacement cost, purchase price, etc., to arrive at shareholder value and BV

The Basic Premise of Brand Value Chain

BVC resides in the minds of the consumer A number of linking factors intervene at the value stages, which determines the value created, transferred or multiplied to the next stage

1. 2. 3. 4.

4 value stages
Marketing program investment Consumer mindset Market performance Shareholder value

3 sets of modifiers moderate the transfer between the marketing program and 4 value stages
1. 2. 3.

Program multiplier Customer multiplier Market multiplier

Understand ROI of Marketing Investments

VALUE STAGES

Marketing Program Investment

- Product - Communications - Trade - Other

Customer Mindset

Market Performance

Shareholder Value

- Awareness - Associations - Attitudes - Attachment - Activity

- Price premiums - Price elasticities - Market share - Expansion success - Cost savings - Profitability

- Stock price - P/E ratio - Market capitalization

Brand Value Chain Value Stages

1.

Marketing program investment

Product R&D, design Marketing communications Trade or intermediary support Others

Extent of financial resources alone does not guarantee success of BE creation It depends on the qualitative aspects for the program multiplier

Brand Value Chain Value Stages

1. Marketing program investment
Program multiplier the ability of marketing programs to affect consumer mindset - judged by 4 factors 1. Clarity do consumers correctly interpret and evaluate the meaning conveyed by marketing activities? 2. Relevance how relevant is it to the consumers? Do they feel that the brand should receive serious consideration? 3. Distinctiveness how unique is the program from those of competition? How creative or differentiating? 4. Consistency- How consistent and well integrated is the program - with the past, continuing, and evolving in the right direction)? Do they combine to create a big impact?

These factors impact the consumer mindset

Brand Value Chain Value Stages

2. Customer mindset the extent to which consumers mindset has changed as a result of marketing program
Mindset includes thoughts, feelings, perceptions, beliefs, attitudes etc. about the brand

5 dimensions are important to measure customer mindset

1. Brand awareness extent to which brand is recognized, recalled, and identified with the category and different contexts 2. Brand associations strengths, favorability, uniqueness of perceived attributes and benefits (key source of BE) 3. Brand attitude overall evaluation of brand quality, satisfaction 4. Brand attachment how loyal, ability of brand to withstand bad news, attachment / addiction 5. Brand activity extent of use, WOM, seek information, promotions, events

Brand Value Chain Value Stages

2. Customer mindset Customer multiplier (impacted by size, competition and channels support)
1.

2.

3.

Customer size and profile how many and what type of profile is attracted to the brand Channel and intermediary how much brand reinforcement, selling effort and support is put forth by marketing partners Competitive superiority how effective are quality and quantity of marketing activities of other competing brands?

Brand Value Chain Value Stages

3. Market Performance customer mindset affects the response in the market place sales volume, etc. 6 key outcomes of the response are 1. 2.

3. 4.

5.

6.

Price premium Price elasticity (how much does the brand demand increase or decrease with rise and fall of price) Market share success in driving sales Brand expansion category extensions and new product launches Cost structure / savings in marketing programs because of customer mindset Brand profitability (combination of all 5)

Brand Value Chain Value Stages

3. Market Performance
Market Multiplier extent to which value is generated by market performance is manifested in shareholder value and brand valuation, and depends on contextual factors external to the brand 1. Market dynamics of financial markets interest rates, supply of capital, investor sentiment 2. Growth potential how supportive / hindering is the PEST environment to growth prospects of the brand and the industry 3. Risk profile of the brand - how vulnerable is it to the environmental factors? 4. Brand contribution how important is the brand as part of the brand portfolio?

Brand Value Chain Value Stages

4. Shareholder value based on Market multiplier factors, forecasted information about the brand, and other considerations, the financial market makes assessments that have a direct financial implications for the brands value 3 important considerations are 1. 2. 3.

Stock price Price/earnings multiple Overall market capitalization for the firm

Brand Value Chain Value Stages

Implications there are a number of implications
1. Value creation begins with marketing programs well designed, well implemented

Make shrewd investments in marketing programs

2. 3 multipliers impact the value (value transfer from stage to stage)

Maximize market and customer multipliers to translate investment into bottom-line financial benefits Understanding the uncontrollable nature of the factors is important to understand value

3. BVC provides a road map for tracking value creation and measurement.

Brand Value Chain Value Stages

Implications - in the Marketing Dept. BVC is a structured means to understand the value created by different levels in the Dept.

Brand and category managers must be interested in

Customer mindset and impact of marketing programs Market performance and impact of mindset on market behavior Share value and impact on market performance and investment decisions

Chief Marketing officer will be interested in

Managing director will be interested in

Brand Value Chain Value Stages

Implications there are a number of implications Each stage has a set of measures for assessment

Marketing program by plan and budget Customer mindset quantitative and qualitative research Market multiplier market reports, internal accounting records Shareholder value and multiplier investor analysis and interviews

Brand Value Chain Value Stages

Implications BVC can be expanded with modifications
1. Feedback loops can be introduced

Growth of market share and stock value can impact employee morale

2. Value creation may not be created sequentially as depicted

share value may increase because of advertising

3. Some marketing activities may have diffused effects that are visible over the long term

CSR

4. Means and variance may vary by segment

niche market may get high value across a small segment

Brand Equity Measurement System

Brand Equity Measurement System

Brand equity measurement system is

A set of research procedures designed To provide timely, accurate, and actionable information for marketers To 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

Tracking procedures. Designing BE management system

Brand Equity Charters Brand Equity Reports Brand Equity Overseers

Conducting the Brand Audit

Brand audit - comprehensive examination of brand

Consists of two activities to assess health of brand

Brand Inventory Brand Exploratory

brand equity sources from the perspective of both the firm and the consumer.

Uncovering sources of equity requires understanding of

Provides in-depth information and insights for setting long term strategic direction Positioning

Suggest ways to improve and leverage equity

Conducting the Brand Audit

Brand audit

Brand inventory - provides a complete, up-to-date profile of how all products and services marketed and branded by Firm

To identify each product

relevant brand elements supporting marketing program

Summarized information - both visually and verbally.

Although primarily a descriptive exercise Some useful analysis can be conducted - consistency with which brand elements are used.

Conducting the Brand Audit

Brand audit Brand exploratory - research activity designed to identify potential sources of brand equity. It provides detailed information as to what consumers think of and feel about the brand. 3 steps involved

Review past studies and interview relevant personnel.

provides some insights, and more queries for research

Qualitative research techniques are employed first to allow a

broad range of issues to be covered and examined in-depth Quantitative phase is often necessary to provide a more specific assessment of the sources of brand equity

Designing Brand Tracking Strategies

Tracking studies - provides less detailed info.

It is required for short-term tactical considerations day to day decision making TS Provides valuable diagnostic insights into the collective effect of all Marketing Activities on consumer mindset, market outcome, shareholder value. Quantitative measures - check how marketing programs are performing on key dimensions Uses BVC model - to find out in what way, and to what extent BV is created, and Positioning is achieved

Developing Tracking Procedures

Tracking studies involve information collected from consumers on a routine basis over time

Provides descriptive and diagnostic information

Done periodically on a continuous basis All CBBE items are candidates for tracking Must be customized to address specific issues faced by the brand and reflect different questions Key decisions

what, who, when and where to track How to interpret tracking studies

Developing Tracking Procedures

Tracking studies involve information collected from consumers Key decisions what, who, when and where to track

What to track

Product based tracking Corporate or family brand Global tracking

Designing Brand Tracking Strategies

What to track - Product-brand tracking Involves measuring

Brand awareness Specific brand associations performance, imagery, beliefs (POP / PODs with respect to competitive brands) Associations should be measured on bases of (in that order)

Strength if brand is to be recalled Favorability affects decision making Uniqueness so that no other brand is substitutable

Track more general higher levels- brand Judgments and Feelings, and other outcome related measures Check Brand Attitude

when they changed their attitude, intention, behavior recent weeks, months why they changed their attitude

Include association that distinguish competing brands (lower level associations - performance and imagery attributes and benefits, and higher level attitude)

Designing Brand Tracking Strategies

What to track - Corporate or Family brand tracking Done separately or concurrently with individual brand TS

Additional questions can be included in the TS of individual product brands

Questions to reflect the nature of experience the respondents have with the company

How well managed? How easy is it to do business? How concerned is it with its customers? How approachable is it? How accessible is it? How much do you like doing business?

When a brand is identified with multiple products, check which product of the brand reminds them of Corporate

On an unaided basis What comes to mind when you think of Nike? Or aided basis for sub-brands Do you know of AirJordan? Consumers can be probed about the relationship between the brand and the products to better understand the relationship

Designing Brand Tracking Strategies

What to track - Global tracking when the brand involves diverse geographic markets

A broad set of background measures are needed to put brand development in perspective in those markets These context measures may not be collected too often

Economic indictors Retail Technology Personal attitudes and values Media indicators Demographic profile Other products and services Attitude to brands and shopping

Designing Brand Tracking Strategies

How to conduct a tracking study

What to track

All elements that play a visible and major role in decision making - name, logo, symbols etc.

Designing Brand Tracking Strategies

Whom to track Different consumer segments

Current customers

Heavy and light users Loyals and switchers

Non users of brand and category new segments Other types of customers can be monitored

Channel members and intermediaries Employees (particularly in service organizations)

Different questionnaires are required to capture specific issues associated with each segment

Designing Brand Tracking Strategies

When to where to track How frequently should information be collected ?

Continuous TS smoothes out aberrations of unusual activities and events (new ad campaign), and provides a more representative baseline measure Frequency of TS depends on frequency of purchase, consumer behavior, amount of competitive activity in the product category

Results on a rolling average basis monthly / quarterly

Less frequency is needed when a brand has more stable and enduring associations

But because of competitive moves, (even if there is no change in marketing activities), tracking of changing consumer perceptions is a must

Global basis frequency can be decided on the basis of the product or brand life cycle opinions in mature markets may not change much, but in emerging markets they may shift radically

Designing Brand Tracking Strategies

How to interpret tracking study

Findings must be reliable and sensitive to be actionable

To develop sensitive measures, questions must be phrased in a

comparative manner (compared to other brands) temporal manner (compared to earlier)

Decide on appropriate cutoffs (sufficiently high level of awareness, sufficiently strong associations)

In low involvement categories a distinct image may be difficult (dont know / dont care answers reflect it)

Identify the determinants of BE (real value drivers - tangible and intangible PODs that influence choice)

Associations that influences BE attitudes, behavior Marketing activities (IMC) that have the most impact on brand knowledge

Many links and paths suggested by BVC model can be used for measuring BE

Brand Equity Management System

Establishing Brand Equity Management System

Info. from TS and Audits cannot ensure good decisions unless internal structures and procedures are put in place One of the biggest threat to BE is internal

Brand managers present for a limited period of time results in short-term perspectives, and sales generating tactics (extensions, sales promotions, etc.) Therefore internal branding is important and a BE Management System put in place (a set of processes designed to improve the understanding and use of BE within the firm)

Establishing Brand Equity Management System

3 steps should be taken

1. 2.

Create BE charters spirit of the brand Assemble BE reports

Descriptive information - what is happening to the brand Diagnostic information why it is happening BE Gatekeepers Organizational design and structure Managing partners

3.

Define BE responsibilities

Brand Equity Management System: Three Steps

1. Brand Equity Charter - Formalize company position and philosophy into a Brand Equity Charter to provide relevant guidelines to marketing managers.

Importance of brands and brand equity History of brand Brand positioning

Core brand values (brand mantra) Core brand promise POP/POD

Brand guidelines
Strategic Tactical

Brand Equity Management System: Three Steps

1.

Brand Equity Charter - guidelines Define the firms view of BE and explain its importance Describe scope of key brands in terms of associated products and the manner by which they have been branded and marketed Specify what the desired and actual BE is for the brand at all levels of brand hierarchy (corporate level and individual product level) Range of associations are defined including POPs and PODs, core brand values, brand mantra or promise Explain how BE is measured in terms of TS and resulting BE Report Suggests how BE should be managed strategic guidelines Outline how marketing programs should be devised- tactical guidelines Specify proper treatment of the brand elemnts - trade marks, packaging, and communications

Brand Equity Management System: Three Steps

1.

Brand Equity Charter

Should be updated on an annual basis to provide Current brand profile New brand opportunities and potential risks New introductions products, marketing programs, etc. Insights that emerge from Brand Audits can be included

Parts of BE may not change from year to year

Brand Equity Management System: Three Steps

2. Brand Equity Report must include

Results of Tracking Survey and other relevant outcome measures and distributed to managers on regular basis Provide descriptive information - what is happening with a brand market performance components As well as diagnostic information - why it is happening Include all relevant internal and external measures of brand performance, sources and outcomes of BE Summarize the findings of consumer research

Perceptions of key attributes, benefit associations, Preferences Reported behavior

Brand Equity Management System: Three Steps

2. Brand Equity Report

Descriptive market-level information must give insights into market performance components of the BVC Product shipment and movement through channels of distribution Relevant cost break downs Price and discount schedules Sales and market share information broken down by relevant factors (geographic, retail) Profit assessment It can be done online and made accessible over the net

Brand Equity Management System: Three Steps

3. Brand Equity Responsibilities BE gatekeepers Establish position of VP / Director of Equity Management to ensure that, marketing of the brand is done in a way that reflects the spirit of the Charter and the substance of the Report House such responsibility is in the corporate marketing group that has a senior management reporting relationship Determination and deployment of marketing budgets where and how the resources will be deployed Inputs should be provided to decision makers so that they recognize the short-term and long-term ramifications of decisions for BE

Brand Equity Management System: Three Steps

3.

Brand Equity Responsibilities organizational design and structure Marketing function should be organized within the firm to optimize BE Brand management - hire brand managers from packaged goods companies The traditional marketing dept. is disappearing replaced by business groups, multidisciplinary teams,. etc

Brand Equity Management System: Three Steps

3.

Brand Equity Responsibilities Managing marketing partners

Increasingly firms are consolidating marketing partners and reducing the number of outside suppliers

advertising agency, etc - provides greater consistency intermediaries with a carefully designed push program