measuring brand equity
TRANSCRIPT
Measuring Brand Equity
Nov. 10, 2008
BrandAmplitude, LLC All Rights Reserved
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Positioning recommendation
For __________________________ is the only_____________________that_________________________
because ______________________.
Mantra
P&G Gain: $1 Billion Brand
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http://www.ilovegain.com/home.do
Successful repositioning of value brand to appeal to Hispanic Households.
Create Brand Positioning
Brand Strategy Process
Target & Insight
Brand Execution Brand Execution
Brand Elements
Competitive Assessment
Brand Inventory
Equity Pyramid
Positioning
Objectives & Metrics
Personality
CommunicationsStrategy
Brand Experience Map
Brand AuditBrand Audit
CRM &Community
Building
Points of Parity and Difference
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Why Measure Brand Equity?
• Understand drivers of brand value in order to support strategic decision – making.
• To evaluate efficacy of brand value building programs -- ROMI.
Why Measure Brand Health??
If you don’t know where you are, it’s If you don’t know where you are, it’s hard to decide how to get there. hard to decide how to get there.
If you don’t know where you’re going, If you don’t know where you’re going, any road will get you there.any road will get you there.
““The health of your brand is a prime indicator of The health of your brand is a prime indicator of the health of your company…The most effective the health of your company…The most effective
way to monitor your brand is to way to monitor your brand is to combine combine consistent real-world research with the use of consistent real-world research with the use of
quantitative models to measure, and even quantitative models to measure, and even predict, change in key variables.”predict, change in key variables.”
Jim Gregory, The Best of Branding, 2004, p 57
Why Measure Brand Health?
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What Are the Key Measures?
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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What’s Wrong With These Metrics?
There is no consistent definition of ROI," noted one There is no consistent definition of ROI," noted one respondent. Marketing organizations are instead using respondent. Marketing organizations are instead using "surrogate" metrics, ranging from input-related metrics such "surrogate" metrics, ranging from input-related metrics such as awareness and brand image in financial services to market as awareness and brand image in financial services to market share and growth in consumer packaged goods companies.”share and growth in consumer packaged goods companies.”
Source: ANA/Booz Allen online survey of over 370 marketing and non-marketing managers of mostly publicly traded 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, Financial Services, 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 to measure.
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 Organization
Currently Creating ROI Model
Not Able
High Level Estimates
Sales Force Productivity
Compare Spending AgainstCompetitiors
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
Brand Loyalty Underlies Brand Equity
““The mechanism that underlies (equity) is agreed to be a The mechanism that underlies (equity) is agreed to be a latent latent value in the mind of customersvalue in the mind of customers that is that is exhibited through its exhibited through its
impact on behavior.impact on behavior. Positive equity results in behavior that Positive equity results in behavior that benefits the brand through purchase frequency, brand loyalty, benefits the brand through purchase frequency, brand loyalty,
price insensitivity, willingness to recommend and more.” price insensitivity, willingness to recommend and more.” ----
Dr. Tom Reynolds & Carol Phillips, “In Search of True Brand Equity Metrics: All Market Share Ain’t Created Dr. Tom Reynolds & Carol Phillips, “In Search of True Brand Equity Metrics: All Market Share Ain’t Created Equal”, paper in review, Equal”, paper in review, Journal of Advertising ResearchJournal of Advertising Research
Brand Equity Defined
Loyal Behavior Psychological Preference
Perceptions Impact Behavior
Now which box would you choose?
$5 $5,000$500$50
Perceptions Impact Behavior
Which jar would you choose?
$1.89 $2.49 $2.29
• Brand equity can be measured by determining loyal users’ contribution to category profits (ideally) and to brand sales (realistically).
Premium Brand?
Price Brand?
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 Every brand could benefit from having the core group represent a larger share of its total franchise.larger share of its total franchise.
– – Dr. Tom ReynoldsDr. Tom Reynolds
Brand Equity Defined
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Now, what Are the Key Measures?
Aaker Keller Y&R Equi-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 xOrg. Associations
Differentiation x
Perceived Quality x x xx
Dist. Coverage x
Perceived Value x
Esteem x Personality x x
International x Price Premium xx
Knowledge x Relevance x
Leadership x xx Salience x
Legal Protect’n x
User Sat./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
Market Performance
Customer Perceptions & Behavior
““You can’t put attitudes in the bank!”You can’t put attitudes in the bank!”
ROMI
• Multiple measures at different levels of the value chain, benchmarked and tracked consistently over time:
Activity & Program Metrics
Market Performance
Customer Perceptions & Behavior
The ‘Right’ Approach
•Marketing Investment•Program Quality
•Clarity•Relevance•Distinctiveness•Consistency
•Channel expansion
•Brand awareness•Brand familiarity/associations•Brand evaluations/attitudes•Customer acquisition/ conversion•Customer retention•Attachment/Loyalty
•Sales•Market share•Price premium•Profitability•Price elasticity•Expansion success
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Financial Value
The Right Approach
•Stock price•P/E ratio•Market capitalization•Brand contribution (i.e., CoreBrand index)
Activity & Program Metrics
Market Performance
Customer Perceptions & Behavior
• Linking customer perceptions and market performance to impact on financial value to assess ROMI.
ROMI
• 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
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
Brand Valuation and Measurement Firms
Financial Value
Strategic Value
Measurement Firms
Are Brand Equity and Brand Valuation the Same?
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 “Don’t Waste Time with Brand Valuation”, MarketingNPV.com, October 2004.
““(For most companies) the operative question is less what (For most companies) the operative question is less what their brand is worth than what their brand could do for them their brand is worth than what their brand could do for them in terms of revenue and profit. …gaining an understanding in terms of revenue and profit. …gaining an understanding of the causal activities related to the changes would make of the causal activities related to the changes would make
brand equity measures more actionable.”brand equity measures more actionable.”
--Dr. Tom Reynolds & Carol Phillips, “In Search of True Brand Equity Metrics: All Market Share Ain’t Created Equal”, paper in review, Journal of Advertising Research
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 and perceptions 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 Ain’t 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
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 4.0P2 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
Other Brands
Total Volume
Market Share
Loyalty Volume (Volume
attributable to loyal users*)
Equity Share
(Share of loyal user volume*)
Top Box
Volume
Loyalty Contribution
(Loyalty Volume as Percent of
Brand Volume)
Top Box Contribution
(Top Box Volume as
Percent 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%
TOTAL 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 those on 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 quantitative understanding of brand value within their organizations, according to a recent survey by the Association of National Advertisers and global branding consultancy Interbrand.
Further, because brand value's effect on corporate value is not clearly quantified, it isn't being incorporated in decision-making: 64% of the 118 marketing officers and senior marketing executives polled said that brands do not influence decisions made 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?
• 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 for
customers 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 Judy Hopelain, 2008 http://www.brandamplitude.com/whitepapers/Brand%20Vitals%20vF.pdf
“In Search of True Brand Equity Metrics: All Market Share Ain’t Created Equal”, Tom Reynolds and Carol Phillips, Journal of Advertising Research, 2005 http://www.brandamplitude.com/whitepapers/all_market_share_aint_created_equal.pdf
“On Track: The Next Generation of Brand Tracking”, Judy Hopelain, AMA’s Marketing Management, 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 don’t bother”, Scott Davis, Strategy, January, 26, 2004