Measuring Brand Equity
OUR PERSPECTIVE
March, 2012
 Brand Amplitude is an insights-based brand strategy consulting firm.
 Clients include CPG, Retail, B2B, Higher Education, Healthcare.
 Relationships are led by experienced marketing practitioners and industry
thought leaders, Carol Phillips and Judy Hopelain.
 Supported by a virtual team of research, analytic and consulting associates.
Client-Side
Illuminations
Patagonia
Whirlpool
Consulting
Agency
Business Faculty
JWT
Leo Burnett
Mullen
Y&R
Accenture
BCG
Prophet
Swander Pace & Co.
A strong brand is one of a company’s most important assets. By growing
brand equity, marketers help achieve the organization’s business objectives.
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INTRODUCTIONS
Who Are We?
 We help clients solve strategic business and brand issues by leveraging a
range of proven tools and frameworks.
– Brand audit
– Market segmentation
– Target insights (motivations, culture and
decision-making)
– Brand identity and rallying cry
– Brand positioning
– Brand architecture
– Brand activation
– Brand measurement
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INTRODUCTIONS
What Services Do We Offer?
 Metrics are an integral part of the brand strategy process.
Reasons to Measure Brand Equity
Strategic Marketing Framework
 Understand drivers of brand strength in
order to support strategic decision –
making.
I. Business Strategy
II. Brand Strategy –
Architecture, Identity & Positioning
 To evaluate performance of brand
management in increasing equity over
time.
III. Go-to-Market Strategy
Value Proposition
 To evaluate efficacy of brand building
programs -- ROMI.
Messaging & Offer Design
Customer Experience
 To assess the value of the brand for
purposes of licensing or sale.
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IV. Marketing Execution & Metrics
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BRAND EQUITY MEASUREMENT
Why Measure Brand Equity?
 Brand value and brand equity are not the same. Brand value is a financial
measure specific to a point in time that is especially useful in M&A or licensing.
Brand equity represents the potential for your brand to impact your business.
“(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.”
-- Tom Reynolds & Carol Phillips
“In Search of True Brand Equity Metrics: All Market Share Ain’t Created Equal”
Journal of Advertising Research, 2005
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BRAND EQUITY MEASUREMENT
Brand Equity vs. Brand Value
 Little consensus among experts about the best way to measure brand equity.
Key Issues:
•
•
•
•
•
Definition of equity – brand value vs. impact of customer knowledge
Measurement complexity – many components, unclear weights
Accountability – hard to relate to market share, profitability
Actionability – hard to link to marketing activities, spend, programs
Engagement – limited organizational uptake of results
Leading Brand Equity Measures & Sources
Source: Journal of Advertising Research, June 2005
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BRAND EQUITY MEASUREMENT
Brand Equity: What Do Experts Recommend?
 Brand equity is usually measured through easy-to-obtain ‘proxies’ such as
awareness or market share.
“’There is no consistent definition of ROI.’ Marketing organizations are instead
using "surrogate" metrics, ranging from input-related metrics such as awareness
and brand image in financial services to market share and growth in consumer
packaged goods companies.”
-- ANA/Booz Allen survey October, 2004.
Most commonly used metrics:
Changes in brand awareness
81%
Changes in market share
79%
Changes in consumer attitude toward the brand
73%
Changes in purchase intent
Return on objective
Lifetime customer value
59%
36%
23%
Changes in the financial value of brand equity
20%
Source: ANA, State of ROMI Measurement, 2007
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BRAND EQUITY MEASUREMENT
How Is Equity Usually Measured in Practice?
 Each industry and consulting firm defines equity in terms that are specific to its
model or unique needs.
Sample of Industry Brand Measures
 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
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Leading Brand Measurement Firms
BRAND EQUITY MEASUREMENT
Little Standardization – Many Opinions
 Brand equity resides in the minds of customers. The best ‘proxy’ is one that best
captures that intangible idea that impacts choice.
“Customer-based brand equity is the differential effect that brand knowledge
has on customer response to the marketing of that brand.”
-- Kevin Keller, Strategic Brand Management, 2008, p. 48
$1.99
$4.18
$2.29
Which jar would you choose?
The decision is not driven by price alone, but moderated by the sum of your experiences with
the brand. This is what enables some brands to charge a premium, while others cannot.
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PERCEPTIONS IMPACT BEHAVIOR
What Is the Best Proxy for Brand Equity?
 Brand equity is observed through its impact on choice. Measures of brand equity
should reflect both attitudinal and behavioral components.
“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.”
Dr. Tom Reynolds & Carol Phillips, “In Search of True Brand Equity Metrics: All Market Share Ain’t
Created Equal”, Journal of Advertising Research, 2005
Brand Equity Components
Loyal Behavior
•
•
•
Share of wallet
Purchase frequency
Vendor consolidation
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Beliefs
•
•
•
•
•
Relative overall quality
Perceived cost
Preference
Willingness to recommend
Understands my needs
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Intent
•
•
Future purchase intent
Self-perceived trend (more
or less of my business)
BRAND EQUITY MEASUREMENT
Brand Equity Defined
 Just as all calories are not equally nutritious, not all share points contribute equally
to the health of the brand. Loyal customers are ‘nutrient rich’ and contribute more
to brand health than the ‘empty calories’ of price sensitive customers.
Loyalty Contribution by Brand
Customers who devote 80% or more of requirements to the brand
Market Share
34.5%
37.4%
Sales contributed
by loyal customers
28.0%
Premium
76%Brand?
Sales
Brand A
56% Sales
Brand B
Price
Brand?
40%
Sales
Brand C
“Size and vitality of the core varies by brand. Every brand could benefit
from having the core group represent a larger share of its total franchise.”
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BRAND EQUITY MEASUREMENT
Share Tiering Approach to Measurement
 Goal is to determine how much of a brand’s share is being driven by people
who are loyal in both attitude and behavior.
Loyal Behavior
Beliefs
Operationally define loyal
behavior in a way that is
specific to the category (e.g.,
80% total category needs).
Classify customers according to
their brand beliefs.
Determine Total Volume and Loyalty
Volume* within each classification.
Determine what percentage
of Total Volume is ‘Loyalty
Volume’* by brand.
Superior
Quality
Good
Quality
Acceptable
Quality
Advocates
Unconvinced
Indifferents
Price a Minor
Barrier
Aspirers
Opportunists
Ignorers
Price a
Significant
Barrier
Admirers
Skeptics
Rejectors
Price Not a
Barrier
*Loyalty volume = brand volume
contributed by customers who
are classified as ‘loyal’
Intent
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Classify customers regarding
how typical their recent
purchasing has been and
whether they expect a shift
in the future.
BRAND EQUITY MEASUREMENT
Share Tiering Measures
 From these measures, a range of metrics can be calculated.
Market Share
Share of total category volume
Top Box Contribution
% Brand volume sourced from Advocates
Loyalty Contribution
Brand’s loyalty volume as % of total brand volume
Equity Share
Share of loyal user volume (any brand)
Leveragability Index
Ratio of volume from Aspirers to combined sales of
Aspirers and Unconvinced
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BRAND EQUITY MEASUREMENT
Share Tiering Metrics
 Consumer beliefs regarding Ragu and Prego are similar – what explains their
very different market shares?
Market Share Spaghetti Sauce Category - Self Report Data*
Other, 23%
Ragu, 46%
Store, 6%
52% rate quality ‘superior’;
42% say ‘cost is not a barrier’
to purchase.
Prego, 25%
57% rate quality ‘superior’;
44% say ‘cost is not a
barrier’ to purchase.
n=417 male and female primary grocery shoppers who purchased spaghetti sauce in past 3 months, 2005
Volume expressed in units of jars, cans, tubs.
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BRAND EQUITY MEASUREMENT
Example of Sharing Tiering
 Self-report information on beliefs and behavior obtained through surveys can be
used to measure brand equity components.
Loyal Behavior
•
•
•
Share of wallet
Purchase frequency
Vendor consolidation
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Beliefs
•
•
•
•
•
Relative overall quality
Perceived cost
Preference
Willingness to recommend
Understands my needs
14
Intent
•
•
Future purchase intent
Self-perceived trend (more
or less of my business)
BRAND EQUITY MEASUREMENT
Example of Share Tiering
 Share tiering reveals that Ragu derives more volume from its core customers –
those who think it is superior and worth the price. This data reflects volume;
profitability is most likely even more skewed.
Share Tiers Based on Volume
P1
P2
P3
Share of Volume
Q1
Q2
37.9% 11.4%
26.1% 13.0%
0.5%
1.4%
Q3
1.6%
6.2%
1.8%
P1
P2
P3
Loyalty Share
Q1
Q2
80.0% 65.8%
84.8% 15.2%
0.0%
0.0%
Q3
76.9%
0.0%
0.0%
P1
P2
P3
Share of Volume
Q1
Q2
15.0%
14.3%
32.3%
21.8%
2.3%
2.7%
Q3
7.3%
0.4%
3.8%
P1
P2
P3
Loyalty Share
Q1
Q2
57.0%
31.0%
51.5%
10.7%
0.0%
0.0%
Q3
90.9%
0.0%
0.0%
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Ragu derives nearly 38% of its
volume from Advocates while Prego
derives just 15% from its Advocates.
A higher proportion of Ragu volume is
‘Loyalty Volume’, even among those
with high future intent.
BRAND EQUITY MEASUREMENT
Example of Share Tiering
 Share tiering provides direction for improving Prego brand equity relative to Ragu.
 Prego is vulnerable - its market share is a misleading indicator of its brand health, as
much of the volume is driven by non-loyal customers.
 Prego is strongly ‘leveragable’ – the brand should focus on driving volume among
‘Aspirers’ by convincing them Prego’s superior quality is ‘worth the price’.
Market Share
Equity Share
Loyalty
Contribution
Advocate
Contribution
Leveragability
Index
(Share of category
volume)
(Share of
category loyal
user volume)
(Contribution of top (Ratio of Aspirer volume
(Loyal user volume box respondents to
to Total Aspirer +
as % total)
volume)
Unconvinced volume)
Ragu
46%
51%
63%
30%
70%
Prego
25%
20%
44%
9%
69%
Store
6%
4%
33%
23%
0%
Other
23%
26%
66%
16%
60%
TOTAL
100%
100%
57%
21%
64%
Loyal users = 4 of last 5 purchases devoted to one brand.
Advocates = those who rate brand superior on quality, price is no barrier to purchase
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BRAND EQUITY MEASUREMENT
Example of Share Tiering
 Measures are understandable, not black box
 Easily translated into financial strength and ROI
 Yields universal metrics that can be applied across categories, brands, SBU’s
 Questions are easy to administer, so equity can be assessed more frequently
 Frequent measurement allows tracking of changes over time
 Allows modeling relative to marketing activities and investments
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BRAND EQUITY MEASUREMENT
Advantages of Share Tiering
 Academics are actively proposing improved ways to measure brand equity, but
each tends to emphasize a different aspect – belief, behavior, intent.
Metric
Publication
Author
Definition
Corporate Branding
Index
Leveraging the
Corporate Brand
James R. Gregory
Reputation, communications &
financial performance
Net Promoter Score
The Loyalty Effect
Fred Reichfeld
Difference between percentage
of brand promoters and
detractors
Driving Customer
Equity
Customer Equity
Roland Rust
Sum of the lifetime volues of
current and future customers
Energized
Differentiation
The Brand Bubble
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John Gerzema and Palpable and measurable energy
Ed Lebar
that fosters irrational fidelity
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BRAND EQUITY MEASUREMENT
Other Directions in Brand Equity Measurement
 The ‘right’ way to measure brand equity involves a mix of measures and the
ability to relate them to business results.
Comprehensive Brand Equity Measurement Approach
Activity & Program
Metrics
Customer Perceptions &
Behavior
Financial Impact/Performance
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Market
Performance
BRAND EQUITY MEASUREMENT
Recommended Approach
 Understand the difference between brand equity and brand value –
which is more important to you to know?
 Recognize there is no silver bullet
–
–
Requires a thoughtful approach based on a clear idea of how brand equity
manifests itself in your business -- what behaviors and attitudes drive brand
value for customers and investors?
Use a mix of measures – belief, behavior, intent, financial
 Tie measures to strategy
–
If possible, model the relationship between brand equity measures and
business performance to determine equity drivers
 Be consistent
–
Movies work better than ‘snapshots’ – pick a method and stay with it to
build knowledge over time
 Prioritize measures
–
–
Don’t confuse data with insight – make it meaningful or it will be ignored
Most companies suffer more from too much data than from too little
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BRAND EQUITY MEASUREMENT
Key Takeaways
To Learn More, Contact Us:
Carol Phillips
[email protected]
Judy Hopelain
[email protected]
269-429-6526
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415-810-8268
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