Brand Evaluation Systems
Three Brand Measurement Strategies
• Brand Equity – brand assets (or liabilities)
linked to a brand’s name and symbol that
add to (or subtract from) a product or
services*
• Brand Valuation – Assigning a dollar value
to the brand
• The Brand Report Card
“Brand Leadership”, Aaker and Joachimsthaler
Essentials of Brand Measurement
Use a consumer
response model
Establish
communications
objectives
Understand and
implement proper
research
Use pretests
and posttests
Brand
Measurement
Use multiple
measures
Brand Equity Dimensions & Constructs
Awareness
Perceived
Quality
Association/
Differentiation
Loyalty
Market
Behavior
Brand
Awareness
Perceived
Quality
Perceived
Value
Price
Premium
Market
Share
Leadership
Brand
Personality
Satisfaction
Price Indices
Organizational
Associations
Aakers, David “Measuring Brand Equity Across Products and Markets”
Distribution
Indices
Brand Equity Assessment Criteria
• Tap the full scope of brand equity
• Focus on sustainable advantages not easily
duplicated by competitors
• Reflect the constructs that truly drive the market;
are associated with future sales & profits
– Movement on a measure will move price levels, sales or
profits
• Measures should be sensitive – when equity
changes the measures reflect those changes
• Applicable across brands, product categories &
markets
– Tested proven measures provide structure for developing a
set of individual brand measures
Brand Awareness
• The level of brand recognition that
consumers have of a particular brand and
its specific product category
• Reflects the salience of the brand
• Awareness levels
–
–
–
–
–
Recognition: Has heard of the brand
Recall: Brands that can be named
Top-of Mind: The first-named brand
Brand Dominance: The only brand recalled
Brand Knowledge: Knowing what the brand
stands for
– Brand Opinion: A value judgment of the brand
Perceived Quality
• Special associations that occur in many
contexts; empirically shown to affect ROI
• Associated with price elasticities and brand
usage
• Associated with specific function benefit
variables
• Measured as a scale in comparison to
alternative brands
– High vs. average vs. inferior
– The best vs. one of the best vs. one of the worst
vs. the worst
– Consistent vs. inconsistent quality
Brand Association - Value
• Focuses on the brand value proposition
• Brand value involves
– a functional benefit
– is usually basic to most brands in its class
• Brand value can be measured by
– Provides good value for the money
– Whether there are reasons to buy a brand over
competitors
Brand Loyalty
• A consumer’s commitment to repurchase or
otherwise continue using the brand
• When consumers like and consistently buy a
specific brand in a product category
• Creates a barrier to entry
• Brand equity’s core dimension
Market Behavior Precautions
• Market Share
• Price/Distribution Indices
After The Break
• Divide into your teams
• Apply Aakers Brand Equity
Measurement System to Apple six
months after the antenna crisis (as
you best recall)
• Provide an
analysis for
each dimension … and give your
rational for your directional score
Pros and Cons of Brand Measurement
Advantages
Disadvantages
Avoid costly mistakes
Cost of measurement
Evaluate alternative
strategies
Research problems
Increase efficiency in
general
Disagreement on
what to test
Determine if objectives are
achieved
Measure the wrong things
Time
Brand Awareness Precautions
• Awareness is not equally important across
categories
– Recognition is important for new companies
– Recall and top-of-mind important to mature
categories/companies
• On its own provides an incomplete picture
Perceived Quality Precautions
• Perceived quality involves a competitor
frame of reference
• Need to compare “apples to apples” … subcompacts vs. luxury brands
• Segmentation issues … perception varies
across customers vs. switchers vs.
competitive loyalists
• It may not be the key driver
• It may not be sensitive to relevant events
Brand Value Precaution
• Is brand value different from perceived
quality? Perceived quality/price?
• Brand value may relates more to functional
benefits and utility
• Perceived quality may have a higher
association with prestige
Brand Loyalty Precautions
• Defined with respect to only one set of
competitors
• Might miss an emerging competitor or an
emerging variable
• Does not apply to non-customers
• Do not measure brand equity beyond the
customer base
Market Behavior Precautions
• Market Share
– More elements than brand go into market share
– Often responsive to short-term strategies
• Price/Distribution Indices
– Different channels
– Complex competitive set
Where to From Here?
• Develop a set of 4-8 constructs from the
five dimension
• Establish a weighting system to
accommodate relative importance
• Match the weighing system to perceived
values of the target market
Keller’s Brand Report Card
• The simplest of the three Measures
“brand equity” as a creative asset
• Identifies 10 traits shared by strong
brands
• Grades performance of each trait
• Objective is to identify
– Areas for improvement
– Strengths
Keller’s 10 Brand Traits
Trait
Definition
Superior Customer
Benefits
An attractive whole
Starbucks Coffee Bar
Community
Relevant
Tangible +Imagery +
Feelings + Relations
Gillette Advance Razors
Price=Value
(Perceived)
Quality, features, cost
… & price
P&G EDP
Mercedes
Proper Positioning
Parity & Differentiation
Harley – Performance
plus image
Consistent
Continuity + Freshness
GEICO?
Rational Brand Portfolio
Hierarchy creates equity
value
GM: Chevy – Buick Cadillac
IMC
Ads, web, events, pr
Coke-a-Cola
Mgt. understands the
meanings
Grasp the experience;
holistic decisions
Bic=disposable
Bic For Men cologn?
Adequate Support
Monitors Equity Sources
Example
Shell – the ‘80s leader
Active audits & tracking
Period Equity Reports
Brand Valuation
“IF THIS BUSINESS WERE SPLIT UP, I
WOULD GIVE YOU THE LAND AND BRICKS
AND MORTAR, AND I WOULD TAKE THE
BRANDS AND THE TRADEMARKS AND
WOULD FARE BETTER THAN YOU
JOHN STUART, CHAIRMAN OF QUAKER (CA.1900)
History
• Driven by the increase in premium above stock
market values in ‘80s consumer company
acquisitions
• Since the 1990’s the need to establish a dollar
valuation for Intellectual Capital Assets has the
development of valuation methodologies
• These methods are nearing formal recognition by
the Financial Accounting Standards Board (FASB)
• Headed for inclusion in the standard repertoire of
the Generally Accepted Accounting Principles (GAA)
Brand Valuation Today
• The average brand accounts for more than
1/3 of shareholder value
• McDonald’s brand accounts for more than
70% of shareholder value
• Coca-Cola brand accounts for 51% of the
Coca-Cola Company’s stock market price
• Samsung spends 7.5% on R&D and 5% on
communications
•
BusinessWeek, Interbrand,/JP Morgan 2002
Four Brand Valuation Approaches
Approach
Strengths
Weakness
Cost
• From an accounting/
financial perspective
•Complies with standard acct.
practices
• Is conservative
• Assumes the asset declines
in value
•Not well-suited to
intangible values
•Overlooks new brand
contributions
• No future replacement cost
allowance
Market
• What the brand could be sold • Difficult to separate from
for
Goodwill
• Addressed through market
• Overly simplified
capitalization (Market Cap –
Book Value = Brand value
•Assumes future brand
benefits
Four Brand Valuation Approaches
Approach
Strengths
Income
• Identifies Brand after-tax • Does not take into
operating income
account other IP (mgt.,
• Assumes the brand’s
patents, etc.)
ability to generate after tax
income
•Premium price over
unbranded competitors
Brand Strength • The most comprehensive
Assessment
• Works from a set of
factors
• Measures future results
Weakness
• Includes an “attitude”
variable
So Which is Better?
• All have their strengths & weakness
• Increasingly, the trend is toward
Brand Strength Assessments because
of its comprehensiveness
Brand Strength Assessment Approach
Assigns a financial value to brand equity.
Brand Value measures the current and
future earnings due to the brand asset of
a company; the net present value of
expected future earnings.
Two Brand Valuation Methodologies
Customer Brand
Valuation
• Focuses on customers
as a the target
audiences
• A key role of brand
component is customer
satisfaction
Shareholder Brand
Valuation
• Focuses on the
investment community
as the target market
• A key “role of brand”
component is share
price