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Brand Evaluation Systems

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

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Brand Evaluation Systems

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  1. Brand Evaluation Systems

  2. 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

  3. Essentials of Brand Measurement Use pretests and posttests Establish communications objectives Understand and implement proper research Use multiple measures Use a consumer response model Brand Measurement

  4. Brand Equity Dimensions & Constructs Aakers, David “Measuring Brand Equity Across Products and Markets”

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. Market Behavior Precautions • Market Share • Price/Distribution Indices

  11. 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

  12. Pros and Cons of Brand Measurement Disadvantages Advantages Cost of measurement Avoid costly mistakes Research problems Evaluate alternative strategies Disagreement on what to test Increase efficiency in general Measure the wrong things Determine if objectives are achieved Time

  13. 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

  14. Perceived Quality Precautions • Perceived quality involves a competitor frame of reference • Need to compare “apples to apples” … sub-compacts 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. Keller’s 10 Brand Traits

  21. Brand Valuation

  22. “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 youJohn Stuart, Chairman of Quaker (Ca.1900)

  23. 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)

  24. 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

  25. Four Brand Valuation Approaches

  26. Four Brand Valuation Approaches

  27. So Which is Better? • All have their strengths & weakness • Increasingly, the trend is toward Brand Strength Assessments because of its comprehensiveness

  28. 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.

  29. 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

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