brand valuation 050510(4)

Evaluating

Brand

Equity

Presented by Peter Harris

National President

Australian Market and Social Research Society

MD Vision Critical ANZ

@peteraharris

Peter Harris

AUDITOR marketing RESEARCH

Family man AMSRS aussie NEW MEDIA

building relationships CRICKET TRAGIC

In this session

The value contribution of brand

Measurement approaches

The looming brand bubble

Why should we care about a brand?

Source: Interbrand

5%

38%

62%

85%72%

62%

95%

62%

38%

15%28%

38%

0%

20%

40%

60%

80%

100%

1978 1982 1992 1998 2004 2007

Tangibles

Intangibles

Brookings Institute, 1994, Baruch Lev: Analysis of S&P 500 companies, 2000, Fortune,

1978 and 2004, Brand Finance 2007

Market Capitalisation

Intangibles are a key source of corporate value

albeit weakening

Source: Interbrand

Highly valued brands create superior returns…

Strongest brands outperform the market

So what exactly

is brand equity?

―Latent value in the mind of customers that

is exhibited through its impact on behavior.

Positive equity results in behavior that benefits

the brand through purchase frequency, brand

loyalty, 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 Equal‖, paper in review, Journal of Advertising

Research

Loyal

Behavior

Psychological

Preference

Every brand could benefit from

having the core group represent a

larger share of its total franchise.

– Dr. Tom Reynolds

How do we

measure

it?

It has risen in prominence as the brand‘s contribution to the market capitalisation of an

organisation is appreciated.

Brand valuation is one type of measure

and a relatively new one

http://www.slideshare.net/pjcollings/measuring-brand-value-patrick-collings

What the Experts say

(in terms of measuring brand value)

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 xPerceived

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 xUser

Sat./Loyalty x x xx

Market Share x Stability x

Sources: D. Aaker, Building Strong Brands, 1996; K. Keller, Strategic Brand Management, 2003

BrandAsset Valuator (BAV) is Young & Rubicam's

comprehensive global database of consumer

perceptions of brands: 350,000 consumers,19,500

brands, 44 countries, 173 studies since 1993

The BAV research is based on four key pillars:

differentiation, relevance, esteem and knowledge

Financial Value

Activity &

Program Metrics

Market

Performance

Customer Perceptions

& Behavior

• Linking customer perceptions and market performance

to impact on financial value to assess ROMI.

ROMI

A Better Approach

• Multiple measures at different levels of the value chain,

benchmarked and tracked consistently over time:

Activity &

Program Metrics

Market

Performance

Customer Perceptions

& Behavior

A Better 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

Financial Value

•Stock price

•P/E ratio

•Market capitalization

•Brand contribution (i.e.,

CoreBrand index)

Activity &

Program Metrics

Market

PerformanceCustomer Perceptions

& Behavior

ROMI

A Better Approach

―(For most companies) the 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.‖

--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

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

Brand Equity vs Value

http://vimeo.com/2013701

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

Key Takeaways

• There Is No Silver Bullet

— Each company may require unique measures

• 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

Peter.Harris@VisionCritical.com

Twitter.com/PeterAHarris