brand valuation 050510(4)
DESCRIPTION
TRANSCRIPT
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
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
