PAUL DYSON ANDY FAKK AND

NIGEL S. HOLLIS

UNDERSTANDiNG, iVIEASURiNG, AND USING BRAND EQUITY

PAUL DYSON Group Statistician

Miliward Brown International

This paper describes a survey research system designed to place a financially related value on the consumer-based equity of brand images and associations. The two components of the system, the Consumer Value model and the BrandDynamics'^' Pyramid, identify the value of individual respondents to a brand based on their predicted loyalty and explain the variation in that loyalty based on each person's attitudes toward the brand. The paper demonstrates how findings from the system can be used to help marketing decision makers manage their brand's equity and so maximize the value of their asset.

ANDY FARR European Research & Development Director Millward Brown Internationa!

t is a well-recognized concept that there is a financial value which attaches to a brand name, but there is little agreement on how to measure that value, in this paper we will suggest a consumer-driven definition of brand equity, and propose a new system for understanding, measuring, and using that equity. A brand can and should be an enduring and profitable asset for its owners. Recognizing this fact, many brand owners have sought to place the monetary value of a brand on the balance sheet, in the same way that they would that of a capital asset, such as a factory. A brand, however, does not have foLmdations built of concrete and steel. When John Stuart, then Chairman of Quaker Oats Ltd., stated, "If ihe business
were split up, 1 xvould take the brands, trademarks, ami goodwill, and you couhi have all the bricks and mortarand I would fare better

NIGEL S, HOLLIS Group Research & Development Director Millward Brown International

than you." he was recognizing that brands exist in the minds of their potential consumers and that what those consumers think

of a particular brand determines the value it has to its owner. A brand's foundations are, therefore, composed of peoples' intangible mental associations about it. In placing a value on a brand, we are placing a value on the strength and resilience of those associations. Up until now, however, there has been no systematic means of assigning to this consumer equity a financial value that is related to the overall worth of the brand. Nor has survey research offered a consistent way of understanding and assessing that consumer equity. This has impaired the ability of decision makers to properly manage their brand's equity to maximize the longterm profit realized from their asset. This paper reports on the results of a Research and Development (R&D) program aimed at using survey research data to place a financially related value on the consumer-based equity of brand images and associations. We wili document the empirically derived theories underlying the final system and describe the

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individual components wbich comprise it. We will then sbow how by translating research data into simple descriptive concepts it can be made accessible to marketing decision makers and, hence, provide a key input into strategic thinking and action'.

Our R&D program, therefore, sought to address these traditional problems, witbin tbe context of a unified survey research tool.

The Consumer Value Model

The Consumer Value model was created from survey data collected from 750 U.K. consumers and calibrated against their actual purchasing bebavior (recorded by diary) across the 12 weeks following the interview. The model was then applied to survey data collected using the same questionnaire in the United States and Spain. In the United Kingdom four categories were included: toothpaste; coffee; margarine; and tea.

Measuring Brand Equity: The Need for a Systematic Approach

The objective of many research techniques is to provide decision makers with guidance on how to improve tbeir brand's competitive strength in the marketplace. Wby tben tbe need for a new approach? We have identified four basic limitations of research techniques which have been designed to meet this overall objective. Tbese limitations are as follows: 1. Failure to identify the value of a consumer to a brand in a way that it can be related back to the balance sbeet. 2. Inability to explain why that value is high or low, in terms of a consumer's fundamental attitudes toward the brand. 3. Lack of a consistent set of consumer equity measures which can easily be applied across brands, categories, and countries. Without tbis, learning is limited to individual cases. 4. Lack of a clear hierarchy of "importance" to tbe consumer equity measures, based on tbe extra value likely to be derived from someone endorsing the brand on a particular measure.
'Atl data on specific brands presented in this paper was taken from surveys funded solely by Millward Brown International unless otherwise specified.

Where Financial and Consumer Equity Meet

So bow could we address the first of tbese issues? We needed a way of bridging the gap between the intangible perceptions of a brand and the revenues reahzed from it. Tbere is an obvious point at whicb financial and consumer equity meet, and that is when a transaction occurs in tbe marketplace. We were in agreement witbj. Walker Smith (1991) when he said tbat economic value is created in transactions and that transactions are tbe source of equity. Whether a brand can command tbe price asked for it in the marketplace is in large part determined by how it is perceived by tbe buyer, and wbetber someone continues to buy the same brand is also in large part a function of their attitudes toward it. It was our belief that if we could successfully predict transactions from survey data we would bridge tbe gap between tbe intangible perceptions of a brand and the tangible revenues generated from it. In other words we will have taken an important step toward identifying and measuring the value of brand associations. Thus tbe starting point for our analysis was to identify a survey research measure, or combination of measures, wbich reflected the potential sales value of each consumer to the brand. This we have termed tbe Consumer Value model.

. . loyalty alone does not determine the value of a purchaser to a brand.

The market shares calculated from the diary panel for the 33 brands in the four categories matched those reported by Nielsen very closely (see Table 1), reassuring us that we could use the panel data as the dependent variable in our analysis. A control group of 250 respondents who were not interviewed about the brands prior to the panel displayed no difference in behavior from the remainder. The research methodology used to collect both the survey and panel data is described in more detail in papers available from Millward Brown International. The variable predicted by the Consumer Value model is the value sbare of requirements derived from the panel, that is, the proportion of an individual's category expenditure that went toward each brand. Thus we were not seeking to explain how much people spent on a category, but what proportion of that expendi-

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Table 1 Correlations for Categories Covered in R&D Program

Country UK UK UK UK Coffee Toothpaste Tea Margarine Analgesics Shampoo Category UK, panel value shares vs. Nielsen Brand CL vs. panel share of requirements 0.98 0.99 0.97 0.98 Brand CV vs. Nielsen/IRI value shares

0.99
0.99 0.98 0.87

0.99 0.96
0.97

0.91 0.99 0.90 0.55

0.99

US US US
Spain

NA NA NA NA

NA NA NA NA

Rice
Instant coffee

Spain Spain
Spain Spain

Carbonated beverages
Toothpaste Analgesics Ground coffee

NA
NA NA
NA

NA
NA NA
NA

0.98
0.90 0.90

0.85

ture went to one brand or another. We feel that the value share of requirements measure is a key indicator of brand equity, since it will reflect both the proportion of volume sales and the degree to which people are prepared to pay a premium price (which itself is a strong indicator of a brand's equity). By estimating value share of requirements from an individual's attitudes toward the brand we will be accessing their underlying or potential value to the branda cleaner measure of true consumer equity than might be derived from panel data alone. The Consumer Value model works by estimating value share of requirements for each brand for each respondent. We call this the Consumer Loyalty (or CL). In effect the Consumer Loyalty tells us, in percentage terms, how a consumer is likely to divide up their total category expenditure across the set of available brands. As we shall review below, the model takes account

of a variety of factors to make the prediction, including individual respondents' price responsiveness and whether or not they are a repertoire purchaser. Figure 1 Consumer Value Model Validation

When aggregated up to the brand level the accuracy of the Consumer Loyalty prediction is good, as shown in Figure \. The correlation between the loyalty predicted from the survey and that measured from the panel is 0.96. Correlations for individual categories are given in Table 1. We need to recognize, though, that loyalty alone does not determine the value of a purchaser to a brand. We must also take the weight of consumption into account. By asking questions about weight of purchase in the category, it is a simple step to convert the Consumer Loyalty score into a Consumer Value (CV). This recognizes the fact that even though they may be equally loyal to a brand, those who are heavy category purchasers are inherently more valuable to a brand than those who are infrequent purchasers. Aggregating individual Consumer Values across our panel allowed us to estimate value market shares (we call these

Predicted Consumer Loyalty vs. Share of Requirements by Brand

q
CO a

2
01

Predicted Brand Consumer Loyalty

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Brand CVs) for each of the 33 brands in the study. As argued above, our estimate of value share, being based on attitudes, represents an underlying share estimate and as such may not reflect short-term share which could be affected by marketing activity. However, Table 1 shows a strong relationship within each category between the estimated value share from the Consumer Value model and actual Nielsen value share over the 12 weeks of our U.K. panel. The lowest correlation is for margarine, a crowded and illdefined category. A similar program to that in the United Kingdom was followed in the United States where consumers were interviewed about their purchasing behavior in three categories: analgesics, shampoo, and rice. The base size was 300 for each survey; however, the sample definition for each was matched to tracking studies already running in those categories (as we shall see, with hindsight this was not an ideal decision). The same questionnaire was used as in the U.K. work, but we did not follow up to monitor actual purchase behavior. Instead, we used the U.S. data to see how well the BrandDynamics'" questions added to our understanding of the brands and categories. However, once we had created the Consumer Value Model we realized the U.S. data could also provide an out-of-sample validation by using the model derived in the United Kingdom to project up to dollar market share in the United States. Where the survey data could be compared on a like-for-like basis with the share data, the projection was as accurate in the United States as in the United Kingdom (see Table 1). The exception was the U.S. rice category. Originally the sur12

veys in the United States had been set up with the objective of comparing results to existing tracking surveys, not Nielsen or IRl share data. The existing study definitions allow a reasonably direct comparison for analgesics and shampoo (the fact that only women were interviewed may account for the lower correlation for shampoo than for analgesics, which was more representative). However, this was not true for rice. While the failure to match the rice category definition reported by the scanner companies resulted in a failure to properly verify the Brand CVs for that category, it did serve to highlight the importance of matching the two in future work (if validation is required). Subsequent live BrandDynamics"' studies have achieved correlations more consistent with the analgesic and shampoo categories. Since the U.K. and U.S. surveys were completed we have now conducted another study, this time in Spain (see Table 1). Again, the results from the Consumer Value Model match the actual market share figures reasonably well, suggesting that the model is robust and that it can work well across categories and countries. While further refinements will be made to the mode! as more data becomes available, we believe that it currently meets our requirements of predicting individual respondents' potential loyalty based on survey data alone. The following pages explore the underlying assumptions of the Consumer Value model in more detail.

mance in many different categories has shown that claimed consideration has a strong directional relationship with actual sales over time. That relationship, however, is often disguised at a point in time by both the purchase cycle in the category and the influence of price and other key factors that affect purchase behavior. The specific consideration scale used within the Consumer Value model takes account of three aspects of purchasing behavior. People often maintain an open mind with respect to brands they might possibly purchase and can have a wide consideration set. People often do not just buy one brand; they may regularly swap between a repertoire of brands in certain categories. Even if it is part of a repertoire, a brand that is bought for a specific purpose will be bought more frequently than others in the same repertoire, which may be more easily substituted for one another. 2. Brand Size. In every category there is a clear relationship between brand size and the probability of purchase. This is the Double Jeopardy effect, first noted by McPhee in 1963 and confirmed in subsequent work by Ehrenberg (1995) and his colleagues. This empirically based finding suggests that the bigger a brand is the more loyal its buyers will be, and it has been observed to influence purchasing behavior in virtually all categories studied. While Double Jeopardy has proven to be a robust and reproducible empirical generalization, its effect is often ignored in both marketing and market research practice. However, it still plays an important

Factors Taken into Account by the Consumer Value Model

1. Consideration. Our experience of tracking brand perfor-

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Figure 2 Foundations of Consumer Equity: The BrandDynamics" Pyramid

Bonded

category or relevant competitive set. This is accomplished by allocating consumers to one of three clusters: Brand Loyal, Repertoire, or Price Driven. Individuals are assigned to a specific cluster based on their answers to a limited set of questions covering areas such as satisfaction with the category or the influence that price discounts might have on their decision. In the original validation work the Price Driven consumers exhibited six times the responsiveness to price compared to the Brand Loyal group. Typically, the groups display different brand preferences and the proportion of people that fall into each cluster differs from one category to the next.

Using Consumer Loyalty and Value

part in determining the actual outcome of peoples' purchasing behavior. The Consumer Value model explicitly takes account of the Double Jeopardy effect by including a survey-based measure of brand size. 3. Consumer Price Responsiveness. Price has two influences on purchase behavior, one general and one specific. The general perception of a brand's price relative to others helps determine whether or not a brand is included in an individual's consideration set. The specific price asked at the point of purchase will determine which brand in the consideration set is actually chosen. The Consumer Value model takes account of this by identifying an individual's price responsiveness and then including the actual average market price in the model in the f(jrm of an index against the The Consumer Value model uses all of the factors described above to predict Consumer Loy-

Figure 3 BrandDynamics Pyramids across Categories

Coffee Clothing Retail

Mortgages

Bonding

3%

12%

Advantage

Product
performance

Relevance

Presence

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altyan individual respondent's value share of requirements. To derive a measure of the value of a consumer to the brand we then factor this loyalty prediction by the claimed weight of category purchase. To make market share predictions (like that shown in Table 1), we must use this Consumer Value measure aggregated across respondents. In so doing, we have succeeded in identifying the value of consumers in a way that can ultimately be related to the value of the brand on the balance sheet. We have satisfied our first objective using the Consumer Value measure. We now turn to our remaining objectives: explaining the variation in a person's value to the brand based on their fundamental attitudes toward it; using a consistent framework of consumer equity measures; and incorporating a clear hierarchy of effect. To accomplish this we must use the Consumer Loyalty measure. Category consumption is dependent on many more factors than brand associations, and it is outside the scope of this paper to explore them. Loyalty, however, is in large part dependent on brand associations, and it is this that we seek to predict using the attitudinal data gathered in our pre-survey.

. . . successful brands are distinguished from the competition because they are seen as active and dynamic beyond their stature in the market.
As a result of our experience of monitoring brand health, and extensive R&D work, we identified five conceptual stages in a person's relationship with a brand as reviewed by Hollis (1996). We then developed a broad set of questions which we hoped would discriminate between these stages and applied them in the pre-survey described previously. The development of the BrandDynamics Pyramid involved analyzing the results from our questions to see which ones did discriminate between differing degrees of loyalty. The key evaluative attributes identified from our analysis are summarized by the Brand Pyramid shown in Figure 2. Each

level of the pyramid represents an increased level of familiarity and involvement with a brand. The rationale for each level is described below. A brand must create an active presence in the market. While Aaker (1991) suggests awareness is important because people will often select a recognized brand over an unknown one, simple brand awareness failed to provide discrimination in terms of Consumer Loyalty. A review of brand tracking data collected by Millward Brown demonstrated that, even very early on, successful brands are distinguished from the competition because they are seen as active and dynamic beyond their stature in the market. At the most basic level this is exhibited in unaided awareness of the brand name, remembered trial, or an active understanding of the brand promise. To progress beyond presence, the brand's promise must be of relevance to the needs and aspirations of potential buyers. A brand must show that it is ca-

Figure 4 Average U.S. Packaged Goods Brand

Proportion of Consumers Consumer Loyalty

The Foundations of Consumer Equity: The Development of the BrandDynamics" Pyramid

Our objective in developing the BrandDynamics Pyramid was to find a way of systematically diagnosing the factors underpinning the brand's Consumer Loyalty. In other words we wanted to identify why one person might have a high loyalty for a brand while another might have a low loyalty.
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43% Relevance 76% Presence

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pable oi fulfilling at least some of the key criteria the consumer has for the intended purchase. This could be in terms of functional performance or image to match the identity and self-presentation of the buyer, but an acceptable price is always an additional requirement. A brand's performance must live up to its claims and deliver the intended benefits against the standards set by the competition. It is important to note that performance in this context refers to a generic perception of product acceptability. Innovation is clearly an important means for any brand to sustain its position in the market by ensuring that its product is better than the competition. The brand must demonstrate that it is more relevant than others by creating some advantage over its competition. If a brand is to thrive, it must offer a unique proposition to consumers. In the crowded markets of the 1990s many brands have little functional product differentiation, but successful brands manage to develop a distinctive product positioning or personality through advertising. Work by Farr and Brown (1994) has shown that advertising can be used to enhance the product experience by raising expectations and focusing selective perception on the rewards of the brand. Branthwaite and Swindells (1995) have described the psychological mechanisms by which advertising can also raise the status and interest of a brand by creating a halo of excitement, uniqueness, and supremacy. Finally, it is the ability of the brand to create a bond with its users that ensures loyalty in the future. Ultimately, a successful brand forges a special relationship with the consumer through its unique combination of per-

Figure 5 Comparison of Tylenol to Category Average

Tylenol

Bonded

49%
Advantage

Relevance

100% Presence

Category Average

ceived attributes. At this level, acceptability is taken for granted and the consumer bonds to the brand so that it is the only one to be considered. The relationship has moved from consciousness of the brand (Presence), Figure 6 Cluster Sizes Vary by Category
Pain Retievers

through acquaintance and checking out (Relevance and Performance), then experience (Advantage), to become bonded as the only brand to be considered. While for logistical reasons the original research was confined to

Shampoo

28% 44%

23%
35% 50% 27%

39%

29%
Brand Loyal Repertoire

26%

1 1 Price Driven

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Figure 7 Predicted Source of Revenue by Cluster

Predicted Revenue by Cluster 60% 50%
40% 30% 20% 10%

Brand Loyal

Repertoire

Price Driven

fast moving packaged goods, the concepts and questions developed as part of the BrandDynamics"* Pyramid appear to work well across different brands, categories, and countries. Following its introduction in April 1996 the BrandDynamics^'' system has been used to study impulse purchases, carbonated and alcoholic beverages, financial services, retail, over the counter drugs, personal care, and automotive brands in Europe, North America, and elsewhere. In Figure 3 we contrast three Pyramids based on the brand average within three very different categories. The results seem to make intuitive sense. Most of us can name our favorite clothes store, but not many would claim to be emotionally bonded to our mortgage provider, financially bound maybe!

tent set of measures for each level of the pyramid, such that the combination provides a clear cut between that level and the one below in terms of the average Consumer Loyalty of people who attain that level. Figure 4 shows how the average Consumer Loyalty increases for each level. In Figure 4 we see the average U.S. BrandDynamics Brand, and next to it the average Consumer Loyalty of the people

who attain that level. People who attain the Presence level are likely to spend 13 percent of their category expenditure on the brand in question, compared to only 2 percent for whom the brand has no Presence (note: lack of presence in itself does not preclude the probability of purchase). People who progress to the Bonding level are likely to spend an average of 38 percent of their category expenditure on the brand. Why do they not spend a greater proportion than 38 percent? This figure, like those for the other levels, will vary from brand to brand, and category to category. In this case, we are looking at fast moving packaged goods brands, which are commonly bought as part of a repertoire, so people can be bonded to more than one brand and split their purchasing between them. The exact CL for an individual consumer could range from under 38 percent, in cases where the person is attitudinally predisposed to several brands, up to a theoretical maximum of 100 percent, in which case the person is completely loyal to one brand. At this stage we have

Figure 8 Price Elasticity Depends on Consumer Price Responsiveness

Price/Demand Curves

_ _ Aussie

A Hierarchy of Consumer Equity Measures

In the BrandDynamics"' system we have identified a consis16

I
6
10%

^ ^

Suave

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Figure 9 Brand Pyramids

Gold Blend Kenco
8%

competing U.K. brands of premium instant coffee.

Category Leader Tylenol: The Need to Maintain Bonding

Figure 5 compares Tylenol's consumer equity profile in the United States to that of the average analgesic brand. The dark pyramid relates to the proportions of the total sample that fall into each level of the pyramid for Tylenol, and the gray pyramid at the front shows the average analgesic brand profile. Tylenol captures more people at each level, but the difference is particularly pronounced in the case of Bonding. Over three times as many people are bonded to Tylenol as the average brand. The brand strategy for Tylenol would appear clear. Reinforce commitment to the brand through advertising and consumer loyalty programs, leverage its current position of dominance, and, where possible, continue to innovate and lead the category in terms of product performance.

achieved the goal of addressing the four limitations of traditional research techniques. It is perhaps worth noting at this point that the comprehensive nature of the BrandDynamics'" system does not necessitate a complex or unusual methodology. Both the Consumer Value model and Brand Pyramid can typically be collected within the course of a 15-minute interview, making the system easy to implement, either in the context of an ad hoc survey or tracking study. In the remainder of the paper we examine how the BrandDynamics'" system can be used to guide marketing decisions.

action to strengthen its competitive position. In order to do so, the findings must be readily accessible to nonresearchers and be presented in a way that is consistent with the intuitive insights of the marketing team. This is best demonstrated by means of examples. First, a brief example from the U.S. analgesic category, then another from the U.S. shampoo category, and finally an example describing two

Figure 10 Gold Blend Conversion Profile

pyramid Conversion Profile'

Translating Research Data into Marketing Action

As we implied at the outset, it is our belief that for any system measuring brand equity to be truly valuable it must do more than just measure equity. It must be capable of providing insights into the brand's underlying strengths and weaknesses, and so guide strategic marketing
Product performance Relevance Presence

Bonding Advantage

'Difference from expected conversion ratio

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Figure 11 Kenco Conversion Profile

Pyramid Conversion Profile*

Bonding Advantage

Product performance Relevance -2 'Difference from expected conversion ratio

Presence

Premium and Value U.S. Shampoo Brands: Source of Revenues

Suave is the biggest-selling U.S. shampoo brand. It has almost universal presence in the category and converts people well through to relevance. Historically the brand has been advertised with well-branded and visible copy that positions the brand as having parity product performance with more expensive brands, while costing less. In fact, the brand's retail price is well below the category average. The strong conversion through to Relevance is due to the fact that many people see the basic proposition as appealing, and analysis shows that the price positioning is also a major source of conversion from Performance to Advantage. By contrast, Aussie is a lesser known brand within the category, but it sells at a premium price. Given the segmentation of brands by function and benefit within the category, it is not sur-

prising that consumers within the U.S. shampoo category tend to be more brand loyal than in the others looked at. Even so. Figure 6 shows that the Price

. . . the more people buy the brand, the more people are likely to mention it on any favorable attribute.

Given its price positioning, it is to be expected that Suave will draw the majority of its revenues from the Price Driven group. Aussie, on the other hand, gets 53 percent of its revenues from the Brand Loyal group and only 15 percent from the Price Driven. These differences have important implications in terms of the two brands' price sensitivity and their vulnerability to competitive pricing actions. Suave is the biggest of the two brands, but this analysis suggests that it will be much more responsive to price changeseither their own or competitorssince a large proportion of sales are from those consumers who are looking for the best deal. By feeding hypothetical price changes through our Consumer Value Model and converting these into market shares we can compare the price responsiveness of Suave and Aussie, as shown in Figure 8. The graph in Figure 8 confirms that Suave is much more price sensitive than Aussie. This analysis also makes the point that while we often refer to a brand's price elasticity, the degree of elasticity observed is actually determined by the nature of consumers buying that brand.

Driven group is still the largest overall. The segmentation of consumers into different typologies allows us to do more than simply focus on which categories have the most brand-loyal buyers; we can also use it to understand the source of a brand's revenues and how price sensitive it is likely to be. Figure 7 shows the percentage of each brand's revenue that will be derived from the three cluster groups (predicted revenues are calculated from the respondent level CVs).

U.K. Premium instant Coffee: Contrasting Brand Strengths and Weaknesses

Current Standing. In the United Kingdom, at the time of our research. Gold Blend enjoyed nearly twice the Nielsen value market share (12.9 percent vs. 7.1 percent) and Consumer Value (12.8 percent vs. 6.7 percent) of Kenco. This example shows how the consumer equity framework can identify core brand strengths and weakness

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for each brand. It then outlines how the current status of the brands can be explained by past marketing action and conditions in the marketplace. Finally it demonstrates how the BrandDynamics^"* system can be used predictively to investigate the potential outcome of different "what i f scenarios. Analysis of both of the brands' pyramids (see Figure 9) shows Gold Blend's market share to be underpinned by greater strength on all the dimensions of the pyramid. However, the Double Jeopardy principle suggests that this is exactly what we should expectthe more people buy the brand, the more people are likely to mention it on any favorable attribute. The key question is then; what are the brand's relative strengths and weaknesses? In order to highlight the key areas of strength or weakness it is necessary to construct a relative profile of the brand against the other brands in the category (a more rigorous approach than the one used in the Tylenol example). Figure 10 shows the result of such an analysis. The conversion profile measures the extent to which the brand carries respondents up from one level of the pyramid to the next, relative to the other brands in the category. Gold Blend's profile shows that the brand has a higher level of presence than the average coffee brand and then succeeds in holding more than its fair share of consumers through to the performance level. But the brand then has both lower levels of advantage and bonding than expected. in some respects Kenco (see Figure 11) is a mirror image of Gold Blend. The strength and weakness profiling demonstrates that the brand has a below-aver-

age level of presence, but more importantly a much lower than expected conversion from presence to relevance. In other words, the brand loses more consumers than other coffee brands because of a lack of perceived relevance. In the case of Kenco this is largely driven by negative price perceptions. However, Kenco is then highly successful at converting relevance into both advantage and bonding.

Understanding the Impact of Past Marketing Activity

In order to understand how to increase or maintain the brand's current strengths, we need to understand how its current market positioning has been developed. It is beyond the scope of this paper to discuss all the possible marketing avenues available, and we have restricted ourselves to illustrating the factors likely to have been instrumental in the development of Gold Blend and Kenco's current brand profiles and how they might be leveraged in the future. Gold Blend. The brand's growth surge started with a sequence of highly visible and involving ads charting the developing romance between the "Gold Blend couple" (the same campaign was used for Tasters Choice in the United States). This advertising had the twin benefit of giving the brand considerable presence in the marketplacethe advertising really was a source of consumer and media interest, with each new execution eagerly awaited and heralded in the mass media. It also had the benefit of making the premium coffee sector appear more accessible to the consumer. Sales modeling conducted dur-

ing this campaign demonstrated both a positive short-term advertising effect and, more importantly, a clear positive underlying trend in sales. However, as we can see from the brand's pyramid (see Figure 10), there is an indication that the brand may be suffering from a lack of distinctive advantagesit has an advantage but these are shared with other brands for those who buy it. Again this fits with both the marketplace realities and the nature and style of the advertising itself. Thinking firstly about the marketplace, the brand has to some extent have been a victim of its own success. As sales have grown, a plethora of store brand me-too products have been launched, with names and packaging bearing a marked resemblance to the Nestle product thus making the term "Gold" an increasingly generic term for any premium freeze-dried instant coffee and eroding the uniqueness of the brand's positioning. While other product launches may have led to some dilution of the brand's advantage, it may also be true that the nature, style, and content of the advertising is a factor. While unquestionably successful for the brand, the campaign is a classic example of the interest-status genre of advertising. As Swindells and Branthwaite (1995) observe, in the case of such advertising, it is not the brand which is the focus of interest but the advertising itself. This creates the potential long-term problem that the brand is sustained not by core product values but by a halo of advertising fame. And, as such, the need for this fame to be maintained and refreshed continuously is ever present. We will return to this point when

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examining some potential "what if scenarios," but first let us turn to Kenco. Kenco. Kenco's lower level of presence relative to Gold Blend is a reflection of the fact that the brand has been launched more recently than Gold Blend and historically had a lower level of advertising support. However, superficially the difference in relevance is less readily explained. Both brands operate at similar premiums and, therefore, if price is the limiting factor it does not explain the difference between the brands. However, the difference is entirely understandable if we consider the Kenco's heritage and the nature of its advertising. Kenco's heritage is that of a ground coffee brand, and this has been effectively communicated by some of the brand's initial launch advertising and by a highly impactful series of executions. This background has the effect of narrowing the brand's perceived relevance because, historically within the United Kingdom, ground coffee has been seen as something of a luxury product. However, at the same time this heritage has been beneficial in enhancing the brand's strong product credentials, leading to greater advantage and bonding.

pate them, and responses to a survey will be based on consumers' current knowledge of the marketplace. Predictions made from that data, therefore, might better be referred to as extrapolations, estimates of unknown data made on the basis of available data. If new brands, advertising, or pricing policies are introduced, then consumers' brand perceptions will change, along with their marketplace transactions. In other words, marketing actions determine future market share, and the right actions grow brands. It is the authors' belief, therefore, that the most valuable form of prediction is that which enables the client to evaluate the possible effects of different marketing

. . . marketing actions determine future market share, and the right actions grow brands.

"What If" Scenarios

It is our general belief that the term prediction is often misused in the context of brand equity systems. The coffee examples demonstrate that both client and competitive marketing activity had a major influence on the equity of those brands. However, only brand owners can anticipate actions taken on behalf of their brands. Ordinary consumers can only respond to these actions, they cannot antici-

actions and so make the right choices. The BrandDynamics'" system achieves this by using the BrandDynamics Pyramid to unearth and highlight the current status of a brand. Then through the linkage to the value of each consumer we can examine the potential in-market effect of affecting the different levels of the Pyramid. For example, as we have seen. Gold Blend is underpinned by an above-average level of presence. However, this is highly dependent upon continued advertising input for its maintenance. What would happen if Nestle were to reduce the level of investment and allow the brand's presence to fall back to

the market average? Because we can calculate the value, in the market, of a consumer at each level of the pyramid, we can predict the effect, all other things being equal, of increasing or decreasing the number of people at each level on the brand's underlying sales equitythe CV. In this case the brand's CV, and by implication, its underlying share would decline by about a third from 12.8 percent to 8.9 percent. It is a fairly straightforward analysis to relate the decrease in revenue and profit to the media saving and hence evaluate the cost effectiveness of this route. On the surface it would appear to be very unlikely that the saving in media costs would be sufficient to offset the dramatic decline in share, thus ruling this option out. However, there may be alternative strategies which are worth considering. For example, the media expenditure may be deployed to reduce the brand's retail price, thus bringing more people into the brand. In this case a combination of the pyramid and Consumer Value model could be used to evaluate the effect. Or there may be other brands within the client portfolio which might benefit to a greater extent from increased investment. Such cross-brand evaluations are possible because of the systematic way that the data has been collected. Secondly, if we run a what if scenario for Kenco based on the brand successfully moving its relevance level to be in line with the expected for the market, the mode! predicts an increase in share of over 40 percent, from 6.7 percent to 9.6 percent. Farr (1996) describes a number of different advertising and productrelated mechanics relating to each level of the Brand Pyramid. However, it is beyond the scope

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of this paper to discuss the most appropriate marketing mechanic, except to say that we have seen other brands achieve increases in their perceived relevance by a number of different routes.

Conclusion
There are two key conclusions to be drawn from this paper, both of which relate to the premises we stated initially. First, we set up the idea that what consumers think of a brand that ultimately determines its value to its owner. We believe that the findings reviewed above confirm that a consumer's value to the brand is underpinned by a consistent set of rational, emotional, and saliencybased drivers. Second, we suggested that the lack of a systematic approach to the measurement and diagnosis of brand equity has impaired the ability of decision makers to properly manage their brands. Before developing our approach we highlighted a number of traditional problems associated with consumer equity research and then sought to address them within the context of the BrandDynamics'" system. To this end we created the Consumer Value model which bridges the gap between consumer and financial equity. The aggregation of individual respondent CVs allows us to predict market share, a familiar sales measure with a direct relationship to a brand's revenue stream. Variation in the respondent level CL scores can then be explained using the Brand Pyramid, a consistent set of consumer equity measures which can easily be applied across brands, categories, and countries. As we have illustrated, the Brand Pyramid offers the poten-

tial to not only diagnose a brand's current standing but to predict the effects of future actions. By combining both the measurement and the understanding of brand equity in one research technique, we hope to improve the ability of decision makers to properly manage their brand's equity and so maximize its value in the long term.

References
Aaker, David. Managing Brand Equity. New York; The Free Press, 1991. Branthwaite, A., and A. Swindells. "Capturing the Complexity of Advertising Perceptions." Presented at the ESOMAR Seminar, Paris, 1995. Ehrenberg, A. "Empirical Generalizations, Theory and Method."
Marketing Science 14, 3 (1995):

PAUL DYSON, a Chartered Slatistician, is Millward Brown Infernalional's Group Slalistician He joined the company in January 1985 to Stan up a sales modeling department after graduating Irom York University with a 1st Class Honours degree in econom ics and statistics In 1985 he moved from being the head of the UK Statistics Depariment of Millward Brown's Research & Oevelopmenl team involved in the deveiopmeni ot Millward Brown's products and services Paul s main experience lies in econometric modeling and, m particular, isolating the effects of advertising on sales, brand imagf and advertising awareness ANDY FARR is Millward Brown International's European Research & Development Director, He joined the company in 1985 and has worked in a wide range of categories including packaged goods, media, and automolive, specializing in advertising research He is now part of Millward Brown's global Research & Development team which is responsible for the deveiopmeni of new techniques m the areas of advertising and media research Andy has been closely connected with the cfeaiion of Millward Brown's Print Link pre-test and has published experimental work looking at immediate persuasion and long-term enhancement effects ot advertising NIGEL S. HOLLIS is the Group Researcfi & Development Director at Millward Brown International In his current role he has global responsibility for all proiects related to improving Millward Brown's current services or developing new ones Over the last two years Nigel has worked on projects concerning brand equity, and interactive and on-line research. Nigel started work in market research at Cadbury Schweppes in the United Kingdom and joined Millward Brown in 1983 There he had a key role in the development ot Millward Brown's successful TV Link pretest In 1988 he transferred to the United States and, until moving to his current role, worked on a variety of client businesses, mostly re lated to the analysis of tracking research Nigel has spoken al a variety of different conferences in North America and Europe and has had papers published in the Journal of Advertising Research, Admap. planung und analyse, and the Journal of the Market Research Society.

G20-28. Farr, Andy. "How Advertising Builds Brand Equity." Presented at the ASI Advertising Effectiveness Symposium, Lisbon, 1996. , and Gordon Brown. "Persuasion or Enhancement? An Experiment." MRS Conference Papers 69-77, 1994. Hollis, Nigel. "Integrating Information Sources to Understand Short and Long Term Advertising Effects." In Proceedings of the 19% AMA Attitude and Behavioral Research Conference. Chicago:

American Marketing AssociaHon, 1996.

McPhee, W. Formal Theories of Mass Behavior. New York: The

Free Press, 1963. Walker Smith, J. "Thinking about Brand Equity and the Analysis of Customer Transactions." In Proceediiigs of the ARF Advertising and Promotion Work-

shop. New York: Advertising Research Foundation, 1991.

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