Brand Evaluation Systems

Three Brand Measurement Strategies

Brand Equity brand assets (or liabilities)
linked to a brands 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
Use pretests
and posttests
Use multiple
measures
Understand and
implement proper
research
Establish
communications
objectives
Brand
Measurement
Brand Equity Dimensions & Constructs
Awareness Perceived
Quality
Association/
Differen-
tiation
Loyalty Market
Behavior
Brand
Awareness
Perceived
Quality
Perceived
Value
Price
Premium
Market
Share
Leadership Brand
Personality
Satisfaction Price Indices
Organizational
Associations
Distribution
Indices
Aakers, David Measuring Brand Equity Across Products and Markets
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 consumers 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 equitys 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
Measure the wrong things
Evaluate alternative
strategies
Avoid costly mistakes
Increase efficiency in
general
Disagreement on
what to test
Research problems
Cost of measurement
Determine if objectives are
achieved
Time
Advantages
Disadvantages
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 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
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
Kellers 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

Kellers 10 Brand Traits
Trait Definition Example
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 Shell the 80s leader
Monitors Equity Sources 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 1990s 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
McDonalds brand accounts for more than
70% of shareholder value
Coca-Cola brand accounts for 51% of the
Coca-Cola Companys 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
for
Addressed through market
capitalization (Market Cap
Book Value = Brand value
Assumes future brand
benefits
Difficult to separate from
Goodwill
Overly simplified
Four Brand Valuation Approaches
Approach Strengths Weakness
Income Identifies Brand after-tax
operating income
Assumes the brands
ability to generate after tax
income
Premium price over
unbranded competitors
Does not take into
account other IP (mgt.,
patents, etc.)
Brand Strength
Assessment
The most comprehensive
Works from a set of
factors
Measures future results
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