Brand Amplitude's perspective on measuring brand equity. Includes definition of brand equity, review of brand equity measurement approaches by leading academics and practitioners (Keller, Aaker, Reichfeld, Rust, Gregory, Gerzema, more). Includes examples of brand measures and in-depth examination of share tiering approach to measuring equity.

1. Measuring Brand Equity
OUR PERSPECTIVE
March, 2012

2. Who Are We?
INTRODUCTIONS
 Brand Amplitude is an insights-based brand strategy consulting firm.
 Clients include CPG, Retail, B2B, Higher Education, Healthcare.
 Relationships are led by experienced marketing practitioners and industry
thought leaders, Carol Phillips and Judy Hopelain.
 Supported by a virtual team of research, analytic and consulting associates.
Client-Side Consulting Agency Business Faculty
Illuminations Accenture JWT
Patagonia BCG Leo Burnett
Whirlpool Prophet Mullen
Swander Pace & Co. Y&R
A strong brand is one of a company’s most important assets. By growing
brand equity, marketers help achieve the organization’s business objectives.
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3. What Services Do We Offer?
INTRODUCTIONS
 We help clients solve strategic business and brand issues by leveraging a
range of proven tools and frameworks.
– Brand audit
– Market segmentation
– Target insights (motivations, culture and
decision-making)
– Brand identity and rallying cry
– Brand positioning
– Brand architecture
– Brand activation
– Brand measurement
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4. Why Measure Brand Equity?
BRAND EQUITY MEASUREMENT
 Metrics are an integral part of the brand strategy process.
Reasons to Measure Brand Equity Strategic Marketing Framework
 Understand drivers of brand strength in I. Business Strategy
order to support strategic decision –
making.
II. Brand Strategy –
Architecture, Identity & Positioning
 To evaluate performance of brand
management in increasing equity over III. Go-to-Market Strategy
time.
Value Proposition
 To evaluate efficacy of brand building
programs -- ROMI. Messaging & Offer Design
Customer Experience
 To assess the value of the brand for
purposes of licensing or sale. IV. Marketing Execution & Metrics
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5. Brand Equity vs. Brand Value
BRAND EQUITY MEASUREMENT
 Brand value and brand equity are not the same. Brand value is a financial
measure specific to a point in time that is especially useful in M&A or licensing.
Brand equity represents the potential for your brand to impact your business.
“(For most companies) the operative 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.”
-- Tom Reynolds & Carol Phillips
“In Search of True Brand Equity Metrics: All Market Share Ain’t Created Equal”
Journal of Advertising Research, 2005
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6. Brand Equity: What Do Experts Recommend?
BRAND EQUITY MEASUREMENT
 Little consensus among experts about the best way to measure brand equity.
Key Issues:
• Definition of equity – brand value vs. impact of customer knowledge
• Measurement complexity – many components, unclear weights
• Accountability – hard to relate to market share, profitability
• Actionability – hard to link to marketing activities, spend, programs
• Engagement – limited organizational uptake of results
Leading Brand Equity Measures & Sources
Source: Journal of Advertising Research, June 2005
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7. How Is Equity Usually Measured in Practice?
BRAND EQUITY MEASUREMENT
 Brand equity is usually measured through easy-to-obtain ‘proxies’ such as
awareness or market share.
“’There is no consistent definition of ROI.’ Marketing organizations are instead
using "surrogate" metrics, ranging from input-related metrics such as awareness
and brand image in financial services to market share and growth in consumer
packaged goods companies.” -- ANA/Booz Allen survey October, 2004.
Most commonly used metrics:
Changes in brand awareness 81%
Changes in market share 79%
Changes in consumer attitude toward the brand 73%
Changes in purchase intent 59%
Return on objective 36%
Lifetime customer value 23%
Changes in the financial value of brand equity 20%
Source: ANA, State of ROMI Measurement, 2007
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8. Little Standardization – Many Opinions
BRAND EQUITY MEASUREMENT
 Each industry and consulting firm defines equity in terms that are specific to its
model or unique needs.
Sample of Industry Brand Measures Leading Brand Measurement Firms
 Soft Drink
– Which brand of soft-drink do I consume most
often?
– Which is my first preference of soft drink brands
– Top two boxes purchase intent or which brand do I
expect to consume on my next consumption
occasion?
 Wireless
– Brand owned/used
– Intention to Switch in next 3, 6, 12 months?
– What brands would I consider purchasing?
 Packaged Food
– Price and Quality perceptions
– Number of purchases of last 10 allocated to each
brand
– Future intent to buy
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9. What Is the Best Proxy for Brand Equity?
PERCEPTIONS IMPACT BEHAVIOR
 Brand equity resides in the minds of customers. The best ‘proxy’ is one that best
captures that intangible idea that impacts choice.
“Customer-based brand equity is the differential effect that brand knowledge
has on customer response to the marketing of that brand.”
-- Kevin Keller, Strategic Brand Management, 2008, p. 48
$1.99 $4.18 $2.29
Which jar would you choose?
The decision is not driven by price alone, but moderated by the sum of your experiences with
the brand. This is what enables some brands to charge a premium, while others cannot.
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10. Brand Equity Defined
BRAND EQUITY MEASUREMENT
 Brand equity is observed through its impact on choice. Measures of brand equity
should reflect both attitudinal and behavioral components.
“The mechanism that underlies (equity) is agreed to be a latent value in the
mind of customers that is exhibited through its impact on behavior.”
Dr. Tom Reynolds & Carol Phillips, “In Search of True Brand Equity Metrics: All Market Share Ain’t
Created Equal”, Journal of Advertising Research, 2005
Brand Equity Components
Loyal Behavior Beliefs Intent
• Share of wallet • Relative overall quality • Future purchase intent
• Purchase frequency • Perceived cost • Self-perceived trend (more
• Vendor consolidation • Preference or less of my business)
• Willingness to recommend
• Understands my needs
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11. Share Tiering Approach to Measurement
BRAND EQUITY MEASUREMENT
 Just as all calories are not equally nutritious, not all share points contribute equally
to the health of the brand. Loyal customers are ‘nutrient rich’ and contribute more
to brand health than the ‘empty calories’ of price sensitive customers.
Loyalty Contribution by Brand
Customers who devote 80% or more of requirements to the brand
37.4%
34.5% Sales contributed
by loyal customers
28.0%
Market Share
Price
Premium
76% Sales 56% Sales Brand?
40% Sales
Brand?
Brand A Brand B Brand C
“Size and vitality of the core varies by brand. Every brand could benefit
from having the core group represent a larger share of its total franchise.”
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12. Share Tiering Measures
BRAND EQUITY MEASUREMENT
 Goal is to determine how much of a brand’s share is being driven by people
who are loyal in both attitude and behavior.
Loyal Behavior Beliefs Intent
Operationally define loyal Classify customers according to Classify customers regarding
behavior in a way that is their brand beliefs. how typical their recent
specific to the category (e.g., purchasing has been and
Determine Total Volume and Loyalty
80% total category needs). whether they expect a shift
Volume* within each classification.
in the future.
Determine what percentage
of Total Volume is ‘Loyalty
Superior Good Acceptable
Volume’* by brand. Quality Quality Quality
Price Not a
Advocates Unconvinced Indifferents
Barrier
Price a Minor
Aspirers Opportunists Ignorers
Barrier
Price a
Significant Admirers Skeptics Rejectors
Barrier
*Loyalty volume = brand volume
contributed by customers who
are classified as ‘loyal’
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13. Share Tiering Metrics
BRAND EQUITY MEASUREMENT
 From these measures, a range of metrics can be calculated.
Market Share Share of total category volume
Top Box Contribution % Brand volume sourced from Advocates
Loyalty Contribution Brand’s loyalty volume as % of total brand volume
Equity Share Share of loyal user volume (any brand)
Leveragability Index Ratio of volume from Aspirers to combined sales of
Aspirers and Unconvinced
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14. Example of Sharing Tiering
BRAND EQUITY MEASUREMENT
 Consumer beliefs regarding Ragu and Prego are similar – what explains their
very different market shares?
Market Share Spaghetti Sauce Category - Self Report Data*
Other, 23%
Ragu, 46%
Store, 6%
52% rate quality ‘superior’;
42% say ‘cost is not a barrier’
Prego, 25% to purchase.
57% rate quality ‘superior’;
44% say ‘cost is not a
barrier’ to purchase.
n=417 male and female primary grocery shoppers who purchased spaghetti sauce in past 3 months, 2005
Volume expressed in units of jars, cans, tubs.
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15. Example of Share Tiering
BRAND EQUITY MEASUREMENT
 Self-report information on beliefs and behavior obtained through surveys can be
used to measure brand equity components.
Loyal Behavior Beliefs Intent
• Share of wallet • Relative overall quality • Future purchase intent
• Purchase frequency • Perceived cost • Self-perceived trend (more
• Vendor consolidation • Preference or less of my business)
• Willingness to recommend
• Understands my needs
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16. Example of Share Tiering
BRAND EQUITY MEASUREMENT
 Share tiering reveals that Ragu derives more volume from its core customers –
those who think it is superior and worth the price. This data reflects volume;
profitability is most likely even more skewed.
Share Tiers Based on Volume
Share of Volume Share of Volume
Q1 Q2 Q3 Q1 Q2 Q3
Ragu derives nearly 38% of its
P1 37.9% 11.4% 1.6% P1 15.0% 14.3% 7.3% volume from Advocates while Prego
P2 26.1% 13.0% 6.2% P2 32.3% 21.8% 0.4% derives just 15% from its Advocates.
P3 0.5% 1.4% 1.8% P3 2.3% 2.7% 3.8%
Loyalty Share Loyalty Share
A higher proportion of Ragu volume is
Q1 Q2 Q3 Q1 Q2 Q3
P1 80.0% 65.8% 76.9% P1 57.0% 31.0% 90.9% ‘Loyalty Volume’, even among those
P2 84.8% 15.2% 0.0% P2 51.5% 10.7% 0.0% with high future intent.
P3 0.0% 0.0% 0.0% P3 0.0% 0.0% 0.0%
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17. Example of Share Tiering
BRAND EQUITY MEASUREMENT
 Share tiering provides direction for improving Prego brand equity relative to Ragu.
 Prego is vulnerable - its market share is a misleading indicator of its brand health, as
much of the volume is driven by non-loyal customers.
 Prego is strongly ‘leveragable’ – the brand should focus on driving volume among
‘Aspirers’ by convincing them Prego’s superior quality is ‘worth the price’.
Advocate Leveragability
Equity Share Loyalty Contribution Index
Market Share (Share of Contribution (Contribution of top (Ratio of Aspirer volume
(Share of category category loyal (Loyal user volume box respondents to to Total Aspirer +
volume) user volume) as % total) volume) Unconvinced volume)
Ragu 46% 51% 63% 30% 70%
Prego 25% 20% 44% 9% 69%
Store 6% 4% 33% 23% 0%
Other 23% 26% 66% 16% 60%
TOTAL 100% 100% 57% 21% 64%
Loyal users = 4 of last 5 purchases devoted to one brand.
Advocates = those who rate brand superior on quality, price is no barrier to purchase
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18. Advantages of Share Tiering
BRAND EQUITY MEASUREMENT
 Measures are understandable, not black box
 Easily translated into financial strength and ROI
 Yields universal metrics that can be applied across categories, brands, SBU’s
 Questions are easy to administer, so equity can be assessed more frequently
 Frequent measurement allows tracking of changes over time
 Allows modeling relative to marketing activities and investments
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19. Other Directions in Brand Equity Measurement
BRAND EQUITY MEASUREMENT
 Academics are actively proposing improved ways to measure brand equity, but
each tends to emphasize a different aspect – belief, behavior, intent.
Metric Publication Author Definition
Corporate Branding Leveraging the Reputation, communications &
James R. Gregory
Index Corporate Brand financial performance
Difference between percentage
Net Promoter Score The Loyalty Effect Fred Reichfeld of brand promoters and
detractors
Driving Customer Sum of the lifetime volues of
Customer Equity Roland Rust
Equity current and future customers
Energized John Gerzema and Palpable and measurable energy
The Brand Bubble
Differentiation Ed Lebar that fosters irrational fidelity
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20. Recommended Approach
BRAND EQUITY MEASUREMENT
 The ‘right’ way to measure brand equity involves a mix of measures and the
ability to relate them to business results.
Comprehensive Brand Equity Measurement Approach
Activity & Program Customer Perceptions & Market
Metrics Behavior Performance
Financial Impact/Performance
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21. Key Takeaways
BRAND EQUITY MEASUREMENT
 Understand the difference between brand equity and brand value –
which is more important to you to know?
 Recognize there is no silver bullet
– Requires a thoughtful approach based on a clear idea of how brand equity
manifests itself in your business -- what behaviors and attitudes drive brand
value for customers and investors?
– Use a mix of measures – belief, behavior, intent, financial
 Tie measures to strategy
– If possible, model the relationship between brand equity measures and
business performance to determine equity drivers
 Be consistent
– Movies work better than ‘snapshots’ – pick a method and stay with it to
build knowledge over time
 Prioritize measures
– Don’t confuse data with insight – make it meaningful or it will be ignored
– Most companies suffer more from too much data than from too little
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22. CONTACT US
How Can We Help You Grow?
To Learn More, Contact Us:
Carol Phillips Judy Hopelain
carol@brandamplitude.com judy@brandamplitude.com
269-429-6526 415-810-8268
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