brand evaluation systems
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Brand Evaluation Systems
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Three Brand Measurement Strategies
Brand Equity brand assets (or liabilities)
linked to a brands name and symbol thatadd to (or subtract from) a product orservices*
Brand Valuation Assigning a dollar valueto the brand
The Brand Report Card
Brand Leadership, Aaker and Joachimsthaler
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Essentials of Brand Measurement
Use a consumer
response model
Use pretestsand posttests
Use multiplemeasures
Understand andimplement proper
research
Establishcommunications
objectivesBrand
Measurement
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Brand Equity Dimensions & Constructs
Awareness Perceived
Quality
Association/
Differen-tiation
Loyalty Market
Behavior
BrandAwareness
PerceivedQuality
PerceivedValue
PricePremium
MarketShare
Leadership Brand
Personality
Satisfaction Price Indices
OrganizationalAssociations
DistributionIndices
Aakers, David Measuring Brand Equity Across Products and Markets
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Brand Equity Assessment Criteria
Tap the full scope of brand equity
Focus on sustainable advantages not easilyduplicated 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 orprofits
Measures should be sensitive when equitychanges the measures reflect those changes
Applicable across brands, product categories &markets
Tested proven measures provide structure for developing aset of individual brand measures
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Brand Awareness
The level of brand recognition thatconsumers have of a particular brand andits 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 brandstands for
Brand Opinion: A value judgment of the brand
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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 benefitvariables
Measured as a scale in comparison toalternative brands
High vs. average vs. inferior
The best vs. one of the best vs. one of the worstvs. the worst
Consistent vs. inconsistent quality
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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 overcompetitors
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Brand Loyalty
A consumers commitment to repurchase orotherwise 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
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Market Behavior Precautions
Market Share
Price/Distribution Indices
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After The Break
Divide into your teams Apply Aakers Brand Equity
Measurement System to Apple six
months after the antenna crisis (asyou best recall)
Provide an analysis for
each dimension and give yourrational for your directional score
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Pros and Cons of Brand Measurement
Measure the wrong things
Evaluate alternativestrategies
Avoid costly mistakes
Increase efficiency ingeneral
Disagreement onwhat to test
Research problems
Cost of measurement
Determine if objectives areachieved
Time
Advantages Disadvantages
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Brand Awareness Precautions
Awareness is not equally important acrosscategories
Recognition is important for new companies
Recall and top-of-mind important to mature
categories/companies On its own provides an incomplete picture
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Perceived Quality Precautions
Perceived quality involves a competitorframe of reference
Need to compare apples to apples sub-compacts vs. luxury brands
Segmentation issues perception variesacross customers vs. switchers vs.competitive loyalists
It may not be the key driver It may not be sensitive to relevant events
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Brand Loyalty Precautions
Defined with respect to only one set of
competitors
Might miss an emerging competitor or anemerging variable
Does not apply to non-customers Do not measure brand equity beyond the
customer base
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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
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Where to From Here?
Develop a set of 4-8 constructs from thefive dimension
Establish a weighting system to
accommodate relative importance
Match the weighing system to perceived
values of the target market
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Kellers Brand Report Card
The simplest of the three Measuresbrand equity as a creative asset
Identifies 10 traits shared by strong
brands Grades performance of each trait
Objective is to identify
Areas for improvementStrengths
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Kellers 10 Brand Traits
Trait Definition Example
Superior CustomerBenefits
An attractive whole Starbucks Coffee BarCommunity
Relevant Tangible +Imagery +Feelings + Relations
Gillette Advance Razors
Price=Value(Perceived)
Quality, features, cost & price
P&G EDPMercedes
Proper Positioning Parity & Differentiation Harley Performanceplus image
Consistent Continuity + Freshness GEICO?
Rational Brand Portfolio Hierarchy creates equityvalue
GM: Chevy Buick -Cadillac
IMC Ads, web, events, pr Coke-a-Cola
Mgt. understands themeanings
Grasp the experience;holistic decisions
Bic=disposableBic For Men cologn?
Adequate Support Shell the 80s leader
Monitors Equity Sources Active audits & tracking Period Equity Reports
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Brand Valuation
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History
Driven by the increase in premium above stock
market values in 80s consumer companyacquisitions
Since the 1990s the need to establish a dollar
valuation for Intellectual Capital Assets has thedevelopment of valuation methodologies
These methods are nearing formal recognition by
the Financial Accounting Standards Board (FASB)
Headed for inclusion in the standard repertoire ofthe Generally Accepted Accounting Principles (GAA)
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Brand Valuation Today
The average brand accounts for more than1/3 of shareholder value
McDonalds brand accounts for more than70% of shareholder value
Coca-Cola brand accounts for 51% of theCoca-Cola Companys stock market price
Samsung spends 7.5% on R&D and 5% on
communications
BusinessWeek, Interbrand,/JP Morgan 2002
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Four Brand Valuation Approaches
Approach Strengths Weakness
Cost From an accounting/financial perspectiveComplies with standard acct.practicesIs conservative
Assumes the asset declinesin valueNot well-suited tointangible valuesOverlooks new brand
contributionsNo future replacement costallowance
Market What the brand could be soldforAddressed through market
capitalization (Market Cap Book Value = Brand valueAssumes future brandbenefits
Difficult to separate fromGoodwillOverly simplified
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Four Brand Valuation Approaches
Approach Strengths Weakness
Income Identifies Brand after-taxoperating incomeAssumes the brandsability to generate after taxincome
Premium price overunbranded competitors
Does not take intoaccount other IP (mgt.,patents, etc.)
Brand StrengthAssessment
The most comprehensiveWorks from a set offactorsMeasures future results
Includes an attitudevariable
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So Which is Better?
All have their strengths & weakness Increasingly, the trend is toward
Brand Strength Assessments because
of its comprehensiveness
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Brand Strength Assessment Approach
Assigns a financial value to brand equity.
Brand Value measures the current andfuture earnings due to the brand asset ofa company; the net present value ofexpected future earnings.
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Two Brand Valuation Methodologies
Customer BrandValuation
Focuses on customersas a the target
audiences A key role of brand
component is customersatisfaction
Shareholder BrandValuation
Focuses on theinvestment community
as the target market A key role of brand
component is shareprice