Brand Equity Measurement 101

What is brand equity measurement and how can it help your brand? First, let me start by saying that marketing professionals still have different definitions of brand equity and therefore brand equity measurement. If one defines brand equity as the value that a brand adds to the branded product, service or organization itself, then we have a broad understanding of brand equity. Common brand equity measures include brand awareness and a brand’s perceived relevant differentiation. Most models include these two metrics. Other common metrics include a brand’s market share, the price premium that the brand can command over unbranded products in the same category and customer loyalty to the brand.

Models can be super-simplistic, such as the popular Net Promoter Score, which only measures one thing – attitudinal loyalty to the brand – with one question, the likelihood of recommending the brand to a friend or colleague. Or they can be comprehensive, such as our BrandInsistence brand equity measurement system, which measures over 90 brand equity components (including two different attitudinal brand loyalty questions). Most brand equity measurement systems are somewhere in between these two extremes.

Our BrandInsistence system has as its underpinning the five drivers of customer brand insistence – awareness, relevant differentiation, value, accessibility and emotional connection. But it also measures the importance of and brand delivery against up to 24 brand or category benefits or shared values. The benefits can be functional, experiential, emotional or self-expressive. It also measures top-of-mind brand associations (the brand is owned in the mind of the customer) and top-of-mind brand differentiators. And brand loyalty and brand vitality and up to 30 different brand personality attributes. We have four standard emotional connection measures, which move from mild emotional connection to deep emotional connection. But we can go much deeper with an ancillary product that can map your brand against hundreds of personality attributes and emotions.

Brand equity systems should be used to achieve the following on behalf of your brand:

• Create a baseline brand equity measurement for your brand so that you can measure the impact of your brand management activities on the brand over time
• Provide the information that populates the brand scorecard
• Identify the brand’s strengths, weaknesses, vulnerabilities and threats, including brand positioning vulnerabilities and threats
• Identify competitive brands’ strengths, weaknesses, opportunities and threats
• Identify advantageous brand (re)positioning opportunities (for your brand and competitive brands)
• Measure the impact of specific brand enhancing programs or campaigns
• Measure progress made by the brand over time
• Validate the value of your brand to the leadership team of your organization

Here are some examples of how people have used our BrandInsistence brand equity measurement system to strengthen their brands:

• One client discovered that they had a value and price perception problem. They took corrective action and then remeasured the brand equity, which increased substantially after the corrective action.
• Another client discovered that they were doing everything very well and that the people familiar with their brand loved the brand and were very loyal but that their major problem was extremely low brand awareness based on very low market penetration. After taking corrective action, sales of their brand skyrocketed.
• Another brand discovered that a recent extension of their brand into a new market to increase sales turned their traditional customers off and that their loyalty was decreasing substantially. Based on this, we recommended a new business model to the client.
• Another client whose brand was in rapid decline discovered new product and service areas through which their brand could become relevant and compelling to its target audience again. When it implemented these changes, it saved the brand and its organization. Based this project’s outcome, key members of the organization’s leadership team were promoted.
• Another brand discovered that its brand perceptions were incongruent with the perceptions of its primary distribution channels. By changing distribution channels, its sales began to soar.
• Another brand discovered that the consumer was completely confused about the brand and the benefits that it delivers because of some very confusing brand cues from product packaging. Based on this insight, it is revising its brand’s promise, redesigning the brand’s product packaging and identifying the customer segments that are most likely to highly value this repositioned brand.
• One client discovered a competitor’s brand positioning vulnerability and was able to successfully reposition the competitor in a negative light, creating a share shift to their brand.
• Finally, one client discovered that it was inferior in almost all aspects of its brand equity and especially in the delivery of its products and services vis-a-vis its competitors. Based on this, it re-engineered its business model and is preparing to be acquired. 

You might also want to read this post on brand equity measurement. And if you are interested in learning more about how we can help you measure and manage your brand's equity, please contact us at vanauken@brandforward.com. 

Brand Equity

Brand equity is the commercial value of all associations and expectations (positive and negative) that people have of an organization and its products and services due to all experiences of, communications with, and perceptions of the brand over time. This value can be measured in several ways: as the economic value of the brand asset itself, as the price premium (to the end consumer or the trade) that the brand commands, as the long-term consumer loyalty the brand evokes, or as the market share gains it results in, among many others. From an economist’s perspective, brand equity is the power of the brand to shift the consumer demand curve of a product or service (to achieve a price premium or a market share gain).

To use a metaphor, brand equity is like a pond. People may not know how long the pond has been around or when it first filled with water, but they know that it supports life, from ducks to deer. It also may provide recreation, irrigation, even human drinking water. Clearly it is a valuable resource. But many people take the pond for granted. It seems as if nothing can diminish its supply of water, yet we sometimes notice that it rises with the spring rains or lowers after a long drought or overuse for irrigation.

Similarly, brand equity is a reservoir of goodwill. Brand building activities consistently pursued over time will ensure that the reservoir remains full. Neglecting those activities or taking actions that might deplete those reserves will reduce the reservoir, imperceptibly at first, but soon all too noticeably until it is too late and all that is left is mud.

This illustrates a chronic difficulty in brand management. Brand equity is critically important to a company’s success, yet because of its reservoir-like nature, it is often taken for granted, overly drawn upon, and not adequately replenished, especially in times of crisis or to meet short-term needs.

© 2015 Brad VanAuken Excerpted from Brand Aid, second edition, available here and here.

Measuring A College or University's Brand Equity

Someone recently asked me how one should approach measuring a college or university's brand equity. Here is what I told her.

We would use the same approach outlined in the article I wrote whose link you attached to your question. However, here are some additional considerations for universities:

1. I would target the following audiences: high school students who applied to the school in question (whether they were admitted or not and whether they decided to attend or not), parents of those students, high school guidance counselors, admissions directors at peer institutions, faculty, staff, current students at the school in question, alumni and board members.
2. We would keep track of which students were accepted and which of those had decided to attend to determine how the answers varied by each of these groups.
3. I would ask the students to which other colleges and universities they applied for admission.
4. I might have students rank order the list of colleges and universities to which they applied in order of preference.
5. I would customize the list of brand benefits to the college or university in question and to colleges and universities in general.
6. This list would include these benefits at a minimum:
• Overall reputation or prestige of the school
• Value of a degree from this school after graduation
• Quality of the student experience
• Campus amenities
• Campus aesthetics
• Food quality
• Campus housing quality
• How leading-edge the labs and equipment are
• Caliber of the student body
• Educational quality/effectiveness
• Quality of campus social life
• Desirability of the neighborhood and municipality in which the school is located
• Region of the country in which the school is located
• Weather
• Quality of the sports programs
• Variety and quality of extracurricular activities
7. I would also customize the selection of brand personality attributes to those most appropriate to colleges and universities.
8. I would have people rank program quality for each major division – liberal arts, engineering, science, medicine, law, business, architecture, etc. This could be done at a more detailed level – sociology, psychology, anthropology, etc.
9. We would identify correlations between answers to a variety of the questions and the overall reputation of and preference for the school.
10. We might ask an open-ended response question regarding why they chose this school (if they did).
11. As in all brand equity studies that we conduct, we would ask them what makes this school unique or better than the other schools that they considered (another open-ended response question).
12. If the college or university had the resources to do this, we would conduct focus groups prior to the quantitative brand equity study to build a more robust study based on qualitative insights regarding the factors that most influenced people’s perceptions and decisions. We would conduct these groups separately for each different target audience.

While all of our brand equity studies are based on our BrandInsistence system of brand equity measurement, each study is tailored to the brand in question. I hope this helps you think about how one might develop a brand equity measurement system for a college or university.

I wish you the best.

Brad VanAuken

Common Problems in Brand Equity Measurement

Our brand management equity measurement system is comprehensive, measuring each of the five drivers of customer brand insistence – awareness, relevant differentiation, value, accessibility and emotional connection – along with other factors such as brand vitality, brand loyalty, brand personality and brand associations.

In the process of measuring brand equity, one should avoid making the following mistakes:

• Not specifying up front the purpose of the brand equity study, how you will use the results and what actions you might take based on the results.
• Defining the product/service category too narrowly, too broadly or otherwise incorrectly. Doing so will create the wrong competitive frame of reference in the respondents’ minds.
• Getting feedback on the wrong competitive set. Failing to include key competitors or including ones that don’t matter.
• If your brand has multiple levels of branding (parent brand, sub-brand, etc.), testing the wrong level that has less meaning to category customers.
• Asking questions in the wrong order so that there is order biasing. One should always begin with the most general open-ended questions and conclude with the most detailed brand-specific questions.
• Not randomizing the response choices so that there is response choice order biasing.
• Not crafting a compelling enough survey invitation letter so that the response rate is very low.
• Biasing the respondents’ responses by sending the survey invitation from a specific brand. In particular, it will skew the open-ended top-of-mind brand awareness responses but it will skew other responses as well.
• Making the survey too long so that the complete rate is very low. People become fatigued and drop out of the survey before they have answered all of the questions.
• Asking leading questions, ones that beg certain responses.
• Not being consistent in how one presents response choices. For instance, modifying some with superlatives while not doing so for others. Or, presenting some in an active voice and others in a passive voice.
• Not planning for or achieving a large enough ending response rate so that the results are not projectable. Generally, for most populations, 383 or 384 ending responses will result in a confidence level of 95% +/- 5%. If you want to perform analysis on subsets of the data, you will need this many responses for the subsets too.
• In closed-ended questions, not giving the respondents all of the possible (or at least probable) response choices. I have seen some situations in which more than 50% of the respondents chose “other” for a particular question. This provides little insight unless you allow the respondents to specify “other” in an open-ended response.
• Not providing an “other” option as an answer to close-ended questions.
• Not providing a “don’t know” choice for most close-ended questions.
• Not having carefully thought through and vetted the category’s and brand’s top attributes, benefits and values before populating them as response choices for a close-ended question.
• Asking how important “brand” is in selecting a product within the category. Brand will always be rated as less important than more tangible attributes, benefits and values.
• Not including emotional, experiential and self-expressive benefits and shared values with functional benefits in a close-ended brand benefit importance or brand benefit delivery question.
• Not carefully thinking through how you intend to analyze the results before you design the survey.
• Not setting the questions up in a way that allows for easy filtering or reporting of responses.
• Mixing responses from different populations – such a national consumer panel and a customer list and Facebook fans.
• Asking people who have little awareness of a particular brand to assess the brand in great detail. They will only be guessing at best. Only ask people to rate the brand with which they are the most familiar.
• Not including mandatory brand personality attributes (such as trustworthy, innovative and responsive) in the brand personality question choices.
• Conducting in-depth analysis on a brand that has little to no awareness. How can people react to a brand of which they are not aware and with which they have no experience?
• Not including the following critical brand equity components:

Unaided brand awareness – first recall and other recall

Relevant differentiation

Emotional connection to the brand

Attitudinal loyalty to the brand

• If you ask an open-ended top-of-mind brand association question, asking it in such a way that most of the responses will just be a mention of the product category with which the brand is most associated. For instance, here are four different ways to ask this question:

Thinking about the XYZ brand, what comes to mind?

What makes the XYZ brand superior to or different from the other brands in its category?

What is distinctive about the XYZ brand?

What would you miss most if the XYZ brand ceased to exist?

• Not using the most powerful type of chart or graph to make the key points for the responses to each question.
• Not using the proper/optimal scale for each chart or graph.
• Presenting results that have so few responses that the responses are meaningless and could even be misleading.

I hope this has helped you think about how to create and implement a more robust brand equity study.

VW and Brand Equity Transfer

The VW emissions-rigging scandal has brought to light an interesting area of brand management - brand equity transfer. Experts are now discussing whether the VW fall from grace will affect Germany's perception as a country that manufactures reliable, high-quality products, especially in the automotive sector. This is related to the "country of origin" interaction between countries and industries that are closely related to those countries. For instance, when one thinks of watches, Switzerland comes to mind. When one thinks of wine, France and perhaps Italy, Spain, the US, Argentina, Chili, Australia and South Africa come to mind. When one thinks of chocolate, Belgium comes to mind. And when one thinks of automobiles, Japan, the US, Germany and perhaps South Korea come to mind.

The same thing happens on a regional or state level. When one thinks of wine in the US, California is the first state that comes to mind. But New York, Washington and Oregon also might come to mind. This can even occur on a city level. When one thinks of fashion, Paris, Rome, New York and Milan often come to mind. 

A better way to illustrate this is to think about a product category and place that are not linked in people's minds. Consider precision luxury watches from Mexico or fine wine from Kazakhstan or performance automobiles from Cuba or super-yachts from India. None of these combinations will make sense to most people. There are no linkages between these brands.

The "country of origin" effect is due to brand equity and association transfer between a place and a product (or service) category. That is, the two brands are linked. Therefore, their associations are linked. This can be a blessing or a curse. As long as both brands are strong and benefit from the linkage, this works. As soon as one of the brands, in this case the place or the product category (or in the case of VW, a brand within the product category) has problems it can harm all of the associated brands. 

So "country of origin" effect of countries on industries (and vice versa) is a sub-set of brand equity transfer between two brands.

Do I think the VW scandal will permanently harm Germany's reputation as a country that produces reliable, well-made automobiles? No, not unless other German automobile brands are also mired in scandals. Can it slightly tarnish Germany's reputation in the short-run? Yes.  

Brand Equity Measurement 101

“If you can’t measure it, you can’t manage it.” Peter Drucker

People are often confused about what brand equity actually is. Is it the asset value of the brand? Is it the price premium that the brand is able to command? Is it the reduced price sensitivity that it can create? Is it the emotional connection that the brand makes with people? Is it the loyalty that customers demonstrate toward the brand? Is it the brand’s personality? Is it the brand’s positive associations? Is it the unique identity that it brings to its products and services? Is it the degree to which the brand personifies those products and services? Is it the way the brand is able to share values with its customers and serve as a self-expression vehicle for them? Is it the goodwill that the brand generates? Is it the memory triggers that the brand creates in people’s minds? Is it the ability of the brand to create meaning that extends beyond one product category allowing for brand extension? Is it the brand’s promise? Is it the brand’s unique value proposition? Yes, it is all of these.

If a brand has equity it implies that the brand is an asset that has value. In fact, many studies over time have demonstrated that brand equity is a significant contributor to stock price, company valuation and shareholder value.

So what should the purpose of brand equity measurement be?

• To measure the brand’s health and vitality
• To understand how well the brand is positioned against its competitors
• To serve as a diagnostic tool
• To uncover any underlying weaknesses that require intervention
• To identify opportunities to further strengthen the brand
• To provide the information from which a brand scorecard can be built

That is, a brand equity measurement system’s output should be diagnostic and actionable.

Sometimes people equate brand tracking studies with brand equity measurement. Brand tracking studies tend to be fairly simplistic, often measuring just a couple of things and they are usually not very actionable. Sometimes people equate customer satisfaction scores with brand equity measurement.  And sometimes people equate attitudinal loyalty scores (such as a brand’s Net Promoter Score) with brand equity measurement. All of these are helpful to some extent but they are not very comprehensive or robust. One needs to look at the whole picture.

Here is what we include in our BrandInsistence brand equity measurement system:

• Unaided brand awareness (including first recall) associated with a particular product category. Related to this, unaided brand awareness associated with specific customer benefits.
• Brand relevance.
• Top-of-mind brand associations. Related to this, a map of brand memory triggers.
• The brand’s top-of-mind points of difference.
• The brand’s personality attributes.
• Importance of up to 24 customer benefits and values and the brand’s delivery against the same (allowing for the creation of brand positioning maps).
• Brand value.
• Brand accessibility.
• Emotional connection to the brand (four separate measures).
• Attitudinal brand loyalty (two separate measures).
• Brand vitality (two measures).

We measure all of these brand equity components by customer segment for the brand in question and up to three competitive brands. This provides a comprehensive picture of the brand’s strengths, weaknesses, opportunities and threats together with recommended actions to strengthen the brand.

In a related brand asset mapping study, we map out all of a brand’s associations (purchase, usage, customer segment, product, service, function, feature, lifestyle, occasion, etc.) to identify opportunities for brand extension.  In another related study, we map all of the emotions with which the brand is associated for each customer segment, helping the brand manager establish a stronger emotional connection between the brand and its customers.

I hope this has shed some light on the nuances of brand equity measurement. For more information on this, please refer to chapter 18 (Brand Equity Measurement) in Brand Aid,second edition.

Donald Trump's Brand Equity

Donald Trump contends that his net worth is in excess of $10 billion. Forbes estimates it to be $4 billion, while Wealth-X estimates it to be $4.5 billion. The Wall Street Journal indicates that he has assets of $1.5 billion. So what accounts for the difference between what Donald Trump says he is worth and other estimates of his worth?

His name. He loves his name and uses it on most everything. Many equate his name with quality. When asked, he has indicated that the brand value of his name alone is $3 billion. Previously, he had indicated that the brand value of his name was as high as $6 billion.

What value does brand equity provide? The ability to win business deals, charge a price premium and license the name for royalties among other advantages.

Forbes estimates the value of his licensing deals to be $60 million not counting his real estate licensing deals which could be as high as $120 million, putting his brand licensing income at something less than $200 million.

So, does running for president help or hurt his brand equity? If a key driver of brand equity is brand awareness (and it is), then his presidential bid is significantly improving his brand equity. Consider the fact that there are now dozens of articles highlighting the debate on his net worth, articles in Forbes, Fortune, Business Insider, The New Yorker and New York Times to name just a few periodicals.

But what if the publicity is bad publicity? There is an oft repeated saying that "There is no such thing as bad publicity." But after the first set of GOP debates, several business partners (Macy's, NBC and PGA) announced that they intend to severe ties with Donald Trump, potentially costing him millions of dollars.

According to our proven BrandInsistence(SM) brand equity measurement model, the five things that drive customers to insist on particular brand are awareness, relevant differentiation, value, accessibility and emotional connection. 

Let's take one at a time for the Donald Trump brand:

• Awareness - already high but still up significantly
• Relevant differentiation - differentiation for sure; relevant differentiation (for some, yes - he is still the #1 GOP presidential candidate per the most recent polls)
• Value - licensing value based on name recognition - yes; value to any particular person including women and Mexicans - questionable at best
• Accessibility - it may have increased
• Emotional connection - its seems to have decreased for many people while others applaud his independence and outspokenness

So, while awareness, a prime driver of brand equity, is up significantly, emotional connection is likely to be down for many but up for others. Value and relevant differentiation may also have mixed results.

What is his brand's equity? At least $180 million but likely much more than that. $3 to $6 billion? So says Donald Trump.

Business Benefits of Strong Brands

• Decreased price sensitivity
• Increased customer loyalty
• Increased bargaining power with business partners
• Independence from a particular product category
• Increased flexibility for future growth
• Increased ability to hire and retain talented employees
• Increased ability to focus and organization's activities and resources
• Increased market share
• Increased stock price
• Increased shareholder value

© 2015 Brad VanAuken. Excerpted from Brand Aid, second edition, available at Amazon.com or BarnesandNoble.com.

Brand Research a Must for Brand Positioning

Our primary focus is brand strategy and repositioning based on deep customer insight. Many organizations will ask us to reposition their brands but are reluctant to conduct the necessary customer research at the beginning of the brand repositioning process. They will say, “We conduct ongoing customer satisfaction research,” or “We do product research quite frequently” or “We measured our brand’s equity five years ago” or “We talk with our customers all of the time.” But, do they know which brands have the highest top-of-mind unaided awareness within the relevant product categories? Do they know how their brand is perceived? Do they know the top-of-mind associations for their brand? Do they know their brand’s personality? Do they know if their customers can relate to their brand emotionally? Do they know how attitudinally loyal their customers are to their brand? Do they know the most important brand and category benefits and how their brand stacks up against the competition in delivering against these benefits? Do they know their brand’s perceived strengths and weaknesses vis-à-vis the competition? Have they identified their brand’s positioning vulnerabilities and opportunities? Do they know whether their brand is perceived to deliver a good value for the price paid? Is their brand perceived to be vital or resting on its laurels? Is it perceived to be innovative, responsive, trustworthy, reliable or friendly? Do they understand how these perceptions vary across various customer segments?

Successful brand repositioning requires intuition, creativity, insight, analysis and a deep understanding of the customer and his or her perceptions. The insight, analysis and deep understanding are largely informed by rigorous brand research. Repositioning a brand without research is akin to painting a masterpiece with one’s eyes closed. Neither is a very good idea.

© 2015 by Brad VanAuken

Brand Valuation vs. Brand Equity Measurement

Brand valuation is just what the term implies – it assigns a monetary value to the brand. This helps people understand that a brand is an asset that must be managed and protected. Brand valuation can transform CFOs into brand advocates. It is also useful in M&A situations. Many companies’ valuations far exceed the sum of their tangible assets. While this can be due to many factors, research has shown that brand value is one of them.  Online companies, in particular, have valuations that far exceed their tangible assets and often the brand itself is a substantial part of the company’s overall value.

Brand valuation’s usefulness is limited to the benefits that I have described above. Beyond these benefits, brand valuation offers little help in managing the brand or increasing its equity or value. This is where brand equity measurement can help. Our system of brand equity measurement measures each of the five drivers of customer brand insistence – awareness, relevant differentiation, value, accessibility and emotional connection. Further, it identifies key brand associations, brand personality, brand vitality, brand loyalty and brand positioning opportunities and vulnerabilities vis-à-vis the competition. All of these inform specific actions that can be taken to strengthen the brand.

Peter Drucker said, “If you can’t measure it, you can’t manage it.” Brand equity can be measured. Brand equity measurement systems do this. So, if you are responsible for managing your brand, you should be measuring its equity and all of its equity components so that you can diagnose and solve any problems and identify and seize any opportunities.

I wish you great success in measuring and strengthening the equity of your brand.

Brand Equity Measurement

According to a well-known axiom, you can’t manage what you don’t measure. This is true of brand equity as well. Any strong brand equity measurement system will accomplish the following objectives:

• Measure the brand’s equity across a variety of dimensions at different points in time over time.
• Provide diagnostic information on the reasons for the changes in brand equity.
• Gauge and evaluate the brand’s progress against goals.
• Provide direction on how to improve brand equity.
• Provide insight into the brand’s positioning vis-à-vis its major competitors, including its strengths, weaknesses, opportunities, and threats.
• Provide direction on how to reposition the brand for maximum effect.

When I was named director of brand management and marketing at Hallmark, I was given two primary objectives: 1) to increase Hallmark market share and 2) to increase Hallmark brand equity. Market share is a relatively straightforward objective for which we already had metrics. Brand equity was much less well defined. I spent the better part of the next three years drawing upon the knowledge of various consultants, researchers, and scholars and dozens of different brand equity models to define brand equity in a way that was useful to Hallmark. To be useful to Hallmark, it had to show how to move people from high brand awareness to brand insistence. Since then, this work has resulted in a validated and refined measurement system that is used by scores of organizations across dozens of industries.

Components of a Brand Equity Measurement System

Here are the components that a brand equity measurement system should
measure:

• Brand awareness (first mention, or top-of-mind unaided recall, and total unaided recall)
• Brand preference
• Brand importance/rank in consideration set
• Brand accessibility
• Brand value (quality and value perceptions and price sensitivity)
• Brand relevant differentiation (open-ended question and perceptions
• on key attributes)
• Brand emotional connection
• Brand vitality
• Brand loyalty (multiple behavioral and attitudinal measures, including share of requirements/wallet)
• Brand usage
• Brand imagery (against a standard battery of category-independent brand personality attributes proven to drive brand insistence, and a customized battery of brand personality attributes for the particular organization and its product/service category)

Most Important Brand Equity Measures

The most important brand equity measures are:

• Unaided brand awareness, especially first recall.
• Remembered/recalled brand experience.
• Knowledge of the brand’s promise.
• Brand’s position in the purchase consideration set.
• Brand’s delivery against key benefits. (We have found two separate approaches to be insightful: mapping benefit importance against brand benefit delivery—a scaled response—and an open-ended question, “What makes brand XX different from other brands in the YY category?”)
• Emotional connection to the brand.
• Price sensitivity.
• Relative accessibility.

Excerpted from Brand Aid, second edition. © 2015 Brad VanAuken. Available here now.