Brand Equity 11/3/2010. Today s agenda. Defining, understanding and measuring a brand

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1 Today s agenda Brand Equity Defining, understanding and measuring a brand Per Åsberg, IFS, November 15th 2010 About Brand Equity Defining brand equity Measuring communication effect on the consumer using brand research The three steps of consumer impact Measuring Equity What is brand research How is it used and how will you use it Increasing Brand Equity General views on how to increase brand equity Explaining brand equity is difficult due to the vast number of different definitions available Section I of III About Brand Equity A set of brand assets and liabilities linked to a brand, its name and symbol, that adds to or subtract from the value provided by a product or service to a firm and/or to that firm s customers. David Aaker, 1991 The purpose of branding is to boost the equity of a brand A brand and its worth exists in the mind of the consumer and there is where to measure it Generic cola Look: 70% Taste: 63% Refreshment: 77 % Coca Cola Look: 72% Taste: 87% Refreshment: 90 % The consumer will perceive a difference if the same product is marketed under different brands. That difference constitute the brand equity the power of the brand. It doesn t matter what the brand managers believe their brand to be it is the consumer s view that determine perception of the products and in the end sales. 1

2 There are two way to measure brand equity Kotler & Keller, Marketing Management, p. 289 it is important for marketers to (1) fullly understand the sources of brand equity and how they affect outcomes of interest, as well as (2) how these sources and outcomes change, if at all, over time. The first step towards building and measuring brand equity is brand awareness Brand Recall Brand Awareness Brand Recognition Solution to (1) Brand Audits Solution to (2) Brand Research Brand recall are the brands you can name off hand within a certain category and it is this that is usually measured in real life. Brand recognition are brands you recognize when shown. Brand Awareness and Brand Image are often named the two attributes defining Brand Equity People need to have heard of you in order to buy you, but they must also like your image Brand Awareness Have I seen this brand before What does this brand stand for Suiting Brand Image Brand Universe Brand Awareness defines what part of the brand universe each consumer is aware of, while brand image determine which one of these choices that are most appropriate in each situation Brand Awareness Brand Equity Brand Image The first step to measure Brand Equity is to measure general Brand Awareness One half of Brand Equity, Awareness, is easily measured by asking just one question 52% Which ones of the following car brands have you heard of Which car brands have you heard of 34% Saab Volvo Fiat BMW Ford 17% 1 14% 13% 11% 11% 9% 7% 7% 6% 3% 2% 2% 1% 2% (Brand recognition) (Brand recall) By asking people to name which car brands they know of, you are measuring their Brand Awareness. In general, people know of 7-8 car brands up front. Volvo and Saab have high Brand Awareness in Sweden and therefore possess high Brand Equity on the Swedish market. Chrysler as a new market entry and Opel as a relatively inactive brand are having problem maintaining Brand Awareness. 2

3 The other half, Brand Image, is more abstract and cannot easily be measured Instead, we go one step ahead and measure which brands people actually prefer Brand Strength Uniqueness Reputation Experiences Associations History Strong Brand Image High = preference Since Brand Image consist of so many different parts, some of which are very abstract, it is difficult to determine how to measure it. Also, reputation and associations are different from consumer to consumer. When measuring brands, steps often form between Brand Awareness, Preference and what you actually buy in the end Between these brands, there is an order that is maintained almost regardless of variable 4 40% 3 chocolate pralines have you heard of 4 40% 3 chocolate pralines have you heard of 30% 2 20% 1 10% chocolate pralines do you prefer chocolate pralines have you bought recently 30% 2 20% 1 10% chocolate pralines do you prefer chocolate pralines have you bought recently 0% 0% Aladdin Paradis Marabou Merci Fazer Aladdin Paradis Marabou Merci Fazer There is a decline from Brand Awareness to Preference and finally to what you buy in the store. The top five chocolate praline brands in Sweden are Aladdin, Paradis, Marabou, Merci and Fazer almost regardless of what single variable you measure. The order in which these brands are mentioned could also be their relative Brand Equity strength A brand tracking gives you a general picture of the strength of communication and brand image In this category, the relative strength of the Brand Equity of these brands can be assumed to be the above however their absolute strength is much more difficult to measure. = 75,6 However, you cannot set a definite number on the strength of the brand equity, since it depends on what variables you believe most important and how you measure them. 3

4 There are companies that regularly measure the value of global brands BusinessWeek chose Interbrand s methodology because it evaluates brand value in the same way any other corporate asset is valued on the basis of how much it is likely to earn for the company in the future. Interbrand uses a combination of analysts projections, company financial documents, and its own qualitative and quantitative analysis to arrive at a net present value of those earnings. Quote from BusinessWeek s homepage Section II of III Measuring Equity Brand research and evaluations of campaigns are important parts of every day marketing Brand tracking is a way to monitor the results Communication M M E D I U Poolia Manpower Proffice If you literally put millions into conceptualizing, producing and distributing a commercial message, it s just common sense to put a few thousand Swedish crowns on knowing if those millions had any effect! Anonymous brand manager at global company Brand tracking: have consumers noticed us 4

5 To track a market is to know it Example of variables that may be used A company can for a long period of time follow the development of theirs and competitors brands and evaluate the market as a whole as well as individual brands. Ad Awareness Which car brands have you noticed any advertisement from over the last month How was BMW s last campaign received by the consumer Which car brand does the consumer prefer What do they intend to buy Which car brands have you heard of Preference Brand Awareness Which car brand do you prefer What other brands are interesting How many people own a Volvo What car brand do you own Latest purchase Example: The car industry is very advertisement intensive which brands stand out Advertisement alone does not explain the consumer s choice of brand 1st 2nd 3rd Ad Awareness, Top of Mind, first half of 2009, based on respondents Ipren is the brand of pain relievers in Sweden with the highest Ad Awareness in fact, it s close to the most noticed commercials over all categories Advertisement alone does not explain the consumer s choice of brand However, we still say good old-fashioned Alvedon when we are asked to mention what brand we prefer 70% 6 60% 5 50% 4 40% 3 30% 2 20% 1 10% 0% The greatest advantage of brand tracking is your ability to see the development over time in your industry We can see when each brand invests in communication (arrows) and what impact the campaign has Alvedon Ibumetin Ipren Panodil Treo Eeze Zon Voltaren Bamyl Eox 5

6 Increasing brand equity comes down to optimizing two factors: the communication itself and the brand image communicated Section III of III Increasing Brand Equity It s all about what you say and how you say it The communication needs to be powerful enough to reach through to the consumer and the message clear and understandable The communications strategy (platforms used, number of ads shown, discernability) is the power that moves the rocket foward The messege delivered determines how the consumers percieve the brand and if the image wanted is created If the advertisement budget is too small, there is a risk the message will not reach through Make sure you are saying something that gives you the expected brand image Exposure show the ad enough times and in the right channels Attention make sure the advert stands out/is noticed Comprehension make sure that people understand what you are trying to say Source: Keller Yielding the consumer should like what you have to say Intentions the consumer plans to buy your product Behaviour the consumer buys your product Source: Keller There is a lot of communication going on can you stand up to the competitors Do people like what you have to say Do they label you in the way you intended 6

7 An error would be trying to make your brand stand for everything at once Low price Quality How do you increase your brand equity Design Customization Innovation Global Service 1. Reinforce your brand with campaigns carrying the same message 2. Create brand extensions / co-branding with similar associations 3. Differentiate your brand to make it stick in consumers minds 1. Reinforce your brand with campaigns carrying the same message 2. Create brand extensions / co-branding with similar associations ICA communicates special prices for members, a sense of togetherness, humor and the occational CSR-campaign Pizza Hut co-locating with Taco Bell is a form of co-branding. Pizza Huts brand and offering can be more easily understood through its reference to Taco Bell 3. Differentiate your brand to make it stick in the consumers mind Pizza Huts spin-off WingStreet show great similarity to the Pizza Hut concept, even though Pizza Hut is only visible as a weak endorser. As stated in every Marketing 101 course: differentiation is the single most important step in creating brand equity. It is the velcro that makes the message stick! 7

8 Brand equity has no single definition but could roughly be said to be a brands strength and image combined The meaning of a brand differ more or less between people Proper Brand Equity is a prerequisite for being considered in a purchase situation Epilogue What are the key take-outs 4 40% 3 30% 2 20% The simplest way to build strong brand equity is to differentiate from other brands and thereby giving the consumer a way to distinguish you from the competitors Make sure you communicate the same message and that consumers understand what you want to say 1 10% 0% Aladdin Paradis Marabou Merci Fazer Brand research can be used to measure brand equity, but only in part and indirectly There are different methods for establishing brand equity but the value they assign to a brand is not universal you just have to chose one method you believe in However, it is fairly simple to measure some of the effects of brand equity, such as actual sales and brand awareness By Per E Åsberg, 2010 per.asberg@gmail.com 8