Branding-Chapter 2-equity and value

two steps of measuring brand value

1. For the product category, how important is the brand? 2. How strong is the brand in question?  Those two factors together are assumed to explain how much the brand is worth.  Empirical data and subjective assessments are used to calculate the brand worth.

BAV model

Brand asset valuator. Another example of brand equity calculations. -diagnose on what dimensions the brand is strong, and where the brand needs more support. -Brand equity comes from brand Knowledge and Esteem, summarized as Brand Stature (or brand equity).

CLV

Customer for Life. The value of brand loyalty. Profitability (net present value) of a customer over his or her expected lifespan with the company. Brand's total "customer equity." -eventually leads to the strategy of having the brand move up in the equity pyramid

Interbrand's Brand Valuation Method

For each market where the brand is sold:1) Brand importance 2). Brand strength.The total brand value is the sum of the brand's NPV (net per value) in each market.

brand equity or value?

High brand value does not always mean high brand equity (example: McDonalds) -Brand equity measures are "soft" measures since they are based on perceptions & attitudes, not easily translated into revenues & profits. -The financial brand value measures are "hard" measures, but the precision in the dollar figures can give a misleading impression of accuracy.

measuring brand value

Measuring the amount that a brand is worth in terms of future revenues. measures try to identify how much of a company's revenues and profits are due to the brand itself.  The answer is typically derived in two steps

Stickiness

Refers to the case where an initial choice determines further purchases in complementary products (ex: choice of PC versus Apple). May or may not involve high brand loyalty. should be separated from loyalty.

consumer bonding

The consumer's allegiance rises to loyalty, relationship. deeper meaning At this stage the product connection often is transcended and the brand becomes a self-expressive symbol of the consumer aspirational personality

Forbes' Reach Plus Depth Measure

The issue of depth of consumer attachment versus great reach of the brand is critical in measuring the equity and value of global brands.

generate a high level of Brand Stature

a brand needs to begin by building Differentiation and Relevance, which together =the two dimensions of Brand Strength. -Energy is the dynamism or momentum in a brand.  A brand with high equity will generally have both Stature and Strength.

consumer recognition

awareness is the first step  Promotional campaigns create exposure, interest, and attention to the brand.  The intended brand identity drives the promotional messages.  The aim is to make the consumer feel that the brand is "familiar."  A new brand can involve considerable promotional expenditures.

consumer response

depends not only on consumers' rational evaluation of the brand but also on attitudes.  Segmentation now plays a major role.  Decisions have to be made about whether the brand should be niche brand or a mainstream brand.  It is crucial to choose the right message, the right spokesperson, the right media for the specific target segment.  Here the promotional efforts often shift into competitive comparisons and "hard sell" efforts to encourage trial.

The strength of a brand

depends on two separate dimensions:  The level of affinity with its customers (the "depth" of a brand).  The size of its customer base (the "reach" of a brand). -loyal customers and with many customers

the brand equity pyramid

four levels: consumer recognition, perception, response, bonding. (lowest to highest point)

Weak brand

has both a low level of affinity and a small target market.

consumer perception

involve more knowledge of the product and service behind the brand.  Here the image that the brand wants to convey is at stake.  The aim is the value proposition presentation of the brand, and its positioning.  The messages attempt to highlight the superiority of certain attributes and point of parity with competing brands.

Depth

level of affinity with its customers

measuring brand equity

rely on survey responses from representative samples of consumers. Questions levels of:  Awareness (how familiar the brand is)  Knowledge (and quality perceptions)  Attitudes (including liking and trust)  Purchase intent (and how often bought) - then computed as an average score across consumers, combining several scales.

Reach

size of its customer base

brand equity

the added value from a brand that makes a customer prefer one product over another even thought the two are indistinguishable. -The consumer affinity for a brand - measure of the "depth" of brand affinity among its customers. -The dollar value of a brand reflects not only the depth of affinity, but also the reach -Bigger brands can be more valuable in dollar terms than smaller brands, even if the smaller brands have higher equity.  Brand management involves balancing equity-building among existing customers against expansion into new markets.

Growing a strong brand

the consumer-based brand equity pyramid model suggests to move each customer from awareness to positive affect to loyalty. grows with depth of allegiance and reach across markets.

brand value

the value of the brand as a business asset. -It is the dollar price that one would pay to acquire the brand name and logo.  It is sometimes seen as the intangible "goodwill" embodied in the brand.  Brand value increases with brand equity but also with the number of markets entered.

Depth and Reach can go against each other:

 A small brand can sometimes have high affinity (e.g. Saab)  A niche brand can lose affinity when expanding (e.g. Starbucks)