Handbook of Business Strategy

Understanding brands value: advancing brand equity tracking to brand equity management
Michael Leiser,
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Michael Leiser, (2004) "Understanding brands value: advancing brand equity tracking to brand equity management",
Handbook of Business Strategy, Vol. 5 Issue: 1, pp.216-222, https://doi.org/10.1108/10775730410494189
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(2000),"Brands and brand equity: definition and management", Management Decision, Vol. 38 Iss 9 pp. 662-669 <a
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(1998),"Brand equity valuation: a global perspective", Journal of Product &amp; Brand Management, Vol. 7 Iss 4 pp. 275-290
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 Understanding brand's value: advancing
brand equity tracking to brand equity
management
Michael Leiser
Downloaded by Panyapiwat Institute of Management At 22:58 25 June 2017 (PT)
Michael Leiser is a partner with the Chicago
ofce of Prophet (www.prophet.com) a
management consultancy that helps clients
achieve competitive advantage by creating
and implementing integrated business,
brand and marketing strategies.
We are living in the age of the brand.
Merely tracking performance is no
longer enough, hence brand equity
management.
| |
HANDBOOK OF BUSINESS STRATEGY 2004, pp. 217-221, # MCB UP Limited, ISSN 0894-4318, DOI 10.1108/10775730410494189
Once strictly the purview of the marketing department, savvy organizations now see
the value in using brand as a focal point for their overall business strategies. Many are
using it as a guidepost for internal actions and interactions with customers and other
key stakeholders. C-level executives, led by the chief executive as brand champion,
keep a keen eye on how their actions impact on brand equity, which in turn has an
effect on the overall value of the business. This emerging view of brand stems from
the recognition of a strong brand's role in driving solid benets to the bottom line,
thanks to its ability to command price premiums and fuel market share leadership.
Think Coca Cola, whose brand carries an estimated value of $69.6 billion. Think IBM
weighing in with a brand value of $51.2 billion. Think Nike another valuable brand
with a worth of approximately $7.7 billion. But none of these nor any other great
businesses have been able to achieve brands of considerable worth without having
rst understood their underlying value.
Gaining that understanding is what creates the basis for success as a brand-driven
business. Even more important, however, is the starting point: the ability to identify,
manage and leverage, in a thorough and structured manner, all the most important
associations that combine to create brand equity. It entails going beyond the
marketer's exercise of brand equity proling to achieve brand equity management.
Dening brand and brand equity
Today's understanding of brand takes it far beyond the somewhat simplistic view of
brand that prevailed a decade ago, when it was viewed as a representation a
business or brand logo or tagline or advertising message. It's now more commonly
dened as a set of expectations and associations evoked from experience with a
company or product. It's all about how customers think and feel about what the
business or product actually delivers across the board. If the expectations,
associations, and experiences are positive, the likely results are positive
perceptions about the brand and measurable bottom-line contributions in terms of
market share and protability.
PAGE 217
 It's all those associations positive, negative and neutral that
combine to create the brand's equity. As noted authority David
Aaker denes brand equity, it's the set of assets and liabilities
connected to a brand that add to or detract from its value to the
customer and to the business. As he detailed in his classic
Managing Brand Equity (Free Press, 1991), creating a brand
equity prole involves the identication of the various customer
associations with a brand, and levels of customer awareness
and loyalty that set it apart from competitors.
Brand equity has taken on increased prominence in the last
several years, thanks to various studies that underscore its
signicance. One compelling study is EquiTrend's analysis of
how brand equity impacts on return on investment over time,
showing that businesses with the largest gains in brand equity
saw their return on investment (ROI) average 30 percent, while
those with the largest losses in brand equity saw their ROI
average a negative 10 percent.
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Carrying even more weight, however, has been Interbrand's
annual study on the world's most valuable brands.
It all combines to make for interesting reading and a case for
paying more attention to brand equity. But at the end of the
day, it's less important to monitor the growth and current status
of brand equity than it is to better manage its elements as a
means of supporting day-to-day business strategy decisions
more effectively. This demands going a step beyond traditional
brand equity tracking, with the objective of creating an in-depth
prole of a brand that uses quantitative modeling to identify,
better understand and better manage its strategic drivers or
the associations that make a real difference in the brand's
performance. Ultimately, this endeavor will allow the
organization to optimize the most business-relevant aspects
of the brand to help drive improved nancial performance.
From brand equity tracking to brand equity
management
Most marketing departments within larger businesses
understand and undertake brand equity tracking. These are
generally fairly static initiatives involving customer attitude and
usage surveys where the dimensions of the brand are tracked
and compared with competitors. Yet, the intelligence gained is
not put to strategic use by analyzing and prioritizing the
business impact of those attributes. They need to be sorted
according to those which are neutral, and have no effect on the
business, and those which are ``antes'' that any brand in the
category must possess to play. Critical drivers attributes that
are unique to the brand and integral to brand and business
success must be identied, as should those that have
potential to be key drivers, if provided the strategic support.
And, nally, negative associations with the brand need to be
considered and countered to keep them from hindering the
brand's and business' success.
|
PAGE 218 HANDBOOK OF BUSINESS STRATEGY 2004
|
`` Today's understanding of brand
takes it far beyond the somewhat
simplistic view of brand that
prevailed a decade ago.
''
Once the drivers are identied and categorized, they can serve
as an important gauge for prioritizing brand investment
decisions in order to support underlying business goals and
objectives and, ultimately, enhance overall nancial
performance.
The KitchenAid brand, with products under its umbrella ranging
from mixers to refrigerators and dishwashers, provides an
excellent example. With its roots dating back to 1908 and an
80-quart mixer designed as a labor-saving dough-mixing
device for the commercial baking industry, the KitchenAid
name evolved from its brand promise to post-World War I era
housewives. ``I don't care what you call it, but I know it's the
best kitchen aid I have ever had,'' proclaimed the wife of one
company executive who had helped test the initial non-
commercial mixer.
Today, brand strategy has advanced substantially, and
KitchenAid has a developed a keen understanding of all the
elements that comprise the equity of the brand, and which
strategic drivers have played a critical role in driving the
continuing success of the business.
On one hand are the antes of style and color choice, and the
brand's ability to serve as a kitchen workhorse. KitchenAid's
afliation with Whirlpool is generally known, but it's a neutral
association that doesn't affect the brand equity one way or
another. Its strategic brand drivers those associations that are
unique, important and highly associated with KitchenAid stem
back to its heritage. Key among them are the commercial grade
quality and superior performance that have been aggressively
leveraged everywhere from new product development to
consumer messaging as a means of enabling KitchenAid to
command premium pricing.
A word on brand's impact on nancial performance
Before describing how the business can better optimize its
brand equity, it's important for senior management to fully
understand the correlation between a strong brand and its
benets of premium pricing, customer loyalty/market
leadership and overall nancial performance.
First, consider the measure of price premiums. A Consumer
Branding Study by management consultants Kuczmarski &
Associates showed that 72 percent of customers will pay a 20
per cent premium for their brand of choice over the closest
competitor. Moreover, price is inconsequential to 25 percent of
 customers when buying a brand that ``owns'' their loyalty.
Obviously, that translates into higher price points and higher
prot margins.
Starbucks exemplies a business that has tightly managed its
core brand equity drivers. By focusing on quality, consistency,
and an authentic coffeehouse experience, Starbucks can
charge $1.60 for a medium coffee, while the convenience store
next door can't get away with charging more than 99 cents for
a similarly sized java.
Customer loyalty also inuences nancial performance, in that
loyal customers make repeat purchases of their brands of
choice over the lifetime of their relationship with them. By
maintaining loyalty, a business can count on higher future
prots per customer. Procter and Gamble is one company that
has reaped such benets the lifetime value of its customers is
several thousand dollars. Even though some of its brands
Tide, Crest or Pampers, for example sell at a slight price
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premium over competing brands, it's actually the loyal
customers who make repeat purchases over the years that
drive market share leadership for P&G across a range of
categories.
A study by Brand Keys, which researches brand and customer
loyalty, showed the power of customer loyalty: A mere 5
percent increase in customer loyalty could elevate lifetime
prots per customer by as much as 100 percent. Brand Keys
also found that in some business sectors, an increase in
customer loyalty of just 2 percent could create the same effect
on the bottom line as a 10 percent cost reduction.
Many factors inuence a brand's ability to extend into new
markets. But, in the end, those that have built the strongest
credibility and have tightly and strategically managed their most
customer-inuential brand equity drivers have scored the most
success with product and market extensions. The Virgin brand
is an excellent example. Its strategic drivers, exhibited by the
associations of irreverence, individualism and being
iconoclastic, have been leveraged extensively. As a result,
from its start in the music/entertainment industry, it has
achieved a deep presence in the travel industry (from Virgin
Atlantic Airlines to Virgin Trains to the Virgin Travelstore) and
expanded successfully into such far-ung arenas as mobile
phones, online auto sales and even beverages.
The process of identifying strategic brand drivers
In order to achieve such brand-driven benets, the organization
must undertake a rigorous analysis that identies the key
dimensions of brand equity within the category; proles its
brand against these dimensions; and models the core strategic
brand drivers.
What's crucial here, however, is the need to move the proling
process beyond simply creating an expansive catalog of the
associations that customers have with a brand that comprise
its equity. The exercise must shift to evaluating which
associations have a tangible impact on the brand's
performance, and then the crucial difference in how it's
historically been done articulating the correlations between
strategic brand drivers and business outcomes. As a result,
both the tangible and higher order intangible associations with
the brand will ultimately be far better leveraged and managed.
Consider why and how the team behind one leading brand in a
competitive segment of the soft drink industry undertook a
more strategic brand equity proling approach. It recognized
that the organization spent millions of dollars annually to
support the brand. Tactics ranged from event sponsorships to
aggressive use of celebrity endorsers. While the need to grow
the business was recognized, at the same time, it was
understood that the nature of the support being given to the
brand needed to be measured and strategic. Only then could a
foundation for future growth be built that was substantial. To
achieve that required that the organization enhance its
understanding of what consumer ``levers'' needed to be
pulled. Moreover, it needed a better approach to measure
where brand investments could be expanded, and which could
be cut back.
The company conducted a brand equity proling and modeling
exercise that was far deeper than past initiatives. It was
designed to help the organization better understand how
customers and the public generally perceived the brand, and
which of its aspects were most instrumental in fostering loyalty
and a willingness to pay more (or to enable the brand to
command price premiums). Brand strength would also be
manifested through retailer loyalty, as shown by complete
stocking of the product in all its avors and sizes.
It took both qualitative and quantitative research to help the
company uncover those associations that were most closely
aligned with the brand itself, its competitors, and the category.
More importantly, however, it revealed which associations were
``owned'' by the brand and most instrumental in inuencing a
customer's purchase decision. The insights gained provided
the business with the intelligence it needed to make better-
informed business decisions involving everything from
traditional marketing communications strategies and tactics
to new product development. The steps taken follow.
Developing the brand equity model
To start, the model around which the brand equity prole is
based must be developed. At the core of the model is the
product or service itself. It is described for its attributes (versus
its or the brand's benets), scope, uses, and where it's
acquired, used or seen. The four key dimensions of brand
equity build on that core.
| HANDBOOK OF BUSINESS STRATEGY 2004
| PAGE 219
 The rst dimension is the brand reputation. This involves
tangible and intangible perceptions of what it's ``good at''. The
second evaluates the values and personality of the brand and
its users, providing insight into the brand's ``character''. Next,
the multi-dimensional benets delivered by the brand
functional, emotional and self-expressive are explored. And
the fourth dimension involves analyzing the brand's leadership,
assessing perceptions of the quality and value it delivers, and
future direction it might take. Also analyzed are perceptions of
its momentum in the market and its ability to persuade
stakeholders as to its relevance.
This approach provides the basis for in-depth research
designed to enrich the organization's understanding of how
the brand is perceived. A variety of qualitative techniques
ranging from focus groups to in-depth, one-on-one interviews
to ethnographic surveys are utilized to achieve this. Customers
are asked about the category under discussion, how and when
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they use these products/brands, and what specic needs they
meet.
The qualitative phase provides the team an opportunity to
deepen its understanding of the higher order benets delivered
by the brand through the use of ``laddering'' techniques. Here's
how these techniques might work. For proling a sports drink
brand, a consumer might reveal that he chooses it because it
provides energy when he works out. Continuing the
questioning along these lines, one might discover that this
energy makes him feel stronger, which makes him feel more
condent in his athletic abilities. That, in turn, makes him feel
like a leader. Such an exploration of the brand can uncover
many paths, beginning with product attributes, which link to
logical functional benets, and from there, extend to more
emotional and self-expressive benets.
Gaining such a qualitative understanding of the key
associations tied to the brand leads to a more rened
portrait of the brand's strengths and weaknesses, what
associations the brand might ``own'' in the future and which
associations believed to be owned by the brand either are or
are not, or are not meaningful or motivating in terms of being a
strategic driver.
Once a deeper qualitative understanding of the brand has been
modeled, it's time to take signicant analytic rigor to the
ndings. Here, quantitative research determines the extent to
which an association is owned by a brand in terms of being
highly descriptive of it and being unique within the category.
This is also where it's determined how relevant that association
is to the respondent and the role it plays in the purchase
decision ultimately being correlated to actual purchase and
usage behavior. Brand modeling analysis ensures that brand
stewards are equipped with data that will foster better-informed
business decisions.
|
PAGE 220 HANDBOOK OF BUSINESS STRATEGY 2004
|
`` Businesses need to do a better
job of optimizing the wealth of
information that can be unearthed
about their brand equity.
''
Categorizing brand drivers
Associations identied as key elements of the brand equity
prole are quantitatively modeled to provide the organization a
better understanding of the role they play in inuencing the
brand's performance and how it inuences business decisions
and results. These associations are categorized as:
J Strategic brand drivers These are the most relevant
elements of a brand's equity. They have strong and unique
associations with the brand and are key to a customer's
purchase decision. These must be both protected and
nurtured so that their power as drivers is not lost.
J Potential drivers These are also relevant equity elements,
but which have not yet developed strong enough
associations with the brand to help them evolve to the
level of drivers. By raising awareness of these attributes, the
organization can grow them into drivers.
J Category antes These relevant equity elements have
strong associations with the brand and all competing
brands in the category. They're ``must-haves'' if a brand
expects to participate in the category, but cannot serve as a
platform for differentiation. For example, fast food
restaurants all must have associations of quick, easy and
hassle-free service just to meet basic customer
expectations.
J Neutral associations These equity elements are unique
and highly associated with a brand but play a minor role in
the customer's decision to purchase. The color blue, for
example, is uniquely associated with IBM, but is not a major
inuencer of preference for the brand.
J Brand barriers These are issues that must be addressed if
the brand is to be leveraged for optimal business
performance. They may be customer-relevant equity
elements that are actively not associated with the brand,
or negative associations that are uniquely associated with it.
Such modeling creates a deeper understanding of the brand,
those of competitors and even the category ideal, if desired.
The exercise reveals the gaps between your brand and
associations owned by competitors that they may try to
leverage. It also reveals gaps between your brand, competitors'
and the category ideal that no one is delivering on. These are all
factors that should be considered in deciding where to invest
and how to move your brand ahead.
 The knowledge gained around drivers enables an organization
to make strategic decisions across all of its customer
touchpoints. Going back to the KitchenAid example, the
company's deep understanding of its equity prole has had a
broad-reaching and positive impact on its business. Its identity
has been tightly tied to the superior performance driver that is
demanded by passionate cooks. The KitchenAid brand
promise, for example, is to bring legendary performance to
help customers achieve their culinary dreams. Its
communications strategies have been tied to that driver,
reected in the tagline ``The way it's made.'' That driver has also
been a motivating factor behind product development,
characterized by products with amazing durability the
doors of KitchenAid washing machines, for example, are
three to four pounds heavier than average. Moreover, the
superior performance driver has been integral to the way
KitchenAid's factories approach the production process, as
well as customer service. The stated mission at its Greenville
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plant is ``Any product, any time, anywhere, with legendary
performance.'' And its call center is staffed with associates who
have been brought in right off the production line to ensure the
customer remains a central focus for KitchenAid employees.
Conclusion
Businesses need to do a better job of optimizing the wealth of
information that can be unearthed about their brand equity in a
manner that will enhance and improve both the brand's and the
business' performance. A critical starting point in better
leveraging brand equity necessitates developing a better
understanding of the associations that contribute to a
brand's equity and how they relate to business results.
Optimizing brand equity also requires developing a
systematic way of prioritizing those associations according to
their impact on the brand and the business, and from there,
managing them aggressively across all customer touchpoints.
Businesses undertaking this approach to brand equity proling
and modeling will discover they are better leveraging their
brand equity to guide business initiatives that meet business
goals. In the end, both the brand and the business will be
stronger for it. J
| |
HANDBOOK OF BUSINESS STRATEGY 2004 PAGE 221
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