Improve your Brand Equity: Methodology

How does brand strategy relate to the behavior of real consumers in real markets?

Brand Equity only exists because brands increase the utility of products to the consumers who buy them. So Brand equity or value arises out of consumer choices: brands don't have value independently of consumer choices. In this model of brand equity, the brand is like a code. It transmits a rich set of information to consumers quickly and easily, reduces their perceived risk when they participate in the market and lowers the 'information costs' a consumer incurs.

If we're to accurately assess a brand's true equity therefore, we have to measure:

1. The information costs which consumers save and the reduction in perceived risk created by your brand and those of your competition;
2. The perceived performance of the brand within product categories on various 'quality' and 'credibility' dimensions;
3. The consumer's behavior when exposed to changes in brand and/or product features.

We use a survey instrument for these three critical measurements; at one or more points in time (for the markets and segments of interest). From this survey we can generate a diagnostic analysis of the current state of the brand's health in its category. We can also measure what dimensions of the brand influence desired behaviors (and how much they do so, relative to other dimensions).

This initial work will create a snapshot of the brand's equity at the time (or times) of measurement. Clearly though any change in the market will have an impact on one or more of the brand's dimensions. To gauge the effectiveness of your brand strategy, it will be necessary to carry out smaller surveys to monitor the impact of advertising, marketing, and business development efforts on brand equity.

Suppose, for example, that one of your competitors were to launch an advertising campaign claiming that your brand tells customers one thing but delivers another. This is likely to impact your credibility ratings, which may increase the consumer's information costs and perceived risks. It is likely therefore to decrease your brand equity. But by how much? An on-going measurement regime will help you track your brand's health, correct for market events, and quantify the impact of your brand management strategy.

This approach can be used to evaluate:

1. Strategic brand alliances, mergers and acquisitions
2. Co-branding opportunities
3. Line extensions
4. Umbrella branding and more

Example
Company A is considering a line extension into a new (but related) category that represents a good fit. Advanis' approach can measure the equity of Company A's brand in its own category, as well as the equity it is likely to generate in the new category. We can also take into account the equity of major competitors in key segments, or target markets.

This allows Company A to evaluate value pricing strategies as well as estimate expected revenues, contribution margins, and/or profit levels. Because Advanis' CDA is an integral part of this approach, Advanis can also predict how Company A's strategic or tactical actions are likely to impact not only their own brand, but also competitive brands.