THARAKA DIAS MBA(USA), BBA(USA), Dip in Mgt, ACIM(UK), FAEA(Dip in AEA-UK), FinstSMM(UK), CPM(Asia), MSLIM, PM(Sri-Lanka)

THARAKA DIAS Director – My Media Network MBA(USA), BBA(USA), Dip in Mgt, ACIM(UK), FAEA(Dip in AEA-UK), FinstSMM(UK), CPM(Asia), MSLIM, PM(Sri-Lanka)

 Brand Asset Valuator  Aaker Model  BRANDZ  Brand Resonance

Measuring brand equity Loyalty Measures Price premium Satisfaction/ loyalty Perceived quality/ leadership measures Perceived quality Leadership Awareness measures Brand awareness Association/ differentiation measures Perceived value Brand personality Org association Market behavior measures Market share Price and distribution indices 4

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 Outcomes of brand equity  Greater loyalty  Less vulnerability to competitive marketing actions  Less vulnerability to marketing crises  More inelastic consumer response to price increases  Possible licensing opportunities  Additional brand extension opportunities  Larger margins: on average, prices of strongest brands are 19% higher than weakest brands in category

 Simplifies choice process  Enhances confidence in choice  Reduces perceived risk – recognition of consistency of quality  Provides emotional benefits – signal of status, taste, or affiliation

 Identify the effectiveness of individual brand assets  Identify the barriers to achieving a brand’s full potential  Identify consumer relationships with the brand  Identify the status of the brand in a competitive context

 A systematic approach to brand valuation was jointly developed by Interbrand and the London Business School in The method was partially revised in  Since then, Interbrand has evaluated some 3500 brands for nearly 400 companies.

1. Brand Value or financial performance – Brand value is the financial gain accrued as result of leveraging brand strength.  Financial performance is calculated to see how profitable the company is  This includes sector and regional analysis and the profitability of all its business units  Sector analysis includes the sector of which the brand is a part of (eg. FMCG/Retail sector )  Both these parameters provide an understanding of the relevant performance of the brand 12

2. Brand strength or customer based measures –  Brand strength is the brand association in the mind of the customer.  This helps to analyze what the customer think about the brand in relation to the competitor brands  This can also be termed as customer based measures. 13

 The value of a brand is calculated on the basis of what it actually costs to create or what it might theoretically cost to recreate.  This will take advertising, promotion, campaign creation cost, trademark registration costs etc into account  This however, does not correctly reflect the current value of the brand, as the cost of generating a brand does not truly reflect the income generation potential of the brand 14

 If information regarding market transactions involving comparable brands is available, is possible to estimate one brand’s value by comparing with another brand  This is rarely used since such data is scared  Each brand is unique and it will be difficult to compare brands 15

 This is based on the assumption that if the company did not actually own the brand, but on license it from a third party, then what royalty would it have to pay for using the brand name.  This is estimated by calculating the sales likely to occur in the future and then applying appropriate rates. 16

 This will takes into account the economic value of the brand to the current owner in its current use.  This is most widely use and like the valuation of shares, it is the cash flow valuvation  This is measured by calculating the increase in gross profit due to selling a branded product versus selling an unbranded products. 17

 Brand Asset valuator model  Aaker model 18

Advertising agency Young and Rubicam (Y & R) developed a model of brand equity called Brand Asset Valuator (BAV)

 Differentiation  Measures the degree to which a brand is seen as different from others.  Energy  Measures the brand’s sense of momentum.  Relevance  Measure the breadth of a brand’s appeal.

 Esteem  Measures how well the brand is regarded & respected.  Knowledge  Measure how familiar & intimate consumers are with the brand.

Measuring brand equity Loyalty Measures Price premium Satisfaction/ loyalty Perceived quality/ leadership measures Perceived quality Leadership Awareness measures Brand awareness Association/ differentiation measures Perceived value Brand personality Org association Market behavior measures Market share Price and distribution indices 22

 Price premium – this is the extra money a customer willing to pay for a brand as compared to a competing brand. If the price premium is positive then customer is willing to pay. If not the company should reduce the price the same by percentage to induce the customer to purchase. This will apply only where there is a price difference  Consumer satisfaction/ loyalty - (Service industry and FMCG) – consumer can ask the following questions 1. Are you satisfied/ dissatisfied/ delighted with the brand 2. Will you buy the brand next time 3. Will you recommend the brand to others 4. Is this brand the only brand you purchase etc.  Limitations – this can be done only to people who have purchased the brand or consumed it at some point of time. The others cannot be traced. 23

Perceived quality – customer perception of the quality of a brand result in their preference for it over other competitive brands. This can be done across the product category.  Does this brand have a high quality/inferior or moderate  Is it the best/one of the best/the worst  Does the brand have consistent quality /inconsistent quality Leadership – the popularity of the brand and its leadership is an important construct of brand equity, as it reflect the number one syndrome. Thus leadership also measures the technological innovativeness of the brand.  Is this brand the leading brand  Is this brand growing in popularity  Is this brand innovative and fist with advances in products or service 24

 This is meant to understand how the brand is associated in the mind of the customers and how it is different from competing brands. This can further study under the following three perspectives. 1. The perceived value or how customers perceived the brand as a product 2. Brand personality or how customer perceive the brand as a person 3. Organizational association or how customer perceive the brand as an organization 25

 Brand awareness – 1. Brand recognition 2. Brand recall 3. Top of mind 4. Brand dominance 5. Brand knowledge 6. Brand options 26

 Market share – share of the brand in the marketplace in comparison to its competitors, reflects the brands standing with the customers.  Market price and distribution indices – to overcome the limitation of the effects of promotional strategies in market share, this can calculate as RMP=Avg SP(Brand)/Avg SP(total brands) RMP – Relative market price 27

 Present Brand Positioning  Brand Identity  Brand Image  Brand Personality  Brand Features and Benefits  Brand Name Approach  Brand Sales Performances  Brand Financial Performance  Brand Present Market Segment  Brand Market Share 28

 Association/differentiation measures – these measures are used to understand how the brad is associated in the minds of the customers and how it is different from the competing brands in the same product category  Brand knowledge – this is when the customers know what the chosen brand stand for  Brand opinion – this is when the customer have an opinion about the chosen brand  brand strength – this is the brand association that exists in the mind of the customers. Analyzing brand strength helps us to understand what the customer think about the brand in relation to its competitors  Brand value – this is the financial gain accrued as a result of leveraging the brand strengths. The financial performance is calculated to see how profitable the company is  Conjoint analysis – this is used to identify a combination of features which are most preferred by the consumers and which can be offered to the market 29

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