How about a definition of brand equity?
22nd February 2006 by Merry Elrick
If we can define brand equity, maybe we can begin to quantify and actually measure it. And then we could add it to the balance sheet like they do in the U.K. How much is your brand worth? Wouldn’t that be nice to know? Here’s my stab at a definition: a bunch of assets, like customer loyalty, perceived quality and name awareness, that contribute (positively or negatively) to the value of a brand. Those assets also include other intangibles specific to a brand. Like a Tiffany blue box is shorthand for quality and a really great gift and gift giver. The perception of that blue box is a brand asset. When we quantify that and other assets, we can begin to quantify brand equity.
Any other definitions out there?
February 27th, 2006 at 2:07 pm
It is possible to measure your brand and your impact on it. DePaul University in Chicago just completed a three-year brand research study on three key audiences: undergraduates, graduate/adult students, and advancement audiences (alumni, donors, corporations and foundations, etc.). We identified the core and extended elements of our current brand for each group (such as engaging learning environment, practical knowledge, diverse, student focused). We compared those against what we would like our brand to be in the future with these groups, which allowed us identify believable goals as well as gaps and barriers that impede us from achieving them. Many of these gaps and barriers are operational, so they have been incorporated into our strategic plan. We’ve modified our key messaging to reflect our intended brand, but know that achievement depends on embedding those elements throughout the DePaul experience. We’ll be able to measure again in a few years and see what we have achieved and what we still need to work on.
March 2nd, 2006 at 6:53 am
I believe Kris’ example demonstrates how to measure brand. “Perception” is often difficult to get your hands around - and to get management and/or clients to pay to measure - but if we start by identifying the current brand, establishing a benchmark for perception, and align it with a benchmark for behavior (current sales, enrollment, visits, etc.), we can easily see if we’ve moved the needle in some particular time frame.
There are people far more skilled than I at the specifics to make this work, but as communicators, we have to be the brand evangelists and be willing to push for the research to prove our value. I don’t know exactly how to convert the data into a brand equity score, so I’d have to turn to those researchers to tell me how it would fit on a balance sheet. I do know that it would be a valuable tool to sell brand management to the people responsible for managing the brand!
Are there other real-world examples of brand measurement? I’d love to hear about them, too.
October 25th, 2006 at 1:36 pm
I%5C%27m+love+this+great
December 12th, 2006 at 2:43 pm
Brand Equity: It’s got to be an assessment (DCF) of the additional future cash flows achieved by associating the brand with the underlying product or service. i.e. determine what the future cashflows for an unbranded box and subtract that from the future cashflows of a blue box… the difference is the value attributable to the brand…
Sounds so simple, but where do you go about working out the future cash flows….?
January 9th, 2007 at 8:39 am
It seems to me that no measure of brand or brand equity is separate from business performance, primarily sales or profitability (brand supposedly helping move products or services more often and for less expense). No other corporate department has the luxury of inventing some ‘box’ into which is funnels heaps of money without any fiscal responsibility to justify. Ideally, the value of the brand is embedded in measures of business performance, from employee retention and productivity, to sales efficacy, don’t you think? If we continue to focus on measuring brand as something ’separate’ from all that, aren’t we just waiting for the next economic downturn to tag all of our complicated, esoteric math for deletion as budgets tighten? That’s maybe the best measure of brand value…negatively, of course.
January 10th, 2007 at 11:50 am
It’s important to make a distinction between “brand” and “brand equity.” In Kris’ example above (comment #1), she is measuring the perception of the “brand,” not “brand equity.” Measuring brand equity is much more difficult because, as Jonathan says (comment #5), the value of the brand is embedded in the company’s performance. That will be reflected in all kinds of metrics involving employees, customers and sales. I think you need to determine what you’re trying to achieve by building brand equity and then measure that, as long as you are trying to achieve something reasonable, like a shortened sales cycle or increased customer retention. In addition, I think most people would agree that increased future cash flows, as Gary Ward suggests above (comment #4), would certainly be a desired outcome of increased brand equity. This is where Reichheld’s Net Promoter Score comes into the picture. How loyal are your current customers, how many more can you acquire and what kind of future cash flows can you expect to generate?