CHAPTER 8: DEVELOPING A BRAND EQUITY MEASUREMENT AND

MANAGEMENT SYSTEM

1. Learning Objectives:
After reading this chapter, you should be able to
1. Describe the new accountability in terms of ROMI.
2. Outline the two steps in conducting a brand audit.
3. Describe how to design, conduct, and interpret a tracking study.
4. Identify the steps in implementing a brand equity management system.

2. List of Contents: Chapter 8 Developing a Brand Management and

Measurement System

1. The New Accountability

2. The Brand Value Chain

2.1 Value Stage
2.2 Implications

3. Designing Brand Tracking Studies

3.1 What to Track
3.2 How to Conduct Tracking Studies
3.3 How to Interpret Tracking Studies

4. Establishing a Brand Equity Management System

4.1 Brand Equity Charter
4.2 Brand Equity Report
4.3 Brand Equity Responsibilities
3. Description of Contents:

 Brand Equity Measurement System

In this chapter we will consider how to develop and implement a brand equity measurement
system. A brand equity measurement system is a set of research procedures designed to
provide marketers with timely, accurate, and actionable, information on brands so they can make
the best possible tactical decisions in the short ran and strategic decisions in the long ran. There
are three steps: Conducting brand audits, Developing tracking procedures, Designing a brand
equity management system.

1. The New Accountability

Virtually every marketing dollar spent today must be justified as both effective and efficient in
terms of “return of marketing investment” (ROMI). This increased accountability has forced
marketers to address tough challenges and developed new measurement approaches.

Some observers believe that up to 70% (or even more) of marketing expenditures may be
devoted to programs and activities that cannot be linked to short-term incremental profits, but yet
can be seen as improving brand equity.

2. The Brand Value Chain: Broader perspective than just the CBBE model

The brand value chain is a structured approach to assessing the sources and outcomes of brand
equity and the manner by which marketing activities create brand value. The brand value chain
has several basic premises.

Figure 1: Brand Value Chain

2.1 Value Stages

Brand value creation begins with marketing activity by the firm.

2.1.1 Marketing program investment:

Any marketing program investment that can contribute to brand value development, intentionally
or not, falls into the first value stage.

2.1.2 Program quality multiplier

o The ability of the marketing program to affect customer mind-set will depend on its
quality.

o Quality of marketing program must be clear, relevant, distinct, and consistent.

2.1.3 Customer Mind-Set:

In what ways have customers been changed as a result of the marketing program? How have
those changes manifested themselves in the customer mind-set? Five dimensions are important
measures of customer mind-set according to CBBE model. They are:

 Brand Awareness
 Brand Associations
 Brand Attitudes
 Brand Attachment
 Brand Activity

2.1.4 Customer multiplier

o The extent to which value created in the minds of customers affects market
performance depends on factors beyond the individual customer. Three such factors
are: competitive superiority, channel and other intermediary support, and customer
size and profile.

2.1.5 Market performance:

How do customers respond in the marketplace? We saw in chapter 2 CBBE model. The
value of brand creates in the marketplace is most likely fully reflected in share-holder value.

2.1.6 Market multiplier/ Investor Sentiment Multiplier

o The extent to which the value generated through brand market performance is
manifested in shareholder value.

o It depends on factors such as market dynamics, growth potential, risk profile, and
brand contribution.

2.1.7 Shareholder value:

Based on the current and forecasted information about a brand, as well as many other
considerations, the financial market place formulates opinions and assessments that have very
direct financial implications for the brand value. Three particularly important indicators are the
stock price, the price/earnings multiple, and overall market capitalization for the firm.
3. Designing Brand Tracking Studies

Tracking studies collect information collected from consumers on a routine basis over time

 Often done on a “continuous” basis

 Provide descriptive and diagnostic information

3.1 What to Track

Customize tracking surveys to address the specific issues faced by the brand -

 Product-brand tracking

 Corporate or family brand tracking

 Global tracking

3.2 How to Conduct Tracking Studies

 Whom to track (current and potential target customer)

 When and where to track (continuous and frequently)

 How to interpret brand tracking(reliable and sensitive)

3.3 How to Interpret Tracking Studies

 To yield actionable insights and recommendations, tracking measures must be as reliable

and sensitive as possible.
 To develop sensitive tracking measures, marketers might need to phrase questions in a
comparative way.
 Appropriately defined and tested targets can help management benchmark against
competitors and assess the productivity of brand marketing teams.
 Marketers may also have to design these targets with allowance for competitive
considerations and the nature of the category.
 One of the most important tasks in conducting brand tracking studies is to identify the
determinants of brand equity.
 Similarly, marketers must identify the marketing activities that have the most effective
impact on brand knowledge, especially consumer exposure to advertising and other
communication mix elements.
 Carefully monitoring and relating key sources and outcome measures of brand equity
should help to address these issues.

4. Establishing Brand Equity Management System

A brand equity management system is a set of organizational processes designed to improve the
understanding and use of the brand equity concept within a firm by the:

 Brand equity charter

 Brand equity report

 Brand equity responsibilities

4.1 Brand Equity Charter

 Provides general guidelines to marketing managers within the company as well as key
marketing partners outside the company. It should be updated annually.

 Brand Equity Charter Components

 Define the firm’s view of the brand equity

 Describe the scope of the key brands
 Specify actual and desired equity for the brand
 Explain how brand equity is measured
 Suggest how brand equity should be measured
 Outline how marketing programs should be devised
 Specify the proper treatment for the brand in terms of trademark usage, packaging, and
communication.

4.2 Brand Equity Report

 Assembles the results of the tracking survey and other relevant performance measures.

 To be developed monthly, quarterly, or annually.

 Provides descriptive information as to what is happening with the brand as well as

diagnostic information on why it is happening.

4.3 Brand Equity Responsibilities

 In this section we consider internal issues of assigning responsibilities and duties for
properly managing brand equity, as well as external issues related to the proper roles of
marketing partners. To develop a brand equity management system we need to-

 Organizational responsibilities and processes that aim to maximize long-term brand

equity.

 Establish position of VP or Director of Equity Management to oversee implementation of

Brand Equity Charter and Reports.

 Ensure that, as much as possible, marketing of the brand is done in a way that reflects the
spirit of the charter and the substance of the report.

The branded firm should-

a. Oversee Brand Equity

b. Organize Design and Structures

c. Manage Marketing Partners

Case

Case 8.1: MILLWARD BROWN

Millward Brown has led the innovation and implementation of tracking studies for the last 30
years. In general, the firm interviews 50–100 people a week and looks at the data with moving
averages trended over time. Then it relates specific marketing activity and events to the trend
data to understand their impact. Client brands are typically compared to a competitive set to
determine relative performance within the product category. Millward Brown collects data on a
variety of topics as dictated by the client needs. Modules include brand equity (current and future
potential), brand positioning, value perceptions, awareness and response to marketing
communications and in-store promotions, consumer profiles, and so on. The survey data is
analyzed in conjunction with a variety of other data sources (traditional and social media, search
data, sales data, etc.) to provide guidance on improving marketing ROI. Interviews on average
run from 15 to 20 minutes in length (on the Web, the phone—both landline and mobile—and in-
person in emerging markets). A 20-minute weekly interview with 50 nationally representative
consumers can cost roughly $300,000 annually for a typical consumer product, depending on
modality.
Source: Nigel Hollis, executive vice president and chief global analyst at Millward Brown,
personal correspondence, 6 October 2011.

Collected From: “Strategic Brand Management: Building, Measuring, and Managing Brand
Equity”, Kevin Lane Keller, 4th Edition, PEARSON

Case 8.2 The Role of Brand Personas

To crystalize all the information and insights they have gained about their target market(s),
researchers can employ personas. Personas are detailed profiles of one, or perhaps a few, target
market consumers. They are often defined in terms of demographic, psychographic, geographic,
or other descriptive attitudinal or behavioral information. Researchers may use photos, images,
names, or short bios to help convey the particulars of the persona. The rationale behind personas
is to provide exemplars or archetypes of how the target customer looks, acts, and feels that are as
true-to-life as possible, to ensure marketers within the organization fully understand and
appreciate their target market and therefore incorporate a nuanced target customer point of view
in all their marketing decisionmaking. Personas are fundamentally designed to bring the target
consumer to life. A good brand persona can guide all marketing activities. Burger King’s brand
persona is a cool, youngish uncle, who— although somewhat older than the chain’s early-teens
male target—is younger than their parents. The corresponding brand voice appears online, in ads
and promotions, and wherever the brand expresses itself. Although personas can provide a very
detailed and accessible perspective on the target market, it can come at a cost. Overly focusing
on a narrow slice of the target market can lead to oversimplification and erroneous assumptions
about how the target market as a whole thinks, feels, or acts. The more heterogeneity in the target
market, the more problematic the use of personas can be.
To overcome the potential problem of overgeneralization, some firms are creating multiple
personas to provide a richer tapestry of the target market. There can also be varying levels of
personas, such as primary (target consumer), secondary (target consumer with differing needs,
targets, goals), and negative (false stereotypes of users).

Sources: Allen P. Adamson, Brand Digital: Simple Ways Top Brands Succeed in the Digital Age
(New York: Palgrave-MacMillan, 2008); Lisa Sanders, “Major Marketers Get Wise to the
Power of Assigning Personas,” Advertising Age, 9 April 2007, 36; Stephen Herskovitz and
Malcolm Crystal, “The Essential Brand Persona: Storytelling and Branding,” Journal of
Business Strategy 31, no. 3 (2010): 21. For additional information on storytelling, see Edward
Wachtman and Sheree Johnson, “Discover Your Persuasive Story,” Marketing Management
(March/April 2009): 22–27.

Collected From: “Strategic Brand Management: Building, Measuring, and Managing Brand
Equity”, Kevin Lane Keller, 4th Edition, PEARSON

Questions:
1. What do you see as the biggest challenges in conducting a brand audit? What steps would
you take to overcome them?

2. Pick a brand. See if you can identify the Brand Equity Charter Components for it?

3. Develop a question for KFC’s brand tracking survey? How might this tracking survey
differ from those used for other products?

4. While interpreting a brand tracking study, what are the main problems that you need to
look at? How would you overcome each challenge?