Brand measurement methods tend to differ as the experts strive to refine techniques and consultancies jockey to distinguish their services from the competition. However, for the purposes of clarity, we will try to assign names and define a few of the more common measurement techniques, discussing the merits and pitfalls of each in relation to evaluating your brand.

The basic measurements are awareness, equity, loyalty, share and value. Companies focus significant resources on evaluating all or some of these areas, but then confuse them or use one as a substitute for another, resulting in useless strategies and a lot of wasted resources.

We can also find several examples of this scenario in the bathroom cabinet. Colgate had high awareness, high equity, high loyalty and high sales (share). However, its consumer base had reached a level where it wasn't prepared to pay more for a tube of toothpaste. This inability of the brand to drive revenue earnings resulted in a limited brand value. To overcome this, Colgate introduced Colgate Total and convinced customers to trade up. Gillette demonstrated a similar strategy when it moved from Sensor to Sensor Excel, enabling it to charge up to US$ 9 for a razor.

But these are merely functional aspects of consumer evaluation. Koehn, whose recently published book Brand New deals largely with the value of consumer trust in developing and maintaining a brand, spoke passionately about the untold value of a loyal customer. To demonstrate her argument, she pointed to cell phones. "Think about customer acquisition costs. It costs a cell service provider up to US$ 100 to acquire a new customer. Since they have significant churn rates, they have to keep acquiring buyers by paying for them from their bottom line." Whereas if cellular service providers didn't lose 20 to 30% of their customers each year, acquisition costs would obviously drop, but the participation in add-on services would rise. "Therefore," she points out, "I might buy more services or features. I'd tell my friends about them. The value of capturing mind share and word of mouth is extremely powerful. We need to look at loyalty in a robust way."

So assuming your brand loyalty is working toward earnings, you have what is called brand value. Or as Shailendra Kumar, Head of Brand Valuation at FutureBrand describes brand value: "Basically it's the power of the brand to deliver an earning stream that is robust and generates shareholder value."

How is something as intangible as brand value actually measured? Each industry expert has his own set of methodologies based on the brand measurements outlined above, combined with the financial performance and projected future growth value. Most consultancies do not release the methodology or findings of their studies for public consumption, preferring instead to study the material internally and offer the result to clients in the form of overall knowledge or analyses of the competition.

So what is the brand owner expected to do with this information? "The overall value of measuring your brand is that it informs your strategy going forth. What you learn from the process is where your strengths and weaknesses lie and what forces are driving those strengths and weaknesses," says Parkhurst.

FutureBrand's Kumar agrees: "The financial value is not interesting on its own; it's what we can do to grow it that makes it interesting. [The process of benchmarking a brand's value] involves understanding where that value comes from and supporting those areas to grow the strength of the brand."

However, some experts argue that the margin of error in brand value measurement is too great to be useful in measuring success or failure of marketing campaigns. In response to this, Y&R's Frank points to the value placed on the brand during M&As and reminds us that when it comes to evaluating the success or failure of a marketing campaign all measures have some degree of error. "Distribution, pricing, competitive activity -- all are variable, but the more you can quantify brand value the better off the brand owners will be."

Kumar suggests that regular testing of your brand will lead to greater accuracy over all. "You can't use [these tools] to measure the effectiveness of individual marketing campaigns. It is much more robust when you measure a campaign or a series of campaigns over time -- yearly intervals would be an ideal frequency."

The benefit of tracking brand value at regular intervals is that one can conduct trending analyses and compare campaigns over time, against other indicators within the business. For instance as Jan Lindeman, Interbrand's Brand Valuation Director in London, cautions, "Brand value may go up because things are strong on the financial side but in the meantime you could be damaging your brand on the marketing end. For instance, the brand owner may cut R&D costs sending profits soaring short term but end up damaging the long term growth and stability of the brand overall. We can only prove the effects of these factors by tracking regularly."

It's a lot to grasp and certainly a lot to manage, but one thing all of the industry experts would likely agree on is that a better understanding of the power of the brand is paramount to guiding the brand owner to a long term strategy for managing and growing the business.    

[30-Jul-2001]