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How to Measure Brand Equity

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How to Measure Brand Equity

Brand Equity is Not for Sale

Hans Thoursie, Photographer, Copyright September 1, 2010, Stock.xchng

A brand is a logo, symbol, or name associated with a product. The impact that a brand has on consumer purchases or perceptions about a product is known as brand equity. The word equity indicates that an asset has been generated. In brand equity, the asset is intangible and is measured in terms of the value attributed by a consumer or potential consumer to the product or service. Brand equity translates into consumer goodwill and propensity to prefer or buy a branded product or service. How does one go about measuring this intangible known as brand equity? Take a look at the following considerations and action-steps.

Difficulty: Hard
Time Required: 90 Days

Here's How:

  1. Clarify Brand Equity Perspective Brand equity can be viewed from several different perspectives. The hard-line perspective is that of financial outcomes which examine price premium. That is, how much more will a consumer pay for a product or service that is branded over a product or service that is generic? A softer perspective is that of brand extension where consideration is given to the value that a brand lends to the introduction of other products, or considers the reverse dynamic of the impact of a new product or service on the existing brand. This following steps address a third perspective - customer-based.

  2. Determine Brand Equity Research Goals Brand equity market research falls into one of three camps: Tracking, exploring change, and/or extending brand power. Market research that focuses on tracking makes comparison among competitive brands or products against a benchmark. When exploring change is the research goal, customer brand attitude is tapped regarding branding decisions that might result in repositioning or renaming products or services. A deeper examination of extending brand power is carried out when substantive additions to a brand are considered. Each of these research goals requires a different tact.

  3. Understand Customer Brand Attitude A customer-based perspective in the measurement of brand equity focuses on the experiences that consumers have with a brand. The stronger the brand, the stronger the customer's attitude toward the products or services associated with the brand. When customers experience a product or service, they gauge overall brand quality and tend to infer certain brand attributes. If these experience measures are positive and endure over time, brand loyalty typically results. Today, customers can -- and do -- easily communicate the strength of their brand attitude to others.

  4. Identify Brand Equity Components to Measure Brand awareness, brand reach, and brand image association are aspects of brand equity that may not be closely associated with consumer experience. These measures of brand equity may reflect the impact of traditional advertising campaigns, and the influence of social or interactive media. Brand awareness is an indicator of how branding efforts spotlight a product or service. Brand reach indicates how far and wide that spotlight shines. And brand image association reveals what the brand promises and what it stands for in the eyes of consumers.

  5. Measure Perceived Brand Differentiation Product differentiation is a lynchpin for brand loyalty, confidence in a brand, and the potential for brand switching. Customer perceptions about brand differentiation tend to be strongest when actual product or service experience has occurred, but certainly brand differentiation is not immune to the influence of advertising. Differentiation may float on product or brand recommendations in social media rather than any personal experiences with a brand. Because differentiation is so susceptible to social influence, it lends itself to measurement across multiple media channels.

  6. Qualitative and Quantitative Approaches to Brand Equity Data Ideally, brand equity measurement will include both qualitative and quantitative approaches. Focus groups can provide a good forum for exploring customer perceptions and motivation. Conjoint analysis can reveal key consumer decision-making processes. Effective measurement of brand equity is critical to the development of brand strategy and ultimately supports return-on-investment analysis. Which brings us full circle, back to the financial outcomes perspective on brand equity.

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