Strategic Brand Management Chapter 10

8/3/2019 Strategic Brand Management Chapter 10

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10.1

CHAPTER 10:

MEASURING OUTCOMES OF BRAND EQUITY:

CAPURING MARKET PERFORMANCE

Kevin Lane Keller

Tuck School of Business

Dartmouth College


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10.2

Measuring Brand Equity

Multi-dimensional concept Many different measures required

The ultimate value of a brand depends on the

underlying components of brand knowledgeand sources of brand equity


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10.3

Comparative Methods

Brand-based comparative approaches Marketing-based comparative approaches

Conjoint analysis


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10.4

Brand-Based Approaches

The marketing element under consideration isfixed.

Consumer response is examined based on changes

in brand identification. Application example:Blind testing

Advantage:Isolates the value of the brand

Disadvantage:The totality of what is learned dependson how many applications are examined.


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10.5

Marketing-Based Approaches

The brand is held fixed and consumer response isexamined based on changes in marketing programs.

Applications:Explore price premiums effect on

switching, consumer evaluations of marketingactivities, brand extensions, etc.

Advantage:Ease of implementation

Disadvantage:Difficult to determine whetherconsumer responses are caused by brandknowledge or generic product knowledge


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10.6

Conjoint Analysis

A survey-based multivariate technique that enablesmarketers to profile the consumer decision process withrespect to products and brands

Helps researchers determine the trade-offs consumersmake between brand attributes

Applications:Assess advertising effectiveness and brandvalue; analyze brand/price trade-off

Advantage:Allows for different brands or different aspects

of the product to be analyzed simultaneously Disadvantage:May violate consumers expectations based on

what they already know about brands


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10.7

Holistic Methods

Attempt to place an overall value on the brandin either abstract utility terms or concrete financialterms

Net out various considerations to determine theunique contribution of the brand

Holistic methods:

Residual approaches

Valuation approaches


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10.8

Residual Approaches

Examine the value of the brand by subtractingconsumers preferences based on physical product

attributes alone from their overall brandpreferences

Advantage:Useful benchmark for interpretingbrand equity, especially from a financially orientedperspective

Disadvantage:Static view. Limited diagnostic valuefor strategic decision making


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10.9

Valuation Approaches

Attempt to place a financial value on brand equityfor accounting purposes

Useful in cases of mergers and acquisitions, brandlicensing, fund raising, and brand management

decisionsValuation approaches:

Accounting background

Historical perspectives General approaches

Interbrands brand valuation methodology


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10.10

Accounting Background

Intangible assetsare typically lumped under theheading ofgoodwilland include things such aspatents, trademarks, and licensing agreements,

as well as softer considerations such as theskill of the management and customer relations.

In an acquisition, the goodwill item oftenincludes a premium paid to gain control, which,in certain instances, may even exceed the valueof tangible and intangible assets.


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10.11

Historical Perspectives

In Australia Rupert Murdochs News Corporationincluded a valuation of some of its magazines on itsbalance sheets in 1984.

British firms used brand values primarily to boost theirbalance sheets.

In the United States, generally accepted accountingprinciples (blanket amortization principles) mean that

placing a brand on the balance sheet would requireamortization of that asset for up to 40 years. Such acharge would severely hamper firm profitability; as aresult, firms avoid such accounting maneuvers.


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10.13

Interbrands Brand Valuation

Assumes that brand value is the present worth of thebenefits of future ownership

Follows five valuation steps:

Market segmentation

Financial (role of branding) analysis

Demand (brand strength) analysis

Competitive benchmarking

Brand value calculation

Brand value calculation : Calculate the brand value as thenet present value (NPV) of the forecast brand earnings,discounted by the brand discount rate

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Strategic Brand Management Chapter 10