Brand InEquity – Making Brand Equity Work


I recently came across an interesting Q&A with Professor Byron Sharp from the Ehrenberg-Bass Institute for Marketing Science. Byron was commenting on the validity, or lack thereof, of various brand equity measurement approaches: 

Professor Byron Sharp Talks Brand Equity

Interviewer:
But you don’t like these brand tracking services ? 

Byron:
There is an industry that provides special scores on brands, based on surveying customers.  These services mostly claim to be measures of things like brand loyalty or brand equity.  They usually have exotic names like commitment model, brand esteem, brand voltage, brand asset evaluator….Essentially they claim to be able to predict whether the brand is about to gain or lose market share. 

I think any claims made for these proprietary products should be subject to independent examination.  It’s the job of academics to do this testing. Some of the claims are so extraordinary, and so important that they deserve to be checked out.  If they turn out to be true that would be fabulous. 

Interviewer:
And do these proprietary brand health surveys, these metrics, work? 

Byron:
Well that’s just the thing.  No-one knows… 

This is pretty strong stuff. It’s an article of faith for almost all well-trained Marketers that building your brand’s equity is one of the most important things that you can do. But, the question is: is brand equity really important and if so, how are we doing at measuring it? 

How Are Marketers Measuring Brand Equity?

Brand Equity — Important or Not ?

I have to admit, it’s hard to summon any kind of rational argument that Marketers shouldn’t care about brand equity. Fundamentally, Marketing is about understanding consumer needs–articulated or not–and then delivering and communicating products and services that meet these needs better than competitors. 

If this is the core of Marketing, then it’s self-evident that brands will want to stand for the equities associated with the consumer need and how their brand addresses it better than competition. Can anyone seriously argue this point? I think not. Rather, I think Professor Sharpe’s point is not that brand equity is unimportant, but that people are just not very good at measuring it. 

Brand Measurement: Linking Equity & Consumer Need

What’s Wrong With Equity Measurement

As Professor Sharp points out, there are many different approaches to measuring brand equity or brand health. But, I have two fundamental issues with virtually all of them: 

  1. How Advertising & Media Exposure Impacts Brand Equity — On the front end, Marketers develop advertising and other communications programs to convince consumers that their brand is better than competitors. Hence, they need to understand whether and how these programs are working. Only by understanding this can they optimize advertising and media plans to improve equity impact. Currently, equity surveys generally tell us whether equity scores went up, down or were flat. But, as for what caused the changes, who knows? There’s no easy way today to see the cause and effect relationship between advertising and media exposure and changes in brand equity.
  2. How Brand Equity Impacts Business Results — On the back end, wouldn’t it be great to know that there’s  actually a relationship between brand equity and business results? It’s just assumed by most CMO’s that higher equity scores are better. I too assume they are, but then where’s the evidence? What’s needed is a more direct cause and effect quantification of how changes in brand equity actually cause changes in sales or market share. This would go a long way toward helping inform the debate that CMO’s often have with their CEO’s and CFO’s as to the value of “brand” marketing. And today, this is sorely lacking.

Brand Equity & Market Share

What’s Needed: An End-to-End System

In talking to many senior level Marketers, I hear over and over again that people are looking for an end-to-end system that links key communication and business metrics together. They want to: 

  • Link copy testing scores to real-time in-market tracking of advertising and media effectiveness
  • Connect in-market tracking results to brand equity scores
  • Have brand equity metrics that connect to revenue and share outcomes

CMO's: Chartering The Path From Brand Equity to Business Results

End-to-End Communications — Just a Dream ?

Is this kind of system possible ? Time will tell, but I think it’s within sight. The advent of single source panels which connect what people watch and what people buy at the household level offer tantalizing possibilities.

Until then, Marketers should continue to focus on building brand equity, but keep in mind that higher equity scores are not an end in and of themselves. They ultimately need to drive better business results–otherwise who really cares about brand building? 

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4 Responses to Brand InEquity – Making Brand Equity Work

  1. Chris Cowan says:

    Randall,

    Can’t wait to talk to you about LOYAL3, the first company that literally marries BRAND and EQUITY. We are getting early interest from the top names in beverage, telecom, hotel, cruise, restaurant and other industries. The concept of the “Customer-Owner” is very compelling. Superior economics, loyalty, referral and tenure.

    Chris Cowan
    SVP Sales
    LOYAL3
    chris@loyal3.com

  2. […] This post was mentioned on Twitter by gail_nelson and Peter Bray, Randall Beard. Randall Beard said: Brand InEquity – What's Wrong with Equity Tracking http://lnkd.in/QVhFnM […]

  3. Judy Bodner says:

    Thank you for another great post, Randall – and you’ve hit the nail on the head: the value of brand equity is in its relation to revenue. This is well illustrated in Marketing Metrics – The Definitive Guide to Measuring Marketing Performance, (by Paul Farris, Neil Bendle, Phillip Pfeifer, David Reibstein), where the various models for calculating brand equity, (described as “strategically crucial, but famously difficult to quantify”!) are tied in some manner to market share, prices that customers are willing to pay, and customer retention – key revenue drivers.

  4. thoding says:

    Brand Equity is needed in product marketing, brand equity due to give its own character to your product. With customer-based brand equity approach to your product will give the perception, attention and response inherent in minds of consumers.

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