Brand Equity Measurement
by Brad VanAuken

Read all about the Brand Equity Measurement below. When you've read enough, contact us to talk about how we can put these insights to work for you.

Measuring Brand Equity  |  Brand Awareness  |  Accessibility  |  Value |  Relevant Differentiation  |  Emotional Connection  |  Brand Equity in the Insurance Industry  | 

Measuring Brand Equity

I am often asked about brand equity measurement. This is one of my favorite topics. I have developed an omnibus cross-industry brand equity study and we are currently conducting an insurance industry brand equity study.

When people talk about measuring brand equity they usually mean one of two things: (a) measuring the value of the brand as a financial asset or (b) measuring brand equity.

Measuring the financial value of the brand usually converts the CFO to a staunch brand supporter and gets the organization to view brands as assets that must be maintained, built and leveraged. In his book, Managing Brand Equity, David Aaker writes about several approaches to valuing a brand as an asset. Interbrand has a methodology to help public and private companies measure their brands' values. Financial World, a recently defunct publication, annually ranked top brands by their financial values (estimating the Coca-Cola brand to be worth $48 billion in 1997).

Measuring brand equity helps you to maintain, build and leverage brand equity (that is, it helps you to understand how to increase both the “A” and the “R” in the brand's “ROA” ). I will spend the remainder of this newsletter expounding on (b) measuring brand equity.

To better understand how to build brand equity we must first agree to a definition of brand equity. My favorite definition is as follows: brand equity is the value (positive and negative) a brand adds to an organization's products and services. Brand equity may ultimately manifest itself in several ways. Three of the most important ways are as the price premium (to consumers or the trade) that the brand commands, the long-term loyalty the brand evokes and the market share gains it results in.

Our brand equity model is most interested in one thing, moving consumers from brand awareness and brand preference to brand insistence. To do this, we have identified the major factors that lead to consumer brand insistence. We call them brand equity drivers. The chart on the next page highlights these brand equity drivers.

Brand Awareness

First, consumers must be aware that there are different brands in the product categories in which your brand operates. Next, they must be aware of your brand. Ideally, your brand should be the first one that comes to their minds within specific product categories and associated with key consumer benefits. Consumers should be able to identify which products and services your brand offers. They should also be able to identify which benefits are associated with the brand. Finally, they should have some idea of where your brand is sold.

Accessibility

Your brand must be available where consumers shop. it's much easier for consumers to insist upon your brand if it is widely available. Slight brand preference goes a long way toward insistence when the brand is widely available. The importance of convenience cannot be underestimated in today's world.

Value

Does your brand deliver a good value for the price? Do consumers believe it is worth the price? Regardless of whether it is expensive or inexpensive, high end or low end, it must deliver at least a good value.

Relevant Differentiation

This is the most important thing a brand can deliver. Relevant differentiation today is a leading-edge indicator of profitability and market share tomorrow. Does your brand own consumer-relevant, consumer-compelling benefits that are unique and believable?

Emotional Connection

First, the consumer must know your brand. Then he or she must like your brand. Finally, the consumer must trust your brand and feel an emotional connection to it. There are many innovative ways to achieve this emotional connection„from advertising and the quality of front line consumer contact to consumer membership organizations and company-sponsored consumer events.

As you measure brand equity, keep the following points in mind:

• Include measures of awareness, preference, accessibility, value, relevance, differentiation, vitality, emotional connection, loyalty and insistence.
• Include both behavioral and attitudinal measures (especially for loyalty).
• Tailor the study to your product categories and industry (especially benefit structure)
• Include competitive comparisons

Some of the more telling measures include the following:

• Top-of-mind unaided awareness (first recall)
• Position in the consideration set
• Emotional connection to the brand
• Perceived brand vitality
• Perceived points of difference (open ended question)
• Unique delivery against key benefits

As you develop your brand equity measurement system, keep these questions in mind:

• Do you have a profound understanding of your brand's consumers?
• Do you know what drives your brand's equity?
• Have you established and validated equity measures for your brand?
• Have you set objectives against these measures?
• Do key decision-makers regularly see results against these measures?
• Are people held accountable for achieving brand objectives?

Brand Equity in the Insurance Industry

The findings from our comprehensive brand equity study of the insurance industry has implications for many industries. Here is what we found:

• While there are over 100 insurance brands whose names people have heard of, few achieve widespread top-of-mind awareness (first recall).


• The insurance industry is highly fragmented with a low dominance of usage and preference by a few brands.


• Very few companies are aggressively claiming relevant differentiating benefits in consumer communication. The few that are, are rapidly gaining market share (witness GEICO which is claiming price/value leadership in auto insurance with substantial advertising support).


• Prices/rates are cited as one of the top differentiating benefits, suggesting that the category is commodity-like for many consumers.


• While behavioral loyalty is high, attitudinal loyalty is much lower, indicating a consumer's propensity to switch companies when the switching becomes easier (something the Internet might facilitate).


• Emotional connection to insurance brands is very low. Less than one in five consumers say that their insurance brand has never disappointed them. (The top brand on this measure disappointed two thirds of its customers at some time. All brands below the top eight on this measure disappointed over 90% of their customers.)


• Our analysis of the most powerful differentiating benefits indicate that many of them lie with the way in which insurance agents/representatives and the claims adjusters interact with customers.


• Our data would indicate that the industry is ripe for consolidation or strong niche marketing.


• Three opportunity areas emerged for insurance companies:


• Reinventing the process by which they interact with their consumers.
• Claiming a highly relevant, unique point of difference (focusing on a product category, a consumer benefit or both).
• Increasing emotional connection with their consumers.

The study provides the following lessons that are applicable to other industries:

• Strong, recognizable brand names and logos are important, but the brands behind those trademarks must stand for something unique and important in consumer's eyes. What does your brand stand for?


• When price becomes the major point of difference in an industry, consolidation will occur. The companies that are most likely to succeed in this environment (other than the acquirers) are those that aggressively take ownership of relevant points of difference and redesign themselves to consistently deliver against those points of difference.


• The importance of the customer points of contact to strong brands can not be underestimated. Aligning these with your brand's promise is critical. This may require redesign of your hiring, training, performance management, recognition and rewards and other HR practices. It may also require a redesign of your customer service processes.


• Companies that are market driven, truly caring about their consumers and constantly changing their products and services to meet changing consumer needs, will succeed at the expense of companies that are purely sales driven.