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Managing Brand Equity – Best Global Practice Assessment

Even though there are several definitions of brand equity and multiple methods of measuring it, one thing is
accepted as a fact by all marketers, it is very difficult to measure. Brand equity has a qualitative and quantitative
component, both of which have been source of interest for academicians and marketers for a long time, but until
now no widely accepted forms of measurements for both have been developed.

Brand equity, simply put, is the tangible and intangible value of a brand driven by its recognisability and
perception. The more positive the recognition and perception levels are, the stronger the brand equity is. The
opposite is necessarily not true, but perception has a stronger impact on brand equity, so more negative the
perception lower is the equity. A brand with low recognition levels does not necessarily have lower brand equity. It
is at a stage where brand equity formation is sub-optimal because enough people do not know enough about the
brand to have any opinions about it. This is common for all brands in the early launch stage of their life cycles.
This becomes a challenge when a brand fails to build up enough recognition levels to create a platform for the
initial formation of brand equity. This, in most instances, can be driven by marketing and communication efforts
and influenced by direct brand experience.

Due to the challenges of measuring brand equity, it is equally difficult to manage it also. For many organisations
and marketing leaders, the question essentially becomes:

What are we managing?

What are we supposed to manage?

The principles of successful brand equity management start with a strong sense of understanding of the brand’s
standings in the hearts and minds of the consumer. Even though it is difficult to measure the quantitative impact of
brand equity on brand financials and the softer aspects of status, luxury, warmth, prestige etc., it is still important
that brand managers know what their brands stand for in isolation and also vis-à-vis competition.

It is important to highlight at this stage that a measurement of the current state of brand equity should not have an
unnaturally high level of influence on what the brand should be or should stand for. The current state assessment
is a check to establish how close or how far are organizations and marketing leaders from the goal of establishing
the brand on the intended positioning platform. The current state assessment acts a crucial guideline for
developing the strategy for brand equity development and management.

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Global organisations are increasingly putting into practice research driven frameworks for measuring and
managing brand equity. In the majority of these research programmes, both exploratory and validation, the
objective is to explore, measure and monitor the brand’s standings on key positioning parameters, which are core
to the brand’s identity. In terms of best practice and for giving key organisational stakeholders a compass for the
brand’s direction, annual benchmarks and targets are being applied to measure the brand’s strength on these
key positionings.

There are multiple ways by which the brand’s performance is being assessed, some of which include:

Setting an annual target and measuring the brand’s movement towards this number on a continuous
basis
Measuring quarter-on-quarter performance improvement and also with the same quarter last year
Measuring the difference between the brand’s standing with those of its nearest competitor

In the absence of any scientifically proven way of measuring the softer side of brand equity, comprehensive
research around consumer articulations of what they think, feel and express about different brands are the next
best bet.

The fact that measuring brand performance on key positioning parameters is now an established best practice in
majority of organisations is a positive development. But, the primary aspect that is missing in these brand equity
tracking and measurement programmes is the ability to take on board the evolution of the brand. It is a measured
hard truth that brands evolve continuously in the eyes of the consumers, driven by proactive brand building efforts
and by consumer reactions to marketing and communication initiatives, and influenced by multiple external events
often beyond the brand’s control. Any form of brand equity management should have brand evolution at the heart
of its strategy.

In addition to evolution, brand equity is continuously influenced by some critical factors, which include category
and market fragmentation and evolution, competitor activity, level of brand competitiveness, relevance, changing
consumer tastes and preferences and effectiveness of marketing and communication channels. Keeping in mind
these influencing factors, brand equity management can be categorised under two broad heads:

Proactive management: Understanding and exploring trends that will influence the brand’s positioning
and consequently equity, create new positioning platforms for influencing brand equity to be in line with
current and future strategy, refresh positioning to be in line brand identity, refresh identity and focus on
account of mergers and acquisitions, refresh positioning to be in line with new launches, extensions etc.
and creating marketing and communication campaigns that focus on strengthening brand equity
Reactive management: Marketing and communications campaigns designed to counter competitor
encroachment on core brand positioning territory, short or medium term change in brand focus (due to
M&A activity, expansion into new categories or geographical markets and launch of new brand
extensions), address decline in sales and revenues, decline in brand relevance due to category evolution
and also short term address of medium or long term neglect in proactive brand equity management

These distinctions between proactive and reactive brand equity management drive best and sub-optimal practices
and processes towards the same. In short, the primary reason for organisations to engage in best-in-class or
sub-optimal brand equity management is the presence or lack of understanding. There is a fundamental aspect
that leads to this incomplete understanding – brand equity is a long-term aspect and not a short or medium-term
one.

Any organisation that has successfully managed and strengthened equity of its brand has an in-depth
understanding of the long-term and continuous nature of the task involved and also the mindset change that is
required. The essence of the whole process is that organizations and marketing leaders need to have superior
brand management practices in place to influence and strengthen brand equity. Ultimately, strong brand equity is
an outcome of best-in-class, consistent brand management practices over a sustained period of time.

As mentioned earlier, numerous global organisations have implemented research-driven brand equity

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measurement and monitoring programmes. There are several industry recognised and popular research
frameworks, but the common thread through these programmes is the emphasis on capturing brand performance
on metrics categorised under three broad heads:

Awareness (e.g. extent of awareness, likelihood of recall in different situations, familiarity, presence etc.)
Category and brand involvement (e.g. purchase behaviour, purchase frequency, brand repertoire,
recency of purchase, brand loyalty etc.)
Brand image (e.g. perceptions on benefits, uniqueness, relevance, popularity, quality, bonding, esteem,
prestige, credibility, consideration, superiority, feelings etc.)

For any such research programme to work effectively it should be designed to be relevant and future focused and
the inputs for measurement a true reflection of the brand’s current and proposed future standing in the category.
The importance of getting these brand metrics measured accurately is very high because these programmes are
the only recognisable and standardised forms for measuring brand equity. Additionally, brand performance results
are increasingly getting integrated into brand planning and management cycles, advertising and marketing
communication budgets are being decided and broader strategic brand management and strategy alternatives are
being highly influenced.

Going back to the core challenge of establishing a best-in-class brand management programme that leads to a
continuous, future looking and realistic strengthening of brand equity, there are five key aspects that organisations
need to keep in mind:

Ability to break down brand strategy into elements that influence brand equity: Brand strategy is a broad
domain that encompasses setting the current scope and future direction for the brand. Consequently, many of the
components do not directly or indirectly influence brand equity. Organisations need to remember all the time that
brand equity is an outcome of doing other things correctly over a long period of time. From a strategy perspective,
it is only the management of the brand’s positioning in the market, which should influence brand equity. Other
elements of brand strategy, which include brand architecture, brand guardrails, operating models, go-to-market
models, innovation strategy, visual identity design and brand identity do not influence brand equity directly. They
help establish a sharp positioning, which is required for a strong brand equity standing.

It is important to correctly frame the brand’s positioning that is intended to influence brand equity. This framework
should then be consistently used internally within the organisation and also externally with all service providers,
partners, management consultancies and marketing agencies working with the organisation. Essentially this
means a clear and standardised articulation of the brand’s positioning in strategy briefs, creative briefs, PR briefs,
research briefs, sponsorship briefs and also any form of digital and social communication briefs.

The work being done across these multiple marketing and communication channels should all be focused towards
a synergistic target of strengthening brand equity. Internal and external organizational alignment is critical to
extract maximum impact from marketing and communication campaigns.

Consistent disciplined approach rather than a sporadic reactive one: There are always going to be situations
when urgent brand building initiatives need to be implemented. But to be able to have a sustained positive impact
of brand equity, the underlying brand building and management efforts need to be consistent and disciplined. For
example, a continued emphasis on a brand’s key differentiating elements in every form of marketing and
communication initiative over a long period of time leads to positive impact on brand equity. By nature, the
concept of building brand equity is one that requires sustained efforts over time. Recognition levels may get
ramped up quickly as distribution expands and visibility increases but brand perception needs time to build up.

Building positive brand perception requires the brand to move up and head in the brand funnel. From an
awareness driven initial existence, the brand will now look at generating repeat experiences, building preferences,
creating positive perceptions and creating sustained loyalty. All these aspects will impact the development and
sustenance of brand equity. To be able to develop any of these requires a sustained effort on part of the brand
management team and the C-suite.

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To create highly impactful experience, the brand needs to consistently deliver or exceed expectations. It needs to
generate a uniform experience across multiple touchpoints. For building preference, there needs to be a
consistent, differentiated and impactful series of marketing activities and brand communications across multiple
touchpoints. Perceptions develop in two ways – through direct experience and through indirect brand personality
development. Both of these require long and sustained efforts to enable the brand to cut through the clutter and
enter the purchase set.

Loyalty is even more challenging and time consuming to develop and requires a superior performance and
perception that has the ability to withstand continuous competitive pressure, changing tastes and preferences and
rapid category and segment evolution.

Consequently, building and managing equity requires patience and continuous, sustained involvement from the
C-suite, marketing leaders and all functions across the organization.

Knowing, predicting and creating consumer trends: It is a known fact that knowing the customer is critical for
the success of any brand. But in today’s hypercompetitive world, it is about knowing not only the present
customer, but also the future one. An excellent example of this in practice is the fashion and luxury industry. All
successful brands in this segment have evolved by continually predicting or creating trends. Fashion brands
create products fashion consumers want to wear “next”, while luxury brands create products that people want to
be able to aspire to as the next level of prestige and status. This continuous ability to create future trends comes
from an in-depth understanding of evolving needs and preferences. Cultural, socio-economic, geopolitical, lifestyle
and competitive trends are all crucial to understand effectively in today’s market places.

Understanding of factors that impact current behavioural trends and will shape and influence future ones is critical
for developing positioning platforms for the brand. The more the differentiated positioning is in line with evolving
needs and preferences, higher the chances of brand success. This in turn will positively impact brand equity.
Trend analysis has slowly become an important strategic tool in brand strategy formulation and will continue to
play a significant role in guiding organisational level innovation processes and for future evolution of brands.

Going beyond numbers: Though it is important to measure and monitor brand standings on key positioning
attributes and other metrics that drive equity, brand managers should have the ability to go beyond numbers. This
is critical because of the inherent, incalculable and soft nature of some of the aspects that drive brand equity.
More recently, factors like the emergence of ecommerce, social and digital marketing, non-linear and complicated
purchase processes and the explosion in word-to-mouth marketing and social media have made brand equity
building a complicated and challenging task. This in turn has impacted the level of confidence that marketers have
on typical brand metrics and their ability to create a true picture of the brand’s performance.

A constant exploration of the consumers’ mindset, needs, preferences, tastes and beliefs is required to stay
ahead of the curve. The softer connotations of brand equity that get reflected like aspects like status, prestige,
power and appeal are strongly driven by brand touchpoints, connotations from the brand’s communications, who
it communicates to and how it communicates. Targeted and niche positioning is increasingly becoming a popular
practice among brands who want to operate in a specific segment of the broader market. For these brands, going
beyond the numbers is as important as reading the numbers.

Brands invest millions to create standardised experiences, and in many cases, at a premium or super-premium
level, customised experiences for each of the brand’s customers. Customer Relationship Management (CRM)
programmes will provide brands with the necessary inputs on how different initiatives are performing, but the real
measurement of brand performance will lie in the conversations that the customer had with the salesperson at the
showroom or the small word of gratitude expressed by a customer to an airline who just made his or her day.

Mass-market organisations are increasingly turning towards social listening to capture these conversations.
Online forums are rich with brand reviews, criticisms, recommendations and word-of-mouth marketing. The wealth
of big data, a majority of which is highly unstructured (like any form of human communication), is increasingly
being analysed by social listening tools and platforms.

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Understanding inflexion points: Successful brand management, which influences brand equity, knows and acts
on crucial inflexion points. Inflexion points are timelines in the brand’s history where strategic and crucial
decision-making can influence the brand’s journey and put it on a new path of success. This is crucial for
strengthening or maintaining strong levels of brand equity. Becoming staid after having reached a dominant
position in the segment you operate in is a sure sign of decline for a brand in the future. The ability to act on
inflexion points links up directly with a brand’s need to continually evolve.

Brand evolution is not a whimsical process but a very strategic one. All successful brands that have evolved to
broaden their offerings, refresh their positioning, enter new markets and operate in different segments, always
keep in mind the fact that their brand equity will be a driver of this evolution. But they also have strong realisation
of the fact that brand evolution can either strengthen or tarnish brand equity. Hence, selecting and acting on
specific inflexion points ensure long-term brand success and strengthen brand equity.

Conclusion: Keep a long-term lens on brand equity

Successful brand equity management requires a balanced and strategic understanding of the brand’s positioning
and direction in the categories and segments it operates in. Strengthening or maintaining brand equity requires
broad-based decision-making rather than focusing only on disparate elements. The most tangible and visible
aspect of brand equity management is the long-term nature of the practice and the fact that it requires continuous
investment.

Since strong brand equity is an outcome of superior brand management practices, it is critical that organisations
ensure that brand management is a centre of excellence within the organisation. Building brand equity is also a
strong, collaborative venture across the entire organization and across all stakeholders. A brand manager in
isolation cannot achieve it nor can it be achieved solely by the organisation. It requires uniform thinking and
consistent process-driven action by all stakeholders who are responsible for brand management – both internal
and external.

There should be a continuous realisation that equity is an ever-changing aspect of a brand and looking at it only
from a numbers perspective does not provide answers that are required. Achieving the highest ratings on a set of
key brand positioning attributes may be a short-term sign of success but over a longer horizon, what those
numbers will mean for the brand’s future success is what matters. Hence, there is a need to go beyond numbers
and into understanding customer conversations at every viable brand touchpoint.

In today’s complex and hyper-competitive marketplaces, maintaining and strengthening brand equity is a need
not only for the most established of brands, but for any new brand entering a category or segment. Brand
evolution life cycles are shorter and brands are reaching the phases of decline or continued success much faster
than before. Hence, the need to understand and maintain brand equity is stronger than before.

Martin Roll Company – 2016 – All rights reserved - www.martinroll.com

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