Brand Equity Management

System
 Brand Equity Management System
• A brand equity management system is a set of
organizational processes designed to improve
the understanding and use of the brand equity
concept within a firm:
– Brand equity charter
– Brand equity report
– Brand equity responsibilities

8.2
 Brand Equity Charter
• Provides general guidelines to marketing
managers within the company as well as key
marketing partners outside the company
• Should be updated annually

8.3
 Brand Equity Charter Components
• Define the firm’s view of the brand equity
• Describe the scope of the key brands
• Specify actual and desired equity for the brand
• Explain how brand equity is measured
• Suggest how brand equity should be measured
• Outline how marketing programs should be devised
• Specify the proper treatment for the brand in terms
of trademark usage, packaging, and communication

8.4
 The Knicks Brand Charter
The
Knicks
•Uniquely authentic
•An incomparable event, scene
and energy
•Relentless, resourceful, and
tough
•Championship caliber
•A vital part of New York City
•Unlimited in its possibilities
The Fans
Emotional Bond
•Sensory fulfillment
–Looks, feels, and sounds
An intensely passionate,
professional, unparalleled •Visceral thrill
New York City experience – Eager anticipation/excitement
– War: winning/losing
•Psychological benefits
– Personal identification (with
heroes)
– Social currency/belonging
•Emotional awards
– Intense experience
– Childhood
– Sustaining
8.5 – Exceeds
 Brand Equity Report
• Assembles the results of the tracking survey
and other relevant performance measures
• To be developed monthly, quarterly, or
annually
• Provides descriptive information as to what is
happening with the brand as well as
diagnostic information on why it is happening

8.6
 Brand Equity Responsibilities
• Organizational responsibilities and processes
that aim to maximize long-term brand equity
• Establish position of VP or Director of Equity
Management to oversee implementation of Brand
Equity Charter and Reports
• Ensure that, as much as possible, marketing of
the brand is done in a way that reflects the
spirit of the charter and the substance of the
report

8.7
 Brand Valuation
• Brand valuation is the process used to calculate the
value of brands.
• Historically, most of a company’s value was in
tangible assets such as property, stock, machinery or
land. This has now changed and the majority of most
company’s value is in intangible assets, such as their
brand name or names.
• Techniques to quantify brand value have become
more sophisticated with the advent of computerised
software such as Excel in the mid 1980s. Since 1988,
brand valuation methods have improved and
consolidated .
• It was in 2005 under International Financial
Reporting Standards (IFRS), for the first time, brands
and other acquired intangible assets could be
reported on a company’s balance sheet.
• Brands are valued for many different reasons, such as
for legal disputes, strategic management, internal
communications, business management, brand
securitisation and M&A.
• The application of the brand valuation models
requires specialist knowledge and experience.
 Forms of intangible asset

• Knowledge intangibles: for example, patents,

software, recipes, specific know-how, including
manufacturing and operating guides and manuals,
product research including product trials data,
information databases etc.
• Business process intangibles: these include
unique ways of organizing the business including
innovative business models, flexible manufacturing
techniques and supply chain configurations.
 Forms of Intangible Assets
• Market position intangibles: retail listings and contracts,
distribution rights, licenses such as landing slots, production
or import quotas, third generation telecom licenses,
government permits and authorizations and raw materials
sourcing contracts.
• Brand and relationship intangibles: these include trade
names, trademarks and trade symbols, domain names, design
rights, trade dress, packaging, copyrights over associated
colours, smells, sounds, descriptors, logotypes, advertising
visuals, and written copy. In addition, associated goodwill (the
general predisposition of individuals to do business with one
brand rather than another brand) should be included
Brand Valuation Methods
 BRAND VALUATION METHODS
Cost based valuations, i.e. accumulating the historic, or
replacement costs, associated with brand building.
• Most often this approach is limited to advertising and other
easily allocated costs. Therefore the method is particularly
suitable for calculating claims for damages due to trademark
infringements.
• The major drawback of this method is, of course, that the
linkage between costs and bottom line value can be very
weak. So indeed, the cost based method is obviously a very
dubious one as a basis for serious brand development
decisions.
 BRAND VALUATION METHODS
Market-based valuations; i.e using either “comparable”
market transactions or earlier bidding exercises and publicly
available information to value a brand.
. Although seemingly objective, this method does not necessarily
reflect the "real” and sustainable values of specific brands.
This is perhaps best illustrated by the terrifying figures
attributed to brand values for e-business start-ups during the
early 2000s.
. Although these values were indeed market values, based on
other dot-com comparables, the market in itself proved to be
wrong.
 BRAND VALUATION METHODS
Royalty approach:
The income which a brand will generate if it is licensed
out to another party. The royalties are added for a
specific period in future and then added and
discounted to arrive at the net present value.
1. Expected future sales
2. Forecast sales
Reference to Industry scenario, characteristics of
comparative licensing agreements, nature of
business, speculative or established is a must.
 BRAND VALUATION METHODS
THE INTERBRAND METHOD

The most well-known and widely used method for brand

evaluation today is that developed by leading branding agency
Interbrand in London.
The valuation model, according to our understanding, integrates
three core processes: Financial Analysis, Market Analysis and
Brand Analysis.
Interbrand Brand Valuation Method
Interbrand BRAND VALUE
Attributes
Leadership (25%) Trend (10 %)
Market share, LT performance,
Awareness, Projected performance,
Sensibility of Plans,
Positioning,
competition reactivity
Competitor Profile
Support (10 %)
Stability (15 %) Consistency of message
Longevity Coherence and spendings,
Consistency, Above/below the line
brand Equity, risks Brand franchise

Market (10 %) Protection (5%)

What market,
Volatility size Market
dynamics Barriers
Internationality (25%)
Trademark registration
/registrability
common law,
litigations/disputes
 Interbrand BRAND VALUE Attributes

1. Leadership. A brand that leads its segment enjoys

higher overall economies of scale in both
communication and distribution – and is more stable
than brands in second, third and fourth position.
2. Stability. Long established brands are more powerful
and more valuable than new arrivals.
3. Market. Brands that are in growing and profitable
segments are more valuable than brands that exist
within highly price sensitive, mature markets
4. International. Economies of scale make international
brands more valuable than national or regional
brands.
5. Trend. Long-term and consistent sales development
of a specific brand can also reflect its future
prospects.
6. Support. Brands that have benefited from a
programme of long term and consistent investment
are stronger than those that have not.
7. Protection, Brands with strong legal trademark
protection are more valuable than those without.

The Brand Strength Score is now used to define the

Brand Discount Rate (strong brands = lower discount
because of greater confidence in future earnings).
This is applied to the forecasted Brand Value Added
to produce a net present day Brand Value.
Brand Asset Validator and the WPP´s Brand
Pyramid.
The B2C brand guru, David A. Aaker, in his textbook “Building
Strong Brands”, boils down Brand Equity measurement into the
following
five dimensions:

1. Loyalty; using price premium as the basic indicator and the

best single measure of brand equity (with customer
satisfaction/loyalty coming in as number two).

2 Perceived quality, because it directly affects both ROI and stock

return, To tap into the dynamics of the market David Aaker
suggests a leadership measurement which encapsulates the
popularity/ innovative power of the brand.
3.Associations/Differentiation. Indicators include the
perceived value of the brand, the brand personality
as well as the trust in the organisation behind the
brand.
4. Awareness; i.e. the presence of the brand in the
minds of customers. This should preferably be
measured using salience variables
In other words the degree to which the respondent
holds an opinion about the brand or not.
5. Market behaviour, encapsulating
measurements of market share, price and
distribution indices. For example, the relative
market price, the percentage of stories
carrying the brand and so on.
Thank you