Brand equity concepts and measurement strategies

Brand Equity What are the difficulties in determining brand equity? How would you determine its value for a specific company?

One of the primary difficulties in measuring brand equity is deciding on the technique to be used for the valuation, and second, accumulating the data to complete the valuation analysis. Three of the most common approaches to defining brand equity include brand valuation, price premium analysis, and stock performance correlation (Market Research Executive Board 2005). What make the valuation of brand equity also challenging are the significantly different approaches taken to measuring it. The first, and the most commonly used with packaged goods, nondurable goods, and selected durable goods brands including automobiles, is the definition of brand equity as measured by brand awareness, familiarly, image, and loyalty. For many business-to-business (B2B) companies that data driven approach is more of a foundation for brand equity measurement, including the definition of brand profitability, the use of market share, time-to- market measures of performance, and annual marketing spend as it relates to defining the value of a brand. The methodologies behind consumer-driven versus data-driven approaches vary by company yet both share a common result of quantifying in financial terms the value of a brand. In determining the value of a brand, its critical to first select a methodology that fits with the specific type of company that is working to increase the value of the brand. Consumer-driven factors that define brand equity value vary significantly from those from data-driven methodologies as defined by (Market Research Executive Board, 2005) and the specific examples of Interbrand and BrandFinance. Ascertaining the best methodology for measuring the value of a brand needs to take into account segmentation, financial forecasts, brand value and brand risk analysis to arrive at a reasonable and accurate valuation of a brand. Reference: Market Research Executive Board (2005) - Overview of Brand Equity Measurement Approaches. Market Research Executive Board. September, 2005. Washington, DC. September, 2005.