Brand Equity Models Presentation - PDF

Document Sample
Brand Equity Models Presentation - PDF Powered By Docstoc
					                             BRAND EQUITY:
  WORKING TOWARD A DISCIPLINED
  METHODOLOGY FOR MEASUREMENT


SUSAN SCHWARTZ McDONALD                        Like just about everyone else here, I’m
                                               preaching to the choir by reiterating the
President and CEO                              notion that you can harvest stored brand
National Analysts                              value through strategic line extension.
                                               And, of course, by stating the obvious
                                               corollary: that you can squander your
                                               hard-earned equity by using it to
                                               subsidize misextensions.

                                               Several years ago, Booz•Allen & Hamil-
                                               ton* conducted a survey of companies
                                               which have had varying degrees of success
                                               in new product introduction, in order to
                                               arrive at an understanding of what we
                                               called “best practices” -- that is, what dif-
                                               ferentiated the companies which suc-
                                               ceeded more often than others in the new
                                               products development process. To talk
                                               about the results would require more than
                                               the time I have here, but I’d like to begin
                                               this discussion by sharing at least one
                                               useful point with you. Success in new
                                               product introduction is increasingly as-
                                               sociated with the expenditures of money
                                               earlier in the development process. And, al-
                                               though there are many ways to spend that
                                               money, one of the most obvious is on a
                                               more deliberate examination of brand --
                                               what we might call “brand testing” as a
                                               preface to “new product testing.”
This is the text of a presentation delivered   ___________
                                               * National Analysts was a division of Booz•Allen &
at the 2nd Annual Advertising Research
                                                 Hamilton for 22 years, until April 1, 1992 when it
Foundation Advertising and Promotion             became an independent business entity.
Workshop (February 1990 N NY, NY).
2                                                                             Brand Equity


I plan to spend most of the time allotted       The common denominator is, of course,
me today in talking about research              goodwill, but it’s hard to imagine an
techniques that minimize risk in this sort      algorithm that successfully models and
of brand research enterprise. But before I      values all those aspects of equity in dollar
do, I need to join the swelling ranks of        terms, since the relationships are complex
marketing lexicographers who define             and the predictor variables are sometimes
terms like brand and brand equity. I don’t      crude.
propose any provocative definitions.
When I speak of brand, I am talking here        Brand valuation per se is a concept more
about the set of images and associations        interesting to those who aim to sell or
linked to a commercial identity which:          acquire brands than to those who seek to
                                                lever them, so I will generally confine my
    • Distinguish it from others                remarks to the latter -- by talking about the
                                                role of disciplined thinking and research in
    • Create specific consumer expecta-         successful brand extensions.
       tions and
                                                I think we need, first, to acknowledge that
    • Promote some behavioral orienta-          the process of conversing about brand
       tion (i.e., to buy or avoid)             equity has been, in many cases, a lively
                                                exchange of anecdotes among old brand
When I use the term “brand equity” -- one       warriors: “Let me tell you about the time
I personally like because it’s very ex-         Minute Maid launched orange soda” and
pressive, even though imprecise -- I am         “How about the time Sunkist stretched to
referring to the stored value built up in a     fruit candy extensions?” and so on. And
brand which can be used to gain market          like any process that builds on examples
advantage. What makes that value hard to        and old yarns, there is always the risk that
quantify, especially before the fact, is that   we will be more canny in our retrospective
it can be realized in a variety of ways:        assessment than in our predictions. We
                                                can always find a logic or a set of brand
    1. Brand Resilence: Resistance to           boundaries to explain either success or
       new competitors in the category          failure. I contend that if Jello Pudding
                                                Pops had failed, a lot of us would have
                                                said,    “You see, Jello has a room
    2. New Product Trial:       Increased
                                                temperature or shelf stable equity, and
       consumer willingness to try new
                                                those folks at General Foods didn’t
       products or line extensions under
                                                recognize that.”
       that name -- what you might think
       of as “referred equity”
                                                Now if this seems unduly cynical, I can
                                                only say in defense that we need to take
    3. Brand      Premium:      Consumer        ourselves a little less seriously and to
       willing-ness to pay a premium for        remind ourselves continually that a lot of
       your current product or a new one        these brand ventures -- or adventures --
       under that name                          can go in more than one way, depending
                                                upon how well we execute and market
    4. Channel Leverage: Increased or           them. “Brand heredity” is important, of
       sustained access to distribution         course; I’m not arguing that General Foods
       channels                                 can necessarily put the name Maxwell
Brand Equity                                                                               3


House on coffee cake or that Lysol can          brands are alike, no rigid formula for
become a personal deodorant. But it is          researching them will apply. To revive the
possible to fail with a plausible exten-sion    disease metaphor, a good diagnostician
-- (like Welch Grape Jelly Donuts) and to       decides what information he needs based
succeed against odds with the wrong name        on patient presentation and does not
and the right product -- for instance, the      necessarily submit each patient to the
Honda automobile. Like certain di-seases,       same battery of tests in the same order.
brand misextensions are a function of           This is one of the things that stands
unfortunate “genes” and some tactical           between good market research and the
errors in living, and it’s not always clear     development of a rigidly reliable brand
which set of factors account for the greatest   instrument. On the other hand, there are
proportion of the variance. I say this          some rules of logic and research
because I want to unburden the research         progression that should guide our
community of some of the heavy                  approach
responsibility they’ve shouldered in this
process. We can be good advance scouts,         Step 1 in the process is typically a
but we can’t sweep all the mines or survey      qualitative phase designed to help you
all the territory.                              understand your brand character and the
                                                sort of license and boundaries which the
What, then, is a reasonable goal for us as      character seems to impose. These sessions
marketers and researchers? Well, our pri-       tend to include a lot of ideation and
mary goal should be to learn as much as         projection, and, though the approach is not
we can about the way consumers view our         always uncontroversial, I believe it does
brand competence and our brand per-             help management to think about its brand
sonality or style, and then along with that,    in new, sometimes startling ways. Step 2
what sort of permission consumers will          is quantification of the things we have
extend to us as we prepare to enter neigh-      learned or the hypotheses we have formed
boring territories. A number of research-       in the qualitative phase. The yield from
ers have surfaced with claims to propri-        that two-step research process should
etary techniques, but my impression is          ultimately be a few selected concepts for
that, in fact, many of us are doing largely     testing (following whatever norms or
the same thing because, like the automo-        customs you feel comfortable with). I do a
bile or the transistor, timely discoveries      disservice to the complexity of the process
tend to get made in more than one place at      by referring to only two steps, and I’ll try
the same time.                                  to remedy that a little later. I should
                                                probably also state the obvious point here
The analogy may be forced because, to my        that careful secondary analysis must be
knowledge, no truly new research tools          carried out in con-junction with the
have yet been invented in this arena. What      research, and that, at any point along the
we are doing is recombining established         way, it is legitimate to use that analysis as
techniques in more thoughtful and               a basis for narrowing the field of
systematic ways. And that may be the best       contenders (prod-ucts or categories) which
we can hope for, at least in the near term.     you subject to market research.

One caution I’d raise about the limitations     Let’s talk then about your research goals --
of the discipline is that because no two        what must you attempt to learn about the
                                                character of your brand?
4                                                                             Brand Equity


Brand character tends to involve two            consumers made uncomfortable by a
different elements -- brand competence and      brand that behaves in surprising and
brand personality -- and you need to            inconsistent ways.      This kind of in-
examine both in order to understand the         formation has both strategic and tactical
raw material at your disposal. If your          implications since it tells you where you
brand is Coke or Chiquita circa 1980, I         can legitimately extend, as well as the style
think there’s very little question about        to which your customers have grown
what your competence is, or was. On the         accustomed. Brands that enter extension
other hand, if you have what I like to call a   categories with competence but the wrong
“horizontal” brand, like Heinz, that has        style may not succeed unless they create a
already extended laterally in a variety of      new brand or supporting identity to
different categories, it may not be easy to     bridge the image gap. Jello cannot, I
get a firm grasp of how consumers define        submit, do a true gourmet mousse, even
your competence. Is it condiments? Is it        though the technical capability is there to
barbeque? Is it piquancy? And so on. The        support it. Sober, button-down, adult IBM
more diffuse the brand, the more difficult      would have difficulty selling kids’ creative
it can be to identify the common de-            computing toys unless it took pains to
nominator. Unless you have a brand that         spawn an intermediating brand identity.
is literally defined by a single product --
what Ed Tauber has referred to as brand         It’s important to remember that whether
prototypicality -- it’s wise to be sure you     we speak of brand competence dimensions
really understand what special expertise        or brand style, we are generally not talking
you have, since it tends to define your         only about the kinds of product per-
opportunities.                                  formance attributes that companies normal-
                                                ly think of when they think of brand image
The other important element of your brand       tracking -- for example, “good-tasting,”
character that needs careful examination is     “creamy texture,” etc. One of the big leaps
personality or style. A good friend of          for everyone involved in brand extension
mine and a master of creative brand             is learning to separate the name on the
thinking, Ron Mogel, likes to describe it as    package from the thing inside it -- long
the way your brand “walks, talks and            enough, at least, to help you think about
dresses” -- and I think that’s a nice way to    what the brand could mean when you put
put it. IBM is sober, serious, responsible,     it on another substance entirely. If you
masculine, smart but rigid.          Jello is   were attempting to track the image of
childlike and playful, enthusiastic and fun,    Ragu Pasta Sauce, for example, you would
but not reckless.                               consider recipe dimensions:

It doesn’t matter where these images come              Rich
from. They can arise from your product                 Tomato-ey
design, your technology, your packaging,               Thick
your sales reps, your ads, your                        Sweet
spokesmen, your target audience, your                  Properly spiced
product applications. But they’re as real              Has fresh ingredients, etc.
and as liberating or delimiting as your
own personalities. Just as people are           If, on the other hand, you wanted to learn
generally made uncomfortable when               more about the character of the Ragu brand,
friends or relatives behave out-of-             you’d      probably    focus    on    more
character,              so             are
Brand Equity                                                                            5


transcendent attributes that incorporate       described by users in terms that suggested
personality or style as well as broad          finesse and intellectual achievement while
competence.                                    nonusers raised images of potency and
                                               aggression. Clearly, we need both views
      Authentically Italian                    going into quantitative research.
      A tomato expert
      Pioneering                               A few final points on the exploratory
      Fancy                                    qualitative phase. While it’s important to
      Sophisticated                            invite respondents to invent new product
      Contemporary                             opportunities for you in order to reveal the
                                               way they view your brand, don’t count on
You’d be asking: Is Ragu a brand that          ideation exercises to raise any meaningful
wears jeans or dresses? Is this brand more     or logical extension opportunities you
like Mama Leone or Angelica Huston? By         haven’t already thought of. If they do, in
the way, if you look closely you’ll notice     most cases it means that you haven’t done
that there isn’t always a clear distinction    all of your homework. The purpose of the
between “competence” and “style” and, of       qualitative research is not to have con-
course, there needn’t be. What’s important     sumers stretch the bounds of logic to sup-
is that we capture the brand’s (consumer-      ply you with whimsical ideas; it is to
defined) area of expertise and the manner      understand the way they prioritize those
in which the brand delivers it. Fred As-       ideas once they’re on the table, so that you
taire and Nureyev were both great dancers!     can evolve a set of decision rules to help
                                               you pare down and refine your own list of
We try to elicit personality dimensions        new product ideas. Furthermore, don’t ex-
with projective techniques, and those          pect that the qualitative research will lead
techniques tend to work quite well, so         you inexorably to a compact set of three or
long as you have a tolerance for poetry        four product ideas to test. Qualitative re-
and improvisation. Since the sort of work      search should not bear that burden alone.
we do in these sessions requires a fair        If you have broad brand competence or
degree of abstraction, we like to screen for   you are in a neighborhood full of logical
people who seem comfortable with               possibilities, you may emerge with five to
projective exercises and all they imply.       ten reasonable near-term prospects and an
The pre-sumption is that people with a         equal number of longer-term possibilities -
flair for metaphor and flexible thinking       i.e., product areas you might work your
look at products much the way others do --     way toward over a period of years if the
but they approach our market research          proper bridges can be built. As I men-
                                               exercises with greater vitality and express
                                               themselves in more creative terms.

                                               There is always some controversy around
                                               the role of users and nonusers of your
                                               brand at this stage of the research process.
                                               Users know it well, and their associations
                                               are richer; nonusers, however, are usually
                                               out there in large numbers, and their
                                               impressions may be quite different. Re-
                                               cently, we heard a brand of
                                               medication
6                                                                              Brand Equity


First, you want to confirm consumer             your time pitting a megabrand like
impressions of your brand character -- the      McDonald’s against its more parochial
technical competence you can claim and          competition when you could pit that name
the personality traits ascribed to your         against a brand like Disney and
brand.     Next, you want to determine          get away with it. Who is most efficient?
whether your brand and its characteristics      Who is most caring and nurturing?
conform well to the requirements of the         Consumers can probably handle that kind
extension category. Third, you want to try      of comparison but they can’t sensibly
to assess the risk of debasing or diluting      compare Jello with IBM because the two
your present brand equity by extending          don’t coexist in the same perceptual space.
into any of the new jurisdictions. I’d like
to share some of the issues and challenges      No I don’t propose for us to review or go
that arise in following that general research   through the exercise of defining the “right”
formula.                                        brand set for McDonald’s because it’s clear
                                                that whatever logic you used here and
One of the most challenging tasks can be        whichever choice you made wouldn’t
the construction of an appropriate brand        necessarily guide you in the next research
context. Brand attributes are never per-        enterprise. Selection of an appropriate
ceived in a vacuum, after all.        Brand     brand set will reflect a number of vari-
character arises, in part, through contrast     ables, including:
effect and is recognized only in the context
of competing brands. McDonald’s is a              • What kind of brand do you have?
“fun” brand relative to Denny’s, and it’s a
fun brand relative to AT&T, but not, of              -- Megabrand vs. branded product
course, relative to Disney. So if we wanted
                                                     -- Horizontal vs. vertical brand
to understand the character of McDon-
ald’s, we’d first have to obtain ratings of          -- Product vs. service
McDonald’s relative to its category peer
group -- however we choose to define that.           -- Prototypical or generic brand
And I need hardly add that, in some                     vs. other
categories, our latitude to define the rele-         -- Company name vs. product name
vant set for rating purposes is greater than
others. Consider the implications of these
                                                  • On which categories have you set
alternative selections:
                                                    your sights?
    McDonald’s              McDonald’s               -- How close to home base?
                 Versus                              -- How broadly defined are they?
    Wendy’s                 Denny’s
                                                  • Who might your competition be?
McDonald’s is probably going to look like
                                                     -- Established players?
it’s more “fun” to be at if we choose one
pair, but I could make a case for either one,        -- Current competitors in expansion
depending on how sensitive a measure we                 mode?
want and our ingoing hunches about the
likelihood of seeing meaningful discrimi-            -- Brands converging from different
nation, among other things. In fact, one                directions?
could argue that you’re probably wasting
Brand Equity                                                                           7


Every one of these studies involve some       information you want from them. Our ap-
wheel reinvention and a lot of custom         proach, where possible, is to have them
craftsmanship.      That’s an important       tell us three things:
realization, and it’s one that may make
people looking for intellectual order and       1. What kinds of transcendent at-
demonstrability in this process a little           tributes are most important to
uneasy.                                            products in the target category,
                                                   taking care to include, for test
Let’s go to the second step in the                 purposes, the attributes we believe
quantitative phase where we attempt to             will be definitive of our own brand
gauge the fit between the subject brand            competence and character?
and the target extension categories. Here,
let me make the rather pedestrian               2. How they would expect our brand
observation that the people who have a             to perform relative to principal
right to be heard on this subject are              competitors on those dimen-
generally the consumers who are already            sions?
users of those extension categories. This
requirement tends to make line extension
research more expensive and cum-                3. And, finally, what is the likelihood
bersome to do because it extends your              that they would try the product at a
sampling requirements and it gives you             premium price, a parity price or a
virtually no flexibility.                          discount?

                                              The first two measurers we call Brand
You’ve got to commit in advance to a few      Transfer Analysis; the last we call Brand
options and configure the sample ac-          Premium Analysis. A research veteran
cordingly. I don’t hold personally with       will contend that you can’t expect people
“quickie” quantitative screens that ask any   to try most new brands at a premium, and,
and everyone to rate the logic of Hershey     indeed, that’s true. We do not propose
cookie dough or a Prince pasta sauce. The     that this measure be used to guide pricing
answers you get are often different when      policy. It merely uses price as a rough
you compare people in the category (i.e.,     metric to separate the categories in which
who have direct product experience and        our brand may be seen as heroic from
real problems to be solved) with the          those in which it will be seen as a
responses of those who can only rate brand    reasonably strong competitor and those in
proximity.                                    which it is just a me-too or a weak
                                              contender unable to kindle any real
Non-category users should be included in      excitement at all.
research only if you have reason to believe
that the addition of a new brand would        Finally, we must address one of the
capture nonusers for the category of it --    thorniest issues of all. How to measure the
and this goes virtually without saying --     extent to which extension into any one of
the category is brand new. Both of these      these target categories will debase or
conditions tend to be the exceptions, not     dilute our present equity. Of all the
the rule, in packaged goods.                  questions we’ve posed, I’m most
                                              uncomfortable
Once you’ve got the ear of your target        with this one because I think it is the
audience, you have to decide what kind of     toughest of all for people to answer
                                              realistically. It calls for a level of self-
8                                                                        Brand Equity




knowledge and a degree of “irrationality”     and the fun. But if you ask them whether
that not everyone can display.                kid’s computing products will diminish
                                              their regard for IBM, they may very well
Let me explain what I mean by                 say “no.” Why should any new product
“irrationality” by returning to the earlier   that doesn’t clearly divert resources or
example that has IBM moving into the          make you question corporate sanity
kid’s computing category. Consumers are       diminish your respect for the parent
likely to believe that IBM will bring         company? To say “yes” to that question is
conscientious quality and technical           to demonstrate a certain emotionalism and
sophistication to that category, although     rigidity of expectations which many
they may wonder about the child empathy       people will want to deny...or which
                                              they
Brand Equity                                                                            9


may not recognize ... or which they may       revelations, pleasant or not. There is also
not truly feel for months or years. Un-       the risk that people will expect a program
fortunately, the issue, and the data, both    like this to yield a set of finished product
get muddier as the chasm between your         concepts, and I think most of us here know
present location and your target narrows.     that this sort of process is going to produce
Indeed, there comes a point where the only    only a mission statement, not a blueprint.
valid answer is “It depends.” It depends
entirely on execution in the new category     Earlier today, someone mentioned that his
and continued vigilance at home base.         brand research experiences had involved
                                              him primarily with management, and that
For all my misgivings about the question, I   only now was he interacting more closely
think we’re obligated to ask it in some       with the market research department. That
way, i.e.: “Would a line of ’X’ products by   has not been my own experience. On the
Company Q make you think better of the        contrary, I believe that some of these
company, less, or have no effect?” And        projects flounder or are underfunded
maybe, in time, we will have some             precisely because senior management is
reasonably sensitive norms to help us         shielded or disengaged from the process.
make solid use of the answers. But, if we
do ask questions like that, I think we        My final word of counsel, therefore, is that
should acknowledge, going in, that this       researchers and brand managers do what
question is only a dim light in a foggy       they can to ensure that the findings bubble
channel, not sensitive radar.                 up as high in the organization as possible.
                                              This process of “self-discovery,” which
In my experience with studies of this kind,   brand equity research tends to involve, is
one of the overwhelming challenges -- and     one that should command unusually close
this probably applies to all complex          attention from the very top levels of the
market research, by the way -- is creating    company. The ultimate brand manager is,
and managing expectations.           These    after all, the CEO, and it’s that individual
studies,                                      who’s ultimately responsible to the
when properly done, are expensive, and        shareholders for a misstep under the
they are as unsettling as therapy. It’s the   family name.
point where corporations meet them-                             ♦ ♦ ♦
selves face-to-face, and sometimes there
are
              ABOUT NATIONAL ANALYSTS


National Analysts, Inc. is a research and consulting organiza-
tion providing marketing guidance to corporations in a range
of industries and product categories. Originally established as
an independent entity in 1943, National Analysts was acquired
by Booz•Allen & Hamilton Inc., the international management
and technology consulting firm, in 1970. In 1992, National
Analysts once again became an independent, privately-owned
company with a continuing focus on marketing research and
strategic consulting

Throughout its long history, National Analysts has addressed
a wide range of business problems, earning a reputation for
methodological innovation and unusual success in handling
challenging and complex assignments. It is distinguished by
a unique balance of research and consulting resources, and a
professional staff whose methodological skills are comple-
mented by depth of market knowledge and industry
experience.
   NATIONAL ANALYSTS, INC.
          1835 Market Street
Philadelphia, Pennsylvania 19103-2984
      www.nationalanalysts.com
Tel: (215) 496-6800 N Fax: (215) 496-6802

				
DOCUMENT INFO
Description: Brand Equity Models Presentation document sample