Measuring Sources and Outcomes of Brand Equity

Question 1

Qualitative Research Techniques

Accepted Answer

(focus group interviews, 1-on-1 in depth-interviews, observe customer behaviour) · characteristics: open-ended questions “what, how, when”; Can’t be quantified (counted); uncovers motivations, feelings, preferences; uncovers in-depth info relatively low; not representative interpretation subjective · Techniques: o Free associations o Projective Techniques o Zaltman Mataphor Elicitation Technique o Neural Research Methods o Brand Personality and Value o Ethnographic and experimental methods

Question 2

Qualitative Research Techniques - 1. Free associations:

Accepted Answer

· Without any specific probe, consumers narrate or write down what comes to their mind when they think about the brand or the associated product category “what comes to your mind when thinking of…” · Free associations help marketers to form a rough mental map for the brand and indicate the relative strength, favorability, and uniqueness of brand associations · The order of elicitation gives us an indication of the strength: associations later in the list may be weaker and thus more likely to be overlooked during consumer decision making · Comparing associations with those elicited for competitive brands can also tell us about their relative uniqueness

Question 3

Qualitative Research Techniques - Projective Techniques

Accepted Answer

· Projective techniques are diagnostic tools to uncover consumers’ true opinions and feelings when they are unwilling or unable to express themselves on these matters → seek to reveal subconscious perceptions of brands (often answer stereotypically rather than honestly) o completion and interpretation tasks o comparison tasks (comparing brands to people, animals, countries etc) o archetypes

Question 4

Qualitative Research Techniques - 3. Zaltman Metaphor Elicitation

Accepted Answer

The Zaltman metaphor elicitation technique --> a technique for elicitating interconnected constructs that influence thought and behavior Based on the idea that most social connection is nonverbal and approximately two thrids of all stimuli received by the brain are visual --> Teases out consumers' hidden thoughts and feelings about a particular topic Research Process · Step 1: Participants collect a set of pictures that represent their thoughts and feelings about the topic of interest · Step 2: Advanced interview techniques to reveal deep ideas, archetypes and emotions · Step 3: Researchers identify key themes and constructs, code data and assemble a consensus map · Step 4: The quantitative analysis can provide insights for research as well as important marketing decisions Application of ZMET to the Brand Louis Vuitton · Methodology: Six members of a focus group and seven in-depth interviewees were asked “What does the word luxurious mean to you?” Each individual was instructed to choose five pictures; after the selection, they were instructed to pick the one image out of the five images that best represents their answers · 1-on-1 interview to understand their choices and any hidden metaphors and meanings that respondents might have in relation to their choice They sought to discover any relevant associations of how consumers relate “luxurious” to Louis Vuitton

Question 5

Qualitative Research Techniques - Neural Research Methods

Accepted Answer

· Neuromarketing is the study of how the brain responds to marketing stimuli, including brands It measures emotional responses consumers exhibit presented with marketing stimuli This shows that people activate different regions of the brain in assessing the personality traits or people than they fo when assessing brands By adding neurological techniques to the research arsenal, marketers try to move towards a more complete picture of what goes on inside consumers heads Mein disadv. very costly not universally accepted

Question 6

Qualitative Research Techniques - 5. Brand Personality and Values

Accepted Answer

· Brand personality are human characteristics or traits that consumers can attribute to a brand · Open-ended responses → Example: If the brand were to come alive as a person, what would it be like? What would it do? Where would it live? · Pictures or magazines → Example: Give consumers a stack of magazines or a variety of pictures and ask them to assemble a brand profile

Question 7

Qualitative Research Techniques - Ethnographic and Experimental Methods

Accepted Answer

· Ethnography (from Greek ἔθνος ethnos "folk, nation" and γράφω grapho "I write") is the systematic study of people and cultures · Idea: elicit more meaningful responses by tapping more directly into consumers’ actual home, work, or shopping behaviors · Goal: of ethnographic research is to extract and interpret the deep cultural meaning of events and activities through various research techniques such as consumer immersion, site visits, shop-alongs, embedded research, etc. · Examples: send researchers to consumers’ homes in the morning to see how they approach their days; give business travelers digital cameras and diaries to capture their feelings when in hotel rooms · Example: Burton: Emphasis on its professional riders worldwide; Staff members and riders are in intensive communication with each other (almost every day) ;Riders help design the products; Researchers immerse themselves in rider’s lives; Sales representatives interact with amateur snowboarders

Question 8

Quantitative Research Technique

Accepted Answer

(experiment, questionnaire, overvation) · characteristics: can be counted/measured; based on closed-ended questions; can be representative; objective; can’t uncover in-depth(detailed response; costly It can help to more definitively assess the depth and breadth of brand awareness; the strengths, favorability, and uniqueness of brand associations; the positivity of brand judgments and feelings; and the extent and nature of brand relationships 1. Brand Awareness 2. Brand image 3. Brand responses 4. brand relationships 5. BAV model

Question 9

Quantitative Research Technique - 1. Brand awareness

Accepted Answer

· Brand awareness describes the likelihood that a brand will come to mind in different situations, and the ease with which it does so given different types of cues · Brand recognition · Brand recognition requires consumers to identify the brand under a variety of circumstances and can rest on the identification of any brand element · Recognition test Consumers receive a set of individual items visually or orally and are asked whether they think they’ve previously seen or heard of them; often it is useful to include decoys or lures · brand recall o Consumers must retrieve the actual brand element from memory with some relative probe or cue o Unaided Recall will most likely identify only the very strongest brands 32 o Aided Recall uses several types of cues to help consumer recall · When combined, measures of recall based on product attribute or category cues and situational or usage cues give an indication of breadth and depth of recall Brand awareness: Strategic Implications · Yield insights into how brand knowledge is organized in memory · Identifies cues or reminders necessary for consumers to retrieve the brand from memory · Understanding recall when we use different levels of product category specificity as cues is important, because it has implications for how consumers form consideration sets and make product decisions o Example: Porsche 911 Categorization as a sports car vs. cars in general (people only think of the car as a sports car)

Question 10

Quantitative Research Techniques - Brand Image

Accepted Answer

· Brand Image is reflected by the associations that consumers hold for a brand --> Lower-level considerations Performance and imagery attributes and benefits --> Higher-level considerations Judgements, feelings and relationships --> CONNECTION:Higher-level considerations depend on the picture formed through lower-level considerations

Question 11

Quantitative Research Techniques - Brand responses

Accepted Answer

· The purpose of measuring more general, higher-level considerations is to find out how consumers combine more specific, lower-level considerations about the brand in their minds to form different types of brand responses and evaluations · Forms of measuring brand responses o Purchase Intentions o Likelihood of buying or switching · Brand Responses: Likelihood to recommend o Customer’s willingness to recommend results from all aspects of a customer’s experience --> Net Promoter Score NPS

Question 12

Quantitative Research Techniques - 4. Brand Relationship

Accepted Answer

· Brand Relationship is about the association and connection a consumer has with a brand · Key dimensions o Active engagement § Extent to which consumers are willing to invest their own personal resources on the brand beyond those resources expended during purchase or consumption of the brand § Exemplary measures: word-of-mouth, online behavior o Sense of community § Model of social currency: the extent to which people share the brand or information about it as part of their everyday social lives at work or at home § Dimensions: conversation, advocacy, information, affiliation, utility and identity o Behavioral loyalty § Can be assessed through direct surveys and gives marketers information about consumers’ brand attitudes, past purchase history and intended future purchases § Example: Duracell batteries Which brand of batteries do you usually buy? Which brand of batteries did you buy last time? Do you have any batteries on hand? Which brand? etc. o Attitudinal attachment § Can be defined in terms of two underlying constructs—brand-self connections and brand prominence—and the respective subdimensions Brand-self connection (connected, part of who you are) Brand Prominence (automatic, naturally)

Question 13

C: Comprehensive Models of Customer-based Brand Equity - BrandDynamics Model by Millward Brown

Accepted Answer

Emotional and functional strengths of relationship consumers have with a brand Customers are assigned to one of the five levels depending on their brand responses Comparing the patterns across brands helps uncover relative strengths and weaknesses and identify where brands can focus their efforts to improve their loyalty relationships Bonding, Advantage, Perforance, Relevance, Presence

Question 14

Brand Dynamics Model by Millward Brown Relationship to the CBBE Model

Accepted Answer

The CBBE model synthesizes the concepts and measures from the BRandDynamics Model and provides additional substances and insight --> emphasizes on brand salience and breadth and depths of brand awareness -_> recognition of the dual nature of brands and the significance of rational and emotional considerations in brand building --> importance placed on brand resonance as the culmination of brand building and a more meaningful way to view brand loyalty

Question 15

Comprehensive Models of Customer-based Brand Equity - BAV Model

Accepted Answer

Purpose: Diagnose brand challenges and opportunities and provide early warning signs to brand fatigue 1. Differentiation: the extent to which the brand is seen as different, unique or distinct; what makes the brand stand out and capture the attention of consumers2. Relevance: the extent to which consumers find the brand to be relevant to their needs; how meaningful and relevant a brand is in consumer’s lives3. Esteem: extent to which consumers respect and regard a brand (for its quality, leadership, reliability); how a brand lives up to its promise4. Knowledge: the extent to which consumers understand and are familiar with the brand Differentiation and Relevance :Brand strength: shows future growth value Reveals company’s momentum and ability to drive profitsWhen the brand stands out from the crowd, consumers are more likely to choose this brand over its closest competitors Esteem & Knowledge: Brand stature: shows the current operating valueCorrelated with the company’s profitabilityThe more consumers respect the brand, the more likely they are to purchase the product or service The brand lifecycle Commitment: leadership brands → high earnings and greatest potential to create future valueIndifference: new, unfocused or unknown products → room for business development and trying to break into the marketFatigue: commodity or eroded brands → competition on price and convenience; low customer interest

Question 16

Connection between the BAV Model and the CBBE Model

Accepted Answer

Superiority (brand judgements) -- Differentiation Consideration (brand jusgements) -- relevance Credibility (brand judgements) -- esteem Resonance -- knowledge

Question 17

• Comparative Methods

Accepted Answer

· Comparative methods are research studies or experiments that examine consumer attitudes and behavior towards a brand. The aim is to directly estimate the benefits arising from having a high level of awareness and strong, favorable and unique brand associations o Brand-based comparative approaches hold the marketing program fixed and examine consumer response based on changes in brand identification o Marketing-based comparative approaches hold the brand fixed and examine consumer response based on changes in the marketing program

Question 18

Brand–Based Comparative Approaches

Accepted Answer

· Brand-based comparative approaches use experiments in which one group of consumers responds to an element of the marketing program of the target brand, and another group responds to the same element of a competitive/fictitiously named brand · Consumers may interpret marketing activity for a fictitiously named or unnamed version of the product in terms of their general product category knowledge or they may have a particular brand in mind (e.g. category leader, most preferred brand). They may make inferences to supply any missing information based on their knowledge of this particular brand · Application: Brand purchase or consumption research for new or existing products; determination of brand equity benefits related to price margins and price premiums · Example: Virgin Mobile: Virgin’s brand is so strong that consumers may evaluate the same product or service more favorably if they think it comes from Virgin · Advantages: o Holds all aspects of the marketing program fixed and isolates the value of a brand in a real sense (extremely useful for strategy development) o Theoretically, it can be applied infinitely · Disadvantages: o Effect can only be examined if the respective marketing activity was changed o Some realism needs to be sacrificed in order to gain sufficient control to isolate the effects of brand knowledge o Simulations may distort the impact of the new products

Question 19

Marketing-Based Comparative Methods

Accepted Answer

· Marketing-based comparative approaches use experiments in which consumers respond to changes in elements of the marketing program or marketing activity for the target brand or competitive brands · Dollar-metric measure of brand commitment Step-by-step increase of the price difference between the brand normally purchased and an alternative brand · Variations of this approach to derive similar types of demand curves have been adopted, and many firms try to assess price sensitivity and willingness-to-pay thresholds for different brands · Different ways apply marketing-based comparative approaches: measurement of consumer response to different advertising strategies, executions, or media plans through multiple test markets; explore potential brand extensions · Advantages o Ease of implementation o Virtually, any proposed set of marketing actions for the brand can be compared · Disadvantages: o Difficult to find out whether consumer responses to changes in marketing activities are caused by brand knowledge or more generic product knowledge

Question 20

Conjoint Analysis

Accepted Answer

--> see slides

Question 21

Application: Conjoint

Accepted Answer

Explore how brand names interact with physical product features to affect the extendibility of brand names to new product categoriesApplication to corporate image programs to show how it can determine the company attributes relevant to customers, rank the importance of those attributes, estimate the costs of making improvements, and prioritize image goals to obtain the maximum benefit for the resources spentAdvantages: Different brands and different aspects of the product or marketing program can be studied simultaneously· Disadvantages: o Marketing profiles may violate consumers’ expectations based their brand knowledge o Can be difficult to specify and interpret brand attribute levels

Question 22

e. Holistic Methods of Measuring Outcomes

Accepted Answer

Holistic methods place an overall value on the brand and aim to "net out" various considerations to determine the unique contribution of the brand Residual Approaches examine the brand value by subtracting consumers brand preference based on physical attributes from their overall brand preference Valuation Approaches place a financial value on the brand equity for different purposes such as accounting purposes and mergers and acquisitions

Question 23

i. Residual Approaches

Accepted Answer

· Rationale behind residual approaches Brand equity is what remains of consumer preferences and choices after subtracting physical product effects · The relative valuation of brands can be inferred by observing consumer preferences and choices by considering as many sources of measured attribute values as possible · Methods to determine brand equity o Scanner panel: Use of scanner data to calculate a revenue premium as an estimate of brand equity by calculating the difference in revenues between a brand and a generic or private label in the same category o Choice Experiments: Define an equalization price that equates the utility of a brand to the utilities that could be attributed to a brand in the category where no brand differentiation occurred o Multi-attribute attitude models : Attitude is a function of the presence of certain beliefs or attributes with respect to an object; consumers will like a brand or product that has an adequate level of attributes that the consumer thinks are important SEE FORMULA

Question 24

Discussion: Residual Approaches:

Accepted Answer

· Advantage: o They serve as a benchmark for interpreting brand equity · Disadvantage: o Only suitable for brands with a lot of product-related attribute associations (measures cannot distinguish between different types of non-product-related attribute associations) o Static view of brand equity by focusing on consumer preferences o Issue of separability in brand valuation

Question 25

Valuation Approaches :

Accepted Answer

The ability to put a price tag on a brand’s value may be useful for several reasons · Mergers and acquisitions: Both to evaluate possible purchases and to facilitate disposal · Brand licensing: Internally for tax reasons and to third parties · Fund raising: As collateral on loans or for sale or leaseback arrangements · Brand portfolio: To allocate resources, develop brand strategy, prepare financial reports Three general approaches to determine the value of a brand in an acquisition or merger Cost Approach: brand value is the amount of money that would be required to reproduce or replace the brand Market Approach: brand equity as the present value of the future economic benefits to be derived by the owner of the assetIncome Approach: brand equity is the discounted future cash flow from the future earnings stream for the brand Advantage: In the context of mergers and acquisitions, brand licensing, fund raising and brand portfolio decisionsDisadvantage: Many potentially oversimplified assumptionsRequire judgmental data and contain much subjectivity Methods sometimes lack face validity Financial measures ignore current investments in future equity (advertising, R&D) Strength of brand measures may be confounded with the strength of the company

Marketing (Fach) / Measuring Sources and Outcomes of Brand Equity (Lektion)