Brand tracking measures

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Question - Is there one acknowledged way of tracking your brand?

Answer - No, there are many different ways, ranging from topline and cheap to in-depth and expensive. We recommend that you choose a method your can afford to repeat on a regular basis so that tracking becomes a regular part of your business process

Key points

The role of brand tracking methodologies is to monitor the health and the value of your brands. These are the business equivalent of taking your temperature or reading your pulse - they can tell you quite reliably (within statistically-dictated tolerances) whether you are ill or well, and even how ill or how well. They can also point to certain symptoms. However, if you want to know how to get better, you may have to go to see a doctor (or, in this case, a consultant/marketing research agency using sophisticated diagnostic and prognostic techniques).

There are at least six ways of tracking your brand health (in order of increasing cost):

1. Running top-line brand equity research to measure the customer-perceived health of your brands
2. Buying trade + home audit data in consumer markets
3. Running pricing research to measure the price/value of your brand (a key component in brand valuations)
4. Conducting a formal valuation of your brands
5. Measuring the impact of each constituent of the branding mix (products/services, advertising, promotions, packaging, sales force, call centers, eBusiness, public relations etc.) on the overall health of your brands
6. Developing a business scorecard that can track all inputs to the financial results of the company, and the performance of branding within that total business mix

With the ever greater pressure on Marketing to demonstrate its contribution towards the financial performance of the business, the emphasis will most likely move towards greater investment in tracking mechanisms. To satisfy this trend, more and more sophisticated measurement techniques are coming onto the market.

In more detail............

Brand equity research

This is the cheapest of the brand tracking mechanisms, and can be very cheap if kept to a core number of questions:

Indeed, by asking four sets of questions, you can get a reading on:

• brand/category usage - from usage questions
• awareness/familiarity - from brand stature and intimacy questions
• brand stature - from a brand stature question
• brand intimacy - from a brand intimacy question
• a categorisation of your customers and potential customers (suspect, potential, lost customer, customer, advocate) - from brand stature/intimacy & usage questions
• performance against your key brand attributes - from brand attribute questions
• drivers of loyalty - by correlating your brand attribute performance scores with your combined brand stature/intimacy scores
• association between brand loyalty & usage - by tabulating brand stature/intimacy scores against usage categories (or using categorical statistical techniques)

These four sets of questions are:

1. Brand/category usage:
• Which brands are you currently buying/using [within this sort of environment/situation/mood]?
2. Brand stature:
• How would you rate the quality of the products/services of this brand?
3. Brand intimacy:
• To what extent is this your kind of brand
4. Performance against brand attributes:
• To what extent do you agree with the following statements about these brands?

Trade + home audit data

In larger markets, there are often several agencies running trade audits which work by obtaining data (increasingly Electronic Point of Sale EPOS data) from large wholesalers/distributors/ retailers and by surveying a sample of the smaller ones. EPOS data tend to be very accurate. Grossing up from a representative sample of smaller distributors/retailers will inevitably be less accurate.

Alongside the trade audits, the major agencies also offer home audits, where consumers record what goods/services they have purchased. They may also be asked to answer a number of attitudinal questions.

Combined, they can provide:

• market share data
• sales growth/decline within a competitive context
• customer retention data
• customer loyalty (attitudinal) data

Price/value research

Some companies (notably Intel) commission regular price/value research that they share with their manufacturing intermediaries.

Setting the prices for products/services within a brand is both a major determinant of the profitability of the brand, and a marker to the customer of the quality of the brand.

It is also important to understand that the perceived value of your brand is not fixed or unitary - it is relative to each individual customer & to competitor pricing within the category of products/services in which you operate. You can increase your prices & see an increase in your sales & profits, or you can increase your prices & see a decline in your sales & profits - it depends on how many people accord you what level of premium, & what the competition is doing. Generally speaking, price levels within a market are set by the brand leader, who also benefits from the lower costs associated with selling the highest volume.

There are two main price/value methodologies:

1. brand/price trade-off - which works by mocking up a typical shelf of products/services so that the customer can choose the brand + format s/he prefers within a given repertoire at pre-specified starting prices. Each time the customer chooses a brand, the price of that brand is increased by, say, 5%, & the customer is asked to choose again.
2. conjoint analysis - works by calculating the utility value of each component of a product/service. The greater the utility value of the product/service, the more it is worth. Like brand/price trade-off, conjoint analysis seeks to replicate a typical purchasing environment. Unlike brand/price trade-off, conjoint analysis does not seek to represent the choices by physical products/ services. Rather, the customer is offered a series of paired comparisons or multiple comparisons, usually in the form of cards or options on a computer screen. conjoint analysis is especially useful for calculating the value of individual components of a total package (e.g. the different accessories in a car).

Brand valuation

There are a number of bases on which to value a brand, depending on the purpose of the valuation:

• market value
• brand contribution/profitability
• royalty value
• price premium

For each of these a considerable amount of internal accounting & market information needs to be available:

• brand accounting - the starting point is to structure your management accounts by brand. What are the sales, what are the profits, what tangible & intangible assets are allocated to the brand, & what is the performance forecast for the next few years? Many, if not most, companies will not have this information
• market environment - if a brand has a value today, how stable is this value? Will changing market conditions impact its value &, if so, in which direction & to what extent?
• price premium - this could be a calculation of the actual price premium currently charged in the market, or a research program to ascertain what price premium could be charged if the products/services associated with the brand were to be charged to their full market value
• legal rights - is the ownership of the brand clean? In which categories in which markets is the brand registered? Is the trademark disputed in any markets? Does the business own the Internet domain name?

At the basis of most valuations is the question -How much more profit will I make from buying or licensing this brand than if I were to build my own brand?. The core technique for valuation is therefore a discounted cash flow chart that measures estimated net present value over a specified number of years.

Measuring each constituent of the branding mix

New techniques are coming onto the market to measure the effectiveness of each constituent of the branding mix against the desired outcomes for the brand (be it sales/profit growth or market share).

This approach will combine data from the following areas:

• expenditure on each element of the branding mix

• data analysing and logging the key attributes of each element of the branding mix. For instance, in the case of advertising, it could be timing and weight of advertising, predictive scores collected during pre-tests, attitudinal feedback on the advertising, the brand and competition

• sales and/or market share performance

These data will then be correlated using either statistical or neural network (fuzzy logic) techniques, that will not only identify the inter-relationships and sequencing of those relationships, but can also work predictively.

These techniques can only operate where there is a regular flow of data, so linking internal cost management data, to e-commerce data, to consumer trade and home audit data would potentially provide you with an extremely rich picture.

Business scorecards

Processes for defining business scorecards have been developed over recent years in order to model the influence of external & internal activities on required outcomes - usually measured in terms of financial factors:

• sales
• profits
• economic profit/value added
• productivity

The three most famous scorecards are:

• the Balanced Scorecard, developed by Kaplan & Norton
• the Baldrige Award assessment model
• the EFQM (European Foundation for Quality Management) model

All three were developed to try to counter-balance the preponderance of financial measures used in companies, masking the importance of the processes that generate those financial outcomes. All are time-consuming to develop, but many of the companies that have adopted these models have out-performed their peers.

The basic framework of the scorecards is to track the business' core capabilities:

1. Wealth development
2. Customer intimacy
3. Process development
4. Renewal
5. Leadership

and the processes associated with the assets & resources which underpin these capabilities:

• Financial management
• Knowledge management
• People management
• Physical asset management
• Production management
• Logistics management
• Innovation management
• Market value management

The more sophisticated scorecards are designed as predictive models, formulating for each capability a series of processes that build that capability.

The business scorecard also has to take into account several other dimensions:

• organisational intent - the scorecard should be based upon the business strategy. The business should be designed to deliver the strategy, & the scorecard should model the business
• time - the scorecard lives in the present, but is predictive of the future & cognisant of the past
• the stability of the environment - no business lives in a vacuum. The scorecard has to have knowledge of trends in the environment surrounding the business, & what impacts these will have on the business
• knowledge generation - the scorecard is a means of knowing the business, but must also reflect & improve upon that knowledge

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