Which of these metrics is especially important to clients who are running a branding campaign? Let’s talk about now “Methodology for evaluating the effectiveness of branding”!
Let’s start easy!
How to measure brand performance
We talk a lot about the importance of branding. But how do you know if a brand works in practice?
The easiest way to do this is by answering 3 questions:
- Do you manage to attract a new audience?
- Do they shop with you?
- Do they come back for repeat purchases?
If all the answers are “yes”, congratulations, your brand is working. But this is only the most superficial analysis. The devil is in the details. We will talk about them in our material.
Brand Performance Metrics
Despite the growing demand for accurate measurement of promotional performance, few companies use brand performance metrics . Yes, someone evaluates marketing campaigns. Others also track online reputation. But the effectiveness of branding as a whole is estimated by units.
Perhaps the fact is that there is no understanding of how to do this, what indicators to rely on and what methods to apply. And it can be fixed.
First, let’s understand what we mean by efficiency. In our understanding, this is the ratio of the effect obtained (brand perception, changing audience behavior and economic factors) and the costs of achieving it. Simply put, how much we spent on branding and what we got out of it – recognition, income, loyalty. When it comes to business, numbers always speak louder than words.
Branding costs are all expenses for brand development , its visual packaging, and promotion in communication channels. All these data are usually available and convenient for analysis.
But when processing costs, it is important to consider the following factors:
- The time period for which funds were spent on branding;
- Advertising spend directly increases sales, so they are usually only evaluated in this context. However, promotional activities also create brand awareness and image, which affects future sales.
The resulting effects with branding costs can be divided into 3 groups:
- Perception. Here we evaluate whether it was possible to create knowledge about the brand and form a positive attitude towards it;
- Behavior. Here we evaluate whether we have achieved the formation of brand loyalty;
- Economy. Well, everything is simple here: did you manage to increase income, strengthen your position in the market, increase the capitalization of the company.
When we understand what brand performance indicators to pay attention to, it’s time to move on to methods.
A practical guide to branding a company, product, or person.
Methods for evaluating brand performance
There are many methods for evaluating brand performance. Among them, 4 popular models from the following specialists stand out:
- David Aaker;
- Leslie de Cernatoni;
- Mark Sherrington;
- Scott Davis and Michael Dunn.
We will consider only the most interesting, in our opinion, technique – Scott Davis and Michael Dunn. It is based on an analysis of the ways a person contacts a company.
Contact branding model The
effectiveness of brand management is measured by identifying and managing points of contact with the company. It is in the analysis of the Customer Journey Map that the essence of this technique is.
What are “points of contact”? This is how a person interacts with a company: before, during and after the purchase.
Even before the direct purchase of a product or service, brand awareness can be created through advertising messages, PR campaigns, and promotions. This group of touchpoints with the brand has other purposes:
- Create a perception of the company and expectations of a positive experience;
- To bring to the person the key advantages and benefits of the product;
- Motivate the person to consider purchasing the product
It is important that this stage creates expectations that you can later meet with the quality of the product and service. Otherwise, expectations will quickly be shattered by a negative purchase or use experience. There can be no question of any efficiency then. And forget about repeat purchases immediately.
Points of contact in the buying process should form a positive brand experience. How a person was served, how friendly the staff was – there are no trifles here. If this is an offline point, then the atmosphere in the room, sensitive marketing , and merchandising are important for a person. If the experience turns out to be positive, right at this second a person will be determined to pay more than for a similar solution, and will also consider additional offers.
Contacts after purchasing a product or service maintain a positive attitude. Their goal is for a person to achieve maximum satisfaction from the brand. Here concentrate on post-service, guarantees, loyalty programs (discount cards, offers for regular customers). You can measure the effect of this activity by the number of returning customers and those who came on the advice of friends.
What is the point of “contact branding”? It’s simple: a positive experience at all stages of a person’s interaction with a company leads to an increase in the effectiveness of branding. With negative baggage, exactly the opposite is true. Even the slightest dissatisfaction at one of the points of contact will lead to a decrease in the overall effectiveness of branding.
Brand performance analysis in this model includes strategic and tactical metrics.
The strategic ones are:
- building brand capacity;
- attracting customers with the help of company attributes;
- customer retention;
- brand purchases;
- brand loyalty.
They are needed to be able to assess the impact of the brand on business performance. With them there is an understanding of what contribution branding has made to the development of the company.
Tactical metrics include:
- knowledge about the company;
- understanding of the characteristics of the enterprise;
- degree of brand fit;
- brand confidence;
- fulfillment of promises to the audience;
- brand preference in a situation of choice;
- influence of the brand on the purchase decision;
- product satisfaction;
- recommendations to friends and family.
They are needed to be able to evaluate the effectiveness of branding actions from the standpoint of shaping the customer experience at points of contact.
Analyzing the metrics, it is easy to understand what are the strengths and weaknesses of the enterprise, what ways of interaction between the buyer and the company need to be strengthened or adjusted.
A brand is a strategic asset of an enterprise. And it is important to understand how it is used, what is the use of it for the company. And in order to make branding decisions that are based on facts, it is necessary to evaluate the success of all ongoing events. And now you know how to do it and what methods for evaluating brand effectiveness are.
Recently, branding issues have increasingly become the object of theoretical research and scientific research. Nevertheless, these studies remain problems that are rarely analyzed by theorists, among them is the assessment of the effectiveness of branding. Weak theoretical development of this problem is reflected in the actual practice of brand management. Despite the growing need to accurately measure the performance of brand building and promotion activities, few companies actually use branding performance metrics. If these indicators are used, then they measure the effectiveness of applying only a single branding event (for example, the effectiveness of using marketing communications tools to promote a brand),
Thus, there is a need for a clear methodology that allows you to evaluate the effectiveness of various branding activities in a complex, i.e. in the integrated assessment of effectiveness. This article proposes one of the options for possible approaches to solving this problem.
The first part of the article is devoted to a brief analysis of existing models for evaluating the effectiveness of branding. The second part of the article proposes an integrated approach to evaluating the effectiveness of branding, describes the structure and content of the main stages of evaluation in accordance with the proposed model.
Differentiation of approaches to assessing the effectiveness of Branding
The concept of branding effectiveness. Efficiency characterizes the ratio of the effect obtained and the cost of its implementation and is “a kind of price or payment for achieving this result” [Bukhalkov, 1999, p. 341]. Thus, in order to define the concept of “branding effectiveness”, it is necessary to determine the costs of branding and the effect obtained.
Branding costs are determined by summing up the costs incurred to create and develop a brand: the costs of its development, creation and promotion using marketing communications. Information on the costs of conducting branding events is, as a rule, relatively accessible and convenient for processing and analysis.
However, when calculating costs, the following factors must be considered:
- the time period for which branding costs are calculated;
- structural components of costs in valuation. So, it is known that investments in advertising, on the one hand, lead directly to an increase in sales, which are measured immediately, on the other hand, these investments create brand awareness and image, which contributes to future sales;
- discount rates when adding costs (to bring past costs to the present period).
branding effects. Any effect reflects the degree of achievement of some given result, in the evaluation of which the actual or expected indicators are compared with a predetermined goal (planned indicators). If the result is not achieved at all, then the efficiency loses its positive economic value. So, in the production and economic activities of the company, the efficiency indicator expresses, as a rule, the amount of income per unit of costs, for example, the profitability of products [Bukhalkov, 1999, p. 341].
In branding, it is much more difficult to define the concept of effect, since brand building is associated with the creation of not only material, but also emotional and symbolic values. Therefore, the concept of effect in branding is multidimensional. Due to the complex nature of costs and benefits, when evaluating the effectiveness of branding, a set of branding effects should be considered.
It seems that effects in branding can be divided into perceptual, behavioral and economic effects. Perception effects are associated with the creation of brand awareness and the formation of a positive attitude towards it (through various marketing communications activities). Behavioral effects are associated with the formation of brand loyalty. Economic (financial and market) effects are associated with an increase in sales volumes or brand market share, an increase in brand equity.
Approaches to evaluating the effectiveness of branding. Currently, many authors, to one degree or another, have touched on the issue of evaluating the success or effectiveness of branding, offering various approaches to solving this difficult task. Below, in a summarized form, a number of approaches and models are presented that allow evaluating the effectiveness of branding. It is obvious that the brief overview shown does not exhaust all existing approaches, however, most of the proposals left outside of it are to some extent similar to the options for evaluating the effectiveness of branding below.
Model L. de Cernatoni. L. de Chernatony in his works focuses on the importance of a holistic approach to evaluating the effectiveness of brand management. In 1998, he undertook a study that demonstrated the need to use a whole range of criteria to assess the success of a brand, both based on business indicators and obtained by evaluating consumer opinions [de Chernatony, Riley, Harris, 1998].
Later, this approach was developed in the development of a matrix consisting of two columns (internal and external brand assessment) and five rows (brand vision, organizational culture, brand objectives, brand essence, implementation and search for resources for the brand) [de Chernatony, 2006, p. 206].
On fig. 1 shows five categories representing the building blocks (successive stages) of creating and developing a brand. Within each of them, questions were formulated (a total of 51 questions) that make it possible to determine the effectiveness of branding at each specific stage of brand building.
The answers to these questions are given on a scale from 0 to 5 points. For each of the categories, an integral score is calculated (arithmetic mean of the scores for the entire number of questions within a certain category). So, for example, in the case of the Brand Vision option, the denominator is 14.
Rice. 1. Evaluation of branding effectiveness at various stages of brand building
Compiled from: [de Chernatony, 2006, p. 306].
The next step is to build a brand health chart, which makes it possible to assess its viability. Thus, in the hypothetical example given by Cernatoni, the analyzed brand enjoys strong support from the “organizational culture”, but has problems in terms of “brand objectives” (Fig. 2).
A thorough analysis of the brand health chart allows specialists to identify areas in which it is necessary to take measures to improve the effectiveness of brand management [de Chernatony, 2006, p. 311].
Model M. Sherrington.M. Sherrington (M. Sherrington) proposes to assess the effectiveness of branding using a key performance indicator (Key Performance Indicator – KPI), which is tied to the company’s strategy and its specific vision of the market [Sherrington, 2006, p. 220]. Sherrington emphasizes the need to identify a dominant KPI, arguing that this is “an excellent way to focus a business on the right growth pattern and verify that growth goals are being achieved” [Sherrington, 2006, p. 224]. On the one hand, the simplification of the system of indicators aimed at adapting to a specific market situation is justified. On the other hand, there are certain limits to simplification, and therefore, it is unreasonable to reduce such a complex and multifaceted construct as a brand to one dominant indicator. Besides,
Rice. 2. Brand health chart (hypothetical example)
Source: [de Chernatony, 2006, p.311]
Model D. Aaker. Brand management guru, American specialist D. Aaker believes that the effectiveness of branding should be evaluated based on the analysis of indicators of the use of brand capital assets, such as “brand awareness”, “perceived brand quality”, “brand loyalty” and brand associations.
The effectiveness of the use of assets can be assessed using a system of indicators (Fig. 3), which the author called “a dozen indicators of brand equity” (“Brand Equity Ten”). At the same time, the author believes that effective brand management includes a system of not only financial, but also behavioral and market indicators [Aaker, 2003, p. 376-377]. It should also be noted that this “ten” does not necessarily represent the optimal set for all possible situations and, according to the author, requires modification to be tied to a specific situation and the task being performed.
As shown in fig. 3, the first four groups of indicators are consumer assessments of brand equity assets obtained as a result of research. The fifth group uses indicators that reflect the situation on the market (market share, brand representation in the distribution network). At the same time, according to D. Aaker, consumer loyalty to the brand remains the key parameter of brand capital, since it is “an entry barrier for a competitor, the possibility of obtaining a price premium and time to respond when new competitor products appear, as well as an obstacle to destructive price competition. » [Aaker, 2003, p. 380].
|Commitment indicators1. Price premium2. Customer Satisfaction/Brand Loyalty||Perceived Quality/Brand Leadership Metrics3. Perceived quality4. Leadership/popularity|
|Association/Differentiation Indicators5. Perceived value6. Brand personality7. Associations with the organization||Brand Awareness Metrics8. Brand Awareness|
|Market Behavior Indicators9. Market share10. Market price and brand exposure in the distribution network|
Rice. 3. The Top Ten of Brand Equity Source: [Aaker, 2003, p. 380].
Approach by T. Munoz and S. Kumar. T. Munoz and S. Kumar propose to build a branding evaluation system based on three classes of metrics (perception metrics, behavioral metrics, financial metrics), which make it possible to evaluate the effectiveness of branding [Munoz, Kumar, 2004 ]. At the same time, the company itself determines which metrics will be included in these groups. The disadvantage of the proposed model is that it does not include market metrics (e.g., market share and brand distribution rates), focusing only on consumer and financial metrics.
Research by D. Lehman, K. Keller and J. Farley.In 2008, the results of a study by D. Lehmann, K. Keller and J. Farley, devoted to the study of brand metrics, were published [Lehmann, Keller, Farley, 2008, p. 29–56]. The main goals of this analysis were to identify “universal” brand metrics (cleared from cross-cultural differences in the perception of brands) and establish subordination between them. The results obtained made it possible to form an assessment system from six key groups of brand metrics, including “brand awareness”, “comparative advantage”, “interpersonal relationships”, “brand history”, “brand preference” and “brand commitment”. In addition, the need to pay more attention to metrics such as “interpersonal relationships” and “brand story” is emphasized. Unfortunately, this study is devoted to purely consumer metrics (to a greater extent – to the metrics of perception and to a lesser extent – to the metrics of behavior). Nevertheless, the formed groups of metrics can be used to build a general model for evaluating the effectiveness of branding.
Model by S. Davis and M. Dunn. There is another model for evaluating the effectiveness of branding – the approach proposed by S. Davis and M. Dunn, which we propose to dwell on in more detail. In their opinion, in order to assess the role of the brand in achieving the strategic and tactical goals of the company, it is necessary to develop indicators (metrics) of branding effectiveness – “measurable parameters for evaluating the effectiveness of the actions of a brand-oriented company, i.e. a company that adheres to the rule of compliance with existing or desired brand policy when making strategic decisions” [Davis, Dunn, 2006, p. 147].
To develop branding performance indicators, S. Davis and M. Dunn suggest using the concept of contact branding. It is based on the fact that by identifying and controlling the points of contact between the brand and the consumer, it is possible to evaluate the effectiveness of brand management. At the same time, points of contact are understood as all those ways, using which “existing and potential consumers come into contact with the brand, and which can or are already being used to influence current or future decisions related to the brand” [Schultz, Kitchen, 2004, p. 137].
To evaluate the effectiveness of branding, Davis and Dunn propose to analyze the formation of consumer experience from the perspective of three groups of consumer-brand contact points, such as:
- 1) experience before making a purchase;
- 2) experience at the time of the purchase;
- 3) post-purchase experience (Figure 4).
At the same time, the authors of the model note that the division of contact points into these groups is very arbitrary, since the same points can be in more than one group at the same time and influence the behavior of both potential and real buyers.
Rice. 4. Wheel of brand touchpoints Adapted from
: [Davis, Dunn, 2005, p. nineteen].
The first group of touchpoints, aimed at attracting new consumers, forms knowledge about the brand before making a purchase. The experience of contact with the brand can be gained primarily through the impact of various marketing communication tools: advertising, viral marketing, PR-actions, sales promotion. These marketing communications tools aim to, first, create brand awareness; secondly, to form the perception of the brand and the expectations associated with it; thirdly, to convey the main benefits and advantages of a branded product to a potential buyer; fourthly, to achieve the inclusion of the brand in the buyer’s choice kit. At the same time, in our opinion, one should not overestimate, exaggerate the expectations of buyers from the acquisition of this brand with the help of marketing communications (primarily advertising),
The second group of points of contact is formed during the purchase. It aims to create a positive consumer contact with the brand during the purchase. The formation of a favorable impression of the brand is influenced by the quality of service and the professionalism of the sales staff, the atmosphere in the store, merchandising, sales promotions at the point of sale (distribution of trial samples, tastings).
The third group is contacts after making a purchase. It is aimed, firstly, at maintaining a favorable image among consumers who have purchased a brand; and, secondly, to achieve a high level of satisfaction from their purchase. For the formation of a positive experience after the purchase, after-sales services, guarantees, and service are very important. However, the main goal of creating a post-purchase experience is to increase the number of customers loyal to the company and brand. This goal is achieved not only by a high level of service and brand support in accordance with the expectations that arose before and during the purchase, but also by loyalty programs (discount programs, sales promotions, loyalty clubs).
As a result, the effectiveness of contact branding lies in the fact that the consumer receives a positive impression at all levels of contact with the brand. A negative customer experience at one of the levels of touch points will lead to ineffective branding as a whole. In other words, a favorable impression received by the buyer at one of the levels of points of contact with the brand is not always able to “compensate” for the negative attitude towards him experienced at another level. Thus, poor after-sales service will undermine the consumer’s trust in the brand, and the brand promises made in the previous two stages of formation will be in vain. It becomes clear that it is the total amount of brand exposure that consumers accumulate over time that determines their response to branding programs,
In this regard, it is very important for a brand manager to understand how existing and potential consumers come into direct contact with the brand.
Metrics of contact branding in the model of S. Davis and M. Dunn. There are two types of metrics that, according to S. Davis and M. Dunn, should be taken into account in the company’s metrics system. Tactical metrics provide branding performance diagnostics in terms of shaping the customer experience at brand touch points. The authors note that these metrics “help you evaluate the activities you carry out that are relevant to existing or potential customers within one of three groups of brand touch points” [Davis, Dunn, 2005, p. 244].
The tactical Davis and Dunn include the following branding effectiveness metrics: brand awareness; brand awareness; brand relevance; brand trust; fulfilling brand promises; brand preference; brand review; influence of the brand on the purchase decision; brand promise fulfillment; brand satisfaction; brand recommendation [Davis, Dunn, 2005, p. 245–252].
Thus, the listed tactical metrics should be taken into account when evaluating the effectiveness of company activities at points of contact with the brand. Performance analysis provides an opportunity to identify brand strengths and weaknesses and identify those brand touch points that need to be strengthened.
Strategic metrics, in turn, “provide a diagnosis of brand impact on business performance. These metrics help evaluate the impact of your brand building activities on the overall performance of the brand, and thus the overall performance of the company” [Davis, Dunn, 2005, p. 244].
The following six strategic branding performance metrics provide an opportunity to assess how a company’s brand building efforts and actions at brand touch points affect overall performance:
- 1) brand extension;
- 2) acquisition of buyers with the help of the brand;
- 3) retention of brand buyers;
- 4) buyability of the brand;
- 5) brand price premium;
- 6) brand loyalty.
The choice of certain metrics for assessing the effectiveness of branding depends on the specific objectives of the assessment. Without a clear understanding of specific goals, the company will constantly experience difficulties in determining which of the metrics is really fundamental to it. Table 1 can provide guidance in choosing the most appropriate metrics for a company, given its goals.
Table 1. Joint review of brand goals and metrics
Source: [Davis, Dunn, 2002, p. 215].
Integral branding effectiveness evaluation model
Each of the above approaches to evaluating the effectiveness of branding has its own advantages and disadvantages. Most of them are characterized by the premise that it is necessary to use consumer and financial market metrics to obtain an adequate estimate. We share this position, however, in our opinion, none of the existing assessment models fully covers all the necessary indicators. One of the most promising approaches for the development of a new, integral model for evaluating the effectiveness of branding is the model of contact branding by S. Davis and M. Dunn. The choice of contact branding effectiveness metrics as fundamental in the system of indicators of the effectiveness of branding events as a whole is explained, in our opinion, by the fact that they:
- are practice-oriented, as they allow you to evaluate how the brand manifests itself outside of companies in terms of customer expectations and competitors’ actions;
- provide information for making thoughtful strategic and tactical decisions on the creation, promotion and after-sales service of the brand;
- provide diagnostics of brand impact on business performance;
- allow the company to more effectively invest in the support and development of brands;
- act as starting base indicators (indicators of the first level effect – the effect of perception), on the basis of which it is possible to build a chain of behavioral, market and financial indicators for evaluating the effectiveness of branding [Starov, 2008, p. 251].
However, we propose to structure the system of metrics proposed in the Davis and Dunn model not from the standpoint of the implementation of strategic and tactical goals, but from the standpoint of interdependence and mutual subordination of metrics. It seems that this approach allows creating the basis for the development of an integral model for measuring the effectiveness of branding, where each of the 17 metrics associated with a specific category of brand touch points can belong to one of the following four generalized groups of metrics identified on the basis of contact branding marketing activities:
- 1) perception metrics;
- 2) behavioral metrics;
- 3) market metrics;
- 4) financial metrics (Fig. 5).
These groups of metrics make it possible to carry out integral monitoring of branding effectiveness (primarily the implementation of perception effects, behavioral, market and financial effects), i.e. track how effectively investments in the construction and development of the brand are used.
Perception metrics determine the degree of consumer awareness of the brand, their understanding of the advantages and benefits of its acquisition, the possibility of its inclusion in the selection package, i.e. evaluate consumer behavior before they make a purchase of a brand.
Behavioral metrics assess aspects of consumer behavior primarily after a purchase, which are manifested in brand preference, repeat purchases, loyalty and willingness to recommend a favorite brand to others.
Market metrics determine the competitive position of the brand in the market, predetermine the economic and financial results of branding. Indicators such as market share, brand development index, distribution level represent the main market metrics for evaluating the effectiveness of branding.
Financial metrics reflect the return on investment in the brand, the financial assessment of brand equity growth due to successful contact branding activities. For this, indicators such as ROBI (brand investment efficiency) and current brand value are used.
All these types of metrics provide an opportunity to fully evaluate the effectiveness of branding (Table 2). According to well-known experts in the field of brand management T. Munoz and S. Kumar, “the key benefit of the brand evaluation system is that it allows you to link branding and financial results” [Munoz, Kumar, 2004, p. 382]. All of these indicators are interrelated and interdependent. Improving the target indicators of one of the groups of metrics contributes to the growth of the performance of the indicators of the other group of metrics.
For example, let’s trace the relationship between market and financial metrics. Strong brands have significant market share: typically, the market share of the leading brand is twice that of the brand in second place, and three times that of the brand in third place in the market. The brand with the largest market share produces the highest value. According to a study of 2600 companies, the rate of return on investment of brands with a market share of 40% is, on average, three times higher than those of brands with a market share of 10% [Doyle, 2001, p. 237] (Fig. 6).
Table 2. Branding performance metrics
|Perception Metrics||Behavioral metrics||Market Metrics||Financial Metrics|
|Awareness||Acquaintance and willingness to be included in the selection kit||Buying decision||Loyalty||Market behavior||Creating Cash Flows|
|Are consumers aware of the brand?||What do consumers think about the brand?||How do buyers behave?||How do buyers behave after the purchase?||How does the brand behave in the market?||How does a brand create added value?|
|induced awarenessSpontaneous awareness||Brand differentiationBrand relevanceBrand TrustConsidering a brand among alternative buying optionsInfluence of the brand on the purchase decisionBrand awareness||Acquiring customers with a brandBrand BuyabilityBrand PreferencePrice premiumBrand Excellence||Brand SatisfactionBrand CommitmentWillingness to make brand recommendationsKeeping brand promisesRetention of brand buyers||Brand market shareBrand distribution levelBrand development indexBrand extension||ROBIBrand value|
Compiled after: [Davis, Dunn, 2005, p. 245–253; Munoz and Kumar, 2004, p. 383].
Rice. 6. Relationship between market share and brand return on investment
Source: [Doyle, 2001, p. 238].
Let us consider these groups of metrics in more detail.
Brand perception metrics (Table 3) are divided into two groups:
- awareness metrics;
- metrics of familiarity with the brand and readiness to be included in the selection kit. This group of metrics is measured during consumer marketing research. The group of perception metrics includes both metrics that are widely used in other branding performance evaluation models (for example, brand awareness or influence on the purchase decision) and less common metrics (for example, brand awareness).
Table 3. Brand Perception Metrics
|Metrics||What does it measure?|
|Brand awareness and recognition||Measures brand visibility in the market|
|Brand differentiation (uniqueness)||Measures the degree of uniqueness attributed by existing and potential customers to a brand|
|Relevance (relevance) of the brand||Shows the relevance and relevance of brand value to various stakeholders, given unmet market needs|
|Brand Trust||Measures whether a brand’s promise actually seems accurate and compelling to current and potential customers|
|Considering a brand among alternative buying options||Indicates how willing consumers are to include a brand in the final set of considered purchase options|
|Influence of the brand on the purchase decision||Demonstrates the likelihood that a brand is included in the final set of options considered before making a purchase decision|
|Brand awareness||Measures whether potential buyers really know what the brand means, what value it provides, and what benefits can be obtained from the experience of interacting with the brand|
Compiled after: [Davis, Dunn, 2005, p. 245–253].
Behavioral metrics (Table 4) are aimed at assessing the cognitive and affective attitude towards the brand, which forms a general opinion about it. They can also be divided into two groups of indicators:
1) related to the purchase decision;
2) related to behavior after the purchase.
Table 4. Behavioral brand metrics
|Metrics||What does it measure?|
|Acquiring customers with a brand||Shows the number of new customers acquired by the company as a result of brand asset management activities.|
|Superiority||Shows whether buyers consider the researched brand to be unique and superior to other analogues|
|Brand Buyability||Measures the number of existing customers who purchased more of your products or services as a result of your brand building efforts and thus generated more revenue for you.|
|Price premium||Determines the amount of premium to the price that can be set for the brand relative to the prices of branded goods of competitors in this category|
|Brand Preference||Determines the brand’s priority in the set of options available to customers|
|Brand Commitment||Allows you to assess whether customers are returning to the brand again|
|Retention of brand buyers||Measures the number of customers a company would lose if it did not use a sound brand asset management strategy that provides an understanding of the degree of loyalty customers have to a brand|
|Fulfilling the brand promise||Measures the degree of trust existing and potential consumers have in brand promises|
|Brand Satisfaction||Determines the degree to which a brand meets consumer expectations|
|Brand recommendation||Shows the number of buyers committed to the brand and evaluates their willingness to recommend the brand to other people|
Compiled after: [Davis, Dunn, 2005, p. 245–253].
market metrics. In our opinion, the following indicators should be attributed to the main market metrics that make it possible to determine the effectiveness of branding:
- brand market share;
- brand development index;
- level of brand distribution;
- brand extension.
Brand market share is one of the most important marketing performance indicators of branding, reflecting the competitiveness of the brand, its ability to attract potential and real buyers.
The brand market share can be determined by the formula proposed by G. Dowling [Dowling, 2006, p. 102]:
Brand market share = Penetration rate x (Frequency of purchases x Number of purchases). (one)
Based on formula (1), we can conclude that three strategies should be used to increase the market share:
- 1) an increase in the number of purchased branded goods in one visit to the store (through the use of various sales promotion techniques, in particular, sales of packages containing several units of branded goods at the price of one unit, as well as the use of coupons at points of sales sales promotion;
- 2) increasing the frequency of brand purchases in the market (a strategy aimed at persuading people to use a branded product more often and more intensively);
- 3) an increase in the degree of brand penetration (the percentage of buyers of the desired brand from the total number of buyers who purchase goods of a certain category to which this brand belongs).
Brand switching dynamics and market share. Market share and its dynamics can be tracked based on the analysis of switching between brands. In this regard, the study of this problem, carried out by J.-J. Lambin (J.-J. Lambin).
To simplify the analysis of switching, Lamben limited himself to considering a market consisting of two competing brands. As shown in fig. 7, in terms of dynamics, each specific purchase has three outcomes:
- 1) purchase of goods of brand A;
- 2) purchase of goods of brand B;
- 3) refusal to purchase.
Then, for brands A and B, it is necessary to determine the “level of loyalty” and “level of attraction”, which is determined by surveys or other types of consumer research. These levels, in turn, characterize the switching between brands [Lamben, 2004, p. 248]:
- the level of loyalty is the percentage of buyers who, having purchased goods of brand A in the past period (t – 1), continue to buy goods of this brand in the current period (t);
- the level of attraction is the percentage of buyers who, having purchased a product of a competing brand in the past period (t – 1), chose brand A in period t.
These quantities, called “switching probabilities” by Lambin, allow us to explain changes in market share and formulate forecasts of the future state of the market.
Brand distribution level.
The brand may be well-known, but a weak presence in the distribution channels (especially its absence) can nullify all successful branding efforts. To analyze the level of brand distribution in the market, sales monitoring data (audit of retail trade) of independent research companies are used. The study of audit data is interesting from the point of view of assessing the positions of competing companies in relation to the representation of brands in retail trade in a particular region.
It is advisable to consider several indicators at once. Along with the traditional indicator of numerical distribution (numerical distribution), i.e. percentage of stores with a brand on the shelves, it is also reasonable to estimate the weighted distribution indicator. It represents the cumulative share of stores that carry a given brand in total sales for the category as a whole. If numerical distribution can be considered a quantitative indicator that reflects the breadth of branded product representation, then a qualitative indicator that reflects the level of brand representation in retail outlets is weighted distribution.
To assess the level of brand distribution, the indicator of the lack of goods in a retail outlet (Out of stock or OOS distribution) is also used. This indicator assesses the stability of the supply of branded goods to retail outlets. As a rule, the lower the OOS indicator, the more effective the work of distributors in promoting the company’s brand (in the city, region, country) is.
Brand development index. If the distribution of the company’s products occurs in different areas of the country, it is recommended to use the brand development index (Brand Development Index – BDI). It is calculated using the following formula:
Moreover, if BDI < 100%, then the indicator is considered low, and if BDI > 100% – high. Accordingly, the regions can be divided into areas with low and high BDI values.
Brand extension. If a company wants to stretch or expand a brand, a brand leverage study is conducted – the brand’s ability to expand by increasing the number of users, expanding into new product groups, new markets and in a new quality. In fact, this is the difference between efforts to promote the same product using an existing brand and a brand from scratch.
This metric is very important for evaluating the effectiveness of brand strategies, optimizing the brand portfolio, and geographic expansion of the company.
financial metrics. In addition to market indicators, it is necessary to use financial metrics for the effectiveness of branding, which primarily include the return on investment in the brand (ROBI) and the assessment of the current brand value.
The Return on Brand Investments (ROBI) indicator reflects the effectiveness of investments in brand creation and development projects. The use of this branding effectiveness metric, according to I. Serov, has the following advantages [Serov, 2005, p. 12]:
- serves as a simple criterion for comparing the performance of alternative brand solutions;
- allows you to prioritize the financing of brand projects;
- makes it possible to evaluate the effectiveness of the brand manager (the average ROBI for a particular brand is compared with the indicators for the company as a whole and for individual brands of the company’s brand portfolio).
The formula for calculating ROBI proposed by Serov is as follows:
where Incremental Gross Margin is the increase in gross income; Brand Investments – investment in the brand.
Investment in the brand, in turn, is calculated by the formula:
Brand Investments = Up-front development costs + Variable Expenses + (6) + Long-term expense commitments + Marketing Staff + Other related costs,
where the main components of investment in the brand are presented in tabular form (Table 5).
Table 5. Brand investment structure
|Up-front development costs||Upfront costs for project development, including product, design, concepts, TV commercials, etc.|
|Variable Expressions||Variable marketing costs (TV, outdoor advertising, press, radio, POS materials)|
|Long-term expense commitments||Long term duties. Advertisers are increasingly entering into multi-year advertising contracts with TV or outdoor advertising providers, which allows them to get better placement conditions. Although the actual cost of such contracts is borne by the advertiser at the time of placement, the resulting long-term liability must be accounted for in the calculation of ROBI as committed.|
|Marketing Staff||Costs for marketing staff (for example, if you have to hire another brand manager to implement the next project for one of the brands)|
|Other related costs||Other project related costs|
Source: [Serov, 2005, p. thirteen].
I. Serov believes that the use of the Incremental Gross Margin should be considered from two points of view [Serov, 2005, p. thirteen]:
1) if we are talking about a short-term project only a few months long (i.e., a project of such duration when the cost of money and risks can be neglected), then the formula for calculating the Incremental Gross Margin is quite simple:
Incremental Gross Margin = Revenues – COGS – Incremental Expenses, (7)
where Revenues is additionally generated revenue (as a rule, “net” revenue minus VAT is taken for calculation); COGS – cost of goods (includes the cost of raw materials and processing); Incremental Expenses – additional variable costs that have arisen in connection with the implementation of the project;
2) if we are talking about longer-term projects, the payback period of which is six months or more, then formula (5) should take into account the discount factor.
Brand value. One of the key indicators for assessing the effectiveness of branding is the assessment of the current value of the brand 1 . Smart branding, based on the effective use of brand capital assets, leads to an increase in the additional value of the brand and, as a result, to an increase in brand value. Thus, according to the British consulting company Interbrand, in 2007 the brand of the Internet company Google achieved significant success, the value of which increased by 44% compared to 2006 (from 12.38 to 17.84 billion dollars). As a result, the brand moved from 24th to 20th place in the ranking of the world’s most expensive brands by value. The increase in brand value, in addition to market factors, seems to be largely due to competent Google branding.
In conditions when the brand becomes a strategic asset of the company, the evaluation of the effectiveness of branding activities is becoming increasingly relevant. It is the assessment of the effectiveness of branding that gives the company the opportunity to make decisions based on facts in the future and optimize the process of making them.
To monitor the success of branding events, it is necessary to develop special metrics. Brand metrics are the measured parameters for evaluating the effectiveness of a brand-oriented company. At the same time, simply measuring metrics and making decisions based on a set of indicators is no longer enough. It is necessary to develop a holistic system of metrics that provides a comprehensive assessment of the effectiveness of branding activities. K. Keller predicted: “In the future, marketers will have to implement complex systems for regular and thorough measurement of the capital of the brand and its competitors, subject to certain rules” [Keller, 2005, p. 679]. This future has already arrived, and the relevance of developing an integral approach to evaluating the effectiveness of branding leaves no doubt.
Among the models presented, we consider the concept of contact branding by S. Davis and M. Dunn to be the most successful for the development of an integral approach to evaluating effectiveness, the content of which is revealed in the fact that by highlighting the points of contact between the brand and the consumer and controlling them, one can evaluate the effectiveness of brand management. The system of metrics within the framework of this approach is divided into tactical (provide diagnostics of branding effectiveness in terms of the formation of customer experience at points of contact with the brand) and strategic (provide diagnostics of the brand’s impact on business performance as a whole).
The authors propose to restructure the system of metrics used to evaluate the effectiveness of branding, dividing them into four main groups: perception metrics, behavioral, market and financial metrics. An integrated approach to the use of these metrics, taking into account their subordination and complementarity, will allow a more balanced and accurate assessment of the effectiveness of measures to create and promote a brand. For the most part, the existing models for evaluating the effectiveness of branding have one significant drawback: the absence of one or another important group of indicators. The use of the proposed integrated approach makes it possible to take into account the multidimensional nature of the brand,
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