How to calculate your Brand Equity?

Building and managing a brand is one of the top priorities for all major firms across the globe today. After all, with a strong brand equity, the consumer acquisition and retention becomes much easier, which is the key to the profitability of any company. Having said that, many companies face difficulty in managing their brands' performance. And one of the major reasons for that remains the fact that these companies are unable to measure their brand equity or performance effectively.

To strengthen the branding for any entity, Marketing Guru Kevin Lane Keller suggests curation of what he calls as a Brand Report Card, a tool showing how their brand stacks up on the top 10 traits shared by the world's strongest brands. This can also become a strong basis to calculate the Brand Equity of any brand. Let us see what these factors are one by one -

1. Deliver benefits customers desire - The brands should create an engaging customer experience. The questions the brand managers need to ask themselves are -Whether they have attempted to uncover the unmet customer needs and wants? If yes, then by what methods? Is there a focus to maximize on the customers' product and service experience? Is there a feedback mechanism from the customer, that is looped to the product or R&D team? A classic example here is Starbucks, which delivers the romance and sense of community defining Italian coffee bars.
2. Stay relevant - The elements of the brand such as the type of person who uses the brand, should keep up with the times. The questions that the brand managers need to ask here are - Have they invested in product improvements that provide better value to the customers? Are they in touch with the customers' tastes in current market conditions and new trends? If yes, then are the Marketing Decisions based on the knowledge of the above? An example here would be Gillette Razor Blades, where Gillette tweaks the images of men at work & play to reflect contemporary trends.
3. Price it based on consumers' perception of brand value - The idea here is that the nature of the product - for example, premium versus household staple - should influence the price. The questions that the brand managers need to ask here are - Have they optimized the price, cost and quality to meet the expected customer expectations? Do they have a system in place to monitor the customers' perception of the brand value? Have they estimated or identified how much value their customers believe the brand adds to the product? An example here would be of the P&G Tide Portfolio in India, where Tide is priced slightly higher to target the Tier 2 segment, whereas Tide Naturals is priced slightly lower to target the Tier 3-4 segment.
4. Position it properly - A brand should have a clear positioning in the minds of the end consumer. It should clearly communicate the similarities and differences from the competing brands. The questions the brand managers need to ask here are - Does their brand have the necessary points of parity with competitors? Also, have they established the desirable and deliverable points of difference? As an example, Visa labels its cards 'Gold' and 'Platinum' to equate its status with American Express Cards. But it also showcases its cards' superiority by featuring desirable locations which don't accept American Express.
5. Be Consistent - The Marketers need to ensure that the communication does not send conflicting messages over time. The questions the brand managers need to ask themselves here are - Are they sure that the Marketing communication that is going out to the consumers is not sending conflicting messages? Are they adjusting the programs to keep current? A classic example here is that of Michelob, whose market share went down drastically for inconsistent advertising about when they should drink beer.
6. Fit sensibly into brand portfolio - The brands in a portfolio need to work logically together to ensure that one does not cannibalize the other, since they are all family. The questions the brand managers need to ask themselves here are - Can they create a seamless umbrella of all the brands in the portfolio? Do the brands in the portfolio hold individual niches? Is there a brand overlap? Do the brands maximize the market coverage? Is the brand hierarchy well thought-out and understood? For example, in the Indian detergent market, Unilever positions Surf Excel for Tier 1, Surf for Tier 2, Rin for Tier 3 and Wheel for Tier 4.
7. Integrate with Marketing Strategy - The Marketers here need to ensure that all the activities and channels communicate the same messages about the brand, solidifying the brand's identity. The questions the brand managers need to ask themselves here are - Are they aware of all Marketing activities that revolve around the brand? Are the people managing each of these activities aware of one another? Have they capitalized on the unique capabilities of each communication channel while ensuring that the capability of the brand is consistently represented? For example, Coca Cola's logo, promotions, corporate sponsorship, and interactive website all reinforce the company's key values, such as 'originality' and 'classic refreshment'.
8. Is meaningful and understood by company folks - The Managers handling different Marketing initiatives should know the consumers' different perceptions of the brand. The questions the brand managers need to ask themselves here are - Do they know what their consumers love and hate about their brand? Are they aware of all the core associations that people make with their brand? For example, Unilever in the detergent category markets Surf Excel for normal wash, and Surf Excel Matic for Washing Machine wash. Thus, a brand extension helps segregate what each item stands for.
9. Receive sustained support - The company should never take their existing brand equity for granted, and should constantly focus on improving it on the go. The questions the brand managers need to ask themselves here are - Are the successes or failures of Marketing Campaigns fully understood, before they are changed? Is the brand given sufficient R&D or Product support? Have they avoided the temptation to cut back Marketing support for the brand in an event of downturn or slump in Sales? The established brands like Nike, Adidas and Puma spend Millions of Dollars on Marketing and Branding every year, in spite of being popular, to stay afresh and within the consideration set in the minds of the consumers.
10. Constantly Monitor Sources of Brand Equity - The companies should invest enough time, effort and resources on calculating the managing the brand equity of the entity. The questions the brand managers need to ask themselves here are - Do they conduct periodic brand audits to assess the health of the brand and set a strategic direction? Do they conduct routine tracking studies to evaluate current market performance? Have they assigned explicit responsibility for monitoring and preserving brand equity? For example - Once Disney's brand audit revealed that the consumers resented excessive exposure of Disney characters at places where there is no obvious connect, the company decided not to co-brand with a Mutual Fund.

Using the brand report card, one can identify the actions required to maximize the brand equity of the entity. In an abstract sense, brand equity provides the marketers with a strategic bridge from their past to their future. In other words, all the money spent each year on Marketing can be looked upon as investments rather than expenses, which would reap fruits in the longer run. With a stronger brand equity, the company not only ensures the customer acquisition in the short term, but also the customer satisfaction and loyalty in the medium and long term, which leads to customer retention, a higher life-time value and hence sustained profitability.

Note: Inputs taken from HBR's 10MR

About the author: The author of the article is the CMO of Finnovation Tech Solutions Pvt. Ltd., the parent company of the brands KrazyBee (India's Largest Student Credit Platform) and KreditBee (India's Fastest Growing Salary Advance & Short-term Personal Loan Platform for Young Professionals). He is a full-stack Marketing & Sales professional, handling various functions ranging from Digital Marketing, Offline Marketing, Field Sales Management, Tele-Sales (Inside Sales) Management, Customer Support and Business Development over the last 2.5 years for the entity.