978-0132664257 Chapter 8 Solution Manual

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Chapter 8

Developing a Brand Equity Measurement & Management

System

Chapter Objectives

1. Describe the new accountability in terms of ROMI.

2. Outline the two steps in conducting a brand audit.

3. Describe how to design, conduct, and interpret a tracking study.

4. Identify the steps in implementing a brand equity management

system.

Overview

If managers are to develop programs designed to build, maintain, or

leverage a brand’s equity, they must %rst understand consumer

knowledge structures for the brand. Marketers need new tools and

procedures that justify the value of their expenditures beyond “Return

on Marketing Investment” (ROMI) measures tied to short-term changes

in sales. This chapter describes various ways to measure those

knowledge structures, which represent sources of brand equity. The

concept of a brand equity measurement system is introduced.

Implementing a brand equity measurement system involves three

steps: conducting brand audits, designing brand tracking studies, and

establishing a brand equity management system.

A brand audit is a consumer-focused exercise to assess the health of

the brand, uncover its sources of brand equity, and suggest ways to

improve and leverage its equity. The brand audit consists of two steps:

the brand inventory and the brand exploratory.

Tracking studies measure consumer attitudes toward the brand on a

consistent basis over time and provide a contemporary picture of the

state of the brand. Five key measures can be used to capture the

consumer mindset: brand awareness, brand associations, brand

attitudes, brand attachment, and brand activity or experience.

Brand equity management systems consist of three components: a

Brand Equity Charter, a Brand Equity Report, and the creation of

senior-level executive positions charged with overseeing the

implementation of the Brand Equity Charter and Brand Equity Report.

The Brand Equity Charter should accomplish the following: de%ne the

%rm’s view of the brand equity concept and why it is important;

describe the scope of key brands; specify the actual and desired brand

equity for all brands in the brand hierarchy; explain how brand equity

is measured by tracking studies and the Brand Equity Report; provide

strategic guidelines for brand equity management; provide speci%c

tactical guidelines for marketing programs; specify proper treatment of

brands in terms of trademark usage, packaging, and communications.

The Brand Equity Report should provide description as to what is

happening with a brand as well as to why it is happening. It should also

include all relevant internal and external measures of brand

performance as well as sources and outcomes of brand equity. To

provide adequate management, it is important for companies to

establish a position of Vice President or Director of Strategic Brand

Management to oversee the implementation of the Charter and Report

and provide central coordination for all branding activities.

Brand Focus 8.0 illustrates a sample brand audit using the Rolex brand

as an example.

Science of Branding

THE SCIENCE OF BRANDING 8-1

THE ROLE OF BRAND PERSONAS

Personas are detailed pro%les of one, or perhaps a few, target market

consumers. They are often de%ned in terms of demographic,

psychographic, geographic, or other descriptive attitudinal or

behavioral information. The rationale behind personas is to provide

exemplars or archetypes of how the target customer looks, acts, and

feels that are as true-to-life as possible, to ensure marketers within the

organization fully understand and appreciate their target market and

therefore incorporate a nuanced target customer point of view in all

their marketing decision-making. Personas are fundamentally designed

to bring the target consumer to life.

A good brand persona can guide all marketing activities. Although

personas can provide a very detailed and accessible perspective on the

target market, it can come at a cost. The more heterogeneity in the

target market, the more problematic the use of personas can be. To

overcome the potential problem of overgeneralization, some %rms are

creating multiple personas to provide a richer tapestry of the target

market.

There can also be varying levels of personas, such as primary (target

consumer), secondary (target consumer with di;ering needs, targets,

goals), and negative (false stereotypes of users).

THE SCIENCE OF BRANDING 8-2

MAXIMIZING INTERNAL BRANDING

Internal branding creates a positive and more productive work

environment. It can also be a platform for change and help foster an

organization’s identity. According to branding expert Scott Davis, for

employees to become passionate brand advocates, they must

understand what a brand is, how it is built, what their organization’s

brand stands for, and what their role is in delivering on the brand

promise. Formally, he sees the process of helping an organization’s

employees assimilate the brand as three stages:

Hear It: How do we best get it into their hands?

Believe It: How do we best get it into their heads?

Live It: How do we best get it into their hearts?

Davis also argues that six key principles should guide the brand

assimilation process within an organization:

Make the brand relevant—Each employee must understand and

embrace the brand meaning.

Make the brand accessible—Employees must know where they

can get brand knowledge and answers to their brand-related

questions.

Reinforce the brand continuously—Management must reinforce

the brand meaning with employees beyond the initial rollout of

an internal branding program.

Make brand education an ongoing program—Provide new

employees with inspiring and informative training.

Reward on-brand behaviors—An incentive system to reward

employees for exceptional support of the brand strategy should

coincide with the roll-out of an internal branding program.

Align hiring practices—HR and marketing must work together to

develop criteria and screening procedures to ensure that new

hires are good %ts for the company’s brand culture.

Davis also emphasizes the role of senior management in driving

internal branding, noting that the CEO ultimately sets the tone and

compliance with a brand-based culture and determines whether proper

resources and procedures are put into place.

Branding Briefs

BRANDING BRIEF 8-1

SAMPLE BRAND TRACKING SURVEY

Introduction: We’re conducting a short online survey to gather

consumer opinions about quick-service or “fast-food” restaurant

chains.

Brand Awareness and Usage

a. What brands of quick-service restaurant chains are you aware of?

b. At which brands of quick-service restaurant chains would you

consider eating?

c. Have you eaten in a quick-service restaurant chain in the last week?

Which ones?

d. If you were to eat in a quick-service restaurant tomorrow for lunch,

which one would you go to?

e. What if you were eating dinner? Where would you go?

f. Finally, what if you were eating breakfast? Where would you go?

g. What are your favorite quick-service restaurant chains? We want to

ask you some general questions about a particular quick-service

restaurant chain, McDonald’s.

Have you heard of this restaurant? [Establish familiarity.]

Have you eaten at this restaurant? [Establish trial.]

When I say McDonald’s, what are the %rst associations that come to

your mind? Anything else? [List all.]

Brand Judgments

We’re interested in your overall opinion of McDonald’s.

a. How favorable is your attitude toward McDonald’s?

b. How well does McDonald’s satisfy your needs?

c. How likely would you be to recommend McDonald’s to others?

d. How good a value is McDonald’s?

e. Is McDonald’s worth a premium price?

f. What do you like best about McDonald’s? Least?

g. What is most unique about McDonald’s?

h. To what extent does McDonald’s o;er advantages that other similar

types of quick-service restaurants cannot?

i. To what extent is McDonald’s superior to other brands in the

quick-service restaurant category?

j. Compared to other brands in the quick-service restaurant category,

how well does McDonald’s satisfy your basic needs?

We now want to ask you some questions about McDonald’s as a

company. Please indicate your agreement with the following

statements.

McDonald’s is . . .

a. Innovative

b. Knowledgeable

c. Trustworthy

d. Likable

e. Concerned about their customers

f. Concerned about society as a whole

g. Likable

h. Admirable

Brand Performance

We now would like to ask some speci%c questions about McDonald’s.

Please indicate your agreement with the following statements.

McDonald’s . . .

a. Is convenient to eat at

b. Provides quick, eDcient service

c. Has clean facilities

d. Is ideal for the whole family

e. Has delicious food

f. Has healthy food

g. Has a varied menu

h. Has friendly, courteous sta;

i. O;ers fun promotions

j. Has a stylish and attractive look and design

k. Has high-quality food

Brand Imagery

a. To what extent do people you admire and respect eat at McDonald’s?

b. How much do you like people who eat at McDonald’s?

c. How well do each of the following words describe McDonald’s?

Down-to-earth, honest, daring, up-to-date, reliable, successful,

upper class, charming, outdoorsy

d. Is McDonald’s a restaurant that you can use in a lot of di;erent meal

situations?

e. To what extent does thinking of McDonald’s bring back pleasant

memories?

f. To what extent do you feel that you grew up with McDonald’s?

Brand Feelings

Does McDonald’s give you a feeling of . . .

a. Warmth?

b. Fun?

c. Excitement?

d. Sense of security or con%dence?

e. Social approval?

f. Self-respect?

Brand Resonance

a. I consider myself loyal to McDonald’s.

b. I buy McDonald’s whenever I can.

c. I would go out of my way to eat at McDonald’s.

d. I really love McDonald’s.

e. I would really miss McDonald’s if it went away.

f. McDonald’s is special to me.

g. McDonald’s is more than a product to me.

h. I really identify with people who eat at McDonald’s.

i. I feel a deep connection with others who eat at McDonald’s.

j. I really like to talk about McDonald’s to others.

k. I am always interested in learning more about McDonald’s.

l. I would be interested in merchandise with the McDonald’s name on

it.

m. I am proud to have others know I eat at McDonald’s.

n. I like to visit the McDonald’s Web site.

o. Compared to other people, I follow news about McDonald’s closely.

BRANDING BRIEF 8-2

UNDERSTANDING AND MANAGING THE MAYO CLINIC BRAND

Mayo Clinic grew to be a worldwide leader in patient care, research,

and education and became renowned for its world-class specialty care

and medical research. In 1996, Mayo undertook its %rst brand equity

study and since then has conducted regular, national qualitative and

quantitative studies. Mayo’s research identi%es seven key brand

attributes or values, including (1) integration, (2) integrity, (3)

longevity, (4) exclusivity, (5) leadership, (6) wisdom, and (7)

dedication.

In terms of integration, respondents described Mayo as bringing

together a wealth of resources to provide the best possible care. For

integrity, respondents placed great value on the fact that Mayo is

noncommercial and committed to health and healing over pro%t.

In a more recent quantitative study, overall awareness of Mayo Clinic in

the United States was 90.2 percent, and a remarkable one-third knew

at least one Mayo patient. From its research, Mayo Clinic understands

that its brand “is precious and powerful.” Mayo realized that while it

had an overwhelmingly positive image, it was vital to develop

guidelines to protect the brand. In 1999, the clinic created a brand

management infrastructure to be the “institutional clearinghouse for

ongoing knowledge about external perceptions of Mayo Clinic and its

related activities.” Mayo Clinic also established guidelines for applying

the brand to products and services. Its brand management measures

work to ensure that the clinic preserves its brand equity.

BRANDING BRIEF 8-3

HOW GOOD IS YOUR MARKETING? RATING A FIRM’S

MARKETING ASSESSMENT SYSTEM

To help companies evaluate if their marketing assessment system is

good enough, Tim Ambler suggests that they ask the following 10

questions—the higher the score, the better the assessment system.

1. Does the senior executive team regularly and formally assess

marketing performance?

a. Yearly—10

b. Six-monthly—10

c. Quarterly—5

d. More often—0

e. Rarely—0

f. Never—0

2. What does the senior executive team understand by “customer

value”?

a. Don’t know. We are not clear about this—0

b. Value of the customer to the business (as in “customer lifetime

value”)—5

c. Value of what the company provides from the customers’ point of

view—10

d. Sometimes one, sometimes the other—10

3. How much time does the senior executive team give to marketing

issues?

a. >30%—10

b. 20–30%—6

c. 10–20%—4;

d. <10%—0

4. Does the business/marketing plan show the non%nancial corporate

goals and link them to market goals?

a. No/no plan—0

b. Corporate no, market yes—5

c. Yes to both—10

5. Does the plan show the comparison of your marketing performance

with competitors or the market as a whole?

a. No/no plan—0

b. Yes, clearly—10

c. In between—5

6. What is your main marketing asset called?

a. Brand equity—10

b. Reputation—10

c. Other term—5

d. We have no term—0

7. Does the senior executive team’s performance review involve a

quanti%ed view of the main marketing asset and how it has changed?

a. Yes to both—10

b. Yes but only %nancially (brand valuation)—5

c. Not really—0

8. Has the senior executive team quanti%ed what “success” would look

like 5 or 10 years from now?

a. No—0

b. Yes—10

c. Don’t know—0

9. Does your strategy have quanti%ed milestones to indicate progress

toward that success?

a. No—0

b. Yes—10

c. What strategy?—0

10. Are the marketing performance indicators seen by the senior

executive team aligned with these milestones?

a. No—0

b. Yes, external (customers and competitors)—7

c. Yes, internal (employees and innovativeness)—5

d. Yes, both—10

Brand Focus

BRAND FOCUS 8.0

ROLEX BRAND AUDIT

Rolex has remained one of the most recognized and sought-after

luxury brands in the world. A thorough audit can help pinpoint

opportunities and challenges for Rolex, whose brand equity has been

historically strong, as much is at stake.

Background

History—Rolex was founded in 1905 by a German named Hans Wilsdorf

and his brother-in-law, William Davis, as a watch-making company,

Wilsdorf & Davis, with headquarters in London, England. In 1912, Rolex

moved its headquarters to Geneva, Switzerland, and started working

on improving the reliability of its watches. Twelve years later, Wilsdorf

developed and patented the now famous Oyster waterproof case and

screw crown. Over the years, Rolex has pushed innovation in watches

to new levels. For decades, Swiss-made watches owned the middle and

high-end markets, remaining virtually unrivaled until the invention of

the quartz watch in 1969. In order to survive, Rolex was forced to move

into the high-end market exclusively—leaving the middle to the quartz

people—and create a strategy to defend and build its position there.

Private Ownership—Rolex is a privately owned company and has been

controlled by only three people in its 100-year history. By staying an

independent entity, Rolex has remained focused on its core business.

Brand Portfolio—Rolex includes three family brands of wristwatches,

called “collections”; the Oyster Perpetual Collection, the Professional

Collection, and the Cellini Collection. Rolex owns a separate “%ghter”

brand called Tudor, developed in 1946 to stave o; competition from

mid-range watches such as TAG Heuer, Citizen, and Rado.

Brand Inventory

Rolex not only produces extremely high-quality timepieces, but also

tightly controls how its watches are sold, ensuring high demand and

premium prices. Its sophisticated marketing strategy has created an

exclusive and premium brand that many aspire to own.

Brand Elements—Rolex’s most distinguishable brand element is its

Crown logo. Many Rolex watches also have a distinct look, including a

big round face and wide wrist band.

Product—Throughout the years, Rolex timepieces have maintained the

high quality, durability, and prestige on which the company built its

name. The company does not license its brand or produce any other

product besides watches. Its product portfolio is clear, concise, and

focused.

Pricing—By limiting production to approximately 2,000 watches a day,

Rolex keeps consumer demand high and prices at a premium. Scarcity

also helps positively inTuence the resale value of Rolex watches.

Distribution—Rolex carefully monitors how its timepieces are sold,

distributing them only through its approximately 60,000 “ODcial Rolex

Dealers” worldwide. In addition, a large secondary market exists for

Rolex, both through online auction sites and at live auctions.

Communications—Rolex associates itself with “ambassadors”—

established artists, top athletes, rugged adventurers, and daring

explorers—to help create its imagery. Rolex also sponsors various

sports and cultural events as well as philanthropy programs to help

align with targeted demographics as well as create positive

associations in consumers’ minds.

Advertising—One of the company’s largest expenditures is for

magazine advertising. Rolex’s print ads are often simple and austere,

usually featuring one of its many brand ambassadors or a close-up

photo of one of its watches with the tagline “Rolex. A Crown for Every

Achievement.” Rolex does not advertise extensively on television, but

does sponsor some events that are televised.

Ambassadors—Rolex’s celebrity endorsers are continuously added and

dropped depending on their performance. These ambassadors fall into

four categories: athletes, artists, explorers, and yachtsmen.

Sports and Culture—Rolex sponsors a variety of elite athletic and

cultural events to reinforce the same messages, values, and

associations as it does through its ambassador endorsements. These

include a quest for excellence, pursuit of perfection, teamwork, and

ruggedness.

Philanthropy—Rolex gives back through three established philanthropic

programs, viz. the Awards for Enterprise program, the Young Laureates

Programme, and the Rolex Mentor and Protégé Arts Initiative.

Brand Exploratory

Consumer Knowledge—Rolex has successfully leveraged its history and

tradition of excellence along with innovation to become the most

powerful and recognized watchmaker in the world. Some positive

consumer brand associations for Rolex might be “sophisticated,”

“prestigious,” “exclusive,” “powerful,” “elegant,” “high quality.” Some

negative brand associations that some consumers may link to the

brand, however, could include “Tashy” or “snobby.” While the brand

and product line seem to resonate well with older, wealthy individuals,

Rolex struggles somewhat to connect with younger consumers.

Brand Resonance Pyramid—The functional and emotional bene%ts

Rolex strives to deliver are in harmony with consumers’ imagery and

feelings about the brand. Rolex also enjoys the highest brand

awareness of any luxury brand as well as high repeat purchase rates

and high customer loyalty. Rolex has successfully focused on both the

superior product attributes and the imagery associated with owning

and wearing a Rolex.

Competitive Analysis—Through its pricing and distribution strategies,

Rolex has positioned itself as a high-end luxury watch brand. On the

lower end of the spectrum it competes with companies such as TAG

Heuer and OMEGA, and on the higher end with brands such as Patek

Philippe, maker of the world’s most expensive wristwatch.

TAG Heuer—A leader in the luxury watch industry, the Swiss %rm TAG

Heuer distinguishes itself by focusing on extreme chronograph

precision in its watches, and on sports and auto-racing sponsorship in

its advertising. TAG ’s image and positioning is inextricably connected

to chronograph precision. TAG Heuer uses oDcially licensed retailers to

sell its watches both in stores and online. The watchmaker generates

brand awareness through brand ambassadors and sponsoring sporting

events and advertises extensively in magazines.

OMEGA—OMEGA has long prided itself on the precision of its watches

and timing devices. OMEGA was the time equipment selected for the

1936 Winter Olympics, which saw the %rst use of synchronized

chronographs. OMEGA employs ambassadors to generate brand

awareness, including athletes Michael Phelps, Alexander Popov, Ernie

Els, and race car driver Michael Schumacher as well as Hollywood stars

Nicole Kidman and Cindy Crawford. OMEGA watches are o;ered in both

women’s and men’s styles in four di;erent collections: Constellation,

Seamaster, Speedmaster, and De Ville. Prices vary greatly even within

individual collections.

Patek Philippe— The innovator of many technologies found in today’s

high-end watch, Patek Philippe represents the absolute pinnacle of

luxury timepieces. In particular, the %rm prides itself on creating many

of the world’s most complicated watches through innovations with

split-second chronograph and perpetual date technology. Patek

Philippe does not rely on event sponsorship or brand ambassadors to

generate name recognition. Patek Philippe evaluates every authorized

dealer’s storefront to ensure that it meets the watchmaker’s quality

standards. It also separates itself from other watchmakers on price,

with its least expensive noncustomized watch retailing.

Strategic Recommendations

Positioning

Points-of-Parity—Rolex is similar to other watchmakers in the high-end

luxury watch market on several levels. All pride themselves on their

attention to detail and ongoing innovation in the watch industry.

Points-of-Di;erence—Rolex separates itself from the competition in

several ways. Through careful selection of event sponsorships and

brand ambassadors, Rolex has cut through the clutter, resonated with

consumers around the world, and maintained an air of prestige.

Brand Mantra—Rolex has been extremely successful in building a

global name through clever marketing and communications, without

compromising the integrity of the brand.

Tactical Recommendations

The Rolex brand audit proved that Rolex is a very strong brand with

signi%cant brand equity. It also identi%ed a few opportunities and

challenges:

Leverage the Company’s Independent, Continuous Heritage and Focus

Rolex is the largest and most successful watch company in the

world. As a result, many consumers don’t realize it is privately

owned and competes against major conglomerates. While being

privately owned is a good thing for many reasons, it also brings

up several challenges.

Rolex may want to leverage and promote the fact that in some

ways it has to work harder to succeed.

Leverage the Company’s Elite Craftsmanship and Innovation

Research from the Luxury Institute group suggested that

consumers do not consider Rolex the top brand in quality and

exclusivity.

Connect with the Female Consumer

Women are more and more interested in purchasing unisex

mechanical watches rather than feminine-styled watches. This is

a great opportunity for Rolex, whose watches are primarily

masculine in design.

Rolex may want to tweak its female ambassador list to coincide

with a more unisex product line.

Attack the Online Counterfeit Industry

To maintain its limited distribution, Rolex does not authorize any

of its watches to be sold on the Internet. In order to combat the

online sale of counterfeits, however, Rolex might consider

building an exclusive online store, or an exclusive distribution

site to which all oDcial e-retailers must link. In fact, Rolex

dedicates extensive resources to %ght the illegal use of the

brand, including sponsoring the International Anti-Counterfeiting

Coalition and suing companies that allow the sale of counterfeit

Rolexes.

Use Marketing to Reach Younger Consumers

Research has shown that younger consumers do not value

watches the same way older generations did.

Communicate Long-Term Value

Rolex competes for a share of the luxury buyer’s wallet with a

host of other types of goods, such as clothes, shoes, and

handbags. Many are less durable over time than a Rolex watch

and are susceptible to falling out of fashion.

Swiss luxury watch competitor Patek Philippe used print

advertising to communicate the heirloom quality of its watches.

Rolex could pursue a similar approach.

Discussion questions

1. What do you see as the biggest challenges in conducting a brand

audit? What steps would you take to overcome them?

2. Pick a brand. See if you can assemble a brand inventory for it.

3. Consider the McDonald’s tracking survey presented in Branding

Brief 8-1. What might you do di&erently? What questions would you

change or drop? What questions might you add? How might this

tracking survey di&er from those used for other products?

4. Can you develop a tracking survey for the Mayo Clinic? How might it

di&er from the McDonald’s tracking survey?

5. Critique the Rolex brand audit in Brand Focus 8.0. How do you think

it could be improved?

Exercises and assignments

1. Have students discuss how they would go about conducting a brand

audit for a brand of their choice. This activity will help them

understand better the concepts of brand inventory and brand

exploratory.

2. Have groups of students design a brand tracking survey for the

same brand. The groups may then assess the similarities and

di;erences between the surveys.

3. Have students choose a well-known brand and develop a Brand

Equity Charter. Students may then identify current branding issues

facing the chosen company and use the Brand Equity Charter to

develop responses to these issues.

4. Have several di;erent groups of students create a Brand Equity

Report for the same brand. Have them evaluate the di;erences and

similarities in the reports’ designs and their %ndings.

Key take-away points

1. Understanding what consumers believe, think, know and infer about

a brand is critical to building and managing brand equity.

2. The purpose of a brand equity measurement system is to provide

timely, accurate and actionable information that marketers can use

in their tactical and strategic decision-making.

3. To learn how consumers think, feel, and act toward brands and

products so the company can make informed strategic positioning

decisions, marketers should %rst conduct a brand audit.

4. The purpose of the brand inventory is to provide a current,

comprehensive pro%le of how all the products and services sold by a

company are marketed and branded.

5. The brand exploratory is research directed to understanding what

consumers think and feel about the brand and act toward it in order

to better understand sources of brand equity as well as any possible

barriers.

6. Brand tracking studies collect information from consumers on a

routine basis over time, usually through quantitative measures of

brand performance on a number of key dimensions that marketers

can identify in the brand audit or other means.

7. Brand equity management systems involve the creation of a Brand

Equity Charter and Brand Equity Report, plus the development of

senior management to oversee the implementation of these tools.