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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
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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).
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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
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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.
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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 . . .
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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
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
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
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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
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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.
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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.
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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,
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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
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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?
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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?
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
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.
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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.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
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.
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