8.1

CHAPTER 8:CHAPTER 8: DEVELOPING A BRAND EQUITY DEVELOPING A BRAND EQUITY

MEASUREMENT AND MANAGEMENT MEASUREMENT AND MANAGEMENT SYSTEMSYSTEM

Kevin Lane KellerKevin Lane KellerTuck School of BusinessTuck School of Business

Dartmouth CollegeDartmouth College

8.2

The New AccountabilityThe New Accountability Virtually every marketing dollar spent Virtually every marketing dollar spent

today must be justified as both effective today must be justified as both effective and efficient in terms of “return of and efficient in terms of “return of marketing investment” (ROMI). marketing investment” (ROMI).

Some observers believe that up to 70% Some observers believe that up to 70% (or even more) of marketing (or even more) of marketing expenditures may be devoted to expenditures may be devoted to programs and activities that cannot be programs and activities that cannot be linked to short-term incremental profits, linked to short-term incremental profits, but yet can be seen as improving brand but yet can be seen as improving brand equity. equity.

8.3

The Brand Value ChainThe Brand Value Chain

Broader perspective than just the Broader perspective than just the CBBE model CBBE model

The brand value chain is a The brand value chain is a structured approach to assessing the structured approach to assessing the sources and outcomes of brand sources and outcomes of brand equity and the manner by which equity and the manner by which marketing activities create brand marketing activities create brand value. value.

8.4

The Brand Value ChainThe Brand Value Chain

The brand value chain has several The brand value chain has several basic premises. Fundamentally, it basic premises. Fundamentally, it assumes that the value ofassumes that the value of a brand a brand ultimately resides with customers.ultimately resides with customers.

8.5

The Brand Value ChainThe Brand Value Chain Based on this insight, the model next assumes thatBased on this insight, the model next assumes that the brand the brand

value creation process begins when the firm invests in a value creation process begins when the firm invests in a marketing program targetingmarketing program targeting actual or potential customers. actual or potential customers.

The marketing activity associated with the program then The marketing activity associated with the program then affects theaffects the customer mindset with respect to the brand – customer mindset with respect to the brand – what customers know and feel about the brand. what customers know and feel about the brand.

This mindset, across a broad group of customers, then This mindset, across a broad group of customers, then results in certainresults in certain outcomes for the brand in terms of how it outcomes for the brand in terms of how it performs in the marketplace – the collective impactperforms in the marketplace – the collective impact of of individual customer actions regarding how much and when individual customer actions regarding how much and when they purchase, the price thatthey purchase, the price that they pay, and so forth. they pay, and so forth.

Finally, the investment community considers this market Finally, the investment community considers this market performanceperformance and other factors such as replacement cost and and other factors such as replacement cost and purchase price in acquisitions to arrive at anpurchase price in acquisitions to arrive at an assessment of assessment of shareholder value in general and a value of the brand in shareholder value in general and a value of the brand in particular.particular.

8.6

The Brand Value ChainThe Brand Value Chain The model also assumes that a number of linking The model also assumes that a number of linking

factors intervene between these stages.factors intervene between these stages.

TheseThese linking factors determine the extent to which linking factors determine the extent to which

value created at one stage transfers or “multiplies”value created at one stage transfers or “multiplies” to to the next stage. the next stage.

Three sets of multipliers moderate the transfer Three sets of multipliers moderate the transfer between the marketing programbetween the marketing program and the subsequent and the subsequent three value stages: the program quality multiplier, the three value stages: the program quality multiplier, the marketplace conditionsmarketplace conditions multiplier, and the investor multiplier, and the investor sentiment multiplier. sentiment multiplier.

Brand Value ChainBrand Value Chain

ProgramMultiplier

MarketingProgramInvestment

CustomerMindset

MarketPerformance

ShareholderValueVALUE

STAGES

- Product- Communications- Trade- Employee- Other

- Awareness- Associations- Attitudes- Attachment- Activity

- Price premiums- Price elasticity- Market share- Expansion success- Cost structure- Profitability

- Stock price- P/E ratio- Market capitalization

ConsumerMultiplierFILTERS

- Clarity- Relevance- Distinctiveness- Consistency

- Channel support- Consumer size and profile - Competitive reactions

- Market dynamics- Growth potential- Risk profile- Brand contribution

MarketMultiplier

8.8

Value StagesValue Stages Marketing program investmentMarketing program investment

Any marketing program that can be Any marketing program that can be attributed to brand value developmentattributed to brand value development

Customer mindsetCustomer mindset In what way have customers been In what way have customers been

changed as a result of the marketing changed as a result of the marketing program?program?

Market performanceMarket performance How do customers respond in the How do customers respond in the

marketplace?marketplace? Shareholder valueShareholder value

8.9

Marketing Program Marketing Program InvestmentInvestment Any marketing program investment that potentially can be Any marketing program investment that potentially can be

attributed to brand valueattributed to brand value development, either intentional or development, either intentional or not, falls into this first value stage. not, falls into this first value stage.

Specifically, some of theSpecifically, some of the bigger marketing expenditures bigger marketing expenditures relate to product research, development, and design; trade relate to product research, development, and design; trade oror intermediary support; marketing communications (e.g., intermediary support; marketing communications (e.g., advertising, promotion, sponsorship,advertising, promotion, sponsorship, direct and interactive direct and interactive marketing, personal selling, publicity, and public relations); marketing, personal selling, publicity, and public relations); and employeeand employee training. training.

The extent of financial investment committed to the The extent of financial investment committed to the marketing program, however, doesmarketing program, however, does not guarantee success in not guarantee success in terms of brand value creation. Many marketers have spent terms of brand value creation. Many marketers have spent billionsbillions of dollars in marketing activities and programs but of dollars in marketing activities and programs but due to questionably strategic and tacticallydue to questionably strategic and tactically ineffective ineffective campaigns., have seen competitors steal key market campaigns., have seen competitors steal key market positions. The ability of apositions. The ability of a marketing program investment to marketing program investment to transfer or multiply farther down the chain will thus depend transfer or multiply farther down the chain will thus depend onon qualitative aspects of the marketing program via the qualitative aspects of the marketing program via the program quality multiplier.program quality multiplier.

8.10

Program Quality Program Quality MultiplierMultiplier

The ability of the marketing program to affect The ability of the marketing program to affect the customer mindset will depend on the the customer mindset will depend on the quality ofquality of that program investment. There are that program investment. There are a number of different means to judge the a number of different means to judge the quality of a marketingquality of a marketing program and many program and many different criteria may be employed. To different criteria may be employed. To illustrate, four particularly importantillustrate, four particularly important factors factors are as follows:are as follows:

8.11

MultipliersMultipliers Program quality multiplierProgram quality multiplier

The ability of the marketing program to affect The ability of the marketing program to affect customer mindsetcustomer mindset

Must be clear, relevant, distinct, and consistentMust be clear, relevant, distinct, and consistent Customer multiplierCustomer multiplier

The extent to which value created in the minds of The extent to which value created in the minds of customers affects market performancecustomers affects market performance

It depends on factors such as competitive superiority, It depends on factors such as competitive superiority, channel support, and customer size and profilechannel support, and customer size and profile

Market multiplierMarket multiplier The extent to which the value generated through The extent to which the value generated through

brand market performance is manifested in brand market performance is manifested in shareholder valueshareholder value

It depends on factors such as market dynamics, It depends on factors such as market dynamics, growth potential, risk profile, and brand contributiongrowth potential, risk profile, and brand contribution

8.12

Program Quality Program Quality MultiplierMultiplier

1. Clarity1. Clarity:: How understandable is the marketing How understandable is the marketing program? Do consumers properly interpret andprogram? Do consumers properly interpret and evaluate the meaning conveyed by brand marketing?evaluate the meaning conveyed by brand marketing?

2. Relevance2. Relevance:: How meaningful is the marketing program How meaningful is the marketing program to customers? Do consumers feel thatto customers? Do consumers feel that the brand is one the brand is one that should receive serious consideration?that should receive serious consideration?

3. Distinctiveness3. Distinctiveness:: How unique is the marketing How unique is the marketing program from those offered by competitors?program from those offered by competitors? How How creative or differentiating is the marketing program?creative or differentiating is the marketing program?

4. Consistency4. Consistency:: How cohesive and well integrated is the How cohesive and well integrated is the marketing program? Do all aspectsmarketing program? Do all aspects of the marketing of the marketing program combine to create the biggest impact with program combine to create the biggest impact with customers? Does thecustomers? Does the marketing program relate marketing program relate effectively to past marketing programs and properly effectively to past marketing programs and properly balancebalance continuity and change, evolving the brand in continuity and change, evolving the brand in the right direction?the right direction?

8.13

Customer MindsetCustomer Mindset A judicious marketing program investment could A judicious marketing program investment could

result in a number of different customerresult in a number of different customer relatedrelated outcomes. Essentially, the issue is, outcomes. Essentially, the issue is, in what ways have customers been changed asin what ways have customers been changed as a result of a result of

the marketing program? the marketing program? How have those changes manifested themselves in theHow have those changes manifested themselves in the

customer mindset? customer mindset?

Remember that the customer mindset includes Remember that the customer mindset includes everything that existseverything that exists in the minds of in the minds of customers with respect to a brand: thoughts, customers with respect to a brand: thoughts, feelings, experiences, images,feelings, experiences, images, perceptions, perceptions, beliefs, attitudes, and so forth. Understanding beliefs, attitudes, and so forth. Understanding customer mindset can havecustomer mindset can have important important implications for marketing programs.implications for marketing programs.

8.14

Customer MindsetCustomer MindsetA host of different approaches and measures are available to A host of different approaches and measures are available to

assess value at this stage. One simple way to reduce the assess value at this stage. One simple way to reduce the complexity of the brandcomplexity of the brand resonance model into a simpler, resonance model into a simpler, more memorable structure is in terms of five key more memorable structure is in terms of five key dimensions.dimensions. The “5 A’s” are a way to highlight key The “5 A’s” are a way to highlight key dimensions of the brand resonance model within the branddimensions of the brand resonance model within the brand value chain model as particularly important measures of the value chain model as particularly important measures of the customer mindset:customer mindset:

1. Brand awareness 1. Brand awareness The extent and ease with which The extent and ease with which customers recall and recognize the brandcustomers recall and recognize the brand and thus the and thus the salience of the brand at purchase and consumption.salience of the brand at purchase and consumption.

2. Brand associations 2. Brand associations The strength, favorability, and The strength, favorability, and uniqueness of perceived attributes anduniqueness of perceived attributes and benefits for the benefits for the brand in terms of points-of-parity and points-of-difference in brand in terms of points-of-parity and points-of-difference in performanceperformance and imagery. and imagery.

3. Brand attitudes 3. Brand attitudes Overall evaluations of the brand in terms Overall evaluations of the brand in terms of the judgments and feelings itof the judgments and feelings it generates. generates.

8.15

Customer MindsetCustomer Mindset

4. Brand attachment 4. Brand attachment How intensely loyal the customer How intensely loyal the customer feels toward the brand. A strong formfeels toward the brand. A strong form of attachment, of attachment, adherence, refers to the consumer’s resistance to adherence, refers to the consumer’s resistance to change and the ability of achange and the ability of a brand to withstand bad brand to withstand bad news (e.g., a product or service failure). In the news (e.g., a product or service failure). In the extreme, attachmentextreme, attachment can even become addiction. can even become addiction.

5. Brand activity 5. Brand activity The extent to which customers are The extent to which customers are actively engaged with the brand such thatactively engaged with the brand such that they use the they use the brand, talk to others about the brand, seek out brand brand, talk to others about the brand, seek out brand information, promotions, andinformation, promotions, and events, and so on. events, and so on.

8.16

Customer MindsetCustomer Mindset An obvious hierarchy exists in these five dimensions of An obvious hierarchy exists in these five dimensions of

the brand resonance model: Awarenessthe brand resonance model: Awareness supports supports associations, which drive attitudes that lead to associations, which drive attitudes that lead to attachment and activity. According toattachment and activity. According to the brand the brand resonance model, brand value is created at this stage resonance model, brand value is created at this stage when customers havewhen customers have

1. deep, broad brand awareness;1. deep, broad brand awareness;

2. appropriately strong and favorable points-of-parity and 2. appropriately strong and favorable points-of-parity and points-of-difference;points-of-difference;

3. positive brand judgments and feelings;3. positive brand judgments and feelings;

4. intense brand attachment and loyalty; and4. intense brand attachment and loyalty; and

5. a high degree of brand engagement and activity.5. a high degree of brand engagement and activity.

8.17

Marketplace Conditions Marketplace Conditions MultiplierMultiplier

The extent to which value created in the minds of customers The extent to which value created in the minds of customers affects market performance dependsaffects market performance depends on various contextual on various contextual factors external to the customer. Three such factors are as factors external to the customer. Three such factors are as follows:follows:

1. Competitive superiority1. Competitive superiority:: How effective are the quantity and How effective are the quantity and quality of the marketingquality of the marketing investment of other competing investment of other competing brands.brands.

2. Channel and other intermediary support2. Channel and other intermediary support:: How much brand How much brand reinforcement and sellingreinforcement and selling effort is being put forth by various effort is being put forth by various marketing partners.marketing partners.

3. Customer size and profile3. Customer size and profile:: How many and what types of How many and what types of customers (e.g., profitable or not)customers (e.g., profitable or not) are attracted to the brand.are attracted to the brand.

8.18

Marketplace Conditions Marketplace Conditions MultiplierMultiplier

The competitive context faced by a brand can have a The competitive context faced by a brand can have a profound effect on its fortunes. For example,profound effect on its fortunes. For example, both Nike both Nike and McDonald’s have benefited in the past from the and McDonald’s have benefited in the past from the prolonged marketing woes ofprolonged marketing woes of their main rivals, Reebok their main rivals, Reebok and Burger King, respectively. Both of these latter and Burger King, respectively. Both of these latter brands have sufferedbrands have suffered from numerous repositionings from numerous repositionings and management changes. On the other hand, and management changes. On the other hand, MasterCard hasMasterCard has had to contend for the past decade had to contend for the past decade with two strong, well-marketed brands in Visa and with two strong, well-marketed brands in Visa and AmericanAmerican Express and consequently has faced an Express and consequently has faced an uphill battle gaining market share despite its well-uphill battle gaining market share despite its well-receivedreceived “Priceless” ad campaign. “Priceless” ad campaign.

8.19

Market PerformanceMarket Performance The customer mindset affects how customers react or The customer mindset affects how customers react or

respond in the marketplace in a six mainrespond in the marketplace in a six main ways. ways. The first two outcomes relate to price premiums and The first two outcomes relate to price premiums and

price elasticities. How much extra areprice elasticities. How much extra are customers customers willing to pay for a comparable product because of its willing to pay for a comparable product because of its brand? And how much doesbrand? And how much does their demand increase or their demand increase or decrease when the price rises or falls? decrease when the price rises or falls?

A third outcome is market share,A third outcome is market share, which measures the which measures the success of the marketing program to drive brand sales. success of the marketing program to drive brand sales. Taken together, theTaken together, the first three outcomes determine the first three outcomes determine the direct revenue stream attributable to the brand over direct revenue stream attributable to the brand over time.time. Brand value is created with higher market Brand value is created with higher market shares, greater price premiums, and more elasticshares, greater price premiums, and more elastic responses to price decreases and inelastic responses to responses to price decreases and inelastic responses to price increases.price increases.

8.20

Market PerformanceMarket Performance The fourth outcome is brand expansion, the success of the The fourth outcome is brand expansion, the success of the

brand in supporting line and categorybrand in supporting line and category extensions and new extensions and new product launches into related categories. Thus, this product launches into related categories. Thus, this dimension captures thedimension captures the ability to add enhancements to the ability to add enhancements to the revenue stream. revenue stream.

The fifth outcome is cost structure or, moreThe fifth outcome is cost structure or, more specifically, specifically, savings in terms of the ability to reduce marketing program savings in terms of the ability to reduce marketing program expenditures becauseexpenditures because of the prevailing customer mindset. of the prevailing customer mindset. In other words, because customers already have favorableIn other words, because customers already have favorable opinions and knowledge about a brand, any aspect of the opinions and knowledge about a brand, any aspect of the marketing program is likely to be moremarketing program is likely to be more effective for the effective for the same expenditure level; alternatively, the same level of same expenditure level; alternatively, the same level of effectiveness can beeffectiveness can be achieved at a lower cost because ads achieved at a lower cost because ads are more memorable, sales calls more productive, and soare more memorable, sales calls more productive, and so on. on.

When combined, these five outcomes lead to brand When combined, these five outcomes lead to brand profitability, the sixth outcome.profitability, the sixth outcome.

8.21

Investor Sentiment Investor Sentiment MultiplierMultiplier

The extent to which the value engendered by the The extent to which the value engendered by the market performance of a brand is manifestedmarket performance of a brand is manifested in in shareholder value depends on various contextual shareholder value depends on various contextual factors external to the brand itself. Financialfactors external to the brand itself. Financial analysts analysts and investors consider a host of factors in arriving at and investors consider a host of factors in arriving at their brand valuations andtheir brand valuations and investment decisions. investment decisions. Among these considerations are the following:Among these considerations are the following:

8.22

Investor Sentiment Investor Sentiment MultiplierMultiplier

1. Market dynamics 1. Market dynamics What are the dynamics of the financial What are the dynamics of the financial markets as a whole (e.g., interestmarkets as a whole (e.g., interest rates, investor sentiment, or rates, investor sentiment, or supply of capital)?supply of capital)?

2. Growth potential 2. Growth potential What are the growth potential or prospects What are the growth potential or prospects for the brand and the industryfor the brand and the industry in which it operates? For example, in which it operates? For example, how helpful are the facilitating factors and how inhibitinghow helpful are the facilitating factors and how inhibiting are the are the hindering external factors that make up the firm’s economic, hindering external factors that make up the firm’s economic, social, physical, and legalsocial, physical, and legal environment? environment?

3. Risk profile 3. Risk profile What is the risk profile for the brand? How What is the risk profile for the brand? How vulnerable is the brand likely to be tovulnerable is the brand likely to be to those facilitating and those facilitating and inhibiting factors?inhibiting factors?

4. Brand contribution 4. Brand contribution How important is the brand as part of the How important is the brand as part of the firm’s brand portfolio and allfirm’s brand portfolio and all the brands it has? the brands it has?

8.23

Shareholder ValueShareholder Value Based on all available current and forecasted information about Based on all available current and forecasted information about

a brand as well as manya brand as well as many other considerations, the financial other considerations, the financial marketplace then formulates opinions and makes variousmarketplace then formulates opinions and makes various assessments that have very direct financial implications for the assessments that have very direct financial implications for the brand value. brand value.

Three particularlyThree particularly important indicators are the stock price, the important indicators are the stock price, the price/earnings multiple, and overall marketprice/earnings multiple, and overall market capitalizationcapitalization** for for the firm. Research has shown that not only can strong brands the firm. Research has shown that not only can strong brands deliver greaterdeliver greater returns to stockholders, they can do so with less returns to stockholders, they can do so with less risk.risk.

** Market capitalization Market capitalization (often (often market capmarket cap) is a measurement ) is a measurement of size of a business enterprise (corporation) equal to the share of size of a business enterprise (corporation) equal to the share price times the number of shares outstanding (shares that have price times the number of shares outstanding (shares that have been authorized, issued, and purchased by investors) of a been authorized, issued, and purchased by investors) of a publicly traded company. publicly traded company.

8.24

Brand Equity Measurement Brand Equity Measurement SystemSystem

A set of research procedures that is A set of research procedures that is designed to provide timely, designed to provide timely, accurate, and actionable information accurate, and actionable information for marketers so that they can make for marketers so that they can make the best possible tactical decisions in the best possible tactical decisions in the short run and strategic decisions the short run and strategic decisions in the long runin the long run

8.25

Brand Equity Measurement Brand Equity Measurement SystemSystem

Conducting brand auditsConducting brand audits Developing tracking proceduresDeveloping tracking procedures Designing a brand equity Designing a brand equity

management systemmanagement system

8.26

Designing Brand Tracking Designing Brand Tracking StudiesStudies

Tracking studies involve information Tracking studies involve information collected from consumers on a collected from consumers on a routine basis over timeroutine basis over time Often done on a “continuous” basisOften done on a “continuous” basis

Provide descriptive and diagnostic Provide descriptive and diagnostic informationinformation

8.27

What to TrackWhat to Track

Customize tracking surveys to Customize tracking surveys to address the specific issues faced by address the specific issues faced by the brandthe brand

Product-brand trackingProduct-brand tracking Corporate or family brand trackingCorporate or family brand tracking Global trackingGlobal tracking

8.28

How to Conduct Tracking How to Conduct Tracking StudiesStudies

Who to track (target market)Who to track (target market) When and where to track (how When and where to track (how

frequently)frequently) How to interpret brand trackingHow to interpret brand tracking

8.29

Sample Brand Tracking Sample Brand Tracking Survey-McDonald’sSurvey-McDonald’s

Assume that McDonald’s was interested in designing a short tracking survey Assume that McDonald’s was interested in designing a short tracking survey to be conductedto be conducted over the phone. How might you set it up? Although there over the phone. How might you set it up? Although there are a number of different types ofare a number of different types of questions, it might take the following questions, it might take the following form:form:

Interviewer: Interviewer: We are conducting a short phone interview concerning We are conducting a short phone interview concerning consumer opinions about quickconsumer opinions about quick--serviceservice or “fast food” restaurant chains. or “fast food” restaurant chains.

BRAND AWARENESSBRAND AWARENESS

Recall (unaided)Recall (unaided)

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

b)b) At which brands of quick service restaurant chains would you At which brands of quick service restaurant chains would you consider using?consider using?

c)c) Have you eaten in a quick service restaurant chain in the last Have you eaten in a quick service restaurant chain in the last week? Which ones?week? Which ones?

d)d) If you were to eat in a quick service restaurant tomorrow for lunch, If you were to eat in a quick service restaurant tomorrow for lunch, which one wouldwhich one would you go to? you go to?

e)e) What if instead it were for dinner? Where would you go?What if instead it were for dinner? Where would you go?

f)f) What if instead it were for breakfast? Where would you go?What if instead it were for breakfast? Where would you go?

g)g) Which are your favorite quick serve restaurant chains?Which are your favorite quick serve restaurant chains?

8.30

Sample Brand Tracking Sample Brand Tracking Survey-McDonald’sSurvey-McDonald’s

BRAND AWARENESSBRAND AWARENESS

RecognitionRecognition

Now, we want to ask you some questions about a Now, we want to ask you some questions about a particular quick service restaurantparticular quick service restaurant chain, McDonald’s. chain, McDonald’s.

a)a) Have you heard of this restaurant? [Establish Have you heard of this restaurant? [Establish familiarity]familiarity]

b)b) Have you eaten at this restaurant? [Establish trial]Have you eaten at this restaurant? [Establish trial]

c)c) When I say McDonald’s, what are the first associations When I say McDonald’s, what are the first associations that come to your mind? Anything else? that come to your mind? Anything else? [[List allList all]]

8.31

Brand Tracking Survey-Brand Tracking Survey-McDonald’sMcDonald’sBRAND IMAGEBRAND IMAGE

What are the top five words that come to mind when you think of What are the top five words that come to mind when you think of "McDonalds" (This should"McDonalds" (This should take less than 30 seconds)take less than 30 seconds)

Brand AttributesBrand Attributes

How well do the following words describe McDonalds?How well do the following words describe McDonalds? (1= not at all, 5 = (1= not at all, 5 = very much)?very much)?

McDonald’s ...McDonald’s ...

a)a) Is convenient to eat atIs convenient to eat at

b)b) Provides quick, efficient serviceProvides quick, efficient service

c)c) Has clean facilitiesHas clean facilities

d)d) Is for the whole familyIs for the whole family

e)e) Has delicious foodHas delicious food

f)f) Has healthy foodHas healthy food

g)g) Has a varied menuHas a varied menu

h)h) Has friendly, courteous staffHas friendly, courteous staff

i)i) Offers fun promotionsOffers fun promotions

j)j) Has a stylish and attractive lookHas a stylish and attractive look

k)k) Has good pricesHas good prices

8.32

Brand Tracking Survey-Brand Tracking Survey-McDonald’sMcDonald’sBrand Personality (note this might also include user imagery, Brand Personality (note this might also include user imagery,

usage imagery asusage imagery as

breakout questions)breakout questions)

How well do the following traits describe McDonaldsHow well do the following traits describe McDonalds (1= not at all, (1= not at all, 5 = very much)?5 = very much)?

SincereSincere ExcitingExciting CompetentCompetent SophisticatedSophisticated RuggedRugged PeacefulPeaceful PassionatePassionate

8.33

Brand Tracking Survey-Brand Tracking Survey-McDonald’sMcDonald’sJudgments of QualityJudgments of Quality

What is your overall opinion of McDonald’s?What is your overall opinion of McDonald’s? What is your assessment of the product quality of McDonald’s?What is your assessment of the product quality of McDonald’s? How good a value is this McDonald’s?How good a value is this McDonald’s? Is McDonald’s worth a premium price?Is McDonald’s worth a premium price? What do you like best about McDonald’s?What do you like best about McDonald’s?

Judgments of CredibilityJudgments of Credibility How innovative is McDonald’s?How innovative is McDonald’s? How much do you admire McDonald’s?How much do you admire McDonald’s? How much do you respect McDonald’s?How much do you respect McDonald’s?

Judgments of ConsiderationJudgments of Consideration How likely would you be to recommend McDonald’s to others?How likely would you be to recommend McDonald’s to others? To what extent does McDonald’s offer advantages that other To what extent does McDonald’s offer advantages that other

brands cannot?brands cannot? How personally relevant is McDonald’s to you?How personally relevant is McDonald’s to you?

8.34

Brand Tracking Survey-Brand Tracking Survey-McDonald’sMcDonald’sJudgments of SuperiorityJudgments of Superiority

How unique is McDonald’s?How unique is McDonald’s? To what does McDonald’s offer advantages that other brands To what does McDonald’s offer advantages that other brands

cannot?cannot? To what extent is McDonald’s superior to other brands in the To what extent is McDonald’s superior to other brands in the

quick servicequick service restaurant category? restaurant category?

FeelingsFeelings

Does McDonald’s give you a feeling of … (1= not at all, 5 = very Does McDonald’s give you a feeling of … (1= not at all, 5 = very much)much)

WarmthWarmth ExcitementExcitement TrustTrust AweAwe FearFear CalmCalm IntensityIntensity

8.35

Brand Tracking Survey-Brand Tracking Survey-McDonald’sMcDonald’sRELATIONSHIPRELATIONSHIP

If McDonalds came to life as a person, what type of person would If McDonalds came to life as a person, what type of person would s/he be? This should takes/he be? This should take less than 30 seconds. less than 30 seconds.

If McDonalds came to life as a person and was at a party with you, If McDonalds came to life as a person and was at a party with you, what would s/he say towhat would s/he say to

you? This should take less than 30 seconds.you? This should take less than 30 seconds.

LoyaltyLoyalty I consider myself loyal to McDonalds.I consider myself loyal to McDonalds. I eat at McDonalds whenever I can.I eat at McDonalds whenever I can. This is the one brand of fast‐food restaurant I would most prefer This is the one brand of fast‐food restaurant I would most prefer

to visit.to visit. If McDonalds were not an option, it would make little difference If McDonalds were not an option, it would make little difference

to me if I had to eatto me if I had to eat elsewhere. elsewhere. I would go out of my way to go to McDonaldsI would go out of my way to go to McDonalds

8.36

Brand Tracking Survey-Brand Tracking Survey-McDonald’sMcDonald’sAttachmentAttachment

I really love McDonalds.I really love McDonalds. I would really miss this brand if it went away.I would really miss this brand if it went away. McDonalds is special to me.McDonalds is special to me.

EngagementEngagement I really like to talk about McDonalds to others.I really like to talk about McDonalds to others. I am always interested in learning more about McDonalds.I am always interested in learning more about McDonalds. I would be interested in merchandise with this brand’s name on I would be interested in merchandise with this brand’s name on

it.it. I like to visit the website for McDonalds.I like to visit the website for McDonalds. Compared to other people, I follow news about McDonalds Compared to other people, I follow news about McDonalds

closely.closely.

CommunityCommunity I really identify with people who use this brand.I really identify with people who use this brand. McDonalds is often frequented by people like me.McDonalds is often frequented by people like me. I feel a deep connection with others who use this brand.I feel a deep connection with others who use this brand.

8.37

Brand Equity Management Brand Equity Management SystemSystem

A A brand equity management systembrand equity management system is a set of organizational processes is a set of organizational processes designed to improve the designed to improve the understanding and use of the brand understanding and use of the brand equity concept within a firm:equity concept within a firm: Brand equity charterBrand equity charter Brand equity reportBrand equity report Brand equity responsibilitiesBrand equity responsibilities

8.38

Brand Equity CharterBrand Equity Charter

Provides general guidelines to Provides general guidelines to marketing managers within the marketing managers within the company as well as key marketing company as well as key marketing partners outside the companypartners outside the company

Should be updated annuallyShould be updated annually

8.39

Brand Equity Charter Brand Equity Charter ComponentsComponents

Define the firm’s view of the brand equityDefine the firm’s view of the brand equity Describe the scope of the key brandsDescribe the scope of the key brands Specify actual and desired equity for the brandSpecify actual and desired equity for the brand Explain how brand equity is measuredExplain how brand equity is measured Suggest how brand equity should be measuredSuggest how brand equity should be measured Outline how marketing programs should be Outline how marketing programs should be

deviseddevised Specify the proper treatment for the brand in Specify the proper treatment for the brand in

terms of trademark usage, packaging, and terms of trademark usage, packaging, and communicationcommunication

8.40

The Knicks

The Fans

The Knicks Brand CharterThe Knicks Brand Charter

Emotional Bond

•Uniquely authentic

•An incomparable event, scene and energy

•Relentless, resourceful, and tough

•Championship caliber

•A vital part of New York City

•Unlimited in its possibilities

•Sensory fulfillment

–Looks, feels, and sounds

•Visceral thrill

– Eager anticipation/excitement

– War: winning/losing

•Psychological benefits

– Personal identification (with heroes)

– Social currency/belonging

•Emotional awards

– Intense experience

– Childhood

– Sustaining

– Exceeds

An intensely passionate, professional, unparalleled New York City experience

8.41

Brand Equity ReportBrand Equity Report

Assembles the results of the tracking Assembles the results of the tracking survey and other relevant survey and other relevant performance measuresperformance measures

To be developed monthly, quarterly, To be developed monthly, quarterly, or annuallyor annually

Provides descriptive information as Provides descriptive information as to what is happening with the brand to what is happening with the brand as well as diagnostic information on as well as diagnostic information on why it is happening why it is happening

8.42

Brand Equity ReportBrand Equity Report

In particular, one section of the In particular, one section of the report should summarize consumerreport should summarize consumer perceptions on key attribute or perceptions on key attribute or benefit associations, preferences, benefit associations, preferences, and reported behavior asand reported behavior as revealed revealed by the tracking study. Another by the tracking study. Another section of the report should include section of the report should include more descriptivemore descriptive market level market level information such as:information such as:

8.43

Brand Equity ReportBrand Equity Report

1) Product shipments and movement 1) Product shipments and movement through channels of distribution.through channels of distribution.

2) Relevant cost breakdowns.2) Relevant cost breakdowns.

3) Price and discount schedules where 3) Price and discount schedules where appropriate.appropriate.

4) Sales and market share information 4) Sales and market share information broken down by relevant factors, e.g.,broken down by relevant factors, e.g., geographic region, type of retail geographic region, type of retail account or customer, etc.account or customer, etc.

5) Profit assessments.5) Profit assessments.

8.44

Brand Equity Brand Equity ResponsibilitiesResponsibilities

Organizational responsibilities and Organizational responsibilities and processes that aim to maximize long-processes that aim to maximize long-term brand equityterm brand equity

Establish position of VP or Director of Equity Establish position of VP or Director of Equity Management to oversee implementation of Management to oversee implementation of Brand Equity Charter and ReportsBrand Equity Charter and Reports

Ensure that, as much as possible, Ensure that, as much as possible, marketing of the brand is done in a marketing of the brand is done in a way that reflects the spirit of the way that reflects the spirit of the charter and the substance of the reportcharter and the substance of the report

8.45

Internal BrandingInternal Branding Internal brand management makes sure that Internal brand management makes sure that

employees and partners appreciate andemployees and partners appreciate and understand understand basic branding notions and how these can affect the basic branding notions and how these can affect the equity of the brandsequity of the brands that they are working with. The that they are working with. The ultimate goal is to make everyoneultimate goal is to make everyone in the organization, in the organization, from the CEO to the trainees, to become passionate from the CEO to the trainees, to become passionate brandbrand advocates. This can be achieved, according to advocates. This can be achieved, according to Davis, by following a threestepDavis, by following a threestep course: “Hear It, course: “Hear It, Believe It, Live It”. To get employees to “live the Believe It, Live It”. To get employees to “live the brand”, brand”,

8.46

Brand Brand Assimilation Process-Assimilation Process-Scott DavisScott Davis

Principle 1: Make the Brand Relevant Principle 1: Make the Brand Relevant One of most critical principles is to make sure the brand is One of most critical principles is to make sure the brand is relevant to employees. Each employee in each functional group relevant to employees. Each employee in each functional group or unit of the company must understand not just what the brand or unit of the company must understand not just what the brand stands for, but how they as individuals can embrace its meaning stands for, but how they as individuals can embrace its meaning and represent it publicly. Only employees who understand the and represent it publicly. Only employees who understand the brand can help support it and use it to guide decision making. brand can help support it and use it to guide decision making.

Principle 2: Make the Brand Accessible Principle 2: Make the Brand Accessible If employees are to live and breathe the organization’s brand, If employees are to live and breathe the organization’s brand, they must be equipped with the information and tools they need they must be equipped with the information and tools they need to understand it. Giving employees the ability to make brand-to understand it. Giving employees the ability to make brand-supporting decisions means that they must have ready access to supporting decisions means that they must have ready access to answers to questions.answers to questions. Without creating that kind of access, the Without creating that kind of access, the organization risks creating employees who are disinterested or organization risks creating employees who are disinterested or frustrated with the task. frustrated with the task.

8.47

Brand Brand Assimilation Process-Assimilation Process-Scott DavisScott DavisPrinciple 3: Reinforce the Brand Continuously Principle 3: Reinforce the Brand Continuously

For brand to become a cultural underpinning of the organization, For brand to become a cultural underpinning of the organization, employees must be continuously exposed to its meaning, far beyond employees must be continuously exposed to its meaning, far beyond the initial rollout of the internal branding program.Take Southwest the initial rollout of the internal branding program.Take Southwest Airlines as an example. In seeking to internally apply the attributes of Airlines as an example. In seeking to internally apply the attributes of its brand promise,“A symbol of freedom,” Southwest’s people (or HR) its brand promise,“A symbol of freedom,” Southwest’s people (or HR) department teamed with other such departments as public relations department teamed with other such departments as public relations and marketing to create an internal branding campaign around and marketing to create an internal branding campaign around employee freedom.As part of the campaign, support was fostered employee freedom.As part of the campaign, support was fostered through tactics such as having the carrier’s in-house publication through tactics such as having the carrier’s in-house publication highlight employee freedoms, having employees write about how they highlight employee freedoms, having employees write about how they personally took advantage of freedoms, and renaming the intranet site personally took advantage of freedoms, and renaming the intranet site “Freedom Net.” “Freedom Net.” Newsletters and the intranet can be invaluable communication tools Newsletters and the intranet can be invaluable communication tools that help keep brand identity elements, successes, and updated that help keep brand identity elements, successes, and updated information on the brand strategy top-of-mind for employees. Other information on the brand strategy top-of-mind for employees. Other tactics can include the rollout of such brand-related tools as laminated tactics can include the rollout of such brand-related tools as laminated identity cards and brand trading cards.identity cards and brand trading cards.

8.48

Brand Brand Assimilation Process-Assimilation Process-Scott DavisScott DavisPrinciple 4: Make Brand Education an Ongoing Program Principle 4: Make Brand Education an Ongoing Program

It’s particularly important that new employees are grounded in the brand It’s particularly important that new employees are grounded in the brand culture and inspired to believe in what the brand represents. Putting culture and inspired to believe in what the brand represents. Putting these processes in place helps newcomers better understand the brand’s these processes in place helps newcomers better understand the brand’s role and impact on the business, and it gives them the tools and the role and impact on the business, and it gives them the tools and the frameworks they need for their day-to-day decision-making. Additionally, frameworks they need for their day-to-day decision-making. Additionally, the investment the company makes in training new employees speaks the investment the company makes in training new employees speaks volumes about its level of commitment to them. The hotel chain has volumes about its level of commitment to them. The hotel chain has emphasized training because its top priority was the satisfaction of its emphasized training because its top priority was the satisfaction of its guests—and it knew that employees were critical to delivering on that guests—and it knew that employees were critical to delivering on that promise. Each new employee went through an intensive orientation called promise. Each new employee went through an intensive orientation called The Gold Standard, which was comprised of principles created to support The Gold Standard, which was comprised of principles created to support the brand.the brand. These brand precepts were reinforced in daily departmental These brand precepts were reinforced in daily departmental meetings attended by all employees. The Gold Standard provided the meetings attended by all employees. The Gold Standard provided the basis for all ongoing employee training. Not so coincidentally, Ritz-Carlton basis for all ongoing employee training. Not so coincidentally, Ritz-Carlton became a hospitality industry leader in training, providing 120 hours of became a hospitality industry leader in training, providing 120 hours of training per employee per year.training per employee per year.

8.49

Brand Brand Assimilation Process-Assimilation Process-Scott DavisScott DavisPrinciple 5: Reward On-Brand Behaviors Principle 5: Reward On-Brand Behaviors

An incentive system rewarding employees for exceptional An incentive system rewarding employees for exceptional support of the brand strategy should be tied to the rollout of support of the brand strategy should be tied to the rollout of the internal branding program. This not only helps create the internal branding program. This not only helps create and maintain excitement in the program, but it underscores, and maintain excitement in the program, but it underscores, through individual recognition, the kinds of behaviors that through individual recognition, the kinds of behaviors that need to be supported. Rewards also help demonstrate the need to be supported. Rewards also help demonstrate the organization’s commitment to the brand and the program organization’s commitment to the brand and the program while creating a tangible model that helps employees better while creating a tangible model that helps employees better understand how they, too, perform on-brand. Continental understand how they, too, perform on-brand. Continental Airlines created an employee reward program called Airlines created an employee reward program called “Working Together” under its new emphasis of promising “Working Together” under its new emphasis of promising on-time service as a key component of its brand promise to on-time service as a key component of its brand promise to customers. customers.

8.50

Brand Brand Assimilation Process-Assimilation Process-Scott DavisScott Davis

Principle 6:Principle 6: Align Hiring Practices Align Hiring Practices Because the success of a brand assimilation program Because the success of a brand assimilation program hinges on employees’ ability and capacity to embody the hinges on employees’ ability and capacity to embody the brand spirit, it’s also important that HR and marketing brand spirit, it’s also important that HR and marketing work together to develop basic screening procedures that work together to develop basic screening procedures that ensure new hires will fit with and support the company’s ensure new hires will fit with and support the company’s brand culture. This can be accomplished through a variety brand culture. This can be accomplished through a variety of tactics, starting with the incorporation of the core and of tactics, starting with the incorporation of the core and extended brand identity elements into the process of extended brand identity elements into the process of evaluating prospective employees. Over time, job evaluating prospective employees. Over time, job descriptions should be rewritten to incorporate these descriptions should be rewritten to incorporate these same brand identity traits into the list of expected same brand identity traits into the list of expected employee behaviors. employee behaviors.

8.51

Rate Your Firm's Marketing Rate Your Firm's Marketing Assessment SystemAssessment System

1. 1. Does the senior executive team regularly and formally assess Does the senior executive team regularly and formally assess marketing performance?marketing performance?(a) Yearly(a) Yearly - 10 - 10(b) Six-monthly(b) Six-monthly - 10 - 10 (c) Quarterly(c) Quarterly - 5 - 5(d) More often(d) More often - 0 - 0 (e) Rarely(e) Rarely - 0 - 0(f) Never(f) Never - 0 - 0

2. 2. What does the senior executive team understand by 'customer value'?What does the senior executive team understand by 'customer value'?(a) Don't know. We are not clear about this(a) Don't know. We are not clear about this - 0 - 0(b) Value of the customer to the business (as in 'customer lifetime value')(b) Value of the customer to the business (as in 'customer lifetime value') - 5 - 5(c) Value of what the company provides for the customers' point of view(c) Value of what the company provides for the customers' point of view - 10 - 10(d) Sometimes one, sometimes the other(d) Sometimes one, sometimes the other - 10 - 10

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

(a) (a) >30% - 10>30% - 10(b) (b) 20-30% - 6 20-30% - 6 (c) (c) 10-20% - 410-20% - 4(d) (d) <0% - 0<0% - 0

8.52

Rate Your Firm's Marketing Rate Your Firm's Marketing Assessment SystemAssessment System

4. 4. Does the business/marketing plan show the non-financial Does the business/marketing plan show the non-financial corporate goals and link them to market goals?corporate goals and link them to market goals?(a) No/no plan(a) No/no plan-0-0(b) Corporate no, market yes(b) Corporate no, market yes-5-5(c) Yes to both(c) Yes to both-10-10

5. 5. Does the plan show the comparison of your marketing Does the plan show the comparison of your marketing performance with competitors or the market as a whole?performance with competitors or the market as a whole?(a) No/no plan(a) No/no plan-0-0(b) Yes, clearly(b) Yes, clearly-10-10(c) In between (c) In between -5-5

6. 6. What is your main marketing asset called?What is your main marketing asset called?(a) Brand equity(a) Brand equity-10-10(b) Reputation(b) Reputation-10-10(c) Other term(c) Other term-5-5(d) We have no term(d) We have no term-5-5

8.53

Rate Your Firm's Marketing Rate Your Firm's Marketing Assessment SystemAssessment System

7. 7. Does the senior executive team's performance review Does the senior executive team's performance review involve a quantified view of the main marketing asset and involve a quantified view of the main marketing asset and how it has changed?how it has changed?(a) Yes to both(a) Yes to both-10-10(b) Yes but only financially (brand valuation)(b) Yes but only financially (brand valuation)-5-5(c) Not really(c) Not really-0-0

8. 8. Has the senior executive team quantified what 'success' Has the senior executive team quantified what 'success' would look like five or ten years form now?would look like five or ten years form now?(a) No(a) No-0-0(b) Yes(b) Yes-10-10(c) Don't know(c) Don't know-0-0

8.54

Rate Your Firm's Marketing Rate Your Firm's Marketing Assessment SystemAssessment System

9. 9. Does your strategy have quantified milestones to indicate Does your strategy have quantified milestones to indicate progress towards that sucess?progress towards that sucess?(a) No(a) No-0-0(b) Yes(b) Yes-10-10(c) What strategy?(c) What strategy?-0-0

10.10. Are the marketing performance indicators seen by the Are the marketing performance indicators seen by the senior executive team aligned with these milestones?senior executive team aligned with these milestones?(a) No(a) No-0-0(b) Yes, external (customers and competitors)(b) Yes, external (customers and competitors)-7-7(c) Yes, internal, (employees and innovativeness)(c) Yes, internal, (employees and innovativeness)-5-5(d) Yes, both(d) Yes, both-10-10

8.55

Rate Your Firm's Marketing Rate Your Firm's Marketing Assessment SystemAssessment System

Score yourself according to the scale below. Score yourself according to the scale below.

- If your total is greater than - If your total is greater than 90 percent90 percent,, excellent excellent..

- If your total is - If your total is 70-90 percent70-90 percent, congratulate yourself , congratulate yourself and keep at it.and keep at it.

- More than - More than 50 percent 50 percent is good.is good.

- Less than - Less than 30 percent30 percent means what you think it means. means what you think it means.