MANAGEMENT OF BRAND AND BRAND PORTFOLIO. BRAND-AUDIT
As a result of studying this chapter, the student will: know
• stages of the brand's life cycle and their distinctive features;
• The role of brands in the contexts of the market and the brand portfolio
• reasons and methods for eliminating brands; be able to
• manage a portfolio of brands;
• carry out audit of the brand and portfolio of brands;
• Evaluate the contribution of individual brands in the portfolio; own
• skills to assess the level of cannibalization of brands;
• the main levers of brand strengthening;
• Methods for evaluating brand health.
Constant changes in the external environment require brand managers to track consumer perceptions of their brands and their competitive position. Moreover, for making specific decisions on brand management, it is necessary to clearly understand at what stage of the life cycle the brand is now and what its value is. To do this, companies conduct an audit of their brands, which can be carried out both by their own brand managers and external consultants.
Brand audit is a complex process of analyzing the various elements of a brand.
When conducting an audit, both qualitative and quantitative indicators are included in the analysis, which allow us to assess both the current health of the brand and the potential for its development. The audit should result in recommendations on brand management, in particular to strengthen its positioning and increase the brand's capital. Martin Jelesma proposes to include in the brand audit six elements (Figure 10.1), and not only the company's brand is analyzed, but also competing brands: the internal environment,
market segments, brand identity, positioning; distinctive characteristics (differentiators) and metrics.
Fig. 10.1. Brand Audit
1. Metrics. There is a significant amount of metrics, through the measurement of which the company can evaluate the health of the brand and the potential for its development. Some of these metrics directly characterize the brand and can serve as indirect indicators of the effectiveness of marketing and business in general, the other directly assesses the effectiveness of marketing and business. When monitoring brand health (the so-called brand tracking research), which can be carried out monthly, quantitative and qualitative indicators are usually used. Constant brand monitoring allows us to determine the cumulative effect of a variety of marketing actions on brand equity and react quickly to changes, making appropriate adjustments to marketing actions.Metrics , associated with the brand image. This metric block shows how the brand managed to take a prominent position in the minds of existing and potential consumers.
Brand awareness. Kevin Keller provides the following definition of awareness:
Awareness of the brand is a system of knowledge about the brand, allowing to create the most complete picture of it, its functions, elements.
Brand awareness is determined by consumer surveys and can be measured using two indicators: brand recognition and recall. Brand recognition (awareness with a hint) reflects the ability of consumers to confirm acquaintance with the brand (ie indicate that a brand is not new to them, they have already seen or heard about it). A recognition rating with a hint can be obtained with, for example, the following question: "Which of the following brands of radio stations are familiar to you?" Recollection (spontaneous awareness) reflects the ability of the consumer to "find & quot; brand in memory when mentioning a certain product category or, for example, the situation of consumption. To estimate spontaneous awareness it is possible by means of, for example, such question: "What brands of engine oil can you name?"
Deep awareness of the brand makes it easy to remember and recognize it. At one time, Procter Gamble advertised its Head Shoulders brand on TV using the offer to consumers to remember shampoo for dandruff & quot; number two & quot ;. In this advertisement, all consumers easily recalled only Head & Shoulders, which was supposed to root in the minds of the target audience the idea of the leadership of this brand and its deep awareness about it.
The image of the brand. The image reflects the perception of the brand by consumers and is evaluated through the identification of those associations that are associated with a particular brand in the minds of consumers. To identify these associations, for example, the approach to the brand image audit proposed by the consulting company, in which it is proposed to break all associations related to the brand, into four categories: caused by tangible and intangible characteristics, as well as rational and emotional advantages (rice .10.2).
Fig. 10.2. Brand image analysis
Let's consider them in more detail:
1. Tangible characteristics. The characteristics of this category are perceived by the senses (they can be physical, functional and visual), and it is thanks to them that the brand image is formed in the mind of the consumer. For example, for the brand & quot; Barrier & quot; consumers distinguish the following tangible characteristics: & quot; Barrier & quot; - the only brand that has in its arsenal replacement cassettes for different types of water, a well-known brand, is actively advertised, in the assortment of the company there are pitchers of different colors and formats, a wide choice, they are sold everywhere, they were shown in the telecast "Health".
2. Intangible characteristics. This category includes characteristics related to the brand's identity: its origin, reputation and individuality. In the case of the brand & quot; Barrier & quot; to intangible characteristics were attributed: & quot; Barrier & quot; - domestic producer, filters were developed specifically for Russian water (& quot; for us & quot;), professional water treatment, health care for the whole family.
3. Rational benefits. These advantages are provided, firstly, by the functional characteristics of the product, secondly by the organization of work with customers and, thirdly, by the relationship between the consumer and the owner of the brand. For example, for the & quot; Barrier & quot; this is a replaceable cassette for different types of water, the cost of a liter of water purified by a filter "Barrier", which is 25 times cheaper than a liter of bottled water, a free hotline, on which customers can call to receive quality advice from specialists.
4. Emotional advantages. The brand creates emotional advantages, if it contributes to the increase of self-esteem and self-assertion of consumers. In particular, the brand & quot; Barrier & quot; gives consumers the following emotional benefits: safety, health protection, family values.
Loyalty stairs. One of the popular techniques used to analyze brand health and determine customer loyalty is the construction of a loyalty staircase. This method allows monitoring of such indicators as:
• awareness of the brand (with and without hint) of potential and existing consumers;
• consumption of products under this brand;
• brand loyalty (for example, the intention to make a re-purchase, the actual subsequent consumption, the willingness to recommend the brand to others).
Each step of the ladder shows the proportion of respondents who know the brand, consume it, prefer it among other brands and loyal to this brand.
For the analysis of brand health, conversion rates are used, which are calculated as the ratio of the higher level of the pyramid to the previous one. The higher the conversion rates, the more healthy the brand. In general, brand health is defined as the ratio between the knowledge of a particular brand and the loyalty of consumers to it.
So, the loyalty ladder, developed by the company, involves analysis of five stages of the consumer acceptance decision process: the analysis reveals how many consumers have heard about the brand (awareness with a clue), know about it (awareness without a clue), are considering buying his, already at least once bought it and are ready to continue buying (loyalty). Having determined the percentage of consumers at each of the stages, it is possible to understand where & quot; is lost & quot; highest number
customers and, accordingly, where you should concentrate the marketing efforts of the company. In Fig. 10.3 shows such an analysis using the example of the Volkswagen Passat.
Fig. 10.3. Analyze the effectiveness of the Volkswagen Passat brand at different stages of the purchasing decision process
Metrics of influence. This metric block contains indicators that characterize the market success of the brand. Here you can use indicators such as market share, brand profitability, price premium.
The price premium can serve as an indicator that allows you to assess the overall health of the brand and the quality of marketing programs. The price premium is calculated in relation to a competitor or a group of competitors. So, during the survey of consumers they will be asked, for example, the following question: "The brand chain X is n rubles. How much more are you willing to pay for the brand? & Quot; This is the approach used by the company Intel. Every week, interviewers conduct such surveys in computer stores, figuring out how many consumers are willing to pay for a computer without Intel Inside .
Capital and brand value. This block consists of estimates of the integral indicator of brand equity, although usually separate indicators are calculated that characterize the components of the brand equity. Companies can also monitor the change in the value of their brands, i.e. financial expression of the value that the brand has in the market. The value of the brand is a function of the brand's capital and its sales volumes.
Brand equity is the aggregate of assets (liabilities) associated with a brand name and a symbol that increases (decreases) the value of a product or service for the firm and/or customers of that firm.
Brand equity components include brand awareness, perceived quality, brand identity, brand loyalty, and other assets (for example, patents and know-how).
One of the most cited approaches to evaluating the brand equity is the "dozen indicators" The brand captain, developed by D. Aaker. It includes:
• Commitment indicators - price premium and customer satisfaction (or brand loyalty)
• indicators of the perceived quality (leadership) of the brand - perceived quality and leadership (or popularity);
• indicators of association (differentiation) - perceived value, brand identity and association with the organization;
• brand awareness indicators;
• indicators of market behavior (market share, market price and brand representation in the distribution network).
Most of these indicators, in addition to indicators of market behavior, are estimated as a result of consumer surveys.
Various methods can be used to estimate the brand value, which can be grouped into three approaches:
1. Cost-based approach. In this case, all the costs of creating a brand are evaluated, because all past expenses (for example, R & D, advertising, test marketing, etc.), are brought to the current prices and summed up. Its main drawback is that the costs of past periods are not related to the current value of the brand.
2. Market approach. At the heart of various methods within the framework of this approach is the idea of comparing the estimated brand with analogs. Accordingly, the brand value is the difference between the sales of branded products (in value terms) and the sales volume not branded, minus brand costs (R & D, marketing). The main limitation of this method is its static nature, i.e. it does not take into account the future state of the brand. This approach is poorly applicable to innovative products, as it is extremely difficult to find a comparable non-branded product or private brand.
3. Financial (income) approach. This approach is based on the principles of economic and financial analysis, uses methods for determining the value added and discounting cash flows. One of the most popular methods of financial valuation
of brands is a method developed by the company "Business" (Figure 10.4), which is based on three key components: financial results, the role of the brand when the consumer makes a purchasing decision and the strength of the brand.
Fig. 10.4. The methodology for calculating the value of brands of the company interbrand
This methodology is based on the following stages of work:
• Calculation of the cash flow generated by the company's intangible assets, based on the analysis of the company's financial statements;
• the allocation of the cash flow generated by the brand (based on the analysis of the role of the brand);
• Define the brand multiplier - & quot; brand multiplier & quot; (based on the evaluation of brand strength).
The strength of the brand in the methodology of the company interbrand is determined on the basis of expert evaluation of ten factors:
• Internal factors:
• external factors:
The maximum value of brand strength can be 100 points. This value is then transformed using the 8-curve into the indicator "brand-multiplier" (maximum of 20 points).
The final evaluation of the brand value is obtained by multiplying the brand's income by the "brand-multiplier". The limitations of this methodology are a certain degree of subjectivity in the definition of key components (for example, the evaluation of brand strength), and the lack of use of the discount factor in its pure form (possible risks are reflected through the indicator "brand multiplier").
2. Internal environment. These elements characterize the internal structure of the brand and the solutions for its maintenance and management. The key in this analysis is the identification of the strengths and weaknesses of the brand and the extent to which the company's internal environment, its organizational structure is able to support or inhibit the development of the brand.
Brand structure. An analysis of how the brand in question is embedded in the brand hierarchy of the company, what is the architecture of this brand (these aspects will be discussed in detail in paragraph 10.3). If a brand produces several products (in one or more product categories), you need to analyze what contribution they make to the overall sales of the brand.
Brand management. Within this block, various components of organizational support for brand creation and management initiatives should be analyzed. In particular, there is an analysis of the resources that the brand has within the company, for example, the availability of qualified brand managers, the budget. If a corporate brand audit is carried out, an organizational culture assessment may be required, as it serves as a motivation tool for staff and ensures a uniform behavior of employees, which ultimately creates brand trust from different stakeholder groups and enhances brand performance.
3. Market segments. It is necessary to analyze all the markets (segments) on which the brand in question operates. M. Jelsema offers to study such parameters as the size of the segment, its location, maturity, industry trends, consumer profile and purchasing behavior. This is necessary to identify market factors that either contribute to the development of the brand. Also, if a brand works in several markets (segments), you need to assess how the differences in their characteristics should be taken into account in the identity, positioning and architecture of the brand.
4. Individuality. M. Dzhelsema proposes to conduct an audit of the brand identity by studying external elements, which are a kind of reflection of the individuality: brand name, logo, slogan, packaging, etc. In addition, a consumer survey can be conducted to identify the characteristics of the human personality with which the brand is associated.
5. Positioning. In the framework of the analysis of positioning, perception maps are usually used, which were discussed in detail in Ch. 7. In other words, it is necessary to identify how the brand is perceived by consumers (existing and potential).
6. Differentiators. In this part of the analysis, it is necessary to determine which attributes distinguish the brand from competitors (points of differentiation), and which ones coincide (points of parity), and also whether the brand has competitive advantages.
The results of the brand audit conducted by companies are the basis for the development and further implementation of brand management solutions. In the next section, we'll look at the brand management approach based on the concept of the brand's life cycle.
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