Measuring Brand Equity

Posted by  D&M Research Team

POSTED ON  November 24, 2021

CATEGORIES  Learn

What is brand equity?

The relationship between customers and brands generates a type of value-add which can be described as brand equity. For example, some brands are better known than others, others have more compelling propositions, while yet others have stronger associations and emotional bonds with consumers. Brands with high levels of equity generally do better in terms of market share, are less prone to having to compete on price, and generally have more loyal customers.

How do we measure brand equity?

There are many ways to measure brand equity and, since the early 1990s, a proliferation of models have been developed by marketing and brand researchers. Each of these try to understand the value the brand brings to the consumer against an unbranded product by looking at dimensions such as awareness, trial, quality or performance, brand image or perceptions and, of course, loyalty.

To learn more about the common customer-based brand equity models, download our FREE printable Brand Health and Equity Guide by completing the form at the bottom of this post!

These models are often proprietary in nature and can be “black boxes” in practice, expensive to access and therefore confusing to understand and integrate into the monitoring of brand health.

Fortunately, there is another way. Using simple brand health metrics already deployed as part of our brand funnel, we can create a set of additional scores that can be used to measure a brand’s equity that’s easy to understand and won’t break the bank. We call it the brand equity web.

brand equity web

These new scores – Salience, Propensity, Proposition, Adoption and Resonance – use a technique called ratio analysis which is a simple process of dividing one brand funnel metric by another to create a ratio of how consumers are being converted through the brand funnel and therefore reflecting aspects of the actual relationship of the brand to consumers.

The scores not only indicate the relative strengths and weaknesses of a brand’s equity, but also can compare brands with different market shares on a level playing field.

Brands with lower awareness can score just as well as brands with higher awareness if they convert through the funnel at equally high levels. For a brand like one plotted in the web above, the key job would be to increase its awareness to be a real threat to the larger brands. Other brands might do well at converting awareness through to trial by having a compelling proposition, but then fail in adoption because the product did not perform to expectations.

Using brand equity webs can reveal these strengths and weaknesses not only for your brand but also for the market leader and your direct competitors, giving real insight into what needs to be done to increase market share. The other benefit is that they are flexible; you can create whatever and as many scores as make sense to your brand and category.

Here is a quick rundown of the five scores:

Salience score

The Salience score is an indication of consumers’ mental availability for the brand by expressing the proportion of those consumers who can readily access a brand and associate it within a category from the set of brands they already know.

Brand salience is considered in modern marketing science as one of the most important aspects of how brands grow (Sharp) and every brand should have some form of brand salience measurement, even if it’s just spontaneous and prompted awareness.

Propensity score

The Propensity score is an indication of how well the brand is positioned in the mind of consumers who know the brand, to either pique interest in purchasing the brand for the first time (if they haven’t before), or purchasing it again in the future. It is effectively the proportion of consumers who know the brand that would consider it and/or do not reject future purchasing.

Proposition score

The Proposition score is a measure of whether the brand proposition is strong enough to evoke trial of the brand. It is effectively the proportion of consumers who know the brand that have ever bought it or tried it.

Adoption score

The Adoption score is a measure of whether the brand performs well enough for it to be repeatedly bought and become part of consumers’ current repertoire. This, again, is also a fundamental score because it supports the idea of growing a larger consumer base to grow the brand, even if that purchase is infrequent.

Resonance score

The Resonance score is a measure of whether the brand performs well enough for it to be considered the main brand amongst a group of repertoire brands.

Brand resonance is more important in categories that have typical repertoire purchasing, such as FMCG, and is less relevant in categories that have slower purchase cycles or lack trial and substitution behaviours.

Other brand equity metrics worth considering

In addition to using ratio analysis, there are several other direct measurements that can be useful in assessing a brand’s equity. Some of the more popular ones are detailed below.

Brand momentum

An alternate and good check of brand salience in action that can work to supplement ratio analysis is an additional direct question we call brand momentum. It is essentially like asking what “gear” a brand is in, to use a car analogy.

Brand familiarity

This is an extension of salience and attempts to measure how close the brand is to the consumer in terms of what they know about the brand beyond just its name. Being more familiar with the brand means that the brand has a higher level of mental availability and is therefore more likely to be chosen or purchased if it is also physically available.

Brand loyalty

Another alternative to ratio analysis that taps into conversion through the funnel (from consideration to adoption and resonance) is a direct question on brand loyalty. Unlike ratio analysis, this tells you where the brand sits across the consideration dimension from no consideration (rejection) to being the only one considered (loyalty).

Brand love

Becoming popular over the last decade or so, the idea of brand love has worked its way into our marketing diction. As an equity measure, it purports to measure a brand’s ability to really engage with consumers, turning them into brand fans who most likely also advocate for the brand. It is a measurement of the relationship with the brand that includes the level of emotional engagement driving (beyond awareness) desire, loyalty, and advocacy.

Brand advocacy (NPS)

Brand advocacy has become a whole industry thanks to the popularity and almost universal adoption of the Net Promoter Score (NPS), thanks to Fred Reichheld of Bain & Company purporting it to be the only score you will ever need to grow. While common sense and a whole lot of empirical research (including our own award-winning white paper) has questioned this notion, the metric continues to be prolific and is a useful measure to include in your arsenal of brand equity measures.

Brand relevance

Another metric that has been popular for some time is brand relevance. This essentially tries to measure whether a brand is considered a good match with the consumer or not and is the impact and culmination of all the brand communications on the individual consumer. This can be useful if you are trying to ensure that your targeting is working, that your brand offer including its image, features, benefits and price position is talking and resonating with the consumer.

In our next blog post, we’ll have a look brand image – the many different functional and emotional associations that customers make with brands – and how to measure it. Stay tuned!

For a more detailed look at these metrics and to understand how your brand is performing in your category against your competitors, download our FREE printable Brand Health and Equity Guide by completing the form below!

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