LECTURE 18

Brand Equity Measurement System

Overview
If managers are to develop programs designed to build, maintain, or
leverage a brands equity, they must first 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.
Two components make up a brand equity measurement system: brand
tracking studies and brand equity management. 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: define the
firms view of the brand equity concept and why it is important;
describe the scope of key brands; specify the actual and desired brand
equity for all brands in the brand hierarchy; explain how brand equity
is measured by tracking studies and the Brand Equity Report; provide
strategic guidelines for brand equity management; provide specific
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.
The chapter introduces the brand value chain as a means by which
marketers can relate marketing investment to financial performance.
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By using a series of three multipliers the marketing program

multiplier, the customer multiplier, and the market multiplier
companies can develop a sense of how their investment in their
brands is paying off in the marketplace. The chapter conducts a brief
brand value chain analysis for three brands: Starbucks, Miller, and
Reebok.
Brand Focus 8.0 discusses branding issues and perspectives at Ogilvy
& Mather (O&M), one of the worlds largest advertising agencies.
O&M brand management is described through a three-step process
called 360 Degree Brand Stewardship. The steps are: 1) Discovery, 2)
Strategy & Planning, and 3) Execution.
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. Measuring brand equity requires uncovering the associations
consumers have for a brand, determining the strength, favorability
and uniqueness of those associations, and assessing the impact of
brand knowledge on consumer response to marketing programs.
3. 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.
4. The brand value chain can be used to tie marketing investment to
market and financial performance.
5. 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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BRANDING BRIEF 8-7

CORPORATE MASTERBRAND GE
GE was established in 1892 when Edison General Electric merged
with Thomson-Houston. The company produced light bulbs, elevators,
motors, and appliances. Early success for the company came as a
result of J.P. Morgans financial backing and a focus on research and
development. The company evolved over the next century into one of
the worlds biggest companies, with a diverse portfolio of products
and businesses. It is among the largest U.S. companies in terms of
revenues. GE offers an incredible variety of products, from consumer
electronics and industrial power to financial services and television
broadcasting. Other operating segments include plastics, aircraft
engines, and technical products and services for medicine and
science. Under the leadership of Jack Welch, who became GEs CEO in
1981, the company enjoyed two decades of unprecedented growth and
prosperity.
Welch is widely praised as a visionary business leader today due to his
performance at GE. Once he took charge of the company, Welch
dramatically restructured the industrial giant by decentralizing the
companys operations. Welch also sought to expand GEs business
with highly profitable ventures, and worked to shed the company of
low performing businesses, such as air-conditioning and housewares.
This massive restructuring came at a significant cost to GEs
workforce: between 1981 and 1985, the company cut 100,000 jobs.
Once the restructuring was completed, Welch pursued an aggressive
acquisition strategy. Some of the major acquisitions included GEs
purchases of NBC Television in 1986, and Kidder, Peabody investment
bank in 1990 (which it later sold to Paine Webber). In the 1990s,
Welch greatly expanded the historically small GE Capital Services
with bank and insurance company acquisitions. GE Capital now
operates a diverse range of 27 business, including real estate,
insurance, finance, heavy equipment leasing, and provides over 40
percent of the companys revenues. The pace of acquisitions increased
between 1997 and 2000, during which time GE averaged more than
100 acquisitions per year. In 1999, GE acquired 134 companies worth
$17 billion. In 2000, Welch oversaw the companys biggest acquisition
during his tenure, the $45 billion purchase of manufacturing titan
Honeywell International.
Today, GE has 49 strategic business units operating under the larger
master brand. Despite its size, the company is able to react to the fast
pace of the New Economy. In 2000, the company reorganized GE
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Information Systems into an e-commerce unit called GE Global

Exchange Services and a support unit named GE Systems Services.
These two units manage the worlds largest electronic trading
community, comprised of more than 100,000 trading partners.
Additionally, at Welchs urging, GE employees saved billions of dollars
for the company by finding ways to involve the Web in their jobs. The
company also developed an online network to monitor its
manufacturing practices, put its human resources reviews online, and
established a 24/7 service center for its plants. Welch sees GE as wellpositioned to take advantage of the Internet, because he thinks
content is the easy part of e-commerce while infrastructure is the
hard part, and we have the infrastructure to capitalize on.1
In the 20 years while Jack Welch was at GEs helm, the company has
prospered tremendously. GE stock rose 3,098 percent between April
1981 and February 2001, compared with 896 percent growth for the
S&P 500 during that same period. Once he named his successor
Jeffrey Immelt, head of GEs medical imaging business in November,
2000, analysts wondered what effect the change would have on the
company. Immelt, like Welch, has professed a dedication to the
Internet. He describes it as a transformational technology that is
right in our sweet spot.2 What remains to be seen, though, is whether
Immelt will conduct GE through a period of prosperity the way Welch
has.

1 McGinn, Daniel. Jack Welch Goes Surfing. Newsweek. December 25, 2000
2 Useem, Jerry. Meet Da Man. Fortune. January 8, 2001

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BRANDING BRIEF 8-8

ON-LINE TRACKING AT KNOWLEDGE NETWORKS3
Marketing research firm Knowledge Networks was founded by two
Stanford University professors in 1998. The company is one of the
leaders in the emerging field of Internet research. It boasts an online
panel of more than 100,000 consumers connected via WebTV
interactive television boxes. In order to approximate a cross-section of
the U.S. population, Knowledge Networks uses random digit dialing
phone surveys which give each household in the U.S. an equal
probability of selection to fill its panel. The WebTV survey system
has the advantage of allowing panelists to respond at their
convenience, as opposed to phone surveys. Interactive televisions
operate with a remote control in exactly the same fashion as normal
TVs, so Internet literacy is not required for participation in Knowledge
Networks research. The network of panelists enables the company to
pursue its mission: To help companies transform their markets by
providing valid, timely, and cost-efficient information about
consumers.
Knowledge Networks monitors its panelists in-home media intake and
their purchase behaviors, which allows the company to track spending
as it relates to marketing messages. The WebTV sets also enable
Knowledge Networks to test advertising for companies in a realistic
setting, by simulating commercial television viewing. In addition to
product and advertising testing, Knowledge Networks conducts Web
surveying. The company conducted numerous polls during the 2000
election season for CBS News and the Washington Post, and even did
a lighthearted poll after the TV show Survivor finale.
Additionally, Knowledge Networks keeps consumer profiles with over
1,000 data points updated weekly for all its panelists, which
companies can access to learn about potential customers. The
company seeks to become a one-stop marketing research company,
performing television- and Internet-usage tracking studies, brand
management diagnostics and tracking, product and advertising
evaluations, and traditional survey applications. Knowledge Networks
claims this comprehensive research coverage yields a 360-degree
view of the consumer by:

3 www.knowledgenetworks.com; Peter Sinton. Polling Using the Internet Seeks to

Improve Accuracy. San Francisco Chronicle, October 28, 2000; Rebecca Buckman.
Pollster Aims at One-Stop Marketing Shop. Wall Street Journal, September 7,
2000.

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Capturing and recording marketing inputs, such as

advertising, and environmental factors that affect
consumers
Observing and analyzing how consumers process these
stimuli and how, in turn, this shapes their thoughts,
attitudes, and feelings
Tracking what action consumers take in response to their
experience of these stimuli

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