The marketing industry is good at coining terms and creating stories, but Ken Roberts wonders if we’ve taken the concept of brand equity too far.
As marketers, we have all innocently told our fair share of fairy tales as we have grappled with market ambiguity.
Some of our fairy tales have happily turned out to reasonably approximate market behaviour whereas others have ranged from over-simplifications to unintended fabrications.
Perhaps the greatest fairy tale of our marketing careers has come from the concept of “brand equity”.
BIRTH OF THE BRAND
EQUITY MYTH
The expression “brand equity” was coined by David Aaker about 20 years ago.
Brand is just stored value in the form of purchase intentions so the idea of an expression like brand equity made perfect sense, with equity implying stored value. The most common application of brand equity today is in measuring brand health.
With increased use of the term came legitimacy and the brand
equity myth was handed on to a generation of marketing graduates.
THE BRAND EQUITY
GOLD RUSH
The marketing research fraternity rushed to market with a bevy of brand equity metrics. In the absence of a universal meaning of brand equity, every research firm seemed to have a different measure. Research International developed the Equity Engine, IPSOS the Equity Builder, ACNielsen gave us Winning Brands and Millward Brown talked of BrandDynamics, all of which claimed to be measuring brand equity in one form or another.
Add to this the associated fields of brand finance and valuation, with their own techniques for measuring brand equity, and you arrive at a tangle of divergent claims about what is brand equity.
The potential for brand equity fabrication comes when marketing researchers provide the client with a brand equity score and
imply that increasing that score is something the business should be striving for.
It is at that point that the bond between research finding and fact becomes unfastened and heroic assumptions about the cause and effect of brand equity are made.
Does increasing brand equity as measured by an infinite number of contorted formulae bring about an increase in market share?
BRAND EQUITY =
MARKET SHARE
Brand measurement should be about measuring the brand’s power of attraction. That is, consumers’ purchase intentions.
If the brand measurement you are using does not strongly correlate with changes in market share, then it is not measuring brand. It doesn’t matter a jot if the measure has the term brand equity in its name and is accompanied by a convoluted formula or not.
When we choose to measure something like brand equity rather than a hard measure such as predicting sales, we choose to measure something which is imagined rather than something which is bankable.
If marketers were to more directly measure brand then they would be more directly accountable. It is easier to be accountable for an old-school, murky definition of brand equity rather than to be accountable for sales.
Being a creative mob, we seemed to have mastered coming up with pseudo scientific expressions to wrap around concepts that can be difficult to evaluate. Brand equity is the case in point. If you believe that brand and all its facets simply equates to future sales, then you should be measuring brand directly against relative sales potential and not against some other esoteric, ill-defined, made-up measure.
Measure the Fact,
not the Fairy tale
Quite simply, there is no universal meaning for the fabricated term brand equity.
I don’t know how or when you will next measure the performance of your brand but no matter how wedded your organisation is to brand equity and no matter what books you read on the subject or who you have heard present on brand equity, if the output of what you are measuring does not strongly correlate with sales, and therefore market share, then you are measuring the fairy tale and not the brand. <
Ken Roberts is managing partner of Forethought Research.
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