Companies work hard building the strength of their brands - it is critical to the ongoing brand management process to have meaningful and actionable data-driven measures of these efforts.

Building a brand, cultivating its strengths, pruning its weaknesses, and making it more valuable to its owners is the bottom line job of marketing. Everything marketing does should ultimately work in concert to make a firm's brands more valuable. There are many different tactics and strategies that go into strengthening a brand name: advertising, promotions, public relations, and research and development, to name a few. While companies use these and many other methods to strengthen their brands' positions in increasingly competitive markets, how can they measure the return on this work? More precisely, how can a company determine the worth of one, or any of its brands?

Measuring brand equity allows a company to establish a baseline and track changes in its brand equity over time. If a company consistently works to improve the strength of its brands, it must track progress, or risk "flying blind." Changes in a quantitative measurement of brand equity can show the company the effects of its work, and greatly aid in setting marketing and management priorities in the next business planning cycle.

Once a brand equity measurement system is established, a company can better understand and therefore determine if equity in a given brand can be leveraged or transferred to an entirely new product or service category. Thus, a firm can increase the return from the investment in building a particular brand over time by extending that brand's equity into new categories.

A company may want to measure its brand equity to aid in assigning a monetary value to a brand. Wall Street measures the strength of a brand by looking primarily at current and historical financial measures, with minimal use of information directly from the "voice of the marketplace" (i.e., current and prospective customers). While historical financial performance is important in understanding brand strength, it does not tell the whole story, especially in terms of what the future might hold for the brand. This potential deficiency derives from the choices made in defining brand equity.

Burke has developed a simple, yet powerful, definition of brand equity. For a brand to be strong it must accomplish two things over time: retain current customers and attract new ones. To the extent a brand does these things well, it grows stronger versus competition, and delivers more value to its owners.

The ability to retain customers is largely experiential. High equity brands exhibit stronger levels of customer satisfaction and loyalty. History has shown that consumers will continue to buy a brand that offers them "their money's worth."

The ability to attract new customers is largely perceptual. Because customers do not have actual brand experience, they must go by what they hear, see and believe about a brand. The two primary ways the market receives this information is through messages controlled by marketing, such as advertising and PR efforts, as well as uncontrolled messages such as press stories and "word of mouth."

Burke has identified two key drivers of the customer acquisition and retention dynamic: Brand Recognition and Brand Regard.

Burke has created a brand equity score comprised of Recognition and Regard components based on extensive R&D using world class brand as identified in BusinessWeek's Annual "Most Valuable Global Brands" issue. Our brand equity R&D efforts included the following brands, for which we conducted in excess of 5,000 interviews.

Recognition is measured by determining brand awareness levels such as "top of mind," "unaided," and/or "aided" awareness. Burke's recommended "Brand Regard" measure is the result of extensive analytical exploration across a wide set of brand attribute ratings. Our R&D efforts led to the testing of over 94,000 distinct versions of an overall Brand Regard measure, searching for the combination of perceptual brand measures that optimize the correlation with market share.

The final Brand Regard metric is composed of measures from dimensions related to Trust, Pride, Value, Responsibility, Stability, and Loyalty. Specific brand ratings from these dimensions are used to construct an overall Brand Equity Score (when combined with Recognition). In addition to an overall score, our system is also designed to provide a more granular look at how the brand is perceived by current customers and non-customers. Loyalty is measured using Burke's Secure Customer Index®, so there is a natural bridge between Burke's recommended methods for Brand Equity research and Customer Loyalty & Relationship Management protocols.

Burke typically reports brand equity tracking results as part of a Brand Scorecard system for clients, which can be made available for online access via Burke's Digital Dashboard® reporting tool. In addition to survey based measures of brand equity (such as awareness, image, value, loyalty, etc), Brand Scorecards also typically show information about changes in marketing activity such as trends in advertising and promotional expenditures, as well as key business outcomes such as trends in market share for the client brand and competitors.

Recognition and Regard play critical intermediate roles in driving Total Brand Equity (built out of Acquisition Equity and Retention Equity) which in turn drives the overall size of the customer base (by enabling the brand to capture more new customers and lose fewer current customers). A larger customer base is the engine of aggregate Customer Value (the dollar value to the brand of the annual buying power of all customers). Building Customer Value in a sustained manner over time demonstrates the cash flow power of the brand, leading ultimately to a greater Brand Value (i.e., the dollar amount the brand, independent of it's physical assets, is worth to its owners as an intangible asset). The chain of brand building events is illustrated below:

Burke R&D using a set of 24 brands identified by BusinessWeek as being among the most valuable brands in the world provides tangible proof that Burke's Brand Equity metric is highly associated with greater brand value. The following chart shows the Burke Brand Equity database of scores divided into high, medium, and low performers on the Burke Brand Equity Score. For each grouping, the average brand value in dollars (as reported by BusinessWeek) is shown. There is a clear and strong relationship, illustrating that brands that perform best on Burke measures of Trust, Pride, Value, Responsibility, Stability, and Loyalty represent significantly more value to their owners.

• Extensive experience conducting brand equity tracking research for Fortune 100 companies
• Extensive experience designing and executing brand equity research across multiple product and service categories
• R&D-based, empirically determined brand equity scoring system that is validated to correlate with real world market share, and brand value in dollars
• Global research capabilities
• World class research design, analytical, and project management capabilities

Before you can successfully extend current equity, you must understand what images, attitudes, and associations come together to determine general market acceptance of the brand, or "brand regard."

When the elements that drive the parent brand's overall regard and equity are understood, then evaluations can be made as to whether or not potential brand extensions have a good perceptual fit with the parent brand. Burke's approach to brand equity extension provides understanding about how to best leverage a parent brand's core "brand regard" elements into a new category, and identify the risks (if any) to the parent brand, and how to minimize them.

Using concepts for new "brand extension" products that are branded with the desired parent brand name, Burke will conduct research that enables plotting each concept in a two dimensional space where one axis is "business potential" (a function of purchase intent and other affinity measures), and the other axis is "brand equity transference." Brand Equity Transference is determined by the relative distance between parent brand performance on key attributes and the importance of the attributes to the category of interest, weighted by perceived brand fit between the parent brand and the concept. An example of such a brand equity extension map is shown below. The upper right hand quadrant is the "winning zone" - that is, an area where brand extension ideas simultaneously offer good sales potential, and have maximum "fit" with the parent brand.

Burke's approach to brand equity extension research will tell a client if a concept:

• Has sufficient business potential
• Is better or worse than other brand equity extensions ideas being considered
• Is seen as being a reasonable or credible extension from the parent brand by current customers and/or prospective customers.