BRAND DYNAMICS:On the dimension of knowledge, The importance of measures

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Brand Management (MKT624)

Lesson 40

BRAND DYNAMICS

Introduction

With the understanding of measures on the first two dimensions, that is, differentiation and

relevance, this lecture continues with the discussion on measures of variants of the remaining

two dimensions, esteem and knowledge1.

On the dimension of esteem

Customer loyalty: This shows how consistent customers are in buying your brand, how long

they have been buying and how long they may buy? This measure should tell you the number

of customers that you would have lost had you not had the branding strategies. This also tells

you that the customers who did not leave your brand are loyal customers.

You ask your customers what other brands they considered before finally deciding to stick to

your brand. You can find out the competitive brands that entered your customers' decision-set.

The next question should clarify why they stuck to your brand after considering competition

and then discarding it.

You will get yet another testimony to your product's quality and branding strategies.

Price premium/Financial brand value: This shows you why your customers are willing to pay

you a premium over your competitors or a price that offers you good, attractive margin. This

also is an important measure in determining the right price premium for your brand.

You compare the price of your brand with your immediate competition and determine to what

extent you can further go up in price, thus following the market-based pricing mechanism.

The measure gives you insights into

· Going for the right premium

· Adjusting your pricing upwards, even if you do not charge a premium, to ensure you

have the right margins.

· Cutting your costs wherever you can to improve your margins

Lifetime value of a customer: It lets you have your loyal customer's lifetime worth in terms of

your brand's purchasing.

On the dimension of knowledge

Positioning understanding: This measure tells you to what extent customers understand the

way you have positioned your brand. Any gaps between your message and understanding of the

target market will raise questions for correction.

A similarity of message and reception of it by the market is a testimony to the right positioning

and, hence, leveraging of the brand.

It is one of the most important measures for the simple reason that differentiation and

segmentation come to life if a position is rightly occupied in the minds of your consumers. To

what extent customers understand your positioning and own it tells you the level of success that

you have achieved from your branding effort.

If you positioned your brand from the taste and quality platform, then it has to be perceived so

in the market.

Conversely, if it is perceived more as a price-friendly brand, then the perception needs to be

changed. This perception may hinder your efforts to go for a price increase; for customers may

take it for granted that your price will never be out of their perception range. That will be a big

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constraint for you. If, however, the right positioning is taking hold, then you will be free of that

constraint and can charge a premium or a price that offers a high level of margin.

There is a straight line relationship between quality perception and premium pricing.

Perception of high quality and taste will also enable you to make your customers stick to your

brand and attract new customers through referrals.

In short, a complete understanding on part of the customers about your brand's inner core and

character testifies that your position is well understood by them.

Referral index: It pinpoints the potential to create new business/customers owing to referrals by

satisfied and loyal customers on the basis of their knowledge of the brand.

The importance of measures

The importance of such measures comes to the surface under two sets of circumstances:

· In adversity, when sales start slipping, market share eroding and management having no

choice but making desperate decisions as quick fixes.

· In less difficult conditions, where brand's potential is not being fully harnessed, leaving

much to be desired. You realize this mostly in hindsight.

According to experts, these measures along with financial measures create a balanced method

of measuring a brand's performance. The challenge therefore is to use these measures to

supplement the financial measures. However, it is not important to go for all the measures that

are discussed. You can pick a few that are relevant to your strategic situation and then see with

confidence that your brand is moving the way it was planned. If not, then make relevant

changes before damage is done.

Such an approach ensures that brand building efforts are not compromised and you can:

1. Maintain your brand position an extremely important dimension that drives all

marketing strategies.

2. Preempt most of the damages that could be caused by not addressing the strategic

factors.

3. Further consolidate your brand position by ensuring that all brand strategies are taking

hold.

4. Stay focused in maintaining your brand picture. It helps you eliminate any gaps between

the picture you have created and the actual image.

5. Determine the impact of your strategies on retaining loyal customers. Loyal customers

give referrals of your brand to others and create more customers.

6. Use the result of your branding efforts toward creating new customers, creating new

extensions.

7. Achieve an overall picture of the qualitative returns you are getting on the money you

are investing into brand-building.

Summary

Measuring performance of your brand means you are managing your brand right. Measurement

comes in the form of your monthly, quarterly, and annual returns on investments and revenues,

but it has to be supplemented with measurements of your strategies.

Strategies cause financial results and therefore must be measured to see if there are any changes

required toward tactical adjustments. The need for tactical adjustments keeps you alert and

timely action ensures that the financial results that you are posting continue improving.

A time may come when financial results take a turn for the negative if strategies are left to

chance and you lose control of their implications. The strategic implications are demonstrated

in four different macro dimensions, that is, differentiation, relevance, esteem, and knowledge.

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These dimensions translate themselves into so many different variants (offshoot) that allow us

an opportunity to measure them and see whether or not we are on the right path. If we are not,

then we make adjustments and the process goes on.

There could be so many different measures. You should not always follow a rigid checklist of

measures. Be sensitive to variables that affect your results and strategies under a particular set

of circumstances. Relating those variables with your circumstances, you should decide which

measures to go for market share, loyalty, pricing, brand image recognition, positioning or any

other?

Bibliography:

1. David Aaker: "Building Strong Brands", The Free Press ( )

Suggested readings:

1. Scot M. Davis: "Brand Asset Management Driving Profitable Growth through Your

Brand"; Jossey-Bass, a Wiley Imprint (220-226)

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