BRAND EQUITY:
WORKING TOWARD A DISCIPLINED
NATIONAL ANALYSTS, INC.
1835 Market Street
Philadelphia, Pennsylvania 19103-2984
www.nationalanalysts.com
Tel: (215) 496-6800 ◆ Fax: (215) 496-6802
METHODOLOGY FOR MEASUREMENT
SUSAN SCHWARTZ McDONALD
President and CEO
National Analysts
This is the text of a presentation delivered
at the 2nd Annual Advertising Research
Foundation Advertising and Promotion
Workshop (February 1990 ◆ NY, NY).
Like just about everyone else here, I’m
preaching to the choir by reiterating the
notion that you can harvest stored brand
value through strategic line extension.
And, of course, by stating the obvious
corollary: that you can squander your
hard-earned equity by using it to
subsidize misextensions.
Several years ago, Booz•Allen & Hamil-
ton* conducted a survey of companies
which have had varying degrees of success
in new product introduction, in order to
arrive at an understanding of what we
called “best practices” -- that is, what dif-
ferentiated the companies which suc-
ceeded more often than others in the new
products development process. To talk
about the results would require more than
the time I have here, but I’d like to begin
this discussion by sharing at least one
useful point with you. Success in new
product introduction is increasingly as-
sociated with the expenditures of money
earlier in the development process. And, al-
though there are many ways to spend that
money, one of the most obvious is on a
more deliberate examination of brand --
what we might call “brand testing” as a
preface to “new product testing.”
___________
* National Analysts was a division of Booz•Allen &
Hamilton for 22 years, until April 1, 1992 when it
became an independent business entity.
2 Brand Equity
I plan to spend most of the time allotted
me today in talking about research
techniques that minimize risk in this sort
of brand research enterprise. But before I
do, I need to join the swelling ranks of
marketing lexicographers who define
terms like brand and brand equity. I don’t
propose any provocative definitions.
When I speak of brand, I am talking here
about the set of images and associations
linked to a commercial identity which:
• Distinguish it from others
• Create specific consumer expecta-
tions and
• Promote some behavioral orienta-
tion (i.e., to buy or avoid)
When I use the term “brand equity” -- one
I personally like because it’s very ex-
pressive, even though imprecise -- I am
referring to the stored value built up in a
brand which can be used to gain market
advantage. What makes that value hard to
quantify, especially before the fact, is that
it can be realized in a variety of ways:
1. Brand Resilence: Resistance to
new competitors in the category
2. New Product Trial: Increased
consumer willingness to try new
products or line extensions under
that name -- what you might think
of as “referred equity”
3. Brand Premium: Consumer
willing-ness to pay a premium for
your current product or a new one
under that name
4. Channel Leverage: Increased or
sustained access to distribution
channels
The common denominator is, of course,
goodwill, but it’s hard to imagine an
algorithm that successfully models and
values all those aspects of equity in dollar
terms, since the relationships are complex
and the predictor variables are sometimes
crude.
Brand valuation per se is a concept more ABOUT NATIONAL ANALYSTS
interesting to those who aim to sell or
acquire brands than to those who seek to
lever them, so I will generally confine my National Analysts, Inc. is a research and consulting organiza-
remarks to the latter -- by talking about the tion providing marketing guidance to corporations in a range
role of disciplined thinking and research in
of industries and product categories. Originally established as
successful brand extensions.
an independent entity in 1943, National Analysts was acquired
I think we need, first, to acknowledge that by Booz•Allen & Hamilton Inc., the international management
the process of conversing about brand and technology consulting firm, in 1970. In 1992, National
equity has been, in many cases, a lively Analysts once again became an independent, privately-owned
exchange of anecdotes among old brand company with a continuing focus on marketing research and
warriors: “Let me tell you about the time strategic consulting
Minute Maid launched orange soda” and
“How about the time Sunkist stretched to Throughout its long history, National Analysts has addressed
fruit candy extensions?” and so on. And
a wide range of business problems, earning a reputation for
like any process that builds on examples
methodological innovation and unusual success in handling
and old yarns, there is always the risk that
we will be more canny in our retrospective challenging and complex assignments. It is distinguished by
assessment than in our predictions. We a unique balance of research and consulting resources, and a
can always find a logic or a set of brand professional staff whose methodological skills are comple-
boundaries to explain either success or mented by depth of market knowledge and industry
failure. I contend that if Jello Pudding experience.
Pops had failed, a lot of us would have
said, “You see, Jello has a room
temperature or shelf stable equity, and
those folks at General Foods didn’t
recognize that.”
Now if this seems unduly cynical, I can
only say in defense that we need to take
ourselves a little less seriously and to
remind ourselves continually that a lot of
these brand ventures -- or adventures --
can go in more than one way, depending
upon how well we execute and market
them. “Brand heredity” is important, of
course; I’m not arguing that General Foods
can necessarily put the name Maxwell
Brand Equity
House on coffee cake or that Lysol can
become a personal deodorant. But it is
possible to fail with a plausible exten-sion
-- (like Welch Grape Jelly Donuts) and to
succeed against odds with the wrong name
and the right product -- for instance, the
Honda automobile. Like certain di-seases,
brand misextensions are a function of
unfortunate “genes” and some tactical
errors in living, and it’s not always clear
which set of factors account for the greatest
proportion of the variance. I say this
because I want to unburden the research
community of some of the heavy
responsibility they’ve shouldered in this
process. We can be good advance scouts,
but we can’t sweep all the mines or survey
all the territory.
What, then, is a reasonable goal for us as
marketers and researchers? Well, our pri-
mary goal should be to learn as much as
we can about the way consumers view our
brand competence and our brand per-
sonality or style, and then along with that,
what sort of permission consumers will
extend to us as we prepare to enter neigh-
boring territories. A number of research-
ers have surfaced with claims to propri-
etary techniques, but my impression is
that, in fact, many of us are doing largely
the same thing because, like the automo-
bile or the transistor, timely discoveries
tend to get made in more than one place at
the same time.
The analogy may be forced because, to my
knowledge, no truly new research tools
have yet been invented in this arena. What
we are doing is recombining established
techniques in more thoughtful and
systematic ways. And that may be the best
we can hope for, at least in the near term.
One caution I’d raise about the limitations
of the discipline is that because no two
3
brands are alike, no rigid formula for
researching them will apply. To revive the
disease metaphor, a good diagnostician
decides what information he needs based
on patient presentation and does not
necessarily submit each patient to the
same battery of tests in the same order.
This is one of the things that stands
between good market research and the
development of a rigidly reliable brand
instrument. On the other hand, there are
some rules of logic and research
progression that should guide our
approach
Step 1 in the process is typically a
qualitative phase designed to help you
understand your brand character and the
sort of license and boundaries which the
character seems to impose. These sessions
tend to include a lot of ideation and
projection, and, though the approach is not
always uncontroversial, I believe it does
help management to think about its brand
in new, sometimes startling ways. Step 2
is quantification of the things we have
learned or the hypotheses we have formed
in the qualitative phase. The yield from
that two-step research process should
ultimately be a few selected concepts for
testing (following whatever norms or
customs you feel comfortable with). I do a
disservice to the complexity of the process
by referring to only two steps, and I’ll try
to remedy that a little later. I should
probably also state the obvious point here
that careful secondary analysis must be
carried out in con-junction with the
research, and that, at any point along the
way, it is legitimate to use that analysis as
a basis for narrowing the field of
contenders (prod-ucts or categories) which
you subject to market research.
Let’s talk then about your research goals --
what must you attempt to learn about the
character of your brand?
4 Brand Equity
Brand character tends to involve two
different elements -- brand competence and
brand personality -- and you need to
examine both in order to understand the
raw material at your disposal. If your
brand is Coke or Chiquita circa 1980, I
think there’s very little question about
what your competence is, or was. On the
other hand, if you have what I like to call a
“horizontal” brand, like Heinz, that has
already extended laterally in a variety of
different categories, it may not be easy to
get a firm grasp of how consumers define
your competence. Is it condiments? Is it
barbeque? Is it piquancy? And so on. The
more diffuse the brand, the more difficult
it can be to identify the common de-
nominator. Unless you have a brand that
is literally defined by a single product --
what Ed Tauber has referred to as brand
prototypicality -- it’s wise to be sure you
really understand what special expertise
you have, since it tends to define your
opportunities.
The other important element of your brand
character that needs careful examination is
personality or style. A good friend of
mine and a master of creative brand
thinking, Ron Mogel, likes to describe it as
the way your brand “walks, talks and
dresses” -- and I think that’s a nice way to
put it. IBM is sober, serious, responsible,
masculine, smart but rigid. Jello is
childlike and playful, enthusiastic and fun,
but not reckless.
It doesn’t matter where these images come
from. They can arise from your product
design, your technology, your packaging,
your sales reps, your ads, your
spokesmen, your target audience, your
product applications. But they’re as real
and as liberating or delimiting as your
own personalities. Just as people are
generally made uncomfortable when
friends or relatives behave out-of-
character, so are
consumers made uncomfortable by a
brand that behaves in surprising and
inconsistent ways. This kind of in-
formation has both strategic and tactical
implications since it tells you where you
can legitimately extend, as well as the style
to which your customers have grown
accustomed. Brands that enter extension
categories with competence but the wrong
style may not succeed unless they create a
new brand or supporting identity to
bridge the image gap. Jello cannot, I
submit, do a true gourmet mousse, even
though the technical capability is there to
support it. Sober, button-down, adult IBM
would have difficulty selling kids’ creative
computing toys unless it took pains to
spawn an intermediating brand identity.
It’s important to remember that whether
we speak of brand competence dimensions
or brand style, we are generally not talking
only about the kinds of product per-
formance attributes that companies normal-
ly think of when they think of brand image
tracking -- for example, “good-tasting,”
“creamy texture,” etc. One of the big leaps
for everyone involved in brand extension
is learning to separate the name on the
package from the thing inside it -- long
enough, at least, to help you think about
what the brand could mean when you put
it on another substance entirely. If you
were attempting to track the image of
Ragu Pasta Sauce, for example, you would
consider recipe dimensions:
Rich
Tomato-ey
Thick
Sweet
Properly spiced
Has fresh ingredients, etc.
If, on the other hand, you wanted to learn
more about the character of the Ragu brand,
you’d probably focus on more
Brand Equity
may not recognize ... or which they may
not truly feel for months or years. Un-
fortunately, the issue, and the data, both
get muddier as the chasm between your
present location and your target narrows.
Indeed, there comes a point where the only
valid answer is “It depends.” It depends
entirely on execution in the new category
and continued vigilance at home base.
For all my misgivings about the question, I
think we’re obligated to ask it in some
way, i.e.: “Would a line of ’X’ products by
Company Q make you think better of the
company, less, or have no effect?” And
maybe, in time, we will have some
reasonably sensitive norms to help us
make solid use of the answers. But, if we
do ask questions like that, I think we
should acknowledge, going in, that this
question is only a dim light in a foggy
channel, not sensitive radar.
In my experience with studies of this kind,
one of the overwhelming challenges -- and
this probably applies to all complex
market research, by the way -- is creating
and managing expectations. These
studies,
when properly done, are expensive, and
they are as unsettling as therapy. It’s the
point where corporations meet them-
selves face-to-face, and sometimes there
are
9
revelations, pleasant or not. There is also
the risk that people will expect a program
like this to yield a set of finished product
concepts, and I think most of us here know
that this sort of process is going to produce
only a mission statement, not a blueprint.
Earlier today, someone mentioned that his
brand research experiences had involved
him primarily with management, and that
only now was he interacting more closely
with the market research department. That
has not been my own experience. On the
contrary, I believe that some of these
projects flounder or are underfunded
precisely because senior management is
shielded or disengaged from the process.
My final word of counsel, therefore, is that
researchers and brand managers do what
they can to ensure that the findings bubble
up as high in the organization as possible.
This process of “self-discovery,” which
brand equity research tends to involve, is
one that should command unusually close
attention from the very top levels of the
company. The ultimate brand manager is,
after all, the CEO, and it’s that individual
who’s ultimately responsible to the
shareholders for a misstep under the
family name.
♦ ♦ ♦
8 Brand Equity
knowledge and a degree of “irrationality”
that not everyone can display.
Let me explain what I mean by
“irrationality” by returning to the earlier
example that has IBM moving into the
kid’s computing category. Consumers are
likely to believe that IBM will bring
conscientious quality and technical
sophistication to that category, although
they may wonder about the child empathy
Brand Equity
transcendent attributes that incorporate
personality or style as well as broad
competence.
Authentically Italian
A tomato expert
Pioneering
Fancy
Sophisticated
Contemporary
You’d be asking: Is Ragu a brand that
wears jeans or dresses? Is this brand more
like Mama Leone or Angelica Huston? By
the way, if you look closely you’ll notice
that there isn’t always a clear distinction
between “competence” and “style” and, of
course, there needn’t be. What’s important
is that we capture the brand’s (consumer-
defined) area of expertise and the manner
in which the brand delivers it. Fred As-
taire and Nureyev were both great dancers!
We try to elicit personality dimensions
with projective techniques, and those
techniques tend to work quite well, so
long as you have a tolerance for poetry
and improvisation. Since the sort of work
we do in these sessions requires a fair
degree of abstraction, we like to screen for
people who seem comfortable with
projective exercises and all they imply.
The pre-sumption is that people with a
flair for metaphor and flexible thinking
look at products much the way others do --
but they approach our market research
and the fun. But if you ask them whether
kid’s computing products will diminish
their regard for IBM, they may very well
say “no.” Why should any new product
that doesn’t clearly divert resources or
make you question corporate sanity
diminish your respect for the parent
company? To say “yes” to that question is
to demonstrate a certain emotionalism and
rigidity of expectations which many
people will want to deny...or which
they
5
described by users in terms that suggested
finesse and intellectual achievement while
nonusers raised images of potency and
aggression. Clearly, we need both views
going into quantitative research.
A few final points on the exploratory
qualitative phase. While it’s important to
invite respondents to invent new product
opportunities for you in order to reveal the
way they view your brand, don’t count on
ideation exercises to raise any meaningful
or logical extension opportunities you
haven’t already thought of. If they do, in
most cases it means that you haven’t done
all of your homework. The purpose of the
qualitative research is not to have con-
sumers stretch the bounds of logic to sup-
ply you with whimsical ideas; it is to
understand the way they prioritize those
ideas once they’re on the table, so that you
can evolve a set of decision rules to help
you pare down and refine your own list of
new product ideas. Furthermore, don’t ex-
pect that the qualitative research will lead
you inexorably to a compact set of three or
four product ideas to test. Qualitative re-
search should not bear that burden alone.
If you have broad brand competence or
you are in a neighborhood full of logical
possibilities, you may emerge with five to
ten reasonable near-term prospects and an
equal number of longer-term possibilities -
i.e., product areas you might work your
way toward over a period of years if the
proper bridges can be built. As I men-
exercises with greater vitality and express
themselves in more creative terms.
There is always some controversy around
the role of users and nonusers of your
brand at this stage of the research process.
Users know it well, and their associations
are richer; nonusers, however, are usually
out there in large numbers, and their
impressions may be quite different. Re-
cently, we heard a brand of
medication
6 Brand Equity
First, you want to confirm consumer
impressions of your brand character -- the
technical competence you can claim and
the personality traits ascribed to your
brand. Next, you want to determine
whether your brand and its characteristics
conform well to the requirements of the
extension category. Third, you want to try
to assess the risk of debasing or diluting
your present brand equity by extending
into any of the new jurisdictions. I’d like
to share some of the issues and challenges
that arise in following that general research
formula.
One of the most challenging tasks can be
the construction of an appropriate brand
context. Brand attributes are never per-
ceived in a vacuum, after all. Brand
character arises, in part, through contrast
effect and is recognized only in the context
of competing brands. McDonald’s is a
“fun” brand relative to Denny’s, and it’s a
fun brand relative to AT&T, but not, of
course, relative to Disney. So if we wanted
to understand the character of McDon-
ald’s, we’d first have to obtain ratings of
McDonald’s relative to its category peer
group -- however we choose to define that.
And I need hardly add that, in some
categories, our latitude to define the rele-
vant set for rating purposes is greater than
others. Consider the implications of these
alternative selections:
McDonald’s McDonald’s
Versus
Wendy’s Denny’s
McDonald’s is probably going to look like
it’s more “fun” to be at if we choose one
pair, but I could make a case for either one,
depending on how sensitive a measure we
want and our ingoing hunches about the
likelihood of seeing meaningful discrimi-
nation, among other things. In fact, one
could argue that you’re probably wasting
your time pitting a megabrand like
McDonald’s against its more parochial
competition when you could pit that name
against a brand like Disney and
get away with it. Who is most efficient?
Who is most caring and nurturing?
Consumers can probably handle that kind
of comparison but they can’t sensibly
compare Jello with IBM because the two
don’t coexist in the same perceptual space.
No I don’t propose for us to review or go
through the exercise of defining the “right”
brand set for McDonald’s because it’s clear
that whatever logic you used here and
whichever choice you made wouldn’t
necessarily guide you in the next research
enterprise. Selection of an appropriate
brand set will reflect a number of vari-
ables, including:
• What kind of brand do you have?
-- Megabrand vs. branded product
-- Horizontal vs. vertical brand
-- Product vs. service
-- Prototypical or generic brand
vs. other
-- Company name vs. product name
• On which categories have you set
your sights?
-- How close to home base?
-- How broadly defined are they?
• Who might your competition be?
-- Established players?
-- Current competitors in expansion
mode?
-- Brands converging from different
directions?
Brand Equity
Every one of these studies involve some
wheel reinvention and a lot of custom
craftsmanship. That’s an important
realization, and it’s one that may make
people looking for intellectual order and
demonstrability in this process a little
uneasy.
Let’s go to the second step in the
quantitative phase where we attempt to
gauge the fit between the subject brand
and the target extension categories. Here,
let me make the rather pedestrian
observation that the people who have a
right to be heard on this subject are
generally the consumers who are already
users of those extension categories. This
requirement tends to make line extension
research more expensive and cum-
bersome to do because it extends your
sampling requirements and it gives you
virtually no flexibility.
You’ve got to commit in advance to a few
options and configure the sample ac-
cordingly. I don’t hold personally with
“quickie” quantitative screens that ask any
and everyone to rate the logic of Hershey
cookie dough or a Prince pasta sauce. The
answers you get are often different when
you compare people in the category (i.e.,
who have direct product experience and
real problems to be solved) with the
responses of those who can only rate brand
proximity.
Non-category users should be included in
research only if you have reason to believe
that the addition of a new brand would
capture nonusers for the category of it --
and this goes virtually without saying --
the category is brand new. Both of these
conditions tend to be the exceptions, not
the rule, in packaged goods.
Once you’ve got the ear of your target
audience, you have to decide what kind of
7
information you want from them. Our ap-
proach, where possible, is to have them
tell us three things:
1. What kinds of transcendent at-
tributes are most important to
products in the target category,
taking care to include, for test
purposes, the attributes we believe
will be definitive of our own brand
competence and character?
2. How they would expect our brand
to perform relative to principal
competitors on those dimen-
sions?
3. And, finally, what is the likelihood
that they would try the product at a
premium price, a parity price or a
discount?
The first two measurers we call Brand
Transfer Analysis; the last we call Brand
Premium Analysis. A research veteran
will contend that you can’t expect people
to try most new brands at a premium, and,
indeed, that’s true. We do not propose
that this measure be used to guide pricing
policy. It merely uses price as a rough
metric to separate the categories in which
our brand may be seen as heroic from
those in which it will be seen as a
reasonably strong competitor and those in
which it is just a me-too or a weak
contender unable to kindle any real
excitement at all.
Finally, we must address one of the
thorniest issues of all. How to measure the
extent to which extension into any one of
these target categories will debase or
dilute our present equity. Of all the
questions we’ve posed, I’m most
uncomfortable
with this one because I think it is the
toughest of all for people to answer
realistically. It calls for a level of self-
6 Brand Equity
First, you want to confirm consumer
impressions of your brand character -- the
technical competence you can claim and
the personality traits ascribed to your
brand. Next, you want to determine
whether your brand and its characteristics
conform well to the requirements of the
extension category. Third, you want to try
to assess the risk of debasing or diluting
your present brand equity by extending
into any of the new jurisdictions. I’d like
to share some of the issues and challenges
that arise in following that general research
formula.
One of the most challenging tasks can be
the construction of an appropriate brand
context. Brand attributes are never per-
ceived in a vacuum, after all. Brand
character arises, in part, through contrast
effect and is recognized only in the context
of competing brands. McDonald’s is a
“fun” brand relative to Denny’s, and it’s a
fun brand relative to AT&T, but not, of
course, relative to Disney. So if we wanted
to understand the character of McDon-
ald’s, we’d first have to obtain ratings of
McDonald’s relative to its category peer
group -- however we choose to define that.
And I need hardly add that, in some
categories, our latitude to define the rele-
vant set for rating purposes is greater than
others. Consider the implications of these
alternative selections:
McDonald’s McDonald’s
Versus
Wendy’s Denny’s
McDonald’s is probably going to look like
it’s more “fun” to be at if we choose one
pair, but I could make a case for either one,
depending on how sensitive a measure we
want and our ingoing hunches about the
likelihood of seeing meaningful discrimi-
nation, among other things. In fact, one
could argue that you’re probably wasting
your time pitting a megabrand like
McDonald’s against its more parochial
competition when you could pit that name
against a brand like Disney and
get away with it. Who is most efficient?
Who is most caring and nurturing?
Consumers can probably handle that kind
of comparison but they can’t sensibly
compare Jello with IBM because the two
don’t coexist in the same perceptual space.
No I don’t propose for us to review or go
through the exercise of defining the “right”
brand set for McDonald’s because it’s clear
that whatever logic you used here and
whichever choice you made wouldn’t
necessarily guide you in the next research
enterprise. Selection of an appropriate
brand set will reflect a number of vari-
ables, including:
• What kind of brand do you have?
-- Megabrand vs. branded product
-- Horizontal vs. vertical brand
-- Product vs. service
-- Prototypical or generic brand
vs. other
-- Company name vs. product name
• On which categories have you set
your sights?
-- How close to home base?
-- How broadly defined are they?
• Who might your competition be?
-- Established players?
-- Current competitors in expansion
mode?
-- Brands converging from different
directions?
Brand Equity
Every one of these studies involve some
wheel reinvention and a lot of custom
craftsmanship. That’s an important
realization, and it’s one that may make
people looking for intellectual order and
demonstrability in this process a little
uneasy.
Let’s go to the second step in the
quantitative phase where we attempt to
gauge the fit between the subject brand
and the target extension categories. Here,
let me make the rather pedestrian
observation that the people who have a
right to be heard on this subject are
generally the consumers who are already
users of those extension categories. This
requirement tends to make line extension
research more expensive and cum-
bersome to do because it extends your
sampling requirements and it gives you
virtually no flexibility.
You’ve got to commit in advance to a few
options and configure the sample ac-
cordingly. I don’t hold personally with
“quickie” quantitative screens that ask any
and everyone to rate the logic of Hershey
cookie dough or a Prince pasta sauce. The
answers you get are often different when
you compare people in the category (i.e.,
who have direct product experience and
real problems to be solved) with the
responses of those who can only rate brand
proximity.
Non-category users should be included in
research only if you have reason to believe
that the addition of a new brand would
capture nonusers for the category of it --
and this goes virtually without saying --
the category is brand new. Both of these
conditions tend to be the exceptions, not
the rule, in packaged goods.
Once you’ve got the ear of your target
audience, you have to decide what kind of
7
information you want from them. Our ap-
proach, where possible, is to have them
tell us three things:
1. What kinds of transcendent at-
tributes are most important to
products in the target category,
taking care to include, for test
purposes, the attributes we believe
will be definitive of our own brand
competence and character?
2. How they would expect our brand
to perform relative to principal
competitors on those dimen-
sions?
3. And, finally, what is the likelihood
that they would try the product at a
premium price, a parity price or a
discount?
The first two measurers we call Brand
Transfer Analysis; the last we call Brand
Premium Analysis. A research veteran
will contend that you can’t expect people
to try most new brands at a premium, and,
indeed, that’s true. We do not propose
that this measure be used to guide pricing
policy. It merely uses price as a rough
metric to separate the categories in which
our brand may be seen as heroic from
those in which it will be seen as a
reasonably strong competitor and those in
which it is just a me-too or a weak
contender unable to kindle any real
excitement at all.
Finally, we must address one of the
thorniest issues of all. How to measure the
extent to which extension into any one of
these target categories will debase or
dilute our present equity. Of all the
questions we’ve posed, I’m most
uncomfortable
with this one because I think it is the
toughest of all for people to answer
realistically. It calls for a level of self-
8 Brand Equity
knowledge and a degree of “irrationality”
that not everyone can display.
Let me explain what I mean by
“irrationality” by returning to the earlier
example that has IBM moving into the
kid’s computing category. Consumers are
likely to believe that IBM will bring
conscientious quality and technical
sophistication to that category, although
they may wonder about the child empathy
Brand Equity
transcendent attributes that incorporate
personality or style as well as broad
competence.
Authentically Italian
A tomato expert
Pioneering
Fancy
Sophisticated
Contemporary
You’d be asking: Is Ragu a brand that
wears jeans or dresses? Is this brand more
like Mama Leone or Angelica Huston? By
the way, if you look closely you’ll notice
that there isn’t always a clear distinction
between “competence” and “style” and, of
course, there needn’t be. What’s important
is that we capture the brand’s (consumer-
defined) area of expertise and the manner
in which the brand delivers it. Fred As-
taire and Nureyev were both great dancers!
We try to elicit personality dimensions
with projective techniques, and those
techniques tend to work quite well, so
long as you have a tolerance for poetry
and improvisation. Since the sort of work
we do in these sessions requires a fair
degree of abstraction, we like to screen for
people who seem comfortable with
projective exercises and all they imply.
The pre-sumption is that people with a
flair for metaphor and flexible thinking
look at products much the way others do --
but they approach our market research
and the fun. But if you ask them whether
kid’s computing products will diminish
their regard for IBM, they may very well
say “no.” Why should any new product
that doesn’t clearly divert resources or
make you question corporate sanity
diminish your respect for the parent
company? To say “yes” to that question is
to demonstrate a certain emotionalism and
rigidity of expectations which many
people will want to deny...or which
they
5
described by users in terms that suggested
finesse and intellectual achievement while
nonusers raised images of potency and
aggression. Clearly, we need both views
going into quantitative research.
A few final points on the exploratory
qualitative phase. While it’s important to
invite respondents to invent new product
opportunities for you in order to reveal the
way they view your brand, don’t count on
ideation exercises to raise any meaningful
or logical extension opportunities you
haven’t already thought of. If they do, in
most cases it means that you haven’t done
all of your homework. The purpose of the
qualitative research is not to have con-
sumers stretch the bounds of logic to sup-
ply you with whimsical ideas; it is to
understand the way they prioritize those
ideas once they’re on the table, so that you
can evolve a set of decision rules to help
you pare down and refine your own list of
new product ideas. Furthermore, don’t ex-
pect that the qualitative research will lead
you inexorably to a compact set of three or
four product ideas to test. Qualitative re-
search should not bear that burden alone.
If you have broad brand competence or
you are in a neighborhood full of logical
possibilities, you may emerge with five to
ten reasonable near-term prospects and an
equal number of longer-term possibilities -
i.e., product areas you might work your
way toward over a period of years if the
proper bridges can be built. As I men-
exercises with greater vitality and express
themselves in more creative terms.
There is always some controversy around
the role of users and nonusers of your
brand at this stage of the research process.
Users know it well, and their associations
are richer; nonusers, however, are usually
out there in large numbers, and their
impressions may be quite different. Re-
cently, we heard a brand of
medication
4 Brand Equity
Brand character tends to involve two
different elements -- brand competence and
brand personality -- and you need to
examine both in order to understand the
raw material at your disposal. If your
brand is Coke or Chiquita circa 1980, I
think there’s very little question about
what your competence is, or was. On the
other hand, if you have what I like to call a
“horizontal” brand, like Heinz, that has
already extended laterally in a variety of
different categories, it may not be easy to
get a firm grasp of how consumers define
your competence. Is it condiments? Is it
barbeque? Is it piquancy? And so on. The
more diffuse the brand, the more difficult
it can be to identify the common de-
nominator. Unless you have a brand that
is literally defined by a single product --
what Ed Tauber has referred to as brand
prototypicality -- it’s wise to be sure you
really understand what special expertise
you have, since it tends to define your
opportunities.
The other important element of your brand
character that needs careful examination is
personality or style. A good friend of
mine and a master of creative brand
thinking, Ron Mogel, likes to describe it as
the way your brand “walks, talks and
dresses” -- and I think that’s a nice way to
put it. IBM is sober, serious, responsible,
masculine, smart but rigid. Jello is
childlike and playful, enthusiastic and fun,
but not reckless.
It doesn’t matter where these images come
from. They can arise from your product
design, your technology, your packaging,
your sales reps, your ads, your
spokesmen, your target audience, your
product applications. But they’re as real
and as liberating or delimiting as your
own personalities. Just as people are
generally made uncomfortable when
friends or relatives behave out-of-
character, so are
consumers made uncomfortable by a
brand that behaves in surprising and
inconsistent ways. This kind of in-
formation has both strategic and tactical
implications since it tells you where you
can legitimately extend, as well as the style
to which your customers have grown
accustomed. Brands that enter extension
categories with competence but the wrong
style may not succeed unless they create a
new brand or supporting identity to
bridge the image gap. Jello cannot, I
submit, do a true gourmet mousse, even
though the technical capability is there to
support it. Sober, button-down, adult IBM
would have difficulty selling kids’ creative
computing toys unless it took pains to
spawn an intermediating brand identity.
It’s important to remember that whether
we speak of brand competence dimensions
or brand style, we are generally not talking
only about the kinds of product per-
formance attributes that companies normal-
ly think of when they think of brand image
tracking -- for example, “good-tasting,”
“creamy texture,” etc. One of the big leaps
for everyone involved in brand extension
is learning to separate the name on the
package from the thing inside it -- long
enough, at least, to help you think about
what the brand could mean when you put
it on another substance entirely. If you
were attempting to track the image of
Ragu Pasta Sauce, for example, you would
consider recipe dimensions:
Rich
Tomato-ey
Thick
Sweet
Properly spiced
Has fresh ingredients, etc.
If, on the other hand, you wanted to learn
more about the character of the Ragu brand,
you’d probably focus on more
Brand Equity
may not recognize ... or which they may
not truly feel for months or years. Un-
fortunately, the issue, and the data, both
get muddier as the chasm between your
present location and your target narrows.
Indeed, there comes a point where the only
valid answer is “It depends.” It depends
entirely on execution in the new category
and continued vigilance at home base.
For all my misgivings about the question, I
think we’re obligated to ask it in some
way, i.e.: “Would a line of ’X’ products by
Company Q make you think better of the
company, less, or have no effect?” And
maybe, in time, we will have some
reasonably sensitive norms to help us
make solid use of the answers. But, if we
do ask questions like that, I think we
should acknowledge, going in, that this
question is only a dim light in a foggy
channel, not sensitive radar.
In my experience with studies of this kind,
one of the overwhelming challenges -- and
this probably applies to all complex
market research, by the way -- is creating
and managing expectations. These
studies,
when properly done, are expensive, and
they are as unsettling as therapy. It’s the
point where corporations meet them-
selves face-to-face, and sometimes there
are
9
revelations, pleasant or not. There is also
the risk that people will expect a program
like this to yield a set of finished product
concepts, and I think most of us here know
that this sort of process is going to produce
only a mission statement, not a blueprint.
Earlier today, someone mentioned that his
brand research experiences had involved
him primarily with management, and that
only now was he interacting more closely
with the market research department. That
has not been my own experience. On the
contrary, I believe that some of these
projects flounder or are underfunded
precisely because senior management is
shielded or disengaged from the process.
My final word of counsel, therefore, is that
researchers and brand managers do what
they can to ensure that the findings bubble
up as high in the organization as possible.
This process of “self-discovery,” which
brand equity research tends to involve, is
one that should command unusually close
attention from the very top levels of the
company. The ultimate brand manager is,
after all, the CEO, and it’s that individual
who’s ultimately responsible to the
shareholders for a misstep under the
family name.
♦ ♦ ♦
2 Brand Equity
I plan to spend most of the time allotted
me today in talking about research
techniques that minimize risk in this sort
of brand research enterprise. But before I
do, I need to join the swelling ranks of
marketing lexicographers who define
terms like brand and brand equity. I don’t
propose any provocative definitions.
When I speak of brand, I am talking here
about the set of images and associations
linked to a commercial identity which:
• Distinguish it from others
• Create specific consumer expecta-
tions and
• Promote some behavioral orienta-
tion (i.e., to buy or avoid)
When I use the term “brand equity” -- one
I personally like because it’s very ex-
pressive, even though imprecise -- I am
referring to the stored value built up in a
brand which can be used to gain market
advantage. What makes that value hard to
quantify, especially before the fact, is that
it can be realized in a variety of ways:
1. Brand Resilence: Resistance to
new competitors in the category
2. New Product Trial: Increased
consumer willingness to try new
products or line extensions under
that name -- what you might think
of as “referred equity”
3. Brand Premium: Consumer
willing-ness to pay a premium for
your current product or a new one
under that name
4. Channel Leverage: Increased or
sustained access to distribution
channels
The common denominator is, of course,
goodwill, but it’s hard to imagine an
algorithm that successfully models and
values all those aspects of equity in dollar
terms, since the relationships are complex
and the predictor variables are sometimes
crude.
Brand valuation per se is a concept more ABOUT NATIONAL ANALYSTS
interesting to those who aim to sell or
acquire brands than to those who seek to
lever them, so I will generally confine my National Analysts, Inc. is a research and consulting organiza-
remarks to the latter -- by talking about the tion providing marketing guidance to corporations in a range
role of disciplined thinking and research in
of industries and product categories. Originally established as
successful brand extensions.
an independent entity in 1943, National Analysts was acquired
I think we need, first, to acknowledge that by Booz•Allen & Hamilton Inc., the international management
the process of conversing about brand and technology consulting firm, in 1970. In 1992, National
equity has been, in many cases, a lively Analysts once again became an independent, privately-owned
exchange of anecdotes among old brand company with a continuing focus on marketing research and
warriors: “Let me tell you about the time strategic consulting
Minute Maid launched orange soda” and
“How about the time Sunkist stretched to Throughout its long history, National Analysts has addressed
fruit candy extensions?” and so on. And
a wide range of business problems, earning a reputation for
like any process that builds on examples
methodological innovation and unusual success in handling
and old yarns, there is always the risk that
we will be more canny in our retrospective challenging and complex assignments. It is distinguished by
assessment than in our predictions. We a unique balance of research and consulting resources, and a
can always find a logic or a set of brand professional staff whose methodological skills are comple-
boundaries to explain either success or mented by depth of market knowledge and industry
failure. I contend that if Jello Pudding experience.
Pops had failed, a lot of us would have
said, “You see, Jello has a room
temperature or shelf stable equity, and
those folks at General Foods didn’t
recognize that.”
Now if this seems unduly cynical, I can
only say in defense that we need to take
ourselves a little less seriously and to
remind ourselves continually that a lot of
these brand ventures -- or adventures --
can go in more than one way, depending
upon how well we execute and market
them. “Brand heredity” is important, of
course; I’m not arguing that General Foods
can necessarily put the name Maxwell

NATIONAL ANALYSTS, INC.
1835 Market Street
Philadelphia, Pennsylvania 19103-2984
www.nationalanalysts.com
Tel: (215) 496-6800 ◆ Fax: (215) 496-6802
BRAND EQUITY:
WORKING TOWARD A DISCIPLINED
METHODOLOGY FOR MEASUREMENT
SUSAN SCHWARTZ McDONALD
President and CEO
National Analysts
This is the text of a presentation delivered
at the 2nd Annual Advertising Research
Foundation Advertising and Promotion
Workshop (February 1990 ◆ NY, NY).
Like just about everyone else here, I’m
preaching to the choir by reiterating the
notion that you can harvest stored brand
value through strategic line extension.
And, of course, by stating the obvious
corollary: that you can squander your
hard-earned equity by using it to
subsidize misextensions.
Several years ago, Booz•Allen & Hamil-
ton* conducted a survey of companies
which have had varying degrees of success
in new product introduction, in order to
arrive at an understanding of what we
called “best practices” -- that is, what dif-
ferentiated the companies which suc-
ceeded more often than others in the new
products development process. To talk
about the results would require more than
the time I have here, but I’d like to begin
this discussion by sharing at least one
useful point with you. Success in new
product introduction is increasingly as-
sociated with the expenditures of money
earlier in the development process. And, al-
though there are many ways to spend that
money, one of the most obvious is on a
more deliberate examination of brand --
what we might call “brand testing” as a
preface to “new product testing.”
___________
* National Analysts was a division of Booz•Allen &
Hamilton for 22 years, until April 1, 1992 when it
became an independent business entity.