THE CUSTOMER BENEFIT FORMULA Apparently, there’s a formula you can apply to work out how much benefit you are delivering to your customers. It goes like this:“Consumer benefit = V (value of market offering) + B (value of brand) + R (value of relationship) - C (cost of market offering) - T (cost of time)” So now you know. Use it wisely. Oh, and if you already use this calculation or something similar, let me know what good it does your organization in practice, as I’d love to know. AVS
From India, Madras
456From India, Madras
Thanks anurag3433 for your request.
Indeed this is a difficult question – and impossible to answer.
Here are David Aakers 10 measures of brand equity. As you can see they are “fluid” and how you weight them to come to a final figure is a matter of internal evaluation and judgment. Whether “price premium” is more important than market share by volume is something only your organisation can determine.
Price premium,
How much is a consumer prepared to pay in comparison with competing brands. Coca-cola traditionally commands a price premium of 15% or more over its rivals.
For cheaper goods and services the lower price can be a positive in terms of equity if it translates into higher revenue through market share, i.e. price demand elasticity in action.
User Satisfaction/Loyalty.
Usually measured through regular surveys and for certain goods and services includes repeat purchase.
Perceived Quality.
Can be measured on a number of scales, high low, best in class, consistent versus inconsistent, premium, average, low. Good idea to get a steer on how important it is in the specific purchase.
Leadership.
3 dimensions. “The number 1 syndrome” the top, the biggest market share etc. 2. Growth rates, etc. the fastest selling, the one that’s “cool” to have. 3. Perception of the underlying organisation, the most modern, the most technologically sophisticated.
Perceived value
Two approaches to value. Represents the best value for money. And is there a reason to buy this brand over the others? Bang & Olufson for design, OXO Good Grips.
Personality
Does the brand have one, is it an interesting personality, does it reflect or resonate with the user.
Organisation.
Is there a visible organisation behind the brand with a strong presence. Such measures as an organisation I can trust, an organisation I admire, or would be proud to work for.
Brand Awareness.
Starts with recognition - I have heard of it, through recall - I remember it, to “first mentioned” brand and consideration - I would consider using it. Brand awareness drives everything, but remember bad news can drive brand awareness.
Market Share
What it is, how it is moving, what you want it to be?
Price & Distribution Indices
Price indices = average of price of sales and share of total category revenue. The percentage of people who have access to a distribution point.
To get your brand professionally valued can be very expensive and to be honest the number at the end has little meaning. The true value of the brand is what someone is prepared to pay for it or how willing they are to invest in it. When Nestle bought Rowntree they especially wanted the “Kit Kat” brand, which had a greater value to them because of its greater potential through their stronger distribution channels which is why they were prepared to pay way over the book value of the organisation.
Brands are sometimes valued as part of a defense against acquisition, or to lure investors. Nevertheless it is a good idea to get a measure of brand equity and track it periodically to see how the organisation is progressing.
As for the second part of your question, brand extension, it depends ……. IBM ThinkPad is generally regarded as a “Silver Bullet”, it added value to the parent brand, whereas the Porsche 922 & 924’s were considered to be too cheap and damaging the cache of the other models so were dropped.
Hope this helps you ….
AVS
From India, Madras
Indeed this is a difficult question – and impossible to answer.
Here are David Aakers 10 measures of brand equity. As you can see they are “fluid” and how you weight them to come to a final figure is a matter of internal evaluation and judgment. Whether “price premium” is more important than market share by volume is something only your organisation can determine.
Price premium,
How much is a consumer prepared to pay in comparison with competing brands. Coca-cola traditionally commands a price premium of 15% or more over its rivals.
For cheaper goods and services the lower price can be a positive in terms of equity if it translates into higher revenue through market share, i.e. price demand elasticity in action.
User Satisfaction/Loyalty.
Usually measured through regular surveys and for certain goods and services includes repeat purchase.
Perceived Quality.
Can be measured on a number of scales, high low, best in class, consistent versus inconsistent, premium, average, low. Good idea to get a steer on how important it is in the specific purchase.
Leadership.
3 dimensions. “The number 1 syndrome” the top, the biggest market share etc. 2. Growth rates, etc. the fastest selling, the one that’s “cool” to have. 3. Perception of the underlying organisation, the most modern, the most technologically sophisticated.
Perceived value
Two approaches to value. Represents the best value for money. And is there a reason to buy this brand over the others? Bang & Olufson for design, OXO Good Grips.
Personality
Does the brand have one, is it an interesting personality, does it reflect or resonate with the user.
Organisation.
Is there a visible organisation behind the brand with a strong presence. Such measures as an organisation I can trust, an organisation I admire, or would be proud to work for.
Brand Awareness.
Starts with recognition - I have heard of it, through recall - I remember it, to “first mentioned” brand and consideration - I would consider using it. Brand awareness drives everything, but remember bad news can drive brand awareness.
Market Share
What it is, how it is moving, what you want it to be?
Price & Distribution Indices
Price indices = average of price of sales and share of total category revenue. The percentage of people who have access to a distribution point.
To get your brand professionally valued can be very expensive and to be honest the number at the end has little meaning. The true value of the brand is what someone is prepared to pay for it or how willing they are to invest in it. When Nestle bought Rowntree they especially wanted the “Kit Kat” brand, which had a greater value to them because of its greater potential through their stronger distribution channels which is why they were prepared to pay way over the book value of the organisation.
Brands are sometimes valued as part of a defense against acquisition, or to lure investors. Nevertheless it is a good idea to get a measure of brand equity and track it periodically to see how the organisation is progressing.
As for the second part of your question, brand extension, it depends ……. IBM ThinkPad is generally regarded as a “Silver Bullet”, it added value to the parent brand, whereas the Porsche 922 & 924’s were considered to be too cheap and damaging the cache of the other models so were dropped.
Hope this helps you ….
AVS
From India, Madras
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Google’s Employee Benefit Formula is Cost Plus Values.pdf