The paper "Brand Equity and Associated Metrics in Marketing" is an outstanding example of marketing coursework. Marketing experts have identified the equity of a brand as being among the most powerful of intangible assets that drive the value of a corporate (Lev 2005). Others are of the opinion that brands are representative of a company’ s large assets, commanding about forty percent of a firm’ s market value. In actual fact, it would be correct to consider the brand as the fifth most important resource in a firm, after human resources, information, goods and funds (Lev and Daum 2004).
Brand equity concept has thus, over the years, become a subject of interest to both practitioners and academics. Brand equity can thus be defined as the differential response that a brand creates in the marketplace (Rossolatos 2014). This can either be a positive differential response or negative differential response. To understand this concept better, one should understand that a brand’ s ability to generate some kind of differential response in the market dictates the value of that particular brand. Thus, if a brand has high equity then it will generate a positive differential response in the market.
Given that brand equity is an intangible asset, it can only be reflected in a firm’ s earnings and in its stock price (Lev and Daum 2004). What this therefore means is that brand equity is held in the consumers’ mind in terms of brand awareness and brand image. Ultimately, the customer becomes the most important component in determining the value of a brand as his/her choices will dictate the success or failure of a firm’ s brand. Of considerable relevance, however, is how to measure brand equity and the metrics employed. Metrics in Brand Equity It is believed that by 2020, branding will become the most important value driver in corporate boardrooms.
At the moment, it is already considered an effective means to better leadership and helps an organisation’ s boardroom drive its vision in the right direction. The primary goal of the boardroom in a firm is to build shareholder value and sustain it as well as deliver to shareholders, competitive returns. To achieve this, boardrooms must manage by using metrics to find out how their brand is performing.
Brand equity can thus be measured using three broad metrics of financial, preferences and knowledge considerations. The measures under each of these three metrics are fundamental in ensuring that the firm’ s brand portfolio performs highly. Financial Metrics When measuring brand equity, financial metrics are applied to measure the monetary value of the brand via parameters such as market share, brands lifetime value, price premium, brand’ s growth rate, the capability to generate revenue and the transaction value. All these will allow a firm to estimate the accurate financial value of its brand (Davis 2012). Market share metric: The market share metric quantifies the amount of market share that a brand commands in the market place.
This quantification can be divided into consumer segments, product segments and geographical segments (Skiera, Schulze and Wiesel 2012). This metric therefore indicates a brands aptitude to retain existing customers and more fundamentally, attract new customers.
Lev, B 2005, Intangibles: Management, Measurement, and Reporting, Oxford, University of British Columbia Press.
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