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Brand value: Brand-Value Monitor ®
In today’s world the market value of a company is mainly determined by the value of this company’s brands. Various methods have been developed to ascertain the value of a brand. Even though it may be of interest to assess the financial value of a brand, it is possibly more important still – from a managerial perspective – to know what affects that value. The Brand-Value Monitor gives a brand manager the tools to directly manage the value of a brand, and, therefore, the value of the company.
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Brand-Value Monitor: conceptual model
The Brand-Value Monitor is based on the brand-added value model by Rik Riezebos, which is derived from David Aaker’s model. This model distinguishes two main components: (1) the added value a brand offers a consumer (brand-added value) and (2) the added value for the brand owner (brand equity). The unique aspect of this model is the fact that it bridges the lines of thought of brand management and of strategic management. The brand-added value factors are immediately recognizable – and, therefore, manageable – for brand managers, while the brand equity factors are immediately identifiable for and usable by CFOs and CEOs.
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'Brand-added value' factors
The Brand-Value Monitor distinguishes three brand-added value factors (brand value for the consumer): perceived quality, psycho-social meaning and brand awareness. Perceived quality relates to the fact that a brand has a positive effect on the quality perception of consumers. This can be developed by communicating unique selling propositions (USPs), by emphasising the authenticity of the brand, or by managing by optimal price-quality ratio. Psycho-social meaning refers to the fact that consumers buy a brand to tell something about themselves. In addition to the various aspects of perceived quality and psycho-social meaning, the Brand-Value Monitor establishes the degree of brand awareness. Research has shown that this factor has a relatively large impact on the added value that consumers attribute to a brand.
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'Brand equity' factors
The Brand-Value Monitor distinguishes three brand-equity factors (added value for the brand owner): size of market share, stability of market share and price margin. Size of market share depends on how much added value consumers attribute to a brand. The stronger the brand, the more units will be sold. Moreover, stability of market share is measured. This factor is relevant for the consumers’ brand loyalty. The third factor is price margin. Various studies have shown that strong brands have, or can have, a considerably higher price margin. Return on investment is an important aspect of brand management. The results of a Brand Value Monitor can be used straightaway to help you make the right decisions.
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Comprehensive modules
The Brand-Value Monitor pinpoints all brand-added value and brand equity components, giving you, the brand manager, a better grip on your brand. In addition, three even more comprehensive modules were developed:
The influence of distribution level, price and brand-related proprietary assets (such as trade relations). Research has shown that these factors can have a considerable effect on the relationship between brand-added value and brand equity.
In-depth studies into one or more brand added value and/ or brand equity factors. Examples are additional studies into differences in loyalty or in brand awareness. The Brand-Personality Monitor is an in-depth study of the psycho-social significance of the brand in question.
Research into the effect of certain marketing tools on brand-added value and/ or brand equity (e.g. the effect of marketing communication and of design).
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Brand-value tracking
Brand-added value is a dynamic concept. The brand is continuously in motion, with both external and in-company factors playing a role. For this reason, monitoring brand-added value is an absolute necessity. Brand-value tracking gives brand managers an understanding of the development of the strength of their brand in time. In many cases a link may be made with various marketing efforts (design, communication). This enables you, the brand manager, to keep a finger on the pulse and make adjustments, when and where required.
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