ROBI-Brand Management-Lecture Handout | Exercises Brand Management

Brand Management (MKT624) VU

Lesson 39

RETURN ON BRAND INVESTMENT – ROBI

Introduction

All strategic moves are made according to a game plan that we have learnt through different

stages of the brand management process. From brand picture to positioning to channels to

communication are all strategic formulations that require investment. If these formulations are

put right, the result you get is brand value and profitability. To what extent the strategies in

place are giving return on brand investment should be measured so that you can make

adjustments in your strategic moves whenever and wherever those are required. The lecture

throws light on that!

Return on brand investment – ROBI

The basic idea of ROBI is to measure brand’s performance. To manage your brand well, you

have got to measure its movement in terms of changing preferences and loyalties. The most

important challenge here is to see that loyalty to the brand does not erode, for it is one basic

measure of keeping your customers, bringing in new ones, and keeping them loyal as well.

There are different measures that are employed to gauge the strategic movement and growth of

your brand. Such measures allow insights into the following factors or formulations that

organizations have in place to ensure growth of their brands:

•Allow to see that overall strategic movement is according to the strategic plans.

•Offer insights into any changes that may be required in adjusting brand position or

further strengthening it.

•Let you adjust or reinforce communication plans for consistent focus.

•Offer insights into provision of resources in a more effective way.

•Let you identify brand strength and potential areas of growth within and across

categories, that is, line or brand stretch.

Why measure performance?

It can be argued that in the presence of accounting measures like revenues, margins, and returns

on revenues and investments, why measure brand’s performance? The achievement of financial

goals is a requisite of the highest order. What else is needed? These are interesting questions

and should be answered.

Beneath the surface of accounting and other statistical figures are strategic factors that cause

subtle changes to brand’s movement as time passes by. It therefore becomes important to track

such changes in order to make right decisions and adjust tactical moves relating those changes.

In other words, we measure, on the one hand, financial results, and, on the other, strategic

factors that cause those results.

Brand dynamics

There is a cause-and-effect relationship between strategic factors and financial measures. The

strategic factors, according to the most relevant brand equity model by Young and Rubicam

(Y&R) are1:

1. Differentiation

2. Relevance

3. Esteem

4. Knowledge

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Lesson 39 RETURN ON BRAND INVESTMENT – ROBI Introduction All strategic moves are made according to a game plan that we have learnt through different stages of the brand management process. From brand picture to positioning to channels to communication are all strategic formulations that require investment. If these formulations are put right, the result you get is brand value and profitability. To what extent the strategies in place are giving return on brand investment should be measured so that you can make adjustments in your strategic moves whenever and wherever those are required. The lecture throws light on that! Return on brand investment – ROBI The basic idea of ROBI is to measure brand’s performance. To manage your brand well, you have got to measure its movement in terms of changing preferences and loyalties. The most important challenge here is to see that loyalty to the brand does not erode, for it is one basic measure of keeping your customers, bringing in new ones, and keeping them loyal as well. There are different measures that are employed to gauge the strategic movement and growth of your brand. Such measures allow insights into the following factors or formulations that organizations have in place to ensure growth of their brands:

Allow to see that overall strategic movement is according to the strategic plans.
Offer insights into any changes that may be required in adjusting brand position or further strengthening it.
Let you adjust or reinforce communication plans for consistent focus.
Offer insights into provision of resources in a more effective way.
Let you identify brand strength and potential areas of growth within and across categories, that is, line or brand stretch. Why measure performance? It can be argued that in the presence of accounting measures like revenues, margins, and returns on revenues and investments, why measure brand’s performance? The achievement of financial goals is a requisite of the highest order. What else is needed? These are interesting questions and should be answered. Beneath the surface of accounting and other statistical figures are strategic factors that cause subtle changes to brand’s movement as time passes by. It therefore becomes important to track such changes in order to make right decisions and adjust tactical moves relating those changes. In other words, we measure, on the one hand, financial results, and, on the other, strategic factors that cause those results. Brand dynamics There is a cause-and-effect relationship between strategic factors and financial measures. The strategic factors, according to the most relevant brand equity model by Young and Rubicam (Y&R) are^1 :

Differentiation
Relevance
Esteem
Knowledge

According to this model brands are built sequentially according to the four factors as shown in the graphic illustration. Differentiation comes first, as no brand with ambitions can become strong unless it has a point of real differentiation. It is the bottom line characteristic of any brand that seeks to acquire price premium or a decent price with good margins. Relevance is next on the model. It means that a brand must have clear meaning for its users. Unless it is relevant for the target market, it will not buy it, despite being much differentiated. Very expensive professional cameras and chronograph wrist watches are much differentiated, but they have an appeal for a niche market and not a large target market. Therefore, they are no good for a common customer. If a brand has differentiation and is highly relevant for a big market, it becomes a big seller and, hence very strong. Brand strength, then, is a function of differentiation and relevance. We can say that Brand strength = Differentiation multiplied by relevance We must try for our brands to become strong on both characteristics, which offer one “construct” of brand strength. The other “construct” comprises of the other two dimensions that are esteem and knowledge. Esteem multiplied by knowledge is the brand stature construct. See the graphics on the following page. Esteem refers to perceived quality and a rise or decline in popularity. Customers loyal to their brands hold them in high esteem owing to the quality perceptions. Esteem then has a direct relationship with loyalty. Knowledge illustrates that customers are not only aware of the brand and its product, but also understand the reason for this product’s existence. They are aware of the positioning of it and have a true understanding of the brand. That is the height of the brand building process. The four dimensions have further variants. You study their variants within the two major constructs and choose which ones are most relevant for measuring performance of your brand. In other words, the performance and subtle changes that are caused over time stem from these dimensions. Starting with awareness, recognition, and recall, these dimensions end with referral index. As a reminder, these measures are carried out along side routine financial results to complete a balanced brand-building process. One important beginning about these measures is that they

Differentiation

Relevance

Esteem

Knowledge

Model of Brand Dynamics

Source: Building Strong Brands by David A. Aaker Figure 43

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Figure 45 While carrying out research, importance should also be given to symbols and imagery. In many cases, symbols and images cannot be separated from the brand name when it comes to evoking a recall. Question about what comes to your mind in terms of symbols and images while we mention this name is important. Getting people to recall and recognize your brand goes a long way in building brand equity. The data generated on recall and recognition therefore should be used very strategically in making decisions about different variables of the marketing mix. Persona recognition: It measures the extent to which your brand is consistent with its persona. Are distinct and differentiated features recognized by your customers? Basically, it is a measure Awareness, recognition, and recall Persona recognition Contract fulfillment Market share Purchase frequency Customer satisfaction Quality perception Lost and found customers Customer loyalty Price premium Lifetime value of a customer Positioning understanding Referral index Differentiation Knowledge Relevance Esteem

that tells you whether the brand persona developed by you is being received at the customer end the way it was intended! This measure should also be drawn on a representative sample of your customers to find out how they associate themselves with your brand. It should be judged by the degree to which customers perceive receiving the benefits and developing emotional associations with your brand. You, therefore, have to devise a questionnaire that is intended to evoke the correct and objective responses. The next step is obviously for you to compare the results with your original persona. Any variations that you detect have to be taken care of in relation to their nature and severity. If you intended to create a persona of a dependable, friendly, and, informal brand and the results are contrary to that persona, you must make adjustments where ever those are warranted

in quality, packaging, just the visual part, symbols, or maybe your communication. The chances are that major changes will not be desired, for your persona should not be that much off the mark to dictate major changes. That will, most probably, bring your focus on to the imagery, where some adjustments will fix the problem Contract fulfillment: It measures the extent to which the brand upholds the contract. Are all promises being delivered? This measure gives a straightforward report on how much your brand is keeping all the promises it has made with its customers. Are customers satisfied about whatever they think should be delivered is being delivered? If the answer is yes, then you are keeping the contract. Any breaches dictate that you must repair the contract and win over customers’ confidence. You will recall this contract is only emotional and economic in nature. Unavailability or erratic availability of a successful brand of yours reflects flaws either in distribution system or company’s logistics. Customers expect regular availability to reap the benefits your brand offers. This is a breach of the contract and has to be repaired. Not being able to supply or deliver the product through a direct marketing system is another breach of contract. Compromising quality is yet another. Conversely, fulfillment of the contract builds trust in your brand. Trust creates loyalty, which in itself starts off a process of gaining new customers on a continuous basis. On the relevance dimension Market share: This measure lets you have a clear picture of the number of customers or usage of your brand in comparison with competition. Purchase frequency: This measure lets you have the number of times your customers buy your brand. Your objective becomes, “how can I have these customers buy more every time they buy? Customer satisfaction: This provides a rating on the degree of satisfaction with your brand. It also shows you how much willing customers are to stick to your brand. Brand-driven penetration: You use this measure on line and brand extensions. It basically tells you how many of your existing customers have chosen to buy products and services that are an extension of your existing brand. It confirms or does not confirm the extendibility of your brand by giving you a proof of to what extent your customers are willing to go with you on your extensions. In other words, it is a measure of how rational you are in devising your

ROBI-Brand Management-Lecture Handout, Exercises of Brand Management

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