10 New Brand Metrics for FMCG
One of my previous posts, ‘Measuring the Irrational’, covered the theoretical implications of accepting that people are essentially irrational beings and that brands are irrational constructs. The following brand measures have been developed as a practical next step, they are largely new in approach, but do incorporate metrics that are already in existence. I have to confess, that 2 of the 10 metrics are not new at all, but work to compliment the other 8.
The following metrics have been conceived for a generic FMCG brand looking to gain (or re-gain) iconic status. A familiar, but tough, brief.
The brand in the mind
I believe that the difference between the subjective impressions of a brand can be compared with objectives ones to indicate brand strength in the consumer’s mind. By creating indexes of subjective vs. objective measures, and assessing them vs. competitors over time, we can measure and track the intangible power of a brand in the consumer’s mind.
1. Perceived Quality
Numerous studies and meta-analysis have linked financial success of a brand to perceived brand quality, but how can we measure this and what is it in relation to? From psychological experiments to ‘the Pepsi challenge’, there are plenty of examples of brand effect on subjective experience, e.g. taste. By comparing blind and branded taste test scores, one can create a ‘brand quality index, which measures the extent to which the brand enhances (BQI>1), or detracts (BQI<1) from the objective product experience.
2. Good Will
Comparing perceived relative price difference to actual relative price difference will provide an index that indicates how much the brand is valued above what is normally paid for it. This is not a measure of price elasticity, it can be used to give a positive (PRPI>1) or negative (PRPI <1) indication of perceived value and resultant ‘good will’, an established variable of a brand’s financial success.
3. Brand Fame (popularity)
Brand ‘fame’ or popularity has been established as both a profitable communications strategy, but also a reliable indicator of a brand’s financial success. Asking consumers ‘how many people out of 10 do you think use this product’ establishes a consumer perception of popularity. This can be compared to actual popularity (penetration used as proxy) to give a ‘brand fame index’. The brand fame index will measure the extent to which the brand is more (BFI>1) or less (BFI<1) famous that it deserves to be, which is a measure of brand power in the mind.
The brand in the market
What we say, think and do can sometimes be completely different, behavioural measures are needed to provide an accurate picture of how a brand effects consumer behaviour. Again, all measures should be assessed over time and compared with competitors.
4. Purchase Behaviour
Purchase behaviour (frequency, weight and penetration, the latter being most important) can provide an important indication of brand’s financial success or weaknesses. However, past purchase behaviour does not always predict future success. Claimed purchase intent alone is subject to a different kind of problem, it tends to be a measure of past behaviour, rather than a predictor of future behaviour. By comparing claimed, with actual behaviour, we not only understand how people are currently buying, we also gain an indicator of the direction purchase behaviour is moving in.
5. Devotion
Loyal customers may buy the brand ‘most of the time’, but the really devoted ones will only ever buy the brand, even if this means foregoing the category we’re out of stock. The Devotion Index will give an indication of the number of buyers who are well and truly bonded to our brand.
6. Share of branded goods
The recession in the UK has seen the branded FMCG goods sector decrease as value seeking consumers down trade to own label products. This means that substitution now occurs across categories as consumers seek limit branded purchases in an effort to reduce the total shopping bill. The total value share of the brand’s products as a proportion of all branded FMCG purchases will give us an indication of the overall strength of the brand that will not be effected by recessionary factors.
The brand at the bank
7. Price Elasticity
The extent to which sales rise or fall given a 1% price increase, when compared to competitor brands this measure can provide a powerful indicator of band strength that is directly linked to financial success.
8. Campaign Efficiency
Movements in share of market (SOM) are directly correlated with movements in share of voice (SOV) at a category level. This allows us to make market share predictions given our media spend. However, strong brands enjoy greater campaign efficiency, i.e. they exceed the predicted SOM growth given SOV. The Campaign Efficiency Index gives a proxy for the strength of the brand based on more than expected movements in SOM given our SOV.
9. Brand Valuation
Discounted Cash Flow
The objective of building a sting brand is to increase its profitability. The long term health of the brand will therefore be measured by its long term contribution to the bottom line. This will be assessed using the discounted cash flow (DCF) method.
Iconic Status
10. Getting into Mark’s and Spencer’s
Marks & Spencer is to break with 85 years of tradition by stocking brands other than those with an M&S label. Although the distribution gains achieved by meeting this objective will not significantly impact upon business in the same way that distribution in the main supermarkets might, meeting this objective will confirm the brand has claimed (or reclaimed) its iconic crown.
This can be downloaded as a document, with references, here.
Measuring the irrational
What to measure?
‘Accountability’ and ‘effectiveness’ were some of the industries more liberally used phrases of last year, but what should we be measuring and how? Asking this question means asking a more fundamental one, how do communications work to build brands, and how does this payback in cold hard cash? Economic measures may tell us if a brand is performing, but not why, and this is what we need to know if we want to replicate success.
Traditional metrics used to assess brand health have their roots in traditional views of how brands are built. These traditional views tend to be variations of persuasion models that rely on moving the consumer through a series of logical stages, e.g. AIDA. It’s interesting that definitions of what a brand is allow for non-rational elements, whilst traditional brand models seem to focus purely on rational measures. The problem is that we are not rational creatures (all the rage at the moment, see ‘Nudge‘, ‘Predictably Irrational’ and ‘Freakonomics’). I believe that the ‘irrational’ contribution of brands is exactly what we work so hard to create, and hence should be measured. We can achieve this by measuring differences in subjective brand impressions and objective measures. The irrational contribution of a brand is dependent on associated feelings and experiences, none of which are constant.
Measuring differences in brand affect
I think that affect can be measured by breaking it down to components that can be each measured in terms of differences between the consumer’s subjective feelings and objective reality. ‘Value’ and ‘desirability’ have both been highlighted as predictive measures of brand success, I believe that taken together, they are correlates of brand affect.
In brand context, risk is equated to value, it is the relative financial risk of choice compared to other options. Measuring perceived relative price is nothing new, but by comparing this to actual relative price will give an indication of the consumer’s subjective opinion of financial risk vs. an objective measure. A subjectively ‘smaller than life’ assessment of risk would provide a key factor of brand affect.
In a brand context, desirability can be equated to popularity. Measuring consumer perceptions of popularity/fame, and comparing these to actual measurements, will provide an indication of brand desirability. This might be achieved by asking consumers ‘how many people out of 10 do you think use this brand’ to establish a consumer perception of popularity, this can be compared to actual popularity (penetration used as proxy). Desirability, a subjectively ‘larger than life’ assessment of popularity, would provide the second key factor of brand affect.
Perceived brand value (risk) compared to perceived desirability (popularity) would provide indirect, and measurable correlates for brand affect.
Measuring differences in brand experience
Altering brand experience is a hallmark of successful brands. Take the Pepsi/Coke challenge, the Coke brand is so strong it actually fools your taste buds into believing they prefer Coke to Pepsi, whilst the opposite is true in blind taste tests.
Comparing consumer’s subjective impressions of a brand with objective measures will provide an indirect measurement of the extent to which marketing efforts have changed the consumer’s experience of the brand. Some examples of this approach might include:
- Sensory experience enhancements, as measured by blind vs. branded sensory evaluation (taste/touch/smell)
- Social experience enhancements as measured by with vs. observed measures of confidence such as body language and discourse analysis
Finally…
What we choose to measure depends on how we think brands work. If you believe that bands operate via persuasion, then there are a whole host of existing rationally biased metrics that can be used to assess brand strength. However, if you believe as I do, that brand experience and affect play a larger role in consumer decision making than cognitive factors, we will have to embrace new ‘irrational’ measures of brand strength.
This is part of a wider essay written for the IPA Diploma course, it can be found in full here.
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