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.
Synesthesia – communicating one sense through another
A friend of mine was stuck on ways to communicate a new take on ‘fresh’ without resorting to showing flowers or waterfalls, this lead us to wonder how we truly experience our senses. Are sensory experiences always that separate? What makes up a sensory experience?
Synesthesia is a neurological condition where one sense is experienced though another. Someone with this condition might be overwhelmed by a particular smell in response to hearing a particular sound, they might describe middle C as having a ‘earthy smell’. Others experience a certain colour when they see written numbers, 7 is often yellow apparently. Whilst we might use synesthetic metaphors, like calling a shirt ‘loud’ and Monday ‘blue’, people with synaesthesia actually have involuntary cross model experiences. Given the relatively low incidence of synaesthesia, it is surprising that quite a few artists have the condition, from David Hockney to Stevie Wonder, it seems being able to enjoy experiences in the ‘wrong’ sense maybe a blessing, rather than a curse. The video below is an interesting interpretation of what is might be like to be a true synesthetic:
http://www.territimely.com/_/v/2-short-films?video_id=34
Video belongs to Teri Timely (http://www.territimely.com)
Back to fresh. There may be some really interesting and unexplored areas of communicating sensory experience. Considering the ‘feeling’ of the sensory experience you’re trying to describe, and expressing it though a different sense could lead to some really interesting work. Maybe by taking something we associate with ‘fresh’, like a new sunrise, could be expressed through a different sense. What does sunrise smell like?
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.
Practical Behavioural Economics
At its best, BE a powerful way to think about human behaviour, at its worst its 50 anecdotes loosely strung together under one phrase. To take behavioural economics beyond dinner party conversation we have to take practical steps to apply it to real life business problems.
There’s been a lot of noise about something called ‘behavioural economics’ recently, books such as ‘Nudge‘, ‘Predictably Irrational’ and ‘Freakonomics’ have done a lot to bring this area of study into the mainstream, whilst Rory Sutherland makes an excellent case for why we should incorporate it into everything we do as communication professionals here.
So what is behavioural economics and how can we use it?
We were lucky enough to have a ‘behavioural economics’ day down Ogilvy recently to get to the bottom of this question. Put simply, behavioural economics is the study of why consumers and economic agents do what they do, especially when what they do is seemingly less than rational. For a good summary of the day, along with some definitions and principles of behavioural economics, check out James Myers’ post here.
Knowing about behavioural economics and being able to quote some examples is one thing, using it is another. One of the expert speakers at the Ogivly BE day was Eric Bonabeau, CEO of Icosystem. Eric began his fascinating talk by making the observation that behavioural economics remains ‘a set of 50 or so anecdotes strung together under one phrase’ unless we can apply it in a practical way to form predictive models. Eric’s started by outlining how he uses the principles of behavioural economics to solve real business challenges. Eric’s approach involves intense study of detailed behavioural data in order to identify the patterns that explain why we do what we do.
The clever thing that Eric does, is to explain these patterns in terms of the ‘heuristics’ (rules of thumb) that we use to find ‘best fit’ solutions to complex problems. We form heuristics through experience, they allow us to make snap judgements based on the outcomes of previous events. A relevant example might be ‘if something costs more it must be better’, this heuristic uses past experience to solve the complex problem of too much choice. However, heuristics are prone to error, they are fast but imprecise ways of making decisions that can result in seemingly irrational outcomes. When heuristics lead us to make these irrational decisions, they are called biases. Biases normally occur when:
• We give too much weight to one particular element of a problem
• We over generalise solutions across problems
• We interpret information in a way that best suites us
Eric uses data to reveal the heuristics and biases that people use to make decisions, once these are known, it becomes possible to influence them.
How do we apply behavioural economics?
1) Identify the specific heuristics and biases (rules of thumb) that are at play at the moment of decision.
Remember the following:
• Biases are by their nature irrational, look for things in the decision process that don’t make rational sense. What factors shouldn’t make a difference, but do? What factors have the opposite effect of what might be expected?
• Heuristics are subconscious processes; they exist so we can make decisions without having to think about them. Discoverer them through observation (qualitative or quantitative) of behaviour, not direct interrogation of people.
• More than one heuristic or bias is likely to be operational at any one time, keep looking until you have a satisfactory model.
• Heuristics and biases are a function of experience, so not everyone will be using the same ones, in fact, you may use these differences to form the basis of a segmentation model.
The good news is that you don’t have to start from scratch, a validated list of general heuristics and biases can be found here. It is doubtful that these general heuristics and biases will fully explain the behaviour you are observing, you will need to adapt them, and discover more to suit your needs.
2) Experiment
Once you have identified a few possible heuristics that might be in play, test them. Controlled experiments will help you identify what combination of heuristics are actually in use.
3) Exploit
Once you’ve identified the heuristics and biases that are in use, explore how they can be exploited. What changes can you make to influence decisions in your favour? What changes will have the biggest influence on consumer behaviour?
4) Evolve
Heuristics and biases are a function of previous experience, that means they are subject to change over time. Periodic re-examination of these heuristics and biases will be necessary. It may also be possible to ‘train’ people with new heuristics by controlling experience, this may be one of the ways traditional branding works.
Conclusions
I hope the above helps to take behavioural economics beyond dinner party conversation into practical business application. This is just my personal take on the whole thing, and I’m by no means an expert, so as always, please comment and let me know what you think.
Ski yoghurt ad from 1967 – What’s it all about and does it matter?
I’m planning on Ski Yoghurt at the moment and I came across this truly bizarre ad from 1967. It seems to involve a man skiing (ok) but also some fireworks (a little strange, but ok) and some strange Ski protest march (?). There’s no real story in the ad, is this a bad thing? Would it still work today? What would the Link test score be? Either way, I found it interesting enough to put here, so I suppose 40 yrs later, it still has something…
Brand building: from ‘slow and intangible’ to ‘fast and tangible’
Don Tapscott talks extensively on how the ‘net generation’ expect things to be tangible and fast, they expect return immediate and real results from their actions. This is true for the jobs in which they work, the hobbies they pursue and the way they choose to interact with government, why should brands be different?
The principle of being ‘fast and tangible’ contrasts with the traditional branding approach, which aims to drive preference by constructing intangible values over a long period of time. I believe brands should provide activity that the consumer can ‘do’ something with, the more immediate and the more social the better. A hypothetical example of how this might work is below (this example also highlights how one might use social graphs/profiles to target communications but that’s making a slightly different point, if you’re interest, more here):
The idea is that every consumer action should produce a tangible result that in turn prompts another action. I suppose the results is an ‘idea chain’, with each link providing the consumer with something tangible and ideally of social value. I don’t think that this is only an online thing, Russell Davies wrote a really interesting post about producing tangible representations of online behaviour, which I loved.
This approach makes it look like I’m suggesting a very linear journey (or ‘consumer funnel’) from communications to purchase, but I don’t think that’s right. Idea chains should be designed to allow multiple consumer journeys that are experimented with and optimised along the way (I like Ted’s attack submarine analogy for this). If you were going to draw this out, it might look like this:
Each arrow represents a different activity that prompts some kind of consumer behaviour, the following activity is then defined by that behaviour until the desired results is achieved.
That’s that for now. If you’re interested, this is part of a broader essay that can be downloaded here.
Do then say
I was recently reviewing media budgets on one of our global Clients to find they were very low indeed, much lower than expected. This made me question the standard communications toolkit approach they had asked for (this normally means a range of ATL executions with some digital around the edges). With some markets having budgets that wouldn’t stretch past a few press insertions or maybe some digital work, I wondered whether we would ever be able to get our message (which I believe is actually motivating) out there. I got thinking that maybe we should just spend all our budget actually doing something for consumers and hope that they appreciate it so much that they tell their friends. I had a go at illustrating what this brand planning model might look like:
The idea is that you put consumer needs/desires at the centre, then work out what you’re going to actually do that helps meet these needs/desires, finally, if you’ve got budget left, you find a way of sharing what you’re doing with more people.
I know Clients often see their product as the thing they ‘do’ for consumers, and see communications as the thing that tells everyone how great the product is. This is a very brand/product centric view of the world, a brand’s product/service is the price of entry, it’s the minimum consumers expect. Products can only ever serve a limited number of needs, brands should do a lot more.
Seems simple enough but this way of planning does have some implications:
Your brand is what it does, not what it says
Your brand is not defined by a single essence, proposition or even thought, it’s defined by its actions, by the way it meets its consumers’ needs/desires. This is kind of helpful and removes all that painstaking wordsmithery that can go into defining a band with traditional Clients.
Creatives do what they do best
A planner’s role here would be to understand and articulate the consumer need/desire, but not to come up with the single thought/proposition. Creatives then get to do what they do best, finding creative things that brand can do to meet consumer need/desire. I’m using the term planner and creative in its loosest possible sense here, this approach would result in a breaking down of traditional agency barriers anyway.
More time/money spent on doing
The principle here would be that the more helpful/useful/entertaining our actions make us the less we will have to spend telling people how great we are. Actions speak louder than words, etc.
What about traditional advertising?
There is still a place for this, sometimes the most useful thing you can do might be to give consumers’ information or knowledge on a certain subject or topic. They key thing is that whatever you are motivated by actually doing something for your consumer, no by telling them something that serves your brand more than your consumer.
So what happened with the global toolkit problem?
In progress, will update as things start to happen.
How the herd feels
I find Mark Earls’ ‘herd’ theory fascinating and I also think he’s also onto to something. If you’re not familiar with it check out his blog here. I must confess that I have not read all of his material so Mark may have covered this but maybe not, I think there’s quite an interesting thing that happens when you consider different types of herd arrangement. Rather than the herd being one big uniform homunculus, it can be thought of as a group of individuals that can be arranged in an infinite number of ways. It starts to get really interesting when you consider how the arrangement of individuals within the herd may effect its emotional state.
Whilst reading over Richard Huntington’s Adliterate blog I stumbled across a great post about the role of emotion in advertising, in which he cited Robert Plutchik’s ‘psychoevolutionary theory of emotion’ which quite nicely plots out basic emotions (very useful for discussing emotional territories with Clients). Here’s what it looks like:
Plutchick seems to be a bit of a genius, whilst researching him further it seems he has also mapped emotions onto various arrangements of individuals within a group:
Communications normally have objectives focussed on desired action – getting people do something, and advertising theory says emotion leads to action, so we make ads that make people feel something. Mark Hancock suggests, however, that we need to move away from this approach – to begin looking at emergent behaviour:
“I believe that we will stop thinking about trying to change behavior at the individual level and more about how to influence positive emotional responses through the creation of shared interactions.” (via Gavin Heaton)
However, if we want a behaviour to propagate through a group, or herd, it may be that we should look at the arrangement of the individuals in that herd to decide what emotion to leverage.
Tailoring communication/emotion to the configuration of the herd may maximise the chances of an idea catching on. Plutchick’s model deals with physical arrangements of people, but the theory should still hold when thinking about how people relate to each other in other ways (social networks, ideaology, interests etc.).
Some questions we might ask ourselves to explore this:
- How are the individuals in this herd arranged?
- How does their arrangement effect the groups emotional state?
- What kinds of emotional stimulus might the group be most receptive to?
I think there are some other things that drop out of this line of thought which I’ll explore in another post.
Why does Micky wear gloves?
Just something a friend (@tomduckham) and I wondered once…
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