In a previous post (“Marketing performance: measuring brand equity“) we have reviewed the concept of brand equity and the various methodologies suggested by practitioners and academics for measuring it. Today’s blog post aims to clarify several brand dimensions used in measuring performance in branding.

The performance measures that we consider of interest in this context are the following:

• % Brand awareness - refers to the population that is aware (i.e. has heard of the brand) from the total target population. When measuring brand awareness, a particular attention needs to be given to the methodology: will prompted or unprompted awareness be measured?
• % Brand knowledge – extends awareness to population that besides being aware of the brand, have some knowledge of that brand. Here, too, knowledge can be prompted or unprompted and, most important, a clear definition of the knowledge should be developed (What kind of data should consumers know about the brand and at what extend so as to be considered they have “brand knowledge”?).
• % Top of mind - measures the population that indicates the brand as coming first on their mind when asked to mention brand names for a particular type of product. It can give indication on brand preference, yet its relevance can be lowered by the fact of being the result of the most recent advertisement seen or contact had with the brand, rather than the result of a long-term experience.
• % Brand preference – refers to the population that chooses the brand over competitor brands. The battle to gain consumer preference is a continuous one, as failing to deliver the brand promise can determine immediate switch to competition and therefore a switch in brand preference. The goal for each brand is to become the upmarket brand – the first in the list of brands consumers prefer the most.
• % Brand coherence – measures the population that believes correlation between various brand attributes exists. Coherence or incoherence are rather difficult to measure, as people fail or don’t bother to analyze subtle brand attributes. Still, obvious incoherence can have negative impact on the brand. This happened with Pepsi, which tried twice to introduce new concepts that lacked to correlate with the attribute of brown that consumers associate with Pepsi – it is the case of Pepsi Blue in 2002 and Pepsi Crystal in 1992. Both faced strong resistance on behalf of the customers.

Notes

These are only some of the brand performance measures. Practice and literature reveal various models of measuring brand performance that integrate various brand measures. No matter the integrated model used, or even developing own concept of what to measure, when and how, organizations need to have clear understanding of the dimensions they measure and well-articulated methodologies (in terms of target groups, periods of measurement, survey questions etc.).

Limitations

Gathering performance data for these measures is generally done through consumer surveys. This makes the measurement rather expensive and subject to consumer subjectivity (which can translate into dishonesty in some cases).

Purpose

Still, they are helpful in assessing a brand ’s position within its relevant market and consumer beliefs and attitudes towards it. Whereas market and sales results measures reflect actual consumer behavior (frequency of purchases, dormancy rates etc.), brand dimensions help understand consumer attitudes that enhance and influence this behavior. They involve deep dives into customer perceptions, attitudes and beliefs, all of these standing at the base of their actual actions in respect to the physical product that the brand encompasses.

Further reading

Rajagopal (2008), “Measuring brand performance through metrics application”, Measuring Business Excellence, Vol. 12 No. 1, pp 29-38.

Forethought Research (2009), “At Last! Brand Measurement Equals Brand Performance”, available at: http://www.forethought.com.au/ArticleDocuments/86/Forethought%20White%20Paper%20-%20At%20Last.%20Brand%20Measurement%20Equals.pdf.aspx.

When assessing the overall firm performance within the market it operates in, measurement focuses on macro metrics, that capture data regarding the overall market, respectively firm position within this market.

These metrics help understanding market trends and dynamics, both those of the firm, and those of competition. We will not focus on brand elements in this context, as we intend to deal with them in a future post dedicated integrally to these.

The most common Key Performance Indicators used in employing performance measurement initiatives at a market level are the following:

1. % Served market refers to the portion of the total market in which the firm operates. From the overall market for a particular product, a firm might might not serve some geographic regions, for example. Therefore, its served market excludes these regions from the total potential market. This is important to assess when desiring to calculate market share; to be relevant, the share will refer only to the portion of the market that is served.

2. % Market share measures the part of a market accounted for by a particular business/entity.

In can be measured either in units sold – % Unit market share, or in sales revenue – % Revenue market share. These two metrics differ in that the first one reflects sales in terms of volume, whereas the second one reflects sales in terms of revenue being influenced, therefore, also by the prices at which products are being sold.

3. ÷ Relative market share measures the firm’s market share relative to the share of the market leader. This metric helps in benchmarking firm position against that of the industry leader.

4. # Market share rank measures the position of the firms in its market by arranging market shares of all players on the market in descending order, on the 1st position being that of the firm with the largest share.

5. % Market concentration measures the portion of the market accounted for by a small number of firms (usually, the largest two or three). This is important to calculate as it can indicate the degree at which a small number of firms can influence market parameters (prices, imposing industry norms etc.).

6. % Market growth measures the increase in demand for a product, by comparing demand from one period to demand from the period before.

Along with % Market share, the % Market growth is used in constructing the BCG (Boston Consulting Group) matrix used for making decisions regarding product strategy.

An important thing that ought to be carefully dealt with when measuring market dimensions is providing a clear definition of the market; this should be not too narrow and not too broad. Managers should define the market by focusing on a specific list of clear parameters: products, competitors, geographic areas and time intervals.

All these performance indicators should be measured and monitored when assessing market trends and dynamics. It is important to clearly define the relevant market from the overall market, to measure how much of this market is accounted for by the business, how great is this share by comparison to competitor shares, especially that of the largest competitor. Also important is the awareness of the market composition, this indicating the degree of free competitiveness. Finally decisions should be made based on market growth predictions.

We have inserted below a figure of how these market KPIs relate to each other in the way they are constructed and cover various market dimensions: