White Paper: Understanding brand value
A Review of Price, Performance, Equity, and Category Dynamics
Arriving at an improved understanding of the role of price and value in influencing a brand’s success is a critical component in measuring a brand’s in-market performance. Most brand equity models do a reasonable job in describing the attitudinal components of a brand’s profile, but it is often the case that a brand with strong equity scores can suffer a decline in market shares. Likewise, a brand with weak-looking equity can increase in share over time, or become a major player in its category. Store brands sometimes fall into this latter category.
Usually, when these exceptions occur, it seems that the proper relationship between the forces of price, quality, and relative product performance, are playing critical roles. In other words, how close a brand’s product performance comes to the “best in class” brand, when weighed against its relative price, is being reflected in its share performance.
The purpose of this paper is to explore these dynamic forces, in order to improve our understanding of brand value. We will show that it is possible to combine price and quality into a highly predictive measure of value. We will also demonstrate that when value is combined with other critical measures of a brand’s success, we can better understand why certain brands grow to larger shares. We believe that this work can help improve a brand manager’s process of managing his brand asset.