Don't be ridiculous. What ARE you thinking when you say brand equity?

If you want to practice new marketing, you have to understand the language.

There is a new word to marketing that will help marketers think differently about their jobs. I did not coin the word – google it and you will see - but to my knowledge this will be the first definition and the first interpretation of the word.

It is the most important concept in marketing, not because I am defining it here, but because just like we (once-upon-a-time) shifted from a production orientation to a marketing orientation, we have to now shift again but we are being held back by the semantics of the old marketing principles

Top of the list of redundant marketing terms is the notion of ‘brand equity’.

Not quite non sequitur, but certainly a paradox and at the very least illogical. The organisation may think it ‘owns’ a brand, but brands are essentially what consumers think/feel about your brand, so you can never own what happens in a consumer’s mind. That would be like saying you own someone’s attention when they happen to be listening to you at a point in time.

Adherence (belief in) the notion of brand equity signifies that marketers still cling to the notion that they are in charge. (And if the fact that you are not, comes at a surprise to you, then I am afraid there isn’t much I can say to convince you.)

Brand equity implies that the brand is an asset that has inherent value. If it exists only in the mind of the customer it cannot be inherent, right?

Opposite-word.com defines the opposite of inherent as: "acquired, added, external, extrinsic, incidental, learned"

If you scrutinise that list, then you may concede that it is a much better description of what a brand means in the context of what (traditional) brand managers have always done.

If not brand equity, what then is that ‘thing’ marketers must strive for and that companies must measure and value?

I propose brand valence, and in order to understand what it is, you need to understand the two factors that constitute brand valence.

1. Brand integrity: Michael Kanazawa[1] defines brand integrity as

Brand Experience/Customer Expectation (divided by)

2. Net Promoter Score: Essentially this is (casually) defined as:

%Promoters - % Detractors

The concept has its own detractors, but it is simply a measure of the likely momentum that positive brand outcomes will be able to rely on in the consume market place.

Combining those two ideas we can define Brand Valence as:

Brand Integrity x Net Promoter Score

Conceptually that means a brand’s ‘valence’ is a measure of its energy that is caused by it living up to it’s a promises multiplied by the percentage of people who believe in those benefits.

Like human ‘energy,’ brand valence is critical to growth and survival, but it is not amenable to being stored indefinitely. It can be ‘increased’ to a certain extent, but is best ‘managed’ by using it positively and replenishing it appropriately. (Just ask Qantas.)

 

Dr Dennis Price

Chief Ideas architect at Ganador Management Solutions

(Creating amazing things at the intersection of people and brands)


[1] Putting a Signature on Customer Experience. ChangeThis 89.06 – Dec 2011