Measuring brand equity - a consumer-led approach

Rory Morgan and Iona Carter, Research International, propose an exciting new model for evaluating the equity of retailer brands

Rory Morgan and Iona Carter

In the retail sector, we have found that consumers are increasingly taking the view that the high-street offer is becoming undifferentiated. As retailers compete with, and copy each other on service, pricing, product and so on, the branding of the retailer becomes increasingly important as a means of providing differentiation to attract customers and keep them loyal. Understanding the nature of the retail brand, and exploring its potential, is therefore becoming increasingly important for retailers.

However, brands cannot simply be measured in financial terms. Although they do represent an asset to their owners, and classical accounting methods can be used to put a figure on these assets based on cash flow and expected future earnings, these methods are essentially backward-looking, and often insensitive to the ephemeral tastes and fashions that ebb and flow in the buying public. For a more demand-driven stance, we should look to the consumers themselves, and the way that brands work on them. In this context, our preferred definition of a brand is: