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A behavioural long-term based measure to monitor the health of a brand

Abstract

In response to calls for marketing accountability and for evaluating the long-term brand building efforts, this research proposes a new behavioural long-term-oriented measure, called Brand Health Index (BHI) to monitor the health of a brand. Similar to the health of a person that cannot just be associated to what they have had for breakfast, the health of a brand should not be judged on a short-term basis. Long-term lagged impacts must also be considered. BHI is the first longitudinal measure that encompasses the long-term sales performance of a brand to measure its health. We provide managerial insights into effective brand management over the long-term. We conduct a longitudinal analysis from 2002 to 2011. Four industries, airlines, banking, department stores and insurance, are studied to improve the model’s generalisability. We validate our BHI by correlating it to Interbrand’s and Millward Brown’s BrandZ measures of brand value. Using a Two-Way Cluster-Robust Error regression, we study the association between BHI and two financial measures. The findings suggest that the proposed measure is significantly positively correlated with ROA and EPS.

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Notes

  1. In market conditions such as a world war or in markets when growth rates are always constant over the years with no fluctuations, the proposed model is not applicable.

  2. Here we discuss the HSBC USA and not the global HSBC.

  3. Krasnikov et al (2009) in examining the impact of brand on financial performance use ROA as a financial ratio that provides information about the future profitability to investors.

  4. Again it must be emphasised that 9-year base brand health means that in order to compute brand health for each period, we include the sales growth and sales growth volatility of the last nine periods. Similarly, for 5-year base brand health, we compute the brand health in each period based on the last five periods’ sales growth and growth volatility.

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1holds PhD in Business from Macquarie University. He is a lecturer in Marketing at Macquarie University, Sydney. His major research interests include advertising, brand management, brand health, customer equity and long-term marketing accountability. His work has been published in international journals. He is a recipient of a best paper award from the Australian and New Zealand Academy of Marketing Conference (ANZMAC 2013).

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Mirzaei, A., Gray, D., Baumann, C. et al. A behavioural long-term based measure to monitor the health of a brand. J Brand Manag 22, 299–322 (2015). https://doi.org/10.1057/bm.2015.18

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  • DOI: https://doi.org/10.1057/bm.2015.18

Keywords

  • brand health
  • brand equity
  • brand performance
  • marketing accountability
  • branding