Marketplace measurement of brand equity

Abstract

The Philip Morris Company paid roughly double the stock market valuation for Kraft, Inc. and for General Foods, Inc. Financial analysts said that the price was due to the equity in the acquisitions’ brand names. These observations sparked latent interest in going beyond accounting standards and the stock market to find an objective measure of the value of brand names.

It was not not long after these acquisitions that the Interbrand Group set the standard by which brand name valuation could be developed from internal financial data and expert judgments regarding ‘brand strength’.

This has proved a useful approach for annual evaluation of one's own company but it is not ideal for making confident estimates of brand equity trends relative to competitive brands. Furthermore, because accounting figures lag substantially behind actual operating results, these estimates suffer from a lack of timeliness rendering it particularly difficult to analyse the impact of marketing practices on brand equity and, thus, to evaluate marketing management.

For these reasons, a comparable, market databased method of brand equity valuation which provides competitive assessments, as well, and in a timely fashion, would enable marketers to track current brand equity trends and to relate them to marketing actions.

Longman-Moran Analytics, Inc., (LoMA) developed a retail sales data method of brand equity measurement and has been applying it since 1985. More recently, LoMA has developed a parallel technique utilising consumer survey data. This paper assesses the LoMA method of brand equity measurement.