Principles of Brand Asset Management - American Marketing Association

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Principles of Brand Asset Management


	By Scott Davis
	Scott Davis is a Senior Partner in the Chicago office of Prophet, a leading consultancy specializing in helping senior marketers more effectively use brand and marketing to drive profitable growth.

	1. Introduction

Would your business recruit top MBAs and then leave them in their offices to learn by osmosis? Would it invest millions of dollars in equipment, but fail to maintain it over time? Would it park its Treasury funds in a 1.9% savings account?

Of course not.

People, capital and machinery are crucial business assets. As such, they must be given the proper nurturing in terms of investment, management and maintenance for their value to prove out over time.

If an asset is defined as a property with an assumed value that should be consistently maximized by an organization, then shouldn’t businesses also be managing their brands as the assets they are?

It’s a notion that an increasing number of organizations are beginning to understand and apply as integral to their long-term, underlying business strategies – the strategy is called brand asset management.

Adopting it enables companies to maximize the long-term value of their brands from two perspectives. First, demanding consumers are forcing companies to spend more dollars to earn greater returns. Second, companies generally admit that they don’t have the strategies in place to make the most of their opportunities for getting those dollars from consumers.

Implementing a brand asset management strategy involves more than just putting a process in place – although going through the process is essential. It requires a commitment to brand asset management from the very highest levels of the organization, so that the end goal of supporting and nurturing your brand as an asset is imbued throughout the corporate culture.

Brand Management Leads to Return on Investment

An astounding 71 percent of companies admit that they under-leverage their brands, according to a study I conducted several years ago. Perhaps if they better understood the correlation between brand strength and Return on Investment (ROI), that statistic would change. In Brand Leadership (Free Press), authors David Aaker and Erich Joachimsthaler point to a causal link between brand equity and stock return, based on the EquiTrend database from Total Research.

EquiTrend’s annual brand power rating for 133 U.S. brands in 39 categories uses perceived quality as the key brand equity measure. The average quality rating among those with opinions on brands has been found to be highly associated with brand liking, trust, pride and willingness to recommend.

“Consistent with a wide body of empirical research in finance, a strong relationship between ROI and stock return was found,” Aaker and Joachimsthaler say in their book. “Remarkably, the relationship between brand equity and stock return was nearly as strong.

“Firms experiencing the largest gains in brand equity saw their stock return average 30 percent; conversely, those firms with the largest losses in brand equity saw stock return average a negative 10 percent. And brand equity impact was distinct from that of ROI – the correlation between the two was small. In contrast, there was no impact of advertising on stock return, except that it was captured by brand equity.”

The authors suggest that the brand equity/stock return relationship might stem from brand equity’s tendency to support a price premium, which contributes to profitability. “This relationship is undoubtedly based upon a two-way causal flow – a strong brand commands a price premium, and a price premium is an important quality cue,” they write. “When a high level of perceived quality has been (or can be) created, raising the price not only provides margin dollars but also aids perceptions.”

Clearly, improving the return on all investments in the brand is a key benefit of adopting a Brand asset management approach. But the benefits go further: It maximizes the growth potential of the brand while also protecting it against customer "disloyalty triggers." And finally, the approach provides a discipline for senior management and others throughout the organization in terms of prioritizing resources and making decisions all aimed at the same outcome: maximizing the long-term value of the brand.

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2001 MarketingPower Inc. Contents used by permission of the author.

Table of Contents

1.	Introduction
2.	Brand Vision
3.	Brand Picture
4.	Asset Management Strategy
5.	Supporting a Brand Asset Management Culture