Health care for brands

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branding

Healthcare for Brands on A Budget

In recessionary times brands need to monitor their health and make the most of every investment.

Reading Time: About 7 minutes

Average Americans aren’t the only ones fretting over healthcare issues. Brand health is becoming one of the hottest topics in the CMO community. Two forces are driving the sudden interest in metrics and “brand dashboards.” Managers are growing more metrics-focused because of the rising use of online media in the total marketing mix. Online media allows managers to see a direct cause-and-effect relationship between a demand generation initiative and sales. It’s only natural that the same managers would start to ask, “How much is my brand driving sales?”

The other factor is money, or more precisely, the scarcity of money. Marketing budgets are usually the last to recover when an economy rises from the ashes of a recession. Every expense is scrutinized. Before investing money on a brand, it’s helpful to assess your brand’s overall health. Think about it: Would you be willing to let a doctor perform a procedure on your body without first doing an examination? Probably not.

When funds are scarce and investments are heavily scrutinized, you owe it to your shareholders to assess your state of wellness, or lack thereof. Unfortunately, many managers think that measuring brand health is a massive endeavor that requires quant jocks running loose with expensive studies, time-consuming audits, and complex statistical analyses. They fear that in the end they’ll be sitting around a table scratching their heads trying to make sense of all the data sets, still clueless where to invest. It doesn’t have to be this way. Here are four time-tested diagnostic areas to consider when assessing your brand’s health.

Awareness

Brand awareness is by far the easiest and the least expensive driver to measure. It answers a simple question: Do people know my brand exists? It is usually measured first in an unaided format, and then benchmarked against results from respondents after a little prompting.

Brand awareness is critical for new or emerging brands, where the battle is for recognition. In fact, if awareness is very low, it isn’t worth the time or money to measure most other equity drivers. The mandate for the emerging brand is to win a piece of the target’s mental real estate. Awareness is the diagnostic tool to track your progress.

The corollary is often also true. Coca-Cola doesn’t need to spend a lot of money on brand awareness. It has nearly 100 percent awareness in just about every corner of the world, and in just about every demographic and socio-cultural segment. In the same way that politicians are lamenting the bloated cost to U.S. taxpayers from the physicians ordering too many unrequired medical tests, many brands can skip measuring awareness.

There are occasions when it makes sense for a well-established brand to measure awareness. One example is when it is trying to measure generational decay. For example, a brand like Borden’s Milk might have very high awareness with baby boomers but near zero awareness with millennials. In this case, awareness by demographic segmentation might yield useful strategic insights. Otherwise, save your money and the respondent’s time. Move up the hierarchy of brand equity.

Familiarity

It’s one thing to have high awareness, but quite another to have high familiarity. If someone cites your brand unaided as part of the consideration set of brands in the category, do they know what you do or what makes you distinct? Qualcomm is a well-established brand that has fairly high awareness scores, but a lot of people think it’s a sports brand because of its prominent exposure at Qualcomm Stadium in San Diego. Qualcomm is one of the largest manufacturers of semiconductors for mobile devices. It’s an ingredient brand, and familiarity is probably the most important measure of health it should track.

Familiarity is another measure that doesn’t require expensive studies. It can be facilitated online quite nicely, and you can even uncover useful insights from informal qualitative research. Statistical significance is nice to have, but the prescription for poor familiarity is often better informed by the data you generate in deep discussions with targets. What do they think the brand is or does? What makes them think that?

Linking

The sine quo non of brand building is the “higher order” of brand drivers. Al Ries and Jack Trout famously claimed [in their book “Positioning: The Battle for your Mind”] that positioning is the battle for the mind of your target. The war is won when you link your brand to emotional and self-expressive associations. People link Disney to magic, Nike to performance, and Apple to creativity. What do people associate with your brand, if anything? Are the associations the ones you want them to have, or are they a byproduct of the past?

Linking studies are critical for repositioning projects, but they are often poorly designed. The brand community suffers from a nasty plague: rational inquiry. Too many studies attempt to measure brand associations by using rational inquiry. Hedonism plays a role in Virgin Atlantic’s brand equity. It’s a brand that glorifies life in upper class. But if you tried to measure the link between Virgin and hedonism by directly asking respondents how much they value Virgin’s ability to let them indulge their sensual side, you might be fooled by the results. A lot of brand equity derives from irrational associations. When you attempt to rationalize it, you tend to get three kinds of erroneous answers. First, you get people who are too embarrassed to say what they really feel, so they answer falsely to conform to a social norm. Second, you get people who answer in a very logical way. The problem is, in the moment of brand use, they aren’t thinking logically. Finally, we tend to forget our irrational impulses. Since most studies are backward-looking (the study asks respondents questions about past behavior), they sometimes just remember wrong.

One solution to the problem is to simply design better descriptive studies. The old rule about garbage in/garbage out applies. Many managers skip over discussions about the attributes or questions to include on the survey. Survey design is both an art and a science. The artful part is often neglected.

The other solution is to consider experimental study formats. Most people think experimental research is reserved for academics, but experimental studies can be cost effective and highly predictive. Online brands have relied on experimental research more than offline brands, largely because it easier to conduct. Amazon.com frequently tests new features and new user interface designs in real-time by pushing the new material live for a small random sample of its customers. It then compares the behavior of the sample with the behavior of the general population. It’s a safe and effective method for product testing. With a little ingenuity and bravery, brand managers can use similar designs to test changes in brand positioning.

Also, it is important to consider that brands are not static entities. They change over time, just like consumer tastes. Longitudinal studies that track changes in brand associations over time are a useful approach. While the first year of the study might be the most costly, incremental waves of the study are generally easy and economical to execute. Just as your doctor keeps a record of your vital signs, an ongoing linking study provides a simple diagnostic of your wellness.

Preference and loyalty

Do your customers prefer to use your brand even when prices go up? Are they willing to recommend your brand to a friend? Do they give you permission to take your brand into new markets or product categories? Brands with loyal customers can and should ask these questions and consider them in strategy formulation. Brands on the cusp should weigh the potential costs and benefits.

When budgets are tight, loyal customers are like a rainy day savings account. It’s less expensive to keep a loyal customer than it is to win a new customer. However, like contributing to a rainy day fund, you really need to study customer loyalty in advance of when you need to draw upon it. To gauge the strength of your customer’s loyalty, you really need to compare two sets of data. For many of the reasons stated above, it is hard to gauge loyalty with just one wave of a study. Also, some of the best loyalty measures are not descriptive surveys but sales and customer satisfaction data gathered over time.

If you’re planning a baseline loyalty study, there’s another reason you should be cautious now, in a wounded economy. When there are macro-environmental trends that cut across the entire market, you may be measuring loyalty during a low tide. Just like your company, your consumers are also pinching pennies. In this context, most people are willing to sacrifice brand loyalty for pocketbook savings. That will often surface in a loyalty study, and even though it may be relative in regard to your competitors, you’re gathering bad data.

Preference, which is a closely related cousin of loyalty that measures how much customers prefer your brand to a competitor, may be a more effective area to study. There are many simple and effective quantitative techniques to gauge preference, conjoint being a favorite of many researchers. Keep in mind that you may need qualitative data to supplement what you find in quantitative studies. It’s one thing to know that customers prefer your brand to a competitor, even if the price is a few dollars more. It’s another thing to understand why that is.

This is not to say that you should ignore loyalty measures and focus solely on preference. For some brands, loyalty is a critical indicator of brand health, and now may be just as good a time as any to take its pulse.

One size does not fit all

When doctors order lab work, there are many panels of tests they can order to assess your health. They rarely order all. Instead, they assess your age, your family history, your previous health issues, and their surface observations about you after an exam. You must do the same in assessing your brand health. There is no silver bullet brand health study that will serve every brand on the planet. You have to assess what you know about your brand and fit the study to the patient.

If your brand is young, growing, and owns limited market share, you should probably focus your efforts on awareness and familiarity. If your brand is an established and dominant player with scores of legacy data, you may want to focus on linking and preference. As we’ve heard so often in the national healthcare debate, the key to keeping brand health costs down and generating data that will improve your strategies is to focus on the desired outcome, and then work backwards.

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