I participated in a great discussion today with a prospective client about how we might define a robust concept of brand equity, and put in place a system for measuring it over time.
The prospective client is in a relatively low involvement category (financial services) and so is rightly skeptical of the applicability of a number of FMCG models of brand equity to their context. Attitudinal loyalty is low in financial services – but switching costs are high. It is the exact inverse of many consumer goods which have high attitudinal loyalty but experience high levels of switching.
Our discussion focused heavily on our recommended definition of brand equity and the extent to which this definition had been tested and validated. Specifically, what was the evidence that changes in brand equity were associated with higher business value?
Great questions and – thanks to Natalie Mizik at the Graduate School of Business at Columbia and Bob Jacobson at the University of Washington – there is really impressive academic validation for the relationship between the concepts of Relevance and Differentiation and business value.
The precise definition of brand equity will still require a great deal of refinement as we try to thread a path between a definition that skews too strongly towards a purely attitudinal measure that lacks a robust connection to behavior – and one that is purely empirical and fails to deliver insight into motivation.
The decision about who gets the assignment is in the lap of the Gods now – but whichever agency gets the work will be lucky to work with such an intelligent client.
