Using financial analysis to assess brand equity

Abstract

PurposeThe purpose of this article is to describe a method of assessing brand equity quantitatively.Design/methodology/approachThe article describes an example of analysis using publicly available financial data to assess brand equity.FindingsBrand equity measurement has been an elusive goal for product managers. While qualitative definitions are available, few studies have attempted to quantify a product or company's brand equity. Using financial analysis techniques focusing on return on equity and return on assets, the case examines the results of two distinct brand equity growth strategies. The first is growth by acquisition; the second, organic brand development. Using historical financial data for the Safeway corporation, the case calculates the brand equity effects of two distinct marketing strategies. In the example, organic brand development, the traditional task of the brand manager, results in higher brand equity.Research limitations/implicationsAs in all case studies, the specific conditions found in one organization may not be found more generally in others. Readers are cautioned that the conclusions drawn may have limited applicability.Practical implicationsThe work illustrates a technique that a product/service manager may use to assess the brand equity effects of a marketing strategy.Originality/valueThe work describes a technique not widely publicized in the brand literature.