Brands identify the source or maker of a product. Based on what customers know about the brand, they can form reasonable expectations about its benefits. Companies believe that brands contribute to reducing risk by helping buyers avoid a purchasing mistake. It is also a widely held belief that brands are financially important to companies. For example, Carol J. Simon and Mary W. Sullivan in 1993 found that brand power is reflected in higher firm valuation. As a result, many organizations invest heavily in brand building initiatives.

Many researchers and practitioners have focused on ways to measure brands’ performance. For example there have been studies that have examined brand awareness, associations, and loyalty as customer-based indicators of brand performance. Other studies that have linked financial results such as price premium, revenue or market share to brand performance.

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Brand Relevance as a Metric

Some companies are beginning to use brand relevance, which measures a customer’s predisposition or preference to a brand, as a way to measure the success of a brand. The assumption is that a brand’s relevance affects the buying decision. Therefore when brands are more relevant, customers are willing to accept a higher price for the brand named product or to be more loyal to their preferred brand. Brand relevance attempts to measure the influence the brand has on the customers’ buying decision. It is only a viable measure if brands are important in the decision and buying processes.

How to Create a Relevant Brand

How do you create a relevant brand? In 2004, David Aaker said that for a brand to be relevant it must meet all three of the following conditions:

1. A product or service category or subcategory exists

2. There is a perceived need or desire on the part of a customer segment for the category or subcategory

3. The segment considers the brand as being material to the product category or subcategory

To answer the question, “Does brand relevance play a role in my customers’ decision and purchasing process?”, you will need to ascertain the answers to the following:

1. The role brand plays in comparison to other decision criteria (such as price, availability)

2. The importance of a brand in the decision criterion

3. The importance of buying branded products

4. The likelihood customers will buy a branded product even if they incur extra costs or efforts

5. The importance of a branded product in the purchase decision

The answers to these questions often require conducting research.  Armed with this information, you can decide whether brand relevance is a critical measure of your Marketing investments and worth measuring.

If it turns out that brands are of low significance in a category, then brand relevance as a metric is irrelevant. Identify a more appropriate metric and redirect you your Marketing efforts and dollars where they will be more beneficial.

If on the other hand, you learn that brand relevance is crucial to the decision and purchasing process, brand relevance is an important metric to track. Invest your Marketing efforts and dollars accordingly.

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FAQ:

• Customer-based indicators: brand awareness, brand associations, and brand loyalty
• Financial indicators: price premium, revenue, and market share (and other financial outcomes linked to brand strength)

1. A product or service category (or subcategory) exists.
2. A customer segment perceives a need or desire for that category/subcategory.
3. The segment considers the brand material to the category/subcategory.

1. The role the brand plays compared to other criteria (e.g., price, availability).
2. The importance of brand within the decision criteria.
3. The importance of buying branded products.
4. The likelihood customers will buy a branded product even if it requires extra cost or effort.
5. The importance of a branded product in the final purchase decision.

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