USING DATA TO MEASURE THE PERFORMANCE OF A BRAND
To a Marketing Person, a Brand is something which needs to be differentiated in the Consumer’s mind so that it is purchased. To the shareholder or to the CFO, a Brand is an asset which yields continuous cash flows when people keep buying it. Hence, for you or me, Parachute is a brand of Hair Oil. For a shareholder of Marico Industries, it is a cash generator – or an asset.
Like all assets, a Brand needs continuous investment. These investments need to be made to ensure that consumers keep buying it, thus ensuring cash keeps being generated. Hence, advertising, sales promotion (to consumer as well as trade), price cuts, product improvement, spends on social and outdoor media, sponsorship of events etc. are all different investments made.
Given the moneys invested in a Brand, it is natural that one needs to audit whether this is money well spent. Is the Brand performing well enough to justify the investments made? Or should we be diverting the money to some other Brand? Hence, the performance of each Brand is tracked very closely to check whether it is justifying the investments made.
Now, you may wonder what the Big Deal is. All that we need to know is the Sales of a Brand, the Market Share it enjoys – and the profits generated by it. Aren’t these fair indicators? Indeed, they are, as these are objective and quantifiable metrics. Hence, these three metrics will ALWAYS be used to measure the performance of a Brand. The problem is that these three metrics by themselves are not enough. Why are they not enough?
- You have just launched the Brand. If a Brand is assessed on its performance in the first 3 months of launch on these 3 metrics, most brands will not survive. In fact in today’s competitive environment, there are brands which could take more than a couple of years to start showing positive EBITDA.
- The 3 objective metrics tell you WHAT happened. They tell you nothing about WHY it happened. Is your Brand gaining or losing relevance? Are people switching to another category or vice versa? Are people seeing no differentiation and choosing on price? Has your competitor made enough noise to drown you out – or squeezed you out of the shop shelves due to attractive trade schemes? Is your sales team delivering on the ground?
Prof. Srinivas Govindrajan
Prof. PD Purkayastha
Hence, the 3 objective metrics capture what happened – and whether the investments made last year were justified. They may not be the best indicators about Fresh investments to be made.
Let us use a Case study to illustrate the point. The Case contains the usual data points which a Brand Manager handles – and has to make sense of. Basis this, he is required to measure (or audit, if you may call it) the performance of a Brand. This audit will provide directions for FUTURE investments in the Brand. It will also provide cues on what needs to be done to ensure that the Brand continues to generate healthy cash flows.
For starters, have a look at the Case study and have a crack at it. We will introduce more reference material as we go along. This will familiarize you with the different variables – and how one can derive meaningful actionable insights from these variables.
The first set of data analysis is for the data on Consumer Track and Media Spends.
That is given here: Case – Consumer Track and Media Spends
The analysis of Consumer Panel Data is given here: Case – Consumer Panel
The analysis of Distribution Data is given here: Case – Distribution
We do hope you enjoy the exercise!
Case File : Case – Premium Toilet Soap
Data for the Case : Premium Toilet Soap Brand X