Measuring Brand Equity from Aggregate Sales data

Brand Equity is an important and expansive measure of brand performance. Estimating Brand Equity can be challenging. This book presents an approach to do so using secondary sales data alone. The approach assumes that brand premiums arise as a deviation from the sales performance of an unbranded generic product. The deviation itself can be estimated by borrowing and adapting stochastic frontier models popular in production economics. The extent of such deviation form a neat proxy for brand equity which, when fed into a discounted cash flow model, yields measures of brand value. These brand value measures can be externally validated via a simple comparison against brand valuation figures routinely published by syndicated data and analysis providers who use proprietary methodologies in their computations. The book depicts an example from the beer industry. Chapters 2 and 3 of the book extend the brand equity computation principle to store brands and spatio-geographical effects of brand equity, respectively.