Measuring the short-term spillover impact of a product recall on a brand ecosystem

I've put some research into the publication pipeline lately.

Here's the abstract from the forthcoming Journal of Brand Management. It's an article I worked on with my co-author Jean-Francois Belisle.  You can check out the full article here or contact me and I am happy to chat about it.

Measuring the short-term spillover impact of a product recall on a brand ecosystem

This research examines the short-term impact of a product recall on a brand ecosystm by investigating the following questions: How do product recall spillover effects spread to (i) the recalled brand's related product categories, (ii) competing brands, and (iii) private label brands?  Studying the Land O' Lakes butter recall case using a difference-in-differences model, our research shows that negative spillovers occur within the same brand family, carry over to private label brands and then quickly dissipate, but do not carry over to competitor brands.  Managerial implications and directions for future research are provided.

Toronto trounces brand Montreal

by Genevieve McCallum

As someone who grew up in Toronto and is now at university in Montreal, I often get asked which city I like better. I’m a Torontonian through and through, with no doubt as to which side of the Montreal/Toronto rivalry I fall on. But now as a student of branding, I started thinking which city has a stronger brand- Montreal or Toronto?

To do a quick comparison on the brand equity of Toronto versus Montreal, I did a couple Google searches. The idea here is that the more returns that come back, the higher the awareness of each city.   Google returns about 450,000,000 results from a search on “Toronto” vs. 33,000,0000 results for “Montreal.”  That’s a route for Toronto awareness.

So what might be driving Toronto’s big win?  Well, here are a few thoughts.  First, according to the organizations that track this kind of stuff, Toronto has more than double the number of head offices that Montreal has (175 vs 81).  In other words, the greater number of head offices provides Toronto with more high paying jobs, more business visits to the city, driving more hotel visits, more theaters, more restaurants etc.  Second, Toronto has 3 major professional sports teams (the Toronto Maple Leafs, the Toronto Jays, and the Toronto Rapters) compared to Montreal’s lonely Canadiens. Translation: Toronto still gets its scores reported more often in more seasons, on more media than Montreal.  Finally, Toronto wins on cityscape. The world famous CN tower (for the longest time the tallest free standing structure in the world) simply trumps the Olympic Stadium located away from the downtown core.

I remember my dad telling me that forty years ago, around the time that the ’67 Olympics were held, Montreal was Canada’s leading city. I’ve just argued that  this seems to no longer be the case.  Perhaps I’m biased because of where I’m from, so I’m curious: to all the born and bred Montrealers out there, how would you argue in Montreal’s defense? 

Buying into the Price Tag

by Jesse Kim

One of the things I’ve been noticing during my bi-yearly visits back to Korea is the growing domination of high-fashion brands on the streets. It’s becoming just as common to see middle-aged women with Louis Vuitton purses as teenage boys with Gucci shoulder bags. Do Koreans just happen to be fashionistas as a collective nation, or is there something more to this phenomenon? To make matters more puzzling, those elite brand products, which already command an astounding price, tend to cost even more in Korea especially relative to their living costs. For me, a simple attribution to luxurious taste in fashion does not fare well in explaining why there are so many Korean eighteen year olds expecting a three thousand dollar purse for Christmas.  

Granted, I’ve always been aware that premium pricing is a huge part of the fashion industry in Korea. I even remember watching a news interview as a little girl that featured a storeowner who admitted that simply adding a zero at the end of the price tag of a dress boosts its sales. This excited me because she seemed to have just exposed a big secret: “price doesn’t always represent quality”; though I did eventually realize that most people were already aware of this fact. Then why is it that premium pricing continues to play such a potent role in increasing perceived brand value, especially for high fashion brands, and how come it’s more potent in some places, like Korea, than others, like Canada?

When considering brand equity as the difference in value of a product with a brand and the same product without the brand, the comparison between my trusty old fifty dollar purse and my cousin’s three-thousand dollar Gucci purse shows the brand equity of such high fashion brands to be enormous.  It’s obvious that brands such as Coach and Chanel enjoy considerable brand equity around the globe, but my experience tells me that it seems to be more evident in some places than others.  It could be that in some countries, fashion brands are simply valued more due to their country-of-origin desirability.  It might also be that some cultures value highest priced goods more as a symbolic device. In any event, the relationship between the brand and the high prices has some sort of equilibrium:  the high prices are imposed to help create the brand equity;  the intangible benefits of the brand justify the higher prices.

I still can’t shake the strange feeling that I get while watching a 9 year old Korean girl trot to school with her mini Louis Vuitton backpack and a Burberry scarf. But by accepting that different places may have different attitudes regarding brands, I can view these seemingly "wasteful" tendencies as an interesting cultural brand phenomenon taking place, rather than the result of the brands’ exploitation of superficiality.

Aston Gets Grilled By Ford

by: Michaël De Kerf
Ask car aficionados which brand of car this is:

You’ll most likely get this response: Aston Martin Vantage. The Vantage has a price tag north of $150,000. 

But it also looks like the Ford Fusion’s grill. The Fusion’s price? Around $25,000.  

Ford Fusion 2012

Has the classic design of the Aston Martin grill been ripped off? 

It’s not surprising that a mainstream brand would try to “borrow” styles of the higher end.  The purpose of this is straightforward.  If Ford can link (or infer) its Fusion to an elite car, then, other inferences might also take hold. In addition to having a better styled car, Ford model might benefit from other Aston Martin brand features like “powerful performance”, “sophisticated sportiness” or “refined sleek styling”. These inferences can be very valuable for Ford Fusion’s  brand equity.

Of course, this “borrowing” is a two way street. It could come at a cost to Aston Martin, which competes in the elite class of cars. It is unlikely that Aston Martin would want any associations that comes with Ford like: “main-street America feel” and “tough/robust ruggedness”.

Yet, Aston Martin doesn't seem to care about protecting its designs from Ford. This might seem strange. After all, don't designers protect their designs vigourously?  (Just think how Louboutin aggressively protected its red-soled shoes or how Apple locked horns with Samsung on design interface!)

There is really a simple answer to why Aston Martin has seemed to be complacent. The answer lies in the history of Aston Martin. In 1987, Ford became the majority shareholder of Aston Martin. Ford eventually became the sole owner in 1993 but then sold Aston Martin in 2007. During this 20-years period, lots of models were developed, giving Ford rights to a bunch of IP including designs.

 

The 5 Most Difficult Branding Decisions #3 Measuring the Brand

Let's recap our countdown of the Top 5 Most Difficult Branding Decisions.

#5 Branding a Late Entrant
#4 Branding the Boring
#3 Measuring the Brand

Whenever I teach a brand course, I like to ask the question: How valuable are brands? Pretty much every undergrad, MBA, manager or exec jumps on the “brands are valuable” bandwagon. Some will cite some famous quotes from business titans like Warren Buffett: “brands are economic castles protected by unbreachable ‘moats’ (Kuper, 2008) . Others will comment how 2/3rds of Coca-Cola’s value is brand-based. Still others will make the case that brands create the bulk of worth for business to business brands like GE.

So then I follow up “If a brand is so valuable, what is a brand anyway?”

A lot of product managers (or those schooled in product management) discuss brands in the context of “a differentiated product”. Academically trained brand managers tend to provide an answer like “a brand a network of meaningful associations linked to the brand name in the customer’s mind”. I’ve heard accountants say that “a brand is a pretty good proxy for ‘goodwill’ on a balance sheet. Finance folks view the brand as an asset to leverage financially. Many senior executives talk about a brand to be acquired or sold. Directors of charities view brands as drivers of accountability. Ask 10 managers from different departments that question and you’ll likely get 10 different responses.

So who’s right?

Here’s the thing. All those responses are correct. A brand is all of the above and more. Brands function at different levels (consumer, product, and firm levels), have several different dimensions (awareness and loyalty, for example),and have dollar value impact on the organization. Where this gets especially tricky then, is measuring the brand.

In one of my papers, I developed a thorough taxonomy of brand measures. I scoured pretty much every academic journal, book, and professional magazine to find any way that brands can- and are being measured. But, I also went beyond that. In one of my studies, I approached brand guardians (VP marketing, brand manager, global brand managers etc) directly to see how they measured the brand. I found lots and lots of measurements – some that measure the brand, some that measure part of the brand, and some that don’t really measure the brand at all! The thing that was so surprising was just how imperfect even the best measures are. This is hardly surprising because what is a brand is is so hard to pin down.

Let’s look at a couple of the highest profile brand measures that approach brands from opposite ends of the spectrum.

On one extreme there is the Interbrand approach, made famous from its annual Business Week “The Top 100 Global Brands”. This approach is great for dollar valuing the firm level of a brand- and this makes it attractive to CFOs or CEOs who are viewing the brand as a balance sheet asset. Think of the measure this way. A brand’s value is estimated on the basis of projected profits discounted to a present value. The discount rate is a subjective rate determined by Interbrand and Wall Street equity specialists and is a function of the brand’s risk profile, market leadership, stability and global reach of the brand (Chu and Keh, 2006). Intangible assets like patents are subtracted to assess what portion of the earning are due to the brand alone. Qualifying brands must be publicly traded, have at least 1/3rd of revenues outside the home country, and not be a purely business-to-business brand (Interbrand 2011).

There are lots of reasons why this is a cool measure (you can benchmark your brand against the best-in-class brands, for example) and lots reasons why this measure is so tough to use. I’ll just comment on a couple points. First, most brands aren’t publically traded so for a non-public company, a forced hypothetical “market cap” would be required to execute this measure and figuring this data point out is not simple to do. Second, the folks in organizations are more interested in finding out the value of product level brands (e.g. Tide and Crest ) than the firm brand valuation (e.g. P&G.) It is incredibly complicated to get to the dollar level product level using this type of measure.

On the other extreme is what I call the Keller model. In the Keller metrics, measures are taken at the consumer level. The idea behind it is that brands with high levels of awareness (ie familiarity) and a strong, favourable, and unique brand image (as defined by strong, favourable, unique associations)have high brand equity. So to uncover the associations in the consumers’ minds, a bunch of tests like free associations, in-depth interviews, and projective tools are administered, and then scaled to validate. It’s time consuming, costly, and requires lots of brand-specific expertise to do this.

The Keller approach is a preferred choice for hard-core marketers because it helps the managers compare the brand directly to competiors. Uncovering associations is also a great diagnostic tool too. If you track the brand over time and you see association favorability slipping, then you can take action to reconstruct the associations. That being said, there are lots of problems with this type of brand measure as well. I’ll highlight a major one here. Consider the CMO of Coke using this approach to measure the brand. The outcome of his study would provide a series of word associations. So, the CMO from Coke, comparing his customers’ associations of Coke to customers’ brand associations for Pepsi, would see near-identical consumer associations (Silverman, Spott, and Pascal, 1999) leading to the conclusion that Coke and Pepsi have similar levels of brand equity. Yet, an Interbrand measure will evaluate Coke’s brand at around $55 billion more than Pepsi’s. Which takes us to the obvious point- are they really measuring the same thing?

So what does all this mean to a brander? Brands are multi-dimensional, hard to define, and can be costly/time consuming to measure. Then there is the added complexity of measures not jiving with one another. Having said that, there are a few ways to remedy the measurement challenges. Using multiple measures is one- which increases cost and complexity. I designed Brand Mojo as a key piece to remedy these (and other) brand measurement issues. But for the manager who realizes that the brand is the most valuable asset that she has, the brand ought to be measured so it can be managed. This is not an easy thing to do and for this reason it is #3 on our list of the Top 5 most difficult branding decisions.