A Model for Managing Multicategory Brand Equity

This work was a finalist for the 2006 Marketing Science Practice Prize.

http://www.informs.org/Edu/MarketingScience/

We develop a model for estimating, tracking, and managing brand equity for multicategory brands based on a combination of customer survey and financial measures for each product category. We apply this model to measure the equity of the flagship brand of a leading insurance company and its leading competitor with the same brand name in multiple product categories, allowing for spillover effects of the brand from one category to another. Furthermore, we examine the relationships between advertising and brand equity and between shareholder value and brand equity, using longitudinal data on advertising, brand equity, and shareholder value, and build a decision support simulator. Our model provides reliable estimates of brand equity and our results show that advertising has a strong long-term positive influence on brand equity. This brand equity model and simulator has enabled the company reallocate its advertising resources to improve brand equity and shareholder value, and offer better guidance to managers, analysts, and investors.