Predicting Brand Equity: Using Discriminant Analysis-Based ...

Predicting Brand Equity:
Using Discriminant Analysis-Based Perceptual Mapping
John A. Fiedler
POPULUS, Inc.
1990
AMA Advanced Research Techniques Forum
Abstract
MDA-based mapping is utilized to measure the extent to which subjects
can readily transfer the benefits associated with a brand’s core franchise
to line extensions and other new product opportunities. Reorientation of
the product space places a manufacturer’s current products at the center
of the space and displays new product opportunities around the current
brand franchise.
Background
Researchers and marketers have long used perceptual mapping as a powerful device for
interpreting and communicating insights about market structure. Its applications have
primarily focused on understanding how brands compete in terms of delivering benefits.
The last twenty years seem to have produced considerable development in the ease of use
of a variety of mapping techniques, better assessments of the strengths and weaknesses of
each technique, and far more elegant graphic presentations of results. Far less energy and
creativity have been devoted to developing new applications for perceptual mapping or
dealing with the perceptual psychology of marketing managers who must utilize the
results of MDA.
One new application of MDA-based mapping is the measurement of brand equity.
Understanding brand equity has become increasingly important as the mergers and
acquisitions activities of the last decade has resulted in a recognition that many
companies’ brand names are substantially undervalued.
One common problem with MDA-based mapping comes from a perceptual
misunderstanding. As marketing managers begin to understand a perceptual map, they
invariably ask: “What does the middle of the map mean?” They are rarely satisfied with
the appropriate answer, namely that the center is simply the average of the products rated,
because the center has no marketing meaning. This is often unsettling as they are
confronted with a fascinating visual whose focal point has little or no meaning.
The procedure described herein describes an application of mapping to asses a brand’s
potential to extend its franchise to new products and simultaneously present finding in a
more easily understood format.
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The data are taken from an actual survey in which 821 subject’s evaluated 77 products:
five were products currently marketed under the sponsor’s brand; the remaining 72 were
either products new to the brand or new product concepts. The products evaluated
spanned a number of technologies.
Both products and technologies are masked. For example, one set is represented by
flowers (azalea, begonia, etc.); another is represented by fish (alewife, bass, etc.), and so
on. Only 25 of the 77 products are displayed.
Brand Equity
Brand Equity Defined
Brand equity was defined as a set of benefits which were associated with the
manufacturer’s current products and which differentiated these products from their
competitors.
Measure of Brand Equity Transfer
A review of previous research yielded a set of attributes which appeared to successfully
describe and discriminate the client’s existing products. However, many of these were
physical descriptors of the current franchise and inappropriate for the opportunities being
investigated. Qualitative research, using the “laddering” technique, yielded a set of
eighteen benefit statements applicable to both current and proposed products. All
eighteen benefit statements were utilized in a pre-test of the questionnaire instrument, and
a final set of six statements were selected on the basis of discrimination across the entire
brand and product set.
A critical objective of the research was to measure how well the benefits associated with
the brand’s current products could be transferred to, or associated with, new products
carrying the same brand name. We termed this process “Brand Stretch.” More correctly,
but perhaps less tantalizingly, it should have been called “Benefit Stretch.”
Each respondent provided 252 benefit ratings [14 products (one current product and 13
new products) x 3 brands x 6 benefit statements]. A mean rating score was computed for
each respondent across all ratings and each respondent’s data was centered by subtracting
that mean. The dependent variable for the discriminant analysis was the seventy-seven
category product variable; discriminant scores were computed on two dimensions for
each of the three brands rated by each respondent.
To the extent to which new products were perceived close to existing products, it was
hypothesized that the brand’s benefits might be readily transferable. The further the
distance, the greater the “stretch,” the less likely the transfer of brand equity.
Communicating Brand Equity Stretch
Focusing Marketing Vision
Placing the client’s core franchise at the center of the perceptual space was a logical
solution to the oft-asked question regarding the meaning of the middle.
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Other benefits arose from this orientation as well. First, decision makers more readily
consider all possible options. Secondly, it is quickly apparent that adding new products
changes how the brand itself is perceived. The sponsor’s management quickly realized
that each time they put their brand on a product, there was a twofold result: the brand
said something new about the product, and the product said something new about the
brand.
Centering the Product Space
The product space was centered on the client’s franchise at the level of the individual
respondent. This was done by subtracting the pair of discriminant scores for the client’s
existing product from the discriniminant scores from each of the remaining thirteen
products. At the same time, the distances from the existing product to each of the other
13 products were calculated.
Figure 1 displays the results for 25 of the 77 products studied
FIGURE 1
CENTERED PRODUCT SPACE

Afghan
Earwig
Beagle
Antelope
Alewife
Bear
Dragonfly
Camel
Crocus
Collie
Cicada
Bass
Elephant
Deer
Begonia
Elkhound
Bee
Carp
Dachshund
Azalea
Ant
Daisy
Devilfish
Eel
Edelweiss


The concentric rings help the viewer interpret the map. Different technologies tend to
dominate different areas, each emphasizing different benefits delivered by the brand.
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Potential Misinterpretation
One product concept was almost entirely new to the sample and was not explained
adequately in the survey instrument. When it was never rated as being similar to any of
the client’s products, it was also never rated consistently. As a result, respondents’
individual perceptions were located about the perimeter of the space. The consequence
was that a product which appeared to share the parent’s brand equity, actually did not.
Market Potential
Opportunity Evaluation
The fact that a new product shares some benefits with its putative parent is no guarantee
of market acceptance. It is also necessary to determine interest in the new product itself.
A measure of “purchase interest” was derived from a traditional purchase intent question.
It is useful to combine the distance measure of “Brand Equity” from the mapping
exercise with the purchase interest measure, as shown in Figure 2.
FIGURE 2
BRAND STRETCH SPACE

Dragonfly
Cicada
Bee
Domain
Domain of
of
Line
Brand
Extensions
Stretch
Camel
Ant
Begonia
Bass
Bear
Carp Eel
Deer
Devilfish
Earwig
Azalea
Beagle
Daisy
Elkhound
Elephant
Crocus Edelweiss
Antelope
Dachshund
Alewife
Collie
Afghan
Purchase Interest


The plot shows that the measures are correlated; the products with the greatest brand
equity are those with the highest level of purchase interest. All of these products shared
the same technology (all represented as insects). This technology also encompassed most
of the products currently offered under the brand name. In the parlance of the project,
these opportunities represented little “stretch” and more logically line extensions.
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Of greater interest was the band new products which offered either above average shared
brand equity or above average purchase interest. Most of the “mammals” other than
“dogs” fell into this band, and it was toward this technology that the sponsor decided to
devote its efforts.
Combining the major findings from the mapping analysis with other data from the survey
in a simple visual form such as shown in Figure 2 adds significant value to the mapping
exercise.
Conclusions
The procedures described appear to offer benefits to the end-user of a study utilizing
MDA-base mapping.
First, centering the product space on the client’s own brand or some other meaningful
referent permits the non-researcher to grasp the findings more readily.
Second, combining the findings of a mapping analysis with other summary data from a
survey take the thinking and decision-making beyond the simple question of “Where do
we go?” to a more complex question of “What do we do?”

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