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Buying Cars and Paper Tissues: When Is Brand More Important and Why Does It Matter?

When you go out to buy something how much importance do you place on the brand name? Not only does this vary from person to person but also from category to category. Yet the vast majority of brand related research has focused on understanding the importance of brand within categories, not across. That may be understandable from a brand manager’s perspective because he is in charge of just that brand. But while a company may sell a single brand a consumer makes purchase decisions across a spectrum of categories. The importance she places on a brand in a particular category is therefore contextual. Understanding this issue of Brand Relevance in Category (BRiC) and its implications is what three researchers set out to do in a large scale multi-product, multi-country study. Here’s what they did.

Their approach is conceptually simple (though laborious in execution the first time around). They treat BRiC as the brand equivalent of price sensitivity. Therefore when managers understand the BRiC score for their category (it is a category-level score not a brand-level score), much like with price sensitivity, it will affect their brand investment decisions.

Following time tested academic principles, the researchers developed a BRiC scale comprised of 12 items and used it to collect data from about 6000 consumers in five countries (U.S., U.K., France, Spain and Japan) across twenty categories (ranging from consumer goods to durables, services and retailers). Higher BRiC scores indicate more importance for brand name in purchase and vice versa.

Results

Across all five countries, cars and cigarettes have the highest BRiC score implying those are the categories where consumers felt brand name was most important. The lowest positions were consistently taken by drug stores and paper tissues. There is country-based variation too and a good example is leisure airline travel. It is near the top in France and near the bottom in the U.K. This is reflected in market shares of low cost airlines (37%) in the U.K. and France (5%).

For the U.S. specifically the highest scorer is Beer. That is, of the twenty categories studied brand name is most important for choice in the Beer category. Interestingly Mobile Network Operators are in the top five, while Department Stores and Leisure Wear are in the bottom three.

Managerial Value

While the BRiC score is an interesting perspective across categories are there ways in which individual brand managers can use it? Sure. Depending on the importance of brand within a category, managers can choose to increase or decrease their brand expenditures. The researchers speculate that DHL failed in the U.S., because the express delivery market has very high BRiC scores and hence requires high levels of brand investment to break in (just look at what FedEx and UPS are doing). Similarly, large investments in brand by P&G on behalf of Bounty and Charmin in Western Europe may not have helped as those categories have low BRiC scores. The lesson here is if you are entering a low BRiC market spending a ton of money on the brand may not be particularly useful.

Implementation

A lot of money gets spent in improving the brand name, with little contextual information. Getting the contextual information can be very useful to determine the magnitude of brand investment. What these researchers have done is to show that getting the contextual information is pretty straightforward. Conduct a proper market research survey to measure BRiC scores for your brand category, related categories and some unrelated categories. That’s about it.

Warning

Hubris can be a problem for the brand manager. To prove this the researchers asked managers to estimate how consumers perceive BRiC across the twenty categories. This was then correlated with the actual scores to see how much managers knew about the importance placed by consumers on brand name. The answer was an underwhelming 36%. Yes, there is definitely room for a survey.

The Authors

This research was conducted by Marc Fischer, Professor of Marketing and Services at University of Passau, Franziska Volckner, Professor of Marketing and Management at University of Cologne and Henrik Sattler, Professor of Marketing and Management at University of Hamburg. It was published in the October 2010 issue of the Journal of Marketing Research.

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