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How does brand popularity impact market share?

Alex Haigh
Lorenzo Coruzzi
19 November 2021

What makes a brand strong? Our brand valuation analyses attempt to predict the long-term effects of future brand strength. However, a key element within that assessment is working out how strong and effective the brand is today. In short, do perceptions of a brand help make people choose it right at this moment?  

In order to do that, we have developed a simple, market-research based measure used to calculate brand popularity and mental availability of brands, which can be used as a market share predictor. This concept is called the BrandBeta®, lending its name from the financial term Beta – a measure of financial return from company shares.  

Understanding a brand’s popularity - or its BrandBeta® - is simple in that it contains only two measures: familiarity and relevance. Familiarity is a measure of depth of awareness – to be familiar with a brand you must know of it and know what it does fairly well. Relevance is a measure of acceptance into customer’s consideration set – to be relevant you must be considered by those familiar with your brand.  

Our analysis shows that, when combined, familiarity and relevance explain over 80% of the variance in market share within the categories covered. That is across all countries and sectors. Analysing the impact of familiarity and relevance, we noted that familiarity explains approximately 65% of the variance in share, while relevance explains approximately 35%. BrandBeta® - measuring a brand’s popularity - is a combination of the two measures in the ratio (65:35). This combination creates a score out of 10 which our additional analysis shows can be used to predict market share growth. However, as well as this prediction of share we also need to understand the factors which drive relevance and familiarity. Brand attributes - such as quality, coolness, availability, and trust - will be influencing the likelihood to consider and should be researched. 

Within our “Tier 1” sectors, these measures are researched. In the “Tier 2” sectors, additional research can be performed as necessary in order to give diagnostic detail on how to improve brand positioning and messaging to influence likelihood to consider and therefore purchase.  

However, this assessment should always be considered as one part of a full Brand Strength Index, which reviews inputs that are being performed to build BrandBeta® - or brand popularity -, combined with an analysis of behaviour and financial outputs - for example on market share and price. 

The popularity of a brand, if tracked, can be used to quantify the benefits of brand-building as an investment. Connected to brand reputation and other explanatory brand attributes, it can be used to explain how to change your brand’s positioning, what to do about a brand portfolio you are having issues with, what position to take in a purchase or licencing negotiation and many other applications.  

Graph showcasing how brands & marketing impact brand popularity and market share
How brands & marketing impact brand popularity and market share

Key takeaways:

  1. Brands and their reputation drive business results.  

We have found that over 80% of variation in market share across all sectors and markets is explained by these measures, and this level of explanation rises when looking at sectors and countries individually.  

  1. Brand reputation is important but not the only thing you should worry about.  

Reputation explains only between 50% and 70% of the difference in Relevance. To be successful you also need to build familiarity, have the right products/services, available in the right places, at the right price.  

  1. Larger spend needs to be supported by a strong positioning and vice versa

BrandBeta® - the measure of brand popularity - is a combination of familiarity and reputation as both are needed to drive changes in market share.  

  1. Purpose is pointless if you’re not selling what people want.  

First and foremost, customers consider brands because they’ve heard of them and they think they can buy what they want from them for a reasonable price. Marketers should think carefully before putting all their faith in their purpose and reputation without getting the basics right first. 

About the Authors

Alex Haigh
Director
Brand Finance Plc

Alex is a technical specialist in the use of market research and brand valuation for transfer pricing and has completed the Advance Diploma in International Tax, with a specialisation in Transfer Pricing.

His other area of expertise has been the assessment on the return on investment of different brand architecture and brand positioning options. Much of this experience has focussed on identifying the brand structures, media investment, media mix and distribution channel management needed to minimise risk and maximise opportunity from any brand changes.

Working on clients across the Brand Finance Footprint including North America, Argentina, most of Europe, South Africa, Kenya, most of the Middle East, China, Singapore and Australia.

More from Alex Haigh
Lorenzo Coruzzi
Senior Consultant
Brand Finance

Lorenzo is experienced in valuation and brand strength analysis, and his expertise lies in brand architecture, portfolio management and brand extension projects. He specialises in the Automobile, Technology, IT and Telecom sectors Lorenzo is a qualifying management accountant, CIMA Adv. Dip. MA.

More from Lorenzo Coruzzi
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