Instructor: Armand Gervais

Email: [email protected] preferred

Office: TRS 1-095

Branding 1
 Lecture 4 Branding – Agenda

• ~75 Minute Lecture

• Reminders
– Q2 Simulation decisions due Friday 4:00 pm
Remember to continue to submit.
A few groups missed this step in Q1
Remember you be active in the simulation for a minimum of 30
Minutes each quarter beginning Q2.
Completing micro simulation is active and helps with decisions in
the simulation.
Making decisions is being active.
– Quiz 3 due this Sunday 6pm.
• Branding
• Brand Z reports 2020-2022
• After lecture:
– Work on Simulation
– Pre-recorded metrics lectures
– Quiz
• To Do’s for next weeks class

Branding 2
 What is Branding?
• How do you $ value a Brand?
– Brand knowledge recall
– Performance – Market Share, Sales, Profits
– Shareholder Value
– Intangible assets Goodwill
1975 intangibles were 17% of market value of S&P 500.
Today 2020 it’s 90%
Apple!
Why is Branding So important?
• STP provides a advantage in consumers minds when extending brands.
• What are some great Canadian brands?
– Why?
– https://www.marketing91.com/top-brands-in-canada/

• What are some failing Canadian brands?

– Why?

• How has brand management changed?

– Hint Social Media

Branding 3
Branding 4
2022 BrandZ Portfolios outperform S&P 500 and MSCI
index

Branding 5
BrandZ Portfolios outperform S&P 500 and MSCI index

Branding 6
 A Simple Conceptual Model of Brand Equity
. . . and benefits both
A good brand . . . . . . provides positive target customers and firm
consumer responses . . .
Marketing Mix Supports: Promotion Product, Price, Community, Customer Benefits
Communication and Distribution Programs Brand Awareness
⚫ Confidence
Wrap-Arounds ⚫ Depth
⚫ Loyalty
⚫ Breadth
⚫ Satisfaction
Brand Associations
Core Product / ⚫ Strength Firm Benefits
Service – Relevant
⚫ Distribution co-operation
– Consistent
⚫ Reduced marketing costs
⚫ Valence
⚫ Increased margins
⚫ Uniqueness
⚫ Opportunity for brand
– Memorable
extensions
– Distinctive

7
Source: Keller (1996), Aaker (1996), Strategic Market Research Group, Marketspace Analysis

Branding 7
 Components of a Brand?

Characters https://www.adobe.com/express/learn/blog/30-compani

Spokespeople
Slogans
Logos and All State: you
symbols are in good
hands!
https://www.youtube.com/watch?v=I1NBNj
lm3_Q

Brand name Branding Jingles/Sounds

https://www.youtube.com/watch?v=IlcYkZqgbbA
https://www.youtube.com/watch?v=HXc6LyqS92o
Branding 8
P&G Brands

Branding 9
 Brand Z. Brand Archetypes

• TD Canada Trust, Harley, Apple, Jeep, Virgin?

Branding 10
 What Makes a Brand Valuable?

According to Al and Laura Ries “The Origin of

Brands” :
• Create and be first in a new category or own the
category
• Most successful brands today are innovators or
disruptors, or create the category
Amazon, CNN, Dell, Domino’s, Nike, Swatch, Tide, Google,

• Valuable Brands stand or represent the

category
– Google “Search and find’
– Amazon “Online Shopping”
– Starbucks “High end Coffee experience”
– Rolex “exclusive and Expensive Swiss Watch”
– Red Bull “Energy Drink”
– Tide “Detergent”
– Costco “Warehouse Club”
– Home Depot “ Home improvement Warehouse”

Branding 11
 Ways to develop and create Brand Equity

1. Develop positive brand awareness and

associations
– Gatorade Replenish energy and electrolytes
– Head and Shoulders Dandruff control

2. Establish brand’s meaning in the minds of

consumers- Functional and imagery-related
– Nike –Just Do it! Active lifestyle
– Lululemon – Healthy body and mind

3. Elicit proper consumer responses to brand’s

identity –
– Michelin keep loved ones safe. Related to key benefits.

4. Create consumer brand resonance evident in

intense active loyalty
– Apple creative and expressive,
– Harley-Davidson Free and rebellious?

Branding 12
10 Different ways to create brand beyond
the tangible benefits
1. Creating a conceived linkage to a Tangible
Benefit
– Pantene mends damaged hair
2. Forming a Mental Context
– W-hotels-Premium service, unique, special.
3. Directing an Experience
– Red Bull a wave of energy beyond the physical drink
4. Creating a Means of Self-Presentation
– Absolute Vodka and Yuppies
5. Creating a means to deliver a message
– Debeers- Diamond are forever- Commitment to the
relationship.

Branding 13
 Advantages of a Good Brand?

• Brands are Valuable Assets

• Decision Heuristics. Customer short cuts.
• Facilitates brand extensions into new
categories: Apple, President’s
Choice
• Price premium
• Higher profits
• Goodwill
– Insulates brand from bad experiences for services or recalled
products
• Recall
• Customer Loyalty
• Lower advertising Costs- Viral Marketing Apple
– Starbucks, Wal-Mart, Viagra and Red Bull were built with virtually
no advertising
• Competitive Advantage- Entry Barrier

Branding 14
 10 Different ways to create brand beyond
tangible benefits
6. Building a Social Cultural Authority
– Apple a device for creative and expressive people
7. Creating a Long Hand
– Body shop and protecting the environment
– Valuable brands do more than just serve the consumer.
8. Creating an Alto Ego
– Provocative sexual being Diesel
9. Building an emotional Gym
– Allow consumers to experience emotional possibilities- Dolce &
Gabbana
10.Facilitating Fantasies
– Timberland allow consumers to fantasize about being courageous
adventures
– SUV’s Jeep outdoor and off-road adventures.

Branding 15
 Review the Brand Z Top 10 for 2022
• The Kantar Brand Top 100 Most Valuable Global Brands rose 23% for
2022, to reach a total value of nearly $8.7 trillion. This represents the
second-greatest annual rise in Brand history, following last year's
benchmark of 42%.
• Compare those figures to 2019 and 2020's annual increases of 7%
and 6%, respectively, and it's clear that the world's top brands are, in
many ways, thriving as never before.

What do the top 10 Brands have in

common?
– American
– Relatively young 20-30 years old compared to brands like Coke 129 years, Ford 117 years, Walmart 58 years
– Technology
– Innovative
• Disruptive in their industries.
– Primarily services

Why are these Brands Valuable?

I don’t believe it is from advertising!

Branding 16
Kantar Brand Z Report 2022 Top 50

Branding 17
Kantar Brand Z Report 2022 Top 100

Branding 18
Brand Z 2021 Most Valuable Brands

Branding 19
 Brand Z Calculation
Brand Z Value=Branded Earnings*Brand Multiple*Brand Contribution.
1. Branded Earnings =Corporate Earnings*Attribution Rate
Attribution Rate is the corporate earnings attributable to the specific
brand in question.

2. Financial Value =Branded Earnings*Brand Multiple

Brand Multiple is the future earnings prospects for the Brand.
3. Brand Value =Financial Value*Brand Contribution
Brand Contribution-isolates brand value by removing rational factors like
price, convenience, availability and distribution.

Branding 20
 Except Brand Z 2020
• In January 2020, not long after we began the process of developing this report, it seemed as if the
BrandZTM Top 100 Most Valuable Global Brands would describe another year of healthy value growth
with some brand and category fluctuations.
• As we publish this report six months later, the word fluctuation doesn’t come close to describing the
global upheaval caused by the Covid-19 pandemic that extracted a terrible human toll, isolated
households in months-long quarantines, and curtailed most economic activity.
• No brand could possibly be fully prepared for this level of devastation.
But certain brands had already adjusted to the way people live today. And some of those brands had
actually shaped the habits of modern life—the way we navigate our digitized daily routines on smart
phones, checking in with friends, shopping, ordering takeout, hailing a car.
• During the period when we were all locked down at home, ordering our groceries for delivery, sitting in
front of our screens to work remotely or catch- up with friends and family, these brands were not simply
useful, they became our indispensable lifelines. These brands are the powerful ecosystems that we’ve
been talking for several years.
• These ecosystems—and others like them— flourished because they were exactly what people needed.
These brands have become gravity-less and borderless, acting like superheroes in their ability to move
when and where they want. In part because of its ability to respond during the crisis, one of these brands,
Amazon, remained the No. 1 most valuable brand this year, just ahead of Apple, another gravity-less
brand.
• The pandemic accentuated certain existing trends that shaped brand and category value fluctuations
during most of the 12-month period covered by the BrandZ Global Top 100 report. Winning brands were
aligned with—and drove—these trends.
• Brands that enabled people to navigate life with digital devices, and achieve convenience and comfort,
generally increased in value or at least outperformed their category. These brands had anticipated, even
invented, the online-offline dynamics of modern life that became indispensable for survival during the
lockdown homebound weeks of avoiding the contagion.

Branding 21
 22

Branding 22
 23
Source: https://www.kantar.com/campaigns/brandz /global

Branding 23
Top Canadian Brands 2022

Source: https://brandirectory.com/rankings/canada/table Branding 24

Branding Options and Challenges

Branding 25
 Branding Overview

Branding

Brand Brand Brand

Equity Ownership Name
Strategies Strategies

• Brand Awareness • Manufacturer or • Corporate or

• Perceived Value National Brand Family Brand
• Brand • Store or Private • Corporate and Product
Associations Label Line Brand
• Brand Loyalty • Generic • Individual

Branding 26
 Brand Extensions

Key Benefits of brand extensions:

• Leverages a well-established
name to enter new markets
or increase sales
• Brand known for high quality
or key features
• Lowers marketing costs
• May be synergy among
products-Distribution for
example
• Boost sales of the core brand

Branding 27
 Brand Extensions
Some make sense, some don’t!

https://blog.hubspot.com/marketing/brand-extensions

https://www.packagingstrategies.com/articles/92670-the-2-
secrets-of-brand-extension-success

Branding 28
 Brand Extensions
Some make sense some don’t!
What does the brand mean to the consumer?

Branding 29
 Repositioning a Brand
to Serve different segments or existing
segments with new products

Branding 30
 LO5

Brand Licensing

• Lacoste
– Founded in 1933 by David
Lacoste
– Still sold in stores today
• Harley Davidson
– ConAgra recently introduced Harley Davidson Beef
Jerky into the $2.7 billion per year beef snack category
– The product will be sold in convenience stores and in
Harley Davidson dealerships
• Canadian Tire/Nascar
– official automotive retailer of NASCAR in Canada

Branding 31
 Co-Branding LO5

https://blog.hubspot.com/marketing/best-cobranding-
partnerships

Branding 32
 3 benefits that are created through a
co-branded relationship.

1. Establish Credibility - Co-branding enables businesses to build or

enhance their brand by partnering with another respected business. Two
brands coming together establishes credibility because each company is
able to highlight and reflect each other's assets and thus strengthen their
position in a given market.
2. Extend Reach - When two brands come together to form a co-
branding partnership, they are given the opportunity to gain the interest of
each other's market. This in turn can extend their reach and visibility to a
market to which they may once not have had access.
3. Double Marketing Budget - Businesses understand that marketing
products can be a costly expenditure. A huge bonus of co-branding is that
the costs are typically split between both parties. This benefit allows for
more creative ideas and opportunities to better market a product or
service, and therefore can potentially result in a greater return on
investment (ROI).
Each of these benefits can be an outcome of successful co-branding. It gives
any business or company the opportunity to increase their market share.
To reap these benefits, it is extremely important to choose your partner(s)
wisely as you run the risk of damaging your own credibility and reputation.

Branding 33
 Brand Dilution
• Negative Change in Consumer Brand Associations
• Decrease in strength of positive associations
• Addition of negative brand associations
• Decrease in uniqueness of brand associations
• Decrease in Overall Brand Attitudes or Preference
• Decrease in Brand Sales, Market Share, or Stock Value

http://www.theglobeandmail.com/globe-
drive/culture/commentary/car-makers-hooking-
us-on-luxury-but-its-a-dangerous-
game/article31742039/

Branding 34
 LO5

Brand Dilution

Evaluate consumer
Evaluate the fit between
perceptions of the
the product class
attributes of the core brand
of the core brand
and seek out extensions
and the extension.
with similar attributes.

Refrain from Is the brand

extending the brand extension distanced
name to too many enough from the
products. core brand?

Branding 35
No-Name to Premium Private Label

Branding 36
 Private Labels vs. National Brand

•Evolution of Private Labels

– Dave Nichol established four retailer-branded product lines: "no name" for generic
products; "President's Choice" for superior quality products; ""Too Good to be
True"" (TGTBT as labeled) for nutritious healthy products; and "Green" for
environmentally friendly products.
– http://w ww.theglobeandmail.com/report-on-business/industry-new s/marketing/loblaw -targets-food-savvy-canadians-in-major-marketing-
overhaul/article20647658/

•Why do retailers use Private Label

Brands?
– Differentiation
– Margins
– Balance of power between retailers and manufacturers.
• Coke, Kraft, Heinz, Tide, Etc.
– Kirkland –Costco
– http://w ww.storebrands.info/store-brand-insights/store-brand-new s/costco-private-label-only-gets-bigger-

Branding 37
 Private Labels

Source: Coriolis Research Towards Retail Private Label Success

Branding 38
Private Label Dollar Share by Country Share

• http://www.nielsen.com/us/en/insights/news/2013/private-labels-are-not-
for-everyone-yet.html Branding 39
Unilever Brands

Branding 40
P&G Brands

Branding 41
 Next Week To Do’s

• Work on Q2 then Q3 simulation decisions.

• Read Chapter 4
• Watch D2L for more announcements.

Branding 42
 Brand Metrics

• These are covered in the pre-recorded tutorials

Branding 43
 Brand Z Report 2019
Brand Value Methodology pages 350-354

Calculating Financial Value is a three-step process:

Step 1 We begin with the brand’s parent company, which generates earnings
from:
• Tangible assets – (assets with a physical form, which include fixed assets - e.g. buildings, machinery, land &
current assets e.g. cash and inventory)
• Intangible assets – (such as patents, trademarks and brands)
• To determine the proportion of earnings directly derived from the company’s intangible assets we begin with
Corporate Earnings - sourced from Bloomberg, which represent the latest annual earnings reported by the
parent company. Then by using other financial data from the same source, we calculate and apply a metric
called the Intangible Ratio.
• By multiplying Corporate Earnings by the Intangible Ratio, we are left with Intangible Earnings, which
represent earnings derived from intangible assets.
Step 2 The step is to consider the projected earnings of the brand in question,
which measures the brand’s ability to generate earnings in the future and requires
the Brand Multiple
• This can also be calculated from financial data sourced from Bloomberg. It’s similar to the
calculation used by financial analysts to determine the market value of stocks (Example: 6X
earnings or 12X earnings).
Step 3 The final step is to determine the proportion of these Intangible Earnings
that are directly attributable to the brand we want to value.
• To do this we take the Value calculated in step 2 and apply the Attribution Rate, which literally attributes a
proportion of the parent company’s Intangible Earnings to the brand we want to value.
• The Attribution Rate is determined by analysis of brand level financial information from the parent company’s
published financial reports and other credible sources, such as data from Kantar.

Branding 44
 Determining Brand Contribution
• To arrive at the true value of the brand (i.e. the asset in the minds of consumers) we
need to quantify its strength relative to competitors i.e. to isolate the Financial Value that
is directly driven by its Brand Equity.
• This allows us to understand the proportion of the Financial Value that is explained by
the brand alone and hence the total $ value of the brand itself.
• A brand’s equity can impact consumer behavior and contribute value to a corporation in
three ways:
• Current demand – based on the strength of its equity alone a brand can influence
consumers to choose it over others in the present – generating volume share
• Price premium – based on the strength of its equity alone a brand can influence
consumers to be willing to pay more for it over others – generating value share and profit
• Future demand and price – based on the strength of its equity alone a brand can
influence consumers to buy the brand more in future or to buy it for the first time at the
desired price – increasing volume and value share in future.
• Using BrandZ™’s unique survey based brand equity model (The Meaningfully Different
Framework) we are able to quantify a brand’s abilities in each of these three areas
relative to competitors, with a survey based measure:
• Current demand = Power Price Premium = Premium Future demand and price =
Potential
• Each of these measures contributes to the proportion of the company’s total value
accounted for by the brand’s equity alone – i.e. the Brand Contribution.

Branding 45
 Part 3 – Calculating Brand Value

• Brand Value is the $ amount that the brand

contributes to overall business value of the
parent company.
• Brand Value = Financial Value x Brand
Contribution

Branding 46
Sample Brand Calculation

Branding 47
 Gillette Brand Z calculation 2016:

• Step 1 Branded earnings = $1,164.3 million

– = $11,643 Million (refer to Figure 4.1 or income statement this is revenue generate
by all P&G brands in the world) We now multiply by 10% (We are estimating the
amount of revenue that the Gillette brand generated for P&G. 1-100%
• Step 2 Financial Value =$20,957.4 million
– =$1,164.3 Million*18 times (estimated brand multiple) Similar to earning multiple
used to value stock. You would be provided this multiple. We are estimating that
the Gillette brand will generate revenue for 18+ years for P&G. 1-40 years
• Step 3 Brand Value =$16,766 million
– =$20,957.4 *(4/5) (Brand Contribution as a ratio or % refer to Brand Z report) We
are provided that 80% of the revenue generated is directly related to the brand
value.
• We have now estimated that the Gillette brand is worth approximately
$16.76 Billion.
• If you review the Brand Z report 2016 page 32, Gillette is ranked
number 61 in brands and is worth $16.4 Billion down -17% from 2015.
We have done an respectable job of estimating the brand value of
Gillette using the Brand Z methodology.
• Gillette's current Brand Z 2019 Value $14.15 Billion -8% from 2018!
Why? Notice the brand contribution is 5.

Branding 48
 Branding and Market Share
• Market share gives an overall idea about the composition of an industry
– Market Concentration
– Relative Market Share 0.20% 4.60%
Nestlé Purina
– Share of Category 0.80% PetCare Co
Mars Canada Inc
0.90%
1.30% 11.30% Del Monte Foods Co
2.40%
2.80% 28.20% Procter & Gamble
Inc
Champion Petfoods
LP
Hill's Pet Nutrition
Canada Inc
6.50% Wal-Mart Canada Inc
19.40%
12.30% Loblaws Cos Ltd

Nutro Products Inc

3.60% Rolf C Hagen Inc
5.70% Sobeys Inc

PetSmart Canada Inc

Branding 49
 Market Share and Relative Market Share
Unit Market Share (%) = Unit Sales (#)
Total Market Unit Sales (#)

Revenue Market Share (%) = Sales Revenue ($)

Total Market Revenue ($)

Relative Market Share (I) (%) = Brand’s Market Share ($,#)

Largest Competitor’s Market Share ($,#)

Branding 50
 Example

Next we’ll calculate the Unit and Revenue Market Shares for the Pet
Food:
Unit25,000
Sales (#)
Unit Market Share (%) =
Total Market Unit Sales (#)
50,000

$375,000,000
Sales Revenue ($)
Revenue Market Share (%) =
Total Market Revenue ($)
$937,500,000

Units Sold Unit Revenue Revenue

(000s) Market Share (000s) Market Share
Iams 25.0 50% $375,000 40.0%
Pro Plan 10.0 20% $200,000 21.3%
A-One 7.5 15% $187,500 20.0%
Kirkland 5.0 10% $125,000 13.3%
Chien 2.5 5% $50,000 5.3%
Market Total 50.0 100% $937,500 100%
51 Branding 51
 Example

The market for Pet Food consists of five players:

Units Sold Revenue (000s)
(000s)
Iams 25.0 $375,000
Pro Plan 10.0 $200,000
A-One 7.5 $187,500
Kirkland 5.0 $125,000
Chien 2.5 $50,000
Market Total 50.0 $937,500
In the market for Pet Food, managers at A-One want to know
their firm’s market share relative to its largest competitor on
the basis of revenues and unit sales:
Relative Market Brand’s Market
7,500 Share
$187,500,000
Relative Market Share
Share = ($, #) = 0.5
0.30
A-One
A-One (Units) (I)
(Revenue)
Largest Competitor’s Market Share ($,#)
$375,000,000
25,000
52 Branding 52
 Brand Equity Index
Marketing Metrics pages. 140-141
Brand Equity Index=Effective Market Share*Relative
Price*Durability. BEI=A*B*C
Tide sales originate from three Geographic segments.
A) 10% of sales are in Canada with a 60% share of the market, 80% of
sales are in the United States with a 75% share of the market, and 10%
of sales are in Mexico with a 40% share of the market.
B) The average price of tide in all 3 geographic segments is $5.00
compared to average of $4.00 for comparable brands.
C) 80% of all customers intend to repurchase Tide next year.
Calculate the Brand Equity Index (Moran) for Tide

Answer: Brand Equity Index=Effective Market Share*Relative

Price*Durability.
Effective Market Share= (10%*60%)+(80%*75%)+(10%*40%) =.7
Relative Price= Brand Price/Average Market Price
Relative Price= $5/$4 =1.25
Durability=80%
Brand Equity index= .7*1.25*.8 =.7

Branding 53
 Delving Deeper: How big of a splash are we
making?
Market Penetration (%): Gives an idea regarding the relative size of the market to its
maximum size
Brand Penetration (%): Gives an idea regarding the brands relative size of the market
to its maximum size
- compares the number people who have made a purchase in the category/bought
the brand to the total focal population (e.g., Canada, segment size, etc.)

Brand Development Index (BDI): For a specific group (e.g., a segment), how many in
the target group are buying our brand, versus our competitors?
Category Development Index (CDI): For a specific group (e.g., a segment), how many
people in the group are buying something from our category,
relative to total category sales?
- compares two ratios: brand/category sales relative
to the number of people in a group AND total brand/category
sales to total people in a group

Branding 54
 Market Penetration
Market Penetration (%)=Customers who purchased a product in the Category (#)
Total Population (#)

Example: In the last month 3 million households out of the 13.5 million Canadian
households purchased laundry detergent.

What is the market penetration for Laundry detergent this month?

Market Penetration (%)= 3.0 Million

13.5 Million

Market Penetration (%)=22.2%

Two issues with this metric:
• Not brand focused
• not based on total purchases of detergent.

Branding 55
 Brand Penetration
Brand Penetration (%)=Customers who purchased the brand (#)
Total Population (#)

Example: In the last month 1,800,000 households out of the 13.5 million households
purchased Tide Branded laundry detergents.

What is the market penetration for Laundry detergent this month?

Brand Penetration (%)= 1,800,000

13,500,000

Brand Penetration (%)=13.33%

issue with this metric:
• not based on total purchases
of detergent.

Branding 56
 Penetration Share
A better metric for brand managers!
Penetration Share (%): Gives a ratio of people who buy a brand relative
to people who buy from the category
- multiple ways of calculating, depending on information available
- similar to market share

1) Penetration Share (%) = Brand Penetration (%)

Market Penetration (%)
2) Penetration Share (%) = Customers who have Purchased the Brand(#)
Customers who have Purchased a Product in the Category
3) Penetration Share (%) = Market Share (%) _
[Heavy Usage Index * Share of Requirements]

Branding 57
 Penetration Share Laundry Detergent
1) Penetration Share (%) = Brand Penetration (%)
Market Penetration (%)
2) Penetration Share (%) = Customers who have Purchased the Brand (#)
Customers who have Purchased a Product in the Category (#)

Example: In the last month 3 million households out of the 13.5 million households
purchased laundry detergent. In the last month 1,800,000 households out of the
13.5 million households purchased Tide Branded laundry detergent.

1) Penetration Share (%) = 13.333%

22.222%
1) Penetration Share (%) = 60%
Or
2) Penetration Share (%) = Customers who have Purchased the Brand(#)
Customers who have Purchased a Product in the Category

2) Penetration Share (%) = 1,800,000/3,000,000 = 60%

Branding 58
 Brand Development Index
Imagine we want to know how our restaurant is doing amongst Ryerson students.
We know that Ryerson has 38,000 undergrads, and that we typically serve 500
students per week. Comparatively, we have 6,000 people visit a restaurant in a
week in general, and these people come from the 2 million people who live in
Toronto.

Brand Development Index (BDI) = [Brand Sales to Group (#,$) / Households in Group # ]
[Total Brand Sales (#,$) / Total Households # ]
BDI = [500 / 38,000]
[6,000 / 2,000,000]
BDI = 0.013
0.003
BDI = 4.33

Branding 59
 Category Development Index
Category Development Index (BDI) = [Category Sales to Group / Households in Group]
[Total Category Sales / Total Households ]
Index used to show how well a category performs in a given market segment ,
relative to its performance in the marke as a whole.

You want to understand how your Purex laundry brand is performing. After consulting
your sales database, you note that you sold 20,000 units in Toronto, and 12,400 units in
Montreal. According to StatsCan, there are about 13 million households in Canada,
2 million households in Toronto and 1.6 million households in Montreal. During the
same period 800,000 units were sold across Canada
Calculate the BDI for Toronto

Category Development Index (BDI) = [Category Sales to Group / Households in Group]

[Total Category Sales / Total Households ]

Category Development Index (BDI) = [20,000 / 2,000,000]

[800,000/ 13,000,000]

=.01/.0615
=.1626

Branding 60
 Share of Requirements (aka Share of
Wallet)
Share of Requirements (aka Share of Wallet): For people purchasing a
particular brand, what is the ratio between brand purchases and other category
purchases?
- compares brand purchases with total category purchases (either in # of
units or $
Share of Requirements (%) = Brand Purchases #
Total Category Purchase by Brand Buyers #
Sole Usage (%): Of the people buying products from our category, how many
are exclusively buying our brand?
- compares brand loyal purchases to total purchases by people who bought
the focal brand at least once
Heavy Usage Index: Relative to other consumers, do the people
buying our brand buy more or less often?
- compares average purchases for the focal brand to overall
average purchases within the category
- this is a multiplier that is also used to qualify other metrics

Branding 61
 Share of Requirements (Wallet)
Gas consumption
A customer goes to the gas station 6 times per month. They go to
Shell 4 times and Costco 2 Times. Each time they visit Shell they
spend $20 on average and each time they visit Costco they spend
$100 on average.
Calculate Shell and Costco Share of Requirements by # of visits and
by spend.
# Shell 4/6 =66.7%
# Costco 2/6 = 33.3%
Share of Requirements using revenue
Shell
4*$20/(4*20+2*$100) =$80/$280=28.6%
Costco
=$200/$280=71.4%!
Branding 62
 Heavy Usage Index Example
A winery, Montmercey, wants to know if its customers tend to buy more or less wine
than the average wine consumer. They have a market share in Ontario of 12%, and a
penetration share of 60%. They sold 150,000 bottles last year, and know that the total
sales of wine for people who bought at least one bottle of Montmercey was 450,000
bottles.
Heavy Usage Index (I) = Market Share %
(Penetration Share * Share of Requirements)

HUI = 12% _
(60% * Share of Requirements)
Share of Requirements also known as Share
HUI = 0.12 _
(0.60* 0.333) of Wallet
Share of Wallet (%) = Brand Purchases #
HUI = 0.12_ Total Cat. Sales by Brand Buyers
(0.2) Share of Wallet (%) = 150,000_
HUI = 0.6 450,000
Share of Wallet (%) = 33.3%

Branding 63