• STRUCTURAL EQUATION MODELING

    Driving efficiencies for marketers from brand-tracking studies

    Business Problem

    Brand tracks & reviews provide hindsight- like report cards they evaluate past activities. How do you take action from them? Can they provide you with foresight on how consumers make choices in a category? What are the relevant needs, how do consumers decode image, how do they respond to them and how do these integrate to determine overall brand perception, or guide purchase decision.

    Solution

    Structural Equation Modeling (SEM) is an advanced analytics technique that models the complex relationship of product attributes, brand image and consumer response that determines consumer choice. It has helped our clients – leading global marketers – in answering questions like:

    1. Optimizing product formulation. Identify relevant consumer met/ unmet needs and how consumers perceive them. Plan scenarios around how product attributes can drive choice.
    2. What is the hierarchy of needs/benefits, brand image and the responses they evoke; how do those ladders up to impact overall brand perception, guide purchase decision.
    3. What is the competitive landscape- who is an immediate threat? In which segment? What are the opportunities – are we exploiting the brand associations?
    4. Providing strategic direction to building the brand identity system
      • What should be the optimal strategy for my brand- what image and product attributes evoke the best emotional, rational response from the target segment.
    5. Optimizing brand portfolio holistically, from a consumer relevance & response standpoint.
    Behind the Scenes

    SEM is based on the simple fact that different brand attributes have varying degrees of influence on product purchase/ brand equity. For any category, overall equity is built by multiple associations. SEM models the effect of attributes simultaneously influencing the ultimate dependent variable chosen. An understanding of the direct and indirect influences of product attributes- hierarchy of relevance- combined with competitive brand strength on these attributes helps deliver actionable insight.

    As can be observed from Figure 1 there are 13 consumer themes in boxes which build overall equity here. These themes are frames from 56 variables in the tracking study. The themes on the top are consumer-response themes while the lower ones are brand-trigger attributes and imagery. Note that the thickness of the lines show the strength of association and the percentages mentioned in the boxes represent the total effect of the theme on overall equity.

    figure1

    Figure 2 shows ranking of equity themes in order of relevance juxtaposed with brand competitiveness on each theme. Trust, Reliable Protection and Popularity of brand are the top 3 relevant themes in this scenario. Client’s Brand B has strength on the themes of being One with nature, Friendly and Odor protection, while competitor Brand A has a higher strength on Being traditional and Having a heritage.
    figure2
    Figure 3 indicates that ‘reliable protection to popularity’ and ‘confident to trust’ is a pathway which impacts overall equity. It can be therefore concluded that Brand B needs to own Reliable Protection and Popular Image to evoke Confidence & Trust thus having an impact on overall equity.
    figure3

    Key Advantages

    The key advantages that such an approach offers are –

    1. Integrates the supplier side dimensions (product attributes, brand image) and consumer side dimensions (rational, emotional responses)
    2. Overlays brand scorecard onto the category model enabling the marketer to identify opportunities & threats.
    3. Can split model by segments, for additional insights.
    4. SEM can be conducted off any regular consumer tracking survey
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