mytest > help > Part 2. MM4XL Tools > 2. Analytical Tools > Business Formulas > mmBEI, Brand Equity Index

Business Formulas

mmBEI, Brand Equity Index

Category: Reporting > Metrics

The Brand Equity Index (BEI) is used to assess a brand's value. It is easy to compute and is a straightforward method to evaluate a brand portfolio as well as to compare competing brands. Developed by Bill Moran, the Brand Equity Index looks at year-on-year changes combining Effective Market Share, Relative Price, and Durability (loyalty index).

Business analysis formulas for Excel. Marketing tool for professionals

Where:

MS = Effective market share, the share of a market segment, weighted by that segment's percentage of brand sales. The higher the market share the stronger the brand is assumed to be.

Pr = Relative price, also known as price premium, is the price of a product, divided by the average price in the market. Price indexes above 1 represent a price premium and a strong brand. If a brand receives a score of less than 1 along this dimension, it is selling at a discount and is deemed a weaker brand.

L = Durability/loyalty, the brand's customers who will re-buy in the next year. A score of 100% indicates that all will repurchase, and the brand is assumed to enjoy strong loyalty within its customer base. To estimate loyalty values try the MM4XL software tool Brand Switch Analyst.

Syntax

mmBEI(Market_Share, Average_Market_Price, Brand_Price, Loyalty_Index, Optional Brand_Profit)

Market_Share The market share of your brand
Average_Market_Price The average price of all brands competing in a market
Brand_Price The price of your brand
Loyalty_Index Percentage of a brand's customers who will re-buy in the next time period
Brand_Profit Optional - The profit of your brand, used to return BEI in monetary terms

Example

See example file Business Formulas.xls, sheet mmBEI.

Business analysis formulas for Excel. Marketing tool for professionals

Tip: To estimate loyalty values try the MM4XL software tool Brand Switch Analyst.

Related functions
  • mmBDI
  • mmCDI
  • mmEI
  • mmHERF
  • mmMOI
  • mmPREMIUM
  • mmPRESS
  • mmSHARE
Related MM4XL software tools
  • Brand Switch Analyst
  • Profile Manager
  • Smart Mapping
  • Semantic Differential
Source
Paul Farris, 2006, Marketing metrics: 50+ metrics every executive should master
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