Lessons Learned: Using Van Westendorp to Determine the Value of a Brand Name
Groupe SEB, one of the world's largest manufacturers of small appliances, came to Ipsos Insight with an interest in answering the following questions:
- What is the incremental value of changing the brand name on a small appliance?
- If a given brand name can generate a price premium, can that difference be used to measure a brand's financial value?
A 100-cell monadic online concept test was conducted, in which brand names were varied across 8 appliance subcategories. A total of 300 interviews were completed per concept, or approximately 30,000 in total. Concepts were identical to one another within a category, with the exception of the brand. In other words, the only test variable was the brand name.
The following chart demonstrates that the average prices generated in this project, by way of the Van Westendorp questions, closely matched the average retail prices (as reported by Insight Intelect retail point-of-sale data), in each category, as measured by point of sale figures.
Notes: 1. VW OPS = Optimum Price Point = Point at which an equal number of respondents see the product as too expensive and too cheap = Ideal Price for this product
By combining this pricing data with the concept's purchase interest score, it is even possible to determine not only whether or not a given brand can be expected to be priced at a higher or lower price point, but how many consumers would be willing to buy the brand at that price. In other words, this technique can be used to place a financial value on a brand name.
The next chart demonstrates that certain brands in a given category, Hair Dryers in this case, will generate significantly higher average prices than other brands. In other words, certain brands can command higher prices in the marketplace. The result would be that if you brand a hair dryer with the Brand A name, an incremental $10 million sales would be generated above the category average.
And the next chart shows that, across the categories, certain brands consistently generate premium price expectations, while others do not. For example, licensing Brand A across categories would result in greater total revenue than licensing Brand J.
