Whether you consider BP’s problems in the Gulf of Mexico are down to bad luck or bad management there can be little argument that once again a major brand will suffer potential brand damage. However, it does raise the question of how you evaluate brand damage. The cost to the company is quite straightforward to asses – it is in dollars spent on repair and rescue efforts, lost production and clean-up. But damage to the BP brand is more difficult to evaluate as it concerns attitudes, emotions, values and the actions that may result from them.
There are a number of tried approaches to brand evaluation and views on which is the most appropriate and reliable can be quite heated, but there are standard models. However, these models cannot be easily inverted to apply to brand damage. For example, one approach uses the value of advertising and promotion invested in a brand – this is always a bit suspect to me as it does not take account of the effectiveness or otherwise of the campaigns. Manifestly, this cannot be used in reverse. A more robust approach has been to calculate the cost for an organization to license the brand in question. This is perhaps more accurate, though it does depend upon a good deal of subjectivity.
Direct financial loss or movement in share price could be included in a formula of indicators, but although these may be a measure of corporate loss, they may not help us assess real damage to the brand. Let us return to the example of BP: as we noted earlier we can already look at the cost to the company of the disaster, and look at the impact on the share price. A more accurate indicator may be sales. Customer attitude to brands is often directly reflected in willingness to buy and switching brand choice. But customers are not the only stakeholders and in the case of powerful multi-national brands, the reputation amongst governments, influencers, regulators, trade bodies, employees and trades unions will all reflect the degree of brand damage.