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Revenue Premium Based Brand Equity

Brand equity is a common concept in marketing.  The basic idea is that well known and well thought of brands provide value to organizations.  Examples of high brand equity brands include companies such as Coca-Cola, McDonald’s and Apple.  These brands have value because consumers may have significant loyalty to the brand, or may be willing to pay a price premium.  There are a wide variety of methods for calculating brand equity.  Most methods involve surveys of consumers, and focus on data such as awareness levels, loyalty rates or consumer associations.

For our “College Basketball” brand equity analysis we use a “Revenue Premium” method.  The intuition of this approach is that brand equity is reflected in a school’s men’s basketball revenue relative to the team’s quality.  To accomplish our analysis, we use a statistical model that predicts team revenues as a function of the team’s performance, as measured by winning rates and post season success.  The key insight is that when a team achieves revenues that greatly exceed what would be expected based on team performance, it is an indication of significant brand equity.

There are, of course, other possible measures of brand equity.  Consumer surveys could assess fan awareness, or we could look at a school’s ability to recruit five-star student athletes.  The advantage of a revenue premium approach is that the brand equity measure is directly determined by market performance.  This is not to say that a revenue premium approach is not without faults.  Schools may face short- or medium-term constraints that prevent them from fully exploiting the value of their brands.  For example, while the Duke Blue Devils score very well in our analysis, Duke University could likely increase overall revenue by replacing Cameron Indoor Stadium with a larger facility.

For now we have conducted two analyses related to revenue based brand equity premiums.  The first is a ranking of teams for the 6 major conferences.  Secondly, we have also ranked all the conferences in Division 1 basketball.

Our hope is that fans find these analyses of interest.  We will be happy to respond to questions about the method and to engage in debate.  We also expect to frequently update the site with additional analyses, insights and updates.

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