Measuring The Long-Term Health of Selected Brands in South Africa Using the Brand Health Index - Research

Brand building is crucial in any competitive market. A strong brand can create opportunities for growth, a larger market share, establish an entry barrier for competitors and help maintain consumer loyalty. A brand that performs at its optimum capacity is an asset to a company and is linked to a high brand health index score. Using the Brand Health Index (BHI), this paper evaluated the brand health of selected companies on the Johannesburg Stock Exchange (JSE) over the period December 2001 to December 2017. The aim of this study was to evaluate the health of selected brands of South African companies listed on the JSE and determine the relationship between brand health and profitability. A non-probability sample of 28 brands from the target population that consisted of brands competing on the Johannesburg Stock Exchange in South Africa were selected for the study. To measure the financial value of the health of a brand over time, the regression method was applied to determine the relationship between BHI and financial performance. The study used two-way cluster-robust error regression and found that there is a positive and significant relationship between BHI and Earnings Per Share (EPS) as well as Return On Asset (ROA) on listed companies on the JSE and secondly shows that a longer-term BHI measure - 10-year BHI - has a better explanatory power than shorter-term BHI measures namely, a 5-year, 6-year, 7-year, 8-year and 9-year BHI. This article provides evidence of the relationship between BHI and earnings per share (EPS), and also a significant relationship between BHI and return on asset (ROA).