Module 7 Flashcards
Virtually every marketing dollar spent today must be justified as both
effective and efficient in terms of “return of marketing investment” (ROMI).
Some observers believe that up to 70% (or even more) of marketing expenditures may be devoted to
programs and activities that cannot be linked to short-term incremental profits, but yet can be seen as improving brand equity.
Marketers must go beyond ROI measurements to address whether
brands truly are assets that enable the business to generate superior returns over time.
To qualify a brand as an asset in financial terms, marketers need to measure it in terms of
its ability to generate future cash flows.
Marketers can create value only by changing
customer behavior- changes in attitude don’t generate cash flow.
Marketers should measure brand equity in a way that captures
the source and scale of the emotional component the brand adds to functionality of the product.
To understand how to design and implement a brand equity measurement and management system, a __ __ needs to be taken.
broader perspective (than just the CBBE model)
The brand value chain is a
structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value.
The Brand Value Creation Process:
Stage 1 : Firm invests in marketing program
Stage 2 : Associated marketing activity then affects customer mind set
Stage 3 : This mind set, across a broad group of customers, produces the brand performance
Stage 4 : Finally the investment community considers this market performance
The Brand Value Chain: Value Stages
- Marketing Program
-Investment
-Product
-Communications
-Trade
-Employee
-Other - Customer Mindset
-Awareness
-Associations
-Attitudes
-Attachment
-Activity - Market Performance
-Price premiums
-Price elasticity
-Market share
-Expansion success
-Cost structure
-Profitability - Shareholder Value
-Stock price
-P/E ratio
-Market capitalization
The Brand Value Chain: Multipliers
- Program Quality Multipliers
-Clarity
-Relevance
-Distinctiveness
-Consistency - Marketplace Conditions Multiplier
-Channel support
-Consumer size and profile
-Competitive reactions - Investor Sentiment Multiplier
-Market dynamics
-Growth potential
-Risk profile
-Brand contribution
Marketing Program Investment
Any marketing program investment that can contribute to brand value development, intentionally or not, falls into this first value stage
Program Quality Multiplier
The ability of the marketing program to affect customer mind-set will depend on its quality.
Must be clear, relevant, distinct, and consistent.
Customer Mind-Set
In what way have customers been changed as a result of the marketing program?
Brand awareness
Brand associations
Brand attitudes
Brand attachment
Brand activity
Marketplace Conditions Multiplier
The extent to which value created in the minds of customers affects market performance depends on factors beyond the individual customer.
Market Performance
Brand value is created by how customers react in 6
main ways….
- Price premiums
- Price elasticities
- Market share
- Brand expansion
- Cost structure
- Brand profitability (result of the previous 5 factors)
Investor Sentiment Multiplier
Financial analysts and investors consider a host of
factors in arriving at their brand valuations and
investment decisions
Shareholder Value
Three vital indicators:
+
Based on all available current and forecasted
information about a brand, as well as many other
considerations, the financial marketplace formulates
opinions and assessments that have very direct
financial implications for the brand value.
Three vital indicators:
Stock Price
Price / Earnings multiple
Overall market capitalization for the firm
Value creation begins with
the marketing program investment.
Value creation requires more than
the initial marketing investment.
Tracking value creation that make
marketing research and
intelligence efforts easier.
Both the __ and the __ of some brand value chain measures could matter.
mean, variance
Tracking studies involve information collected from
consumers on a routine basis over time
Often done on a “continuous” basis.
Provide descriptive and diagnostic information.
Tracking studies provide consistent baseline information to facilitate
day to day decision making.
Tracking an individual branded product requires measuring
brand awareness and image, using both recall and recognition measures and moving from more general to more specific questions.
Benefit associations are often important determinants of behavior. Examples:
Functional performance
Convenience & ease of accessing the product/service
Brand personality
Pricing & value component
Marketers may also want to track the corporate or family brand
separately or concurrently (or both) with individual products.
When a brand is identified with multiple products, one important issue is
which particular products are most influential in affecting consumer perceptions about the brand.
If your tracking covers diverse geographic markets, then you may need a
broader set of background measures to put the brand development in those markets in the right perspective.
Brand Context Measures
Economic Indicators
Retail
Technology
Personal Attitude and Values
Media Indicators
Demographic Profile
Other Products and Services
Attitude to Brands and Shopping
How to Conduct Tracking Studies
Whom To Track:
Current customers; but can also be used to monitor nonusers of the brand even of the product category as a whole.
When & Where To Track:
One useful approach for monitoring brand associations is continuous tracking studies, which collect information from consumers continually over time.
How To Interpret Tracking Studies:
Tracking measures must be as reliable and sensitive as possible
Set appropriate benchmarks
Design targets with allowance for competitive considerations and the nature of the category
AC Nielsen’s Alastair Gordon highlights some of the reasons brand equity or health metrics have not always been helpful:
- Too much focus on “top–level” boxes or scores and indices.
- Targets that are not set at all, are unattainable, or are inappropriate for the management level they are given to.
- Metrics treated as an independent research study and not integrated with other information such as category trends.
- Too much focus on consumer attitudes and emotional connections without a link to behaviors.
Brand Equity Charter Components
Define the firm’s view of the brand equity concept and explain why it is important
Describe the scope of key brands in terms of associated products and the manner by which they have been branded and marketed
Specify what the actual and desired equity is for a brand at all relevant levels of the brand hierarchy
Explain how brand equity is measured in terms of the tracking study and the resulting brand equity report
Suggest how marketers should manage brand equity with some general strategic guidelines
Outline how to devise market programs along specific tactical guidelines, including criteria for ad evaluation and brand name choice
Specify the proper treatment of the brand in terms of trademark usage, packaging, and communications
has undergone a brand transformation, including quirky ads and co-promotion, to help revitalize sales.
Burger King
The combined print and TV “Got Milk?” campaign has helped to
stem the decline in milk sales.
Brand Equity Report
Assemble the results of the tracking survey and other relevant performance measures for the brand into a brand equity report or scorecard to be distributed to management on a regular basis
The brand report should describe
what is happening with the brand as well as why it is happening
One section of the brand equity report should summarize
consumers’ perceptions of key attributes or benefit associations, preferences, and reported behavior
Another section of the brand equity report should include more descriptive market-level information such as the following:
Product shipments
Retail category trends
Relevant cost breakdowns
Price and discount schedules
Sales and market share information
Profit assessments
Brand Equity Report Goal
Identify key brands for the next fiscal period.
Brand Equity Report Activity
Locate current status on a baseline, compared with brands owned by the firm or competition.
Brand Equity Report Measurement
Allocate inputs with specific objectives like changing consumer behavior and increasing purchase intensity.
Brand Equity Report Evaluation
Assess the outputs.
Brand Equity Report GAME
Goal
Activity
Measurement
Evaluation
Harrah’s Casino focuses on three report metrics:
Share of its customer’s gaming dollars (share of wallet)
Loyalty program updates (an indicator of increased concentration of a customer’s gaming at Harrah’s)
Percent of revenue from customers visiting more than one of Harrah’s 30 casinos (an indicator of cross-selling)
Managers must clearly define organizational responsibilities and
processes with respect to the brand.
Brands need
constant, consistent nurturing to grow… weak brands
often suffer from a lack of discipline, commitment, and investment in
brand building
Overseeing Brand Equity:
Person responsible for providing central coordination; overseeing the implementation of the brand equity charter and brand equity reports; ensuring that product and marketing actions across divisions and geographic boundaries reflect their spirit as closely as possible; and maximizing long-term equity of the brand. Eg: CBO
Organizational Design and Structures:
Firms should manage its marketing function to optimize brand equity.
Several trends have emerged in organizational design and structure that reflect the growing recognition of the importance of the brand and the challenges of managing brand equity carefully.
Managing Marketing Partners:
Performance of a brand also depends on the actions taken by outside suppliers and marketing partners, thus these relationships have to be managed carefully.
Overseeing Brand Equity:
Scot Bedbury, who helped direct the Nike and Starbucks brands during some of their most successful years, advocates periodic brand development reviews. He suggests the following topics and activities during these reviews:
- Review brand-sensitive material
- Review the status of key brand initiatives
- Review brand sensitive projects
- Review new product and distribution strategies with respect to core brand values
- Resolve brand positioning conflicts
IBM has carefully managed its brand image as it has put more emphasis on its
service offerings
Organizational Design and Structure
In considering the future of brand management, Hulbert, Berthon, and Pitt make several observations and forecasts:
- It is incumbent upon the whole organization to commit to a focus on the customer, and brands will increasingly become a means to that end
- Marketing must become far more active in initiating and driving innovation
- Information technology will increasingly become a tool for allowing and maintaining large-scale customer and consumer interaction and conversation
- The onus for ownership and management of change in brands and the brand management system will increasingly shift to senior management
P&G uses __ __ __to handle all its different brands
category management principles
T/F
GM has struggled to adopt the right approach to brand management for its portfolio of brands
T
Increasingly firms have been consolidating their
marketing partners and reducing the number of their outside suppliers.
The trend especially apparent with global advertising accounts where a number of firms have placed most, if not all, their business with
one agency.
Factors such as cost efficiencies, organizational leverage, and creative diversification affect the
number of outside suppliers the firm will hire in any one area.
From a branding perspective, one advantage of dealing with a single major supplier such as an ad agency is
the greater consistency in understanding and treatment of a brand.
