Module 9 Flashcards
“If this business were split up, I would give you the land and bricks and mortar, and I
would take the brands and trade marks, and I would fare much better than you.”
- John Stuart, Chairman of Quaker
Seven important customer-related benefits of positive brand equity
- Different perceptions and interpretations of product performance.
- Enjoy greater loyalty – less vulnerable to competitive marketing actions.
- Command larger margins – more inelastic responses to price increases and more elastic responses to price decreases.
- Receive greater trade cooperation and support.
- Increase marketing communication effectiveness.
- Yield licensing opportunities.
- Support brand extensions.
Methods of Measuring Sources of Brand Equity
- Comparative Methods
- Holistic Methods
Comparative Methods
research studies or experiments that examine consumer attitudes and behavior toward a brand to directly estimate the benefits arising from having a high level of awareness and strong, favorable, and unique brand associations
Comparative Methods
Approaches
Brand-Based Comparative Approaches
Marketing-Based Comparative Approaches
Conjoint Analysis
Holistic Methods
Approaches
Residual Approaches
Valuation Approaches
Brand-Based Comparative Approaches uses experiments in which
one group of consumers responds to an element of the marketing program or some marketing activity when it is attributed to the target brand, and another group responds to that same element or activity when it is attributed to a competitive or fictitiously named brand.
The classic example of the brand-based comparative approach is
“blind testing” studies in which consumers examine or use a product with or without brand identification.
Brand-based comparative approaches are also useful to determine
brand equity benefits related to price margins and premiums.
Brand-Based Comparative Approaches Advantages
Effective in isolating the value of a brand
Useful in developing pricing and advertising strategies
Ability to study an infinite variety of marketing activities
Works well for new sales, promotions, campaigns or brand extensions
Brand-Based Comparative Approaches Disadvantages
Does not work well if a marketing activity is already strongly identified with the brand
Results may be distorted because simulations and concept statements may unnecessarily highlight particular product characteristics
Requires that scenarios be as realistic as possible
Detailed concept statements can be used when
it is too difficult for consumers to examine or experience the marketing program without being aware of the brand
Brand-Based Comparative Approaches: An Example
Deutsche Telecom
Deutsche Telecom has invested much time and money in recent years in building its T-Mobile communication brand. In the U.K., however, the company leases its network lines to competitor Virgin Mobile. As a result, the audio quality of the signal that a T-Mobile customer receives in making a call should be virtually identical to the audio quality of the signal for a Virgin Mobile USA customer. Despite that fact, research has shown that VM customers rate their signal quality significantly higher than do TM customers. The strong Virgin brand image appears to cast a halo over its different service offerings, literally causing customers to change their impressions of product performance.
Marketing-Based Comparative Approaches hold the brand fixed and
examine consumer response based on changes in the marketing program
Marketing-Based Comparative Approaches–
Many firms try to assess
price sensitivity and thresholds for different brands
Marketing-Based Comparative Approaches Applications:
Explore price premiums’ effect on switching, consumer evaluations of marketing activities, brand extensions, etc.
Can also be used to assess consumer response to different advertising strategies, executions or media plans through multiple test markets
Marketing-Based Comparative Approaches Advantages
Very easy to implement
Can compare any set of marketing actions for the brand
Marketing-Based Comparative Approaches Disadvantages
May be difficult to discern whether consumer responses are caused by brand knowledge or generic product knowledge
To determine whether consumer response is specific to the brand, similar tests must be conducted with
competing brands.
Conjoint Analysis
Survey-based multivariate technique that enables marketers to promote the consumer decision process with respect to products and brands.
In a Conjoint Analysis, consumers are asked to choose among a number of
carefully designed product profiles.
In a Conjoint Analysis, researchers can determine the trade-offs consumers are making between
various brand attributes and the importance they are attaching to them.
Ex: Green & Wind’s classic study examined consumer evaluations of a spot-remover product
Based on 5 attributes: package design, brand name, price, Good Housekeeping seal, and money-back guarantee
Conjoint Analysis Advantages
Allows simultaneous study of different brands and aspects of the product or marketing program
Can uncover information about consumers’ responses to different marketing activities for both the focal and competing brands
Conjoint Analysis Disadvantages
Marketing profiles may violate consumers’ expectations based on what they already know about brands
During a Conjoint Analysis, we must take care that consumers do not evaluate
unrealistic product profiles or scenarios.
Holistic Methods places an overall value on
the brand in either abstract utility terms or concrete financial terms.
Holistic Methods attempt to “net out” various considerations to
determine the unique contribution of the brand.
Holistic Methods
Approaches
Residual Approach
Valuation Approach
Residual Approach
Examines the value of the brand by subtracting consumers’ preferences for the brand — based on physical product attributes alone — from their overall brand preferences.
