Week 3

Question 1

Fama-french four-factor model

Answer 1

• excess return on a broad market portfolio (market risk factor, CAPM)
• difference in return between a large-cap and small-cap portfolio (size risk factor)
• difference in return between high and low book-to-market stock (value risk factor)
• momentum (how managerial actions can add or subtract value)

Question 2

earnings surprises

Answer 2

difference between analysts’ consensus forecasts and the realized value of earnings

Question 3

Cahart four-factor financial model

Answer 3

• based on cross-sectional inferences
• may be subject to omitted variables

Question 4

2 types of event studies

Answer 4

• stock return models (single equation, limited ability to represent temporal chain)
• persistence modeling (system of equations)

Question 5

cumulative abnormal return

Answer 5

• abnormal returns relative to a model (CAPM)
• short-term horizons

Question 6

buy and hold return

Answer 6

abnormal return an investor would earn from holding stock over an extended period

Question 7

calendar portfolio

Answer 7

• all stocks of firms with the event as unit of analysis
• measures long-term abnormal returns of portfolio

Question 8

matched-pair return model

Answer 8

only stocks of the focal firm and matched firm

Question 9

systematic risk

Answer 9

part of the total risk explained by changes in overall market portfolio returns due to inflation, interest rate changes, etc.

Question 10

measuring investor response using event studies… why?

Answer 10

it eliminates the dependence on accounting informations, assuming that markets are efficient and allow for an inference of cause and effect

Question 11

measuring investor response using calendar portfolio theory..

Answer 11

• create portfolio including all stocks of firms with the event as unit of analysis
• intemporal variation of portfolio returns
• average is measures, abnormal performance hard to identify

Question 12

measuring investor response using persistence modeling

Answer 12

each equation tracks the behavior of another important agent

Question 13

biases in investor response to marketing actions

Answer 13

• investor overconfidence bias
• investor familiarity bias
• loss-aversion bias
• influenced by persuasive communication of companies and analysts

Question 14

what is marketing-excellence? (previous definition)

Answer 14

a strategy-like activity or process that concerns the firms’ superior ability to perform essential customer-facing activities

Question 15

3 new insights with regards to marketing excellence

Answer 15

• aspirational and difficult to achieve
• means of achieving organic growth
• refers to marketing ecosystem priority, end-user priority, and marketing agility priority

Question 16

new definition marketing excellence

Answer 16

a type of firm strategy focused on achieving organic growth by executing the marketing ecosystem priority, the end-user priority and the marketing agility priority

Question 17

knowledge transfer-based marketing ecosystem

Answer 17

firm can build a symbiotic network of actors in which it exchanges knowledge and cooperates with other actors

Question 18

offering-based marketing ecosystem

Answer 18

firm builds an interacting network of actors, in which firm dominantly positions itself in the ecosystem by owning offerings provided

Question 19

owned platform-based ecosystem

Answer 19

firm passively participated and dominantly positions itself in the ecosystem by owning the platform

Question 20

open source platform-based ecosystem

Answer 20

passively participates and equally positions itself in the ecosystem by owning the platform but not taking a dominant position in it

Question 21

Burggraeve’s 8 fundamentals new model…

Answer 21

• pricing power (why)
• purpose (why)
• marketing organization (who)
• marketing expertise (who)
• brand health (what)
• value propositions (what)
• way of marketing (how)
• excellence culture (how)

Question 22

pricing power

Answer 22

increase WTP

Question 23

purpose

Answer 23

clearly articulate existential reason for being towards all stakeholders

Question 24

marketing organization

Answer 24

marketing should be a line role

Question 25

marketing expertise

Answer 25

• attract the best marketing talent
• marketing training ground for professionals

Question 26

brand health

Answer 26

results of marketing inputs and its outputs –> brand perception

Question 27

value propositions

Answer 27

• benefits
• price
• reference

Question 28

the way of marketing

Answer 28

strategic tools and processes used across brands and regions

Question 29

excellence culture

Answer 29

• commitment to systematic learning and continuous improvement as a way of habit
• driven to be the best