©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1 1 Enhancing Brand Equity and Accountability

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Objectives After reading this chapter you should be able to: 1.Explain the concept of brand equity from both the company’s and the customer’s perspectives. 2.What are some of the positive outcomes that result from enhancing brand equity? 3.Describe the different models of brand equity from the customer’s perspective. 4.Understand how marcom efforts must influence behavior and achieve financial accountability. 2

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Are There Too Many Social Media Brands? 3

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Which Brand Is “Best”? (Measures are important!) 1. Harris Interactive Poll (2400 adults) “Which three brands do you consider to be the best?” [2007 – Coca-Cola, Sony, Toyota] 2. Harris Interactive Brand Equity (EquiTrend) Study (25,000 adults) Familiarity, quality, purchase considerations, brand expectations, distinctiveness, trust [2008 – Heinz, M&Ms, Hershey’s; 2010 – Target, Nintendo, M&Ms] 3. Interbrand’s “Best Global Brands” Brand sales as a % of total company sales Earnings (profits) for a brand NPV of the brand earnings, discounted by interest rates, risk, market leadership, stability and global reach [2007 – Coca-Cola, Microsoft, IBM; 2010 – IMB #2] 4. Young & Rubicam’s Brand Asset Valuator (200,000 adults) Brand strength: differentiation, relevance Brand stature: esteem, knowledge 4

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Brand Defined Brand A name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of the competition. 5

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Definition of Brand Equity Brand Equity the goodwill (equity) that an established brand has built up over its existence. 6

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. As Brand Equity Increases… A higher market share is achieved Brand loyalty increases Premium prices can be charged The brand earns a revenue premium 7

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Revenue Premium The revenue differential between a branded item and a corresponding private-labeled item. 8 Revenue premium= (volumeb)(priceb)-(volumepl)(pricepl)

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Children’s Taste Preferences 9

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Young & Rubicam’s “Brand Asset Valuator” and Creating Strong Brands Methodology: Interviews with over 200,000 consumers 40 countries 19,000 brands 40 measurement scales “DREK” sequence (measures of brand equity): differentiation -> relevance -> esteem -> knowledge Power Grid: brand strength (differentiation, relevance) brand stature (esteem, knowledge) Brand Development Cycle 10

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure 2.1: Power Grid and Brand Development Cycle 11

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure: 2.2: A Customer-Based Perspective on Brand Equity 12

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure 2.3: Brands and Their Management 13

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Brand Concept and Brand Concept Management Brand concept: the specific meaning that brand managers create and communicate to the target market. this is accomplished by appeals to functional, symbolic, and experiential needs Brand concept management: the analysis, planning, implementation, and control of a brand concept throughout the life of a brand. 14

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. How Brand Concepts Can Be Developed Functional needs (solving problems): products that attempt to fulfill the consumer’s consumption- related problems Symbolic needs (associating the brand with symbolic objects): directed at consumers’ desire for self-enhancement, role position, group membership, and belongingness Experiential needs (sensory pleasures, personal experience): products that provide sensory pleasure, variety, and/or cognitive stimulation. 15

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Dimensions of Brand Personalities Sincerity (e.g., Disney) Excitement (e.g., Hummer) Competence (e.g., Toyota) Sophistication (e.g., Rolex, Cartier) Ruggedness (e.g., Timberland boots) 16

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Illustration of a Sincere Brand--Disney 17

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Illustration of a Sophisticated Brand 18

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Illustration of a Rugged Brand 19

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Three General Ways Brand Equity is Enhanced Allow brand to speak-for-itself Create message-driven associations Leveraging current meanings or associations 20

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure 2.5: Leveraging Brand Meaning from Various Sources 21

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Co-branding and Ingredient Branding Co-branding A partnership between two brands Ingredient branding Inclusion of one brand within the other 22

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Benefits Result from Enhancing Brand Equity? Increased consumer loyalty Long-term growth and profitability for the brand Maintain brand differentiation from competitive offerings Insulate brand from price competition 23

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Measuring World-Class Brands Quality Salience Equity Evaluating World-Class Brands 24

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Measuring World-Class Brands Quality: score ranging from 0 to 10 (unacceptable/ poor to outstanding/ extraordinary) Salience: score ranging from 0 to 100 (percentage of people who feel sufficiently well informed about a brand to rate it) Equity: score ranging from 0 to 100 (determined by multiplying the quality and salience scores and dividing the product by 10) 25

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Equitrend’s Top-Ten World-Class Brands Overall (2009) 26

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Interbrand’s Top 20 Global Brands (2010) 27

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Affecting Behavior and Achieving Marcom Accountability Creating brand awareness and boosting brand image serve little positive effect unless individuals make purchases or engage in some other form of desired behavior. 28

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ROMI The effect of marcom, or of its specific elements such as advertising, can be gauged in terms of whether it generates a reasonable revenue return on the marcom investment. In marketing, return on investment is called return on marketing investment (ROMI) (In accounting, ROI = net income/avg. O.E.) 29

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Difficulty of Measuring Marcom Effectiveness Choosing a Metric Gaining Agreement Collecting Accurate Data Calibrating Special Effects 30

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Choosing a Metric Change in brand awareness Improved consumer attitude toward the brand Increased purchase intentions Larger sales volume (e.g., via scanner data; marketing mix models) 31

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Gaining Agreement Finance Departments’ Measures of Success : Discounted cash flows Net present values of investment decisions Marketing Departments’ Measures of Success: Measures of brand awareness, image, equity, sales, … 32

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Collecting Accurate Data and Calibrating Special Effects What exact sales figures should be used to calculate sales? How much relative effect does each program element have on sales volume compared to the effect of other elements? 33

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing-Mix Modeling – Example 34