For example, McDonalds benefited in the s from the marketing woes of its main rival, Burger King. On the other hand, MasterCard has had to contend for the past decade with two strong, well-marketed brands in Visa and American Express and consequently has faced an uphill battle gaining market share.
Brand Performance The customer mindset and marketplace multipliers affect how customers react or respond in the marketplace to the brand in a variety of ways. There are six key aspects or dimensions of that response. The first two related dimensions are price premiums and price elasticities.
How much extra are customers willing to pay for a comparable product because of its brand? And how much does their demand for the brand increase or decrease when the price rises or falls? A third dimension, market share, measures the success of the marketing program in driving brand unit sales.
Taken together, the first three dimensions determine the direct revenue stream attributable to the brand over time. Brand value is created with higher market shares and greater price premiums, which result partly from more elastic responses to price decreases and inelastic responses to price increases. The fourth dimension is the success of the brand in supporting line and category extensions and new product launches into related categories.
This dimension captures brand expansion potential and the ability to add enhancements to the revenue stream. The fifth dimension is cost structure or, more specifically, the ability to reduce marketing program expenditures for the brand because of the prevailing customer mindset.
In other words, because customers already have favorable opinions and knowledge about a brand, any aspect of the marketing program is likely to be more effective for the same expenditure level. Marketplace Conditions Multiplier Success with consumers or customers may not translate to success in the marketplace, however, unless other conditions also prevail. The ability of the customer mindset to create. When combined, these five factors lead to brand profitability, the sixth dimension.
In short, brand value is manifested at this stage by profitable sales volumes. Investor Sentiment Multiplier How much the value manifested in the performance of a brand translates to shareholder value again depends on external factors reflected in the investor sentiment multiplier.
Financial analysts and investors consider a host of factors in arriving at their brand valuations and investment decisions. First, what are the dynamics of the financial markets as a whole e. Second, whats the growth potential or what are the prospects for the brand and its industry? For example, how helpful are the facilitating factors and how inhibiting are the hindering external factors that make up the firms economic, social, physical, and legal environment?
Third, what is the risk profile for the category in general and the brand in particular? How vulnerable is the brand likely to be to various facilitating and inhibiting factors? Fourth, how important is the brand as part of the firms brand portfolio and all the brands it has? Said differently, big volume and flagship brands have more impact than small, mature ones. An important component of the investment multiplier relates to the option value of potential brand expansion.
This component depends, in addition to factors such as competition and economic growth, on the ease with which the firm can expand into other categories. The ease of expansion, in turn, depends on the customer mindset, which determines what markets the brand has the customers permission and support to expand into.
For example, in spite of having the name electric in its name, GE customers thought it was also appropriate for the company to make gas rangesand even thought that they didbefore the company began to do so. The value created for the brand is most likely to be reflected in greater shareholder value when the firm is operating in a healthy and growing industry without serious environmen tal hindrances or barriers and when the brand contributes a significant portion of the firms revenues and appears to have bright prospects.
An extreme example of brands that benefited from a strong investor sentiment multiplierat least for a whilewere the numerous dot-com brands such as Priceline and eToys.
The huge premium placed on basically negative brand performance, however, quickly dissipated. On the other hand, many firms have lamented what they perceive as under-valuation by the market. For example, repositioned companies such as Corning found it difficult to realize what they viewed as their true market value due to lingering investor perceptions from their past i. Of course, they were also subject to the recent general devaluation of the tech sector.
Repeat rate Market share Price premium Revenue premium Marketing mix elasticities Brand extension success. Shareholder Value Based on available information about a brand, as well as many other considerations, the financial marketplace formulates opinions and makes various assessments that have direct financial implications for the brand value. Other measures such as economic value added are also useful.
These may be fairly insensitive indicators, however, for a brand that accounts for only a small portion of the value to a firm. Tracking Value Creation Marketers create value first through shrewd investments in their marketing program and by maximizing, as much as possible, the program quality, marketplace conditions, and investor sentiment multipliers that translate those initial expenditures into bottom-line financial benefits. The brand value chain thus provides a structured means for managers to understand where and how value is created and suggests where to look to improve that process.
Certain stages, however, will be of greater interest to different members of the organization. Brand and category marketing managers are likely to be more interested in the customer mindset and the impact of the marketing program on customers.
Chief marketing officers are likely to be more interested in brand performance and the impact of customer mindset on actual marketplace behaviors. A managing director, CEO, or CFO is likely to be mor e interested in shareholder value and the impact of brand performance on investment decisions and market capitalization. The brand value chain provides a detailed road map for tracking value creation that should facilitate marketing research and intelligence efforts to inform each of these three different constituents.
As defined, each of the stages and multipliers has a set of assessment measures Exhibit 2 , although customer mindset measures by far are the most commonly available in the marketing function. In general, there are three main sources of information for understanding the brand value chain, and each source of information taps into one value stage and one multiplier. The first stage, the marketing program investment, is straightforward and can come from the marketing plan and budget.
Customer mindset and the program quality multiplier can both be assessed by customer surveys. Brand performance and the marketplace conditions multiplier can both be captured through market scans e.
What It Takes A number of implications arise from the brand value chain. First, value creation begins with marketing program investment. Therefore, a necessarybut not sufficient condition for value creation is a well-funded, designed, and implemented marketing program.
Its rare that marketers get something for nothing. Nevertheless, value creation involves more than the initial marketing investment. Each of the three different multipliers can increase or decrease market value as it moves from stage to stage. Unfortunately, in some cases, factors that can potentially inhibit value creation may be largely out of the hands of the marketer. Recognizing the uncontrollable nature of these factors is important to help put in perspective the relative success or failure of a marketing program.
Just as in sports where coaches should not be but often are held accountable for unforeseen circumstancessuch as injuries to key players or financial hardships that make it difficult to attract top talent marketers cannot logically be held accountable for certain market forces and dynamics with their brands.
Specifically, the farther to the right along the brand value chain marketers get, the less control they have over brand value creation.
So its critical to generate momentum with the marketing program at the beginning of the brand value chain so value will carry through the rest of the chain. That said, each multiplier in the brand value chain must be maximized to the greatest extent possible to ensure that the initial value created by the marketing program has the best opportunity to affect stock price.
Beyond designing a highquality marketing program to maximize the program quality. Improving these multipli ers involves a myriad of different activities. But perhaps one of the most important is to communicate the amount and nature of brand value thats been created at the previous stage to all relevant parties in the next stage and make them fully aware of the potential benefits that could accrue from maintaining and potentially enhancing that brand value.
For example, increasing the marketplace conditions multi plier could involve making sure that retailers and other intermediaries are aware of the brand value that has been potentially created by the marketing program e. Enhancing the investment community multiplier involves ensuring that investor relations and other such activities appreciate the value that has been created in the marketplace as well as future growth plans.
For example, attempts to convey the value at this stage may include name changessuch as when American Home Products changed their name to Wyethin order to signal to the investment community the category in which a company intends to compete. Several possible enhancements to the brand value chain could expand its relevance and applicability. First, a number of feedback loops are possible.
For example, stock prices can have an important effect on employee morale and motivation and hence on the program quality multiplier. Second, in some cases, value creation may not occur sequentially. For example, stock analysts may react directly to an ad campaign for the brandeither personally or in recognition of public acceptanceand factor those reactions directly into their investment assessments.
Third, some marketing activity may have effects that are only manifested over the long term. For example, cause-related or social responsibility marketing activity might affect customer or investor sentiment slowly over time.
Fourth, both the mean and variance of some of the measures of the brand value chain could matter. For example, in terms of the customer mindset, a niche brand may receive very high marks but only across a very narrow range of customers. Nevertheless, such a brand may be much more valuable at least potentially than a bigger brand that had some low or average position. In spite of such caveats, however, the brand value chain shows considerable promise both at the conceptual level to organize managerial decisions and as a basis for measuring and assessing marketing performance.
He may be reached at kevin. Donald R. He may be reached at dlehmann msi. Open navigation menu. Close suggestions Search Search. User Settings. Skip carousel. Carousel Previous. Carousel Next. What is Scribd? How Do Brands Create Value? Uploaded by Anonymous fZqz9Z2. This influences customers who, in turn, affect how the brand performs in the marketplace and is ultimately valued by the financial community.
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Flag for inappropriate content. Download now. Save Save How do brands create value? For Later. Original Title: How do brands create value? Related titles. Carousel Previous Carousel Next. Building Strong Brands David a. Aaker What is Brand Equity Associations could be positive or negative.
This refers to the extent of customers who already use the brand and talk to their peers about it, seeking out information about the brand accordingly. What do you associate the brand with? Would that particular be fit for any formal events? Have you started talking to your friends about that brand? What are their views on it? Would they be thinking the same? Or perhaps it will lead to an argument due to differing point of views.
Marketplace conditions are the external factors that affect the overall performance of a marketing program investment. A great marketing investment is one that utilises every available channel, online and offline. Companies can also use its marketing partners to reinforce its marketing program investment, adding headcounts of audiences exposed to the marketing program investment.
Companies can charge for a premium price when customers have a strong positive mindset towards the brand. In addition, if the company decides to increase the price of their product or service, it will not affect the purchasing behavior of their customers. A successful marketing program investment, directed to a brand extension, will provide additional opportunities for companies to add a product line or depth, thus adding on a new revenue stream.
Creating a strong brand gives companies a competitive edge and stretches the profitability of the company. Market performance will affect the value of the shareholder. However, investor sentiment will greatly influence its effect. Market performance will affect the shareholder's value.
With given information about the brand and several other considerations, the financial marketplace will then drive arguments and evaluations that will influence financial implications of the value of the brand.
Hear from your target consumers what they think about your brand now. Check out our brand score page to learn more. Consumer Understanding. Brand Insights. Product Insights. Campaign Effectiveness. Concept Testing. New to Research. Start being data-driven in your decision making. Brand Health Audit Product Audit. Why us. We ARE Vase. Login Get started. We should invest in branding, because life is full of decisions. These numbers are made up of different kinds of decision we take. For example: What should I eat?
What should I wear today? Which directions should I take to the office? How should I act and behave in front of people? Should I give my seat to this elderly person? Until this, What should I purchase? Which product do I need? Which one is the best for me? Name similar products and the benefits you will gain, and choose what you would much prefer, for example: Apple vs Samsung, Mercedes vs BMW, Perodua vs Proton Your choices are more likely based on the brands itself, how you perceive the product in terms of its performance and its image.
How Do Brands Create Value? The Keller and Lehmann study will explain so, as displayed on this linear framework below: There are four value stages in total, and there are key elements that build up each value stage. Marketing Program Investment Brand value chain starts with marketing program investment. Relevance Marketing program should be relevant to your customers. Consistency Your marketing program should be consistent and include integration from different channels that the program utilises.
Awareness Awareness consists of depth, breadth and usage of the brand. Activity This refers to the extent of customers who already use the brand and talk to their peers about it, seeking out information about the brand accordingly. To try out the customer-based brand building blocks, here are a few example questions: What do you think is the best brand for a car? Whether you own one or plan to own one Why do you think it is the best car?
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