Managing Customers for Profit

1. Managing Customers for Profit V. Kumar Chapter – 11 Linking Investments in Branding to Customer Profitability Instructor’s Presentation Slides

2. Relevant Issues

3. Samsung and Nokia Example Figure 11.1 Brand Value Net Income* * The net income has been scaled by a factor of 1000 to make it comparable Figure 11.2 Brand Value Net Income* * The net income has been scaled by a factor of 1000 to make it comparable

4. Framework for Linking Value to CLV • Linking the IBV to the CLV is a dynamic process, where each aspect of the individual’s brand value such as brand knowledge, brand attitude, brand behavior intention and brand behavior contributes towards the individual’s lifetime value with the firm.

5. Firm-Level Firm Actions Marketing Communications Corporate Activities Marketing Mix Activities Individual-Level Firm Actions Marketing Communications Components of an Individual’s Brand Value Behavior Outcome Brand Knowledge Components of an Individual’s CLV Brand Behavior Brand Advocacy Brand Awareness Marketing Cost Brand Loyalty Premium Price Behavior Brand Image Purchase Frequency Contribution Margin Brand Attitude Brand Behavior Intention Brand Trust Brand Experience Purchase Intention Customer Referral Brand Affect Framework for Linking Value to CLV Figure 11.3

6. Components of Individual Brand Value

7. How to Link IBV and CLV

8. Predicted Behavior Outcomes

9. Implementation Estimated Bob’s Individual Brand Value

10. Implementation (cont’d) Estimated and Optimized Bob’s Individual Brand Value Optimized Estimated

11. Customer Lifetime Value CLV Curve Measured after New Brand Strategy CLV Curve Measured before New Brand Strategy Time Implementation (cont’d)

12. Customer Lifetime value Brand Management for Each Individual Traditional CLV Curve Time Acquisition Retention Attrition • Build desirable brand knowledge • Cultivate favorable brand attitude • Encourage positive brand behavior • Maintain desirable brand knowledge • Strengthen favorable brand attitude • Further develop positive brand behavior • Forecast with signaling brand behavior • Prevent with brand investment • Win back with new brand strategy OPTIMAL RESOURCE ALLOCATION Marketing Communications Corporate Activities Marketing Mix Activities Implementation (cont’d) Customer Life Cycle Brand Management: An Integrated Framework

13. How to acquire customers with potentially high CLV • Existing Customers with High IBV • Profile of High IBV Customers • Prospects Group • Selecting Potential customers

14. End of Chapter 11