 2007 Thomson South-Western

1. Chapter Two Marcom’s Challenges: Enhancing Brand Equity, Influencing Behavior, and Being Accountable  2007 Thomson South-Western

2. Chapter Two Objectives • Explain the concept of brand equity from both the company’s and the customer’s perspectives. • Describe the positive outcomes that result from enhancing brand equity. • Present a model of brand equity from the customer’s perspective. • Examine how marcom efforts must influence behavior and achieve financial accountability.

3. 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.

4. Definition of Brand Equity Brand equity can be considered either from the perspective of the organization that owns it or from the vantage point of the customer.

5. As Brand Equity Increases… • A higher market share is achieved • Brand loyalty increases • Premium prices can be charged • The brand earns a revenue premium

6. Revenue Premium The revenue differential between a branded item and a corresponding private labeled item. Revenue premium= (volumeb)(priceb)-(volumepl)(pricepl)

7. A Customer-Based Perspective on Brand Equity

8. Two forms of Brand Knowledge Brand Awareness An issue of whether a brand name comes to mind when consumers think about a particular product category and the ease with which the name is evoked.

9. The Brand Awareness Pyramid

10. Brand Recognition

11. Aided Brand Recall • “We try harder.” | • “Don’t leave home without it.” | • “Reach out and touch someone.” | • “The quicker picker upper.” | • “M’m! M’m! Good!” | • “When it absolutely, positively has to be there overnight.” | • “Say it with flowers” | • “Finger lickin’ good” | • “Betcha can’t eat just one.” | • “Melts in your mouth, not in your hand.” | • “Good to the last drop.” | • “Like a good neighbor,…” | • “Drivers wanted.” | • “Breakfast of champions.”

12. Two Forms of Brand Knowledge Brand Image The types of associations that come to the consumer’s mind when contemplating a particular brand.

13. Dimensions of Brand Personalities • Sincerity • Excitement • Competence • Sophistication • Ruggedness

14. Illustration of a Sincere Brand

15. Illustration of an Exciting Brand

16. Illustration of a Competent Brand

17. Illustration of a Sophisticated Brand

18. Illustration of a Rugged Brand

19. 3 Ways Brand Equity Is Enhanced • Speak-for-itself • Message-driven • Leveraging

20. Leveraging Brand Meaning From Various Sources

21. Co-branding and Ingredient Branding • Co-branding • A partnership between two brands • Ingredient branding • Inclusion of one brand within the other

22. Roger Enrico, ex-CEO of PepsiCo: “In my mind the best thing a person can say about a brand is that it’s their favorite….We should be looking at market share, but also at where we stand vis-à-vis our competitors in terms of consumer awareness and regard for our brands.”

23. www.lovemarks.com • “Guinness isn't sold in India. So whenever I'm abroad, I make it a point to get a pint into me. It makes my trip complete! It's a brand I love so much that my house has a wall dedicated to framed postcards with Guinness advertising from down the years. It's a brand I'm hopelessly and madly in love with.”

24. www.lovemarks.com • “I really annoy a lot of my friends because I am constantly talking about Jeep. I absolutely love my Jeep and will continue to love my Jeep. To me there is just no substitute for Jeep. I could walk around with a sign “I – love – my – Jeep”. I do this to my friends. I really do. All the time.”

25. 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) Measuring World-Class Brands • Equity: score ranging from 0 to 100 (determined by multiplying the quality and salience scores and dividing the product by 10)

26. Characteristics of World Class Brands • Delivers benefits consumers want • Stays relevant • Price equals value • Good positioning • Consistency

27. Characteristics of World Class Brands • Fits into brand portfolio • Brand uses all IMC options available to build equity • Brand’s managers understand what the brand means to consumers • Support over long run • Monitoring of the sources of brand equity

28. Top-Ten World-Class Brands Overall

29. Top 7 Global Brands • Coca Cola $65.32 bn. • Microsoft $58.71 bn. • IBM $57.09 bn. • GE $51.57 bn. • Nokia $33.70 bn. • Toyota $32.07 bn. • Intel $30.95 bn www.interbrand.com

30. 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.

31. 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)

32. Difficulty of Measuring Marcom Effectiveness • Choosing a Metric • Gaining Agreement • Collecting Accurate Data • Calibrating Special Effects

33. Choosing a Metric • Change in brand awareness • Improved consumer attitude toward the brand • Increased purchase intentions • Larger sales volume

34. Finance Departments’ Measures of Success: Discounted cash flows Net present values of investment decisions Marketing Departments’ Measures of Success: Measures of brand awareness, image, and equity Gaining Agreement

35. 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?

36. Marketing-Mix Modeling Employing well-known statistical techniques to estimate the effects that various advertising and promotion efforts have in driving sales volume.