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2007 Thomson South-Western

Marcom’s Challenges: Enhancing Brand Equity, Influencing Behavior, and

Being Accountable

Chapter Two

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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.

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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.

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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.

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As Brand Equity Increases…

1. A higher market share is achieved

2. Brand loyalty increases

3. Premium prices can be charged

4. The brand earns a revenue premium

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Revenue Premium

The revenue differential between a branded item and a corresponding private labeled item.

Revenue premium=

(volumeb)(priceb)-(volumepl)(pricepl)

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A Customer-Based Perspective on Brand Equity

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Two forms of Brand Knowledge

Brand Awareness

An issue of whether a brand name comes tomind when consumers think about a

particular product category and the easewith which the name is evoked.

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The Brand Awareness Pyramid

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Brand Recognition

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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.”

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Two Forms of Brand Knowledge

Brand Image

The types of associations that come tothe consumer’s mind when

contemplating a particular brand.

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Dimensions of Brand Personalities

• Sincerity

• Excitement

• Competence

• Sophistication

• Ruggedness

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Illustration of a Sincere

Brand

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Illustration of an Exciting Brand

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Illustration of a Competent

Brand

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Illustration of a Sophisticated

Brand

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Illustration of a Rugged

Brand

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3 Ways Brand Equity Is Enhanced

1. Speak-for-itself

2. Message-driven

3. Leveraging

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Leveraging Brand Meaning From Various Sources

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Co-branding and Ingredient Branding

• Co-branding

A partnership between two brands

• Ingredient branding

Inclusion of one brand within the other

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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.”

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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.”

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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.”

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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)

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Characteristics of World Class Brands

• Delivers benefits consumers want

• Stays relevant

• Price equals value

• Good positioning

• Consistency

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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

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Top-Ten World-Class Brands Overall

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Top 7 Global Brands

1. Coca Cola $65.32 bn.

2. Microsoft $58.71 bn.

3. IBM $57.09 bn.

4. GE $51.57 bn.

5. Nokia $33.70 bn.

6. Toyota $32.07 bn.

7. Intel $30.95 bn

www.interbrand.com

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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.

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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)

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Difficulty of Measuring Marcom Effectiveness

• Choosing a Metric• Gaining Agreement • Collecting Accurate

Data • Calibrating Special

Effects

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Choosing a Metric

• Change in brand awareness

• Improved consumer attitude toward the brand

• Increased purchase intentions

• Larger sales volume

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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, and equity

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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?

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Marketing-Mix Modeling

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