Strategic Brand Management. Brand Equity what is it?

Transcription

1 Strategic Brand Management Exeter MBA and MSc Day 2 Lecture 1 Brand Equity Concepts and Approaches Brand Equity what is it? The added value to the firm, the trade, or the consumer which a given brand endows a product (P.Farquahar Farquahar) The brand s s source of value to the company and the consumer (Kapferer( Kapferer) A set of brand assets and liabilities linked to a brand, its name and symbol, that add or subtract from the value provided by a product or service to a firm and/or to that firm s s customers (Aaker( Aaker) 1

2 Brand Equity Financial Goodwill P/E ratios Managerial Audit Evaluate Strategy Brand Equity is a relatively recent concept combines finance with marketing may be more relevant in mature industries may be more relevant in larger companies will probably vary geographically 2

3 Three Big Brand Equity Stories Coke s formula change Marlboro s price cut P&G s value pricing Building a Brand in Mindspace Trust Relevance Esteem Relationship Brand Stage 3 Differentiation Brand Stage 2 Risk Reduction Brand Stage 1 Brand Awareness 3

4 Aaker s Sources of Equity Brand name awareness Brand loyalty Perceived quality Brand associations Brand Awareness Recognition spontaneous Recognition prompted Recall Salience Aware In brand repertoire In consideration set 4

5 The Graveyard Model High Graveyard Recognition Niche Brand Low Recall High Source: Y & R Out of the Graveyard Aga Foodservice High brand recognition Low brand salience Identified younger target market Product range refreshed Brand/marketing investment 5

6 Graveyard Model Illustrates the difference between recognition and salience Works best for heritage brands Much harder for mass and discount brands Brand Loyalty Loyalty Purchase loyalty market share Attitude loyalty price premium Double Jeopardy (Ehrenberg( Ehrenberg) Small brands have fewer buyers AND their buyers buy less often (loyalty) 6

7 Double Jeopardy Brand Maxwell Market Penetration 24% Exclusive Buyers 20% Volume per Buyer 3.6 Sanka 21% 20% 3.3 Tasters 22% 24% 2.8 High Point 22% 18% 2.6 Folgers 18% 13% 2.7 Nescafe 13% 15% 2.9 Brim 9% 17% 2.0 Source:Ehrenberg et al (1990) Journal of Marketing Brand Loyalty Costs of attracting new customers much higher than retention MBNA (financial services) 5% increase in retention increased company profits by 60% over 5 years Stronger brands characterised by greater loyalty 7

8 Loyalty Groupings Low Satisfaction High High Perceived Risk in switching Low Frustrated Switchable Loyal Vulnerable Source: Rossiter & Elliott (2001) Perceived Quality The one measure to directly impact ROI Improve perceived quality and ROI will improve Requires product frame of reference More effective in mature industries Harder to measure in cool industries 8

9 Brand Associations Emotional and self-expressive expressive benefits Brand as product Brand as organization Brand as person Brand as symbol BRAND IDENTITY Brand Equity 10 (Aaker( Aaker) Loyalty Measures 1.Price Premium 2.Satisfaction/Loyalty Perceived Quality/Leadership measures 3.Perceived quality 4.Leadership/popularity Associations/Differentiation Measures 5.Perceived Value 6.Brand Personality 7.Organizational Associations Awareness Measures 8.Brand Awareness Market Behaviour Measures 9.Market Share 10.Market price and distribution coverage 9

10 Brand Awareness + Image +Perceived Quality +Evocations +Familiarity/liking = Brand Assets Source:Kapferer From Assets to Equity Brand added value, perceived by consumers -Cost of branding - Cost of invested capital = Brand Financial Value (Brand Equity) Interbrand s Top Brands Leadership Stability Market International Trend Support Protection 10

11 Interbrand in Coca-Cola 2. Kellogg s 3. McDonald s 4. Kodak 5. Marlboro 6. IBM 7. American Express 8. Sony 9. Mercedes-Benz 10. Nescafe Financial World Marlboro 2. Coca-Cola 3. McDonalds 4. IBM 5. Disney 6. Kodak 7. Kellogg s 8. Budweiser 9. Nescafe 10. Intel 11

12 Interbrand in Coca-Cola 2.Microsoft 3.IBM 4.GE 5.Intel 6.Disney 7.McDonalds 8.Nokia 9.Toyota 10.Marlboro 2004 Big Winners Apple Amazon.com Yahoo Samsung HSBC 12

13 2004 Big Losers Kodak Nintendo Nokia AOL Ford Brandchannel.com Challenges to Brand Equity Models Increasing power of own-labels and mass- merchandising Brand proliferation and extensions Increasing number of brand alliances Rapid growth and erosion of brand equity Non-traditional marketing techniques Regional variations 13

14 Brand Equity Financial Goodwill P/E ratios Managerial Audit Evaluate Strategy 14