Brand Loyalty Brand Value by xop43846

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									Determination of Brand Value
 The Role of Brands

        A Brand is a distinguishing name and/or symbol
(i.e. logo, trademark, package design) intended to identify
the goods or services of either one seller or group of sellers
and to differentiate those goods or services from those of
competitors.
Top Ten Brands


          1990                 1996
  •   Coca-Cola          •   McDonald’s
  •   Kellogg’s          •   Coca-Cola
  •   McDonald’s         •   Disney
  •   Kodak              •   Kodak
  •   Marlboro           •   Sony
  •   IBM                •   Gillette
  •   American Express   •   Mercedes-Benz
  •   Sony               •   Levi’s
  •   Mercedes-Benz      •   Microsoft
  •   Nescafe            •   Marlboro
Brand Equity

    Brand Equity is a set of brand assets and liabilities
    linked to a brand, its name, and symbol, that add to
    or subtract from the value provided by a product or
    service to a firm and/or to that firm’s customers.

                                          Aaker
                          Perceived
            Name           Quality          Brand
          Awareness                      Associations

Brand
Loyalty                                         Other Proprietary
                                                  Brand Assets



                           Brand
                           Equity
Brand Equity
                      Perceived
            Name       Quality       Brand
          Awareness               Associations

Brand
Loyalty                                  Other Proprietary
                                           Brand Assets



                       Brand
                       Equity




     Provides Value                   Provides Value
      to Customer                         to Firm
Brand Equity



  • Provides Value to      • Provides Value to Firm
    Customer By              by Enhancing
    Enhancing Customer’s      – Efficiency and
    – Interpretation            Effectiveness of
      /Procession of            Marketing Programs
      Information             – Brand Loyalty
    – Confidence in the       – Prices/Margins
      Purchase Decision
                              – Brand Extensions
    – Use Satisfaction
                              – Trade Leverage
                              – Competitive Advantage
Assessing the Value of a Brand



  • Price Premium             • Brand Name and
    – Observe Competitive       Customer Preference
      Prices and determine    • Quantified by the
      which brand
      consumers are willing     marginal value of
      to pay more for.          having
    – Consumer Research         included/omitted the
    – Conjoint (Trade-Off       Brand Name
      Analysis)                 – Brand Preference
                                – Brand Attitude
                                – Purchase Intention
Assessing the Value of a Brand



  • Brand Value Based          – Brand Equity =
    upon Stock Price             F(age of brand, Brand
                                 order of entry into
    Movements (See               market, cumulative
    Simon and Sullivan)          advertising, and current
     – Market Value-             share of industry
       Replacement Cost of       advertising)
       Tangible Assets=      • Replacement Cost
       Intangible Assets
                               – The cost of establishing
  • Intangible Assets            a comparable name or
     – Brand Equity              business
     – Value of Nonbrand
       Factors
     – Value of Industry
       factors
Brand Value Based on Future Earnings


  • The best measure would be the discounted
    present value of future earnings that can be
    attributed to brand equity.
    – Net Present Value
    – Discounted Cash Flow
Brand Value (Interbrands)

  • Brand Value =

   Brand Strength x Brand Net Income

  • Brand Strength
    –   Brand Leadership
    –   Brand Stability
    –   Global Capability
    –   Brand Positioning
    –   Brand Communication Effectiveness
Brand Loyalty
   -is a measure of the attachment that a customer
   has to a brand.             Aaker



                        Committed
                          Buyer

                    Likes The Brand

                  Satisfied Buyer with
                    Switching Costs
                Satisfied/Habitual buyer

        Switchers/Price Sensitive-No Brand Loyalty
Measuring Brand Loyalty
  • Behavioral Measures
      – Repurchase Rate
      – Percent of Purchase
      – Number of Brands Purchased
  •   Switching Costs
  •   Measuring Satisfaction
  •   Liking of the Brand
  •   Commitment
Appraising Brand Assets

  • Brand Loyalty              • Brand Awareness*
    – What are brand loyalty     – How important is
      levels by segments?          brand awareness in this
    – Are customers                market?
      satisfied?                 – How does the firm
    – Why do customers             brand awareness level
      leave?                       compare to that of
    – What are the market          competition?
      share or sales trends?     – What could be done to
                                   improve brand
                                   awareness?
Appraising Brand Assets

  • Perceived Quality*          • Brand Associations
    – What drives customers       – What mental image if
      perceptions of quality?       any does the brand
    – Is perceived quality          stimulate?
      valued or is the market     – Does the brand image
      moving toward a               provide a competitive
      commodity business?           advantage?
    – How do competitors          – Is there a slogan or
      stack up to perceived         symbol?
      quality?
Managing Brand Equity

 • Bases for Brand         • Creating New Brand
   Equity                    Names
 • Creating Brand Equity   • Creating a Family of
 • Managing Brand            Brand Names
   Equity                  • Measuring Brand
 • Forecasting the           Equity
   erosion of Brand        • Evaluating Brand
   Equity                    Equity and the value
 • Brand Extensions          of Brand Assets.
Brand Awareness*

  • Brand Awareness is assumed to be identical
    across all market segments.
  • Changes in the level of Brand Awareness can be
    obtained through advertising and depend on
    – Copy Efficiency
    – Advertising Budget



  Brand Awareness in period t


        90%




                                Effective advertising budget in Period t
Brand Purchase Intentions
 The Purchase intention index for a given brand represents
the proportion of the potential buyers who intend to
purchase that brand?

                                   B1
                        15
                                        B2
                        10


                        5           I
             -10

                                   10   15   20



                             -10
             B3
Brand Purchase Intention


                                     Awareness of
                                     Brand B/Dbs
     Purchase Intention Index

                                 S
     For Brand B in Segment S           Awareness of
                                        Brand B/Dbs
                                 b=n




                                        .50/60
    Purchase Intention B1
                                .50/60 + .20/.35 + .60/455


                                  .54
EVOLUTION OF MARKET SEGMENT NEEDS
                            +20
                        1



                                     4

AXIS 1                                   3

PRICE -20         5                          +20



            2

                             -20
                      AXIS 2-POWER
 NATURAL BRAND POSITIONING

                      +20




Standardized
  Physical
Characteristic
-1                            +1




                       -20
                  Perceived
                    Price
BRAND REPOSITIONING
                          O

                                  a   M

                                       *Bt
                              n
                                      n


                      P               *
                                      Bt-1
              r
EVOLUTION OF MARKET SEGMENT NEEDS




                                 AXIS 2
                                 POWER
                                   +20

                             1




                                          4

                                              3
      AXIS 1
      PRICE    -20       5                        +20




                     2


                                   -20
Brand Repositioning


                          O


                              M

                              *Bt




                              *
                      P
                              Bt-1

               r
Positioning Statement Format



     Convince [Our Target Market] that

  [Customer Benefits Sought] because

  [How Our Strategy Provides Benefits]
Target Market and Positioning

 Product or Service_______________
 Target Market Segment_____________

 Convince_______________________ that
                  Target Market

 _______________________________ Because
         Customer Benefits Sought

 _________________________________
   How our strategy provides benefits
Developing Objectives


     Which type of             Develop Objectives
      objective should be        – By Market Segment
      emphasized?                – By Geography
     Should the type of         – By Customer Target
      objective vary by
      segment and customer
      target?
     What criteria should
      be used to assess
      objectives?
Template for Good Objectives



  ____________ percent of _____________
  A quantifiable number   Target Customer


  will _______________ the ____________
           Objective      Product or Service


  in ________________.
           Time Frame
Evaluating Market Feasibility


   Industry Demand
   Market Share
   Required Investments
   Costs
   Performance
Brand Value (Interbrands)


  • Net Income Attributable to Brand=

   2 yr. weighted average        Tax
                            X
   Brand earnings                Rate
Brand Value
  • Earnings Attributable to a Brand=

  Capital Required to             Standard
  Produce Brand                Industry Profit

  • Capital Required to Produce Brand=

  Capital Employed        X       Brand
  Company Sales                   Sales

								
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