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Sources of Brand Equity Introducing a new product - creating brand equity (Brand Elements and Mix) Brand Positioning (Customers, Competition) Managing a brand - reinforcing and building brand equity (Extensions, Marketing Mix) Outcomes and Measurements of Brand Equity Slide 3: Marketing Strategies Brand Equity Outcomes Source of Brand Equity (knowledge) Brand Equity: Sources & Outcomes Case Analysis Approach : Case Analysis Approach Problem Identification Generate Alternatives and Facts Supporting or Not Supporting Alternative Situation Analysis required to for all strategic decisions: Consider the 3Cs when analyzing the alternatives Consumer Analysis Competitive Analysis Company Analysis Evaluate Alternatiaves Using + and - Recommendation Marketing Strategy Approach3Cs and 4Ps : Marketing Strategy Approach3Cs and 4Ps Slide 6: Marketing Strategy Process Strategic Situation Analysis Marketing Program Development Design Marketing Strategy Implement And Manage Marketing Strategy Slide 7: Customer Analysis – Segmentation Competitor Analysis Company Analysis Strategic Situation Analysis Strategic Situation/Brand Analysis: 3Cs : Strategic Situation/Brand Analysis: 3Cs Consumer Analysis - Identify market opportunities – examine trends, identify unmet consumer needs, describe buyers, understand their motivations and preferences, size and growth rate of market, etc. Define segments Competitive Analysis - Evaluate and identify what companies and products compete in the market, their images and positioning strategies and their strengths/weaknesses. Company Analysis - Assess organizational strengths and weaknesses, understand existing brand image. Competitive Analysis : Competitive Analysis Who are our competitors? What are their strategies? What are their objectives? What are their strengths, weaknesses, opportunities, and threats? What is their competitive advantage Anticipate competitor actions What are their reaction patterns to our moves? Our Competitive Position : Our Competitive Position Factors to examine How strong is present competitive position? Is position expected to improve or deteriorate if present strategy is continued? How does firm rank relative to key rivals on each important measure of competitive strength or industry success factor? Does firm have a sustainable competitive advantage or disadvantage? Slide 11: Identifying Distinctive Company Capabilities Desirable Capabilities Superior to Competition Difficult to Duplicate Applicable to Multiple Competitive Situations Assessing the Portfolio : Assessing the Portfolio The SWOT Matrix : The SWOT Matrix Strengths Opportunities Weaknesses Threats Match Match Con vert Con vert Slide 14: Customer Analysis – Segmentation Customer Targeting Competitor Analysis Company Analysis Positioning Strategies Designing Marketing Strategy Strategic Situation Analysis Building Marketing Relationships Design Marketing Strategy : Design Marketing Strategy Includes target marketing, positioning strategies, and building marketing relationships Decide how, when, and where to compete by analyzing consumer segments. Find the best match between the value requirements of each segment and the organization’s distinctive capabilities. Targeting guides the development of the positioning strategy Positioning Strategy Development and Implementation : Positioning Strategy Development and Implementation Price Strategy Target Market Positioning Strategy Promotion Strategy Product Strategy Distribution Strategy Slide 17: Customer Analysis – Segmentation Customer Targeting Competitor Analysis Company Analysis Positioning Strategies Designing Marketing Strategy Strategic Situation Analysis Building Marketing Relationships Market Program Development Product Strategy Promotion Strategy Price Strategy Distribution Strategy Marketing Program Development – 4Ps : Marketing Program Development – 4Ps Targeting and positioning strategies guide the formation of the marketing mix (4Ps): product, price, promotion, distribution (place) The marketing mix strategies implement the positioning strategy Slide 19: Customer Analysis – Segmentation Customer Targeting Competitor Analysis Company Analysis Positioning Strategies Designing Marketing Strategy Strategic Situation Analysis Building Marketing Relationships Market Program Development Implement and Manage Strategy Product Strategy Promotion Strategy Price Strategy Distribution Strategy Gap Analysis Marketing Plan Marketing Audit Implementation and Management of Marketing Strategy : Implementation and Management of Marketing Strategy Integration of the components of the marketing mix Prepare marketing plan, implement the plan, and use plan to manage and control the strategy on an ongoing basis Marketing plan : guidelines for activities to be implemented, who does what, dates, costs and expected results (e.g., sales forecasts) Track performance, look for new opportunities and threats in the future Planning process – ongoing activity Strategic Questions? : Strategic Questions? 1) What does the company do well? 2) What does the client want? 3) What is the competition offering? If 1 matches 2 better than 3 matches 2, we have a potential competitive advantage. Managing Brand Equity : Managing Brand Equity Why is branding important? improves efficiency of marketing improves leverage with trade intensifies loyalty basis of price premium (on average, prices of strongest brands were 19% higher than weakest brands in category) What makes a brand strong? ownership of a single, relevant benefit in the consumer’s mind perceived superior quality Valuable Asset What is a Brand? : What is a Brand? AMA (technical definition) “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 competition” What Is a Brand? : What Is a Brand? Formally… A proprietary trademark for a specific product or service Conceptually… A “promise” from the company to its customers; A promise of specific benefits, quality, and value. Is unique vs. competitors It is the integration of rational and emotional elements transmitted to consumers. Brands Have Two Key Dimensions : Brands Have Two Key Dimensions Product Dimension Brand Equity Dimension The Brand Product/Service Brand Equity Functional Dimensions Perceived, subjective associations What is a Product? : What is a Product? Kotler’s Five levels to a product: Potential Product The Fundamental Need or Want that consumers satisfy by consuming the product or service Basic Version of the product containing only those elements absolutely necessary to function. No distinguishing features. Attributes and Characteristics that buyers normally expect and agree to when they purchase a product Additional product attributes, benefits, or related services that distinguish the product from competitors Potential Product All the augmentations and transformations that a product might ultimately undergo in the future Your Product Is Not Your Brand : Your Product Is Not Your Brand “A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless.” (Aaker 1993, pg. 1) Your Brand Is Not Your Product : Your Brand Is Not Your Product Because the product/service is part of the brand, they often get confused Products/Services Have functional value Can be copied by competitors Can become outdated, need to be updated to be timely Your Brand Is Not Your Product : Your Brand Is Not Your Product Because the product/service is part of the brand, they often get confused Brands Exist in customers’ minds Are unique and proprietary Have functional and emotional value Are timeless Source of equity What is a Brand? : What is a Brand? Product = Commodity A product is a produced item always possessing these characteristics: Tangibility Attributes and Features Brand = “Mind Set” The sum of all communications and experiences received by the consumer and customer resulting in a distinctive image in their “mind set” based on perceived emotional and functional benefits. Timothy D. Ennis, Ennis Associates, Inc What is a Brand? : What is a Brand? Relative Brand Distinction The more distinctive or different a brand is in the consumers “mind set”, the stronger brand preference becomes. This is critical to keeping competition from the consumer’s consideration. A brand’s preference is primarily built through differentiation and relevance. Insulate product from competition. Timothy D. Ennis, Ennis Associates, Inc Benefits of Branding : Benefits of Branding Attributes Benefits Awareness (aided) Traffic Top-of-mind Positive associations Distinctive value proposition (brand promise) Consistent delivery Consideration Loyalty Premium price Personality Presence Increased leverage opportunities Name Brand Power Brand (Sony, Xerox, Coke, Mercedes, Virgin, Disney) Branding Benefits for Consumers : Branding Benefits for Consumers Creates Shopping Efficiency and Simplifies Choice Reduces Perceived Risks and Increases Confidence Informs Consumer About Quality (consistency) Provides Symbolic and Emotional Benefits (prestige/status) Leads to Innovations; More Variety and Choice Branding Benefits for Sellers : Branding Benefits for Sellers Efficiency Processing Orders, Marketing Plans, and Tracking Error Loyal Clients Price Premiums/Higher Margins Brand Extensions Power to Negotiate with Channel Members Provides Legal Protection for Unique Features Allows for Market Segmentation (same product category) Creates Barriers to Entry Brand Equity : Brand Equity Brand equity is built on the continuity of a relationship – not a series of transactions Brand Equity : Brand Equity Common Denominator to interpret the potential effects and tradeoffs of various strategies and tactics Common Denominator for assessing the value of a brand Brand Equity : Brand Equity A set of stored values that consumers associated with a Product/Service. These associations add value beyond the basic product functions due to past investments in marketing the Brand. Timothy D. Ennis, Ennis Associates, Inc Brand Equity : Brand Equity Stresses the importance of the brand (brand name, logo, symbol) in marketing strategies. Defined in terms of the marketing effects uniquely attributable to the brand. i.e., what is the value of the “product/service” with and without the name? Represents the “added (subtracted) value” endowed to the product as the result of the investment in the brand. Why Is Equity So Important? : Why Is Equity So Important? Consolidation of Markets Increased Cost of New Product Introduction and Support Proliferation of New Brands and Extensions Little Technological Differentiation Brand Equity: Why is it so Important? : Brand Equity: Why is it so Important? Key element of differentiation Introducing new products is more and more costly Distribution Channels have a lot power Proliferation of private labels (store brands) Easy to imitate on products features Strong versus Weak Brands : Strong Brands Make very clear promises that are kept over time Have rich, unique brand equity…strong thoughts and feelings Are dependable and deliver consistently against expectations Have a loyal franchise Weak Brands Make vague promises that may change over time Very general equity and low emotional commitment Have inconsistent reputations Little loyalty, rely on pricing and promotional incentives Strong versus Weak Brands What Makes the Best Brands? : What Makes the Best Brands? Source of company wealth for generations Improves with Age Develop clearly defined personalities Develop affection & loyalty of the public Become parents to sub-brands and brand extension Brands = Powerful emotional tools POWER BRANDS : The Successful Brands Don’t JUST sell products Communicate Clear Values Stretch Across a Number of Products Attached to Consumers/ NOT Products POWER BRANDS Slide 44: Source: Interbrand, 2001 Highest Valued Brands Highest Valued Brands : Highest Valued Brands The World's 10 Most Valuable Brands - 2007 VALUE ($billions) 1 COCA-COLA 68.32 2 MICROSOFT 58.71 3 IBM 52.09 4 GE 51.57 5 NOKIA 33.70 6 TOYOTA 32.07 7 INTEL 30.95 8 McDONALD'S 29.40 9 DISNEY 29.21 MERCEDES 23.57 Data: Interbrand Corp., J.P. Morgan Chase & Co / 2007 Interbrand’s Assessment is of Brand Power – the fullest possible view of each brand’s strengths and potential as a marketing and financial asset. Building Strong Brands : Building Strong Brands Is there a meaningful point-of-difference? What is the value proposition/brand promise? associations Personality Are all parts of the organization consistently reinforcing the brand promise? Who will get the credit (or blame) for product or service quality? Brand Value Breakdown : Brand Value Breakdown $US Billions The Value of Brand Equity : The Value of Brand Equity Value is Determined by Customers : Value is Determined by Customers Brands represent an important intangible asset that must be carefully managed! It is the only true source of sustainable competitive advantage! Customer-based brand equity is defined as the differential effect that knowledge about the brand has on consumer response to the marketing of that brand. Note that this can be positive or negative… Slide 50: Marketing Strategies Brand Equity Outcomes Source of Brand Equity (knowledge) Brand Equity: Sources & Outcomes Dimensions of Consumer Brand Equity : Dimensions of Consumer Brand Equity BRAND KNOWLEDGE Key Components (Sources) of Equity : Key Components (Sources) of Equity Brand Awareness What is the strength of the brand in memory? Reflected by consumers’ ability to identify the brand under different conditions. Brand Image What are the perceptions about the brand held in consumers’ memory? Reflected by the brand associations. Components of Brand Awareness : Components of Brand Awareness Brand Recognition: Ability to confirm prior exposure when given the brand cue. Brand Recall: Ability to correctly retrieve the brand when given the category or some other non-brand cue. Brand Awareness : Brand Awareness Presence of the brand in consumers mind Measured by: Recognition: Exposure to the brand Recall: Which brands of the category are known Top of Mind Evoked set The more aware, the more likely to be chosen. Familiar brands have an advantage over unknown brands. Brand Awareness Pyramid : Brand Awareness Pyramid Unaware of Brand Top of Mind Brand Recall Brand Recognition The Value of Brand Awareness : The Value of Brand Awareness Brand Awareness Anchor to Which Other Associations Can Be Attached Familiarity - Liking Signal of Market Presence Brand Consideration Brand AwarenessHow to get it? : Brand AwarenessHow to get it? Through the brand Appropriate name Use symbols or spokesperson Line or brand extension Through the product Good performance/quality Distinctive benefits compared to competitors Good packaging Adequate display of the brand Cross advertising through other products Brand AwarenessHow to get it? : Brand AwarenessHow to get it? Through Advertising Different and memorable message: link between the brand and the product class Repetition Slogan. Ex. Milo te hace grande. Symbol, visual image easy to learn and remember Ex. Apple for Apple. Generating news about the brand Sponsoring events or institutions Adequate distribution Slide 59: What comes to mind when you think of the following brands? Brand Exercise… Dimensions of Consumer Brand Equity : Dimensions of Consumer Brand Equity BRAND KNOWLEDGE Components of Brand Image : Components of Brand Image Variety of Brand Associations Tied to the Brand Image Associations Type (attributes, benefits, and overall attitudes) Favorability (bad to good) Strength (low to high) Uniqueness (shared with competing brands or not) The evaluation of brand associations may be context or situation-dependent! The Value of Brand Associations : The Value of Brand Associations Perceptions linked to the brand, based on experiences and past exposures Help consumer process and retrieve information. Differentiate position A reason for consumers to buy Create positive attitudes and feelings Basis for brand extensions Add value to the brand, in the case where they are: Favorable, Strong, and Unique Importance of Perceived Quality : Importance of Perceived Quality Perceived Quality - Customer´s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives. Among all brand associations, perceived quality is the one most directly related to financial performance. Importance of Perceived Quality (Cont.) : Importance of Perceived Quality (Cont.) Often is the reason why the consumer buys and generates brand loyalty. Justifies charging a price premium which provides increased profits or resources to reinvest in building the brand. Can permit the brand to extend. Creates channel member interest. A principal positioning characteristic of the brand that creates differentiation. Association Chains : Association Chains Realize that associations may themselves be linked to other associations Company (who makes the product) Country of Origin (where it is made) Channels of Distribution (where it is purchased) Spokesperson or Endorser Sporting or Cultural Event Where to Associate? : Where to Associate? Individual Brand Names Family or Company Branding Company & Individual Names Sub-branding offers two potential benefits Facilitates access to overall company attitudes Allows for the creation of specific brand beliefs Example: AOL Instant Messenger The Equation... : The Equation... Equity = (Aware of the Brand) + (Holds some Favorable, Strong, and Unique Brand Associations in Memory) Slide 68: Marketing Strategies Brand Equity Outcomes Source of Brand Equity (knowledge) Brand Equity: Sources & Outcomes Marketing Strategy Effects on Sources of Brand Equity ... : Marketing Strategy Effects on Sources of Brand Equity ... Increased Awareness Enhanced Image or Image Change (Strengthen or Expand) Attitude Changes (Favorability) Changes in Customers’ Responses to Marketing Initiatives Challenges to Brands : Challenges to Brands Consumer skepticism Proliferation of competitors Private labels Aggressive/knowledgeable retailers Under-investment Proliferation/dilution Short-term view Market Internal Globalization Emergence of large middle-class in developing countries Changes in demographics Opportunities Indicators of an Under-emphasis on Brand Building : Indicators of an Under-emphasis on Brand Building Managers cannot identify with confidence brand associations and the strength of those associations. Little knowledge about how brand associations differ across segments and over time. Knowledge of levels of brand awareness is lacking. There are no indicators of the brand being tied to long-term success of the business that are used to evaluate the brand´s marketing efforts. Indicators of an Under-emphasis on Brand Building (cont.) : Indicators of an Under-emphasis on Brand Building (cont.) There is no person in the firm who is really in charge of protecting the brand equity. The measures of performance associated with a brand and its managers are quarterly or yearly. There are no consistent measures that evaluate the impact of the marketing program upon the long-term equity of the brand. There is often no long-term strategy for the brand. Why Is It So Hard to Build Brands? : Why Is It So Hard to Build Brands? Pressure to Compete on Price Proliferation of Competitors Bias Toward Changing Strategies Pressure to Invest Elsewhere Short-Term Pressures Brand Concept Management : Establish brand image/position in the marketplace Develop marketing mix to communicate the brand image and to remove transaction barriers (e.g. information availability) How do you use the mix to develop brand awareness and communicate brand image? Brand Concept Management Slide 75: Brand Strategy System Brand Constructs : Brand Constructs Brand Image - How the brand is now perceived. Brand Identity - How strategists want the brand to be perceived. Brand Position - The part of the brand identity and value proposition to be actively communicated to a target audiences. The CE/CI Framework : The CE/CI Framework CORPORATEEXPRESSIONS CUSTOMERIMPRESSIONS Styles Themes Executing the Brand Position and Image : Executing the Brand Position and Image Brand name Logo/Symbol Characters Slogans Product Packaging Price Distribution Promotion Brand Element Criterion : Brand Element Criterion Memorable -Easily recognized and recalled Meaningful Descriptive, Persuasive, Interesting, Imagery Protectable Legally, Competitively Adaptable Flexible, Updatable Transferable Within and across categories and cultures Critique of Brand Element Options : Critique of Brand Element Options What´s the Bottom-Line? : What´s the Bottom-Line? Difficult to Quantify, but In many product categories the leading brands in 1925 remain #1 or #2 today E.g., Coca-Cola, Ivory, Gillette, Lipton, Colgate, and so on. Final Thoughts on Brand Equity : Final Thoughts on Brand Equity Equity needs to be established through more than just the product/service. Equity building implies a long-term commitment to the customer and brand. Brands must be managed and updated to remain relevant to constituencies and form relationships. Treat your brand as your only truly unique and sustainable competitive advantage. You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.