Strategic Brand Management Chapter 10
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Transcript of Strategic Brand Management Chapter 10
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10.1
CHAPTER 10:
MEASURING OUTCOMES OF BRAND EQUITY:
CAPURING MARKET PERFORMANCE
Kevin Lane Keller
Tuck School of Business
Dartmouth College
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10.2
Measuring Brand Equity
Multi-dimensional concept Many different measures required
The ultimate value of a brand depends on the
underlying components of brand knowledgeand sources of brand equity
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10.3
Comparative Methods
Brand-based comparative approaches Marketing-based comparative approaches
Conjoint analysis
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10.4
Brand-Based Approaches
The marketing element under consideration isfixed.
Consumer response is examined based on changes
in brand identification. Application example:Blind testing
Advantage:Isolates the value of the brand
Disadvantage:The totality of what is learned dependson how many applications are examined.
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10.5
Marketing-Based Approaches
The brand is held fixed and consumer response isexamined based on changes in marketing programs.
Applications:Explore price premiums effect on
switching, consumer evaluations of marketingactivities, brand extensions, etc.
Advantage:Ease of implementation
Disadvantage:Difficult to determine whetherconsumer responses are caused by brandknowledge or generic product knowledge
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10.6
Conjoint Analysis
A survey-based multivariate technique that enablesmarketers to profile the consumer decision process withrespect to products and brands
Helps researchers determine the trade-offs consumersmake between brand attributes
Applications:Assess advertising effectiveness and brandvalue; analyze brand/price trade-off
Advantage:Allows for different brands or different aspects
of the product to be analyzed simultaneously Disadvantage:May violate consumers expectations based on
what they already know about brands
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10.7
Holistic Methods
Attempt to place an overall value on the brandin either abstract utility terms or concrete financialterms
Net out various considerations to determine theunique contribution of the brand
Holistic methods:
Residual approaches
Valuation approaches
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10.8
Residual Approaches
Examine the value of the brand by subtractingconsumers preferences based on physical product
attributes alone from their overall brandpreferences
Advantage:Useful benchmark for interpretingbrand equity, especially from a financially orientedperspective
Disadvantage:Static view. Limited diagnostic valuefor strategic decision making
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10.9
Valuation Approaches
Attempt to place a financial value on brand equityfor accounting purposes
Useful in cases of mergers and acquisitions, brandlicensing, fund raising, and brand management
decisionsValuation approaches:
Accounting background
Historical perspectives General approaches
Interbrands brand valuation methodology
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10.10
Accounting Background
Intangible assetsare typically lumped under theheading ofgoodwilland include things such aspatents, trademarks, and licensing agreements,
as well as softer considerations such as theskill of the management and customer relations.
In an acquisition, the goodwill item oftenincludes a premium paid to gain control, which,in certain instances, may even exceed the valueof tangible and intangible assets.
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10.11
Historical Perspectives
In Australia Rupert Murdochs News Corporationincluded a valuation of some of its magazines on itsbalance sheets in 1984.
British firms used brand values primarily to boost theirbalance sheets.
In the United States, generally accepted accountingprinciples (blanket amortization principles) mean that
placing a brand on the balance sheet would requireamortization of that asset for up to 40 years. Such acharge would severely hamper firm profitability; as aresult, firms avoid such accounting maneuvers.
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10.13
Interbrands Brand Valuation
Assumes that brand value is the present worth of thebenefits of future ownership
Follows five valuation steps:
Market segmentation
Financial (role of branding) analysis
Demand (brand strength) analysis
Competitive benchmarking
Brand value calculation
Brand value calculation : Calculate the brand value as thenet present value (NPV) of the forecast brand earnings,discounted by the brand discount rate