PowerPoint Presentation by Charlie Cook The University of West Alabama CHAPTER 2 Eighth Edition © 2010 South-Western, a part of Cengage Learning All rights reserved. Marketing Communications Challenges: Enhancing Brand Equity, Influencing Behavior, and Being Accountable

1.Explain the concept of brand equity from both the company’s and the customer’s perspectives. 2.Describe the positive outcomes that result from enhancing brand equity. 3.Appreciate a model of brand equity from the customer’s perspective. 4.Understand how marcom efforts must influence behavior and achieve financial accountability.. 1.Explain the concept of brand equity from both the company’s and the customer’s perspectives. 2.Describe the positive outcomes that result from enhancing brand equity. 3.Appreciate a model of brand equity from the customer’s perspective. 4.Understand how marcom efforts must influence behavior and achieve financial accountability.. Chapter Objectives After reading this chapter you should be able to: © 2010 South-Western, a part of Cengage Learning. All rights reserved.2–2

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–3 Introduction: Framework for Marcom Process Fundamental Decisions Desired Outcomes Implementation Decisions Evaluation and Corrective Action

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–4 Basic IMC Issues How to enhance brand equity How to affect customer behavior How to justify marcom investments How to demonstrate financial accountability Marketing Communicators

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–5 Basic IMC Issues What can marketing communicators do to enhance the equity of their brands?What can marketing communicators do to enhance the equity of their brands? How can marketing communicators affect the behavior of their present and prospective customers?How can marketing communicators affect the behavior of their present and prospective customers? How can marketing communicators justify their investments in advertising, sales promotions, and other marcom elements?How can marketing communicators justify their investments in advertising, sales promotions, and other marcom elements? How can marketing communications demonstrate financial accountability?How can marketing communications demonstrate financial accountability?

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–6 Brand BrandBrand  Is a name, term, sign, symbol, or design.  Identifies and differentiates goods and services of one seller or group of sellers from those of the competition.  Communicates a particular set of values. Brand EquityBrand Equity  Can be considered either from the perspective of the organization that owns it or from the vantage point of the customer.  Is valuable when consumers believe the brand can deliver on its promises.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–7 A Firm-Based Perspective on Brand Equity Higher market share Increased brand loyalty Premium pricing Revenue premiums Effects of Brand Equity Increases

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–8 Children’s Taste Preferences (In percents) Table 2.1

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–9 Brand Equity Increases Revenue PremiumRevenue Premium  The revenue differential between a branded item and a corresponding private labeled item.  Revenue premium for a branded item ( b) compared to a private label ( pl ) = (volume b )(price b ) – (volume pl )(price pl )

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–10 A Customer-Based Brand Equity Framework Figure 2.1 Source: Adapted from Kevin Lane Keller, “Conceptualizing, Measuring, and Managing Customer-Based Brand Equity,” Journal of Marketing 57 (January 1993), 7.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–11 Forms of Brand Knowledge Brand AwarenessBrand Awareness  Whether a brand name comes to mind when consumers think about a particular product category  The ease with which the name is evoked Brand ImageBrand Image  The types of associations that come to the consumer’s mind when contemplating a particular brand Top-of-Mind Awareness (TOMA)Top-of-Mind Awareness (TOMA)  Occurs when a brand is the first brand that consumers recall when thinking about brands in a particular product category.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–12 The Brand Awareness Pyramid Figure 2.2 Source: David A. Aaker, Managing Brand Equity (New York: Free Press, 1991), 62.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–13 Brand Associations Positive Attributes Perceived Benefits Favorable Attitude Brand image associations that build brand equity

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–14 Dimensions of Brand Personalities Excitement Sincerity Ruggedness Sophistication Competence

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–15 Ways of Enhancing Brand Equity Speak-for-Itself Message-Driven Leveraging Enhancing Brand Equity

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–16 Leveraging Brand Meaning from Various Sources Figure 2.3 Source: Kevin Lane Keller, “Brand Synthesis: The Multidimensionality of Brand Knowledge,” Journal of Consumer Research 29 (March 2003), 598. By permission of the University of Chicago Press.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–17 Types of Branding for Leveraging Co-BrandingCo-Branding  A partnership between two brands Ingredient BrandingIngredient Branding  Inclusion of one brand within the other

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–18 What Benefits Result from Enhancing Brand Equity? Increased consumer loyaltyIncreased consumer loyalty Long-term growth and profitability for the brandLong-term growth and profitability for the brand Maintain brand differentiation from competitive offeringsMaintain brand differentiation from competitive offerings Insulate brand from price competitionInsulate brand from price competition

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–19 Measuring World-Class Brands Quality Salience Equity Evaluating World-Class Brands

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–20 Characteristics of a World-Class Brand Delivers benefits consumers wantDelivers benefits consumers want Stays relevantStays relevant Price equals valuePrice equals value Good positioningGood positioning ConsistencyConsistency Fits into brand portfolioFits into brand portfolio Brand helps build brand equityBrand helps build brand equity Brand’s managers understand what the brand means to consumersBrand’s managers understand what the brand means to consumers Support over long runSupport over long run Monitoring of the sources of brand equityMonitoring of the sources of brand equity

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–21 Top Ten World-Class Brands Overall (Among 1,030 total brands included in EquiTrend’s Spring 2006 survey) Table 2.2 Source: Spring 2006 EquiTrend brand study by Harris Interactive, (accessed July 26, 2007).

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–22 Interbrand’s Top 20 Global Brands, 2007 Table 2.3 Source: Interbrand Report, “Best Global Brands 2007,”

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–23 Affecting Behavior and Achieving Marcom Accountability The Importance of Brand AwarenessThe Importance of Brand Awareness  Creating brand awareness and boosting brand image serve little positive effect unless individuals make purchases or engage in desired behaviors  Marcom’s objective is ultimately to affect sales volume and revenue

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–24 Measuring Marketing Investment Performance Return on Marketing Investment (ROMI)Return on Marketing Investment (ROMI)  Measures the effect of marcom, or of its specific elements such as advertising, in terms of whether it generates a reasonable revenue return on the marcom investment Why Measure Marcom Effectiveness?Why Measure Marcom Effectiveness?  Demands for greater accountability on the marketing function  To become better at marcom activities

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–25 Measuring Marketing Investment Performance Difficulties in Measuring Marcom EffectivenessDifficulties in Measuring Marcom Effectiveness  Choosing an appropriate metric  Gaining agreement on measures  Collecting accurate data for marcom assessment  Determining effects of specific marcom elements

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–26 Difficulties in Measuring Marcom Effectiveness: Choosing a Metric Change in brand awareness Improvement in attitudes toward the brand Increased purchase intentions Larger sales volume What to Measure?

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–27 Difficulties in Measuring Marcom Effectiveness: Gaining Agreement Finance Departments’ Measures of Success:Finance Departments’ Measures of Success:  Discounted cash flows  Net present values of investment decisions Marketing Departments’ Measures of Success:Marketing Departments’ Measures of Success:  Measures of brand awareness, image, and equity

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–28 Difficulties in Measuring Marcom Effectiveness: Collecting Accurate Data and Calibrating Special Effects What exact sales figures should be used to calculate sales?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?How much relative effect does each program element have on sales volume compared to the effect of other elements?

© 2010 South-Western, a part of Cengage Learning. All rights reserved.2–29 Measuring Marcom Effectiveness Marketing-Mix ModelingMarketing-Mix Modeling  Employing econometric statistical techniques to estimate the effects that elements of the marcom mix have in driving sales volume. Example:Example: