PowerPoint Presentation by Charlie CookThe University of West Alabama

PowerPoint Presentation by Charlie CookThe University of West Alabama

CHAPTER 2CHAPTER 2

Eighth Edition

© 2010 South-Western, a part of Cengage LearningAll rights reserved.© 2010 South-Western, a part of Cengage LearningAll rights reserved.

Marketing Communications Challenges: Enhancing Brand Equity, Influencing Behavior, and Being Accountable

Marketing Communications Challenges: Enhancing Brand Equity, Influencing Behavior, and Being Accountable

INTEGRATED MARKETING COMMUNICATIONS

IN ADVERTISING AND PROMOTION

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 ObjectivesAfter reading this chapter you should be able to:Chapter ObjectivesAfter 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: Introduction: Framework for Marcom ProcessFramework for Marcom Process

Fundamental Decisions

DesiredOutcomes

ImplementationDecisions

Evaluation and Corrective Action

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–4

Basic IMC IssuesBasic 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 IssuesBasic IMC Issues

• What can marketing communicators do to What can marketing communicators do to enhance the equity of their brands?enhance the equity of their brands?

• How can marketing communicators affect the How can marketing communicators affect the behavior of their present and prospective behavior of their present and prospective customers?customers?

• How can marketing communicators justify their How can marketing communicators justify their investments in advertising, sales promotions, investments in advertising, sales promotions, and other marcom elements?and other marcom elements?

• How can marketing communications How can marketing communications demonstrate financial accountability?demonstrate financial accountability?

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–6

BrandBrand

• BrandBrand Is a name, term, sign, symbol, or design.Is a name, term, sign, symbol, or design. Identifies and differentiates goods and services of one Identifies and differentiates goods and services of one

seller or group of sellers from those of the seller or group of sellers from those of the competition.competition.

Communicates a particular set of values.Communicates a particular set of values.

• Brand EquityBrand Equity Can be considered either from the perspective of the Can be considered either from the perspective of the

organization that owns it or from the vantage point of organization that owns it or from the vantage point of the customer. the customer.

Is valuable when consumers believe the brand can Is valuable when consumers believe the brand can deliver on its promises.deliver on its promises.

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–7

A Firm-Based Perspective on Brand EquityA 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 IncreasesBrand Equity Increases

• Revenue PremiumRevenue Premium

The revenue differential between a branded item and The revenue differential between a branded item and a corresponding private labeled item.a corresponding private labeled item.

Revenue premium for a branded item (Revenue premium for a branded item (bb) ) compared compared to a private label (to a private label (plpl) =) =

(volume(volumebb)(price)(pricebb) ) –– (volume (volumeplpl)(price)(priceplpl))

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–10

A Customer-Based Brand Equity FrameworkFigure 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 KnowledgeForms of Brand Knowledge

• Brand AwarenessBrand Awareness Whether a brand name comes to mind when Whether a brand name comes to mind when

consumers think about a particular product categoryconsumers think about a particular product category The ease with which the name is evokedThe ease with which the name is evoked

• Brand ImageBrand Image The types of associations that come to the The types of associations that come to the

consumer’s mind when contemplating a particular consumer’s mind when contemplating a particular brandbrand

• Top-of-Mind Awareness (TOMA)Top-of-Mind Awareness (TOMA) Occurs when a brand is the first brand that Occurs when a brand is the first brand that

consumers recall when thinking about brands in a consumers recall when thinking about brands in a particular product category.particular product category.

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–12

The Brand Awareness PyramidFigure 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 AssociationsBrand Associations

Positive Attributes

PerceivedBenefits

FavorableAttitude

Brand image associations that build brand equity

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–14

Dimensions of Brand PersonalitiesDimensions of Brand Personalities

Excitement

Sincerity

RuggednessSophistication

Competence

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–15

Ways of Enhancing Brand EquityWays 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 SourcesFigure 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 LeveragingTypes of Branding for Leveraging

• Co-BrandingCo-Branding A partnership between two brandsA partnership between two brands

• Ingredient BrandingIngredient Branding Inclusion of one brand within the otherInclusion of one brand within the other

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–18

What Benefits Result from Enhancing What Benefits Result from Enhancing Brand Equity?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 Maintain brand differentiation from competitive

offeringsofferings• 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 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 BrandCharacteristics of a World-Class Brand

• Delivers benefits Delivers benefits consumers wantconsumers want

• Stays relevantStays relevant

• Price equals valuePrice equals value

• Good positioningGood positioning

• ConsistencyConsistency

• Fits into brand portfolioFits into brand portfolio

• Brand helps build brand Brand helps build brand equityequity

• Brand’s managers Brand’s managers understand what the understand what the brand means to brand means to consumersconsumers

• Support over long runSupport over long run

• Monitoring of the sources Monitoring of the sources of brand equityof brand equity

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–21

Top Ten World-Class Brands Overall (Among 1,030 totalbrands included in EquiTrend’s Spring 2006 survey)

Table 2.2

Source: Spring 2006 EquiTrend brand study by Harris Interactive, http://www.harrisinteractive.com/news/allnewsbydate.asp?NewsID=1063 (accessed July 26, 2007).

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–22

Interbrand’s Top 20 Global Brands, 2007Table 2.3

Source: Interbrand Report, “Best Global Brands 2007,” http://www.interbrand.com/best_brands_2007.asp.

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–23

Affecting Behavior and Achieving Affecting Behavior and Achieving Marcom AccountabilityMarcom Accountability

• The Importance of Brand AwarenessThe Importance of Brand Awareness Creating brand awareness and boosting brand image Creating brand awareness and boosting brand image

serve little positive effect unless individuals make serve little positive effect unless individuals make purchases or engage in desired behaviorspurchases or engage in desired behaviors

Marcom’s objective is ultimately to affect sales Marcom’s objective is ultimately to affect sales volume and revenuevolume and revenue

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–24

Measuring Marketing Investment Measuring Marketing Investment PerformancePerformance

• Return on Marketing Investment (ROMI)Return on Marketing Investment (ROMI) Measures the effect of marcom, or of its specific Measures the effect of marcom, or of its specific

elements such as advertising, in terms of whether it elements such as advertising, in terms of whether it generates a reasonable revenue return on the generates a reasonable revenue return on the marcom investmentmarcom investment

• Why Measure Marcom Effectiveness?Why Measure Marcom Effectiveness? Demands for greater accountability on the marketing Demands for greater accountability on the marketing

functionfunction To become better at marcom activitiesTo become better at marcom activities

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–25

Measuring Marketing Investment Measuring Marketing Investment PerformancePerformance

• Difficulties in Measuring Marcom EffectivenessDifficulties in Measuring Marcom Effectiveness Choosing an appropriate metricChoosing an appropriate metric

Gaining agreement on measures Gaining agreement on measures

Collecting accurate data for marcom assessmentCollecting accurate data for marcom assessment

Determining effects of specific marcom elementsDetermining effects of specific marcom elements

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–26

Difficulties in Measuring Marcom Difficulties in Measuring Marcom Effectiveness: Choosing a MetricEffectiveness: 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 Difficulties in Measuring Marcom Effectiveness: Gaining AgreementEffectiveness: Gaining Agreement

• Finance Departments’ Finance Departments’ Measures of Success:Measures of Success: Discounted cash flows Discounted cash flows Net present values of Net present values of

investment decisions investment decisions

• Marketing Departments’ Marketing Departments’ Measures of Success:Measures of Success: Measures of brand Measures of brand

awareness, image, and awareness, image, and equityequity

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–28

Difficulties in Measuring Marcom Difficulties in Measuring Marcom Effectiveness: Collecting Accurate Data Effectiveness: Collecting Accurate Data and Calibrating Special Effects and Calibrating Special Effects

• What exact sales figures should be used to What exact sales figures should be used to calculate sales?calculate sales?

• How much relative effect does each program How much relative effect does each program element have on sales volume compared to the element have on sales volume compared to the effect of other elements?effect of other elements?

© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–29

Measuring Marcom EffectivenessMeasuring Marcom Effectiveness

• Marketing-Mix ModelingMarketing-Mix Modeling Employing econometric statistical techniques to Employing econometric statistical techniques to

estimate the effects that elements of the marcom mix estimate the effects that elements of the marcom mix have in driving sales volume.have in driving sales volume.

• Example:Example: