aakerch1

8/7/2019 aakerch1

1/39

Brand LeadershipBrand LeadershipAaker and JoachimsthalerAaker and Joachimsthaler

8/7/2019 aakerch1

2/39

The Birth of Brand ManagementThe Birth of Brand Management

Neil McElroy, P&G 1931Neil McElroy, P&G 1931

Study Brand MovementStudy Brand Movement

Study heavy sales areas and explain whyStudy heavy sales areas and explain why Study light sales areas and explain whyStudy light sales areas and explain why

Study advertising and promotional strategyStudy advertising and promotional strategyWork at the local levelWork at the local level

Prepare Sales materialsPrepare Sales materialsTrack ResultsTrack Results

Consider Packaging changesConsider Packaging changes

8/7/2019 aakerch1

3/39

The Birth of Brand ManagementThe Birth of Brand Management

What was Neil McElroy really doing?What was Neil McElroy really doing?

1. Identifying Marginal Response by Segment1. Identifying Marginal Response by Segment

2. Identifying Hot and Cold Markets2. Identifying Hot and Cold Markets

3. Developing a Marketing Plan3. Developing a Marketing Plan

4.T

racking the Results4.T

racking the Results

8/7/2019 aakerch1

4/39

Brand Leadership-The Evolving Paradigm

THE CLASSIC THE

BRAND MANAGEMENT BRAND LEADERSHIP

MODEL MODEL

From Tactical to Strategic Management

Perspective Tactical and reactive Strategic and visionary

Brand manager status Less experienced, Higher in the organization,

shorter time horizon longer time horizon

Conceptual model Brand image Brand equity

Focus Short-term financials Brand equity measures

From a Limited to Broad Focus

Product-market scope Single products-markets Multiple products and markets

Brand structures Simple Complex brand architectures

Number of brands Focus on single brands Category focus-multiple brands

Country scope Single country Global perspective

Brand manager's Coordinator of limited Team leader of multiple

communication role options communication optionsCommunication focus External/customer Internal as well as external

From Sales to Brand Identity as Driver of Strategy

Driver of strategy Sales and share Brand identity

8/7/2019 aakerch1

5/39

What is Brand Equity?What is Brand Equity?

Brand Equity is a set of brand assets andBrand Equity is a set of brand assets and

liabilities linked to a brand, its name andliabilities linked to a brand, its name and

symbol, that add to or subtract from thesymbol, that add to or subtract from the

value provided by a product or service to avalue provided by a product or service to a

firm and/or to that firms customers.firm and/or to that firms customers.

Assets and liabilities underlying brandAssets and liabilities underlying brandequity must be linked to the name and/orequity must be linked to the name and/or

symbol of the brand.symbol of the brand.

8/7/2019 aakerch1

6/39

What is Brand Equity?What is Brand Equity?

When the brands name or symbol changes,When the brands name or symbol changes,

some or all of the assets or liabilities will besome or all of the assets or liabilities will be

affected and even lost, although some mightaffected and even lost, although some might

be shifted to a new name and symbol.be shifted to a new name and symbol.

Assets and liabilities on which brand equityAssets and liabilities on which brand equityis based differs from context to contextis based differs from context to context

8/7/2019 aakerch1

7/39

Brand EquityBrand Equity

8/7/2019 aakerch1

8/39

Value of Global Brands as Measured by InterbrandBRAND VALUE

MARKET AS PERCENT

VALUE CAPITALIZATION OF MARKET

BRAND $ BILLIONS $ BILLIONS CAPITALIZATION

1 Coca-Cola $83.8 $142.2 59%

2 Microsoft 56.7 271.9 21

3 IBM 43.8 158.4 28

4 GE 33.5 328.0 10

5 Ford 32.2 57.4 58

6 Disney 32.3 52.6 587 Intel 30.0 144.1 21

8 McDonald's 26.2 40.9 64

9 AT&T 24.2 102.5 24

10 Marlboro 21.0 112.4 19

11 Nokia 20.7 46.9 44

12 Mercedes 17.8 48.3 37

13 Nescafe 17.6 77.5 23

14 Hewlett-Packard 17.1 54.9 3115 Gillette 15.9 42.9 37

16 Kodak 14.8 24.8 60

22 BMW 11.3 16.7 77

28 Nike 8.2 10.6 77

36 Apple 4.3 5.6 77

43 Ikea 3.5 4.7 75

54 Ralph Lauren 1.6 2.5 66

Source: Raymond Perrier, "Interbrand's World's Most Valuable Brands," report of a June 1999 study sponsored by Interbrand and Citigroup, 1999.

8/7/2019 aakerch1

9/39

Objectives of Brand Equity ResearchObjectives of Brand Equity Research

8/7/2019 aakerch1

10/39

Brand Equity

Research Objectives Identify the effectiveness of individualIdentify the effectiveness of individual

brand assetsbrand assets

Identify the barriers to achieving a brandsIdentify the barriers to achieving a brandsfull potentialfull potential

Identify consumer relationships with theIdentify consumer relationships with the

brandbrand Identify the status of the brand in aIdentify the status of the brand in a

competitive contextcompetitive context

8/7/2019 aakerch1

11/39

Pinpoint Brand Problems

Failure of advertising to communicate clearlyFailure of advertising to communicate clearly

Failure of packaging that is too nonFailure of packaging that is too non--intrusiveintrusive

Failure through unmemorable product personalityFailure through unmemorable product personality

Failure through consumers lack of valueFailure through consumers lack of value

perceptionsperceptions

8/7/2019 aakerch1

12/39

Probe the Synergy of Brand

Asset Relationships Equity assetsEquity assets

Potential consistencies in brand image andPotential consistencies in brand image and

consumer perceptionsconsumer perceptions

Potential inconsistencies in brand image andPotential inconsistencies in brand image and

consumer perceptionconsumer perception

8/7/2019 aakerch1

13/39

Products that communicate a

unified image are more likely tohave a stronger shelf impact.

8/7/2019 aakerch1

14/39


unified image are more likely tohave more effective advertising

and promotions.

8/7/2019 aakerch1

15/39


unified image are more likely tohave a stronger brand loyalty.

8/7/2019 aakerch1

16/39

Brand Equity Research Can:

Identify unrecognized product benefitsIdentify unrecognized product benefits

Identify failures of the brand to integrateIdentify failures of the brand to integrate

into the consumers lifestyleinto the consumers lifestyle

Identify a blurred imageIdentify a blurred image

Identify an elusive personalityIdentify an elusive personality

8/7/2019 aakerch1

17/39

Pinpoint the Brand Image in

Light of Competitors NameName

PackagingPackaging

Concept and UsesConcept and Uses

AdvertisingAdvertising

PromotionsPromotions PerceptionsPerceptions

Target MarketTarget Market

8/7/2019 aakerch1

18/39

Key Benefits for Existing Brands

Competitive FrameworkingCompetitive Frameworking

Comparative use patternsComparative use patterns

Perceptual similarities and differencesPerceptual similarities and differences

Target market contrastsTarget market contrasts

Perceived Brand Strengths and WeaknessesPerceived Brand Strengths and Weaknesses Motivators and Hurdles for the brandMotivators and Hurdles for the brand

8/7/2019 aakerch1

19/39

Key Benefits for Existing Brands

Mindset OrientationMindset Orientation

Where does the brand fit on a logical orWhere does the brand fit on a logical or

emotional continuumemotional continuum

Product PriorityProduct Priority

Designation of the brand as high or lowDesignation of the brand as high or lowManagement PriorityManagement Priority

8/7/2019 aakerch1

20/39

Key Benefits in New

Development Opportunities

Build Brand LoyaltyBuild Brand Loyalty

Strengthen current assetsStrengthen current assets

Refine obstaclesRefine obstacles

Create more memorable product personalitiesCreate more memorable product personalities

or positionsor positions

Adjust outAdjust out--ofof--sync brand assetssync brand assets

8/7/2019 aakerch1

21/39

Key Benefits in New

Development Opportunities

Enhance TrialEnhance Trial

Develop packaging with more impactDevelop packaging with more impact

Maximize communicationsMaximize communications

Optimize promotionsOptimize promotions

8/7/2019 aakerch1

22/39

Key Benefits in New

Development Opportunities Expand UseExpand Use

Improve current customer relationshipsImprove current customer relationships

Ascertain new nichesAscertain new niches

Add valueAdd value

Go to alternative channels of distributionGo to alternative channels of distribution

8/7/2019 aakerch1

23/39

Key Benefits in New

Development Opportunities Increase the Product Line SynchronizationIncrease the Product Line Synchronization

With Current Brand EquityWith Current Brand Equity

New productNew product

Line extensionsLine extensions

8/7/2019 aakerch1

24/39

Measuring Brand EquityMeasuring Brand Equity

8/7/2019 aakerch1

25/39

Changes in Brand Equity Occur

When

Changes in Brand Equity Occur

When

Major New ProductsMajor New Products

Product ProblemsProduct Problems

Change in top ManagementChange in top Management

Competitor ActionsCompetitor Actions

Legal ActionsLegal Actions

8/7/2019 aakerch1

26/39

Asset and Liability Categories:Asset and Liability Categories:

Brand LoyaltyBrand Loyalty

Name AwarenessName Awareness

Perceived QualityPerceived Quality

Brand Associations in addition to perceivedBrand Associations in addition to perceived

qualityquality

Other proprietary brand assetsOther proprietary brand assets -- patents,patents,

trademarks, channel relationships, etc.trademarks, channel relationships, etc.

8/7/2019 aakerch1

27/39

Brand Equity = Perceived Value

to the Customer

Brand Equity = Perceived Value

to the Customer Value to the customer enhances:Value to the customer enhances:

Interpretation/Processing of brand information;Interpretation/Processing of brand information;

Confidence in the purchase decision; UseConfidence in the purchase decision; Usesatisfactionsatisfaction

Value to the firm is enhanced through: EfficiencyValue to the firm is enhanced through: Efficiency

and effectiveness of Mkt. Programs; Brandand effectiveness of Mkt. Programs; BrandLoyalty; Prices/margins; Brand Extensions; TradeLoyalty; Prices/margins; Brand Extensions; Trade

Leverage; Competitive AdvantageLeverage; Competitive Advantage

8/7/2019 aakerch1

28/39

Perceived Value to the CustomerPerceived Value to the Customer

Mazda Miata introduced in 1990: low cost 2 seatMazda Miata introduced in 1990: low cost 2 seatconvertible with few power options (1950convertible with few power options (1950

throwback). Simple car, sporty, low cost.throwback). Simple car, sporty, low cost.$16,000$16,000

Demand extremely high...$25,000 prices in usedDemand extremely high...$25,000 prices in usedcar sections within first few months (Same patterncar sections within first few months (Same patternfor Mustang...) Perceived Value > Price.for Mustang...) Perceived Value > Price.

Yugoslavian made car, the Yugo: NegativeYugoslavian made car, the Yugo: Negativereports from consumer reports. Price > Variablereports from consumer reports. Price > VariableCosts > Cost Car withdrawn from market.Costs > Cost Car withdrawn from market.

8/7/2019 aakerch1

29/39

Methods for Calculating

Customer Value


Customer Value Industrial engineering methods: ValueIndustrial engineering methods: Value--inin--use,use,

economic benefitseconomic benefits

Overall estimates of customer value:Overall estimates of customer value:Focus group and Survey research questions ofFocus group and Survey research questions ofwillingness to paywillingness to pay

Decomposition approaches:Decomposition approaches:

Conjoint analysis: estimating customer tradeoffsConjoint analysis: estimating customer tradeoffsof product attributesof product attributesBenchmarks: Willingness to pay for incrementalBenchmarks: Willingness to pay for incremental(fewer) attributes(fewer) attributes

8/7/2019 aakerch1

30/39


Customer Value


Customer Value Composition approach: Questions toComposition approach: Questions to

consumers about value of attributesconsumers about value of attributes

Importance ratings: Customer rankImportance ratings: Customer rank

ordering or rating of the importance ofordering or rating of the importance of

product attributes as well as comparisonsproduct attributes as well as comparisonsbetween competitors.between competitors.

8/7/2019 aakerch1

31/39

Value-in-Use ApproachValue-in-Use Approach

Product manager selects a reference productProduct manager selects a reference product

(product used by customer or competitive(product used by customer or competitive

product)product)

Product manager calculates the incrementalProduct manager calculates the incremental

economic benefit to the customer of usingeconomic benefit to the customer of usingthe product or brand in questionthe product or brand in question

8/7/2019 aakerch1

32/39

Simulating the Buying

Experience

Simulating the Buying

Experience Laboratories at or near shopping mallsLaboratories at or near shopping malls

Customer groups receive differentCustomer groups receive different

price/attribute treatmentsprice/attribute treatments

Customers select product they wouldCustomers select product they wouldchoosechoose

8/7/2019 aakerch1

33/39

Estimating Brand Equity with

Conjoint Analysis


Conjoint Analysis Conjoint AnalysisConjoint Analysis

Price ThresholdsPrice Thresholds

Dollarmetric ScalesDollarmetric Scales

8/7/2019 aakerch1

34/39

Estimating Brand Equity using

the Perceived Value Concept

Estimating Brand Equity using

the Perceived Value Concept Market Share, Perceived Value, Price RelationshipMarket Share, Perceived Value, Price Relationship

Perceived ValuePerceived ValueMarket Share = f [Market Share = f [ ---------------------------------------- ]]

PricePrice

Increase Perceived Value by:Increase Perceived Value by: Improving the product itself by increasing actual quality orImproving the product itself by increasing actual quality or

offering better service or a longer warranty periodoffering better service or a longer warranty period

Advertise to enhance the products imageAdvertise to enhance the products image

Institute value added services in the distribution channels such asInstitute value added services in the distribution channels such astechnical support or financingtechnical support or financing

Improve sales effort by training the sales force to sell value ratherImprove sales effort by training the sales force to sell value ratherthan pricethan price

8/7/2019 aakerch1

35/39


Conjoint Analysis


Conjoint Analysis Assume 3 attributes of a laptop computer choice:Assume 3 attributes of a laptop computer choice:

4 or 8 Hour Battery | PIII 500 or AMD 1Ghz | Dell or Compaq4 or 8 Hour Battery | PIII 500 or AMD 1Ghz | Dell or Compaq

Task: Rank order the following combinations of theseT

ask: Rank order the following combinations of thesecharacteristics fromcharacteristics from

8 = most perferred to 1 = least perferred8 = most perferred to 1 = least perferred

4 Hours, PIII500, Dell _____4 Hours, PIII500, Dell _____ 4 Hours, PIII500, Compaq ____4 Hours, PIII500, Compaq ____

8 Hours, AMD1Ghz, Compaq _____8 Hours, AMD1Ghz, Compaq _____ 8 Hours, AMD1Ghz, Dell ____8 Hours, AMD1Ghz, Dell ____

8 Hours, PIII500, Dell _____8 Hours, PIII500, Dell _____ 8 Hours, PIII500, Compaq ____8 Hours, PIII500, Compaq ____

4 Hours, AMD1Ghz, Compaq _____4 Hours, AMD1Ghz, Compaq _____ 4 Hours, AMD1Ghz, Dell ____4 Hours, AMD1Ghz, Dell ____

8/7/2019 aakerch1

36/39


Dollarmetric Scales


Dollarmetric Scales Rather than use 1Rather than use 1--7 liklihood of purchase scales, responses are given in dollar7 liklihood of purchase scales, responses are given in dollar

other currency terms. What should the relative prices of the five brands be?other currency terms. What should the relative prices of the five brands be?First, the respondent chooses the brands most preferred, and next, how muchFirst, the respondent chooses the brands most preferred, and next, how muchextra would they be willing to pay for a six pack?extra would they be willing to pay for a six pack?

CokeCoke, Pepsi 2, Pepsi 2 CokeCoke, 7Up 8 Analysis Totals: Comparative Brand Value, 7Up 8 Analysis Totals: Comparative Brand Value

CokeCoke, Dr Pepper 5 Coke: +2 +8 +5 +12 = 27 cents, Dr Pepper 5 Coke: +2 +8 +5 +12 = 27 cents

CokeCoke, Fresca 12 Pepsi:, Fresca 12 Pepsi: --2 +6 +3 +10 = 17 cents2 +6 +3 +10 = 17 cents

Pepsi,Pepsi, 7Up 6 7Up:7Up 6 7Up: --88 --66 --3 +4 =3 +4 = --13 cents13 cents

Pepsi,Pepsi, Dr PepperDr Pepper 3 Dr Pepper:3 Dr Pepper: --55 --3 +3 +7 = 2 cents3 +3 +7 = 2 cents

PepsiPepsi, Fresca 10 Fresca:, Fresca 10 Fresca: --1212 --1010 --44 --7 =7 = --33 cents33 cents

7Up7Up, Dr Pepper 3, Dr Pepper 3

7Up7Up, Fresca 4, Fresca 4

Dr PepperDr Pepper, Fresca 7, Fresca 7

8/7/2019 aakerch1

37/39

Estimating Brand Equity Using

Perceived Value

Estimating Brand Equity Using

Perceived Value Genentech Drug TPA: clears blood clots that cause heartGenentech Drug TPA: clears blood clots that cause heart

attacks: $2200 per dose.attacks: $2200 per dose.

However, an industry study showed that worked no betterHowever, an industry study showed that worked no betterthan Streptokinase, sold by a competitor for $200 per dose.than Streptokinase, sold by a competitor for $200 per dose.

GenentechGenentech(1) trained sales force to point out some of the limitations(1) trained sales force to point out some of the limitationsof the studyof the study(2) extended payment terms to the pharmacies and(2) extended payment terms to the pharmacies andencouraged stock upencouraged stock up

8/7/2019 aakerch1

38/39

Brand Equity, Perceived Value

and Price

Brand Equity, Perceived Value

and Price Reducing price is more common, but often more expensiveReducing price is more common, but often more expensive

than adding value.than adding value.

(# of units sold) x ( Decrease in contribution margin) =(# of units sold) x ( Decrease in contribution margin) =

Cost of Price DecreaseCost of Price Decrease

VS:VS:

Cost of providing sales training, Cost of improvingCost of providing sales training, Cost of improvingcustomer service, Improved warranty, Improving timecustomer service, Improved warranty, Improving timefor delivery, Reducing phone waiting time.for delivery, Reducing phone waiting time.

Value added is also distributed over all units soldValue added is also distributed over all units sold

8/7/2019 aakerch1

39/39

aakerch1

Documents