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Assistant Professor, MarketingPlease ensure all electronic devices are in “silent

mode”, “vibrate mode” or “turned off”

Anthony Francescucci

MKT 100-021WEEK 9 – BRAND MANAGEMENT

Welcome to

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AGENDA

Lecture on Brand Management

Metrics 7 & 8

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BRAND MANAGEMENT

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WHAT COMES TO MIND WHEN YOU SEE THIS BRAND?

HONDA – RELIABILITY, SMOOTH ENGINES

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WHAT COMES TO MIND WHEN YOU SEE THIS BRAND?

COACH - HIGH QUALITY, GREAT STYLE BAGS

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WHAT COMES TO MIND WHEN YOU SEE THIS BRAND?ROLEX - STATUS, HIGH QUALITY WATCH, COOL, SIMPLE

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WHAT COMES TO MIND WHEN YOU SEE THIS BRAND?

APPLE - COOL, SIMPLE, USEFUL DESIGN

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WHAT COMES TO MIND WHEN YOU SEE THIS BRAND?

WAL-MART – EVERY-DAY-LOW-PRICES

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WHAT IS A BRAND?

A brand

• is a learned cue that, through its association with a product or service, comes to stand for something in the minds of consumers and the market.

• Quality brand names assure customers that they will receive the same quality with their next purchase as they did with their last.

• Consequently, buyers are willing to pay a premium for such quality and assurance of quality conformance.

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HOW IS A BRAND REPUTATION CREATED?

A strong brand reputation is built on a history of good-to-great product design.

A weak brand reputation is built on a history of average-to-poor design.

Product or service reputation makes a brand.

Advertising can promote the reputation but it cannot make the reputation.

Brand reputation is made by sustained quality products and services.

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EXAMPLE OF BRAND REPUTATION

Gillette has a great brand name that has grown in value over the years and it has nothing to do with clever, funny advertising.

It has everything to do with the new technology and innovations it has introduced into blade shaving: the stainless steel razor blade, the twin blade, the lubricant strip, the triple blade, the Sensor with its 19 patents, the M3Power razor.

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TYPES OF BRAND LOYALTY• Unique, memorable, reinforcing experiences create a strong

emotional bond with the brand. Emotional loyalty

• The brand is used as an expression of self, to bolster self-esteem and manage impressions.Identity loyalty

• Brand loyalty is based on perceived superior functional features and attributes. Differentiated loyalty

• Consumer believes that continued loyalty earns special treatment and seller is providing such special treatment. Contract loyalty

• Based on buying convenience.Convenience loyalty

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BRAND EXTENSION: LEVERAGING REPUTATION

A well-known brand has an important advantage:

• it can be used to launch new products itself, or under license by another company (where royalties are paid per sale).

When licensed, the Brand reputation is an asset that earns interest in the form of royalties.

Brand Equity is the value of a Brand as an asset.

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KEYS TO SUCCESSFUL BRAND EXTENSION The extension category is used in the same usage situation as the original

branded product or by the same consumers of the original branded product. It has the same target segment.

The original brand reputation for quality and key benefit is relevant to the extension category.

The extension category is distributed through the same channels with the same reach.

The brand extension is well supported by a push-pull marketing campaign.

The extension category is not dominated by pre-existing powerful brands and brand loyalty.

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EXAMPLES OF BRAND EXTENSIONSThe extension category is used in the same usage situation. It has the same target segment.

The original brand reputation for quality and key benefit is relevant to the extension category.

The extension category is distributed through the same channels with the same reach.

The brand extension is well supported by a push-pull marketing campaign.

The extension category is not dominated by pre-existing powerful brands and brand loyalty.

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BRAND NAME LOGO AND TRADEMARK It should attract attention

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BRAND NAME LOGO AND TRADEMARK It should be memorable

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BRAND NAME LOGO AND TRADEMARK It should help communicate the benefit of the

product (Easy-Off oven cleaner)

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Insert product, ad, logo, maybe competing brandsif they look inferior.

BRAND NAME LOGO AND TRADEMARK It should distinguish the product from competing

brands

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CHANGING BRAND NAME LOGO

Brand reputation is based on a history of association between positive usage experience and the brand logo.

Changing the logo breaks some of this association.

Advertising agencies keen to profit from Brand re-identification ignore this essential principle of branding.

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ANY QUESTIONS

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METRIC MASTERY 7

Break-Even

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BREAK EVEN ANALYSIS1 13 25 37 49 61 73 85 97 109

121

133

145

157

169

181

193

205

217

229

241

253

265

277

289

301

313

325

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

Break-Even Point

RevenueFixed CostsVariable Costs

Units Sold

Sale

s or

Cos

ts

Revenues

Fixed Costs

Total Costs(when VC Stacked

onto FC = Total Costs)Break-Even

Point

Profit

Loss

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BREAK EVEN POINT / BREAK EVEN SALES

How many units of Product X do I need to sell to cover fixed / overhead costs? To cover a specific profit goal?

How many units of Product X do I need to sell before I start making money?

Break-EvenPoint (Sales)

ContributionMargin /unit

Fixed Costs

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Acme made busses that sold for $450 and cost $300 in variable costs to make. You may also remember that total annual fixed costs were $15,500.How many busses did they have to sell before realizing a profit?

REMEMBER ACME COACH

Fixed costs

• Rent $7,2000• Salaries $3,600• Insurance $1,200• Equipment/tools $3,500• TOTAL $15,500

ContributionMargin Revenue

COGS orVariable

Costs$150 $450 $300

Break-EvenPoint (Sales) Fixed Costs

ContributionMargin /unit

$15,500

$150

103.3 units

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You are going to start a small business selling bicycles. Each bike sells for $350, and it costs you $100 to make and $50 to ship. Your office & warehouse rent is $500/month, employee salaries $20,000/year, marketing costs $4,000/year. How many bicycles do you have to sell before realizing a profit?

CONSIDER THIS SCENARIO

Fixed costs

• Rent $6,000• Salaries $20,000• Marketing $4,000• TOTAL $30,000

ContributionMargin Revenue

COGS orVariable

Costs$200 $350 $100 +

$50

Break-EvenPoint (Sales) Fixed Costs

ContributionMargin /unit

$30,000

$200

150 units

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This is only of interest to you if the business returns (or makes) at least as much as you are earning in your current part-time job at Sporting Life ($25,000).

How many bicycles do you need to sell to achieve your goal?

SUPPOSE FURTHER

Fixed costs + Desired Profit• Rent $6,000• Salaries $20,000• Marketing $4,000• Desired Profit $25,000• TOTAL $55,000

ContributionMargin Revenue

COGS orVariable

Costs$200 $350 $100 +

$50

Break-EvenPoint (Sales) Fixed Costs

ContributionMargin /unit

$55,000

$200

275 units

Your market research indicates that demand for your cycles is

unlikely to be more than 250 per year.

What do you do?

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ANY QUESTIONS

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LET’S COMPLETE WORKSHEET

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METRICS MASTERY 8

Marking Return On Investment (MROI)OR

Return On Marketing Investment (ROMI)

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CONSIDER THIS SCENARIO

How do we determine if this is a good marketing investment decision?

A farm equipment company was considering a direct mail campaign to remind Customers to have tractors serviced before spring planting. The campaign is expected to cost $7000 and to increase revenue from $25,000 to $50,000. The contribution margin on tractor servicing revenues (after parts and labour) averages 60%

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• Marketing ROI - is a metric used to measure the overall effectiveness of a marketing campaign by considering the incremental contribution over the cost of the campaign.

MARKETING RETURN ON INVESTMENT

Revenue Attributable to Marketing

Contribution Margin Percent

X Marketing Costs

_

Marketing Costs

Return On

Marketing Investment

(ROMI)%

=

(Source: Farris, Bendle, Pfeifer, Reibstein, 2008)

x 100

Contribution Margin $Attributable to Marketing

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MROI EXAMPLE 1

A farm equipment company was considering a direct mail campaign to remind Customers to have tractors serviced before spring planting. The campaign is expected to cost $7000 and to increase revenue from $25,000 to $50,000. The contribution on tractor servicing revenues (after parts and labour) averages 60%

Return On

Marketing Investment

(ROMI)

Revenue Attributable to Marketing

Contribution Percent

Marketing Costs

X _

Marketing Costs

=114.3%

$25,000 60% $7,000

$7,000

$15,000$8,000

(Source: Farris et. al, 2008)

x 100

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A pizza place company was considering a campaign which included placing a newspaper ad in the local paper to entice customer to get a free pizza and included an offer that was buy 1 medium 3 topping pizza and get 1 free. The ad development and placement is expected to cost $1000. The price of each medium pizza sold is $10 and it cost the company $1 dollar to make. The pizza company expects to sell 500 additional pizzas during the campaign period. Calculate the Marketing Return on Investment for this campaign and suggest whether you think it would be a good investment or not for this company to run the ad?

MROI EXAMPLE 2

Return On

Marketing Investment

(ROMI)

Revenue Attributable to Marketing

Contribution Percent

Marketing Costs

X _

Marketing Costs

=200%

500 X $10= $5,000

($10-$1)/$10= 90%

$1000 + 500 X $1= $1,500

$1,500

$4,500$3,000

x 100

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A pizza place company was considering a campaign which included placing a newspaper ad in the local paper to entice customer to get a free pizza and included an offer that was buy 1 medium 3 topping pizza and get 1 free. The ad development and placement is expected to cost $1000. The price of each medium pizza sold is $10 and it cost the company $2 dollar to make. The pizza company expects to sell 200 additional pizzas during the campaign period. Calculate the Marketing Return on Investment for this campaign and suggest whether you think it would be a good investment or not for this company to run the ad?

MROI EXAMPLE 3

Return On

Marketing Investment

(ROMI)

Revenue Attributable to Marketing

Contribution Percent

Marketing Costs

X _

Marketing Costs

=14%

200 X $10= $2,000

($10-$2)/$10= 80%

$1000 + 200 X $2= $1,400

$1,400

$1,600$200

x 100

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ANY QUESTIONS

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LET’S COMPLETE WORKSHEET

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ASSIGNMENT #2

Bell Internet-based Video Streaming

Due March 29th, 2011 at 11:59 pm

Groups of

2 or 3

No more,

no less

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ESSAY ASSIGNMENT #2

See folder in Assignment Section on blackboard

•Review description PDF document

•Review Excel financial template

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ASSUME BELL HAS DECIDED TO PROCEED TO MARKET

Focus of this assignment is on STP

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ESSAY ASSIGNMENT COMPONENTS

• Overall Setup (-5 marks if missing) • Executive Summary (10 marks)• Marketing Strategy (40 marks)• Financial Analysis (15 marks)• Recommendation (15 marks)• Overall Organization and Writing (15 marks)• Appendix A: Excel financials (5 marks)• Bibliography (-5 if not provided in APA format)• Peer Group Evaluations (-5 if not submitted by each group

member)

Components

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MARKET STRATEGY

• Based on needs preferences

Segmentation Scheme

• Size up the market segment potential

Segment potential

• Include detailed description including applicable geo-, demo-, psycho-graphic & behavioral characteristics.

Recommend a target segment

Develop a positioning statement for recommended target segment

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FINANCIAL ANALYSIS

Prepared required Excel template

Insert (copy & paste) completed Excel template into the appendix of your report

Discuss your assumptions and analysis of financials in the body of your report.

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RECOMMENDATIONS

• If you recommend a launch then briefly outline the implementation issues that you would monitor most carefully during the launch.

• If you recommend not launching at this time, identify what key factors would need to change in order for you to reconsider and launch in Canada.

Discuss whether or not Bell should launch in the Canadian Market & if so to which segment and using which approach (soft or full)?

Be specific

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FORMATTING

Double-spaced (everything)

Put your charts / tables in appendices• Save the body of the report for text• In body, make reference to the appendices

APA formatting for in-text citations and references list

See assignment description for more details

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DON’T FORGETTo include a Title page

Make it easy for marker to read (it should read as one report)

Support your claims with evidence by indicating the source (i.e. either from article or from external research)

Only one group member needs to submit the assignment report to blackboard (see assignment section)

Each group member must submit an electronic peer evaluation on blackboard (see assignment section)

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BEFORE YOU LEAVE TODAY

name cards

Front of the Class

Hand In:

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SEE YOU NEXT WEEK