Developing a Brand Equity

Measurement And Management

System

A presentation by:
Varqa Shamsi Bahar
Presentation Outline
• Accountability in Marketing Investment

• The Brand Value Chain

A presentation by Varqa Shamsi Bahar 2

 Accountability in Marketing Investment

1. Those days where abundance of money available to generate exposure for the
brand is gone.

2. There is hardly any marketing professional who is not worried about what
return will a specific campaign bring about.

3. Virtually every marketing penny spent today must be justified as both effective
and efficient in terms of return on marketing investment (ROMI).

4. It is believed that up to 70% of the marketing spending these days cannot be

linked directly to short‐term increase in profits. However, they have an
influence on building brand equity and long term profitability.

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 ROMI of Magic toothpowder

Brand: Magic Year 2010 Year 2011 Year 2012

Percentage MROI -40% 50% 250%

•Note: This is against Incremental revenue.

•After more than a decade of investment in building brand

equity…since 2011, the brand is showing good signs towards
profitability.

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 ROMI of Senora

Brand: Senora Year 2010 Year 2011 Year 2012

Percentage MROI 4000% 500% 1000%

•Note: This is how powerful brands influence return on

marketing investment (ROMI).

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 ROMI of Shakti

Brand: Shakti Year 2010 Year 2011 Year 2012

Percentage MROI -60% -80% -90%

•Note: A perfect example of in-proper execution of branding

strategies which has lead to continuous –ve ROMI.

•Note: Weak brand equity will lead to –ve profitability.

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 Class Work for Revive

• Marketing Expenditure in 2011: 25 million

• Revenue in 2011: 350 million.
• Revenue in 2010: 300 million.
• Gross Profit in year 2011: 50 million.
• Gross Profit in year 2010: 40 million.

• Questions:
• What is the ROMI in terms of Revenue?
• What is the ROMI in terms of incremental revenue?
• What is the ROMI in terms of Gross Profit?
• Discussion: What can be done to make ROMI into +ve.
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P & G is currently selling Pringles in Bangladesh mainly in 3 flavors - Jalapeño,
Original, and Sweet & Sour Cream. Their contribution to the total Pringles sales in
Bangladesh is: 30%, 50%, and 20% respectively.
In year 2010, P & G sold 200,000 units of Pringles whereas; in 2011 their sales
(unit) grew by a staggering 50% thanks to the effective distribution channel of
MGH group. The amazing factor is that P & G only spent 800,000 TK in terms of
marketing expenditure in year 2011. They just made sure that the brand received
adequate shelf space. And the packaging shape of the product did a great job in
terms of grasping the ‘eye contact’ of the consumers at the retail end.

1. What is the contribution (sales units) of each of the variants in year 2010 and 2011?
2. If the trade price (TP) of Pringles is 135 TK and the Market Retail Price (MRP) is 150 TK,
then what is the revenue Pringles generated in year 2010 and 2011?
3. How much incremental revenue was generated in year 2011 compared to 2010?
4. What is the marketing return on investment in terms of incremental revenue in year
2011?
5. If the Jalapeño variant generates a profit of 30%, Original 10%, and sweet and sour
cream 15% of the selling price – then what is the marketing return on investment in terms
of incremental profit in year 2011?

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The Brand Value Chain

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 What is the brand value chain?

• The brand value chain is a structured approach.

• Assesses the sources of brand equity.
• Assesses how marketing activities create brand value.
• The value of the brand resides in the minds of the consumers.
Brand value creation process:
1. Marketing programs targeting actual/potential customers.

2. These activities affect customer mind‐set (what customers know and feel about the
brand).

3. The mind‐set produces brands performance in the marketplace (purchase occurs).

4. The investors considers the brand’s performance to arrive at a value of the

brand/shareholder’s value.

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 The Brand Value Chain

Marketing Customer Market Shareholder

VALUE Program Mindset Performance Value
STAGES
Investment
- Price premiums
- Awareness - Stock price
- Price elasticity
- Associations - P/E ratio
- Market share
- Attitudes - Market capitalization
- Expansion success
- Attachment
- Cost structure
- Activity
- Profitability

Program Marketplace Investor

MULTIPLIERS Quality Conditions Sentiment

- Clarity - Channel support - Market dynamics

- Relevance - Consumer size and profile - Growth potential
- Distinctiveness - Competitive reactions - Risk profile
- Consistency - Brand contribution

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 Marketing Program Investment

• Any marketing program investment that can contribute to

brand value development.

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 Customer Mind Set: Value is created at this
stage
• five dimensions have emerged from prior research and are also
highlighted in the CBBE model as particularly important measures of
the customer mindset:
• Brand value is created at this stage when customers have –
1. A high level of awareness
2. Strong, favorable and unique brand association
3. Positive brand attitudes.
4. Intensity Attitudinal loyalty and sense of
community.
5. A high degree of brand activity (Behavioral Loyalty
and Active enragement).
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 Customer Based Brand Equity Model

4.4. RELATIONSHIPS
RELATIONSHIPS ==
INTENSE,
INTENSE,ACTIVE What
ACTIVE
LOYALTY Whatabout
aboutyou
you&&me?
me?
LOYALTY

RESONANCE

3.3. RESPONSE
RESPONSE ==
RATIONAL
RATIONAL&&
EMOTIONAL
EMOTIONAL What
Whatabout
aboutyou?
you?
REACTIONS
REACTIONS JUDGMENTS FEELINGS

POINTS-OF-
POINTS-OF-
PARITY 2.2. MEANING
MEANING ==
PARITY&&
POINTS-OF-
POINTS-OF-
DIFFERENCE PERFORMANCE IMAGERY What
DIFFERENCE Whatare
areyou?
you?

DEEP,
DEEP,BROAD
BROAD
BRAND 1.1. IDENTITY
IDENTITY ==
BRAND
AWARENESS SALIENCE
AWARENESS
Who
Whoare
areyou?
you?
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 Program Quality Multiplier

• The ability of the marketing program to affect the customer mid-set

will depend on its quality. Four particularly important factors are as
follows:

– Clarity: did consumers understand the marketing program? Do consumers properly

interpret and evaluate its meaning?

– Relevance: is the marketing program meaningful to the consumer? Do consumers feel the
brand is one they should seriously consider?

– Distinctiveness: How unique is the marketing program? How creative or differentiating it is?

– Consistency: how well integrated is the marketing program? Is the brand evolving in the
right direction?

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despite being outspent by beverage brand giants like Coca-cola and Pepsi - the
California Milk Processor Board was able to reverse decade-long decline in
consumption of milk in California through their well designed and executed
16
“got milk?” campaign.
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 Importance of Program Quality

Numerous marketers have found that expensive marketing

programs do not necessarily produce sales unless they are
well conceived.

For example, brands such as Michelob, Reebok, 7 up and others

have seen their sales slide in recent years despite sizable
marketing support because of poorly targeted and delivered
marketing campaign.

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 Market Performance

• Market Performance: the customer mind set

affects how customer react or respond in the
marketplace in a variety of ways. Six key outcomes
of that response are as follows:
• Price premiums
• Price elasticity
• Market share
• Brand expansion success
• Cost structure
• Profitability
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 Marketplace Conditions Multiplier

Marketplace Conditions multiplier – the extent of which value created in the minds of
customers affects market performance depends on factors external to the
customer. Three such factors are as follows:

These factors are beyond individual customer:

1. Competitive superiority: How effective are the marketing investments of competing brands?
Jui vs Parachute. HOW STRONGLY HAVE COMPETITORS AFFECTED CUSTOMER MIDSET? Are
their brand equity stronger?

2. Channel and other intermediary support: How much selling effort is being put forth by
various channel partners? Are retailers helping to sell your brand? Are distributors
motivated to lift your product? Channel conflict?

3. Customer size and profile: How many and what types of customers are attracted to the
brand? Are they profitable? (toothpaste being launched under magic when only 2% of the
consumers every year shift from toothpowder category to toothpaste).

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 Marketplace Conditions Multiplier Continued…

The competitive context faced by a brand can have a profound

effect on its fortunes:
• both Nike and McDonalds benefited in the 1990s from the
marketing woes of their main rivals, Reebok and Burger King,
respectively. Both of the latter brands have suffered from
numerous repositioning and management changes.
• Master Card has had to compete for the past decade with
two strong brands: visa and American Express and
consequently has faced an uphill battle gaining market share.
• Discussion: So WHY enter a market where there is strong
competition like Unilever and RB and Nestle?

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 Shareholder Value

Shareholders value indicators: Market

Capitalization, and stock price.

Market capitalization: Total value of the shares.

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 Investor Sentiment Multiplier

Financial Analysts and investors consider many factors at

arriving at their brand valuation and investment decision:
• Growth potential: prospect of the brand, prospect of the
industry, Analyze the micro/micro environment. (External
Opportunities).

• Risk profile: risk profile for the brand? (External threats).

• Brand contribution: how important is the brand as part of

the firms brand portfolio?
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Thank you for your Attention.

Any Questions?