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Brand Management Facilitation

Todays Presentation
Definition Key terms in brand management The brand management model
Sector overview Behavior of the model

The dissertation model Q&A


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A Brand Marks what People Think and Feel


It is a rational and emotional formula based on the sum of trust, relevance, and significance that relates people to a firm, a product, or a service throughout their life.

Market Dynamics
Businesses and markets in which brands play an important role are both highly complex: They are tightly coupled: there are lots of complex interactions, interventions based on a single action are unlikely to prove successful in the long term They behave counter-intuitively they can behave in the opposite manner to which one intends
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Market Dynamics cont.


They exhibit trade-offs They are policy resistant attempting to influence the system in one direction will often cause some reaction which minimizes the impact of the original action And they are dynamic changes occur on many different timescales

Brand Management
Some Key Terms

Brand Awareness Brand Loyalty Motivation Desire to Buy Brand Perceived Quality Satisfaction Negative Product Image Positive Product Quality Brand Equity

The Dimensions in Brand Building


Brand identity Brand awareness Familiarity and knowledge of the brand Consideration to evaluate the brand
Purchase

Brand loyalty (or brand equity)

A Managers Goal must be to Build Brand Equity


A brand can only be strong if it has a strong supply of loyal customers Brand equity therefore can be defined as a measure of strength of consumers attachment to a brand.

Brand Equity
Brand Name Industry Brand Value ($US m) 83,845 56,654 43,781 33,502 33,197 32,275 30,021 26,231 24,181 21,048 Brand Value as a % of Market Capitalisation 59% 21% 28% 10% 58% 61% 21% 64% 24% 19%

Coca-Cola Microsoft IBM General Electric Ford Disney Intel McDonald's AT&T Marlboro

Beverages Software Computers Diversified Autos Entertainment Chips Fast Food Telecom Tobacco

Source: Interbrand 1999, The World Biggest Brands

Purpose and Goal of the Model


Brand equity is a complex system and difficult to manage and understand. A simulation model will be used, to identify key leverage points to understand the behavior of the system, thus reduce uncertainty in decision making.

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The Brand Management Model

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Brand Management
A Conceptualized Sector Overview
The Brand Awareness/Effectiveness Sector
Competitive pressure +

Effectiveness + B
Competition Influences

B
Investment Infl uences

Knowledge +
R Kno wlege is g ood

Investment + +

Brand Awareness + At tractiveness of other brands

The Brand Awareness/Loyalty Sector

R
It's What the Customer W ants

+ Motivat ion

Desire t o choose brand + + Brand Brand loyalty loyalty Snowball

+/Product attractiveness R + Perceived quality + Quality is Job One

The Brand Loyalty/Quality Sector

+ Satisfaction

Negative product image

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The Brand Awareness/Effectiveness Sector


Effectiveness + B
Competition Influences

B
Investment Infl uences

Competitive pressure +

Knowledge +
R Knowlege is good

Investment + +

Brand Awareness
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Vensim Brand Awareness/Effectiveness Sector


Loyalty factor Net effect of BA Above-the-line investment Weight on above-the-line investment Fraction of potential BA reached Competitive pressure Awareness multiplier Below-the-line investment Weight on below-the-line investment Brand Awareness Decrease in awareness Increase in brand awareness

Awareness investment Weight on price promotion investment

Initial Investment

Effect from investment in Price Promotion

Forget impact on awareness

Price promotion investment

Forgetting rate

Consumer knowledge about brand

Knowledge gain

Weight on public relations investment Public relations investment

Effect on gaining knowledge <Brand Loyalty>

<Brand Awareness>

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The Brand Awareness/Loyalty Sector


Brand Awareness +
R
It's What the Customer W ants

+ Motivat ion

At tractiveness of other brands

Desire t o choose brand + Brand loyalty Snowball

+
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Vensim Brand Awareness/Loyalty Sector


Motivation <Brand Awareness> Effect on brand choice

<Competitive pressure> <Perceived Product Quality> Pressure on loyalty <Brand Awareness> Attractiveness to choose other brands

Brand Loyalty Increase in brand loyalty <Desire to buy brand> Investment effects on brand loyalty <Below-the-line investment> <Price promotion investment> <Perceived Product Quality> Increase in desire

Factors to increase desire Desire to buy brand Loosing interest 16

<Public relations investment>

Vensim Brand Loyalty/Quality Sector


<Brand Loyalty> Satisfaction Effect of quality on attractiveness Actual product quality

Price PQ multipliers Pe rce ive d Product Quality Effect of price on attractiveness PQ net increase Product Attractiveness De live ry de lay Effect of delivery delay on attractiveness Relative delivery delay Acceptable delivery delay Relative Price Acceptable price

Pressure on PQ

<Effect from Ne gative product investment in Price image Promotion>

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The Brand Loyalty/Quality Sector


+ Brand loyalty -

+/Product attractiveness R + Perceived quality + Quality is Job One

+ Satisfaction

Negative product image


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The Bottom Line: Brand Equity


<Brand Awareness>

<Perceived Quality> Bran d Equi ty

<Brand Loyalty>

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Model Behavior
Base Run
100 100 100 1 Awareness Loyalty desire Quality

Investment: 70 ATL: 0.7 BTL: 0.1 PP: 0.1 PR: 0.1

0 0 0 0.4

Awareness Loyalty desire Quality 0 6 12 18 24 30 Time (M onth) 36 42 48

Brand Awareness : base Brand Loyalty : base Desire to buy brand : base Perceived Product Quality : base

Awareness Loyalty desire Quality

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Model Behavior
100 100 100 0.8 Awareness Loyalty desire Quality

Investment: 35 ATL: 0.7 BTL: 0.15 PP: 0.05 PR: 0.1

0 0 0 0.4

Awareness Loyalty desire Quality 0 6 12 18 24 30 Time (M onth) 36 42 48

Brand Awareness : base2 Brand Loyalty : base2 Desire to buy brand : base2 Perceived Product Quality : base2

Awareness Loyalty desire Quality

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Weakness of the Model


Does not consider people in the system Missing link to capture growth and decline of market share Key leverage point: investment rather than consumers

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The new Approach: Brand Equity as Resource System


Inflow

Loyal Customers

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Outflow

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Objectives
To gain insides in how to control a desired level of loyal customers, thus support resource allocation decisions of a firm
To test and compare alternative strategies to improve the management of brand equity

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What is the contribution to the body of knowledge?


Theory: By creating a generic model to investigate the effect of resource allocation which influences the brand equity of a firm Praxis: Providing recommendations for improving brand strategies
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Investment + Competitive pressure B1


Investment control

Causal Loop Diagram


R1 Familiarity & knowledge of the + brand + Brand awareness R2
Awareness from Investment

Effect from invstment

+ +

+ Evaluation of alternatives Word of mouth +

R3
Competitor determins choice

+ Consideration to +evaluate brand Quality

Price

Brand loyals +

R4
Word of mouth effect

+ Desire to buy + brand

Attractiveness of products + R5
Effect from price value relation

Purchase

Perceived quality of brand

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Potential customers

Stock and Flow Structure


Investment Loosing awareness Unaware Potentials Becoming aware Aware Gaining knowledge

Relevance (advantage over comp etitor)

Familiarity & Knowledge

Pop ulation Word of mouth Attractiveness

Ownership experience

Satisfaction rate in category

Attractiveness of p roduct

Evaluation of alternatives

Loy alty Purchase

Desire to buy Evaluation

Consideration

Price sensitivity

Loosing interest Attractiveness of other brands

Preceived quality

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