Essential Marketing & Brand Management Definitions
Understanding Core Marketing & Brand Management Concepts
Brand Equity Fundamentals
Brand equity is defined as a set of brand assets and liabilities linked to a brand, its name, and symbol that add to (or subtract from) the value provided by a product or service to a firm and/or that firm’s customers.
Types of Brand Equity
Customer Brand Equity
This is the value customers receive from a brand, less the value they receive from a generic product. Customer brand equity comprises value received before purchase (pre-purchase equity) and value received after purchase (post-purchase equity).
Firm Brand Equity
Firm Brand Equity derives from customer brand equity when the firm secures in its customers brand awareness, positive attitudes, high perceived quality, positive word-of-mouth, intention to purchase, purchase, brand loyalty, positive brand image and association (or brand personality), and satisfaction.
Components of Customer Equity
Pre-Purchase Equity
This refers to what customers believe before purchase that they will receive after purchase. It reduces customer search cost and purchase risk.
Post-Purchase Equity
It enhances the customer consumption experience. After purchase, customers actually receive some combination of functional, psychological, and economic values.
Financial Market Views on Brand Equity
Various financial market methods are used to assess brand equity, including market value and replacement methods.
Market Value Method
The market provides the best measure of Firm Brand Equity (FBE); this approach works well for publicly traded corporate brands.
FBE = Market Value – Book Value + Non-Brand Intangibles (e.g., human resources, know-how, patents).
Internal Methods for Brand Valuation
When market value data does not exist (as is the case for most product brands), the firm must use internal methods.
Replacement Cost
The firm multiplies the anticipated brand replacement cost by the probability of success.
Cash Flow Method
This approach is intuitively more appealing, but estimating future cash flows is difficult. Interbrand (a brand consultant) uses a proprietary method to estimate FBE based on future cash flows.
Key Brand & Product Terminology
Brand Identity
What the firm wants the brand to mean to customers, including brand personality and the brand promise.
Line Extension
A new but similar product added to an existing product line, using the same brand name. Example: Jell-O comes in different colors and flavors but uses the same brand name.
Flanker Brand
A new yet similar product, but developed under a new brand or a distinguishing sub-brand.
Multibranding Strategy
Also known as the House of Brands strategy, where the firm uses multiple brands for its various products. The firm seeks target-customer loyalty to individual brands, but not necessarily to the parent-company brand.
Umbrella Branding
Emphasizes a monolithic brand for several products or lines.
Product Portfolio & Management
Product Portfolio
Describes the set of products that the firm or business unit offers.
Portfolio Management
It is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance.
Growth-Share Matrix (BCG Matrix)
Also known as the Boston Consulting Group’s product portfolio matrix, the BCG matrix is designed to help with long-term strategic planning. It assists a business in considering growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue, or to develop products.
Dogs
These are products with low growth or market share.
Question Marks (Problem Children)
Products in high growth markets with low market share.
Stars
Products in high growth markets with high market share.
Cash Cows
Products in low growth markets with high market share.
Product Complementarity
Positive Complementarity
Customers who buy one type of product are more likely to buy a related product. Example: Chips and sandwiches.
Negative Complementarity
Customer dissatisfaction with one product may negatively affect sales of another.
Financial Metrics
Return on Assets (ROA) Equation
Return on Assets = Net Income / Average Total Assets
Advertising Concepts & Measurement
Rational Advertising
It focuses on people’s sense of logic.
Comparative Advertising
This advertising demonstrates superiority over competition.
Refutational Advertising
A special case of two-sided advertising explicitly mentioning competitors’ claims but then directly refuting them.
Selecting Advertising Media
Reach
Percentage of people exposed to an advertisement.
Frequency
Number of times a person is exposed to an advertisement.
Gross Rating Points (GRP)
GRP = Reach × Frequency
Advertising Timing Pattern
This refers to when advertising will appear. The major options are:
Flighting
Repeated high advertising levels followed by low (or no) advertising.
Advertising Measurement Techniques
Unaided Recall
It is widely used for broadcast advertising. The researcher asks subjects what advertising they remember, without prompting.
Tracking Studies
They measure customer responses over time, using either a customer panel or randomly selected respondents.