MRKT 670 Week 5 DB Forum 3 Example

Discussion Board Forum 3: Thread and Two Replies

MRKT 670 Brand Management, Discussion Board Forum 3 (thread and two replies)

Thread by [Student Name]

The prompt, the pet food company and the classmates' posts are composites standing in for the course's own forum; the textbook, Scripture and published studies are real; the requirements follow Liberty's public course guide for MRKT 670.

Thread

A private equity firm has bought a family pet food company whose dry and canned foods sell in about 1,500 independent pet stores and online. The new owners want a single number on the brand's health in every monthly report. I think one number would mislead them, and Keller (2013) explains why: brand equity has sources, what consumers know and feel about the brand, and outcomes, what that knowledge earns in the market, and the two can move separately.

For the sources, I would use a survey of pet owners built on the consumer-based brand equity scale that Yoo and Donthu (2001) developed and validated across cultures. Their scale measures brand loyalty, perceived quality and brand awareness with associations, and combines them into an overall measure. For a pet food brand, perceived quality is likely to matter most, since owners worry about ingredients and their animals' health, and a fall in perceived quality would warn of trouble before sales showed it. A sample of about 400 owners, drawn from the company's online buyers and from shoppers intercepted at a dozen independent stores, would give stable estimates, and repeating the same questions twice a year would show direction as well as level.

For the outcomes, I would use the revenue premium proposed by Ailawadi et al. (2003): the difference between the brand's revenue and the revenue of a store brand in the same category and outlets. They showed that the measure is simple, reliable, correlates with other equity measures and reflects real changes in a brand's health over time. For this company, comparing its revenue with that of the private label foods sold by the larger pet chains, and with independent stores' own labels, would show whether owners still pay for the name.

Each measure misses something. The survey captures attitudes that may not turn into purchases, and it depends on who answers. The premium reports the payoff without the cause, so a drop might reflect a rival's coupon blitz instead of a fading brand. Used together, the two measures tell the owners both whether the brand is earning its premium and whether the reasons customers pay it are holding.

I would report them on a one-page dashboard each quarter, with the revenue premium in the monthly report and the survey twice a year, which Keller's account of brand equity measurement systems suggests should be built into regular management rather than run once. The dashboard would also track two or three associations the brand wants to own, such as "real meat first" and "made in the Midwest," so the owners can see whether advertising is moving them.

Paul urged the Corinthians to examine themselves, to test whether they were holding to the faith (English Standard Version Bible, 2001/2016, 2 Corinthians 13:5). Honest measurement of a brand is a modest form of self-examination. It asks whether the company is still what its customers believe it to be, and it should be designed to reveal problems, not to produce a flattering number for the owners.

Classmates: would you add a financial measure of brand value, or are the two enough for a private company whose owners plan to sell it within five years?

Reply to Derek

Derek, your thread recommended that the hotel group you studied measure its brand with the Net Promoter Score alone, since it is simple and executives understand it. Simplicity is valuable, but research has tested whether the score predicts business results as well as its advocates claim.

Keiningham et al. (2007) went back to the industries Net Promoter's champions use as showcases, drew on years of Norwegian satisfaction interviews covering 21 companies, and found no sign that the score forecast growth better than the alternatives. Matching national satisfaction index scores to later company results, Morgan and Rego (2006) saw the plain average satisfaction score forecast performance best, the share of top-two-box ratings do nearly as well, and recommendation-based measures such as net promoters add little or nothing.

The hotel group could keep the score for its simplicity while adding average satisfaction, which the research supports far better as a forecast. Reporting both would cost little, since a single guest survey can carry both questions at once, and the comparison would show over a year or two which one actually tracks the group's bookings, repeat stays and revenue.

Under the law given through Moses, no charge could stand on a single witness; it took two or three (English Standard Version Bible, 2001/2016, Deuteronomy 19:15). A brand's health deserves the same standard: more than one witness before the company draws conclusions.

Does the hotel group already collect satisfaction scores that it could compare with its Net Promoter results over the past few years?

Reply to Alicia

Alicia, your thread argued that the athletic apparel company you studied should report the value of its brand to investors, since the brand is its most valuable asset even though it barely appears on the balance sheet. Research supports the view that markets value strong brands.

Simon and Sullivan (1993) developed a technique for estimating brand equity from the financial market value of a firm, separating the value of brands from that of other assets, and used it to trace how marketing events changed the brand equity of Coca-Cola and Pepsi. Madden et al. (2006) tracked the shares of companies that an outside valuation ranked as owning the strongest brands and saw them beat the market while carrying less risk, which suggests that patient brand building pays off for shareholders as well as for marketers.

Keller (2013) notes that brand value estimates rest on assumptions, so a company that reports one should explain its method. Different valuation firms often produce very different figures for the same brand, and investors may discount a number whose basis they cannot see, so a clear method matters as much as the figure itself.

Proverbs contrasts money grabbed in a hurry, which shrinks, with money gathered slowly, which grows (English Standard Version Bible, 2001/2016, Proverbs 13:11). Brand value grows the second way, through years of kept promises, which is why it deserves careful stewardship rather than quick exploitation.

Would the company report a brand value figure itself, or rely on an outside ranking that investors already know and that it does not control?

References

Ailawadi, K. L., Lehmann, D. R., & Neslin, S. A. (2003). Revenue premium as an outcome measure of brand equity. Journal of Marketing, 67(4), 1-17. https://doi.org/10.1509/jmkg.67.4.1.18688

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Keiningham, T. L., Cooil, B., Andreassen, T. W., & Aksoy, L. (2007). A longitudinal examination of Net Promoter and firm revenue growth. Journal of Marketing, 71(3), 39-51. https://doi.org/10.1509/jmkg.71.3.039

Keller, K. L. (2013). Strategic brand management: Building, measuring, and managing brand equity (4th ed.). Pearson.

Madden, T. J., Fehle, F., & Fournier, S. (2006). Brands matter: An empirical demonstration of the creation of shareholder value through branding. Journal of the Academy of Marketing Science, 34(2), 224-235. https://doi.org/10.1177/0092070305283356

Morgan, N. A., & Rego, L. L. (2006). The value of different customer satisfaction and loyalty metrics in predicting business performance. Marketing Science, 25(5), 426-439. https://doi.org/10.1287/mksc.1050.0180

Simon, C. J., & Sullivan, M. W. (1993). The measurement and determinants of brand equity: A financial approach. Marketing Science, 12(1), 28-52. https://doi.org/10.1287/mksc.12.1.28

Yoo, B., & Donthu, N. (2001). Developing and validating a multidimensional consumer-based brand equity scale. Journal of Business Research, 52(1), 1-14. https://doi.org/10.1016/S0148-2963(99)00098-3