EMC Academic Group Journal Marketing research … · Marketing research translated into practice...

Marketing research translated into practice

EMC Academic Group Journal

Edition 3 – September 2014

2 EMC Academic Group Journal - Edition 3

Contents

About the EMC Academic Group 3

Contributors to this edition 4

Using analysis of online reputation to justify strategic marketing spend 5

Should companies tell consumers that their ads were generated by fellow consumers? 7

Linking market strategy risk to shareholder value 9

Does a consumer’s in-store travel distance affect the amount they are willing to spend? 14

Getting inside the mind of the marketing managers 16

Do brands actually contribute to firm performance? 19

Useful references and information 21

Contact us 23


The European Marketing Confederation (EMC) is the organisation responsible for bringing together marketing, sales and communications associations across Europe. The aim of the EMC is to share best practice as well as to promote and develop marketing, sales and communication as a fundamental business process.

The EMC’s Academic Group was created to provide practising marketers with access to simple and straightforward academic marketing research which could inform their own marketing strategies.

The group is made up of a pan-European network of senior marketing academics and practising marketers, who translate the latest marketing

About the EMC Academic Group

research into practice. Through their articles, marketers operating at the coalface of the profession can learn about the latest trends and developments affecting their sector.

Each month EMC member associations publish articles summarising the key aspects of each piece of research they have analysed, so that marketers can choose to implement changes within their own organisations, based on informed research.

This biannual Journal is the compilation of each of these articles, all of which have been produced by the professors of the EMC Academic Group.


Contributors to this edition

With thanks to the following professors for their contributions to this edition:

Professor Magnus SöderlundCentre Director, Centre for Consumer Marketing, Stockholm School of Economics (SSE), Sweden

Professor Malcolm McDonald Emeritus Professor, Cranfield School of Management, United Kingdom

Professor Marc LogmanPart-time Professor of Marketing Strategy, Leuven University, Belgium

Professor Peter DorčákAssociate Professor, Department of Marketing and International Trade, University of Prešov, Slovakia

Professor Yolanda JordaanProfessor, Department of Marketing Management, University of Pretoria, South Africa


As every marketer will appreciate, becoming a market leader in the provision of products or services is no longer just about the company or organisation who can boast the highest ‘quality’ product.

It has become a much more complicated marketing challenge to maintain a reputation and therefore a leading position in the marketplace. And reputation is the key word here – having the highest quality product is worth little these days if you have a poor reputation for customer service.

Reputation matters a great deal, and in an age where the internet has become a primary sales and promotion tool where information and opinions can be easily and quickly disseminated, your company’s reputation online is more important than ever. Those companies with a higher reputation online clearly have the competitive advantage over those with more dubious repute.

Whilst the impact of online marketing has been evaluated to a certain extent in Slovakia1, the USA2 and Singapore3 where relationships between reputation management and social media have been analysed, there has been little research scrutinising online reputation specifically.

As a result, it can prove more difficult for marketers to justify spend and investment in online marketing because the reputational impact can be difficult to analyse.

We know that the internet or virtual market has become an important marketing tool - to the extent that some people believe the management of online reputation to be more important than offline. But how can we analyse online reputation and the impact this can have, in order to justify and inform our marketing communication strategies?

Using analysis of online reputation to justify strategic marketing spend

1 RAJZÁK, P. et al. Systém pre hodnotenie online reputácie bánk. Faculty of Electrical Engineering and Informatics of the Technical University of Košice, 2010. pp. 652-657. ISBN 978-80-553-0460-1.2 MADDEN, M., SMITH, A. Reputation management and social media. [online]. [cit. 2013-03-03]. Available on the Internet: http://www.pewinternet.org/2010/05/26/reputation-management-and-social-media/3 ZHIGI, S. et al. A Survey of Trust and Reputation Management Systems in Wireless Communications. University Singapore, 2010. pp. 1755-1772. ISSN 0018-9219.

http://www.pewinternet.org/2010/05/26/reputation-management-and-social-media/



This was the aim of a recent study undertaken with a team of researchers, which looked specifically at the marketing of Slovakian destinations online, using a new methodology which allows marketers to analyse their online reputation effectively, quickly and with ease.

Firstly, it was important to establish just what was meant by reputation. For the purposes of this study, the definition by Oxford University4, where reputation = experience – expectations was used.

Using this as a reference point, a study to analyse the online reputations of the top 20 largest towns in Slovakia was undertaken. This was done using a methodology known as ‘sentiment analysis’5 to study how each town was regarded against a specific criteria of sentiments.

For each town a Google search was carried out using the town’s name as the search term. The top 10 results that came up were analysed. To ensure that this was not influenced by previous searches a proxy anonymiser was used.

The results of the sentiment analysis for each of the top 10 results was then taken to come up with the ‘total sentiment’ which was defined as the overall online reputation for the town.

By listing each town in ascending order based on their overall online reputation, it was possible to draw an important conclusion. The highest ranking towns were those with their own specific websites, managed by the towns themselves.

These towns, which occupied the leading positions in terms of online reputation, therefore had the competitive advantage as a result of the positive perceptions of their identities online.

Clearly, if potential visitors search for a town and come across negative feedback, this is likely to affect their decision on whether or not to visit the

destination, especially if they haven’t been before. The same also applies to potential investors.

Marketers therefore need to ensure that their destination has a significant presence online, preferably within a website of their own. There needs to be information readily available about their town which is as clear and positive as possible, whilst also ensuring that any negative publicity is eliminated through the enhancement of more positive messaging.

In order to do this, there needs to be an effective and active online communications strategy in place, to help spread positive information on key portals where the target audience is active. This might include relevant online newspapers, in addition to identifying and seeking to influence online web pages which feature in the top 10 results of a Google search using your destination or key word.

This piece of research has revealed a new method of analysing online reputation which isn’t too complex, and is transparent and easy to use for practicing marketers. It’s a method which could be of particular benefit to SMEs, public institutions and individuals using the internet for their personal branding.

Whilst the study used destination marketing as an example, the methodology translates right across all sectors and types of organisation because the underlying aims remain the same – how to justify online marketing strategy and spend, through the effective analysis of the impact of online reputation.

To find out more about this method and how to apply it within your own organisation, don’t hesitate to contact the author at: [email protected]

Professor Peter Dorčák, Associate Professor at the University of Prešov, Slovakia

4 ARGRYIOU, E., KITCHEN, P.J., MELEWAR, T.C. The relationship between corporate websites and brand equity: A conceptual framework and research agenda. In : International Journal of Market Research, Vol. 48, No. 5 (2006) pp. 559-575.5 ROHAĽ, R., SASKO, J. Analýza sentimentu výsledkov slovenských firiem. [online]. [cit. 2013-03-10]. Available on the Internet: http://www.reputation.sk/wp-content/uploads/2014/02/ORMreport.pdf

http://www.reputation.sk/wp-content/uploads/2014/02/ORMreport.pdf



These days many companies are involving their customers in user-generated content for their advertising messages. In 2010 Unilever launched one of the largest global consumer video-making competitions involving 13 of its brands. Ford also handed over control to 100 social influencers in 2013, giving them the opportunity to create and implement all advertising efforts for Ford Fiesta that year. Ford became one of the first companies to develop a year-long consumer-generated ad campaign as a result.

Consumer-generated advertising is a fun and intriguing way to create ads, giving marketers an opportunity to gain ideas from the very market that they are aiming to reach. The co-creation of ads by consumers has increased a great deal as developments in technology have empowered consumers more. In some instances consumers create and produce the ad, in others they generate a concept for an ad which an agency will then produce.

Should companies tell consumers that their ads were generated by fellow consumers?

Consumer-generated advertising does, however, have its drawbacks. Because it gives companies less control over their brand message, it’s no surprise that they try to opt for strategies where they can still have the final say. The way they do this is by encouraging consumers to create ads through competitions and forums.

There are many important benefits of involving the customer in consumer-generated advertising. As well as a much deeper customer insight, it provides companies with completely authentic content. However, the benefit of engaging some customers doesn’t necessarily transfer to the broader customer-base not involved in the co-creation process. This raises a question over whether customers react favourably to a message when they know that a fellow consumer has developed the advertisement?

Prior research has suggested that knowing that something was consumer-generated could impact positively on persuasion power. This was dependent on the consumer perceiving the ad

creator as someone they could relate to more than a professional persuader.

The more an individual identified with the ad creator, the more likely they were to be

persuaded by the ad through the process of identification. Research has also shown that if a consumer

was sceptical of the customer’s ability to develop effective advertising, this could impact

negatively on persuasion power.


The concept of scepticism Vs identification was therefore researched in a number of studies where the authors proposed a scepticism-identification model of ad creator influence. The idea was that disclosing to an audience that an ad was created by a consumer triggered one of two effects: scepticism about the competence of the ad creator or identification with them.

To determine which competing effect (scepticism or identification) dominated, a pilot study was run. The results pointed to a heightened pattern of scepticism when disclosure took place.

Based on these results, three more studies were undertaken to establish the factors that decrease scepticism and strengthen identification with the ad creator. The first focused on reducing scepticism by constraining consumers’ cognitive resources; the second focused on increasing identification through background information about the ad creator; and the final study focused on increasing identification through brand loyalty.

The results showed that the effectiveness of disclosing advertising co-creation depended on factors that hindered scepticism and heightened identification with the ad creator. Whilst consumers didn’t necessarily perceive consumer ads as more trustworthy than ads created by

professional firms, persuasion did increase when consumers had:

• Limited cognitive resources to scrutinise the message;

• Background information about the ad creator that enhanced source familiarity; and

• High loyalty to the brand.

The upshot of this for marketers is that careful consideration should be given to whether or not you want to publicise that your ads are generated by consumers. This is especially the case in situations of high involvement and engagement. However, if you do choose this route, increasing identification between the ad creator and the ad recipient will lower scepticism about the consumers’ skills as ad creators – just take Dove Body Wash for example.

Overall, the findings from these studies contribute to our limited knowledge of this new consumer-generated advertising trend and give us food for thought when it comes to embarking on the co-creation process.

Professor Yolanda Jordaan, Department of Marketing Management, University of Pretoria, South Africa

Consumer-generated advertising is a fun and intriguing way to create ads, giving marketers an opportunity to gain ideas from the very market they are aiming to reach.”“


The most common financial objective of modern commercial corporations is the sustainable creation of shareholder value. This can be achieved only by providing shareholders with a total return that exceeds their risk-adjusted required rate of return for the investment.

However, the share price for most companies already reflects some expected future growth in profits. Current shareholders and, more importantly, potential future investors want to assess whether a company’s proposed business strategies will produce sufficient growth in sales revenues and profits to support both the current share price and existing dividend payments, as well as drive the capital growth they want to see in the future.

Alongside this, external stakeholders also need a method of assessing the risks associated with proposed strategies as these have a direct effect on the rate of return.

In today’s highly competitive environment, the major sources of shareholder value creation are intangible marketing assets such as brands, customer relationships and channels of distribution. This accounts for 80% of the company’s value that does not appear on the traditional balance sheet. To reflect the importance of intangible marketing assets, future marketing strategies should be subjected to a rigorous review process.

Unfortunately this is not the case and, worryingly, there are too few rigorous internal evaluations of how marketing strategies will impact on shareholder value. This is surprising as these same companies would undoubtedly have created formal, board-level audit committees responsible for reviewing all the major business risks they face. They would never think of failing to conduct comprehensive financial due diligence processes on their acquisitions or investments, so why should this differ for marketing strategies?

Following four years of company-sponsored research at the UK-based Cranfield University School of Management, this paper is able to set out a Marketing Due Diligence (MDD) process to address the marketing strategy review process gap.

Linking market strategy risk to shareholder value


The MDD process subjects any proposed marketing strategy to a structured, sequential process that will indicate the probability of a marketing strategy leading to increased shareholder value. The whole basis of shareholder value is the direct linking of the level of risk to the level of financial return that is required.

As shown in Figure 1, the perceived risk profile of the investment drives the level of return required by investors.

But what is the methodology around the MDD process and how does it assess the risks associated with planned marketing strategies?

Figure 1: Risk-adjusted required rate of return

Level of return required by investors in investment Y

Risk-adjusted required rate of return line

Specific risk of investment Y

Zero risk of return

Req

uire

d ra

te o

f ret

urn

Perceived risk profile of investment

The whole basis of shareholder value is the direct linking of the level of risk to the level of financial return that is required.”“


The process of MDD

Despite what many non-marketers think, marketing is much more than just promotion. It is much more, even, than designing and delivering the ‘marketing mix’ of promotion, product, pricing, place (distribution), process, people and physical evidence.

Methods for measuring the effectiveness of these more obvious marketing activities have been in place for years. Whilst they have their place, they tell us little about the effectiveness of the marketing strategy - the part of the marketing process that concerns itself with understanding the market and deciding what parts of it to focus on and with what value propositions. This is where the MDD process comes in.

Looked at through the lens of business risk, as investors do, a strong strategy reduces the risk associated with a promised return. To investors, it is the risk-adjusted rate of return that matters, and managing risk is as important as managing returns – sometimes more so.

In essence, all business plans say the same thing. They make three basic assertions, which can be summed up as:

Each of these carries a level of risk that it may be wrong or may fall short of its stated promise. Business risk, therefore, is the combined risk of these three things and can be said to have three components:

Market risk The risk that the market may not be as big as promised in the plan

Share risk The risk that the strategy may not deliver the share promised in the plan

Profit risk The risk that the strategy may not deliver the margins promised in the plan

The table overleaf sets out the contributing factors to each component of the strategic business plan.

Despite what many non-marketers think, marketing is much more than just promotion and designing and delivering the ‘marketing mix’

“1. The market is ‘this’ big.

2. We’re going to take ‘this’ share of the market.

3. ‘That’ share will make ‘this’ much profit.


Table 1: Overall risk associated with the business plan

Market Risk Strategy risk Implementation risk

Product category risk which is lower if the product category is well established and higher for a new product category.

Target market risk which is lower if the target market is defined in terms of homogeneous segments and higher if it is not.

Profit pool risk which is lower if the targeted profit pool is high and growing and higher if it is static or shrinking.

Segment existence risk which is lower if the target segment is well established and higher if it is a new segment.

Proposition risk which is lower if the proposition delivered to each segment is segment specific and higher if all segments are offered the same thing.

Competitor impact risk which is lower if the profit impact on competitors is small and distributed and higher if it threatens a competitor’s survival.

Sales volumes risk which is lower if the sales volumes are well supported by evidence and higher if they are guessed.

SWOT risk which is lower if the strengths and weaknesses of the organisation are correctly assessed and leveraged by the strategy and higher if the strategy ignores the firm’s strengths and weaknesses.

Internal gross margin risk which is lower if the internal gross margin assumptions are conservative relative to current products and higher if they are optimistic.

Pricing risk which is lower if the pricing assumptions are conservative relative to current pricing levels and higher if they are optimistic.

Uniqueness risk which is lower if the target segments and propositions are different from those of the major competitors and higher if the strategy goes ‘head on’.

Profit sources risk which is lower if the source profit is growth in the existing profit pool and higher if the profit is planned to come from the market leader.

Future risk which is lower if the strategy allows for any trends in the market and higher if it fails to address them.

Other costs risk which is lower if assumptions regarding other costs, including marketing support, are higher than existing costs and higher if they are lower than current costs.


Turning MDD into a financial value

Given the focus on aligning the MDD process with the creation of shareholder value, it should come as no surprise that the MDD diagnostic process adjusts the expected cash flows generated by proposed marketing strategies. It does this by using the probabilities assessed through the structured risk analysis process.

This first stage of the MDD diagnostic process should result in an adjusted set of forecast sales revenues, profits and cash flows from the proposed marketing strategy.

The adjusted expected cash flows are then assessed to see whether they are shareholder value-enhancing. This is done by putting them into the context of the capital employed in implementing the marketing strategy and the required rate of return on the capital employed.

A detailed explanation of how these calculations are made can be reviewed in the book nearing publication: “Marketing and Finance – Creating shareholder value” (McDonald M. Wiley 2013).

Not surprisingly, the capital that we use for this computation is the genuine capital that is required in the business in order to implement the marketing strategy. In other words, it includes the value of the relevant intangible assets owned and used by the business, and is not limited to the historically-based, tangible asset-oriented balance sheets published by most companies.

When MDD becomes a routine process for assessing the strategic decisions of company directors, the flaws it detects and the challenges it throws up may be fewer and more routine. In the meantime, MDD will have many important implications for the board.

Professor Malcolm McDonald, Cranfield University School of Management, United Kingdom

Probability-adjusted cash flows

–x– Value of capital employed

Required rate of return

Potential loss from capital at risk

Essentially the formula is as follows:

Looked at through the lens of business risk, as investors do, a strong strategy reduces the risk associated with a promised return.”“


Budget£12.50

Budget£12.50

Many retailers have therefore experimented with activities like deliberately allocating shelf space to a particular part of the store so that the in-store paths for customers become longer, like putting the milk at the back of the shop, exposing consumers to more products.

Department stores are also designed so that customers have to walk from one side of the store to the other in order to ascend or descend multiple floors on the escalator. IKEA’s “forced walk store design” where consumers have to cover the entire store from the entrance to the checkout is also a clever example of how their purchasing decisions are inadvertently influenced.

To date, few academic studies have actually demonstrated a link between in-store travel distance and unplanned purchases. The main reason for this is that it isn’t easy to measure these two variables. However, a recently published study appears to have accomplished exactly that.

Does a consumer’s in-store travel distance affect the amount they are willing to spend?

It is well-known that many retail purchases by consumers are unplanned, particularly when it comes to grocery shopping. The decision to purchase certain items is often born on the shop floor, not prior to entering the store. But why is this?

One reason is that few people plan their shop ahead using a shopping list so they are more easily influenced by products within the store. A consumer’s buying experience is also influenced by the environment within the store itself. The 360 degree nature of a store has the potential to influence each and every one of a consumer’s senses. This can prove to be much more persuasive than any marketing messages sent to them before they enter a store.

Whatever the influencing factors are, increases in unplanned spending represent a very attractive source of revenue during what continue to be difficult times for retailers. So, what could be done by retailers to increase these unplanned purchases?

A classic assumption is that the longer the in-store travel distance becomes, the more likely it is that the consumer becomes exposed to additional items. Exposure is a prerequisite for a purchase – so what cannot be seen cannot be purchased.


In the study, comprising 275 shoppers in a US grocery store, researchers measured in-store travel distance by using radio-frequency identification (RFID) tags on the shoppers. This allowed almost exact measurements to be taken of the distance they covered. Next, the levels of unplanned purchases versus planned purchases were assessed using entry and exit interviews.

The study was able to confirm the assumption amongst many retailers that the longer the in-store travel distance, the greater the share of unplanned purchases. It even identified that unplanned spending rose by approximately $2.54 per shopper when their travel path increased by 10 per cent.

The researchers also made an attempt to assess the effectiveness of a novel strategy to make the in-store travel distance longer for consumers, using mobile telephone in-store promotions.

Whilst in the store customers were sent promotional messages for specific items. This was done both for items located close to their planned shopping path and for items further away. It transpired that the level of unplanned spending was higher for those who received messages about items situated further away from them.

The main message for the retailer could seem quite straight-forward then – to deliberately increase

consumers’ in-store travel distance in order to augment unplanned spending, leading to greater revenues per customer.

Before retailers start drastically increasing their customers’ travel distance, caution should be exercised.

These days people barely have time to shop as it is, so making their travel distance significantly longer wouldn’t be advisable! There is a fine balance to be struck to avoid making your customers’ shopping experience unpleasant by lengthening their in-store time too much.

After all, if consumers were to discover your retail secret, they may not be too impressed about the hidden persuasion!

Magnus Söderlund, Stockholm School of Economics, Sweden


Getting inside the mind of the marketing managers

To date, there has been little academic research focusing on marketing decision makers themselves or, more to the point, their decision making processes.

According to research by Wierenga (2011), only 5% of existing academic research has focused on getting inside the mind of marketing managers. The other 95% focuses on more traditional marketing considerations such as marketing ‘instruments’ like the 4Ps or the market itself, in particular, consumer behaviour.

However, the value of studying the decision making process of marketing managers in more detail shouldn’t be underestimated. Indeed, recent research has revealed that mapping the mental or cognitive decision making process of marketing managers, can provide a useful insight into the managerial decision making process.

By drawing cognitive or mental maps, it is possible to visualise the links between the ideas and theories that reflect current decision making. It can also help decision-makers find ways of improving the decisions that they make, by studying the mental processes they go through in order to reach a decision. In a special section of the Journal of Business research, edited by Roger Marshall (2013), several marketing-specific examples were given of this technique.

This article illustrates the application of cognitive mapping as discussed in Logman (2011). The Logman study researched how marketing managers rate their strategic marketing planning process against certain criteria. Each marketing manager was interviewed and asked to measure their strategic marketing planning decisions against the criteria of realism, simplicity and confidence.

< 5%

Marketing decision makers

Brand managers

Marketing managers

Chief Marketing Officer (CMO

Academic research

45%

Marketing instruments

Product

Price

Promotion

Place

50%

Market

Customers

Resellers

Competitors


The following cognitive map demonstrates what came out of the various interviews, after each marketing manager was asked to describe realism, simplicity and confidence using their own words (i.e. not paraphrased from company written plans or reports to stakeholders).

Dealing with complexity REALISM

Dealing with dynamics

SIMPLICITY

Dealing with uncertainty CONFIDENCE

Defining achievable steps

Understandability

By getting inside the heads of marketing managers, it is possible to map the current cognitive decision making process and better understand how strategic marketing planning processes are evolving.”“

Dealing with all stakeholders and

defining clear roles and responsibilities

Dealing with all relevant

environmental aspects

Setting achievable goals (within certain

terms)

Relying on experience/

benchmarks or facts and figures

Defining measurable assumptions


The words, word categories and broader themes that were used by the marketing managers were analysed sentence by sentence and word by word, to establish specific categories. These categories were then placed into the cognitive map.

What the map demonstrates is that some mental decision making processes by marketing managers are attributable solely to simplicity, trustworthiness (confidence) or realism. The map enables the decision making process to be split into two strands – one which is process oriented (i.e. achievability in a limited number of steps), and another which is outcome oriented (i.e. achievability within certain terms).

The Logman cognitive map was then contrasted with the use of other cognitive frameworks and several differences came to light.

For example, take the SMART principle of marketing activity where SMART is defined as being specific, measurable, achievable, realistic and timely.

When the Logman study was contrasted with this, the results showed a marked difference between what SMART specifies as ‘measurable’ and ‘achievable’ and what marketing managers themselves think. When surveyed, the marketing managers allocated both of these to the ‘realistic’ category. However, in the original SMART principle these exist as two completely separate categories.

In summary, what the Logman study has revealed is the importance of studying in greater detail what marketing managers themselves think. After all, they are at the coalface of the profession.

An important gulf between existing marketing principles and the decision making process of marketing managers in practice has been revealed. By getting inside the heads of marketing managers, it is possible to map the current cognitive decision making processes and better understand how strategic marketing planning processes are evolving.

We look forward to seeing more research focusing on marketing decision makers themselves in the future.

Professor Dr. Marc Logman, Part-time Professor of Marketing Strategy, Leuven University, Belgium


Do brands actually contribute to firm performance?

Brand equity, in simple terms, is the public’s valuation of a brand. The power of brand equity therefore lies in the hands of the consumer. So, how does consumer-based brand equity (CBBE) influence the performance of an organisation?

When investors and managers evaluate potential investments, they tend to do so based on two things: risk and return.

Whilst investors concern themselves with assessing both a firm’s expected returns and the associated risks, marketing activity has tended to ignore risk and focus solely on returns.

Marketers often state that brands (as market-based assets) can allow firms to not only increase returns but also lower the risks associated with these returns, thus increasing their value.

However, with growing evidence linking brands and stock returns, more research is needed into the effect of brands on firm risk. So the real question is: what is the role of CBBE in explaining firm risk?

A recent study, using data from 252 companies from the EquiTrend database, COMPUSTAT and the Centre for Research in Security Prices, has offered insight into the impact of consumer-based brand equity on firm risk. These companies involved were operating in consumer markets during 2000 - 2006.

The authors adapted risk measures that are well established in finance literature, using credit ratings to capture debt-holder risk and the standard deviation of stock returns to measure equity holder risk. This was then broken down further into ‘systematic’ and ‘unsystematic’ equity risk.

Without delving in too much detail into the methodology of the study, the results demonstrated that a firm’s CBBE is associated with firm risk and this can be used to explain changes in risk measures.


So what should marketers take from this research?

The results of the study strongly suggest that investments in brand equity affect firm performance. Marketers therefore need to communicate that brands matter in their contribution to firm performance and this is done by managing firm risk. Marketers should also include calculations regarding the firm’s cost of capital when influencing chief financial offers so that they can demonstrate reductions achieved through investing in a firm’s brand assets.

Furthermore, the results suggest that investments in creating and maintaining CBBE are a direct way for managers to reduce risks that are distinctive to

the firm. This means that brand management should be viewed as an additional tool

when planning and executing a firm’s risk-management strategy.

Overall, the results suggest that managers should make brand management part of the firm’s risk management strategy, and should protect or even increase investment in CBBE during periods of economic uncertainty.

Professor Yolanda Jordaan, Department of Marketing Management at the

University of Pretoria, South Africa

The study also took a closer look at existing finance models and explained the “risk relevance” of CBBE beyond the changes explained by these models.

Essentially, what the results indicated was that CBBE has a stronger role in predicting firm-specific unsystematic risk rather than systematic risk. It also has a strong role in protecting equity holders from downside systematic risk.

Higher levels in the average CBBE of a firm’s brand therefore have a strong impact when it comes to reducing debt-holder risk. This, in turn, directly contributes to lowering the cost of capital for the firm. Furthermore, firms that possess brands with strong CBBE are able to reduce their equity risk quite considerably.

Investments in brand equity affect firm performance. Marketers therefore need to communicate that brands matter in their contribution to firm performance. This is done by managing firm risk.”

“


Useful references and information

Using analysis of online reputation to justify strategic marketing spend Professor Peter Dorčák, Associate Professor at the University of Prešov, Slovakia.

The full references for this study:

RAJZÁK, P. et al. Systém pre hodnotenie online reputácie bánk. Faculty of Electrical Engineering and Informatics of the Technical University of Košice, 2010. pp. 652-657. ISBN 978-80-553-0460-1.

MADDEN, M., SMITH, A. Reputation management and social media. [online]. [cit. 2013-03-03]. Available on the Internet: http://www.pewinternet.org/2010/05/26/reputation-management-and-social-media/.

ZHIGI, S. et al. A Survey of Trust and Reputation Management Systems in Wireless Communications. University Singapore, 2010. pp. 1755-1772. ISSN 0018-9219.

ARGRYIOU, E., KITCHEN, P.J., MELEWAR, T.C. The relationship between corporate websites and brand equity: A conceptual framework and research agenda. In : International Journal of Market Research, Vol. 48, No. 5 (2006) pp. 559-575.

ROHAĽ, R., SASKO, J. Analýza sentimentu výsledkov slovenských firiem. [online]. [cit. 2013-03-10]. Available on the Internet: http://www.reputation.sk/wp-content/uploads/2014/02/ORMreport.pdf.

Should companies tell consumers that their ads were generated by fellow consumers? Professor Yolanda Jordaan, Department of Marketing Management, University of Pretoria, South Africa

The full reference for this study: Thompson, D.V. & Malaviya, P. 2013. Consumer-generated ads: Does awareness of advertising co-creation help or hurt persuasion? Journal of Marketing, Vol. 77, (May 2013), 33-47.

Linking market strategy risk to shareholder value Professor Malcolm McDonald, Cranfield University School of Management, United Kingdom

The full reference for this study: Professor Malcolm McDonald; Linking Market Strategy Risk to Shareholder Value, Journal of Digital Asset Management, volume 5 June 2009.

Does a consumer’s in-store travel distance affect the amount they are willing to spend? Magnus Söderlund, Stockholm School of Economics, Sweden

The full reference for this study: Hui SK, Inman J, Huang Y & Suher J, 2013, The effect of in-store travel distance on unplanned spending: Applications to mobile promotion strategies, Journal of Marketing, Volume 77 (March), 1-16.





Getting inside the mind of the marketing managers Prof. Dr. Marc Logman, Leuven University, Belgium

The full references for this study:

Logman, M. (2011), “Realism versus simplicity in strategic marketing planning: The impact of temporality”, Marketing Intelligence and Planning, 29 (7), 662-671.

Marshall, R. (2013), Special section “Cognitive mapping of strategy in marketing” in Journal of Business Research, September, 1541-1586 (pages covering all contributing authors in that special section).

Wierenga, B. (2011). Managerial decision making in marketing: The next research frontier. International Journal of Research in Marketing, 28 (2), 89-101.

Do brands actually contribute to firm performance? Professor Yolanda Jordaan, Department of Marketing Management, University of Pretoria, South Africa

The full reference for this study: Lopo L. Rego, Matthew T. Billett, & Neil A. Morgan. 2009. Consumer-Based Brand Equity and Firm Risk. Journal of Marketing, Vol. 73 (November 2009), 47–60.


Articles produced by the Academic Group of the European Marketing Confederation (EMC). Copyright (c) 2014. All rights reserved.

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Greece – The Hellenic Institute of Marketing (HIM)

Switzerland – Swiss Marketing (SMC)

Sweden – Sveriges Marknadsförbund (SMF)

South Africa – The Services Sector Education and Training Authority (SSETA)

For further information about the EMC and the membership services that it provides, please contact:

European Marketing Confederation (EMC)Place Chasseurs Ardennais 201030 Brussels (Belgium)T: +32 2 742 17 80E: [email protected]: @infoeumarketing

© 2014 The European Marketing Confederation. All rights reserved.

The European Marketing Confederation is the umbrella organisation for marketing, sales and communication associations in Europe. Operating since the 1960s, our Brussels headquarters was established in 1993. Our mission is the promotion and the development of marketing as the fundamental business process leading to economic growth and prosperity and the improvement of the competitive position of Europe’s trade, commerce and industry. We deliver our mission by defining standards for marketing education and training in Europe, with qualifications that are comparable and recognized across borders, supporting the science and practice of sales, marketing and communication and providing a unique source of information, studies and best practice.

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http://www.serviceseta.org.za/Pages/home.aspx

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EMC Academic Group Journal Marketing research … · Marketing research translated into practice...

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