Term Concept

8/6/2019 Term Concept

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Brand Management Facilitation:Brand Management Facilitation:A Systems Dynamic ApproachA Systems Dynamic Approach

For Decision MakersFor Decision Makers

Peter Otto / PAD 824, Fall 2001Peter Otto / PAD 824, Fall 2001

A Conceptual FrameworkA Conceptual Framework


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Todays PresentationTodays Presentation DefinitionDefinition

Key terms in brand managementKey terms in brand management

The brand management modelThe brand management model

Sector overviewSector overview

Behavior of the modelBehavior of the model

The dissertation modelThe dissertation model Q&AQ&A


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A Brand Marks what PeopleA Brand Marks what People

Think and FeelThink and Feel It is a rational and emotional formulaIt is a rational and emotional formula

basedbased on the sum of trust, relevance, andon the sum of trust, relevance, and

significance that relates people to a firm, asignificance that relates people to a firm, aproduct, or a service throughout their life.product, or a service throughout their life.


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Market DynamicsMarket DynamicsBusinesses and markets in which brands playBusinesses and markets in which brands play

an important role are both highly complex:an important role are both highly complex:

They are tightly coupled: there are lots ofThey are tightly coupled: there are lots ofcomplex interactions, interventions based oncomplex interactions, interventions based ona single action are unlikely to provea single action are unlikely to provesuccessful in the long termsuccessful in the long term

They behave counterThey behave counter--intuitivelyintuitively they canthey canbehave in the opposite manner to which onebehave in the opposite manner to which oneintendsintends


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Market Dynamics cont.Market Dynamics cont. They exhibit tradeThey exhibit trade--offsoffs

They are policy resistantThey are policy resistant attempting toattempting to

influence the system in one direction willinfluence the system in one direction willoften cause some reaction which minimizesoften cause some reaction which minimizes

the impact of the original actionthe impact of the original action

And they are dynamicAnd they are dynamic changes occur onchanges occur on

many different timescalesmany different timescales


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Brand ManagementBrand ManagementSome Key TermsSome Key Terms

Brand AwarenessBrand Awareness

Brand LoyaltyBrand Loyalty

MotivationMotivation

Desire to Buy BrandDesire to Buy Brand

Perceived QualityPerceived Quality

SatisfactionSatisfaction

Negative Product ImageNegative Product Image

Positive Product QualityPositive Product Quality

Brand EquityBrand Equity


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The Dimensions in BrandThe Dimensions in Brand

BuildingBuilding Brand identityBrand identity

Brand awarenessBrand awareness

Familiarity and knowledge of the brandFamiliarity and knowledge of the brand

Consideration to evaluate the brandConsideration to evaluate the brand

PurchasePurchase

Brand loyaltyBrand loyalty (or brand equity)(or brand equity)


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A Managers Goal must be toA Managers Goal must be to

Build Brand EquityBuild Brand Equity

A brand can only be strong ifA brand can only be strong if itit has a stronghas a strong

supply of loyal customerssupply of loyal customers

Brand equity therefore can be defined as aBrand equity therefore can be defined as a

measure of strength of consumersmeasure of strength of consumers

attachment to a brand.attachment to a brand.


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Purpose and GoalPurpose and Goal of the Modelof the Model Brand equity is a complex system and difficultBrand equity is a complex system and difficult

to manage and understand.to manage and understand.

A simulation modelA simulation model will be used, towill be used, to identifyidentifykey leverage points to understand thekey leverage points to understand the

behavior of the system, thus reducebehavior of the system, thus reduce

uncertainty in decision making.uncertainty in decision making.


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Brand

loyalty

Perceived quality

atisfaction

Negative productimage

+

++

R

-

+/-

Qualit

i

J

b O

-

Product

attractiveness

+

BrandBrandManagementManagementA ConceptualizedA Conceptualized

Sector OverviewSector Overview

BrandBrandManagementManagementA ConceptualizedA Conceptualized

Sector OverviewSector Overview

The Brand

Awareness/Effectivenessector

The BrandAwareness/Loyalty

ector

The BrandLoyalty/Quality

ector

Brand

Awareness

Motivation

Desire to

choose brand

Brand

loyalty

+

+

+

+

R

It'

What th

Cust r Wants

RSnowball

Attractiveness of

other brands

-

-

rand

A areness

Competitive

pressure

Effectiveness

Investment

-

+

+

B

BCom

etitionInfluences

Investment

Influences

+-

Kno ledge+

+Knowlege

is good

R


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The BrandThe Brand

Awareness/Effectiveness SectorAwareness/Effectiveness Sector

The BrandThe Brand


Brand

areness

Competitive

pressure

E ectiveness

Investment

-

+

+

B

BCom etitionInfluences

Investment

Influences

+

-

Kno ledge+

+Knowlege

is good

R


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VensimVensim BrandBrand


Brand

Awareness

Competitive

pressure

ecrease in

a

arenessIncrease in brand

a areness

Fraction o

potential

BA reached

et e

ect o

BA

Loyalty

actor

InitialInvestment

Above-the-lineinvestment

rice promotion

investment

Belo -the-line

investment

ublic relations

investment

Weight onabove-the-line

investment

Weight on price

promotion investment

Weight onb

elow-the-lineinvestment

Weight on publicrelations investment

E

ect

rom investment

in

rice

romotion

Consumer

knowledgeabout brand

Kno ledge gain

E

ect on gaining

kno ledge

Forgetting rate

Forget impact

on a areness

Awareness

investment

Awareness

multiplier


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Awareness/Loyalty SectorAwareness/Loyalty Sector

Motivation

Attractivenesstochooseother rands

BrandLoyalty

Increasein randloyalty

Pressureonloyalty

Effecton rand

choice

Investmenteffectsonbrandloyalty

Desireto b y

brand

Increaseindesire

Factorstoincreasedesire

Loosinginterest


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Loyalty/Quality SectorLoyalty/Quality Sector

Perceived

Product

QualityPressure on

PQ

PQ net

increase

Negative product

image

Satis ! action

PQ multipliers

Relative delivery

delay

Product

Attractiveness

E" "

ect o " price on

attractiveness

E" "

ect o " quality on

attractiveness

E" "

ect o " delivery delay

on attractiveness

Actual product

quality

Relative

Price

Price

Acceptable price

Delivery delay

Acceptable

delivery delay


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The BrandThe Brand


The BrandThe Brand


Bra

l alt

Percei e qualit

Satisfacti

Negati e pr uct

image

R

-

/-

Quality i

J O

-

Pr uct

attracti e ess


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The Bottom Line: Brand EquityThe Bottom Line: Brand Equity

Brand E ity


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Model BehaviorModel Behavior

Base un

100 Awareness

100 Loyalty

100 desire

1 Quality

0 Awareness

0 Loyalty

0 desire

0.4 Quality

0 6 12 18 24 30 36 42 48

Time (Month)

Brand Awareness : base Awareness

Brand Loyalty : base LoyaltyDesire to buy brand : base desire

Perceived Product Quality : base Quality

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

PR: 0.1


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100 Awareness

100 Loyalty

100 desire

0.8 Quality

0 Awareness

0 Loyalty

0 desire

0.4 Quality

0 6 12 18 24 30 36 42 48

Time (Month)

Brand Awareness : base2 Awareness

Brand Loyalty : base2 Loyalty

Desire to buy brand : base2 desire

Perceived Product Quality : base2 Quality

Model BehaviorModel Behavior

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

PR: 0.1


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Weakness of the Model

Weakness of the Model

Does not consider people in the systemDoes not consider people in the system

Missing link to capture growth and decline ofMissing link to capture growth and decline of

market sharemarket share

Key leverage pointKey leverage point:: investment rather thaninvestment rather than

consumersconsumers


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The new ApproachThe new Approach: Brand: Brand

Equity as Resource SystemEquity as Resource System

Loyal Customers 0 3 6 9 12

Inflow

Outflow


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What is the contribution to theWhat is the contribution to the

body of knowledge?body of knowledge?Theory:Theory:

By creating a generic model to investigate theBy creating a generic model to investigate the

effect of resource allocation which influenceseffect of resource allocation which influencesthe brand equity of a firmthe brand equity of a firm

Praxis:Praxis:

Providing recommendations for improvingProviding recommendations for improvingbrand strategiesbrand strategies


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Causal Loop DiagramCausal Loop Diagram

Competitive

pressure Brand awareness

Familiarity &

knowledge of thebrand

Consideration to

evaluate brand

Desire to buy

brand

Purchase

Brand loyals

Investment

+

Evaluation of

alternatives

+

+

+

+

-

+

+

+

+

Word of mouth

+

+

+

Attractiveness of

products

Perceived quality

of brand

+

+

+

-

Quality Price

2

1

5

B1

3-

R4

Effectfrom invstment

Competitor

determins choice

AwarenessfromInvestment

Word ofmouth effect

Effectfrom pricevalue relation

Investment control


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Stock and Flow StructureStock and Flow Structure

Unaware Aware Familiarity &

Knowledge

ConsiderationDesire to buyLoyalty

Potentials Becoming aware Gaining knowledge

Attractiveness

Purchase Evaluation

Potential

customers

Population

Investment

Word of mouth

Relevance (advantage

over competitor)

Evaluation of

alternatives

Attractiveness of

other brands

Price sensitivity

atisfaction rate in

categoryAttractiveness of

product

Preceived quality

Ownership

experience

Loosing awareness

Loosing interest


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