Week 4: Market Share & Branding

What makes a brand?

- Brand name - URLs - Logos and symbols - Characters - Slogans - Jingles -Distinctive packaging -Way to differentiate product -Can represent firm, or entire product assortment (GM), product line (Chevrolet), or single product (corvette).

What is the Brand Z Report? What is the 3 step process they follow?

-Brand equity database that estimates brand valuations and generates the top 100 global brands 3 step: 1) Calculate financial value of the brand >Branded Earnings = Attribution Rate x Corporate Earnings >Financial Value= Brand Multiple x Branded Earnings 2)Calculate Brand Contribution 3) Multiply financial value by the brand contribution

What is Penetration ? What are 2 key measures to a product's popularity? Difference between Penetration Share and Penetration rate (brand penetration)?

-Penetration is a measure of brand/category popularity. -Managers must decide whether to seek sales growth by acquiring existing category users from their competitors, or by expanding the total population category users- attracting new customers to the market. Penetration metrics help managers monitor their success . -2 Key measures are penetration rate and penetration share. Penetration Share is determined by comparing brand's customer population to the number of customers for its category in the market. Penetration Rate (or Brand Penetration) is the percentage of relevant population that has purchased a given brand or category at least once in the time period under study. PS = Customers who have purchased the brand (#) / Customers who have purchased a product in the category PS= Brand Penetration (%) / Market Penetration (%) PS= Market Share%/ [I x Share of requirements] Market Penetration= Customers who have purchased a product in the Category #/ Total Population

What is the Usage Index?

-Relative to other consumers, do the people buying our brand buy more or less often? -To Define and measure whether a firm's consumers are heavy users "How heavily are our customers using our products?" If it is greater than 1, it shows that customers use the category to which it belongs more heavily than the average customer for that category Usage Index (I) = Average Total Purchases in Category by Brand Customers (# or $) DIVIDED BY Average Total Purchases in Category by All Customers for that Category OR I = Market Share % / [Penetration Share % x Share of Requirements%]

What factors may contribute to determining a brand's value?

-Top of mind Awareness (When people order coke and not cola) -Brand promises made and kept -Differentiation from Competitors -Customer Satisfaciton -Trust Goodwill (positive impression of your brand) -Advertising strategy

What is Market Share? What types of market shares can we compute?

-gives an overall idea about the composition of an industry >Unit Market Share >Revenue Market Share > Relative Market Share

What is a brand development index (BDI)?

BDI = [Brand Sales to Group/ People in Group] DIVIDED BY [Total Brand Sales/ Total People] Helps identify strong and weak segments (usually demographic or geograhic) for particular brands .. Might determine that mid-westerners buy 2x country music CDs per capita as Americans in general... while people in the East buy less than the national average To illustrate its use: One might hypothesize that sales per capita of Ben & Jerry's brand ice cream would be greater in the brand's home state, Vermont, than in the rest of the country. By calculating Ben & Jerry's BDI for Vermont, marketers could test this hypothesis quantitatively.

What is Moran's formula for Brand Equity Index? Solve the example given using this.

BEI = Effective Market Share x Relative Price x Durability Effective Market Share: A weighted calculation of market share across segments Relative price: A ratio of selling price for the brand relative to the average selling price of a comparable good Durability: A measure of customer retention, the % of past customers who will continue to buy the brand

Branding is divided into 3 parts, which are? Define what each portion entails.

Brand Equity (The value the brand adds to a product): -Brand awareness -Perceived value -Brand Associations -Brand Loyalty Brand Ownership Strategies: -Manufacturer or National brand (CocaCola) -Store or Private Label (PC cola) -Generic (Noname Cola) Brand Name Strategies: -Corporate or Family brand (G&E) -Corporate and Product Line brand (Kelloggs and all their cereals) -Individual (Tide, Gain)

What values does branding add?

Brands: -Facilitate purchasing -Establish Loyalty -Protect from competition - Reduce MKT cost -Are assets -IMpact market value

What is Category Development Index (CDI)?

CDI= [Category Sales to Group/ Household in Group] DIVIDED BY [Total Category Sales/ total households] Shows how well a category performs in a given market segment relative to its performance in the market as a whole FURTHERMORE: Managers could find that country CDs had a low BDI in that segment, but a high CDI... would question why the brand suffered in such a promising segment.

What is the Share of Requirements? (aka Share of Wallets) -Unit Share of Requirements (%) -Revenue Share of Requirements (%)

For people purchasing a particular brand, what is the ratio between brand purchases and other category purchases? Purpose: To understand the source of market share in terms of breadth and depth of consumer franchise, as well as the extent of relative category usage (heavy users/larger customers versus light users/smaller customers). This is a key measure of LOYALTY. -Can guide a firm's decision on whether to allocate resources towards efforts to expand a category, to take customers from competitors, or to increase share of requirements among its customers. Unit Share of Requirements (%) = Brand Purchases (#) / Total Category Purchases by Brand Buyers Revenue Share of Requirements (%)= Brand Purchases ($) / Total Category Purchases by Brand Buyers ($) Share of Requirements= Market Share % / [Penetration Share % x Heavy Usage Index]

Going Deeper: What is -Market Penetration (%) -Brand Penetration (%)

Market Penetration %= Gives an idea regarding how many people have purchased *the product* relative to the maximum size of the market Brand Penetration %= Gives an idea regarding how many people have purchased *the brand* relative to the max size of the market

Relative Price: Durability:

Relative Price is a ratio. It represents the price of goods sold under a given brand, divided by the average price of comparable goods in the market. For example, if goods associated with the brand under study sold for $2.50 per unit, while competing goods sold for an average of $2.00, that brand's Relative Price would be 1.25, and it would be said to command a price premium. Conversely, if the brand's goods sold for $1.50, versus $2.00 for the competition, its Relative Price would be 0.75, placing it at a discount to the market Durability is given in the problem as 0.9

Efective Market Share:

Represents the sum of a brand's market shares in all segments in which it competes weighted by each segment's proportion of that brand's total sales Thus, if a brand made 70% of its sales in Segment A, in which it had a 50% share of the market, and 30% of its sales in Segment B, in which it had a 20% share, its Effective Market Share would be (0.7 * 0.5) + (0.3 * 0.2) = 0.35 + 0.06 = 0.41, or 41%.

What is the formula for: -Unit Market Share -Revenue Market Share -Relative Market Share

Unit MS = Unit sales (#) / Total Market Unit Sales (#) (Measure of competitiveness) Revenue MS= Sales Revenue ($)/ Total Marker Sales Revenue ($) (measure of competitiveness) Relative MS= Brand's Marker Share (%) / Largest Competitor's Market Share (%) (Indexes firm's market share against competitor) Decomposable Formula: Market Share (%) Penetration Share (%) x Share of Requirements (%) x Heavy Usage Index (I)