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MPM (Subject) / Pending (Lesson)

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• Brand value chain 1. Psychological effect : brand knowledge Marketing investment create specific knowledge of the brand Customer-mind set measures (brand awareness, brand image) 2. Behavioural effect : Brand behaviour Brand knowledge is necessary but not sufficient in creating economic advantages, economic impact depends on the general role of brand Product market outcomes (price premium, share premium, sales premium) 3. Financial effect : Monetary Value The value added by the production and merchandising of branded products and services determines the financial value of the brand Financial market outcomes (BES, firm value)
• Linkage of marked based assets to firm value Market based assets : Customer relationships (Brands, installed customer base) Partner relationships (Distribution channels, co branding, networks) -> Market performance Faster market penetration (Faster trials, adoption, referrals) price and market share premium loyalty, retention, sales and service costs --> Firm Value Accelerate cash flows enhance cash flows reduce volatility and vulnerability of cash flows
• Reasons for brand valuation difference Problem related: Valuation purpose (M&A negotiations, financial reporting, management) Target audience (customers, shareholders)Valuation of object  (corporate, individual brand, brand portfolio) Owner of brand (Aldi as owner of kadewe? Methodical implementation: Valuation approach (cost oriented, capital market oriented, indicator)Data quality (Validity, reliability, completeness) Model set up (Logical consistency, transparency)
• Evaluation of Simon/sullivan Positive : orientation at firm value the correct economic success variable Theoretical foundation through Capital market theory Negative: Valuation limited to publicly traded companies no coverage of single brands with multi brand companies completeness of regression equations questionable
• Evaluation of Brand evaluation for financial reporting (BES) Positive: Simple and cost-effective theoretial foundation: utility + firm valuation theory Suitability for financial reporting due to consistency with international account requirements Negative: No consideration of cost benefits from the brand Restricted diagnostic value (No identification of indirect effects such as pull effects from retailers)
• What are issues of customer value analysis? Calculation of CLV - To what extend has the CLV-calc to be adapted to different kind of products? Empirical calibration of CLV - What kind of data has to be available for calibration of CLV models? Prediction of CLV - How do you predict whether a customer is still a customer? Optimization of CLV - how do you allocate expenditures for customer acquisition and customer retention?
• Product management - what is the principle of conjoint + cost method? Use conjoint method to estimate utility of product attributes (part-worth utilities) Copmute total utility for each alternative product simulate market shares based on estimated utility compute costs that are directly linked with the evaluated product alternative enumerate all product attribute combinations and evaluate them in terms of costs and market share to find the profit maximizing combination
• What are limitations of the conjoint + cost method? Assumptions of conjoint models have to hold, e.g. (1) independence of attributes, (2) relevance of attributes, (3) completeness of relevant attributes, (4) appropriate rule for market share FC Short-term maximization of profit no consideration of competitive reactions no consideration of consumer heterogeneity maximizes profit of a single new product, but not portfolio profit
• What is the market value for an attribute (MVAI) approach? Attribute improvement only meaningful if the willingness to pay for the improvement (MVAI) exceeds its corresponding marginal costs MVAI can be determined from discrete choice frameworks MVAI considers heterogeneity of consumer preferences in the aggrigation of individual demand (consumer with high and low purchase probabilities get a lower weight in the aggregation process leading to the MVAI metric, consumer with high randomness in the utility evaluation get lower weight) competitive reactions are considered in the standard approach
• What are limitations of the MVAI ? No decision support for - optimal extent of attribute improvement , - optimal allocation of resources across attributes short term profit perspective without long term impact on market structure and CAPEX
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• Framework for the Next-product-to-buy model (NPTB) 1. Observed customer variables (X) - current use of products of thecompany, socio-demographics, RFM variables 2. Implied need for product j (Vj) 3. Unobserved stochastic influence on the purchase decision for product j 4. Observed purchased for product j
• What are adv and disadv of ROCS? Advantages : integrates the long-term cash implications of actions to manage customer satisfaction Considers the stochastic behaviour of individual buying Net present value Model (CLV Based) Disadvantages: Revenue stream to car dealer not complete (no consideration of cross selling) No evaluation of separate satisfaction actions but the joint impact of all actions on satisfaction Concerns about causility in a cross-selectional survey

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