Market-Based Assets and Company Value
... linking brand-building activity with financial outcomes 1
The traditional role of marketing Role of marketing is to stimulate demand
Achieve revenue and profit objectives
The object of marketing actions is customers / distribution channels therefore, marketing activity is an expense
2
Emerging view
Customers and distribution channels not simply objects to be sold things
They are assets to be cultivated
Marketing is not just an expense, it is an investment An investment to create shareholder value
3
What is ‘shareholder value’ ?
• The value of the company
• How much it’s worth
• How much someone
would pay for it, or a piece of it
• in turn determined by net
present value of future cash flows 4
NET PRESENT
VALUE
Cash revenue year 1
Note: cash in the future is worth less than cash now, so we discount it
+
+
+
+
Cash revenue year 2
Cash revenue year 3
Cash revenue year 4
Cash revenue year 5 etc...
Linking Market-Based Assets to
Shareholder Value
Usage, impact on repeat usage
perceptions, image, satisfaction, awareness, knowledge
Market-Based Assets
Market Performance
Shareholder Value
Customer Relationships:
Faster Market Penetration
Accelerate Cash Flows
Brands
Installed Base
Faster Trials
Enhance Cash Flows
Faster Referrals
Reduce Volatility and
Vulnerability of Cash Flows
Faster Adoption
Partner Relationships
Enhance Residual Value of
Cash Flows
Price Premium
Distribution
Channels
Share Premium
Co-branding
Extensions
Network
Sales / Service Costs
Loyalty /Retention
suppliers, collaborators, users, trade associations etc
?
5
From: Srivastava, Shervani and Fahey, Journal of Marketing 1998
customer 4
Competitor
Our HR supplier
Technology
partner
customer 3
Our distribution partner customer 2
Our IT supplier firm X
The idea of a
‘network’ of customers and partners customer 1
OUR FIRM / BRAND
Our Bank
Our Ad agency
Our Landlord
Industry association
in lecture
6
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