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2 Market Based Assets

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2 Market Based Assets
Lecture 2
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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