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Week 4 Notes + Study Guide

by: Erin McGoff

Week 4 Notes + Study Guide MKTG 421

Marketplace > American University > Marketing > MKTG 421 > Week 4 Notes Study Guide
Erin McGoff
GPA 3.6

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About this Document

These notes cover the international Tata Tea + Tetley merger case. They also have a review of the points needed for the exam.
Brand Management
Dr. Sanal Mazvancheryl
Study Guide
brand, Marketing, Management, exam, one, first, week, 4, american, University, Strength, earnings, premium, price, value, Consumer, customer, International, domestic, acquire, merge, tea, Case, study, Math, equations
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This 6 page Study Guide was uploaded by Erin McGoff on Wednesday September 21, 2016. The Study Guide belongs to MKTG 421 at American University taught by Dr. Sanal Mazvancheryl in Fall 2016. Since its upload, it has received 5 views. For similar materials see Brand Management in Marketing at American University.


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Date Created: 09/21/16
Brand Marketing 9/21/16 7:43 PM Week 4 – Sep 21, 2016 • Brand Audit Overview o Conducting the Brand Audit ▯ What is a brand audit? ▯ An in-depth examination of a brand to uncover sources of its brand equity and value and suggest ways to improve the brand. ▯ A brand audit requires understanding a brand form the perspective of both the company [how much is it worth] and the consumer [how do they feel about the brand] ▯ What should it consist of? ▯ Introduction, brief history, market standing, competitive position ▯ Detailed customer based brand equity ▯ Summary of current marketing and branding strategies ▯ Brand value final calculation ▯ Brand recommendations – based on analysis. • TaTa Tea Case o Should Tata tea (the 2 nd largest tea provider in India behind Lipton) buy Tetley OR create an international brand? o 2 approaches: ▯ Premium Earnings ▯ Premium Price o Conclusions: ▯ Yes, Tata should buy Tetley tea because they already have the infrastructure (tangible and intangible) to be successful internationally. ▯ Yes, Tata should buy Tetley because there will be one less competitor if they do. ▯ Yes, Tata should buy Tetley because the tea market in India was headed downwards and Tata needed to make a major change. • STUDY GUIDE [key points] o The importance of branding from the consumers perspective: ▯ To distinguish a name and promise to tell them apart from competitors. ▯ Created over years of interaction with the brand. ▯ Brands add “Value” to the product. o Importance of branding from the company’s perspective: ▯ Asset for the company—non tangible ▯ Identifies the company’s products. o Brand Association ▯ People know what it is with assist picture or name or description o Brand Image ▯ Perceptions people already have about the brand o Brand Attachment ▯ Loyalty people have to the brand • Building Brand Equity o Determine brand’s knowledge and image o Develop marketing and branding programs o Integrate across different product lines and target markets o Measure and control the brand’s awareness/associations/image/loyalty to brands. • Brand Value – another value of brand strength – financial value of brand o The premium that accrues to a brand because customers are willing to pay more for the brand than generic products or other competing brands o Determine this? 3 appraoches: ▯ Comparable ▯ Similar to applying (price/earnings) ratio approach ▯ Find a similar brand. ▯ Value of a brand = (value/sales)c ▯ Not a reliable approach. ▯ Price premium ▯ Idea that people pay more per unit than they would for the unbranded unit. ▯ V = (price x volume brand) – (price x volume generic) – (cost of branding) ▯ Total brand value = extrapolate the next 10 years (excel) ▯ MOST IMPORTANT THING TO REMEMBER: Two things: the value of the brand will go up, and the value of the dollar will go down. ▯ Premium earnings ▯ How much more will you earn in a year compared to the generic product? ▯ Start with brand revenues ▯ Deduct all operating costs (production, marketing, selling…), tax, and a charge for capital employed. ▯ Results in earnings from intangibles ▯ Decide what % of these earnings is due to the brand? ▯ These earnings are then discounted to obtain the NPV (net present value) of brand earnings ▯ V = (financial data) x (customer research) / (competitor data) ▯ **Step 1: Obtain net earnings from intangibles ▯ You need access to detailed information (public companies) ▯ Step 2: [evaluate the brand] What % of that brand’s value comes from the brand? Estimate brand contribution to index. ▯ Step 3: [discount the future] brand risk analysis: assess the volatility of the brand earnings ▯ How to convert a brand strength score into a discount rate? ▯ Brand risk analysis: convert the brand strength score to a discount rate ▯ The higher the brand strength, the lower the brand discount rate ▯ • • 9/21/16 7:43 PM 9/21/16 7:43 PM


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