Presentation given at the 3rd International Consumer Brand Relationships Conference, www.consumer-brand-relationships.org
Copyright by
Ed Lebar, Blackbar Consulting LLC, USA
Max Blackston, Blackbar Consulting LLC, USA
W.H.Bender Quote 61 -Influential restaurant and food service industry network...
The business case for Consumer Brand Relationships
1. The Business Case for Brand
Relationships
3rd International Consumer
Brand Relationship Conference
Ed Lebar
September 28, 2013
Rollins College
Winter Park, Fla.
2. Presentation Content
● Overview of the BlackBar Brand Relationships Model
● Demonstration of how and which brand relationships
influence consumer franchise power
● Contribution of Consumer Brand Relationships to brand
pricing power (perceptions of worth)
● Explanation of how branded business valuation multiples
are significantly impacted by Consumer Brand
Relationship Equity, customer franchise power and
operating profit
● Exploration of how consumer brand communication and
Consumer Brand Relationships work together to build
consumer franchise
3. Brand Perceptions
Brand Relationship is
defined by the combination
of a specific brand image
with a specific attitude of
the brand;
Brand Perceptions
Brand
Experiences
Based on Relational
Psychology. Brands are seen
as “Transitional Objects”
Brand Relationships are defined
by the combination of Brand
Perceptions /Attitudes and
Brand Experiences. Brand
Relationships are a two way
street.
Our Perspective on Brand
Relationships
14. Brand Relationships Contribute to
Consumer Pricing Power ( perceptions of
Worth)
● The Five Universal Brand Relationships account for
almost 25 % of consumer price evaluations ( willingness
to pay/perceptions of worth)
● Identification has the most influence on pricing power;
the implication is that brands that inspire a strong
emotional bond (“ I love the brand/it loves me”) and
facilitates self expression are worth paying more for
● Self Differentiating and Roll Model have significantly
less impact of pricing power. Brand Relationships built
around differentiation do little to assist a brand’s power
to price.
17. Relationship Equity and Stable
Franchise Size are both very
significant Influences on Sales to
Market Cap. multiple.
R2=.42
Market Cap.
/Sales
.48*
.43*
Stable Franchise is defined as the percentage of
customers
saying they use the brand regularly less the percentage
saying
they do so only if there is no alternative.
Brand Relationships Directly
Influence Branded Business
Valuation
Relationsh
ip
Equity
Stable
franchis
e
* Standardized regression
coefficients
18. Relationsh
ip
Equity
Operatin
g
Profit
Stable
franchis
e
R2=.86
Market
Cap.
.14*
.89*
.32*
-
.22
The negative correlation between Relationship Equity
and Operating Profit reflects the fact that there is a trade-
off
between investment in the brand and the quarterly or
yearly
earnings statement. Nothing comes without a cost.
Actual Market Cap. is a function of
Relationship Equity, Operating Profit
and Stable Franchise Size
Brand Relationships Directly
Influence Branded Business
Valuation
* Standardized regression
coefficients
19. Assessing Individual Company Brands:
Relative Contribution of Relationship Equity,
Operating Profit & Franchise to Market
Capitalization
When we apply this regression to 2012 financial data for the 30
‘mono” brands in our data, the relative contributions of each of
the three factors average out as follows:
● Relationship Equity 40%
● Operating Profit 47%
● Stable Franchise Size 13%
● However, as shown in the following examples the relative
contributions on the three factors to the individual brands’
market capitalization vary significantly from the above
averages
22. Brand Perceptions
Brand Perceptions
Brand
Experiences
Customer
$Financial &
Market
Returns
Marketing investment in Brand
Relationships shape their
strength and pattern.
Marketing
Investment
s
Non-purchase
Behaviors/
Word of
Mouth
Specific Brand Relationships
Encourage personal and
electronic word of mouth
24. Summary ( non-users)
● Identification prompts the most positive
communication about the brand – whether or
not people use it.
● People can use brand communication as a form of
self expression; that doesn’t mean they necessarily
love the brand – or love it enough to use it.
25. If Identification is the Relationship with the most power; It is likely to
prompt positive communication about the brand and discourage
negatives communication
26. Summary ( users)
● Reinforcement generates the most negative and
least positive comment about the brand
● The brand’s satisfactory performance will not bond consumers
with the brand unless it also provides active support for self
esteem – they are independent.
27. Users’ generate more positive comments among all
relationships
But Users brand relationships discriminate little between
among
positives and also little among negatives type of
communication
28. Net Take Away
Consumer Brand Relationship
Positively Impact
1. Acquisition
2. Retention
3 Pricing power/willingness to pay more
4. Valuation multiples
5.Consumer brand communication
30. Top reinforcement brands are
Pantene,
L’Oreal, J&J, Amazon and Google.
While
both components of the relationship
are
important, hair care brands do it more
by enhancing self-esteem.
<< Reinforcement
>>
31. Brands most identified with are Amazon,
Google and WalMart. Apple and J&J
are well-loved brands, but are not
experienced as a means of self-
expression to the extent of the former.
Facebook is a means of self-expression
– but not as well loved.
.
<< Identification
>>
32. Many corporate brands – like GE, 3M,
Facebook and Amazon - are seen as
leaders and innovators, but only Apple and
Google manage to combine those
perceptions with that key personal
experience of feeling both challenged and
encouraged by the brand.
<< Role Model
>>
33. J&J and WalMart epitomize the customer
experience of feeling at the center of
attention, but their product offering is not
differentiated from competitors’. The
uniqueness of Amazon - and the way its
offering feels customized - makes the
customer feel different.
<< Self-
Differentiation>>
34. Brands from several very different
categories are seen as relaxed and stylish
but the most successful casual dining
brands – together with YouTube and
Amazon – are the ones which just seem t
give pleasure, without requiring anything i
return.
<<
Playful>>
35. The Market Valuation Model:
Produces an Excellent Fit
Predicting Market Capitalization
Predicted vs. Actual market cap
36. Relative Contribution of Relationship Equity,
Operating Profit and Stable Franchise -
calculation of percentages for Individual Brands
In order to apply the regression equation to actual data – where operating profit is measured in $m’s ,
franchise in terms of % of consumers, and Relational Equity in terms of a constructed scale measure
– it is necessary to use non-standardized coefficients.
The three components of MarCap are:
MarCap= (c1 x RE) +(c2 x OP) + (c3 x StabFran)
1 2 3
The relevant percentages are calculated for each brand as::
1/MarCap,
2/Marcap
3/Marcap
38. Consumer Brand Communication &
Relationship Equity
There is relatively little difference in Relationship Equity between those communicating
negatively and those not communicating at all about the brand. For brands used,
Relationship Equity is actually higher among the former - No news is not necessarily good
news.
40. Our Definition of Brand Relationships
● Based on the concepts of Relational Psychology, in
which relationships -- with other people and things --
form an integral part of the individual’s personality.
● Relational Psychology recognizes how inanimate
relationship partners -- so-called “Transitional
Objects” -- may be invested with the same type of
characteristics (personality, motivations, imagined
behaviours, etc.) as animate ones.
● The Brand is a “Transitional Object”, represented in
the individual’s psyche simultaneously as both the
object and source of emotions, feelings and
behaviors. The relationship with the brand reflects
both sides of these inner exchanges.
41. A Brand Relationship is defined by the conjunction of one
dimension of brand perception (image, personality, attributes…)
and a dimension of brand attitude or experience
Brand Attitudes/Experiences
Brand
Perceptions
Self-
Esteem
Self-
Expressio
n
Mentoring There For
Me
Pleasure
Performance/
Satisfaction
Emotional
Attachment
Charisma
Positive
Differentiatio
n
Relaxed &
Stylish
42. These 5 Universal Brand Relationships have been identified across
multiple brands and categories with emergent properties: the
combination of the two components has an effect greater than the sum
of their parts
Brand Attitudes/Experiences
Brand
Perceptions
Self-
Esteem
Self-
Expressio
n
Mentorin
g
There For
Me
Pleasure
Performance/
Satisfaction
Emotional
Attachment
Charisma
Positive
Differentiatio
n
Relaxed &
Stylish
Reinforce
ment
Identificatio
n
Role
Model
Self-
Differentiatin
g
43. Brand Perception Factors
Relaxed and Stylish
Fun
Cool
Easy
Friendly
Stylish
Different
Positive
Differentiation
Distinctive
Unique
Charisma
Dynamic
Excitingly
Innovative
Leader
Progressive
Functionality
Performs well
Gives Satisfaction
Emotional Values
Love it
Fits my life
COPYRIGHT 2012 BRANDYIELD CONSULTING LLC
44. Brand Attitude/Experience Factors
● Mentoring
Challenges Me To Think
Differently
Teaches Me
Inspires Me
Shares My Values
● There For Me
Appreciates My Business
Is Recommended By People I
Care About
Responds To My Needs
Has My Interests At Heart
● Pleasure
Brings Back Good Memories
Provides A Little Treat For Me
Excites Me
● Self-Expression
Simplifies My Life
Helps Me To Express Myself
Frees Me To Be Myself
● Self-Esteem
Makes Me Look Good To
Others
Makes Me Feel Good About
Myself
COPYRIGHT 2012 BRANDYIELD CONSULTING LLC
45. Consumer Brand Communication:
● Little communication (bottom left)
● Little communication – but what there is, positive (top left)
● A lot of communication, generally positive (top right)