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Marketing ROI Series - Brand Equity - Availability


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This presentation is the first in a series on marketing ROI and brand equity. It talks about the value of incremental availability (distribution) quantity and quality on driving increased marketing ROI and revenue, profit, brand and share. In this way, brands can be more accountable across all 4Ps in their marketing mix.
This presentation shows disguised results from a recent case study using MarketSim Agent-based modeling and simulation software to build a highly strategic marketing decision support capability.

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Marketing ROI Series - Brand Equity - Availability

  1. 1. Marketing ROI Series - Brand Equity – Availability and Distribution Excerpts in using analytics to support strategic decision making1
  2. 2. Launch new productsBuild strategic marketing plansImprove mix and flighting Deliver more revenue, profit, 2 brand & share
  3. 3. Measuring Brand Equity There are a number of models to measure brand equity: MillwardBrown’s Brandz Y&R’s Brand Asset Valuator The Aaker Model Keller’s Brand Pyramid3
  4. 4. ProRelevant MarketSim’s dimensions of brand equity measurement This case study will focus primarily on the availability dimension of brand value Penetration Brand Relevance Loyalty Purchase Intent Awareness Availability4
  5. 5. Dimensions of distribution quantity Distribution quantity can be measured numerically or weighted based on sales volume. Weighted distribution helps to focus sales efforts on the largest retailers. Numeric distribution is a key basis for calculating costs of incremental distribution Dimensions of Distribution Quantity Numeric Distribution Weighted Distribution5
  6. 6. Distribution Quality6
  7. 7. Case study background This case study is based on a third largest brand in a price tier of a larger segment in the alcoholic beverage space7
  8. 8. Impact of increased distribution on unit volume As distribution increases from zero where there would be no sales, the line resembles a slight S-curve, where as weighted distribution increases to 100% of all category volume the increased sales delivers roughly linear increases in sales volume For Brand C, for every 1% increase in weighted distribution, sales volume increases by 1.1% Impact of increased distribution on volume (All else being equal) 120% 100% 80% Brand A Brand S 60% Linear 40% Brands C, X Percent of max unit volume 20% 0% 0% 20% 40% 60% 80% 100%8
  9. 9. The value of new points of distribution For each new point of distribution added, the incremental volume is generally very small. At the margin it could be as low as .01%. This in a category where 2,500 points of distribution make up 80% of the brand sales volume Cumulative value of each new point of distribution 100.0% . 80% 75.0% 60% . As points of distribution are added, the incremental weighted volume is less and less, yet the cost per new point of 40% . 50.0% distribution remains about the same. 25.0% 20% . 0.0%9
  10. 10. Costing out the cost of higher distribution Sales team costs More sales persons generally needed (including sales managers) to maintain each store regardless of size In-store costs Gaining shelf space in each additional store typically requires investments on a per store basis, either in terms of promotions, flooring or other costs (depending on legal restrictions in various countries)10
  11. 11. Dimensions of distribution quality Distribution quality is driven by how successful the location in the store is a driving awareness for consumers not already aware, and then how persuasive the package and other signage is at driving purchase intent Dimensions of Distribution Quality Distribution Purchase Awareness Quality intent11
  12. 12. Distribution quality Increasing the awareness value through the improvement of shelf space quality has a much stronger effect than improving the persuasiveness of the brands in-store location or the packaging Impact of distribution quality 7.5% 5.0% 5.3% Percent increase in unit volume 2.5% 0.0% 0.2% -0.1% 0.0% -20% Current Volume 20% -2.5% Awareness (% of current) -5.0% Purcahse intent (% of current) -6.9% -7.5% -10.0% % increase in distribution quality12
  13. 13. Distribution hierarchy The hierarchy of measuring the contribution of distribution on sales volume Distribution hierarchy Numeric Quantity Weighted Distribution Awareness Quality Purchase Intent13
  14. 14. ProRelevant +1 404-816-4344, Atlanta, USA +65 9185-6443, Singapore Marketing@ProRelevant.com14