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The business case for Consumer Brand Relationships
The presentation discusses the significance of consumer brand relationships and their impact on brand equity, pricing power, and overall market valuation. It identifies five universal brand relationships—reinforcement, identification, role model, self-differentiation, and playful engagement—that influence customer acquisition, retention, and willingness to pay more. The findings emphasize that effective marketing strategies should leverage these relationships to enhance brand positioning and financial performance.
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The business case for Consumer Brand Relationships
- 1. The Business Casefor Brand Relationships 3rd International Consumer Brand Relationship Conference Ed Lebar September 28, 2013 Rollins College Winter Park, Fla.
- 2. Presentation Content ● Overviewof 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 Relationshipis 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
- 4. Five Universal Relationships ●Reinforcement ● Identification ● Role Model ● Self-Differentiation ● Playful
- 5. Reinforcement Your brand ofchoice makes you look and feel good
- 6. Identification Let the brandyou love tell the world who you are
- 7. Role Model Be empoweredby brands that lead the way
- 8. Self-Differentiation Let a brandwith a difference make a difference to you
- 9. Playful Fun brands that are justto enjoy
- 10. Brand Perceptions Brand Perceptions Brand Experiences CustomerCustomer Acquisitio n Growt h Maintenanc e Retentio n BrandRelationships Influence the Size and Composition of a Brands’ Customer Franchise
- 11. Acquisition of NewUsers is Influenced by Brand Relationships 4 of the Universal Brand Relationships contribute significantly to trial consideration among non-users Entertaining /Playful Identification Reinforcement Self- Differentiating 0.54* 0.48* 0.38* 0.22* Acquisitio ns Customer Brand Relationships Build the Customer Franchise * Standardized regression coefficients
- 12. Reinforcement Role Model 0.24* 0.10* Maintenanc e IdentificationCustomer 0.16* Brand RelationshipsBuild the Customer Franchise Influence of Brand Relationships on Franchise Maintenance A different combination of relationships are significant influencers of brand preference among users * Standardized regression coefficients
- 13. Brand Perceptions Brand Perceptions Brand Experiences $Pricing Power BrandRelationships Contribute to Pricing Power
- 14. Brand Relationships Contributeto 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.
- 15. Relative contribution ofUniversal Brand Relationships to Pricing Power
- 16. Brand Perceptions Brand Perceptions Brand Experiences Customer $Financial& Market Returns Brand Relationships influence brands’ Market value directly, and also indirectly via their influence on Customer Franchise.
- 17. Relationship Equity andStable 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 correlationbetween 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 CompanyBrands: 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
- 20. Brand Relationships Directly InfluenceBranded Business Valuation
- 21. Brand Relationships Directly InfluenceBranded Business Valuation
- 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
- 23. CONSUMER COMMUNICATION ABOUT BRANDS What’sthis got to do with the business case ?.... Work with the right relationships and empower your marketing strategy
- 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 isthe 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 morepositive 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 ConsumerBrand Relationship Positively Impact 1. Acquisition 2. Retention 3 Pricing power/willingness to pay more 4. Valuation multiples 5.Consumer brand communication
- 29.
- 30. Top reinforcement brandsare 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 identifiedwith 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 WalMartepitomize 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 severalvery 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 ValuationModel: Produces an Excellent Fit Predicting Market Capitalization Predicted vs. Actual market cap
- 36. Relative Contribution ofRelationship 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
- 37. Specific Brand Relationshipsand Pricing Power
- 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.
- 39. Constructing and Measuring BrandRelationships
- 40. Our Definition ofBrand 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 Relationshipis 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 UniversalBrand 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 Relaxedand 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)