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Brand Management Facilitation: A Systems Dynamic Approach For Decision Makers A Conceptual Framework Peter Otto / PAD 824, Fall 2001 2
Today‘s Presentation • • • Definition Key terms in brand management The brand management model • Sector overview • Behavior of the model • The dissertation model • Q&A 3
A Brand Marks what People Think and Feel • It is a rational and emotional formula based on the sum of trust, relevance, and significance that relates people to a firm, a product, or a service throughout their life. 4
Market Dynamics Businesses and markets in which brands play an important role are both highly complex: • They are tightly coupled: there are lots of complex interactions, interventions based on a single action are unlikely to prove successful in the long term • They behave counter-intuitively – they can behave in the opposite manner to which one intends 5
Market Dynamics cont. • They exhibit trade-offs • They are policy resistant – attempting to influence the system in one direction will often cause some reaction which minimizes the impact of the original action • And they are dynamic – changes occur on many different timescales 6
Brand Management Some Key Terms • Brand Awareness • Brand Loyalty • Motivation • Desire to Buy Brand • Perceived Quality • Satisfaction • Negative Product Image • Positive Product Quality • Brand Equity 7
The Dimensions in Brand Building • • Brand identity Brand awareness Familiarity and knowledge of the brand Consideration to evaluate the brand • Purchase • Brand loyalty (or brand equity) 8
A Manager‘s Goal must be to Build Brand Equity • A brand can only be strong if it has a strong supply of loyal customers • Brand equity therefore can be defined as a measure of strength of consumers‘ attachment to a brand. 9
Brand Equity Source: Interbrand 1999, The World Biggest Brands 10
Purpose and Goal of the Model • Brand equity is a complex system and difficult to manage and understand. • A simulation model will be used, to identify key leverage points to understand the behavior of the system, thus reduce uncertainty in decision making. 11
The Brand Management Model 12
The Brand Awareness/Effectiveness Sector Brand Management The Brand Awareness/Loyalty Sector A Conceptualized Sector Overview The Brand Loyalty/Quality Sector 13
The Brand Awareness/Effectiveness Sector 14
Vensim® Brand Awareness/Effectiveness Sector 15
The Brand Awareness/Loyalty Sector 16
Vensim® Brand Awareness/Loyalty Sector 17
Vensim® Brand Loyalty/Quality Sector 18
The Brand Loyalty/Quality Sector 19
The Bottom Line: Brand Equity 20
Model Behavior Investment: 70 ATL: 0. 7 BTL: 0. 1 PP: 0. 1 PR: 0. 1 21
Model Behavior Investment: 35 ATL: 0. 7 BTL: 0. 15 PP: 0. 05 PR: 0. 1 22
Weakness of the Model • Does not consider „people“ in the system • Missing link to capture growth and decline of market share • Key leverage point: „investment“ rather than „consumers“ 23
The new Approach: Brand Equity as Resource System Inflow Loyal Customers 0 3 6 9 12 Outflow 24
Objectives • To gain insides in how to control a desired level of loyal customers, thus support resource allocation decisions of a firm • To test and compare alternative strategies to improve the management of brand equity 25
What is the contribution to the body of knowledge? Theory: • By creating a generic model to investigate the effect of resource allocation which influences the brand equity of a firm Praxis: • Providing recommendations for improving brand strategies 26
Causal Loop Diagram 27
Stock and Flow Structure 28
R 29
End of Slide Show Press “Esc” to Exit 30
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