Session 6_Hard

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Questions and Answers

A company with a strong brand identity is considering an acquisition. How does the brand's financial valuation most significantly impact the M&A process?

It increases the company's market value based on intangible assets, provided the financial community values the brand, potentially leading to a higher acquisition price. (correct)
It simplifies the due diligence process by providing a clear and concise summary of all financial transactions associated with the brand.
It primarily affects the perceived value of tangible assets, such as real estate and equipment, leading to a lower overall valuation.
It reduces the emphasis on future earnings projections due to the brand's established market presence and predictable revenue streams.

How can a strong brand contribute to a company's human resources management (HRM) strategy?

By decreasing acquisition costs, decreasing salary expectations, improving performance and increasing employee retention. (correct)
By increasing operational costs through higher wages required to retain talent attracted to the brand.
By reducing the need for employee training programs, as employees are already familiar with the brand's values.
By decreasing employee performance due to reduced pressure to meet targets in a well-established brand.

What is the most likely strategic implication of a brand extension that enjoys a reduced cost per unit of trial compared to launching a new brand?

The company can leverage the established brand equity to achieve a market beachhead more efficiently, reducing establishment costs and increasing the potential for success. (correct)
The company should focus on niche markets to avoid direct competition with established players in the new product category.
The company should adopt a cost-leadership strategy to quickly gain market share, even at the expense of brand image.
The company must significantly increase marketing expenditures to educate consumers about the new product category.

In the context of organizational benefits, why is 'market share' described as an outdated paradigm?

Focusing solely on market share encourages a commodity mindset and reliance on tactics like promotions, potentially undermining brand value. (D) Signup and view all the answers

How does brand equity contribute to 'inelastic demand' as an organizational benefit?

By fostering strong customer loyalty, making consumers less sensitive to price changes. (D) Signup and view all the answers

How does a strong brand primarily benefit consumers in decision-making?

By simplifying the decision-making process, leveraging the availability heuristic. (B) Signup and view all the answers

What is a direct impact of a strong brand on pricing and demand elasticity?

It allows the brand to charge higher prices and experience inelastic demand. (D) Signup and view all the answers

In what ways do strong brands influence consumers beyond functional benefits?

By serving as a means of self-expression, status, and self-esteem enhancement. (B) Signup and view all the answers

What key role do customer referrals play, as reflected by the Net Promoter Score?

They are increasingly a key success factor and are an indicator of brand attachment. (C) Signup and view all the answers

According to the McKinsey Germany study, how do the key priorities of B2B customers differ from those of B2C customers?

B2B customers prioritize risk reduction, while B2C customers focus on image benefits. (B) Signup and view all the answers

What is the strategic implication of a strong brand's ability to reduce perceived risk for consumers?

Consumers are more likely to trust the brand, reducing their need for extensive information gathering. (D) Signup and view all the answers

How do strong brands influence social perceptions and status among consumers?

By helping consumers signal success and improve social status, altering external perceptions. (A) Signup and view all the answers

What is the underlying psychological mechanism by which strong brands simplify decision-making for consumers?

They leverage the availability heuristic, acting as a cognitive miser to streamline choices. (A) Signup and view all the answers

What does inelastic demand, associated with strong brands, imply about consumer behavior?

Consumers are less sensitive to price changes and remain loyal even with increased costs. (D) Signup and view all the answers

How do strong brands assist consumers in expressing their identities and reinforcing self-esteem?

By providing a means of self-expression, enhancing self-esteem, and reflecting personal values. (A) Signup and view all the answers

In the context of branding, what is the most significant strategic advantage that a well-established brand, like Toyota Corolla, typically possesses over a generic or lesser-known alternative, even if the physical product is nearly identical?

Enhanced customer loyalty and perceived value, allowing for premium pricing and higher sales volume. (B) Signup and view all the answers

Considering the example of Toyota Corolla versus Geo Prizm, which statement best explains the discrepancy in market performance despite the cars being nearly identical?

Consumers perceived Toyota as having superior reliability based on the brand’s reputation and marketing. (A) Signup and view all the answers

How does a strong brand reputation primarily influence a company's financial performance, as exemplified by the Toyota Corolla's market dominance?

By enabling the company to charge premium prices, increase sales volume, and achieve higher profit margins. (C) Signup and view all the answers

In the context of pharmaceutical branding, what typically happens to the prices of drugs when generic versions enter the market after the patent expires on the original brand-name drug?

Prices of both brand-name and generic drugs usually decrease, with generic versions typically priced significantly lower than the original. (A) Signup and view all the answers

What strategic implication arises for a brand when a generic alternative can offer a nearly identical product at a substantially lower price?

The brand must reinforce its unique value proposition through enhanced features, services, or emotional connections. (C) Signup and view all the answers

How does a strong brand typically influence consumer behavior beyond just the functional aspects of a product?

It creates an emotional connection and sense of trust, influencing purchasing decisions based on perceived value and status. (A) Signup and view all the answers

What is the most critical factor a company should consider when attempting to build brand equity in a market where direct product comparisons are easily made?

Prioritizing consistent and authentic communication of the brand's values, benefits, and unique identity. (A) Signup and view all the answers

Which of the following best captures the essence of brand equity?

The added value a brand name brings to a product or service beyond its functional benefits. (A) Signup and view all the answers

What is the primary role of a brand according to one of the metaphors discussed?

To act as a simplified representation, or shorthand, for a product or service. (A) Signup and view all the answers

In the context of customer-based brand equity, which of the following is the best definition?

The differential effect that brand knowledge has on a customer's response to marketing activity. (B) Signup and view all the answers

Which of the following best exemplifies brand recall?

Listing several brands of athletic shoes when asked. (B) Signup and view all the answers

Which qualitative research method is most suitable for uncovering the deeper, subconscious associations consumers have with a brand?

Projective techniques, such as asking participants to associate a brand with an animal. (D) Signup and view all the answers

What does brand recognition primarily measure?

The extent to which consumers can correctly identify a brand after prior exposure. (D) Signup and view all the answers

A company notices a significant price difference between its branded product and a similar generic product. What is the most likely explanation for this price difference?

Consumers are willing to pay a premium for the branded product due to its perceived value and associations. (C) Signup and view all the answers

What is the key difference between measuring brand associations qualitatively versus quantitatively?

Qualitative measures aim for depth and exploratory insights, while quantitative measures focus on breadth and statistical significance. (A) Signup and view all the answers

Consider a scenario where a brand has strong associations with environmental sustainability. How might this association impact its brand equity?

It could increase brand equity by attracting environmentally conscious consumers and enhancing brand image. (A) Signup and view all the answers

A company wants to launch a new product and decides to use an existing, well-known brand name. How can the 'halo effect' influence the success?

By reducing marketing costs, as the new product benefits from the established brand recognition and positive image. (A) Signup and view all the answers

Considering the trends displayed in the 'Wholesale Price per Prescription' graph, what is the most likely reason for the initial price stability of the brand-name drug (Capoten) immediately following patent expiration?

The brand manufacturer maintained its original price, leveraging brand loyalty and existing contracts, anticipating a gradual erosion of market share. (A) Signup and view all the answers

Based on the 'Unit Sales' graph, what inference can be made regarding consumer behavior when generic drugs are introduced into the market?

A gradual transition from the brand-name drug to the generic alternative happens over time. (B) Signup and view all the answers

Analyzing the detailing expenditure data, what causal relationship can be inferred between detailing efforts and the sales of Capoten?

Detailing expenditures are inversely proportional to Capoten sales. More detailing is done as the sales fall to attempt to maintain revenue. (D) Signup and view all the answers

Considering the interplay between price, unit sales, and detailing expenditure, what is the most likely strategic goal of the brand-name manufacturer (Capoten) after patent expiration?

To maintain a higher price point while maximizing detailing efforts, targeting patients with strong brand loyalty and those less sensitive to price. (C) Signup and view all the answers

Based on the observed trends, what is a potential long-term implication for pharmaceutical companies regarding revenue streams when their patents expire?

Revenue will depend on how effectively they manage the transition to new, patented drugs or leverage brand loyalty in niche markets. (C) Signup and view all the answers

Considering the relationship between generic entry and brand-name sales, which of the following strategies would be most effective for a pharmaceutical company to employ before patent expiration to mitigate revenue loss?

Develop a strong patient assistance program to foster loyalty and ensure continued access, irrespective of price. (B) Signup and view all the answers

If a second generic manufacturer entered the market 20 months after the first, how would you expect the 'Generic Price' line to change on the 'Wholesale Price per Prescription' graph?

Decrease more rapidly due to increased competition among generic manufacturers. (D) Signup and view all the answers

Hypothetically, if detailing expenditures were prohibited by law, what would be the most likely impact on the 'Brand Units' sales trend?

The decline in Brand Units sales would accelerate due to reduced brand visibility and promotion. (D) Signup and view all the answers

What changes to detailing and marketing practices could potentially occur in the future to make the graphs presented become obsolete?

The trend can become obsolete if detailing is no longer effective in influencing prescriber behavior due to changes in information access or prescriber habits. Marketing may focus on directly advertising to patience to encourage brand loyalty. (B) Signup and view all the answers

Flashcards

What is a brand?

A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

What is Brand Equity?

The differential effect that knowing the brand name has on customer response to the product or its marketing.

Benefits of brands for buyers and sellers

Brands help buyers identify products, reduce risk, and provide confidence. For sellers, brands enhance loyalty, create barriers to entry, and allow for higher prices.

Brand Strategies

The set of decisions around how a company manages its brands, including whether to extend existing brands, create new brands, or acquire brands.