Strategic Marketing and Value Creation

Marketing Activities and Value Creation

• Marketing's ultimate purpose is to create value for customers, the firm, and shareholders.

Strategic Marketing Assets (Intangible Assets)

• These assets are difficult to create and imitate.
• Competitors find it hard to identify or purchase substitutes.
• These assets are crucial for generating sustained competitive advantages.

Intangible vs. Tangible Assets

• Tangible assets (e.g., plant and equipment) enhance productivity. Leverage these to create superior product features and higher pricing. Modern plants/equipment improve employee productivity.
• Intangible assets (e.g., customer and brand equity) create strong customer relationships, leading to lower sales costs and improved perceived value of offerings. Customer loyalty increases switching costs. Strong brands help launch new extensions.

Firm's Most Important Strategic Assets

• Customer equity and brand equity are a firm's most important strategic assets.

Impact of Customer & Brand Equity on Firm Revenues

• Strong customer relationships lower the rate of defection and increase customer share of wallets.
• Customers cross into new categories and buy new offerings. Customers endorse the firm.

Kantar/Brand Z 2023 Most Valuable Global Brands

• A visual representation (likely a graphic) of the most valuable global brands. Data may be present showing brand rankings and valuations.

How Strong Brands Impact Firm Revenues

• Increased brand consideration leads to an increased likelihood of purchase decisions. This allows for price premiums and bigger growth options. Brand strength also leads to stronger endorsements.

Effect of Marketing Assets on Future Value

• Marketing assets lead to faster cash flow (arrival), higher cash flow levels, less volatile cash flow, and reduced vulnerability.

Faster Cash Flows

• These are driven by faster brand retrieval, faster purchase decisions, and faster responses to marketing spending.

Higher Cash Flows

• These are achieved through lower marketing research & new product development costs. Lower expenditure on acquiring customers, and better human capital (lower employee compensation). Lower costs of debt also helps. Larger relationship investments contribute.

Less Volatile & Less Vulnerable Cash Flows

• These are secured by greater customer stability, protection against rival switching and entry strategies, and protection against internal mistakes.

How Intangible Marketing Assets Create Company Value

• The presentation likely delves into the benefits of intangible assets, with specific example of outcomes and impacts on financial performance.

How Customer Relationships Create Company Value

• Improved financial performance (financial payoff). Increased revenue, decreased costs, faster cash flows, reduced volatility, and vulnerability. These derive from lower defect rates, increased customer share of wallet, stronger endorsements, better human capital and lower R&D and employee costs.

How Brands Create Company Value

• Increased revenue is generated via price premiums, increased brand consideration, high likelihood of purchase decisions, bigger growth options, stronger endorsements and more licensing opportunities.
• Lower costs come from lower customer acquisition costs, reduced employee costs, faster brand retrieval, and a faster responses to marketing expenditure

How Markets Value Marketing Assets

• Customers are recognized as assets, particularly in high-growth companies. Marketing assets are critical in firm acquisitions. Brand assets support licensing strategies.