How Marketing Activities Create Value For Companies PDF

HOW MARKETING ACTIVITIES CREATE VALUE FOR COMPANIES 472 1 THE ULTIMATE PURPOSE OF MARKETING IS TO CREATE VALUE FOR CUSTOMERS, THE FIRM, & SHAREHOLDERS 2 Strategic marketing assets AKA intangible asset...

HOW MARKETING ACTIVITIES CREATE VALUE FOR COMPANIES 472 1 THE ULTIMATE PURPOSE OF MARKETING IS TO CREATE VALUE FOR CUSTOMERS, THE FIRM, & SHAREHOLDERS 2 Strategic marketing assets AKA intangible assets are; Resources that are difficult to create Are challenging for competitors to imitate Substitutes for their roles are hard to identify & cannot be easily obtained/purchased Can be critical generators of sustainable competitive advantage for the firm 3 HOW DO INTANGIBLE MARKETING ASSETS COMPARE TO TANGIBLE ASSETS 4  Tangible assets (e.g. plant Intangible marketing & equipment) assets (e.g. customer & brand equity) Lower costs Enhance productivity Strong customer relationships & related knowledge lower sales & service costs Attain price premiums Leverage plant & equipment Strong brands improve to create superior product perceived value of offering functionality, features, & durability. Allows firm to charge higher prices Generate barriers to Expensive for competitors to Customer loyalty increases competition compete on plant/equip. switching costs Improves value of other firm Modern plants/equip. can Satisfied customers are more resources improve employee responsive to marketing productivity expenditures & new products Create growth options for Plant/equip. can be shared Strong brands can be managers across products the firm leveraged to introduce might sell extensions in current & new categories 5 WHAT ARE A FIRM’S MOST IMPORTANT STRATEGIC ASSETS ? CUSTOMER EQUITY & BRAND EQUITY 6 THE IMPACT OF CUSTOMER & BRAND EQUITY ON FIRM REVENUES 7 How strong customer relationships increase firm revenue Lower defection rates Greater share of wallet Cross into new categories & buy new offerings Endorse the firm 8 Kantar/Brand Z 2023 Most valuable global brands 9 How strong brands impact firm revenues Increased brand consideration More likely to purchase Pay price premiums Bigger growth options Stronger endorsements 10 The effect of marketing assets on future value of a firm’s cash flow Firm’s cash flow arrives faster Firm can receive higher cash flow levels Firm’s cash flows are less volatile Firm’s cash flow is less vulnerable 11 Faster cash flows Faster brand retrieval Faster purchase decision Faster response to marketing spending 12 Higher cash flows Lower marketing research & new product development costs Lower marketing expenditures to acquire customers Lower employee pay & better human capital Lower costs of debt Larger relationship investments 13 Less volatile & less vulnerable cash flows Greater customer stability Protection against rival switching strategies Protection against rival entry Protection against internal mistakes 14 HOW INTANGIBLE MARKETING ASSETS CREATE COMPANY VALUE 15 How customer relationships can create company value 16 How brands can create company value Increased revenue Price premiums Increased brand consideration Greater likelihood of purchase Bigger growth options Stronger endorsements More licensing opportunities Decreased costs Lower customer acquisition costs Lower employee acquisition costs, pay & turnover Faster cash flows Faster brand retrieval Faster purchase decision Faster response to marketing spending Less volatile/vulnerable cash flows Protection against rival switching strategies Protection against rival entry Protection against internal mistakes 17 How markets value marketing assets Customers as assets at high-growth companies Marketing assets in firm acquisitions Brand assets & licensing 18