SI CHEN EXAM 3 MBA 706 SCRIPT
COMPLETE ANSWERS GRADED A+
◉ Branding
Answer: The process of endowing products and services with the
power of a brand.
Creates mental structures that help consumers organize their
knowledge about products and services in a way that clarifies
their decision making and, in the process, provides value to the
firm.
◉ For branding strategies to be successful and create brand value:
Answer: Consumers must be convinced that there are meaningful
differences among brands in the product or service category.
Brand differences are often related to attributes or benefits of the
product itself
◉ Brands' role for consumers
Answer: Set and fulfill expectations
Reduce risk
Simplify decision making
Take on personal meaning
Become part of identity
,◉ Brands' role for firms
Answer: Simply product handling
Organize inventory & accounting
Offer legal protection
Create brand loyalty
Secure competitive advantage
Sustainable revenues
◉ In mergers and acquisitions, the price premium is on the basis
of
Answer: The extra profits expected and the difficulty and expense
of creating similar brands from scratch.
◉ Brand Equity
Answer: The monetary value of a brand.
Reflects the premium that is placed on a company's valuation
because of its ownership of the brand.
Encompasses the net present value of the total financial returns
that the brand will generate over its lifetime.
◉ Goodwill
Answer: The monetary value of all intangible assets of a company.
Much broader term than brand equity.
, ◉ Measuring Brand Equity
Answer: There is no universally agreed-on method for assessing
the equity of a brand accurately.
3 approaches: cost, market, or financial
◉ Cost Approach in measuring Brand Equity
Answer: Calculates brand equity by examining the costs of
developing the brand (research, design, legal, etc) or based on the
brand's replacement cost (rebuilding the brand).
◉ Market Approach in measuring Brand Equity
Answer: Measuring the difference between the sales revenues
from a branded offering against those of an identical unbranded
offering, adjusted for the expense of building the brand.
◉ Financial Approach in measuring Brand Equity
Answer: The net present value (NPV) of a brand's future earnings
and usually encompasses three key steps:
1) computing the company's future cash flow,
2) estimating the brand's contribution to the company's future
cash flow,
3) adjusting this cash flow using a risk factor that accounts for the
volatility of the earnings that are attributable to the brand
◉ Brand Power
COMPLETE ANSWERS GRADED A+
◉ Branding
Answer: The process of endowing products and services with the
power of a brand.
Creates mental structures that help consumers organize their
knowledge about products and services in a way that clarifies
their decision making and, in the process, provides value to the
firm.
◉ For branding strategies to be successful and create brand value:
Answer: Consumers must be convinced that there are meaningful
differences among brands in the product or service category.
Brand differences are often related to attributes or benefits of the
product itself
◉ Brands' role for consumers
Answer: Set and fulfill expectations
Reduce risk
Simplify decision making
Take on personal meaning
Become part of identity
,◉ Brands' role for firms
Answer: Simply product handling
Organize inventory & accounting
Offer legal protection
Create brand loyalty
Secure competitive advantage
Sustainable revenues
◉ In mergers and acquisitions, the price premium is on the basis
of
Answer: The extra profits expected and the difficulty and expense
of creating similar brands from scratch.
◉ Brand Equity
Answer: The monetary value of a brand.
Reflects the premium that is placed on a company's valuation
because of its ownership of the brand.
Encompasses the net present value of the total financial returns
that the brand will generate over its lifetime.
◉ Goodwill
Answer: The monetary value of all intangible assets of a company.
Much broader term than brand equity.
, ◉ Measuring Brand Equity
Answer: There is no universally agreed-on method for assessing
the equity of a brand accurately.
3 approaches: cost, market, or financial
◉ Cost Approach in measuring Brand Equity
Answer: Calculates brand equity by examining the costs of
developing the brand (research, design, legal, etc) or based on the
brand's replacement cost (rebuilding the brand).
◉ Market Approach in measuring Brand Equity
Answer: Measuring the difference between the sales revenues
from a branded offering against those of an identical unbranded
offering, adjusted for the expense of building the brand.
◉ Financial Approach in measuring Brand Equity
Answer: The net present value (NPV) of a brand's future earnings
and usually encompasses three key steps:
1) computing the company's future cash flow,
2) estimating the brand's contribution to the company's future
cash flow,
3) adjusting this cash flow using a risk factor that accounts for the
volatility of the earnings that are attributable to the brand
◉ Brand Power
