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Michael Heitner SVP Member Needs & Value The ARF

Michael Heitner SVP Member Needs & Value The ARF. Behavioral Economics of Brand Success. Helen Zeitoun Global Head, Brand & Customer Experience GfK. John Wittenbraker Global Director, Innovation Brand & Customer Experience GfK. How Do We Define Brand Success?.

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Michael Heitner SVP Member Needs & Value The ARF

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  1. Michael Heitner SVPMember Needs & ValueThe ARF

  2. Behavioral Economics of Brand Success Helen Zeitoun Global Head, Brand & Customer ExperienceGfK John Wittenbraker Global Director, Innovation Brand & Customer ExperienceGfK

  3. How Do We Define Brand Success? • See, search, click, view, tweet? • Quarterly sales? • Market share? • Profit? • Stock price? • Customer lifetime value?

  4. What Have We Learned from Behavioral Economics? • Time matters • Choice: sweet treat (eat it now) vs. healthy snack (eat it in a week) • Present-biased preferences • Temporal construal • Short-term challenges get much more attention than long-term ones • Tendency to (non-specific) optimism about the future • Loss aversion • Losses loom larger than gains (especially in the short-run) • Conclusion: Short-term brand success gets too much attention?

  5. What Drives Brand Sales…Online Behavior or Brand Attitudes? • Study conducted by Pauwels & van Ewijk • 36 brands in 15 categories (services, durables, FMCG) • Method: Econometric time series analysis • Average time series = 108 weeks • Questions • How much do online behavior and brand survey metrics explainsales? • How much do online behavior and brand survey metrics predictsales? • How do online and offline marketing actions drive online behavior? Pauwels, K. & van Ewijk, B., Do Online Behavior Tracking or Attitude Survey Metrics Drive Brand Sales? An Integrative Model of Attitudes and Actions Across the Consumer Boulevard, Marketing Science Institute Working Paper Series 2013.

  6. Results • Both brand tracking and online behavior metrics matter for sales explanation • Dual causality of online behavior and brand tracking metrics • In this integrated cycle, brand tracking metrics are better at predictingfuture sales Brand Tracking Metrics • Aware Consider Prefer Loyal Future Purchase Purchase Digital Behavior Metrics • Search Click Visit Shop

  7. Evolution of the Brand Connection in the Consumer Journey Year 4 Consumer returns to Brand X more loyal than ever BRAND Year 2 Consumer leaves Brand A in favor of Brand B Year 1 Consumer becomes a customer of the Brand A Brand/CustomerExperience  Year 3 Consumer's connection to Brand Y fades XP LIFE Consumers’ Evolving Life 

  8. GfK Brand Vivo Model CONNECT • Image • Relationship Action Potential Know Sustainable Business Growth Future Purchase • Consider • Prefer • Aware • Impression • Memorability DO • See, Search, Hear, Click, Shop, Buy, • Tweet Brand Experience Customer Experience Accelerators & Barriers

  9. Brand Connections from 2,000+ Global Brands Intense Conflicted At Risk Strong Enemy Close Friend/ Family Guru Dissolved Friends Fling Weak Social Circle Stranger Acquaint- ance Warm Distant Weak

  10. Brand Connection Examples

  11. Brand Connections Drive Market Premium and Share Weak At Risk Strong Positive Negative Positive

  12. Focus on Activated Brand Connections CONNECT • Image • Relationship Action Potential Know Sustainable Business Growth Future Purchase • Consider • Prefer • Aware • Impression • Memorability DO • See, Search, Hear, Click, Shop, Buy, • Tweet Brand Experience Customer Experience Accelerators & Barriers

  13. Action Potential from Brand Connections Long-Term Relationship Action Potential Not Prefer Prefer Long-Term Relationship Action Potential Not Prefer Prefer Weak Weak Strong Strong At Risk At Risk

  14. Trends in the Evolution of Brand Connections 2012 2013 2012 2013 Action Potential Not Prefer Prefer Action Potential Not Prefer Prefer Action Potential Not Prefer Prefer Action Potential Not Prefer Prefer Win-back 2012 2013 2012 2013 Upgrade Upgrade

  15. Trends in the Evolution of Brand Connections 2012 2013 2012 2013 Action Potential Not Prefer Prefer Action Potential Not Prefer Prefer Action Potential Not Prefer Prefer Action Potential Not Prefer Prefer Long-Term Relationship Upgrade More Flings Win-back

  16. An Example Image Popular with my friends An up-and-coming beer Experience Point Contact Talked about with others Online social networking (e.g., Facebook) Ad on the Internet (e.g., banner ad video) Barriers Costs more than I’m willing to pay Not preferred Preferred Image Has interesting flavor varieties Consistently tastes good Often reflects my mood Experience Point Contact Talked about with others Saw my local store Visited brand website Barriers It can be hard to find in store Weak Strong Image Brand I relate to A brand you can trust Is the best tasting beer Experience Point Contact Saw it at a party Barriers Taste is too heavy Negative

  17. Conclusion: Take the Long View to Achieve Brand Success Short-term experiences are important, but longer-term brand attitudes drive future sales Brand connections matter for building share and price premium Managing brand connections and action potential can drive success

  18. Q & A

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