Marc Fischer

How Important Are Brands? A Cross-Category, Cross-Country Study

This article focuses on the measurement of the overall importance of brands for consumer decision making—that is, brand relevance in category, or BRiC—across multiple categories and countries. Although brand equity measures for specific brands have attracted a large body of literature, the questions of how important brands are within an entire product category and the extent to which BRiC differs across categories and countries have been neglected. The authors introduce the concept of BRiC (a category-level measure, not a brand-level measure). They develop a conceptual framework to measure BRiC and the drivers of BRiC, test the framework empirically with a sample of more than 5700 consumers, and show how the construct varies across 20 product categories and five countries (France, Japan, Spain, the United Kingdom, and the United States). The results suggest a high validity of the proposed BRiC measure and show substantial differences between categories and countries. A replication study two-and-a-half years later confirms the psychometric properties of the suggested scale and shows remarkable stability of the findings. The findings have important implications for the management of brand investments.

Patient- or Physician-Oriented Marketing: What Drives Primary Demand for Prescription Drugs?

The authors analyze primary demand effects of marketing efforts directed at the physician (detailing and professional journal advertising) versus marketing efforts directed at the patient (direct-to-consumer advertising). The analysis covers 86 categories, or approximately 85% of the U.S. pharmaceutical market, during the 2001–2005 period. Primary demand effects are rather small, in contrast with the estimated sales effects for individual brands. By using a new brand-level method to estimate primary demand effects with aggregate data, the authors show that the small effects are due to intense competitive interactions during the observation period but not necessarily to low primary demand responsiveness. In contrast with previous studies, the authors also find that detailing is more effective in driving primary demand than direct-to-consumer advertising. A category sales model cannot provide such insights. In addition, a category sales model likely produces biased predictions about period-by-period changes in primary demand. The suggested brand-level method does not suffer from these limitations.

Practice Prize Winner---Dynamic Marketing Budget Allocation Across Countries, Products, and Marketing Activities

Previous research on marketing budget decisions has shown that profit improvement from better allocation across products or regions is much higher than from improving the overall budget. However, despite its high managerial relevance, contributions by marketing scholars are rare. In this paper, we introduce an innovative and feasible solution to the dynamic marketing budget allocation problem for multiproduct, multicountry firms. Specifically, our decision support model allows determining near-optimal marketing budgets at the country--product--marketing--activity level in an Excel-supported environment each year. The model accounts for marketing dynamics and a products growth potential as well as for trade-offs with respect to marketing effectiveness and profit contribution. The model has been successfully implemented at Bayer, one the worlds largest pharmaceutical and chemical firms. The profit improvement potential is more than 50% and worth nearly €500 million in incremental discounted cash flows.

Product life cycle patterns for pharmaceuticals and their impact on R&D profitability of late mover products

This study describes a cross-sectional and time series analysis of sales data over one decade in four major segments of the market for cardiovascular drugs. We estimate over 200 product life cycles (PLC) using a very flexible mathematical model to account for a variety of PLC shapes. Life cycles are then clustered on the basis of estimated regression coefficients. As a result this analysis leads to the detection of an international PLC classification. Moreover, it turns out that the order of entry is not only crucial to achieve a certain market share level but also to the shape of the drug life cycle and therefore for the long-term economic evaluation of innovative products. The paper provides the initial findings on this subject through a simulation study which is in line with previous research designs and shows the impact of the PLC shape on the net present value (NPV).

Marketing’s Impact on Firm Value: Generalizations from a Meta-Analysis

The interest in the value relevance of marketing investments has given rise to numerous studies on the marketing–finance interface. This study integrates extant research findings and establishes empirical generalizations on marketings impact on firm value. Specifically, the authors conduct a meta-analysis of prior econometric elasticity estimates of the stock market impact of marketing actions and marketing assets. Analyses based on 488 elasticities drawn from 83 studies reveal a mean elasticity of .04 for advertising expenditure variables and of .54 for marketing asset variables. Among marketing assets, customer-related assets show a higher mean elasticity of .72, compared with .33 for brand-related assets. Further analyses show that advertising elasticities are lower in more concentrated industries and that marketing asset elasticities are higher during recession times. Researchers should also be aware that characteristics of the research design (e.g., the type of firm value metric used, the omission of control variables, or not accounting for endogeneity) may affect the estimation results.

Skimming or Penetration? Strategic Dynamic Pricing for New Products

Current complex dynamic markets are characterized by numerous brands, each with multiple products and price points, and differentiated on a variety of product attributes plus a large number of new product introductions. This study seeks to analyze dynamic pricing paths in a highly complex branded market, consisting of 663 products under 79 brand names of digital cameras. The authors develop a method to classify dynamic pricing strategies and analyze the choice and correlates of observed pricing paths in the introduction and early growth phase of this market. The authors find that, despite numerous recommendations in the literature for skimming or penetration pricing, market pricing dominates in practice. In particular, the authors find five patterns: skimming 20% frequency, penetration 20% frequency, and three variants of market-pricing patterns 60% frequency, where new products are launched at market prices. Skimming pricing launches the new product 16% above the market price and subsequently increases the price relative to the market price. Penetration pricing launches the new product 18% below the market price and subsequently lowers the price relative to the market price. Firms exhibit a mix of these pricing paths across their portfolios. The specific pricing paths correlate with market, firm, and brand characteristics such as competitive intensity, market pioneering, brand reputation, and experience effects. The authors discuss managerial implications.

Brand Performance Volatility from Marketing Spending

Although volatile marketing spending, as opposed to even-level spending, may improve a brand’s financial performance, it can also increase the volatility of performance, which is not a desirable outcome. This article analyzes how revenue and cash-flow volatility are influenced by own and competitive marketing spending volatility, by the level of marketing spending, by the responsiveness to own marketing spending, and by competitive response. From market response theory, we derive propositions about the influence of these variables on revenue and cash-flow volatility. In addition, we extend the Dorfman–Steiner theorem to derive the optimal level and volatility of expenditures if volatility effects are taken into account. Based on a large sample of 99 pharmaceutical brands in four clinical categories and four European countries, we test for the empirical relevance of the propositions and assess the magnitude of the different sources of marketing-induced performance volatility. We find broad support for the predicted volatility effects. Volatility elasticities are significant and may be as large as 1.10 for cash-flow variance with respect to marketing responsiveness. The findings imply that common volatility-increasing marketing practices such as price promotions or volatile advertising plans may be effective at the top line, but they could turn out to be ineffective after all costs are taken into account. Optimal marketing volatility needs to trade off sales effectiveness and extra costs resulting from marketing volatility. This paper was accepted by Pradeep K. Chintagunta, marketing .

Drivers of B2B Brand Strength: Insights from an International Study across Industries

This study analyzes the effect of brand associations and marketing-mix instrument perceptions on brand strength for B2B firms. Although B2B brands may contribute substantially to firm profit, only little research has been directed at them. We close this research gap by analyzing a unique data set that spans across three countries and seven industries. We find that the brand-associations ‘sustainability and corporate governance” as well as ‘innovation and expertise” drive brand strength in B2B markets across all countries and industries. For marketing-mix instruments, product and distribution perceptions shape brand strength. However, the effects of marketing-mix instrument perceptions vary by industry and country.

Managing Global Brand Investments at DHL

In this paper, we introduce the customer-insight based approach that Deutsche Post DHL adopted to improve its global express delivery business. DHL has used the operations research based brand assessment tool in more than 20 large countries on four continents since 2004. The tool supports local brand managers in allocating marketing resources to activities that grow the global brand in their country market. Its application led to an estimated increase in brand value of USD 1.32 billion over five years. This corresponds to a return on investment of 38 percent and an internal rate of return of 24 percent. The tools implementation also had a major impact on DHLs strategy and organization.

Neue Konzepte für das Controlling der Zukunft

ZusammenfassungDie Rahmenbedingungen des Controlling haben sich tiefgreifend gewandelt, ohne dass dies vom traditionellen Controlling ausreichend nachvollzogen worden wäre.Das vorgestellte Konzept eines weiterentwickelten Controllings der Zukunft berücksichtigt die veränderten Rahmenbedingungen.Es unterstützt wertorientierte, intelligente Wachstumsstrategien, nutzt neue, dynamisierte und integrative Instrumente und setzt auf den strategischen Dialog zur Unternehmenssteuerung.