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The Frontlines of Brand Risk

GfK MIR Interview with Patrick Marrinan, Managing Principal of Marketing Scenario Analytica, New York City, USA

Susan Fournier and Shuba Srinivasan

Abstract

Whether it be the NFL, Dove, Wells Fargo, VW or countless others–managers need only open a daily newspaper to see how things can go terribly wrong for brands. Decline can be fast and the landing hard. In a contemporary marketplace where ideologies reign and social media guarantees the spread of (mis)information at light speed, a lot of what we think we know about brand marketing needs to be rethought through a risk-management lens. “For me, brand risk is any event, action or condition with the potential to damage a brand’s value, thereby making revenue generation and a company’s market value less than it should or could have been,” Patrick Marrinan, Managing Principal of Marketing Scenario Analytica, states. In his talk with Susan Fournier and Shuba Srinivasan, Patrick illustrates the many facets of a risk that has only begun to be recognized as a serious threat to carefully cultivated brand assets. Here we share what to watch out for and what brands can do to protect against risk.

Open access

Susan Fournier and Shuba Srinivasan

Open access

Shuba Srinivasan

Abstract

Including mind-set metrics like cognitions, affects and intentions in marketing models helps explain the effect of marketing on hard facts like sales and profit and also improves marketing decisions. Mind-set metrics have longer wear-in times than most marketing mix activities and can therefore serve as leading indicators. They allow time for managerial action before market performance itself is affected. The mind-set effects are not identical for all types of products or in all marketing settings. Four criteria – potential, responsiveness, stickiness and sales conversion – help determine and make clear the connection between marketing actions, attitudinal metrics and sales outcomes for different product types and brands. These criteria can also be used in prediction models and to determine the optimal budget for individual marketing activities. The joint modeling of mind-set metrics, marketing mix actions and financial outcomes are relevant and helpful to CMOs and CFOs alike. Such information enables marketing managers to understand the effect of marketing actions while offering financial accountability of marketing to CFOs.

Open access

Susan Fournier and Shuba Srinivasan

Abstract

In an increasingly risky socioeconomic environment, management needs to proactively consider brand-related risks. To understand brands as tools for risk management, they need to understand four types of brand risk: brand reputation risk, brand dilution risk, brand cannibalization risk and brand stretch risk.

Risk management is not a natural act for brand managers trained in astute execution of the 4 Ps, and contemporary market factors make this more challenging still. With an increasingly polarized society, it is almost impossible for brands to remain untouched by ideologies. In addition, the growth in digital advertising gives brand managers less control over advertising placement and context, and the mandate to keep growing adds executional risk.

The more exposed a brand is to brand risk, the more attention this topic will need in the boardroom. To shift a company’s marketing philosophy toward risk, it is important to define marketing competences in a broader way, to be self-critical and to be proactive.

Open access

Harald J. van Heerde, Shuba Srinivasan and Marnik G. Dekimpe

Abstract

To evaluate the success of a new product, managers need to determine how much of its new demand is due to cannibalizing the company’s other products, rather than drawing from competition or generating primary demand. A new model allows managers to estimate cannibalization effects and to calculate the new product’s net demand, which may be considerably less than its total demand. The new methodology is applied to the introduction of the Lexus RX 300 using detailed car transaction data. This case is especially interesting since the Lexus RX 300 was the first crossover SUV, implying that its demand could come from both the SUV and the Luxury Sedan categories. As Lexus was active in both categories, there was a double cannibalization potential. Indeed, demand is shown to originate from different sources and to vary over time. The results contain valuable insights for evaluating and managing brand extensions.