Firms are carefully examining their investment on business activities. Managers are pressured to demonstrate the productivity of marketing actions and spending (Yang 2009). Traditional divide between marketing and finance is disappearing as marketing accountability has gained increasing importance. Increasingly, marketing is made financially accountable, customer profitability has become a key marketing metric, and academic research on customer equity, customer (lifetime) value, and return on marketing is burgeoning (Blattberg and Deighton 1996; Rust et al. 2004b; Berger et al. 2006; Gupta et al. 2006) (as cited in Sander et al 2009). Marketers are now being held accountable for showing that expenditures add to shareholder value, which is directly
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Brand equity is defined as the assets and liabilities linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or service to a firm (Aaker 1996). Brand equity generates financial value through enhanced cash flows attributable to customer loyalty, increased marketing efficiency, brand extensions, and higher margins. The concept of brand equity emerged in marketing in the 1980s. Advertising practitioners in the USA used the idea to counter stock market emphasis on short-term results and consequent cuts to brand advertising budgets. In order to convince senior managers of the long-term value of brand advertising and other marketing investments, it was argued that marketing needed financial measures of brand value. Thus the term ‘brand equity’ was coined to refer to the brand’s long-term customer franchise and its financial value (Brodie, Glynn). Customer equity is defined as the financial value of customers to the firm (Thomas 2001). Rust et al. (2000) identify the three components of customer equity as value, brand, and retention equity. These are measured through customer satisfaction, loyalty, relative switching costs and willingness to repurchase in the future (Kumar, Shah 2011). Customer equity helps measure brand equity through consumer preferences, price premiums, consumer perceptions, price trade-offs, residual intangible value, loyalty, awareness, …show more content…
Marketing capability reflects a firm’s ability to increase the value of its products and services and differentiate them from those of its competitors. Marketing capability builds links between a firm and its customers and enables the firm to compete better by predicting changes in customer preferences (Day 1994). Investments in advertising and promotion can also expand the demand for a firm’s products and services (Bass et al. 2010), and increase sales by expanding product categories (Kotabe et al. 2002). Although investments in marketing and innovation capabilities theoretically help firms to compete in dynamic markets and enhance performance, firm size has a strong influence on whether this is the case (Fosfuri and Giarratana 2009) Marketing capabilities measures performance of a firm in ROA with firm size as a control
Brand equity is defined as the assets and liabilities linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or service to a firm (Aaker 1996). Brand equity generates financial value through enhanced cash flows attributable to customer loyalty, increased marketing efficiency, brand extensions, and higher margins. The concept of brand equity emerged in marketing in the 1980s. Advertising practitioners in the USA used the idea to counter stock market emphasis on short-term results and consequent cuts to brand advertising budgets. In order to convince senior managers of the long-term value of brand advertising and other marketing investments, it was argued that marketing needed financial measures of brand value. Thus the term ‘brand equity’ was coined to refer to the brand’s long-term customer franchise and its financial value (Brodie, Glynn). Customer equity is defined as the financial value of customers to the firm (Thomas 2001). Rust et al. (2000) identify the three components of customer equity as value, brand, and retention equity. These are measured through customer satisfaction, loyalty, relative switching costs and willingness to repurchase in the future (Kumar, Shah 2011). Customer equity helps measure brand equity through consumer preferences, price premiums, consumer perceptions, price trade-offs, residual intangible value, loyalty, awareness, …show more content…
Marketing capability reflects a firm’s ability to increase the value of its products and services and differentiate them from those of its competitors. Marketing capability builds links between a firm and its customers and enables the firm to compete better by predicting changes in customer preferences (Day 1994). Investments in advertising and promotion can also expand the demand for a firm’s products and services (Bass et al. 2010), and increase sales by expanding product categories (Kotabe et al. 2002). Although investments in marketing and innovation capabilities theoretically help firms to compete in dynamic markets and enhance performance, firm size has a strong influence on whether this is the case (Fosfuri and Giarratana 2009) Marketing capabilities measures performance of a firm in ROA with firm size as a control