Goodwill Capital

The concept of goodwill or brand capital is commonly employed by analysts in business and marketing to measure the asset value of a company name or a brand name, and consequently among accountants and business analysts, but is seldom used by economists. The purpose of this article is to begin to develop the concept of goodwill capital by presenting an analysis of what it is and some estimates of its likely magnitudes. We define goodwill capital, like the capital arising from R&D and advertising, as a form of intangible asset, albeit one which cannot be readily related to past investments in R&D, advertising, and capital equipment. We compute estimates of goodwill capital by deducting measures of these other three forms of capital from a firm's market value. For many companies, goodwill capital turns out to be the largest of its four capital stocks. Roughly half of our estimates of goodwill capital turn out to be negative.     

Antecedents and financial impacts of building brand love

Brand love has garnered increasing interest among practitioners and scholars, but little is known about how marketing actions drive brand love, and whether and how brand love transmutes to firm profitability. Using longitudinal brand love data collected from more than 20,000 customers of 152 corporate brands and financial data of firms who own these brands during 2006–2017, the authors examine the antecedents and financial impacts of building brand love. The results show that advertising investments help firms build brand love with diminishing returns after reaching an optimal point, whereas R&D investments positively contribute to brand love. The analyses further show that although brand love does not affect firm profitability and market value in the short term, it increases firm profitability and market value in the long term. More important, the results indicate that the positive effect of brand love on firm performance is stronger for hedonic brands, for firms in product categories that matter greatly to consumers, and those operating in highly competitive markets. Overall, the findings have important implications for marketing theory and provide actionable insights for managers into how to build and manage brand love.     

Synergy between R&D and advertising on shareholder value: Does firm size matter?

Using the hierarchical linear model, we examine whether R&D and advertising and their synergy influence firm value. We also investigate whether firm size moderates the market value effects of R&D, advertising, and the synergistic effect of R&D and advertising on firm value. We find that R&D and the synergy between R&D and advertising have significant positive effects on shareholder value. Moreover, we find that the effects of R&D and advertising are significantly higher in large firms than small firms, while the synergistic effect is significantly positive in small firms but not in large firms. These results offer important insight for executives on the implications of resource allocation on R&D and advertising expenditures to create firm value. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.     

Brand competitiveness antecedents: The interaction effects of marketing and R&D expenditure

This study aims to investigate the interaction effects of marketing and R&D expenditure on brand competitiveness based on performance indicators. While many studies have investigated the individual effects of marketing expenditure and R&D expenditure on a company's brand value, competitive advantage, and performance, there has been limited research on the interaction effect of these two indicators on brand competitiveness. Longitudinal data were collected from 145 companies over seven years, including 1015 observations. The companies were selected using the systematic removal method from 485 companies on the Tehran stock exchange market. We used a generalised method of moments (GMM) to analyse the data. Findings demonstrate that marketing, when considered independently, had a significant effect on brand competitiveness (as reflected in market share) in the long run, while R&D demonstrated a marginally significant effect. In addition, this study revealed that the interaction effect between marketing expenditure and R&D expenditure on brand competitiveness was marginally significant. These results demonstrate that companies need to invest in marketing activities to leverage the benefits of R&D in order to improve their brand competitiveness. As most companies often face budget constraints, maintaining investments in marketing and R&D is recommended to ensure sustained competitiveness in the long term.     

Investigating the Advertising Antecedents to and Consequences of Brand Experience

Brand experience may contribute more to promotional efficacy than concepts such as brand personality/associations/equity/value/attitudes. Yet, little is known about whether managed advertising efforts might evoke more desirable brand experiences and promotional outcomes as a consequence of consumers’ brand experiences. This study examines antecedents and consequences that may be associated with brand experiences. Attitude toward brand name, connectedness to celebrity endorser, message fit, and visual imaging were investigated as antecedents. Brand attitude and brand distinctiveness were examined as consequences. The resulting insights add managerial rigor to advertising processes that currently are often managed more by gut than by reason.     

R&D innovation and the value of cash in the biotech industry

This study investigates how the market pricing of an additional dollar of cash held by biotech firms is conditional upon the industry's typical performance, R&D innovation. Under the proposed R&D innovation regime, I find i) an additional dollar of cash is priced higher if held by a firm with higher R&D innovation; ii) the role of R&D innovation is asymmetric depending on whether R&D activities move the drug discovery and development forward or backward; and iii) R&D innovation also differentiates the association between investment opportunities and value of cash observed by prior studies.     

Good for the feelings,bad for the memory: the impact of 3D versus 2D movies on persuasion knowledge and brand placement effectiveness

Abstract

Brand placements have been a popular advertising strategy for several decades, yet the effects of technological factors have been largely neglected in brand placement research. Consequently, this study analyzes the impact of a popular media technology, namely stereoscopy, on brand placement effectiveness, using the limited capacity model of mediated message processing and the persuasion knowledge model to predict and explain the effects. The main study (N?=?120) confirmed that compared with 3D movies, in 2D movies the participants were more likely to remember the brands placed and to critically reflect the persuasive intentions behind the placements. The additional structural elements in stereoscopic movies appear to require more cognitive resources. The consequent lack of cognitive capacity diminishes persuasion knowledge, which, in turn, positively affects brand evaluations and behavioral intentions. A post-hoc study (N?=?54) validated the assumption that media users watching 3D movies experience a higher cognitive load than those watching 2D movies.     

广告教育中品牌传播的理念导入

现有的“广告”与“广告教育”的内涵规定,随着媒体与社会环境的变化而产生欠缺;由此,二者的内涵需要进行与时俱进的演进,其取向乃为“品牌传播”;体现在广告教育中,则应是品牌传播理念的注入、人才输送重点由广告行业到品牌传播界、课程体系与内容的相应变更、以及与包含企业在内的“品牌传播业界”互动。     

A model of brand awareness and brand attitude advertising strategies

A model is described that helps guide advertising strategy, based upon careful attention to brand awareness and brand attitude. In this model, an important distinction is drawn between recognition brand awareness and recall brand awareness. Brand attitude strategy is seen as reflecting an interaction between a potential consumer's involvement with the purchase decision and the underlying motivation to purchase. Applications of the model are discussed.     

品牌建设视野下本土护肤品牌的发展策略研究

品牌建设是品牌培育和发展的重要途径。本文探讨了本土品牌建设的发展策略:差异化定位,打造民族特色的中草药品牌;注入传统文化,精心设计品牌识别系统;加大研发力度,创新产品类别和功能;树立质量安全观念,树立民族品牌高品质形象;借助网络广告和微博营销,多角度全方位进行品牌推广;维护品牌权益,创新品牌表现形式。     

Do Mature Firms Gain Higher Economic Value from R&D Investment?

Despite the significance of economic value indicators in the measurement of firm value, not much attention has been dedicated to how research and development (R&D) influences firms’ economic value. This study examines the relationship between R&D investments and firms’ economic value and considers the moderating role of age in the relationship using a dataset from manufacturing and information and technology firms in China. The results show that R&D investments impact firms’ economic value positively. This suggests that firms that invest in R&D are rewarded with a monopoly, which increases their market shares, thereby increasing economic value. Again, we find that older firms increase their economic value more than younger ones when they both invest in R&D. Thus, younger firms in China suffer from the liability of newness when they invest in R&D. It is recommended that these younger firms should strive to shorten the time to reap the returns from R&D investments.

     

Managing the Brand in a Corporate Advertising Environment: A Decision-Making Framework for Brand Managers

Abstract

Corporate advertising has become a significant business activity. That fact is important for brand managers because consumers' knowledge formed from corporate advertising may influence the way they think about brands the company markets. Brand managers must understand how such potential influence may occur and manage it to their advantage. The authors explore four key questions brand managers should consider in that context. In presenting answers, they integrate several literatures and propose a conceptual framework with a set of research propositions. Finally, they describe general directions for future research.     

Product Differentiation,Industry Concentration and Market Share Turbulence

Building on the current theory of industrial concentration, we analyze the relation between market size and product differentiation, and show how product differentiation impacts market share turbulence. We first propose that in markets where vertical product differentiation dominates, firms will have an incentive to escalate investment in advertising and/or R&D as market size increases. Secondly, such (firm‐specific) investments will make competitive advantage more sustainable as the firm is less imitable. This will not be the case if the market is primarily characterized by homogeneous products or horizontal product differentiation. Our predictions are tested using an original EU dataset for 1987 and 1997. Our results strongly support our predictions – the degree of market share turbulence increases with market size. However, this relation is weakened by competitive investment in advertising and R&D.     

Exploring hotel brand attachment: The mediating role of sentimental value

Brand attachment is at the core of building strong consumer brand relationships, which has important strategic significance for hotel enterprises and brands in acquiring a sustainable competitive advantage. Currently, neither the mechanisms underlying brand attachment nor the factors influencing hotel brand attachment are clearly understood. Functional, symbolic, and hedonic needs influence brand selection. This paper analyzed the effect of these three factors on consumers’ perceived value and brand attachment. The mediating effects of customer sentimental value were also evaluated. This study expands our understanding of what determines brand attachment by showing that sentimental value mediates the relationships between functional value, symbolic value, hedonic value, and brand attachment. It also has managerial implications for the hotel industry.     

‘Thinking and feeling’ products and ‘utilitarian and value-expressive’ appeals in contemporary TV advertising: A content analytic test of functional matching and the FCB model

Brand equity is now receiving significant attention, both as a result of changes to international accounting standards relating to intangible assets and as a result of the renewed focus on the impact of marketing communications on brand performance. This paper reports on an investigation of the perceptions of senior marketing and advertising agency personnel regarding (1) the importance of brand equity as a valuation and performance measurement tool and (2) whether financially based brand equity measures and marketing-oriented measures can be translated into a single composite measure of brand equity/value. The findings reported herein indicate that, although financially based brand equity valuations have been a low priority in the past, there is increasing interest in this area and in the evaluation of the long-term impact of promotional activity as part of a wider drive for marketing accountability.     

Antecedents of patent value using exchange option models: Evidence from a panel data analysis

This paper examines the patent impact factor by an empirical study using panel data. To investigate the impact factor of patent value, this study conducts a sensitivity analysis of a patent evaluation model within the framework of a real option, while considering the uncertainties associated with both patent counts and the amount of R&D per patent, and develops an empirical analysis method for examining the impact factor of a patent using an unbalanced two-way fixed effects model. The empirical results indicate that the increase of patent value accords with the increase in the patent counts, volatility and patent lifetime. Although patent value declines with the amount of R&D per patent, the impact is not significant. However, reducing cost, raising patent counts and enhancing innovation efficiency offer a feasible method for a firm to increase patent value.     

Brand placements in video games: How local in-game experiences influence brand attitudes

Brand placements are omnipresent in video games, but their overall effect on brand attitudes is small and varies substantially between studies. The present research takes an evaluative conditioning perspective to explain when and how brand placements in video games influence brand attitudes. In two experiments with a 3D first-person video game, we show that only brands encountered during positive in-game experiences benefit from the placement, but not those encountered during negative in-game experiences. Building on the cognitive processes underlying evaluative conditioning, we also show that brand attitudes largely depend on the memory for the pairing of a brand with positive/negative in-game experiences. Pairing memory and thus also evaluative conditioning effects increase when players attend to the pairing of brands and positive/negative experiences, for example, when such pairings are a central part of the game's storyline. Overall, our findings show that evaluative conditioning and its cognitive mechanisms can be utilized to explain and predict advertising effects in applied settings, such as brand placements in video games.     

The trustworthy brand: effects of conclusion explicitness and persuasion awareness on consumer judgments

Two studies examine how a consumer’s awareness of marketing tactics influences the effectiveness of conclusion explicitness advertising (implicit, open-ended or explicit, closed-ended conclusions). Study 1 shows that persuasion awareness and conclusion explicitness influence brand evaluations. Persuasion aware consumers prefer implicit conclusions in comparative advertising that allow them to decide which brand is superior, rather than explicit conclusions which state the superior brand. Persuasion unaware consumers show no difference for conclusion explicitness. Brand trust mediates the results. Study 2 demonstrates the robustness of these effects. Research contributions include persuasion awareness as a moderator of conclusion explicitness effects and the role of trust as a mediator. For managers, results show how implicit conclusions can improve the brand evaluations of persuasion aware consumers.     

基于消费者感知价值的品牌忠诚研究

消费者的品牌忠诚能给企业带来诸多营销优势,消费者的品牌感知价值是品牌忠诚形成的主要驱动因素。消费者的品牌感知价值存在性别差异和品类差异,这种差异直接影响消费者品牌忠诚的形成。对企业进行市场细分及制定差异化品牌营销战略具有重要借鉴意义。     

Firm size and innovation

In an innovation survey in the Netherlands, we find considerably more SMEs which perform small scale R&D than are found in the official R&D surveys. Nonetheless, SMEs appear on average to be somewhat less R&D intensive than large firms. Only when we restrict our observations to firms which perform some R&D, there is no systematic relationship between size and R&D. Among the barriers to innovation the following are particularly important to SMEs: information deficits with respect to instruments of innovation policy; a lack of capital; a lack of management qualifications; problems in finding adequate technical information, and problems in finding qualified employees.