1. The Brand Equity Chain Brand Meaning Brand Equity Brand Value

2. “The value of brands as shareholder assets have been widely recognized, but the crucial role of marketing and advertising in building this brand equity and so enhancing these assets now on the balance sheet, is still not fully recognized” David Bell, Chairman of the Financial Times

3. What We Know • Past studies have demonstrated that brand equity is associated with stock prices • Aaker and Jacobson (1994) • Kerin and Sethuraman (1998) • Sullivan and Simon (1993)

4. What We Don’t Know • Whether these stock prices provide greater returns to their shareholders than, say • The market as a whole • Some other relevant benchmark

5. What We Don’t Know • Whether the difference in stockholder returns remain after adjusting for risk

6. Brands Matter: An Empirical Demonstration of the Creation of Shareholder Value Through Brands Thomas J. Madden Frank Fehle Susan M. Fournier

7. Portfolios Strong Brands Benchmark

8. Monthly and Yearly Returns MonthlyYearly T-Bills .42% 5.16% Full Market 1.52% 19.84% Reduced Market 1.34% 17.32% Brand 1.98% 26.53%

9. Economic Significance $1,000 Dollar investment in 1994 Overall Stock Market $3,195 Brand Portfolio $4,525

10. Results: Adjusting for Risk Beta Alpha Full Market .00 1.00 Portfolio Brand .57 .85

11. Financial Success Category Success Brand Success Forecast EVA Role of Branding Brand Strength Score Brand Risk Brand Earnings Brand Value

12. Results: Adjusting for Risk Beta Alpha Full Market .00 1.00 Portfolio Brand .57 .85 .84 Brand weighted 1.32

13. Key Financial Ratios Brand Asset EmphasisMatch Gross Profit Margin 44.89 39.09 Net Profit Margin 7.35 5.78 Return on Assets 7.18 4.12 Return on Investment 13.03 7.75