Having studied the relationship between how newly merged companies brand themselves and their subsequent stock performance, the authors find that a "fusion" branding strategy-one that combines elements of the two companies' names and logos-leads to superior financial returns three years out. The reason, they believe, is that this approach sends reassuring signals to employees, customers, and ultimately investors.
In 1982, Sonance, a high-end audio company, invented a new product category: in-wall speakers. Two decades later, Sonance is at a turning point. In an attempt to benefit from the soaring housing market, company management shifted its focus from high-end custom-installation dealers to production housing developers and mass-market consumers. While growth accelerated, Sonance's relationship with the high-end audio dealers and its market share began to deteriorate. The new management team needs to determine the best strategy for the future.
Detailing, or visits from pharmaceutical sales representatives to medical offices to provide details about a drug's purpose and side effects, has become the pharmaceutical industry's most costly direct-to-physician marketing effort, with an estimated $20 billion spent annually. Research studies offer conflicting conclusions on the effectiveness of this approach. One study found every dollar spent on detailing resulted in incremental sales of $1.72 and another concluded it offered only a modest impact. In this case students generate a regression analysis to consider the impact of detailing and sampling on a physician's prescription rate.
For investment bankers, consultants, and entrepreneurs, valuing branded businesses as accurately as possible is of critical importance. This case introduces a new approach to valuing branded businesses, one that incorporates public perception of brand characteristics. This case reviews traditional methods of valuation and walks students through the new approach, using Hewlett-Packard as an example.
In 2005 Sonance, a high-end audio company and the inventor of the in-wall speakers category, was faced with declining profitability and shrinking market share. The company had to rethink its marketing strategy to find a path to profitable and sustainable growth. This case summarizes management's decisions as well as the events and developments that followed the 2005 situation discussed in Sonance at a Turning Point, Columbia case #080515A.
A study of 2,859 firms shows that companies unwisely cutting costs to artificially improve performance are fooling no one for long. Their stock rises sharply right afterward but falls precipitously in the next few years, as poor management comes home to roost.
Communicating your brand strategy to the financial community can boost share price, say Columbia Business School's Natalie Mizik and University of Washington Business School's Robert Jacobson.