Abstract

The traditional tension between marketing and finance reflects the fact that marketing is more consumer facing and finance is more management and capital markets facing. The difference in perspective between the two is further widened by differences in the marketing and finance disciplines as well as among accountants, psychologists, and economists in the understanding of brands. An attempt is made to integrate and reconcile these perspectives into an account of how brands can play a vital role in the firm as a whole. With this goal in sight, evidence is reviewed on (1) the power of brands to create real added value for consumers (rather than conceal a lack of product information), (2) the complexities of accounting for the financial value of brands, (3) the relation of brand value to stock returns, (4) the need for methods of evaluating brands (beyond traditional marketing brand equity metrics and financial accounting valuations), (5) how brand value can be reported (since it cannot be included in financial statements), and (6) the expansion of brands to address societal problems through brand purpose coupled with brand engagement as a solution to the problem of firms devoting resources to stakeholders other than consumers without decreasing shareholder value.

Brands: An Integrated Marketing, Finance, and Societal Perspective

Brands: An Integrated Marketing, Finance, and Societal Perspective draws on research on the marketing-finance interface to suggest how marketing and finance can become better aligned. The overriding issue is how to use the power of brands to link marketing’s role in creating value for consumers and finance’s role in deploying assets to obtain the best financial returns and shareholder value. In addition, with the growing attention to corporate responsibility, the relevance of brands for how firms address stakeholders other than consumers is considered.

After a short introduction, Section 2 describes the fundamental practical problem with the marketing-finance interface. Section 3 examines several issues that create conceptual confusion around the marketing-finance interface. Section 4 reviews evidence that despite difficulties with the marketing-finance interface, brands do matter for firm financial performance and for shareholder value. Section 5 distinguishes brand evaluation from brand valuation and discusses the use of the former in designing a better marketing-finance interface. Section 6 deals with the issue of brand purpose and how the development of brands that engage consumers around societally relevant goals and values can overcome the principal-agent model view that firms should ignore other stakeholders and only try to maximize shareholder value. Section 7 concludes with managerial implications.