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Market-Based Assets

Part 1. Marketing Strategy

  1. Tasadduq Shervani

Published Online: 15 DEC 2010

DOI: 10.1002/9781444316568.wiem01044

Wiley International Encyclopedia of Marketing

Wiley International Encyclopedia of Marketing

How to Cite

Shervani, T. 2010. Market-Based Assets. Wiley International Encyclopedia of Marketing. 1.

Author Information

  1. Southern Methodist University, Dallas, TX, USA

Publication History

  1. Published Online: 15 DEC 2010

Abstract

Market-based assets are intangible assets that arise from the commingling of the firm with entities in its external environment. Brands, customer relationships, distribution channel, and other partner relationships are all examples of market-based assets. These assets create value for a firm because they allow the firm to (i) accelerate cash flow, (ii) enhance cash flow, (iii) reduce the volatility and vulnerability of cash flows, and (iv) increase the residual value of cash flows. The ultimate goal of the marketing function within a firm can be defined as increasing the value of the market-based assets of the firm. By conceptualizing market-based assets as a significant portion of the goodwill earned by a firm over time, marketing researchers and practitioners can better understand how marketing creates value. The relationship between marketing and finance, two critical functions in any business, can be better managed using the common language of market-based assets. Finance personnel can now understand the value created by marketing in a language that they are familiar with. Marketers, in turn, can use this common language to ensure that the firm makes appropriate investments in the marketing function and marketing activities

Keywords:

  • market-based assets;
  • intangibles;
  • marketing;
  • finance;
  • cash flow