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Brand equity presentation
1. TABLE OF CONTENTS Executive Summary Introduction What is a Brand? What can be branded? Brand Power What is Brand Equity? Brand Equity & Market Share Brand Equity V/s In Market Performance (Case Studies) Measuring Brand Equity
2. Increasing Brand Equity Building Brand Equity Managing Brand Equity Brand Image Importance of Brand Equity Laws of Brand Equity Benefits of Brand Equity Do’s & Don’ts of Brand Equity Conclusion Indian Brand Equity Foundation ( IBEF )
3. CASE STUDIES McDonalds Case Study Colgate – Palmolive (India) Case Study TATA Case Study
4. The brand equity of a product cannot be known until & unless the product is branded & has become known in the market. Brand Equity follows branding. Brand equity can be defined in many different ways. For a brand to be strong it must accomplish two things over time: retain current customers and attract new ones. To the extent a brand does these things well, it grows stronger versus competition, and delivers more profits to its owners.
5. Brand Equity is important for three major reasons: 1. Brand Equity creates shareholder value 2. Brand Equity Building is a competency that can be mastered to create competitive advantage 3. Brand Equity management creates an array of growth opportunities for the business thus it helps in increasing the overall profits of the firm . There are lots of benefits of brand equity if a company can manage & build its brand equity well & realize the importance of doing so.
6. Introduction The concept of brand is integral to the success of any given product. But what measures a strong brand or the success of a brand? Is it high market share, popular advertising, effective point of sale, or the ability to command a price premium? What is a brand? How is a product branded? & what products can be branded? What is the power of a brand?
7. Brands are an integral part of today's marketplace. Everywhere one looksthere are brands, and strong brands are the most successful products across a wide variety of product categories. The quote `An orange is an orange, is an orange, unless, of course, thatorange happens to be a Sunkist', a name 80 per cent of consumers know and trust, gives an indication of what a successful brand does. . The two concepts- consumer knowledge and trust - sum up what brands and brand equity develop; those are the issues that are at the heart of the brand and of building a brand that has a good relationship with the customer.
8. A brand is a promise a company makes to the customer, of what this product is going to deliver. That is, how the brand is going to fit into the business of the customer. The brand promise is a commitment by the organization, as making a promise to the customer is something that has to be followed. The creation of a strong brand is something the company is going to have to commit to, in order to make it work.
9. WHAT CAN BE BRANDED?Many people ask whether everything can be branded, or if there are types of products that cannot be branded. Brands have been found to give an important competitive advantage across a wide variety of industries. What about medical products? Brands clearly have power in this industry,with over-the-counter products. For example, people know and trust certain headache brands.
10. BRAND POWERThere are two real sources of power: One derives from the customers' perspective and whether customers perceive that the brand provides value and meaning. If they do believe it does, then the brand reduces search costs, and this is important to consumers who lead busy lives, and have too many choices to make. Brands help customers by reducing the effort required to choose a good product. Once the initial search is completed by the consumer, the consumer has built trust and understanding in the brand.
11. Brand Power … The brand also gives other benefits of self-expression. Thesetend to apply more in the consumer goods, and business-to-business realms.In business-to-business, branding can be of great importance: Finally, the brand offers a source of financial return. The research onthe benefits of strong brands, looking across companies, shows that companies gain greater loyalty because of brands. A strong brand makes people purchase it more often. It creates resistance to competitive marketing action.
12. What is Brand Equity? In lay terms, brand equity is the value that a consumer attaches to a certain brand. Although brand equity can be measured tangibly by way of certain indicators, a large component of the concept is intangible, i.e. what perceptions and associations people have of a certain brand, and the familiarity of those brands in the mind of the consumer.
13. Brand Equity as Brand Value Brand value involves actually placing a dollar or rupee value on a brand name. The reasons for doing this are usually to set a price when the brand is sold and also to include the brand as an intangible asset on a balance sheet (a practice which is not used in some countries). It is important to note that there is a significant difference between an "objective" valuation created for balance sheet purposes, and the actual price that a brand may get when sold. A brand is likely to have a much greater value to one purchaser than another depending on the synergy that exists. For acquisitions, the value of a brand to a certain purchaser is often estimated through scenario planning. This involves determining what future cash flows the company could achieve if it owned and took advantage of the brand.
14. Brand Equity as Brand Loyalty Loyalty is a core dimension of brand equity and is a way to gauge the strength of a brand. It represents a barrier to entry, a basis for a price premium, and time to respond to competitive innovations. The variety of measures used for brand loyalty usually is a combination of one or more of the following: Price/demand measures--focus on a brand's ability to command a higher price or make consumers less sensitive to price increases than price increases for competing brands. Behavioral measures--focus on consumers' behavior. Attitudinal measures--focus on general evaluative measures such as 'liking' or 'disliking.' Awareness measures--focus on identifying a brand as being associated with a product category. Brand Loyalty and Equity refer to the notion that some brands are "stronger" or better than others.
15. Brand Equity as Brand Description Brand description, the final component of brand equity, concerns the actual attributes of the brand. These attributes or associations are major creators of brand loyalty. A wide variety of techniques exist for matching consumer associations with perceptions of a brand. These techniques can be both qualitative and quantitative. They work by getting the respondent to link each brand with pictures or words. These attributes then can be measured with multi-dimensional scaling to position the attributes relative to one another.
16. Brand equity and market share Further, the importance of brand equity is that, by understanding how brand equity drives market share, it is then possible to make use of this knowledge in order to grow the market share of a brand. Understanding the link between brand equity and market share will thus assist marketers in which strategies are required to grow market share. The concept of brand is integral to the success of any given product. But what measures a strong brand or the success of a brand? Is it high market share, popular advertising, effective point of sale, or the ability to command a price premium?
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18. Brand equity and market share are not always proportionate. As can be seen from the diagram, the ideal place for a brand to be situated is in the top-right quadrant. This shows that the brand is successful in that it has a strong brand equity and high market share. However, this may not always be the case. It is possible that a brand may have high brand equity, but may not have an accordingly high market share (top-left quadrant). In order to improve the market share of a brand in cases such as this, regard must then be had to in-store issues such as display, shelf space, distribution etc. Thus, understanding brand equity plays an important role in that it gives an indication of how a brand's performance can be improved. Where there is low brand equity and a strong market share (such as the bottom right-hand quadrant), the situation is extremely tenuous. Although the picture may look good owing to the strong market share, the reality is that, with weak brand equity, the product is vulnerable to competitor or other in-market activity. Therefore, measuring only the strong market share does not give the complete picture - brand equity must also be considered, and by improving this, the full potential of the brand can be secured.
19. Case Study 1: Food Brand A should increase its distribution In the absence of brand equity valuation it could be concluded that Brand A’s equity must be strengthened to increase market shares. However, Brand A has stronger equity than Brand B, but lower distribution, resulting in weaker market performance. Brand A should maintain its familiarity levels and current positioning but increase its distribution coverage.
20. Case Study 2: Multinational Personal Care Brand Brand A should strengthen its brand image in Country X & familiarity in Country Y
21. All key brands in the category across two countries are multinational with relative brand equity indices in proportion to market shares. In both countries, Brand A must strengthen its equity to drive market share. The relative importance of the sources of brand equity for the category in both countries is fairly similar. In Country X, Brand A and B are level on familiarity but A has negative 'old-fashioned' brand associations. Brand A must focus on becoming more contemporary and create a distinct positioning on associations that are strong drivers of brand equity. In Country Y, however, Brand A
22. Case Study 3: Baby Food Brand A should leverage its equity and launch a low price line extension
23. Equity for Brand A is significantly stronger than for Brand C, but their market shares are comparable. Brand A is priced at a 151% premium over C, which results in a lower brand equity to market share ratio for Brand A. Brand A has strong brand awareness and a distinctive image on attributes that are important in the category, which drive its strong brand equity. However, due to its price premium, its brand equity does not translate into an equitable market share. Brand A can leverage its equity and launch a lower price line extension to compete with Brand C and increase overall brand share. Thus the above three case study examples clearly shows the relevance of brand equity in the market & its relationship with the market factors in accordance with its in market performance affecting its overall market share & company’s profits. Me
24. Measuring Brand Equity Brand equity does not exist in nature, to be assayed like gold ore in rock. It’s measurement depends on how you define it. Brand equity is a concept. It does not exist in nature in the manner that the specific gravity of elements exists as a physical entity. It cannot be assayed like the gold content in a piece of ore. Those who argue that brand equity cannot be measured miss the essential point. Its measurement depends on how it is defined. That definition must have pragmatic value to a marketer of consumer products or services. It should help improve marketing effectiveness and efficiency by providing a yardstick with which to evaluate these things. Also, the definition should reflect the role of the brand in the dynamics of consumer choice in a competitive environment
25. To its buyers, a brand is a promise A brand is a symbol carrying with it certain associations and images. In customer terms, a brand represents a promise. Its value to consumers is that it reduces risk, saves time and provides reassurance. Predictable results are the promise of a brand.As long as a product or service meets a customer’s expectations with no unexpected negative results, a buyer is likely to continue to buy the brand. It is the customer-oriented definition of a brand that is at the heart of the concept of brand equity. Thus it is a promise expressed in the form of providing quality to its customers Qualitative Measures: The Brand Equity Ten The Brand Equity Ten are ten sets of measures grouped into five categories, which attempt to gauge the strength of a brand. The first four categories represent customer perceptions of the brand along the four dimensions of brand equity- loyalty, perceived quality, associations and awareness. The fifth includes two sets of market behavior measures.
26. Loyalty Price Premium: A basic indicator of loyalty is the amount a customer will pay for a product in comparison to other comparable products. A price premium can be determined by simply asking consumers how much more they would be willing to pay for the brand. Customer Satisfaction: A direct measure of customer satisfaction can be applied to existing customers. The focus can be the last use experience or simply the use experience from the customer's view. Perceived Quality and Leadership Measures Perceived Quality is one of the key dimensions of brand equity and has been shown to be associated with price premiums, price elasticity’s, brand usage and stock return. It can be calculated by asking consumers to directly compare similar brands.
27. Leadership/Popularity has three dimensions. First, if enough consumers are buying into the brand concept it must have merit. Second, leadership often taps innovation within a product class. Third, leadership taps the dynamics of consumer acceptance. Namely, people are uneasy swimming against the tide are a likely to buy a popular product. This can be measured by asking consumers about the product's leadership position, its popularity and its innovative qualities Associations/ Differentiation Measures Perceived Value: This dimension simply involves determining whether the product provides good value for the money and whether there are reasons to buy this brand over competitive brands. Brand Personality: This element is based on the brand-as-person perspective. For some brands, the brand personality can provide links to the brands emotional and self-expressive benefits. Organizational Associations: This dimension considers the type of organization that lies behind the brand.
28. Awareness Measures Brand awareness reflects the salience of the product in the consumer's mind and involves various levels including recognition, recall, brand dominance, and brand knowledge and brand opinion. Market Behavior Measures Market Share: The performance of a brand as measured by market share often provides a valid and dynamic reflection of the brand's standing with customers. Price and Distribution indices: Market share can prove deceptive when it increases as a result of reduced prices or promotions. Calculating market price and distribution coverage can provide more accurate picture of the product's true strength. Relative market price can be calculated by dividing the average price at which the product was sold during the month by the average price at which all the brands were sold.
29. To Financiers, brand equity = retained earnings. There are several possible ways to measure brand equity in financial terms. Brand Equity Index Model Under this model brand equity is calculated by multiplying the relative price of the product by market share in units. The product is then multiplied by a measure of loyalty or durability representing the staying power of the brand. Book or Replacement Values Brand equity is estimated as the replacement cost of the brand over a generic equivalent. A generic equivalent is a product that is sold only on the basis of product attributes. Alternatively, replacement value can be estimated as book value. The challenge with this latter method is that marketing expenditures do not appear on the balance sheet. For either method, replacement cost is difficult to estimate accurately.
30. Value of Avoided Advertising Advertising is a key tool for developing brand strength that management can leverage into equity. Advertising can affect how readily a consumer associates attributes with a brand, what brands consumers include in their evoked set, and other behavioral and perceptual factors. The effect of advertising builds up over time and leads to extending brands with greater ease and less cost. An estimate of Brand Equity is the value of advertising avoided to achieve the current level of performance. To marketers, brand equity = retained customers To a marketer, creating and maintaining brand equity can provide for increased profitability, reduced vulnerability to competition, the ability to charge premium prices, and a platform for introducing new to market products carrying the brand name.
31. A brand’s equity is comprised of its loyalty rate and its relative price The proposed definition of brand equity is the aggregate value of the purchases of customers who buy the brand repetitively. Its magnitude is a function of their frequency of purchase, the extent of repetition and the relative price they pay for the brand. Relative price reflects the perceived value of a brand. A high relative price (over 1.00) indicates that a brand’s buyers value it more than the others in the category. Conversely, a low relative price reflects weak brand “pull”. By using relative price in the calculation of brand equity, we introduce the element of perceived value for the money. Relative price is expressed as the ratio of the average retail selling price of the brand to the category average Loyalty rate is defined as the percent of category purchases of the brand by people
32. INCREASING BRAND EQUITY We believe this approach to defining and measuring brand equity helps to focus marketing strategy and make it easier to choose among alternatives. If, for example, a major goal is to increase brand equity, the marketing strategies and tactics to be used must either increase brand loyalty or pave the way for a price increase while not losing a significant number of customers. Experience shows that brand loyalty can be strengthened in one of several ways: increasing continuity of purchase via such techniques as “frequent flier” or “frequent buyer” programs, “members clubs”, “continuity promotions” that reward cumulative purchases; affinity programs, that create identification between the users of a brand and some recognizable organization, cause, lifestyle or movement.
33. Increasing price can be an effective strategy if a large enough number of the brand’s customers believe it will deliver value at the higher price. We’ve known cases where increasing price has actually help to build business. In one case, the managers of a small little known spirits brand raised its price as a way of committing “brand suicide”. They were amazed and delighted to see the brand’s sales increase shortly thereafter. Thus emboldened, they raised the price again and saw sales continue to rise. Today this brand is reported to be the biggest profit contributor to the company’s stable and research shows its user base to be very loyal. Trading up can be an effective way to increase price while protecting a brand’s original user base. This is accomplished by introducing a justifiably more expensive line extension while continuing to offer the “parent” product at the same price. The key word is “justifiably”, so that the new entry does not denigrate the quality of the parent.
34. BUILDING BRAND EQUITY The basis of brand equity lies in the relationship that develops between a consumer and the company selling the products or services under the brand name. A consumer who prefers a particular brand basically agrees to select that brand over others based primarily on his or her perception of the brand and its value. The consumer will reward the brand owner with dollars, almost assuring future cash flows to the company, as long as his or her brand preference remains intact. The buyer may even pay a higher price for the company's goods or services because of his commitment, or passive agreement, to buy the brand. In return for the buyer's brand loyalty, the company essentially assures the buyer that the product will confer the benefits associated with, and expected from, the brand. Name awareness is a critical factor in achieving brand success. Companies may spend vast sums of money and effort just to attain recognition of a new brand. But getting consumers to recognize a brand name is only half the battle in building brand equity.
45. Implement a brand equity measurement system to ensure that marketing actions properly reflect the brand equity concept.
46. Brand Image Images evoked by exposure to a named brand like brand personality, brand image is not something you have or you don't! A brand is unlikely to have one brand image, but several, though one or two may predominate. The key in brand image research is to identify or develop the most powerful images and reinforce them through subsequent brand communications. The term "brand image" gained popularity as evidence began to grow that the feelings and images associated with a brand were powerful purchase influencers, though brand recognition, recall and brand identity. It is based on the proposition that consumers buy not only a product (commodity), but also the image associations of the product, such as power, wealth, sophistication, and most importantly identification and association with other users of the brand
47. Importance of Brand Equity Brand Equity is important for three major reasons: 1. Brand Equity creates shareholder value Building Brand Equity establishes a bond with consumers. Identifying, rationalizing, and taking steps to own the Brand Promise can ensure that the brand is emotionally connected with consumers. This establishes loyalty and commitment and therefore the ability to command a premium price.
48. Examples of Brands that have understood this include: BrandBrandPromise Pantene Healthy Hair Dove Enhanced self-image through skin care Heinz Ketchup (2001+) Ability to protect loved ones Volvo Fun, family and entertainment Nike Self realization through athletic activity These brands have created long-term, consumer-preferred franchises that deliver reliable streams of revenue and profit to their brand owners.
49. 2. Brand Equity Building is a competency that can be mastered to create competitive advantage Few brands manage their Equity consistently and at every consumer touchpoint. Even fewer link their Brand Equity to marketplace and financial performance indicators. Brand Equity often becomes a facet of the brand that is misunderstood and under-used. Developing a process to consistently measure, plan and develop Brand Equity is the true path to strong brands and sustainable competitive advantage. 3. Brand Equity management creates an array of growth opportunities for the business The process of defining the Brand Vision requires intense consumer interaction. The very action itself reveals the opportunities for the brand – both within the current business category and in new categories and businesses.
50. Laws of Brand Equity The Law of Contraction: A brand becomes stronger when its focus is narrowed. This does not imply carrying a limited product line, but rather limiting and focusing a brand on only one type of core product, which in Titan's case happens to be watches. Titan, though possessed of a wide product line, has stuck to its focus. It hasn't launched other types of products and stuck them with the Titan name, which would have only gone on to cannibalize the value of the core brand. As a result of this, Titan has developed for itself an image of being "time-keeping experts" in the minds of the consumers. The Law of Advertising: Once born, a brand needs to actively advertise in order to stay healthy and maintain market share. If done right, advertising is more of an investment than an expense. Titan has implemented this by always maintaining a high degree of visibility when it comes to its advertising.
51. The Law of the Word: Any brand worth its salt should strive to "own" a word or words in the mind of the consumer. Examples of such brands are Volvo, who owns the word "safety", Mercedes, who own the word "prestige" and Coca-Cola, who own the word "cola". Titan, at least when viewed in the context of the Indian watch market, seems to own the word "quality". The Law of Quality: Though quality is essential to the survival and growth of any brand, the fact remains that brands are not built by quality alone. The perception of the brand is as, if not more significant than mere quality. It is here that Titan "scores". The Law of the Name: In the long run, a brand is nothing more than a name. The difference between products is thus not so much between the products, as it is between their names, or perceptions of the names. Seeing as how its name is perhaps the most important element of a brand
52. Joe Marconi identifies 4 major factors to be kept in mind while naming a brand: 1) It should suggest stability and integrity. 2) It should avoid negative imagery. 3) It should avoid acronyms, the use of which Ries and Trout call "the no-name trap". (Perhaps the sole exceptions to this are BMW & IBM). 4) It should avoid anything-generic sounding (General, National, Standard, etc), as this would not help in defining a brand's personality.
53. The Law of the Company: Brands are brands, and companies are companies. There is a difference. Titan is owned by the Tata Group, who though highly regarded in Indian industry are associated more with heavy industries such as steel and truck building, than with watch making. The Law of Siblings: There is always a time and a place to launch a second brand, but when this is done it should be ensured that both brands have separate and distinct identities. Each brand should be kept unique and special. When Titan decided to diversify into the jewellery segment, they did not call their new brand 'Titan Jewellery', inspite of the high standing of the Titan name in the minds of the Indian consumers. To do so would be to undermine the power of the Titan brand; this is that of being “watch experts”. Hence, the jewellery was called Tanishq. The Law of Shape: A brand's logotype should be well designed, in order to fit the eyes. Visual symbols (again with the possible exceptions of Nike's "swoosh" or Mercedes' 3-pointed star) are highly overrated. The meaning lies in the words, not the symbol
54. The Law of Color: A brand should use a colour and typeface that is the opposite of its major competitor. For example, while Coca-Cola stands for red and appears in running handwriting, Pepsi stands for blue and appears in capital. The Law of Borders: Finally, a brand should know no borders or boundaries. With a name that stands for Hindustan Machine Tools, HMT would be hard-pressed to sell a single watch outside Indian Territory. Such is not the case with the more globally oriented name, Titan. As mentioned previously, Titan is sold in over 40 countries through marketing subsidiaries in London, Singapore and Dubai.
55. The Benefits of Brand Equity What are the benefits of strong brand equity? Well, strong brand equity leads to, strong market share, customer loyalty, more favorable response to price increases, less vulnerability to competitor activity, brand extension opportunities, and communication messages which reach the consumer. In attaining these benefits, strong brand equity will ensure that a product is of an enduring nature. Ultimately, strong brand equity will improve profitability. Do’s & Don’ts in Brand Equity Define the core brand's position and value clearly: A product should be properly positioned and its value (which includes price, quality and image) should be properly defined. As mentioned in the section regarding the law of the word, the two words most highly identified with Titan are “quality" and "Indian". These should thus be emphasized upon. This is exactly what Titan has done,
56. Don't neglect Public Relations: Public Relations, or PR, are vital to the success and survival of any brand. Unfortunately, its value as a brand building tool has more often than not, been undervalued. Newsletters, event and entertainment sponsorships, and other forms of PR help to define the personality of a company or brand, positioning it as a good corporate citizen, and someone nice to do business with. Titan also sponsors a number of popular television programmes, a prime example of which is Star World's "The Practice".
57. Realize that promotions can be tricky: Promotions ought to be used to create recognition and build brand loyalty. Needless and irrelevant contests tend to shift the customer's attention from the product being promoted to the prize being offered (be it a trip to the US or a new car). A better (and far less expensive) way to promote a brand would be to allow it to be used by other companies in their promotional offers. Titan is currently being offered by both Outlook magazine and Welcome Award (the privileged customer programme of the Welcome Group chain of hotels) in their various promotional offers. Realize that promotions can be tricky: Promotions ought to be used to create recognition and build brand loyalty. Titan is currently being offered by both Outlook agazineand Welcome Award (the privileged customer programme of the Welcome Group chain of hotels) in their various promotional offers.
58. If you can't be first, be better: Being the first entrant in any category earns pioneer status for a brand and gives it the advantage of being the probable market leader. Such was the case with HMT. However with its emphasis on its USP and aggressive advertising, Titan convinced the market that it produced the better product and thus destroyed HMT's near monopoly of the Indian watch market. Expand sensibly: Extensions should always be logical and market driven and not mere "product explosions". As the market environment changes with the addition of say, greater competition, or changing customer wants and perceptions, brand extension should be undertaken.
59. Conclusion Strong brands provide value and have a variety of benefits. To customers,brands provide direction, they provide reassurance. Brands reduce risksand they provide a way to self-express. To marketers, brands provide acompetitive advantage. They provide the means and the way of differentiation.Brands provide a means for segmentation for different markets, and a point of entry into new categories that are going to bring greater financial return. Strong brands are based on a relevant differentiated position.Without that, you cannot build a strong brand. A variety of associations are linked to a strong brand. Sometimes we can get carried away, saying This is the most important thing to customers; this is what we should link', and we forget there needs to be more than any one single association.If you look at strong brands, they have a couple of very good sources of strength and a bigger picture of what the brand means and how it is relevant to the customer.