WHAT IS BRAND EQUITY

According to David A. Aker “Brand Equity is the value that a brand generates to the product.”

The value of a brand, based on the extent to which it has highbrand loyalty, name awareness, perceived quality, strong brand associations, and other assets such as patents, trademarks, and channel relationships.”The term brand equity is used mainly when we compare two brands, and also when merger and acquisition takes place.

NEWS AND GOSSIP WORLD EXCLUSIVES

THE

BRAND EQUITY

Measuring Brand Equity

Brand EquityBrand Equity

Cost-Based Price Based Consumer- Based

Historical Cost

Replacement Cost

Market Value Method

Discount Cash flow Method

Brand contribution Method

Interbrand Method

Price Premium

Equalization Price

Indifferent Price

Brand Knowledge

Brand image

Brand knowledge

Attribute association

Benefit association

Attitude association

Loyalty measure

Quality measure

Cost Based Method• Historical Cost- In this we calculate our whole expenditure

till date. Suppose Rs. 100 million have been spent so far in creating a brand called ‘X’ . The value at which the brand can be sold to another organization should be Rs. 100 million. Here we do not mind time value of money and other factor to create the bond.Replacement Cost- How much would it cost to create a brand with similar turnover, profitability, distribution, loyalty etc. Replacement cost = Launch cost + Production and administrative costs incurred over the years + Brand premium acquired over the years due to brand loyalty, distribution etc. It do not give guarantee that if the cost is same then market share, quality and other function will be same.

Cont.…. Market Value Method- This method used when Merger and Acquisition takes place. Suppose Cibaca has been bought by Colgate by 1310 million then what is the equity of Colgate. Suppose Colgate has 17 times more turnover than Cibaca then Equity of Colgate = 1310 * 17=22,270

Discounting cash flow method – This method consists of (1) estimating cash flows that would accrue to a brand in future, (2) converting these to present value using the Time value money.

Suppose estimated sales for the next 5 year is S1, S2, S3, S4, S5 and discount of 15% then present value of cash flow

P = S1/1.15 + S2/(1.15)2/ +………+S5/(1.15)5

Cont.…• Brand Contribution –This method tries to identify the value

that is added the “BRAND” to the product.

Brand Equity = K( Profits from the brand – profits for an unbranded product in the same category)

Inter- brand Method – This method aims at arriving at a value at which a brand can be sold by one company to another.

Brand Equity = (Weighted average of Brand profits * P/E of industry * Brand strength)

Brand Strength depend on certain variable like leadership, stability, internationality, support, protection, market and trend.

Brand strength score = total score of all variable/100

Price Based• Price premium method- This is done by comparing

(retail price of the “branded” product - retail price of an unbranded product.) . The difference will be brand equity of that product.

Market share equalization method-

This method uses an ingenious way of tackling the brand equity problem.

What are the prices at which the

market share for each of these brands

is equal? What is the point at which

40 people switch from Colgate and

distribute themselves among the other

brands equitably. This situation is shown

in the fallowing table

Cont.….• At this point, we have found situation

market shares are equal. The prices

here straight away give an indication

of brand equity. If we divide the prices

in paise by ten we get the numbers in

the brand equity map. In other words,

the brand equity of Colgate is equal

to 245 while that of Babool is 146.

Brand Price No. of people using

Colgate 24.50 25

Close – up

22.50 25

Dabur 17.50 25

Babool 14.60 25

Price premium at indifference

• This Method tries to compare the free prices of Brand at the point of indifference.

• Brand Equity of Colgate = •  • Revised Price of Colgate• 1 * 100• Price of Promise

• Brand Equity of Babool=• Revised Price of Babool• 1 * 100• Price of Promise

Customer Based Brand Equity

• Brand Knowledge- The structure and content of brand knowledge influences consumer behavior. It has two component. (1) Brand Awareness (2) Brand Image

• Brand awareness-Brand awareness plays an important role in consumer decision making. It reflects the importance and the impression of the brand in consumer mind. The different levels or tools for measuring brand awareness are

• Brand recognition• Bran recall• Top of the mind• Brand dominance

Cont.• Q1- Connect Santoor, Sundrop, Baby Soft, Shikakai, and

Yardley to a giant Umbrella company?• Reckitt Benckiser• Wipro• HUL• P & G

• Brand recognition- Recognition means some sense of familiarity which is some times sufficient in decision making at the point of purchase.

• Brand recall- Brand recall refers to the ability to retrieve the brand from the memory when some clue is provided.

• Punchline• Sirf banking aur kuch nahi• Working together for healthier world• The power of knowledge• Eat healthy, think better

• Top of the mind

• Amitabh Bachchan

• Abhishek Bachchan

• Priyanka chopra

• Shahrukh khan

Brand dominanceBRAND/COMPANY CATEGORY

AMUL BUTTER

NOKIA MOBILE HANDSET

FAIR & LOVELY FAIRNESS CREAM

EUREKA FORBS VACUM CLEANER

Cont.…• Q2– Which country manufacture the largest number of laptops

in the world.• India• Malaysia• China• Taiwan

Brand Image• The image of a brand is how it is

perceived by the consumer. In fact, it is these association which differentiate one brand from another in the mind. The image of brand may different type of association.

• Attributes, Benefits, Attitudes

Attribute Association• Attributes are

descriptive features which are used to characterize a product or service. For instance how you will described Refrigerator and McDonald.

Benefit Association• Benefits are suggestion as to what a product or service can do for

them. These are intrinsic advantage of consuming a product. For example functional advantage of a fridge is that it prevents food from getting spoilt.

• Some punch line which shows functional benefit

• “ Powered by Intellect, Driven by values.”

“Infosys Technology”

“Quality in Everything we Do”

“Ernst & young”

Attitude Association• Attitude is an important psychological construct. Attitude

refers to overall evaluation of a concept like person, product, object or a brand. There are 3 components in attitude.

• Cognitive- Knowledge perception that a has about brand

• Affective- Emotions or feelings that someone has toward a brand.

• Conative- Behavioral or action oriented

• Q-3- This company was started in 1894 by a man who was called the “Henry Ford of Eastern Europe”. The company was also one of the official sponsor of the 1986 FIFA world cup, Name it ?

• PUMA• Liberty• Adidas • Bata

Loyalty Measure• Customer loyalty is the core

dimension of measuring brand loyalty. Brand loyalty can be indicated by two factors

• Price Premium- it is the amount that a customer want to pay for the brand comparison with other brand offering similar benefits.

Customer satisfaction• Customer satisfaction is important factor for measuring brand

equity.

• Are you people satisfied with Dell’s Vostro version?

• Are you satisfy with Dell’s service?

• Are you satisfied with coca – cola taste

• Which company’s cosmetic item you like most?

Quality Measure• Quality is another

important factor for measuring Brand Equity.

• How will you rank the quality of these product?

• This company has been awarded the most number of patents for 16th year in a row . It has presence in over 170 countries and even runs its own advertising channel on you tube. Which company is in question.

• Apple• Xerox• Microsoft• IBM

THANKING YOU……………

SANDIP MANDALSANTOSH TRIPATHISAPTAK DASSAPTARSI SANTIKARYSATHAFUL SHAH CHOUDHARY