Brand Equity Sun Feast

2009

1

PRESENTED BY :‐

ABHIJIT DEY – U108001

ABHINAV GUPTA – U108002

MONIKA GUPTA – U108031

VIBHOR SHARMA – U108059

BRAND EQUITY MEASUREMENT OF SUNFEAST

Table of Contents 1. Executive Summary ..................................................................................... 2 2. Brand Loyalty Measurement ........................................................................ 4 3. Leveragability .............................................................................................. 9 4. Brand Equity Model based on share tier approach .................................... 10 5. Van Westendorp Price Sensitivity Meter & Brand Equity ........................ 18 6. Brand Price Trade-Off Technique ............................................................. 20 7. Recommendations ...................................................................................... 21 8. Appendix .................................................................................................... 22 9. Questionnaire ............................................................................................. 22 10. Questionnaire analysis ............................................................................... 27 11. References .................................................................................................. 28

Executive Summary The purpose of the study is to measure the brand equity of Sunfeast. Brand equity is an intangible asset that depends on associations made by the consumer. It has three aspects

• Financial- the ability to charge a premium • Brand extension – the ability to leverage the brand • Consumer based- the satisfaction and loyalty of consumer towards the brand

The brand loyalty was measured using two mathematical models which measured both the loyal and potential switchers. Preference was identified as a behaviour measure and a 2X2 matrix consisting of “most preferred brand” and “last brand purchased”/ “number of purchases” was developed for each brand. From the grid, two metrics were identified- Gravity: the power of the brand to maintain consumers who prefer it & Focus: how many of the purchases were made with the brand as the ‘preferred brand’. The Loyalty index was then expressed as a weighted average of the repurchase and switching indices which were estimated from the gravity and focus ratios for each brand. It was observed that Britannia was succeeding by leveraging strong loyalty whereas Sunfeast is relying on the ability to attract consumers away from other

brands, capturing brand switchers. Results suggested that both Britannia and Parle are being threatened by Sunfeast and that Parle is being perceived as a weakening brand. The loyalty indices for Sunfeast, Britannia & Parle came out to 56%, 88% and 51% respectively. For measuring financial aspect we used van Westendorp Procedure to measure the optimum price which consumer is willing to pay and the market price which the company is charging. The difference in these two will tell the premium which a company is able to charge due to its brand equity. We found those optimum and indifference prices are very near in this category. Britannia and sunfeast have almost equal prices in this category so almost equal brand equity. Another thing which affects the ability to charge premium is presence of other brands for which we did a conjoint analysis using BPTO technique to check how consumer‘s behavior changes in presence of other brands and different prices. The ability to charge the premium, the prem um which can be charged and Brands which have most power to charge a premium were found.

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Brand Loyalty Measurement The brand loyalty will be measured using two mathematical models which measure the loyals and potential switchers as well. The 1st model is a preference-behaviour1 model based on a simple change in the brand switching model as developed by Colombo and Morrison2. Preference is identified as a behaviour measure. The 2nd model is an improvisation on the previous model to address a few of its shortcomings and is used to calculate the loyalty index of the brand. Model 1: (based on last brand purchased) A 2X2 matrix consists of “most preferred brand” and “last brand purchased”. The model defines loyals as those who buy their most preferred brand and others as switchers. Thus, the likelihood of purchasing a given brand is the sum of the proportion of that brand’s loyals and some fraction of the remainder. That fraction is a measure of the brand’s ability to attract potential switchers. Thus, the two important parameters of the model reflect a brand’s reliance on loyal customers and its success in attracting brand switchers. The first group are those who have a positive attitude toward the brand (prefer it) and who buy it. The second group are those who buy it on a given purchase but who may prefer another brand. An assumption of the model is that every consumer has a preferred brand. By considering the relative preferences and purchases, the model computes an ability of each brand to attract consumers from each other brand. The measures and concepts of the model are illustrated in Table 1. The diagonal entries represent the number of consumers who last bought the brand they preferred, which would consist of the loyals and the potential switchers. The off-diagonal entries represent those consumers who last bought something other than their preferred brand.

Table 1 Preferred Brand by frequency Matrix

Preferred Brand

Last brand purchased

Sunfeast Britannia Parle Others Total Sunfeast X Z Britannia X Parle Y X

Others X

Total X: Loyals who bought the brand they preferred. Y: Switchers who prefer Parle but buy Sunfeast. Z: Switchers who prefer Sunfeast but buy Parle.

1 Obermiller brand loyalty metric 2 mktsci.journal.informs.org/cgi/content/abstract/8/1/100

Discussion and Analysis:

Preferred Brand

Last purchased brand

Sunfeast Britannia Parle Others Total Sunfeast 6 2 1 0 9 Britannia 5 22 2 1 30 Parle 3 1 6 0 10

Others 0 0 0 1 1

Total 14 25 9 2 50 Respondents were 50 people randomly selected. The right hand column identified the no. of respondents who identified each of the brands as the most preferred brand - 9 for Sunfeast, 30 for Britannia and 10 for Parle. The columns indicate the last purchased brand for each preferred brand. For example, of the 9 who identified Sunfeast as their favourite brand, 6 purchases were of Sunfeast, 2 were of Britannia and so on. The diagonal entries in the table indicate purchases from the preferred brands. The preference measures indicate perceptions of brand quality or brand equity. A brand with strong consumer preference has a competitive advantage. In this case, Britannia had about 60% of the expressed preferences for the set of brands (30/50, from the far right column) and was, in fact, the leading selling brand (25). On the other hand, the second leading selling brand of the eight was Sunfeast (14), which had only an 18% share of preference (9/50). Another insight into the loyalty of consumers comes from an examination of the diagonals. The diagonal entries are the number of consumers who last bought their preferred brands. If we compare those to the total number of consumers who preferred the brand, we get the proportion of the preferences that were converted into sales. For Sunfeast, this proportion is 0.67—6 preferred and bought (on the diagonal) versus 9 total preferred (from the right-most column). This proportion is termed Gravity—the power of the brand to maintain consumers who prefer it. A brand with high gravity has consumers who are very loyal to their favourite brand. Thus, Sunfeast was able to convert 67% of its preferred customers into sales; whereas Britannia converted 71%. A high gravity ratio indicates that consumers regard the brand as desirable, available, and a good value, a brand that is relatively resistant to competitive prices or promotions. These data suggest that though Sunfeast had established preference it may have been priced higher than Britannia or distributed selectively to convert those preferences to sales. A different perspective on the market is revealed by comparing the diagonals with the total of last purchased. This ratio represents the proportion of sales that come from consumers who identify the brand as most preferred and is termed focus. Sunfeast has a focus of 0.43—6 preferred and bought versus 14 total purchased). A brand with high focus gets sales mostly from consumers who prefer it. Brands with low focus “steal” customers from other brands. Of the brands, the highest focus ratio was Britannia (0.88).

These data suggest that Britannia was succeeding by leveraging strong loyalty (high focus); whereas, Sunfeast is relying on the ability to attract consumers who preferred other brands, capturing brand switchers. Gravity and Focus Ratios

Gravity (α)

Focus (π)

Sunfeast 0.67 0.43

Britannia 0.73 0.88 Parle 0.60 0.67

Inter-brand competition and threats to loyalty can be analyzed by examining the individual off-diagonal entries. These results suggest that both Britannia and Parle are threatened by Sunfeast. Sunfeast has stolen 5 of Britannia’s 30 and 3 of Parle’s 10 preference customers. These ratios (5/30 and 3/10) are indicators of the weakness of these two brands to Sunfeast. Sunfeasts gets 17% (5/30) of its sales from people who prefer Britannia and 30% (3/10) from people who prefer Parle. (Sunfeast’s own brand focus is only 0.43). Considering the off-diagonal for Parle, it is observed that though the brand has a high gravity ratio (0.60) it is losing many of its loyal customers to Sunfeast (3) as compared to itself (6), which suggests both that it is perceived as a weakening brand. Model 2 (based on number of purchases) Model 1 while being an efficient measure of loyalty was not an accurate estimate for a low sample size (50 in this case) so it seemed fit to improvise on the model by replacing the ‘last brand purchased’ variable with ‘number of purchases for each brand’. This seemed more effective as it eliminated bias of certain respondents by taking the count of the purchases for each brand on the consumer’s last 5 visits to a store to purchase the particular product. Besides, there are possibilities of erroneous data creeping into model 1 where a consumer’s ‘last purchase’ may have been influenced by a non availability of his preferred brand, giving a faulty loyalty measure. Model 2 redresses the problem by taking into account the last 5 brand purchases made instead. This helps give a more uniform loyalty measure.

Preferred Brand

Number of Purchases

Sunfeast Britannia Parle Others Total Sunfeast 26 21 9 3 59 Britannia 29 88 21 9 147 Parle 16 9 18 9 52

Others 1 4 0 11 16

Total 72 122 48 32 274 Discussion and Analysis : The analysis is more or less similar to model 1 with the only difference arising due to the no. of purchases made. For instance, out of a total of 59 purchases with Sunfeast as the preferred brand, 26 purchases were of Sunfeast itself (44%: gravity proportion) while Britannia and Parle constituted 36% and 15% respectively.

Gravity (α)

Focus (π)

Sunfeast 0.44 0.36

Britannia 0.60 0.72 Parle 0.35 0.375

Quite clearly, Britannia was the largest selling brand (122) followed by Sunfeast (72) and Parle (48). The focus ratio tells us how many of the purchases were made with the brand as the ‘preferred brand’ out of the total no. of purchases for that particular brand. In this case, the total no. of purchases for Sunfeast was 72, out of which 26 purchases were made with Sunfeast as the preferred brand. This gave it a focus ratio of 36% while those of Britannia and Parle stood at 72% and 37.5% respectively. As is evident, Sunfeast is more reliant on ‘brand switchers’ – a bulk of its sales coming from people who prefer Britannia (29)-40% and Parle (16)-22%. It is interesting to note that Sunfeast made most of its sales from consumers who preferred Britannia over itself! The fact that Sunfeast has supposedly ‘stolen’ 29 purchases from Britannia (20%)and 16 from Parle (31%) makes it a threatening proposition to its rival brands. Yet another interesting observation is seen in the case of Parle, where out of a total of 52 purchases with Parle as the preferred brand, only 18 purchases were of its own (35%) while Britannia (17%) and Sunfeast (31%) made up the other significant rest. This suggests that Parle is losing a sizeable chunk of its sales to Sunfeast- almost the same amount that it is keeping for itself, which shows that the brand is weakening against Sunfeast. Despite its position as a national brand and its presumed high quality perception, Parle is neither maintaining the customers who prefer it, nor too successful in stealing customers from other brands. Britannia has the highest gravity ratio (60%) which shows an inherent loyalty of its consumers and a capability of keeping those potential switchers who like it best. On the other hand, with a focus ratio as high as 72%, Britannia’s ability to attract potential switchers is very low. With the lowest focus ratio (36%), Sunfeast gets its sales volumes by attracting consumers away from other brands and is thus the ‘stealer’ or ‘brand switcher’. Implications

Specific inter-brand competitions can be analysed by examining the appropriate off-diagonals—a brand could identify its most direct competitors as those with the highest focus scores. Gravity can be thought of as a measure of general marketing efficiency—the ability of a brand to convert preference to sales. If the brand is doing enough (usually through its offering) to establish preference, its marketing (usually the other 3 Ps—pricing, distribution, and promotion) must be able to capitalize on that basic advantage. Although a high gravity ratio is not a requirement for success (since widespread preference will lower it), brands should constantly attempt to increase it. The focus ratio tends to reflect targeting. A high focus score indicates a brand (Britannia in this case)that is relying on sales to customers who prefer it. It results from a successful targeting strategy that produces a group of loyal consumers who buy what they most want. Generally, the higher focus ratios are held by brands with more frequent promotions (as is evident in Britannia’s case). Conversely, a low focus score indicates that the firm is relying on sales to customers who prefer some other brand, which corresponds to an unfocused strategy. The clearest strategy for attracting consumers away from other brands is through regular sales promotions. Price cuts offer enough economic incentive to offset the additional value of competitive brands. Gravity and focus scores broadly reflect whether brands compete by focusing on their target segments (high gravity) or to frequent switchers (low focus). Gravity can be increased through image advertising and quality improvements while focus can be reduced or maintained through sales promotions. A final implication of the model comes from a consideration of the off-diagonal entries. Relatively high scores indicate brands that are potential threats or targets-reasons to act upon through competitive promotions/advertising. Loyalty Index measure: Brand Loyalty comes from 2 stages: The hard core loyals who are extremely loyal to the brand: brand’s ability to maintain loyal customers. Switchers from another brand: the brand’s ability to convert potential switchers. Based on the Colombo-Morrison model, loyalty index can be measured as a weighted average of ρ and σ which represent repurchase and switching indices respectively. Weights assigned are 67% and 33% respectively (based purely on assumptions) ρ=α + (1- α) π (expressed in percentage terms) σ = ∑ (1-αi ) πj (expressed in percentage terms) Loyalty Index = 0.67* ρ + 0.33* σ

For Sunfeast,

ρ = 0.44 + (1-0.44)* 0.36 = 64.16 σ= (1-0.60)* 0.36 + (1-0.35)* 0.36 = 37.80 Loyalty Index = 0.67*64.16 + 0.33*37.80 = 55.46 For Britannia,

ρ = 0.60 + (1-0.60)* 0.72 = 88.80 σ= (1-0.44)* 0.72 + (1-0.35)* 0.72 = 87.12 Loyalty Index = 0.67*88.80 + 0.33*87.12 = 88.24 For Parle,

ρ = 0.35 + (1-0.35)* 0.375 = 59.375 σ= (1-0.44)* 0.375 + (1-0.60)* 0.375 = 36.00 Loyalty Index = 0.67*59.375 + 0.33*36.00 = 51.66

ρ σ Loyalty Index

Sunfeast 64.27% 38.10% 55.63%

Britannia 88.81% 87.51% 88.38%

Parle 59.13% 36.03% 51.51%

Leveragability Leveragability is the potential energy to extend a brand successfully into related, or even unrelated, product categories. Some of the brands are considered to be more flexible than others when considered for satisfying need and wants which are different from the ones which it is currently addressing. A company would want the leveragability of its brand to be high since it will help the company in related and unrelated diversification. The monetary costs of extending a current brand name to another product is much lower when compared to the cost of creating a brand from scratch. Thus leveragability of a brand is one of the crucial components of its brand equity and further helps us in deciding how valuable a brand is for the company. We intend to measure brand leveragability by using question number 21 given in the questionnaire given in the appendix. We have taken 8 categories which are all in the food and beverages segment since we felt that these industries would be the logical extensions for the companies if they want to diversify and leverage the brand to new product categories. This could also evoke better response from the respondents. We wanted to measure the brand leveragability by understanding the perception of the consumer about the categories to which they feel the brand could be appropriately diversified. We intend to subjectively analyze the responses and thereby arrive at the comparative brand leveragability among the three brands under consideration. We intend to calculate the percentage of respondents who feel that the brand can be extended to a particular product category.

Findings The following table was obtained from the analysis of data on leveragability.

Cookies Pasta

Ready to eat processed foods

Chocolates and candies

Beverages Snacks Ice cream ketchup

Sunfeast 27 20 20 24 5 17 9 5

Britannia 25 9 20 23 8 24 15 6

Parle 21 2 14 21 14 21 11 11

Cookies Pasta



Beverages Snacks Ice cream ketchup

Sunfeast 54.00% 40.00% 40.00% 48.00% 10.00% 34.00% 18.00% 10.00% Britannia 50.00% 18.00% 40.00% 46.00% 16.00% 48.00% 30.00% 12.00% Parle 42.00% 4.00% 28.00% 42.00% 28.00% 42.00% 22.00% 22.00%

As can be seen that the categories cookies, chocolates & candies, Ready to eat processed foods and snacks were the product categories where the three brands were found to be more leveragable. On a comparative level the brand Britannia was found to be more leveragable of the three brands but the difference was not too significant. Recommendations The leveragability of brand sunfeast was found to be good in the cookies, Pasta, Ready to eat processed foods and chocolates and candies. The parent company ITC already has entered the snacks category with Bingo and sunfeast has already diversified to the pasta segment. The company can look at diversifies into the chocolates and candies segment as the name sunfeast resonates well with the kids.

Brand Equity Model based on share tier approach We based our model on the share tier approach and improvised on the model to suit our requirements for the product for which we are measuring the brand equity. The question 22 in the questionnaire as given in the appendix was used to identify the Price/Quality classification of all the three brands for every individual respondent. The rationale behind using the Price/Quality classification was that the classification helps us in identifying the behavioral pattern of the consumer towards the brand which can then be linked to consumer loyalty and brand perception. This will help us

in developing a metric for quantifying the brand equity of the brands under consideration. The data obtained from the Price/Quality classification will be used to calculate the percentage of sales made by each category of respondents (for instance say a respondent has a perception that Sunfeast has superior quality and price is not a barrier for him. Such a respondent will be classified under the Top box in the grid and so on for other respondents). For the purpose of our analysis we have assumed that the respondent base represents the total market and therefore the cumulative sum of percentages will equal the total sales i.e. 100% of the sales made by the brand. The percentage figures in each box in the 4x4 grid will represent the percentage of total shares for respondents who think that the brand belongs to that Price/Quality classification. The loyalty share for the four cells viz Q1P1, Q2P1, Q1P2, Q2P2 was calculated based on their responses to the Price/Quality classification and the responses to the loyalty based questions in the questionnaire. Hence we could find out the percentage of loyal respondents for the three brands in all the four cells. We have then calculated the equity share for the brands using the loyalty contribution data for each brand which was obtained from the percentage of loyal customers for each brand. This metric reflects the relative percentage that a brand owns of the sales attributable to all loyal customers in the category. It represents the brand’s share of the category’s most desirable, and profitable, customers. The leveragability index was calculated based on the loyalty data and the sales in the cells of the price quality grid. This metric attempts to measure the relative importance of product quality with respect to price, suggesting that if the degree of quality perception is much stronger than price, there is a potential to leverage that perception into other areas beyond the immediate market. The measurement of brand equity index and the share tier index to find out a composite index for brand equity was the next logical step and a model was developed to calculate this which will be explained in detail in the analysis part. Price/Quality Classification Findings The price Quality classification for all the three brands as obtained is given below:

SUNFEAST Superior quality

Good quality

Acceptable quality

Quality not acceptable

Price not a barrier 20.00% 26.00% 14.00% 0.00%

Price minor barrier 6.00% 22.00% 2.00% 2.00%

Price sufficient barrier

0.00% 2.00% 2.00% 2.00%

Price absolute barrier

0.00% 0.00% 2.00% 0.00%

BRITANNIA Superior quality

Good quality

Acceptable quality



Price minor barrier 12.00% 12.00% 2.00% 0.00%


0.00% 2.00% 2.00% 0.00%


0.00% 2.00% 2.00% 0.00%

PARLE Superior quality

Good quality

Acceptable quality



Price minor barrier

4.00% 14.00% 6.00% 0.00%


0.00% 8.00% 6.00% 2.00%


0.00% 0.00% 2.00% 0.00%

As can be seen from the above table Sunfeast has the largest percentage of respondents who consider it to of superior quality and do no consider price to be a barrier. This constitutes the top box contribution. Now the largest percentage of respondents who consider Britannia to be a superior brand and also consider price to be a minor barrier signifies that price is a minor barrier and it charges a premium for its products. Sunfeast has the largest number of respondents who consider price to a minor barrier and the quality to be good and not superior. Recommendations Sunfeast needs to build on its quality perception in order to attract more customers the fact that a large number of respondents consider price to a minor barrier means that it needs to rework its pricing strategy. When compared to the major competitor brands it need to work on these aspects if it wants to gain market share from them in the future. Loyalty Table The loyalty share for the four cells viz Q1P1, Q2P1, Q1P2, Q2P2 was calculated based on their responses to the Price/Quality classification and the responses to the loyalty based questions in the questionnaire. Hence we could find out the percentage of loyal respondents for the three brands in all the four cells. The following data was obtained from the above mentioned analysis:

Loyalty Table Quality Superior Good Sunfeast Britannia Parle Sunfeast Britannia Parle Price Sensitivity None Sunfeast 65% 56%

Britannia 92% 78% Parle 62% 51% Minor Sunfeast 48% 32% Britannia 68% 45% Parle 47% 33%

As can be seen from the above table Britannia has a clear advantage over the other two brands when it comes to consumer loyalty which is a key component of brand equity and hence is an indication of future potential and strength of the brand.

EQUITY SHARE CALCULATION This index helps to calculate the relative percentage that a particular brand owns of the sales due to its all loyal customers in the category. It is that share of the customers of the brand which are the most desirable and derive the profits of the company. This share is specific to the company and has no category equivalent.

METHODOLOGY

For the purpose of calculation, current sales and the market share was considered.

Sales (Rs. Crore) Market Share Proportionate

Market Share Loyalty Contribution Loyalty Sales Equity

Share Sunfeast 650 10% 13% 55.46% 360.49 10.62% Britannia 2145 33% 43% 88.24% 1892.748 55.75% Parle 2210 34% 44% 51.66% 1141.686 33.63% Category Total 5005 77% 100% 3394.924 100.00%

Following Assumption were made for the calculation of the shares:-

1. Due to absence of loyalty contribution, we have not considered others category for calculation of equity share

2. Since we have measured the loyalty for only 3 brands in the organized biscuit segment so for the calculation of equity share we will consider the total sales of these three brands (Sunfeast, Britannia and Parle) as the overall sales in the biscuit market.

The overall loyalty contributions were determined from the loyalty indices as estimated from the model for each of the three brands. Then these numbers were multiplied by sales to find out the figures for the loyalty sales. Then equity share was the share of each brand in loyalty sales out of the total category sales. Each brand figures were divided by the category total sales.

ANALYSIS The equity share represent the relative percentage of each brand’s loyal customers on the basis of the total customers in the category. Here, Britannia has the huge equity share as compared to its existing competitors. Sunfeast has a low equity share. The main reason for is its small share of sales as compared to its competitors as it is a relatively new player when compared to other established players like Britannia and Parle.

LEVERAGABILITY INDEX CALCULATION The index attempts to measure the relative importance of the quality of the product with respect to the price of its price and helps to evaluate whether the perception of the degree of the quality of the product is stronger factor than the price of the product. It is an evaluation of the brand potential to be able to leverage that better quality perception in the markets beyond the existing ones. There are several ways to calculate the Leveragability Index.

METHODOLOGY Here, the two quadrants Q1P2 and Q2P1 that is to say the two adjacent quadrant to the most desired quadrant were considered. First the sales of these two quadrants were found out by multiplying the percentage from the Price-Quality Classification Model to the existing sales. Then the loyalty sales of these quadrants were found out by taking the loyalty index from the loyalty table. Then the leveragability Index was calculated by considering the loyalty sales of the Q1P2 quadrant and dividing it by the sum of the sales of these two quadrants.

Q1P2 Sales

Q1P2 Loyalty

Q1P2 Loyalty Sales

Q2P1 Sales

Q2P1 Loyalty

Q2P1 Loyalty Sales

Leveragability Index

Sunfeast 39 48% 18.72 169 56% 94.64 16.51% Britannia 257.4 68% 175.032 900.9 78% 702.702 19.94% Parle 88.4 47% 41.548 574.6 51% 293.046 12.42%

ANALYSIS The sales of Q1P2 was considered for calculation of the index because for these customers, the brand offers superior quality but the price is a minor barrier for them to purchase the brand. These are the customers which offer the potential for the brand to leverage the future market growth and extend itself beyond the current segmentations. The customer holds the brand in the high esteem but the price is a minor barrier. The price barrier can be removed by the company leveraging upon the perception of the superior quality of the brand. Here, Britannia has the highest Leveragability Index and it is found out to have the highest perception of being a superior quality offering from the company. As per the conclusions, Sunfeast, inspite of being a new brand in the market, has a high leveragability index. This shows that the consumer has the perception that the brand offers quality product to them and the company can use this factor to capture the future growing market of the industry.

BRAND EQUITY INDEX CALCULATION The next logical step was to calculate the Brand Equity Index of each player in the biscuit industry. This would help us estimate the power of the each brand in the market.

SUNFEAST Superior quality

Good quality

Acceptable quality


Price not a barrier 130 169 91 0

Price minor barrier 39 143 13 13


0 13 13 13


0 0 13 0


Good quality

Acceptable quality



Price minor barrier 257 257 43 0


0 43 43 0


0 43 43 0

PARLE Superior quality

Good quality

Acceptable quality



Price minor barrier

88 309 133 0


0 177 133 44


0 0 44 0

WEIGHTS W1 W2 W3 W4 W5 15% 10% 8% 6% 5%

MARKET SHARE

BRAND EQUITY INDEX

SHARE QUALITY INDEX

SUNFEAST 13% 53.95 7.01% BRITANNIA 43% 201.201 86.23% PARLE 44% 175.032 77.29%

Methodology For the purpose of calculation of Brand Equity Index, percentage of customer in each quadrant as found out in Price – Quality Classification Model and the existing sales of the brand were considered. The percentage figures were multiplied with the sales numbers to find out the turnover volume of each quadrant. Then taking the Share Tier Approach as the basis, decreasing order of weights were assigned to each quadrant. The order taken was as follows :- Q1P1 > Q1P2 > Q2P1 > Q2P2 > Others. The sales turnover of each quadrant was multiplied by the assigned weights. The least weight was assigned to all other quadrant sales volumes taken together. The resulting numbers were added together to find out the Brand Equity Index.

Analysis The Brand Equity Index (BEI), as it is known as popularly is used to judge the ability of the brand to capture the market share and the potential of the brand for the future growth. The model used here captures the essence of the customers belonging to every category as well as the current sales of each brand. Britannia has been found out to be having the highest brand equity index. This brand has the higher capability to charge a premium as compared to its competitors. Sunfeast, here is found out to be having the lowest BEI. The brand is the newest entrant in the market as compared to its other competitors but still it has been able to get the market share inspite of the existence of the established market players. The

sales of the brand has been on the rise and it has a sufficient market share given the competition in the industry and the coverage of the market by its biggest competitors.

SHARE QUALITY INDEX CALCULATION The next and the final logical approach was to calculate the Share Quality Index (SQI) For this, BEI was multiplied by the existing market share of the player. This gives the value of the stock of the company and helps to evaluate the benefits of holding it.

Van Westendorp Price Sensitivity Meter & Brand Equity The Van Westendorp Price Sensitivity Meter was developed in the 1970s by Dutch economist Peter H. Van Westendorp to examine patterns of price-consciousness. His method includes four questions related to each respondent’s expectation for a product’s price. Rather than using a direct approach, such as asking “How much would you pay for this product?” (a technique which has been shown to be quite unreliable) the van Westendorp approach is to “surround the market price” by asking four price-value relational questions. (Questions 9-12). Theories behind the model

• “Theory of Reasonable Prices,” which assumes buyers can examine an item and formulate a rough notion of what they would expect the item to cost or at least the range into which they would expect it to fall

• “Price Signaling Quality,” which assumes that some prices are “too low,” and that buyers will avoid products that are in this category, fearing poor quality

The reason for using this method was that this method will give us the optimum price of the product and the indifference price. A company whose product is selling above the optimum price is commanding premium due to its Brand so the company having higher difference between market price and optimum price is having higher brand equity due to which consumer is ready to pay premium. We felt the other methods are not taking into account the price consumers are willing to give for a particular product which is an important factor. Indifference price is the point at which the same percentage of respondents thinks the product is either cheap or expensive. OPP is optimal in the sense that the price sensitivity to the product for being cheap is equal to that of being too expensive, and is often the recommended price.

Methodology We took a sample of 50 people and asked them these 4 questions after which we plotted the responses with price on x axis and % of respondents on y axis. The sample used is very small and from the same background almost so the results are not similar

to ideal graphs. We found out the price for cream biscuits in premium range like Britannia cream treat which was specified to keep the respondents away from confusion. Then we defined a term Westendorp Brand equity index = [(market Price – optimum price)/ optimum price]. The higher the index higher the brand equity. We have used the optimum price to normalize the index because the optimum price will remain fixed whereas market price may vary from company to company.

Van Westendorp Indifference Price Point

The indifference point is 14.

Van Westendorp Optimum price Point

The optimum price comes out to be 12 so for sunfeast so the Westendorp Brand equity index for sunfeast comes out to be 0.0833 and 0.1667 for Britannia. Assuming market Price of Sunfeast Rs 13 and Britannia Rs 14. (It varies on the basis of flavor)

0

20

40

60

80

100

120

0 5 10 15 20 25 30

cheap

expensive

Brand Price TradeOff Technique

Introduction BPTO is a method of marketing research and it is considered to be one of the simplest ways of finding out the relative value of the brand when compared to its competitors in the same product category. In this method, several brands or products are shown at once and the customers are asked to choose their preferred brand at the same comparable price level. Then prices are adjusted and then the customer is asked to choose again from the same adjusted price level list. The end result is that ranking of preferred brand can be inferred in relation to the prices the customers can pay or are willing to pay. The result allows to build a model which shows the likely purchase of the brands at different prices. This model speaks about the ability of the leader to charge a premium and helps to estimate the price elasticity of the product. This also helps in isolating the brand equity as the extra revenue which can be achieved just by the use of the name of the brand.

Methodology The respondents were chosen across a diverse range of background, age group, education level, income and the occupation. In all, 30 respondents were interviewed for BPTO technique. The analysis and the technique gave us the glimpse in the ability of each brand to charge a premium, inference could be drawn about the brand equity of the leading market players in the product category. We considered Chocolate Cream biscuit as the basis of the research by this method. The MRP of the product is Rs. 12 as available in the market.

Analysis The next step was to interpret the results to gain an insight into the market of the biscuits. It was found out that Britannia is the most preferred brand in the biscuit segment and it occupies the top most place (TOMA) in the minds of the consumer. Out of the 30 respondents, 9 were ready to pay Rs. 17 as the maximum price for this product category for Britannia. For the same brand, 3 of them were ready to pay a price upto Rs. 25 for the same product while 12 of them refused to pay anything beyond Rs. 20 for the same product. The maximum price that was considered optimal for the brand name Britannia was Rs. 18 by 3 of them and it was Rs. 22 for 3 of them. The result yielded the capability of the brand to charge a premium which comes out to be from Rs. 5 to Rs. 13 over and above the MRP which ranged from customer to customer. The most favoured maximum price was Rs. 20 for Britannia. The next preferred brand was Sunfeast. In case of constant price rise by Britannia, consumers preferred to switch to Sunfeast when buying Britannia became out of their hand. They trusted the brand for its quality and the reliability. After the analysis, it was concluded that a total of 6 respondents were prepared to pay a price upto Rs. 18 for Sunfeast, while 9 of them, the optimal price was considered to be Rs. 17, for 6 of them it was Rs. 15. Out of all the responses, only few of them considered Sunfeast to be a brand where they would pay above Rs. 18. Only 3 people each were ready to pay Rs. 19 and Rs.20 respectively. After which they would totally stop consumption of

the product from this brand and switch to next preferred brand. The ability of Sunfeast to charge a premium ranges from Rs. 3 to Rs. 7 over and above the MRP. After Sunfeast, next Brand is Parle which is the next preferred brand. Out of the total respondents, 3 each were found out to be ready to pay Rs.17, Rs. 18 and Rs. 19 for the same product while 6 of them refused to move beyond the MRP price for Parle and the equivalent number of respondents did not want to pay beyond Rs. 14. Upto a total of 9 considered Rs. 15 as the maximum price they would pay for this product. After the analysis of the ability to charge a premium, the inter brand comparison was made. This covered the price level at which the consumer switched from their most preferred brand to their next preferred brand, the threshold price at which they had to switch loyalty, what was the price that was considered optimal by them for a particular brand if the prices of other brand were kept constant. This helps us to understand the premium that can be charged over and above the prices of competitors’ price. For Sunfeast, before the switch was made to other brand for example Britannia and Parle, the respondents were ready to pay a premium of a maximum of Rs. 4 on an average. Some of them stuck to Sunfeast till a price difference of Rs. 5 and for some of them the threshold was reached when the price reached a difference of Rs. 2 – Rs. 3 as compared to the competitors. There were some respondents who were extremely price conscious and not brand loyal at all. They would switch the price as soon as the price fluctuated even with a minor difference. This figure was found out to be less for Britannia which is the TOMA brand in the biscuit segment. Sunfeast as a brand is new in the market when compared to its competitors. Still it has been able to capture a place in the minds of the consumer and the brand has the capability of charging a premium.

Recommendations • Considering Sunfeast is a brand with a moderate Gravity ratio compared to the

market leader, Britannia, there is scope for quality improvements and image advertising. Besides, a low focus ratio indicates that Sunfeast relies on sales to customers who prefer some other brand. The strategy to attract consumers away from the other brands could be done through regular sales promotions or price cuts to offset the value of its competitors

• From Van Westendorp analysis we found that optimum point and indifference points are close (in the range of 1-2 Rs) so the products need to be of high quality. As it is low level of involvement products o repetition and point of sales promotion will be important.

• The leveragability of brand sunfeast was found to be good in the cookies, Pasta, Ready to eat processed foods and chocolates and candies. The parent company ITC already has entered the snacks category with Bingo and sunfeast has already diversified to the pasta segment. The company can look at diversifies into the chocolates and candies segment as the name sunfeast resonates well with the kids

• Though the price of the brand is perceived to be on the higher side, because of its lower brand equity Sunfeast is unable to justify the price premium which is limiting the growth of the brand. The quality perception of the brand needs to

be improved in order to justify the price premium and enhance the brand equity

Appendix

Questionnaire NAME AGE GENDER

1. Identify the brand of biscuit the person in below image is eating?

2. Identify the brand from the logo

3. Name the biscuit brand that comes to your mind when you hear the following

words:

SUNNY

PEARL

BRITAIN

4. How satisfied are you with sunfeast NOT AT ALL SATISFIED SOMEWHAT SATISFIED FULLY SATISFIED 1 2 3

5. How likely are you to continue to choose/repurchase Sunfeast biscuits?

NOT AT ALL LIKELY SOMEWHAT LIKELY FULLY LIKELY 1 2 3

6. How likely are you to recommend Sunfeast to a friend/associate?

NOT AT ALL LIKELY SOMEWHAT LIKELY FULLY LIKELY 1 2 3

7. Sunfeast is a name I can always trust to deliver on what it promises. Strongly Disagree

Disagree Neutral Agree Strongly Agree

1 2 3 4 5

8. Please indicate (with a tick) all the biscuit types that you currently buy, plan to

buy in the future or plan to continue buying in the future Currently buy Plan to buy Continue to

buy Don’t buy

Sunfeast

Britannia

Parle

9. At what price would you consider the biscuits to be so expensive that you would not consider buying it? 10 12 15 18 22 25

10. At what price would you consider the biscuits to be priced so low that you would feel the quality couldn’t be very good? 5 8 10 12 15 18

11. At what price would you consider the biscuits starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? 12 15 18 22 25 28

12. At what price would you consider the biscuits to be a bargain—a great buy for the money? 5 8 10 12 15 18

13. Although people may not always buy their favorite brands, most people do have a favorite brand. Which brand is your favorite?

• Sunfeast • Britannia • Parle • Others 14. Which is the last brand that you have purchased?

• Sunfeast • Britannia • Parle

15. How many times have you purchased Sunfeast out of your last 5 purchases?

• 0 • 1 • 2 • 3 • 4 • 5 16. How many times have you purchased Britannia out of your last 5 purchases?

• 0 • 1 • 2 • 3 • 4 • 5 17. How many times have you purchased Parle out of your last 5 purchases?

• 0 • 1 • 2 • 3 • 4 • 5

18. How likely are you to consider a biscuit brand, which you previously considered expensive, if it now comes in a pack of 2 with a discount? NOT AT ALL LIKELY SOMEWHAT LIKELY FULLY LIKELY

1 2 3

19. I stick to the same brand everytime I buy a biscuit rather than keep trying new

brands Strongly Disagree

Disagree Neutral Agree Strongly Agree

1 2 3 4 5

20. If in the future, price is expected to increase, how likely am I to continue purchasing the brand? NOT AT ALL LIKELY SOMEWHAT LIKELY FULLY LIKELY 1 2 3

21. To which of the following product categories do you think the brand can be

extended?

Cookies

Pasta



Beverages

Snacks

Ice cream

ketchup

Sunfeast Britannia Parle

22. Put a tick against the box which conforms to your beliefs about the brand in

terms of its quality and price. SUNFEAST Superior

quality Good quality Acceptable

quality Quality not acceptable

Price not a barrier

Price minor barrier




Good quality Acceptable quality


Price not a barrier

Price minor barrier



PARLE Superior

quality Good quality Acceptable

quality Quality not acceptable

Price not a barrier

Price minor barrier



Questionnaire analysis

• Questions 1,2 ,3 measure the awareness of the sunfeast • Questions 4,5,6,7 measure the satisfaction, trust the customer has from /on

sunfeast • Question 8 tries to measure the buying behaviour of the customers towards

sunfeast, Britannia, Parle • Questions 9,10,11,12 are for the measurement of price sensitivity by Van

Westendorp procedure. In these questions we have tried to find the optimum price for biscuits like Britannia cream treat. the reason behind giving name for the biscuit brand in question is because there are lot of categories of biscuits at different price range so we specified particular category of biscuit to avoid confusion what kind of biscuit we are talking about.

• Questions from 13- 20 measure brand loyalty but the answer for question 14 may be erroneous as the last purchase might be due to unavailability of that brand at the shop.

• Question 21 measures the brand leveragability of sunfeast

• Question 22 measures the price quality perception of the respondents for all the three brands

References

• mktsci.journal.informs.org • classes.seattleu.edu • Measuring Brand Equity across Products and Markets- David A. Aaker • In search of true brand metrics- Thomas J. Reynolds and Carol B. Philips • Measuring Brand Equity as a Network Measurement Problem- Chris Styles

Brand Equity Sun Feast

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