Thesis: building brand equity

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Building brand equity in the wine industry

Transcript of Thesis: building brand equity

Building brand equity in the wine industry the case of Tikves brand Tga za jug in Macedonia

University American College Skopje School of Business Economics and ManagementBuilding brand equity in the wine industry the case of Tikves brand Tga za jug in MacedoniaMaster thesis in Business AdministrationCandidate: Mentor:Anisija Mincikovska Krum Efremov PhD

2/27/2015

Abstract

Branding has emerged as a top management priority in the last decade due to the growing realization that brands are one of the most valuable intangible assets that companies have. Brands are considered to be the valuable assets of business. Branding and brand equity has been the topic of interest for the researchers in the area of marketing. Because of the significant intangible value of brands, building and managing brand equity had become a priority for companies in a wide variety of industries and markets.Nowadays a brand reflects the quality and credibility of a firms products or services and it is a perception of the consumers towards the organization. Therefore, each time more companies focus on creating strong and powerful brands and use them as a strategy to create value and differentiation in todays competitive environment.The thesis investigates the concept of brand equity and its dimensions and provides the necessary depth and breadth of understanding of brand equity and its importance. The overall purpose of this thesis, which is of an exploratory nature, is to provide an overview of the brand equity building process, as well as to reveal the importance of brand equity with special emphasis on the wine industry in Macedonia through the case of Tikves brand Tga za jug. Furthermore, the thesis aims to describe, explain and understand how Macedonian wine producers create and sustain a strong brand, with special emphasis on explaining and understanding its importance.

Keywords: brand, brand equity, brand equity determinants, customer-based brand equity, brand building, wine, wine industry, wine brand

Table of ContentsAbstractiTable of Contents...2List of tables and figures4Chapter 1 Introduction51.1. Introduction51.2. Problem formulation71.3. Objectives of the research71.4. Structure of the thesis8Chapter 2 Review of literature The concept of brand equity92.1. Brand equity conceptualizations92.2. Customer-based brand equity132.3. Brand equity models142.4. Brand equity determinants202.4.1. Brand loyalty202.4.2. Brand awareness212.4.3. Perceived quality222.4.4. Brand associations242.4.5. Other proprietary brand assets242.4.6. Brand knowledge252.4.7. Brand image252.5. Marketing mix elements and brand equity262.6. Brand equity measurements302.6.1. Financial measurement302.6.2. Customer-based measurement322.7. The value of brand equity352.7.1. Value for the firm352.7.2. Value for the customers372.8. Brand equity in wine industry38Chapter 3 Wine industry in the Republic of Macedonia403.1. General information403.2. Sector analysis413.3. Domestic market and exports423.4. Competitive landscape443.5. Wine regions453.6. Types of wine463.7. Tikve Winery463.7.1. Market position of Tikve Winery483.8. The brand Tga za jug503.8.1. History503.9. Sales information523.9.1. General information523.9.2. Tga za jug52Chapter 4 Research methodology and results544.1. Research methodology544.1.1. Research aim and objectives544.1.2. Research design and method554.2. Research results and findings574.2.1. The brand building process584.2.2. Tikves strategy for the brand Tga za jug594.2.3. Marketing activities654.2.4. Other activities for brand reinforce684.2.5. Budgetary information704.3. Discussion71Chapter 5 Conclusions75 5.1. Conclusion....75 5.2. Contributions of the thesis79 5.3. Limitations of the research79 5.4. Recommendations for further research.80References80Appendix 1: Interview guide84Appendix 2: Interview guide85

List of tables and figures

Figure 2.1.1 From awareness to financial valueFigure 2.3.1 Aakers brand equity model Figure 2.3.2 Kellers dimensions of brand knowledgeFigure 2.3.3 Kellers customer-based brand equity pyramidFigure 2.3.4 Sub dimensions of brand building blocksFigure 2.5.1 Yoo et al.s model of brand equityFigure 2.5.2 Chattopadhyay et al.s conceptual framework of brand equityFigure 3.2.1 Total wine production in Republic of Macedonia (2010-2013)Figure 3.3.1 Total wine exports in Republic of Macedonia (2010-2013)Figure 3.5.1 Wine regions in Republic of MacedoniaFigure 3.7.1.1 Market position of Tikve WineryFigure 3.7.1.2 Market share of Tikve Winery in total turnover in hospitality and tradeFigure 3.8.1.1 Evolution of the label of Tga za jug over the yearsTable 3.9.2.1 Total sales of Tga za jug in 2012 and 2013Figure 4.2.1.1 Tikves strategy for the brand Tga za jugFigure 4.2.3.1 The new label of Tga za jug

Chapter 1 IntroductionThe first chapter provides a general overview of the contents of the thesis, including brief introduction in the topic of the thesis, presents the problem discussion, together with the aim and objectives of the research, and introduces the structure of the thesis. 1.1. IntroductionThe role of brands within companies has changed over the last decades. Being no longer just any part of the corporate value chain they are today the key to a companys success. This development can be explained by the fact that the market value of a company does not mainly come from its tangible assets anymore, but its intangibles and goodwill. Brands as intangible assets thus gain more and more importance for a companys existence. This rising position of brands within companies implicates the need to understand how to manage the brand governance mechanisms effectively in order to maximize brand value and therewith also the companys profit.Over the last decades much of the marketers attention has been devoted to the concept of brand equity, which has become one of the most popular and potentially important marketing concepts, discussed by both academicians and practitioners. The motivations for studying brand equity were primarily financially based in order to estimate the value of a brand more precisely for accounting purposes or for merger, acquisition or divestiture purposes. The dynamic environment made it later obvious that brand equity was important especially from a strategy based motivation to improve marketing activity, given higher costs, greater competition and flattering demand in many markets. However, it is widely recognized that the brand has developed into one of a companys most important assets, which makes effective management of the brand a key factor in corporate success.The concept of brand equity has been debated both in the accounting and marketing literatures, and has highlighted the importance of having a long-term focus within brand management. In a general sense, brand equity is defined in terms of the marketing effects uniquely attributable to the brand. That is, brand equity relates to the fact that different outcomes result from the marketing of a product or service because of its brand element, as compared to outcomes if that same product or service did not have hat brand identification. Although a number of different views of brand equity have been expressed, they all are generally consistent with the basic notion that brand equity represents the added value endowed to a product or a service as a result of past investments in the marketing for the brand.Basically, brand equity arises from the greater confidence that customers place in a brand than they do in its competitors. This confidence translates into customers loyalty and their willingness to pay a premium price for the brand. Additionally, brand equity is the driving force for incremental financial gains to the company. Therefore, building a strong brand with significant equity has been seen as providing a host of possible benefits to a company, including greater consumer loyalty and less vulnerability to competitive marketing actions, larger margins as well as more favorable consumer responses to price increases and decrease, increased marketing communication effectiveness, and licensing and brand-extension opportunities (Keller, 2001).It is not surprising that some marketing academics have studied wine marketing and building brand equity (Nowak, et al., 2006). Building brand equity in the wine industry is particularly difficult yet necessary. By building equity a brand will stand out from its competitors. In making a brand recognizable, and developing relationships with consumers, the decision making process for wine purchases becomes simpler and more direct to the consumers. It is widely recognized that equity can be built into brands that will give them value and strength in the market well beyond that which is provided by the inherent characteristics of the products. Therefore, it is vital for the wine brands to ensure that they have the brand equity required to rise above the competition and get their labels off the shelf and into the homes of their target consumers.This thesis has identified dimensions of brand equity from academic literature and provides the necessary depth and breadth of understanding of brand equity and its importance. Further, there will be outlined a detailed explanation of the process of brand building through applicative example of one of the most well-known wine brands on the Macedonian market Tikves brand Tga za jug. The aim of the thesis is to describe, explain and understand how Macedonian wine producers create and sustain a strong brand, with special emphasis on explaining and understanding its importance.1.2. Problem formulationFollowing th