BRAND EQUITY

BRAND EQUITY CONCEPT

Buying products or images ?

Consumers often dont buy products, they buy images associated with the product: Kingfisher Airlines Mc Donald. Marlborough Cigarettes

What is Brand Equity ?

Brand Equity is the sum total of all the different values that people attach to a brand name. Brand Equity is the ultimate intangible Brand Equity exists only in peoples minds, yet it has bankable power It is a common denominator to interpret the potential effects and trade offs of various strategies and tactics and for assessing the value of a brand

EVOLUTION OF BRAND EQUITY

ONE OF THE MOST POPULAR AND POTENTIALLY IMPORTANT MARKETING CONCEPTS TO ARISE IN THE 1980S WAS THE CONCEPT OF BRAND EQUITY. GOOD NEWS-IT HAS RAISED THE IMPORTANCE OF THE BRAND IN MARKETING STRATEGY , WHICH HAS BEEN RELATIVELY NEGLECTED . BAD NEWS-A NUMBER OF DIFFERENT WAYS FOR A NUMBER OF DIFFERENT PURPOSES.

Brand Equity

ACCORDING TO AMBLER AND BARWISE BRAND EQUITY IS DEFINED AS:

THE MARKETING ASSET THAT EXISTS IN CUSTOMERS

MINDS AND IS OF CONTINUING VALUE TO THE BRAND OWNER BECAUSE IT INFLUENCES FUTURE PURCHASES BY THE BUYER AND THE BUYERS SOCIAL NETWORK THROUGH WORD OF MOUTH.

ARTHUR ANDERSON DEVELOPED METHODOLOGY TO DEFINE BRAND EQUITY

WE CAN DIVIDE ALL DEFINITIONS AVAILABLE ON BRAND EQUITY IN TO THE FOLLOWING CATEGORIES:
COST BASED PRICE BASED CONSUMER BASED

COST BASED METHODS

HISTORICAL COST REPLACEMENT COST MARKET VALUE METHOD DISCOUNTED CASH FLOW METHOD BRAND CONTRIBUTION METHOD INTERBRAND METHOD

HISTORICAL COST
THIS IS THE MONEY THAT HAS BEEN SPENT ON THE BRAND TILL DATE.

COST INCURRED IN BRANDS ARE NO MEASURE OF THE EFFICIENY WITH WHICH THE MONEY WAS SPENT.

HISTORICAL COSTS MAY OR MAYNOT BE AN ADEQUATE MEASURE OF A BRANDS FUTURE POTENTIAL .

DISCOUNTING CASH FLOW METHOD

ESTIMATING THE CASH FLOWS THAT WOULD ACCRUE TO A BRAND IN FUTURE. CONVERTING THESE TO PRESENT VALUE USING THE TIME VALUE OF MONEY. THIS METHOD IS USEFUL WHEN THE INDUSTRY AND THE COMPANYS TURNOVERS ARE STABLE AND PREDICTABLE. PRESENT VALUE OF CASH FLOWS IS AS GIVEN BELOW.
P= r/1+i^n

BRAND CONTRIBUTION
TRIES TO IDENTIFY THE VALUE THAT IS ADDED BY THE BRAND TO THE PRODUCT

COMPARES THE PROFITS EARNED BY THE BRAND WITH THE PROFITS EARNED BY AN UNBRANDED OR GENERIC PRODUCT IN THE SAME CATEGORY.

THE DIFFERENCE BETWEEN THE TWO IS TREATED AS A MEASURE OF BRAND VALUE.

REPLACEMENT COST
COST TO CREATE A BRAND WITH SIMILAR TURNOVER,PROVITABILITY,DISTRIBUTIO REACH,BRAND LOYALTY. IT IS BETTER THAN HISTORICAL COST BSE IT CONSIDERS TODAYS COSTS.

REPLACEMENT COST = LAUNCH COST + PRODUCTION & ADMINISTRATIVE COST + BRAND PREMIUM ACQUIRED

MARKET VALUE METHOD

THE BRAND VALUE FOR A PARTICULAR BRAND IS OBTAINED BY COMPARING IT WITH THE VALUE THAT HAD BEEN REALISED IN A COMPARABLE, CURRENT MERGER OR ACQUISITION.

e.g..

Brand

Taken over by

Price (Rs. In million) 2900 2500 1310

Eveready Kelvinator Cibaca

McLeod Russel Whirlpool Colgate

INTER BRAND METHOD

IT DEVELOPED BY THE INTERBRAND CO.,UK THIS METHOD AIMS AT ARRIVING AT A VALUE AT WHICH A BRAND CAN BE SOLD BY ONE COMPANY TO ANOTHER.

THE STEPS USED IN THIS METHOD ARE:-

The weighted average of the last three years profits of the brand is computed. This figure when multiplied with a number gives the value of brand equity.The number is arrived at by multiplying the P/E of the company or industry in which the company operates and a factor called brand strength. Brand strength is dependent on certain variables:Leadership Stability Internationality

Conti

BRAND EQUITY

(Weighted average of brand profits*P/E of the industry*brand strength)

AVERAGE PROFIT =

profit of 1st yr*weightage + profit of 2nd yr*weightage of 2nd yr)

(weightage of 1st yr + weightage of 2nd yr)

PRICE BASED METHODS

THERE ARE SOME METHODS WHICH MEASURE BRAND EQUITY WITH THE RETAIL PRICE OF THE BRAND AS THE BASIS.

PRICE PREMIUM METHOD MARKET SHARE EQUALISATION METHOD PRICE PREMIUM AT INDIFFERENCE

PRICE PREMIUM METHOD

THIS IS DONE BY COMPARING THE DIFFERENCE BETWEEN THE RETAIL PRICE OF THE BRAND AND THE RETAIL PRICE OF AN UNBRANDED PRODUCT IN THE SAME CATEGORY. THIS MEASURE WILL GIVE US AN INDICATION OF BRAND STRENGHT ONLY.

eg. Comparing Colgate Total (the most expensive) and Colgate Cream.

Dental

MARKET SHARE EQUALISATION

THIS METHOD USES AN INGENIOUS WAY OF TACKLING THE BRAND EQUITY PROBLEM.

eg.

Colgate Close-up Promise Babool

PRICE PREMIUM AT INDIFFERENCE

IT TRIES TO COMPARE THE FREE PRICES OF BRANDS AT THE POINT OF INDIFFERENCE.

REVISED PRICE OF A PRODUCT BRAND EQUITY = PRICE OF OTHER PRODUCT -1 * 100

CUSTOMER BASED BRAND EQUITY

The differential effect of brand knowledge on the consumer response to the marketing of the brand.

Consumer-Based Brand Equity Pyramid

Resonance
Loyalty Attachment Community Engagement

Brand Relationships (WHAT About You AND ME?)

Judgments Performance

Quality Credibility Consideration Superiority

Warmth, Fun Excitement, Security, Social Approval, Self-Respect User Profiles Purchase and Usage Situations Personality & Values History, Heritage, & Experiences

Feelings
Brand Response (WHAT About You?)

Brand Characteristics & Secondary Features Product Reliability, Durability & Serviceability Service Effectiveness, Efficiency, & Empathy Style and Design; Price

Imagery
Brand Meaning (WHAT Are You?)

Category Identification Needs Satisfied

Brand Identity (WHO Are You?)

Salience

Customer-Based Brand Equity (CBBE) Model

1 Consumer Response
to Marketing
Brand Equity arises from differences in CONSUMER response

2 Brand Knowledge 3 Differential Effect

What CONSUMERS learned, felt, seen, heard, experienced over time

Reflected in CONSUMER perceptions, preferences, and behavior related to all aspects of the marketing of a brand

Customer-Based Brand Equity (CBBE) Model

The Key To Branding
Consumers Must THINK Branded products are different

2 Brand Knowledge
The Key To EQUITY

What CONSUMERS learned, felt, seen, heard, experienced over time Brand Knowledge Creates the differential effect that creates Brand Equity.

What is the CBBE Model ?

Establish proper brand identity. Create appropriate brand meaning.

Elicit the right brand responses.

Forge appropriate brand relationships with customer.

CONTI.
BRAND EQUITY WILL MEASURE BY 4 METHODS :-

BRAND KNOWLEDGE BRAND RECALL ATTRIBUTE-ORIENTED APPROACH BLIND TEST

THANK YOU