XISS

ASSIGNMENT ON PRODUCT AND BRAND MANAGEMENT WAYS IN WHICH BRAND EQITY IS MEASURED FOR PRODUCT/SERVICES
Brand Equity | DOVE SUMBITTED TO- Prof. Amar Tigga SUMBITTED BY- Gourav Chatterjee Roll no -07 Department of marketing Session -2010 2012 XISS, Ranchi.

Brand Equity Measurement

EXECUTIVE SUMMARY The objective of this phase of the project is to measure the Brand Equity for the brand Dove. Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name. In a market where products are similar, branding can have a large effect on the price that customers will pay. Brands therefore add value to a basic product or service by enabling the product or service to command a higher price, or higher market share than an unbranded equivalent. Its value may be a monetary value (which may be discounted to a net present value), an increase in a rate of return or any number of softer market research measures such as awareness or consideration. There are at least two perspectives from which to view brand equity:

Financial or pricing based approach: One way to measure brand equity is to determine the price premium that a brand commands over a generic product. Consumer based: A strong brand increases the consumers attitude strength toward the product associated with the brand.

In this part of the project we have used a combination of three techniques to measure the brand equity of the brand Dove: 1) Price Premium at Indifference ( Price Based Method of calculating Brand Equity)
2) Yoo and Dinthus Brand Equity Model

3) David Aakers Brand Equity Model.

The basic reason for doing so is to use a combination of both Price Based and Customer-Based Equity methods, as both the methods applied independently have some inherent advantages and shortcomings. The Price Premium at

Indifference method concentrates only on the financial aspect of brand equity and the price premium that the brand can command in the category over generic products. This shortcoming is overcome by using the other two methods which concentrate on the other factors that influence the mind of the consumer and emphasizes on the fact that equity does not lie in price alone. The brand equity has been calculated by comparing Dove with two other brands: Pears and Lux.

The major findings are: Although the brand equity of Dove compared to the other two brands is pretty high but the brand awareness of all the brands is almost similar. This indicates that brand awareness does not contribute substantially to the brand equity presently. So, there is a lot of scope to increase brand equity further by increasing the brand awareness of Dove.
Some of the respondents were willing to pay very high prices for Dove as compared to Lux. This was not because of brand loyalty to the brand Dove. It was due to the fact that they were not willing to use Lux until and unless compelled by extremely high price of Dove. This improves the brand equity of Dove in comparison to Lux. The survey reveals that the people are willing to pay a further premium of Rs. 10 on the current price of Rs. 33 (100 gm bar) before they switch over to the Lux brand. On an average, the respondents felt that Dove and Pears are in the same league and jumping from one brand to another was highly price sensitive. But still, the survey brings to light the fact that the respondents are willing to pay a further premium of Rs. 4.65 on the current price before switching to the Pears Brand.

According to factor analysis method (Model 2), Brand Dove has a high differentiation and unique in all attributes. The overall brand equity of Dove is higher than Lux and Pears. However, people who are users of Dove have high degree of loyalty for Dove.

The major recommendations:

The brand is high on salience and Imagery. It has a distinct image among consumers. Hence there is no need to improve or change the product differentiation.

Knowledge about the brand is fairly high and is comparable to popular category brands like LUX. Basis the awareness is comparable to highly popular brands like Lux, it can leverage this by catering to any lapses in other premium category soaps like Camay etc. Since the users of Dove are pretty loyal to the brand, Dove can gain competitive advantage by increasing the consumer base. This can be triggered by increasing the trials for the products.

For the measurement of brand equity, the group has used a combination of Price Based Method and Customer-Based Brand Equity methods. To measure the Brand equity of Dove, we have derived inputs from 4) Price Premium at Indifference ( Price Based Method of calculating Brand Equity)
5) Yoo and Dinthus Brand Equity Model

6) David Aakers Brand Equity Model

JUSTIFICATION FOR CHOOSING THE BRAND EQUITY MODELS

The group has chosen to work on a combination of both Price Based and Customer-Based Equity methods, as both the methods applied independently have some inherent advantages and shortcomings

PRICE PREMIUM METHOD1

1

Source: Brand Management The Indian Context, Y. L. R. Moorthy, 1999

The premise of the price premium approach is that a branded product should sell for a premium over a generic product (Aaker, 1991). The value of the brand is therefore the discounted future sales premium.

Advantages of Price Premium Method2:

Transparent and easy to understand Relationship between brand equity and price is easily explained

Disadvantages of Price Premium Method:

When a branded product does not command a price premium, the benefit arises on the cost and market share dimensions

Approach and Implementation This method tries to compare the free prices of brands at the price of indifference. For our brand Dove, we have used two brands for comparison: Lux and Pears. We conducted a survey whereby two of the three brands were compared with each other and the prices of the brands were presented to the respondents. So, we had six combinations where one acts as the base. The respondents were then asked as to which brand of soap they would buy and the price of the base was increased if the person opted for that one until the respondent jumps to the other brand. The six combinations were: 1) Dove v/s Pears 2) Dove v/s Lux 3) Pears v/s Dove 4) Pears v/s Lux 5) Lux v/s Dove 6) Lux v/s Pears
2

Source: Valuing Brands and Brand Equity, http://www.geocities.com/akottolli/valuing_brands_and_brand_equity.htm as on August 31, 2009

In all of the above the first one is taken as the base. So, if in the first combination, the respondent opted for Pears, then the revised price for Dove would be Rs 33. However, if the respondent said that he/she would buy Dove, then the price of Dove would be raised until the respondent jumps to Pears. This becomes the revised price for Dove. The similar procedure has been followed for all the combinations. So, for example, a customer jumps from Dove to Pears at Rs. 40. Brand Equity of Dove compared to Pears= {(Revised Price of Dove/Price of Pears)-1}* 100 = {(40/28)-1}*100 = 42.857 Similarly, in comparison with Lux, the customer switches over to Lux at a price of Rs. 40. So, Brand Equity of Dove compared to Lux= {(Revised Price of Dove/Price of Lux)-1}* 100 = {(40/17)-1}*100 = 135.29 To calculate the brand equity of Dove in comparison to both Lux and Pears, we calculate the mean of the two values obtained above. Brand Equity of Dove= (42.857+135.29)/2 = 89.08 Similarly, brand equity is calculated for other two brands as well. The brands may also have negative brand equity. But since equity is relative, it should not matter. To calculate the overall brand equity for the brands, we have calculated the average of the brand equity values.

FINDINGS Price Chart Product and SKU Price (Rs.)

Dove ( 100gm) Pears ( 100 gm) Lux ( 100 gm)

33 28 17

Brand Equity Calculations for each respondent Revis ed Price (Dove v/s Pears ) 35 33 33 33 33 40 50 33 50 33 43 33 33 33 43 33 40 40 45 37 Revis ed Price (Dov e v/s Lux) 35 80 51 33 40 40 50 50 50 40 33 37 45 50 40 33 40 40 45 33 Revis ed Price (Pears v/s Dove) 28 120 56 33 40 28 28 40 28 40 28 30 40 50 28 30 28 28 28 28 Revis ed Price (Pear s v/s Lux) Revis Revis ed ed Price Price (Lux (Lux v/s v/s Pears Dove ) ) 28 17 17 120 17 17 51 28 40 33 33 40 28 32 28 35 40 50 40 32 35 40 32 32 17 28 17 17 17 17 50 17 24 17 17 17 17 17 17 17 17 17 17 25 17 17 17 17 17 17 24 17 17 17 17 20 17 17 17 17 Bran d Equit y of Dove 65.44 194.2 2 108.9 3 55.99 76.58 89.08 136.3 4 105.9 9 136.3 4 76.58 73.84 67.75 91.28 105.9 9 94.43 55.99 89.08 89.08 112.7 1 63.13 Brand Equity of Pears Brand Equity of Lux

24.78 434.76 134.85 32.35 78.25 39.48 39.48 78.25 24.78 54.72 24.78 48.40 78.25 122.82 60.07 39.57 45.37 60.07 36.54 36.54

-43.89 -43.89 -43.89 -12.93 -43.89 -43.89 -43.89 -43.89 6.11 -43.89 -20.78 -43.89 -43.89 -43.89 -43.89 -38.53 -43.89 -43.89 -43.89 -43.89

AVERA GE VALUE S

94.44

74.71

-38.41

AVG. VALU ES (Lux as base)

132.8 5

113.12

From the data collected, the brand equity of Dove in comparison to Lux and Pears is 94.44. The brand equity of Pears in comparison to Dove and Lux is 74.71 and the brand equity of Lux in comparison to Dove and Pears is -38.41. Taking the brand equity of Lux to be the base at 0, the brand equity of Dove is 132.85 and the brand equity of Pears is 113.12. Insights from the survey: Some of the respondents were willing to pay very high prices for Dove or Pears compared to Lux. This was not because of brand loyalty to either of the two brands. It was due to the fact that they were not willing to use Lux until and unless compelled by extremely high prices of the other brands. This improves the brand equity of both Dove and Pears in comparison to Lux. On an average, the respondents felt that Dove and Pears are in the same league and jumping from one to another was highly price sensitive. But that was not the case with Lux in comparison to the other two brands.

YOO AND DINTHUS BRAND EQUITY MODEL The idea behind Yoo and Dinthus Brand Equity Model is that brand equity can be measured by using a customer oriented approach. This model focuses on the customers knowledge and experiences about the brand through five variables:

Brand loyalty: Captures the loyalty of the customer towards the brand both independently and in the presence of availability constraints & competitive pressure. Perceived Quality: Captures the perception of the customer with respect to the quality offered by the brand and its brand promise. Brand awareness and associations Differentiation with respect to the competitors Overall preference measures the customers preference for the brand above and beyond the objective benefits offered by it.

Advantages of Yoo and Dinthus Brand Equity Model: This method argues that equity does not lie in the price at which a brand can be sold but in the mind of the customer. Even if consideration for selling a brand can be a measure, it is argued that this consideration itself depends on how many people like the brand or its customer based brand equity.

Disadvantages of Yoo and Dinthus Brand Equity Model: This method needs extensive validation from a large sample of customers The interpretation of this method becomes clear only when a large number of brands is compared simultaneously

Approach and Implementation

53 respondents were surveyed using a questionnaire which determined the preferences and beliefs of customers regarding the brands Dove, Lux and Pears on five parameters: o Brand loyalty o Perceived Quality

o Brand awareness and associations o Differentiation o Overall preference Each respondent had to answer the questions based on a 5-point Likert scale for Agreement or opinion. The options were Strongly Agree (5), Agree (4), Neutral (3), Disagree (2) and Strongly Disagree (1).

Method 1: o The scores for questions under every parameter were summed up and averaged to obtain a score out of 5 for the parameter.
o

All the parameters were averaged to find a value for customer based brand equity under Yoo and Dinthus Brand Equity Model
PARAMETER Brand Loyalty Quality Perception Brand Awareness Overall Preference Differentiatio n BRAND EQUITY FACTOR DOVE 3.115 4.064 4.212 3.737 4.038 3.833 PEARS 2.822 3.571 4.000 3.276 3.346 3.403 LUX 3.024 3.571 4.144 3.321 3.423 3.496

Findings: Dove was found to have the highest brand equity from a customers perspective. Lux came as second and Pears was third as compared to Dove. When it comes to awareness, the scores for Dove, Pears and Lux were very close, signifying that awareness contributes little to cause the differentiation between the brands based on brand equity. Thus brand awareness of Dove can be increased

through promotions to further enhance the brand equity of Dove. Method 2 This model uses Factor Analysis to group all the variables chosen into suitable factors. The basic difference between Model 1 and Model 2 is that where as Model 1 is a simple linear average of all the variables taken, Model 2 takes the weighted average of all the variables which have factor loadings ( >0.5) on the Factors. The KMO and Bartletts test of Sphericity tables of the data set for Dove, Pears and Lux has been given below. The KMO values (all >0.6) and the significance levels of Bartletts (>0.95) indicate that the data is adequate for factor analysis. Factor Analysis for Dove

Factor Analysis for Pears

Factor Analysis for LUX

Factor Analysis tables for Dove

Factor Analysis for Dove Factor 1 Variable 1 variable 2 Variable 3 Variable 4 Variable 5 Variable 6 Variable 7 Variable 8 Variable 9 Variable 10 Variable 11 Variable 12 Variable 13 Variable 14 Note : All the questions are treated as separate Factor 2 0.24 0.37 0.21 0.38 0.64 0.70 0.64 0.82 0.74 0.69 0.63 0.79 0.73 0.75 variables 0.84 0.84 0.88 0.74 0.41 0.42 0.37 0.10 0.16 0.48 0.60 0.38 0.47 0.31

Steps involved in the calculation of Brand Equity 1) On the basis of Eigen values, two major factors emerged. We have considered all the variables which have factor loadings > 0.5 on the corresponding factor. 2) Next we have calculated the Factor 1 score and Factor 2 score for Brand Dove as given below

Factor Score 1 = ( Wi*Xi/ W i)

Wi is the weightage of those variables whose factor loadings ( > 0.5) on the Factor 1 Xi is the respondents response data set value Factor Score 2 = ( Wi*Xi/ W i) Wi is the weightage of those variables whose factor loadings ( > 0.5) on the Factor 2 Xi is the respondents response data value
3) Next we have multiplied the percentage of variance explained by

Factor 1 and Factor 2 to the factor scores (1 & 2) to come up with the final Brand Equity Value of the considered brands.

Factor Analysis table for pears

Factor Analysis for Pears Factor 1 Variable 1 variable 2 Variable 3 Variable 4 Variable 5 Variable 6 Variable 7 Variable 8 Variable 9 Variable 10 Variable 11 Variable 12 Variable 13 Variable 14 0.77 0.84 0.79 0.75 0.54 0.67 0.61 0.11 0.08 0.61 0.51 0.56 0.66 0.55 Factor 2 0.22 0.23 0.07 0.23 0.55 0.40 0.56 0.86 0.78 0.55 0.54 0.66 0.61 0.66

Factor Analysis table for LUX

Factor Analysis for Lux Factor 1 Variable 1 variable 2 Variable 3 Variable 4 Variable 5 Variable 6 Variable 7 Variable 8 Variable 9 Variable 10 Variable 11 Variable 12 Variable 13 Variable 14 Findings from Factor Analysis Method 1) Brand Equity on the Basis of Factor Analysis Dove Pears Lux Score 15.21 14.64 13.2 0.58 0.71 0.70 0.64 0.72 0.81 0.80 0.15 0.12 0.76 0.68 0.88 0.93 0.81 Factor 2 0.51 0.43 0.50 0.32 0.32 0.40 0.28 0.71 0.84 0.34 0.36 0.10 0.12 0.00

According to the factor analysis method, the Brand Equity of dove is the highest as we had calculated by the Model 1 method. However, according to Model 2, Pears has a higher Brand equity than LUX. This is because of factoring in of all variables and using a weighted average method of calculating Brand Equity. 2) The Brand Equity of Dove is built by variables 8, 12, 14 (refer to corresponding questions of the same number) which have maximum loading on Factor 1. The Brand equity of Dove is built as people are aware of the

brand. They are able to spot brand dove from across all brands. Also there Dove enjoys high level differentiation from other brands. Dove is unique in all attributes than other brand of soaps. Finally dove enjoys overall brand equity than other brands like Pears and LUX. 3) On the second Factor (Factor 2), we find that Dove builds its brand equity by inculcating a high level of Loyalty among the current users. (Variable 1, 2 and 3 have the highest loadings). This probably means that people who start using dove become very loyal to the brand.

DAVID AAKERS BRAND EQUITY MODEL Aakers Brand Equity Ten utilizes five categories of measures to assess brand equity (Aaker, 1996): 1. Price premium 2. Customer satisfaction or loyalty Perceived Quality or Leadership Measures 3. Perceived quality 4. Leadership or popularity Other customer-oriented associations or differentiation measures
5. Perceived value

6. Brand personality 7. Organizational associations Awareness measures 8. Brand awareness Market behavior measures 9. Market share 10. Market price and distribution coverage Advantages of Aakers model: Like Yoo and Dinthus Brand Equity Model, Aakers model also uses the customer based approach. But in addition it also uses price premium method

and market share and distribution strength method. So, it is a more complete method than the other two methods.

Disadvantages of Aakers model: The model is very complicated and difficult. Also, a lot of subjectivity is involved while providing weightings to different measures. Data regarding market share and distribution coverage also needs a lot of secondary research.

OUR MODEL For the customer based approach, we have merged the common aspects of Yoo and Dinthus Brand Equity Model and Aakers model. We have also added one more measure for the estimation of brand recall, which was not sufficiently measured by Yoo and Dinthus Brand Equity Model. The use of brand recall thus completes the customer based approach.

BRAND RECALL The brand recall for the brand Dove has been calculated using the following four questions:

What comes to your mind when I say premium moisturizing soap ? Which bathing soap comes to your mind when I say a premium moisturizing white bar soap from HUL ? Which bathing soap comes to your mind when I say, A premium soap with (Ek chauthai) moisturizer? The advertisement tagline of this soap is it is not a soap it is ek chauthai moisturizer and the logo of the soap brand is a small white pigeon like bird?

If the answer to the first question is Dove, then its Brand Recall is very high. It can be given a score of 5. If the respondent does not have any brand

on top-of-mind awareness identifies Dove for question 2 which contains a stronger clue, his/her association with Dove is that much weaker. The brand recall score assigned in this case is 4. The respondent gets a brand recall score of 3 if he/she identifies Dove in the third question in which a further stronger hint is being provided. The fourth question is almost a giveaway which points straight to the Dove advertisement. If the respondent identifies Dove in this question, he is given a brand recall score of 2. If the respondent is not able to identify the brand even after the four questions, he/she is given a brand score of 1.

Findings: The survey was conducted on 50 respondents. 45 out of 50 respondents recognized the brand as Dove in the first question itself. 5 out of 50 respondents recognized the brand as Dove after the second question was posed to them. So, Brand recall for Dove= (45*5+5*4)/50 = 4.9 (Scale of 5)

Brand Recall Scores for Dove, Pears and Lux Bran d Dove Pears Lux No. of Responden ts 50 50 50 Recall at First Question 45 37 40 Recall at Second Question 5 7 4 Recall at Third Question 0 6 6 Brand Recall 4.90 4.62 4.68

Customer based approach for the brands Parameter Brand Loyalty Dove 3.115 Pears 2.822 Lux 3.024

Quality Perception Brand Awareness Overall Preference Differentiati on Brand Equity Factor from Yoo and Dinthus Brand Recall Factor CUSTOMER BASED BRAND EQUITY SCORE

4.064 4.212 3.737 4.038 3.833

3.571 4.000 3.276 3.346 3.403

3.571 4.144 3.321 3.423 3.496

4.90 4.01

4.62 3.61

4.68 3.69

RECOMMENDATIONS The brand is high on salience and Imagery. It has a distinct image among consumers. Hence there is no need to improve or change the product differentiation. Knowledge about the brand is fairly high and is comparable to popular category brands like LUX. The awareness scores of all the three brands are very close, owing to the fact that they are all well known brands. But, this also shows that there is a potential for Dove to build a stronger brand equity by building higher brand awareness and experience through promotion. Brand Dove has to build on its leadership in the segment to enjoy overall economies of scale in both communication and distribution and become more stable than brands in the second third and fourth position

The survey reveals that the people are willing to pay a further premium of Rs. 10 on the current price of Rs. 33 (100 gm bar) before they switch over to the Lux brand. The survey also brings to light the fact that the respondents are willing to pay a further premium of Rs. 4.65 on the current price before switching to the Pears Brand. So, there is a possibility of charging a further premium over the current price.

ADDITIONAL SOURCES
http://en.wikipedia.org/wiki/Brand_equity http://www.dobney.com/Research/Brand_equity_research.htm