1. Praxis Business School 1 BRAND TRACKER Phase I –Brand Equity Measurement A report Submitted to Prof. Govindrajan In partial fulfilment of the requirements of the course Product and Brand Management On 4th September, 2011 ByAnindita Choudhury B10002Deepika Agrawal B10007Sushmita Agrawal B10035Arunabha Bagchi B10044
2. LETTER OF TRANSMITTALDove04/09/2011 2To, Prof. Srinivas GovindrajanSubject:We are enclosing our report on Dove in partial fulfilment of the requirements of the course.Anindita ChoudhuryDeepika AgrawalSushmita AgrawalArunabha Bagchi
3. EXECUTIVE SUMMARYThe project is intended to serve as a yardstick to measure brand equity of the brand Dove. Theconcept of brand equity is rooted in the importance of a brand to a product. Whilst a brand isgenerally simply a name or symbol which is used to identify a product, it can have a much greaterlevel of importance if properly managed. A strong brand can add significant value to a product inthe mind of the consumer, provided they make positive associations with the brand. Brand equity is 3an intangible asset that depends on associations made by the consumer.Advantages of having Brand Equity are as follows:- A brand enables a company to generate value because it can often command a price premium over comparable generic products. A strong brand can often be extended to related, or even unrelated, products, providing these products with a sales boost. A strong brand allows the substantial cost of advertising and promoting a brand to be spread over more products, but the additional exposure can strengthen the core brand. A brand with significant brand equity can lead consumers to generate a more positive association with product itself. As such, many companies looking to strengthen a product’s performance will often focus on the underlying brandThe brand loyalty is measured using two mathematical models the second one being an improvisedversion of the first one. The first model consists of ‘most preferred brand’ and ‘last brandpurchased’ in form of a 2X2 matrix. In this model loyal are those who end up buying their mostpreferred brand and the others are switchers. Thus, the likelihood of purchasing a given brand isthe sum of the proportion of that brand’s loyal and some fraction of the remainder. That fraction isa measure of the brand’s ability to attract potential switchers. The two metrics were identified-Gravity: the power of the brand to maintain consumers who prefer it & Focus: how many of thepurchases were made with the brand as the ‘preferred brand’.Model 2 redresses the problem by taking into account the last 5 brand purchases made instead.This helps give a more uniform loyalty measure. Here, we see that in case of Dove focus is more(63%) than gravity (47%). This shows that the brand Dove is strong but the supply chain is weak. Onthe other hand both in case of Lux and Pears gravity is more than focus which shows that thepromotions or distribution is very strong and the brand enjoys relatively greater preference.We have then tried to measure the leveragability of the brand by trying to ascertain in whichproduct categories the brand can be extended and where it will be popular.Then we have used the share tier approach where we have used the price-quality relationship toidentify how the consumer behaves on these two metrics which helped us gauge the loyalty of the
4. buyer towards the brand and also the perception of the buyer about the brand which helped us toquantify the brand equity of the brands under consideration.For measuring financial aspect we used van Westendorp Procedure to measure the optimum pricewhich consumer is willing to pay and the market price which the company is charging. Thedifference in these two will tell the premium which a company is able to charge due to its brandequity.Findings and Recommendations:- 4 We found that respondents but they could not connect with the campaigns and the taglines. We also found that a weak supply chain and hence we would recommend Dove to work on its supply chain. Dove is losing out customers because of its high price. We recommend, Dove could come up with campaigns with which people could more relate to Dove can improve on its supply chain and spread its tentacles in the rural areas as well. The product has shown a very high leveragability in case of antiseptic- soaps and hair gel and should diversify in these categories. Dove needs to build on its pricing strategy in order to attract more customers.
5. Table of contentsSl. No. Particulars Page No.1 Executive Summary 32 i) List Of Figures 6 ii) Abbreviations 73 Introduction 8 54 Methodology 115 Brand Awareness 126 Brand Loyalty Measurement 167 Leveragability 218 Brand Equity Model Based on Share 23 Tier Approach9 Equity Share Calculation 2610 Leveragability Index Calculation 2711 Brand equity Index Calculation 2812 Van Westendorp Price Sensitivity 30 Meter And Brand Equity13 Basic Findings 3413 Recommendations 3414 References 35
6. List of figuresFig 1- Integrating Marketing Communications To Build Brand EquityFig 2 Brand EquityFig 3- Brand Awareness CycleFig 4- Brand Awareness 6Fig 5- Identification Of The ImageFig 6-Identification Of The CampaignFig 7-Identification Of the taglinesFig 8- Colombo Morrison Model 1Fig 9- Colombo Morrison Model 2Fig 10- Brand LoyaltyFig 11- LeveragabilityFig 12- Price –Quality RelationshipFig 13- Loyalty TableFig 14- Equity Share CalculationFig 15- Leveragability Index CalculationFig 16- Brand Equity Index & Share Quality IndexFig 17- Indifference Price Point & Optimal Price Point
7. AbbreviationsBAV- Brand Asset ValuatorPSM- Price Sensitivity meterPMC- Point of Marginal CheapnessPME- Point of Marginal Expensiveness 7IPP- Indifference Price PointOPP- Optimal Price PointRAP- Range of Acceptable PricesBEI- Brand Equity IndexSQI- Share Quality IndexIDP- Indifference Price Point
8. IntroductionIn phase-1 we tracked the brand Dove and in this part specifically we measured the brand image ofDove in the eyes of the consumers. We used both a quantitative method (the BAV method) and aqualitative method (laddering method).In phase -2 we will try to measure the ‘equity’ of the brand. According to Wikipedia Brand Equity is“the marketing effects and outcomes that accrue to a product with its brand name compared with 8those that would accrue if the same product did not have the brand name.”It is the incremental contribution (Money) per year obtained by the brand in comparison to theunderlying product (or service). The study of brand equity is increasingly popular as somemarketing researchers have concluded that brands are one of the most valuable assets a companyhas. Brand equity is one of the factors which can increase the financial value of a brand to thebrand owner, although not the only one. Fig 1- Integrating Marketing Communica tions To Build Brand EquityElements that can be included in the valuation of brand equity include (but not limited to): changingmarket share, profit margins, consumer recognition of logos and other visual elements, brandlanguage associations made by consumers, consumers perceptions of quality and other relevantbrand values.WHY IS BRAND EQUITY IMPORTANT?
9. Brand equity is important due to the following reasons:- Facilitates a more predictable income stream. Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing. Brand equity is an asset that can be sold or leased. However, brand equity is not always positive in value. Some brands acquire a bad reputation 9 that results in negative brand equity. Brand equity aims at:- Achieving strong brand differentiation is absolutely fundamental to building a compelling brand relationship with customers. Brand equity can be thought of as the differential effect of brand knowledge on consumer response to the marketing of the brand. Fundamentally, high levels of brand awareness and a positive brand image should increase the probability of brand choice. That is the fundamental goal of managing ones brand. Brand equity only exists as a function of consumer choice in the marketplace. And although marketing and communications efforts can create and change brand images, brand equity comes into being when a consumer chooses a product or service.
10. 10Fig 2 Brand Equity
11. MethodologyResearch TypeMy research is based on the primary data. Primary data has been used to understand the scope ofBrand equity of Dove. We have tried to measure the ‘equity’ of the brand Dove and in the end wehave given our recommendations as to how Dove can improve its brand equity. 11Data TypePrimary data has been used for the purpose of study of Brand Equity of Dove.Sample SelectionTo collect primary data we have surveyed a homogenous population of 40 respondents. The samplewas selected on the basis of simple random sampling.Data Collection MethodIn order to collect the primary data, the method used was personal interview with the help of aquestionnaire and for the secondary data we have taken the help of internet to gather information.Tools Used for Data AnalysisAs no study can be successful without the usage of proper tools and techniques for a betterpresentation and right explanation I used tools of statistics and computer very frequently. And I amvery thankful to all those tools for helping me a lot. Basic tools which I used for project fromstatistics are- Pie Chart Bar Graphs Line DiagramSelection of competitorsWe have selected Lux and Pears as the competitors for Dove because in our first phase of brandtracker we found during our survey the respondents coming up with the names of Pears and Luxfrequently and this indicates that these brand enjoy top of the mind recall and therefore we canconclude that they are the major competitors of the brand Dove.
12. Brand AwarenessAccording to John Gerzema and Ed Lebar in their book The Brand Bubble, “Brand imperativesbecome business imperatives. A rigorous focus on creating an irresistible, high-energy brand cantransform your entire organization, letting the brand act as a catalyst for collaboration, innovationand accountability.”Brand value, however, can just as easily be diminished with inconsistent messaging, awkward 12appearance or misaligned product launches. Managing competitive information, price shops,syndicated data and primary research on a single platform makes information easily searchable,resulting in better brand and category analysis, and ultimately better product decisions. Sharingthat information through on-demand visualization with development partners, like an advertisingagency, helps make sure brand communications are consistent and aligned to the brand promiseand that is how we come to Brand Awareness. Fig 3- Brand Awareness CycleBrand awareness means the extent to which a brand associated with a particular product isdocumented by potential and existing customers either positively or negatively. Creation of brandawareness is the primary goal of advertising at the beginning of any products life cycle in targetmarkets, and has influence on buying behaviour of a buyer. All of these calculations are, at best,approximations. A more complete understanding of the brand can occur if multiple measures areused.
13. Brand awareness can be measured by showing a consumer the brand and asking whether or notthey knew of it beforehand. However, in common market research practice a variety of recognitionand recall measures of brand awareness are employed all of which test the brand namesassociation to a product category cue, this came about because most market research in the 20thCentury was conducted by post or telephone, actually showing the brand to consumers usuallyrequired more expensive face-to-face interviews (until web-based interviews became possible).This has led many textbooks to conceptualise brand awareness simply as its measures, that is,knowledge that the brand is a member of a particular product category, e.g. soft-drinks. Examples 13of such measures include: Brand recognition - Either the brand name or both the brand name and category name are presented to respondents. Brand recall - the product category name is given to respondents who are asked to recall as many brands as possible that are members of the category. Top of mind awareness - as above, but only the first brand recalled is recorded (also known as spontaneous brand recall). Fig 4- Brand Awareness
14. AnalysisKeeping in mind that knowledge an important factor for any brand, the following survey was done.Firstly, the respondents were asked to identify the brand and were shown an image. 14The image was related to Dove. Identification of the image would indicate the level of awarenessthe respondents had about the brand. Identified Not Identified 18% Fig 5- Identificati on Of The Image 82%A major chunk of the respondents could link the image correctly to the brand and hence theirresponses indicate that the respondents were aware of the brand.Secondly, they were shown a campaign ad and again asked to identify it. The campaign was againfor Dove and the result is here under.
15. 15 Identified Not Identified 39% Fig 6- Identification 61% Of The CampaignFrom the responses received we can infer that the respondents did connect with the campaign butthe awareness levels were less as compared to the image identification .Hence we can safelyconclude that the campaigns were not very popular with the respondents.Similarly, another question asked was which was related to taglines. Three taglines were given andthe respondents were asked to relate a brand with them. Series1 13 Fig 7- Identification 6 6 Of the taglines Lux Pears DoveThe tagline which the respondents could immediately recollect was that of Pears followed by Luxand Dove. This indicates that the brand has to work on its awareness programme. An ad or
16. campaign which the consumers can relate with will relatively lead to increase in the awarenesslevels of the product.BRAND LOYALTY MEASUREMENTWe are using the Preference-behaviour model as a metric for measuring brand loyalty. The model isbased on a simple change in the brand switching model as developed by Colombo and Morrison.The second model which we are using is an improvement on the preference –behaviour model 16where we have tried to correct a few loopholes that we have found and this model too will beessentially used to calculate the loyalty index of the brand.MODEL 1(Basis- Last Brand Purchased)It consists of ‘most preferred brand’ and ‘last brand purchased’ in form of a 2X2 matrix. In thismodel loyal are those who end up buying their most preferred brand and the others are switchers.Thus, the likelihood of purchasing a given brand is the sum of the proportion of that brand’s loyaland some fraction of the remainder. That fraction is a measure of the brand’s ability to attractpotential switchers. The two important parameters of the brand are:- It reflects how much the brand relies on its loyal customers. How successful it is in attracting brand switchers.The buyers here can essentially be grouped into two parts:- The first group consist of people who prefer the brand and buy it. The second group is essentially made up of people who buy the brand in a given purchase but actually prefer some other brand.The model assumes every consumer has a preferred brand.The measures and concepts of the model are illustrated in Table 1. The diagonal entries representthe number of consumers who last bought the brand they preferred, which would consist of theloyal and the potential switchers. The off-diagonal entries represent those consumers who lastbought something other than their preferred brand.
17. Preferred LastBrand purchased brand Dove Lux Pears Others TotalDove X ZLux XPears Y XOthers X 17TotalX represents the number of loyal customers who bought the brand they preferred.Y represents the switchers i.e. those customers who prefer Pears but end up buying DoveZ refers to the switchers who prefer Dove but end up buying Pears.preferred Last PurchasedBrand Brand Fig 8- Dove Lux Pears Others Total ColomboDove 12 1 1 1 15 MorrisonLux 0 1 0 0 1 Model 1Pears 2 1 1 0 4Others 4 3 1 12 20Total 18 6 3 13 40Total respondents size is 40. Row indicates that preferred brand is on the row side and lastpurchase brand is on the column. 15 respondent Preferred dove, 1 Preferred Lux, 4 Preferred Pearsand 20 Preferred others. The column indicates the last Purchased brand for each preferred brand. 15 respondents identified Dove as their preferred brand out of which 12 respondents hadpurchased Dove, 1 had purchased Lux, 1 Pears and 1 had purchased others .The diagonal entries inthe table indicate consumers who last purchased their preferred brands. For example, 12respondents purchased Dove and preferred Dove. The preference measures indicate perceptions of brand quality or brand equity. Alone, theymay not be good indicators of competitive strength, because they fail to capture some aspects ofvalue—particularly price and availability. Nevertheless, a brand with strong consumer preferencehas a competitive advantage. In this case, Dove had about 38% of the expressed preferences forthe set of three brands (15/40, from the far right column). On the other hand, Lux had only a 3%
18. share of preference (1/40). This simple result indicates that Lux must have something else going forit, and they are price promoting brand. Another insight about the loyalty of consumers comes from an examination of thediagonals. The diagonal entries are the number of consumers who last bought their preferredbrands. If we compare those to the total number of consumers who preferred the brand, we getthe proportion of the preferences that were converted into sales. For Dove, this proportion is .80—12 preferred and bought (on the diagonal) versus 15 total preferred (from the right-most column). 18This proportion is termed gravity—the power of the brand to maintain consumers who prefer it. Abrand with high gravity has consumers who are very loyal to their favourite brand. For these threebrands, the gravity proportions all fall within a range of .25 to 1 but Pears had the lowest score of.25. Except for one very low score, pears (.25) and one dove (1). Thus, dove was able to convert67% of its preferred customers into sales; whereas, Lux and pears covered 17% and 34 %respectively. Gravity Focus (α) (π)Dove 0.8 0.666666667Lux 1 0.166666667Pears 0.25 0.333333333A high gravity ratio, however, indicates that consumers regard the brand as desirable, available,and a good value, a brand that is relatively resilient to competitive prices or promotions. Thesedata suggest that Pears had established preference but may have been priced too high ordistributed too selectively to convert those preferences to sales. Lux had much lower preferencebut it did convert into sales. Respondents who preferred Lux bought Lux.A different perspective on the market is revealed by comparing the diagonals with the total of lastpurchased. This ratio represents the proportion of sales that come from consumers who identifythe brand as most preferred and is termed focus. For example, dove has a focus of .67—12preferred and bought (on the diagonal) versus 18 total purchased (from the bottom row). A brandwith high focus gets sales mostly from consumers who prefer it. Brands with low focus “steal”customers from other brands. Pears and Lux had .33 and .16 respectively. Dove stole 2 preferredcustomers of Pears and converted them into sales, whereas Lux and Pears could only take 1customer from preferred customer of Dove. Firms can succeed with either high or low focus. This data suggests that Dove is succeedingby leveraging strong loyalty (high focus); whereas, Lux is relying on its ability to attract consumerswho preferred other brands, capturing consumers who are attracted by promotions and also thebrand switchers. This interpretation is consistent with the observation that Lux has very
19. competitive pricing strategy and that Dove and Pears were amongst the highly priced and leastfrequently promoted.MODEL 2(Basis – No of purchases of each brand)Model 1 does not serve its purpose of being an efficient indicator of brand loyalty especially so in 19our case where the sample is relatively small, so we have improvised upon the model by replacingthe ‘last brand purchased’ variable with ‘number of purchases for each brand’. This is helpfulbecause:- It helps to eliminate the bias by certain respondents by taking into account the last five visits of the respondent to the store for the purchase of the particular product. This helps to negate the possibility of the error in the 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.preferredBrand Last Purchased Brand Dove Lux Pears Others TotalDove 36 10 15 15 76Lux 0 2 0 2 4Pears 5 2 8 5 20Others 16 10 6 67 99Total 57 24 29 89 199 Fig 9- Colombo Morrison Model 2The analysis is yielding results which are similar to model 1 the only difference arising due to theno. of purchases made. For instance, out of a total of 76 purchases with Dove as the preferredbrand, 36 purchases were of Dove itself (47%: gravity proportion) while Lux and Pears constituted50% and 40% respectively.
20. Gravity Focus (α) (π)Dove 0.473684 0.631578947Lux 0.5 0.083333333Pears 0.4 0.275862069Quite clearly, Dove was the largest selling brand (57) followed by Pears (29) and Lux (24). The focus 20ratio tells us how many of the purchases were made with the brand as the ‘preferred brand’ out ofthe total no. of purchases for that particular brand. In this case, the total no. of purchases for Dovewas 57, out of which 36 purchases were made with Dove as the preferred brand. This gave it afocus ratio of 63% while those of Pears and Lux stood at 8.33% and 27.58% respectively. As isevident, Dove relies on ‘brand switchers’ – a bulk of its sales coming from people who prefer othersand bought Dove (16). Dove made most of its sales from the consumers who preferred Dove (36).Yet another interesting observation is seen in the case of Pears, where out of a total of 20purchases with Pears as the preferred brand, only 8 purchases were of its own. Pears recordedmore in the case where consumers preferred Dove and purchased Pears (15). This suggests thatPears is taking a sizeable chunk of its sales from Dove. Pears is not on a losing side when comparedto Lux but if seen with dove, it’s neither maintaining the customers who prefer it, nor too successfulin stealing customers from other brands.Lux has the highest gravity ratio (50%) which shows an inherent loyalty of its consumers and itscapability of retaining those who are potential switchers.It’s considered that when gravity>focus, either more no of promotions are made. It is also indicativeof the brand manager’s mind-set of having more sales promotions or a stronger distributionnetwork. This implies that the brand is relatively more preferred. On the other hand whenfocus>gravity, supply chain is weak in spite of a strong brand presence. This implies that the brandis not properly leveraged.Here, we see that in case of Dove focus is more (63%) than gravity (47%). This shows that the brandDove is strong but the supply chain is weak. On the other hand both in case of Lux and Pears gravityis more than focus which shows that the promotions or distribution is very strong and the brandenjoys relatively greater preference. Dove in this case can try and improve on the distributionstrategy. As Dove is a strong brand it will not be difficult for Dove to improve its distributionstrategy and doing this would improve its preferences.Loyalty Index measure:Brand Loyalty comes from 2 stages:The hard core loyal are those who are extremely loyal to the brand: brand’s ability to maintain loyalcustomers.Switchers from another brand: the brand’s ability to convert potential switchers.
21. Based on the Colombo-Morrison model, loyalty index can be measured as a weighted average of ρand 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 = Σ (1-αi) πj (expressed in percentage terms)Loyalty Index = 0.67* ρ + 0.33* ς 21 ρ ς Loyalty IndexDove 80.61% 69.47% 76.934626038781200%Lux 54.17% 9.39% 39.389035087719300%Pears 56.55% 28.31% 47.232667876588000%Another question was asked from the respondents to check their loyalty. The question says do youkeep experimenting with new brands every time you purchase or you stick to the same brand. Therespondents who said they keep experimenting were marked yes and the others were marked no.The result of the survey is hereunder:- 21 Fig 10- Brand Loyalty 19 Yes NoThis showed that 21 out of 40 respondents experimented with the brands every time theypurchased. The trend we saw was it was majority of the boys saying they experiment with thebrands every time. When further asked the reason for this, they replied that their purchases weremostly based on the availability of the brands in the market or the retailers’ suggestion.LEVERAGABILITYLeveragability is the ability of the brand to be launched successfully into related or even unrelatedproduct categories. Some brands are considered to be more flexible than others in respect to
22. satisfying needs and wants other than the ones which the brand is currently addressing. A companywants its brands to be highly leverageable because:- It helps the company to diversify in both related and unrelated products and services. The company is not required to spend huge amounts on creating a brand from the scratch. It helps a company to decide how valuable the brand is to the company. We have tried to measure the leveragability of the brand by using question number 14 given in the questionnaire given in the appendix. We have taken 8 categories where we logically felt the 22 brand could extend itself of the company wants to diversify itself into new product categories. 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 have tried to analyse the responses subjectively and thereby arrive at the comparative brand leveragability among the three brands under consideration. Washing Tooth- Chocolates Antiseptic- Hair Shoes Mobile Beverages Powder pastes soaps Gel Phones 7 7 4 23 23 1 0 4 FigDove 11-Lux 13 2 2 8 13 0 0 1 LeverPears 5 8 4 19 14 0 0 2 agabi lity Washing Tooth- Chocolates Antiseptic- Hair Shoes Mobile Beverages Powder pastes soaps Gel Phones 18% 18% 10% 58% 58% 3% 0% 10%DoveLux 33% 5% 5% 20% 33% 0% 0% 3%Pears 13% 20% 10% 48% 35% 0% 0% 5%As can be seen that the categories washing powder, tooth-pastes, chocolates, antiseptic-soaps, hairgel, shoes, mobile phones, beverages were the product categories where the three brands werefound to be more leveragable.On a comparative level the brand Dove was found to be more leveragable of the three brands.Recommendations:-The product has shown a very high leveragability in case of antiseptic- soaps and hair gel closelyfollowed by washing powder and tooth-pastes. The brand can diversify in these categories.
23. Brand Equity Model based on share tier approachWe based our model on the share tier approach and improvised on the model to suit ourrequirements for the product for which we are measuring the brand equity. The question 13 in thequestionnaire as given in the appendix was used to identify the Price/Quality classification of all thethree brands for every individual respondent.We are using the price-quality relationship to identify how the consumer behaves on these two 23metrics which will help us gauge the loyalty of the buyer towards the brand and also the perceptionof the buyer about the brand which will help us to quantify the brand equity of the brands underconsideration.The data obtained from the Price/Quality classification will be used to calculate the percentage ofsales made by each category of respondents (for instance say a respondent has a perception thatDove has superior quality and price is not a barrier for him. When this happens then such arespondent will be classified under the Top box in the grid and so on for other respondents). Forthe purpose of our analysis we have assumed that the respondent base represents the total marketand therefore the cumulative sum of percentages will equal the total sales i.e. 100% of the sales ofthe brand. The percentage figures are given in the form of a 4x4 grid which will essentiallyrepresent the percentage of total shares for respondents who think that the brand belongs to thatPrice/Quality classification.The loyalty share for the four cells viz. Q1P1, Q2P1, Q1P2, Q2P2 was calculated based on theirresponses to the Price/Quality classification and the responses to the loyalty based questions in thequestionnaire. Hence we will be able to find out the percentage of loyal respondents for the threebrands in all the four. We have then tried to calculate the equity share for the brands using the loyalty contribution datafor each brand which was obtained from the percentage of loyal customers for each brand. Thismetric reflects the relative percentage that a brand owns of the sales attributable to all loyalcustomers in the category. It represents the brand’s share of the category’s most desirable, andprofitable, customers.The leveragability index was calculated based on the loyalty data and the sales in the cells of theprice quality grid. This metric is incorporated as an attempt to measure the relative importance ofproduct quality w.r.t price, suggesting that if the degree of quality perception is much stronger thanprice, there is a potential to leverage that perception into other areas beyond the immediatemarket.The measurement of brand equity index and the share tier index to find out a composite index forbrand equity was the next logical step and a model was developed to calculate this which will beexplained in detail in the analysis part.
24. Dove "Superior "Good "Acceptable "Poor Quality" Quality" Quality" Quality"Price not a 20% 25% 10% 0%barrierPrice minor 10% 15% 0% 0%barrierPrice 0% 8% 0% 0% 24significantbarrierPrice 5% 5% 3% 0%absolutebarrier Lux "Superior "Good "Acceptable "Poor Quality" Quality" Quality" Quality"Price not a 0% 13% 43% 10%barrierPrice minor 3% 10% 8% 3%barrierPrice 0% 3% 5% 3%significantbarrierPrice 0% 0% 3% 0%absolutebarrier Pears "Superior "Good "Acceptable "Poor Quality" Quality" Quality" Quality"Price not a 5% 30% 20% 0%barrierPrice minor 0% 18% 10% 3%barrier
25. Price 0% 5% 5% 0%significantbarrier Fig 12- PricePrice 5% 0% 0% 0% –Qualityabsolute RelationshipbarrierAs can be seen from the above analysis, 20% of the respondents feel that Dove is of superior quality 25and price is not a barrier, which is highest of all the three brands. This constitutes the top boxcontribution. Dove has the largest percentage of respondents saying it to be of a superior (20%)and good quality (25%). Both Dove and Pears have respondents considering them of superior andgood quality but with price a significant and absolute barrier. Pears have the largest number ofrespondents (18%) who consider price to a minor barrier and the quality to be good and notsuperior.RecommendationsDove has been ranked of superior and good quality by most of the respondents. Dove needs tobuild on its pricing strategy in order to attract more customers as most respondents had theconcept that the brand, though pays off its cost by the quality it provides (value for money), butoverall the price is high and is not convenient for all to purchase it regularly.Loyalty TableThe following data was obtained from the above mentioned analysis:Total Loyalty Purchasers Purchasers % Continuity Continuity%Dove 21 53% 9 60%Lux 7 17% 3 75%Ears 3 8% 0 0%Others 9 22% 12 60% Fig 13- Loyalty TableWe asked respondents to choose a brand which they will purchase after choosing their belief aboutthe price and quality. Out of 40 respondents 21 choose dove giving it a 53% purchasing behaviour.7 respondent chose lux whereas 3 for ears and 9 for others.Next we asked them whether they would continue to buy their preferred brand. We found out thatdove had 60 % continuity which means 60% of respondent who preferred dove will continue using
26. Dove. Similarly loyalty for lux is 75% and for pears it is 0%, probably because 1 respondent only preferred pears and that respondent did not want to continue buy pears. Brand loyalty will lead to brand resilience. Brand resilience is a brand’s ability to protect itself and generate consistent volume and revenue, year after year. Resiliency also describes a brand’s ability to gain more than its fair share of category revenue and profits in the face of inadequate marketing or competitive attack. We find that dove has a brand loyalty of 60% amongst the respondents giving in 60% brand resilience. The brand loyal customers will stick to dove if other brands take out sales promotion and other techniques to win over dove’s customers. These loyal customers will 26 help dove to generate cash flows and volumes over time to giving it continuity. EQUITY SHARE CALCULATION This index helps us evaluate the percentage of sales of a particular brand which it owes to the loyal customers in the category. This relates to those customers of the brand from whom the company derives the maximum amount of profit and also pinpoints at the class of customers who are the most desirable. Methodology:- Sales (Rs. Market Proportionate Market Loyalty Equity Loyalty Sales Crore) Share Share Contribution ShareDove 500 6% 24.752475247524800% 76.93% 384.65 38.15%Lux 1200 15% 59.405940594059400% 39.38% 472.56 46.86%Pears 320 4% 15.841584158415800% 47.23% 151.136 14.99%Category 2020 25% 100% 1008.346 100%Total Fig 14- Equity Share Calculation Following Assumption was 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 skin care segment so for the calculation of equity share we will consider the total sales of these three brands (Dove, Lux and Pears) as the overall sales in the skin care 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
27. figures for the loyalty sales. Then equity share was the share of each brand in loyalty sales out ofthe total category sales. Each brand figures were divided by the category total sales.AnalysisThe equity share represents the relative percentage of each brand’s loyal customers on the basis ofthe total customers in the category. Here, Lux has the huge equity share as compared to its existingcompetitors. Pears have a low equity share. Dove has a fairly good equity share but it still needs toimprove on it when compared to its competitors. 27LEVERAGABILITY INDEX CALCULATIONThe index attempts to measure the relative importance that the buyer attaches to the quality of theproduct and whether the buyer perceives quality to be predominant factor or not with respect toprice and hence acts as a yardstick which tells us whether the brand will be able to leverage itsperception of ‘better quality’ in the market. There are various ways to arrive at the leveragabilityindex.METHODOLOGYHere, the two quadrants Q1P2 and Q2P1 that is to say the two adjacent quadrants to the mostdesired quadrant were considered. First the sales of these two quadrants were found out bymultiplying the percentage from the Price-Quality Classification Model to the existing sales. Thenthe loyalty sales of these quadrants were found out by taking the loyalty index from the loyaltytable. Then the leveragability Index was calculated by considering the loyalty sales of the Q1P2quadrant and dividing it by the sum of the sales of these two quadrant. Q1P2 Q2P1 Fig 15- Q1P2 Q1P2 Q2P1 Q2P1 Leveragability Loyalty Loyalty Leveragabi Sales Loyalty Sales Loyalty Index Sales Sales lity IndexDove 50 50% 25 125 60% 75 25.00% CalculatioLux 36 100% 36 156 40% 62.4 36.59% nPears 0 0% 0 96 42% 40.32 0.00%ANALYSISThe sales of Q1P2 were considered for calculation of the index because for these customers, thebrand offers superior quality but the price is a minor barrier for them to purchase the brand. Theseare the customers who offer the potential for the brand to leverage the future market growth andextend itself beyond the current segmentations. The customer holds the brand in the high esteembut the price is a minor barrier. The price barrier can be removed by the company leveraging uponthe perception of the superior quality of the brand.
28. Here, Lux has the highest Leveragability Index and it is found out to have the highest perception ofbeing a superior quality offering from the company. As per the conclusions, Dove, in spite of being anew brand in the market, has a high leveragability index. This shows that the consumer has theperception that the brand offers quality product to them and the company can use this factor tocapture the future growing market of the industry.BRAND EQUITY INDEX CALCULATION 28The next logical step was to calculate the Brand Equity Index of each player in the skincare industry.This would help us estimate the power of the each brand in the market. Dove "Superior "Good "Acceptable "Poor Quality" Quality" Quality" Quality"Price not 100 125 50 0a barrierPrice 50 75 0 0minorbarrierPrice 0 40 0 0significantbarrierPrice 25 25 15 0absolutebarrier Lux "Superior "Good "Acceptable "Poor Quality" Quality" Quality" Quality"Price not 0 156 516 120a barrierPrice 36 120 96 36minorbarrierPrice 0 36 60 36significantbarrierPrice 0 0 36 0absolutebarrier
29. Pears "Superior "Good "Acceptable "Poor Quality" Quality" Quality" Quality"Price not 16 96 64 0a barrierPrice 0 57.6 32 9.6minorbarrierPrice 0 16 16 0 29significantbarrierPrice 16 0 0 0absolutebarrierWEIGHTSW1-15% W2-11% W3-8% W4-6% W5-5% Fig 16- Brand Equity Index & BRAND SHARE Share Quality MARKET EQUITY QUALITY Index SHARE INDEX INDEXDove 6% 42.75 2.67%Lux 15% 70.44 10.57%Pears 4% 21.216 0.85%MethodologyFor the purpose of calculation of Brand Equity Index, percentage of customers in each quadrant asfound out in Price – Quality Classification Model and the existing sales of the brand wereconsidered. The percentage figures were multiplied with the sales numbers to find out the turnovervolume of each quadrant. Then taking the Share Tier Approach as the basis, decreasing order ofweights was assigned to each quadrant. The order taken was as follows: - Q1P1 > Q1P2 > Q2P1 >Q2P2 > Others. The sales of each quadrant were multiplied by the assigned weights. The leastweight was assigned to all other quadrant sales volumes taken together. The resulting numberswere added together to find out the Brand Equity Index.AnalysisThe Brand Equity Index (BEI), as it is known as popularly is used to judge the ability of the brand tocapture the market share and the potential of the brand for the future growth. The model used
30. here captures the essence of the customers belonging to every category as well as the current salesof each brand.Lux was found to be having the highest brand equity index (70.44). This brand has the highercapability to charge a premium as compared to its competitors. Dove is followed by Lux having thesecond highest brand equity index (42.75). The brand is the ‘new kid on the block’ in the market ascompared to its competitors but still it has been able to get the market share in spite of theexistence of the established market players. The sales of the brand have been on the rise and it has 30a sufficient market share given the competition in the industry and the penetration of the marketby its biggest competitors.Van Westendorp Price Sensitivity Meter & Brand EquityThe Price Sensitivity Meter (PSM) is a market technique for determining consumer pricepreferences. It was introduced in 1976 by Dutch economist Peter van Westendorp. The techniquehas been used by a wide variety of researchers in the market research industry. The PSM approachwas a staple technique for addressing pricing issues for the past 20 years. It historically has beenpromoted by many professional market research associations in their training and professionaldevelopment programs. The PSM approach continues to be used widely throughout the marketresearch industry.The traditional PSM approach asks four price-related questions, which are then evaluated as aseries of four cumulative distributions, one distribution for each question. The standard questionformats can vary, but generally take the following form:• At what price would you consider the product to be so expensive that you would notconsider buying it? (Too expensive)• At what price would you consider the product to be priced so low that you would feel thequality couldn’t be very good? (Too cheap)• At what price would you consider the product starting to get expensive, so that it is not outof the question, but you would have to give some thought to buying it? (Expensive/High Side)• At what price would you consider the product to be a bargain—a great buy for the money?(Cheap/Good Value)The responses to the above four questions are graphed. The point at which the Inexpensive andExpensive responses intersect is considered the Indifference Price Point (IDP); the point at whichthe Too Inexpensive and Too Expensive responses intersect is considered the Optimal Price Point(OPP).
31. The intersection of "not cheap" and "too cheap" yields the Point of Marginal Cheapness (PMC). Atthis price point, the number of people considering the product to be too cheap is the same as thenumber considering it to be expensive, or "not cheap."The intersection of "not expensive" and "too expensive" yields the Point of Marginal Expensiveness(PME). At this price point, the same number of people regards the product to be too expensive asregard it as not expensive.The range from PMC to PME is the Range of Acceptable Prices (RAP), or the Optimal Price Band. 31Thus, we are using this method because it will give us the optimum price of the product and theindifference price. A company whose product is selling above the optimum price is commandingpremium due to its Brand so the company having higher difference between market price andoptimum price is having higher brand equity due to which consumer is ready to pay premium.OPP is optimal in the sense that the price sensitivity to the product for being cheap is equal to thatof being too expensive, and is often the recommended priceIndifference Price PointThe Indifference Price Point (IPP) tends to show the average price for the product in a maturemarket or, if there is a market leader with a predominant share, it can show the average price thatmanufacturer/ producer charges.Van Westendorp theory usually represents either the:• Median price actually paid by consumers for a known, existing product, or• The average price of a product produced by a market share dominating, leading producer.Optimal Price PointThe Optimum Price Point (OPP) is a point where you lose the fewest number of purchasers becauseit is either perceived to be too expensive or too cheap. The Range of Competitive Prices helps showthe full range of viable pricing strategies. At the high end of the range, producers will begin to losemarket share, but reap higher-than-normal profits. At the low end of the range, producers will gainshare through a low-cost strategy.Point at which the number of respondents who reject the product as too expensive = number whoreject it for being too cheap. Some consider this to be the Ideal Price for this product.
32. Point Of Marginal CheapnessPoint of Marginal Cheapness = Point at which the percentage of respondents who find the price toocheap (S1) = the inverse of the percentage of people who find the product a bargain (1-S2%) or, inother words, the percentage of people who at each price point would find the price “not a bargain.Point Of Marginal ExpensivenessPoint of Marginal Expensiveness = Point at which the percentage of respondents who find the price 32too expensive= the inverse of the percentage of people who found the product expensive but stillworth considering (1-S3%) or, in other words, the percent of people who at each price point wouldfind the price “not expensive. Indifference Price Point Cheap Expensive 100% 100% 98% 98% 93% 93% 85% 76% 63% 41% 35% 18% Fig 17- Indifference Price Point & Optimal Price Point
33. Optimal Price Point Too Too Cheap Expensive 100% 100% 33 40% 90% 28% 75% 13% 40% 11% 8% 3% 5%The indifference Price Point comes out to be 20. The Optimal Price Point comes out to be 49.Van Westendorp Brand equity index = [(market Price – optimum price)/ optimum price].Assuming the market price for Dove to be 50, the Van Westendorp Brand equity index comes to be0.020.
34. Basic Findings When respondents were asked to identify the brand, the image was identified by most of the respondents but they could not connect with the campaigns and the taglines. From the Colombo-Morrison model we can infer that Dove has a strong brand presence but a weak supply chain and hence we would recommend Dove to work on its supply chain. Dove is losing out customers because of its high price. 34Recommendations The brand is high on salience and Imagery. It has a distinct image among consumers. On the other hand, most of the respondents could not connect to the positioning of Dove (which brand can you relate when you hear dare to step out without makeup). One problem could be that Dove has huge number of campaigns running at the same time which prevents the mass from being updated. So, Dove could come up with campaigns with which people could more relate to and remember like of Pears which related its saying Masoom. This gave the product a very personal feel and helped the consumers remember the brand. Dove can improve on its supply chain and spread its tentacles in the rural areas as well. Mostly now Dove is more skewed towards the urban markets. Dove has shown a very high leveragability with antiseptic soaps and hair gel. We know that dove is a highly leveraged brand and it is successful leveraged its product to personal care brands. From soap to shampoo, conditioner, shower gel, cream etc. The respondent (58%) would prefer buying hair gel and antiseptic soaps if dove launched them. we would recommend that dove could further leverage to antiseptic soaps and hair gel. Dove needs to build on its pricing strategy in order to attract more customers as most respondents had the concept that the brand, though pays off its cost by the quality it provides (value for money), but overall the price is high and is not convenient for all to purchase it regularly. From Van Westendorp analysis we found that optimum point and indifference point are in a difference of 19 which means brand loyalty is existing in the soap category. So dove can use its power of brand to convert purchase.