Brand equity colgate

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Brand equity colgate

  1. 1. “Brand Equity is the sum of all the hearts andminds of every single person that comes intocontact with your company” -Christopher Betzter
  2. 2. Brand Tracker Phase II – Brand Equity Measurement A report submitted to Prof. Srinivas Govindrajan In partial fulfilment of the requirement of the course Product and Brand Management On 9th September 2012 By Abinas Mishra (B11002) Anubhuti Anup (B11008) Piyush Das (B11031) Sumedha Dutta (B110047)2|Page
  3. 3. Executive Summary Brand Equity measures the ability of the brand to manage the changed market condition. It is the added value endowed on products and services, which may be reflected in the way consumers, think, feel, and act with respect to the brand. Thus, Brand Equity is an important intangible asset to the firm that has psychological and financial value. But being an intangible asset it is not easy to measure. There are various models emerged to measure the Brand Equity, but no model is a perfect model in itself. These models define their own method to measure the Brand Equity by measuring the three Brand Equity metrics: Loyalty, Price Premia and Leveragability. In this phase of the brand tracker project we have undertaken a study to effectively measure the equity of the brand “COLGATE”. The study has been conducted with the help of “Winning Brands methods of ACNielsen” and our own interpretation of Brand Equity measurement. The model was named as ASAP model. Winning brands takes care of two aspects: Brand Loyalty and Price premium. So, we have developed a model which deals with the above two criteria along with the Brand leveragability. The study was conducted on a sample size of 32. The instrument of data collection was face-to-face structured interview. In our model we measured Brand Equity as what consumers’ hold in their head about a brand, and how that affects their behaviour. A comparative study was done with four other competitors of COLGATE (Pepsodent, Close Up, Dabur and Anchor) across the three metrics. At first comparative study was done for all the five brands of toothpaste for Consumer loyalty and Price Premium i.e what consumers do or feel. With these two metrics (having equal weightage) we calculated the Brand Equity Index, which gives the Index as per Winning Brands Model. Further we calculated the Brand Equity Index as per our model with 0.3 weightage to the Brand Elasticity of the five brands and 0.7 weightage to the Brand Equity Index of Winning Brand. The ASAP model developed by the group then conducted regression analysis of “Awareness” which includes Top of the Mind, Spontaneous and Aided and “Association” which includes Healthy tooth & gums, Long lasting freshness, Prevention of tooth decay, whiteness and use of natural herbs to check how much these two metrics explains the variations in Brand Equity Index. This model analysed how these factors affect consumers decision while buying a toothpaste and what is the position of these factors in the consumers mind when it comes to the brand Colgate. Thus, by this we are measuring what consumers know aspect to know the Brand Equity Index. From this model we found that Colgate has a Brand Equity Index of 6.415 whereas that of Pepsodent and Dabur has Brand Equity Index of 3.703 and 2.421 respectively on a scale of 10. Thus, Colgate can withstand changed market condition. Its Brand Equity is higher mainly due to high loyalty and ability to charge price premium. But it is not a highly leveragable brand. It can only extend its product range in similar category of products like Tongue Cleaner, Chewing gums and to some extend Colgate can extend its product range to associated categories like Shaving gels and Deodorants.3|Page
  4. 4. Table of Contents Executive Summary……....................................................................................... 3 Defining Brand Equity.......................................................................................5-7 Measuring Brand Equity – Modified Winning Brand Equity .........13-19 Recommendation……………………………………………………………………………19 Annexure………………………………………… ………………………………….. …. 20-25 References...............................................................................................................264|Page
  5. 5. HOW BRAND EQUITY GENERATES VALUE Reduced Marketing Costs Trade Leverage Attracting New Provides Value to Brand loyalty Customers Customer by Create Awareness Enhancing Reassurance Time to Respond to Customer’s: Competitive Threats • Interpretation/ Processing of Information • Confidence in the Anchor to which other Purchase Associations could be Decision Brand Awareness attached • Use Satisfaction Liking Signal of Commitment Brand to be Considered BRAND EQUITY Reason-To-Buy Differentiate/Position Brand Quality Price Channel Member Interest Provides Value to Extensions Firm by Enhancing: • Efficiency and Effectiveness of Marketing Programs Help Process/Retrieve • Brand Loyalty Information Brand Association Reason-to-Buy • Prices/Margins Create positive • Brand Extensions attitude/feeling Extensions • Trade Leverage • Competitive Advantage Other Proprietary Brand Competitive Asset Advantage 5|Page
  6. 6. BRAND ASSOCIATION PRODUCT RELATED ATTRIBUTES NON-PRODUCT-RELATED FUNCTIONAL TYPES OF BRAND ASSOCIATION BENEFITS EXPERIENTIAL SYMBOLIC ATTITUDES6|Page
  7. 7. CONCEPTUALIZING BRAND EQUITY Drive Toward or Against Brand Perception/ Customer Worth of the Product Knowledge behaviour structure Brand Discrimination and value Brand Communication and Contacts Brand Equity (Surplus ±)7|Page
  8. 8. Brand Equity Brand Equity as defined in Kotler is the added value endowed on products and services. It may be reflected in the way consumers think, feel and act with respect to the brand as well as in the prices, market share and the profitability the brand commands for the firm. It can also be defined as the “ability of the brand to manage the changed market conditions”. The purpose of brand equity metrics is to measure the value of the brand. A brand encompasses the name, logo, and perceptions that identify a product, a service or a provider in the minds of the consumers. This takes the form of advertising, packaging and other forms of marketing communication and becomes the focus of the relationship with the consumers. The 3 primary metrics that is used to measure or quantify brand equity are i) Loyalty towards the brand, ii) Ability of the brand to charge a premium and iii) Ability of the brand to leverage its brand name through brand extensions. Brand equity is observed through its impact on choice. Measures of brand equity should reflect both attitudinal and behavioural components. Brand Equity Components •Share of wallet •Purchase frequency •Vendor consolidation •Relative overall quality •Perceived cost •Preference •Willingness to recommend •Understands my needs •Future purchase intent •Self-perceived trend (more or less of my business)8|Page
  9. 9. After conception and popularization of brand equity model, in a bestselling book called “Managing brand equity” in 1980’s, promoted by some advertising agencies; Several agencies started developing new models for brand equity measurements. These models were developed and some are still in their developing phase with a motive to quantify the values of intangible assets. Some widely used brand equity measurement models are:- Equity Engine: Equity Engine, developed by Research International, is one of the most elegantly parsimonious models of brand equity. Essentially, it expresses brand equity as a combination of the functional benefits delivered by the brand (performance) and the emotional benefits (affinity). Equity Engine incorporates a form of conjoint methodology that establishes the price premium that a brands equity will support while still maintaining a "good value for money" rating from customers. Equity Builder: This method developed by the Ipsos Group is unique amongst all the models created to measure brand equity focuses on establishing the emotional component of brand equity.9|Page
  10. 10. Kevin Lane Kellers Model: This is a proprietary tool which is used to measure brand equity by looking at the brand as a blend of the rational and emotional which are measured in terms of brand performance and imagery. Customer’s relationship to a brand is then plotted in terms of their altitude on the pyramid of engagement and their relative bias towards a rationally dominant or emotionally dominant relationship is established. Brand Dynamics: This model is developed by Millward Brown with the notion of an engagement pyramid as its foundation. This approach classifies the relationship that a customer has with a brand into one of the five stages: presence, relevance, performance, advantage, and bonding.10 | P a g e
  11. 11. Winning Brands: This methodology has been developed by ACNielsen. Winning Brands begins from a behavioural observation of brand equity. Brand equity is then measured in terms of a customers frequency of purchase and the price premium paid.11 | P a g e
  12. 12. Measuring Brand Equity ASAP model(Modification of “WINNING B®ANDS™” Model)
  13. 13. We have tried to develop a model of Brand equity i.e. named “ASAP” on the basis of “Winning brands model of brand equity measurement”. Winning brands takes care of two aspects. These are:  Brand Loyalty and,  Price premium. So we have developed a model which deals with the above two criteria along with the  Brand leveragability. WINNING B®ANDS™ WINNING B®ANDS™ is the brand management service from ACNielsen that measures the effect that ALL your marketing activity has on brand equity. The issues that WINNING B®ANDS™ covers are comprehensive - from understanding the category that brand competes in from the consumers perspective, through detailed brand measurement, to an understanding of how the whole range of marketing activity has influenced consumer perception of the brand. Nielsen Winning Brands tracks the underlying strength of the relationship between the customer and the brand, and uses this to create effective strategies to enhance that relationship. At the same time, it provides monitoring to protect and improve the brand’s health as often as is required. It is used to:- • Build deeper relationships with consumers • Monitor and understand changes in brand performance over time • Assess the impact of marketing activity on brand equity • Identify opportunities and threats to brands- not just from competitors but frm the category as a whole. • Determine the long-term potential of your brand and its competitor Customer Brand Loyalty Awareness Brand Equity Index Brand Price Association Premium “Brand Equity is simply what consumers’ hold in their head about a brand, and how that affects their behavior.” ~AC Nielsen13 | P a g e
  14. 14. Research Methodology The ASAP model (modified Winning Brands model) was used to measure the brand equity of the brand vis-a-vis its competitors. As questions of Winning Brands are not available and we have modified the model also, hence an independent questionnaire was designed to gauge the consumer’s perception across the 3 pillars of the model. Weightage of 100% was assigned to all 3 pillar of the brand equity measurement model.  This weightage was split amongst the questions related to them.  Weights were assigned to these questions on the basis of how direct and how comprehensive was the information that could be derived from the question. Research Design: A descriptive research was conducted. Research Instrument: Questionnaire Sampling Unit : Users of Toothpaste Sample size :32 Calculation Brand equity was measured by giving equal weightage to the two factors of winning brand-  Brand Loyalty  Price Premia The two loyalty parameters favourite and next favourite brand were taken into consideration and weights were assigned .They were given weights according there ranks. Favourite brand was given 0.666 weightage and next favourite brand was given .333 weightage. In the modified version we took Brand leveragability into consideration and a weightage of 0.30 was assigned while for the previous two we took a overall weightage of 0.70.The overall loyalty index of colgate was calculated to be 0.483.14 | P a g e
  15. 15. Loyalty Index 0.5 0.45 0.4 0.35 0.3 0.25 fav&next fav 0.2 recommended brand 0.15 0.1 0.05 0 colgate pepsodent closeup dabur Ability to Charge Price Premia: The users were asked how much are they willing to pay for a particular brand. Some statements were made and they were asked to choose the most appropriate statement in accordance with their willingness to pay. Weights were assigned to the different statements and the overall willingness to pay premium was calculated. The Price Premia index for colgate was found out to be 0.751 colgate pepsodent closeup dabur anchor ability to charge price premia 0.75174 0.46181 0.359 0.29861 0.20515 | P a g e
  16. 16. Ability to charge Price Premia colgate pepsodent closeup dabur Whatever it costs 20 16 Don’t know/ Can’t 15 Even if it costs more say than any other brand 10 6 4 7 6 5 1 3 3 1 1 0 1 45 6 3 I would buy even if it I wouldn’t buy it at all 14 1 costs lot more than 3 the cheapest brand 6 6 8 8 Only if it costs the Even if it costs a bit same as the cheapest more than the brand cheapest brand Brand Leveragability: This was calculated by finding the ability of the brand to successfully extend its product into new categories. This was done by identifying nine different products where Colgate and the other competitor brands are not present. The products were selected across three categories. The three categories were:  Similar – cases where there is a clear functional similarity between the brand’s existing offering and the offerings in the new category. The products taken in this category were chewing gum, mouth freshener sprays and tongue cleaners. This category represents the Oral care products.  Associated - cases where there is at least some existing association between the brand and the new category, even if the products offered are functionally quite separate. The products taken in this category were fairness cream, Shaving gel and Deodorants. This category represents the FMCG products.  No relationship – cases where there is no similarity or association between the brand and new category. The products taken in this category were washing machine, Mobile phones and Laptops. Here the comparisons of brands were done with a highly elastic brand I.e. TATA, to find out the relative elasticity of the brands across categories. The calculation was done by taking a base of 1 for each brand and making a net addition and subtraction according to the degree of leveragability shown by the brand.16 | P a g e
  17. 17. 2 1.5-2 1.5 1-1.5 1 0.5-1 0.5 Category with no relationship 0-0.5 0 associated category -0.5 -0.5-0 -1 similar category -1--0.5 -1.5 -1.5--1 -2 -2.5 -2--1.5 -2.5--2 Brand Elasticity 2.5 2 MFS TC 1.5 CG 1 0.5 DABUR 0 CG MFS TC FC FC SG Deo WM Mob Lap PEPSODENT SG 0 2 4 6 8 10 -0.5 Deo TATA -1 COLGATE -1.5 -2 WM Lap -2.5 -3 The above scatter plots shows that the brand Colgate has a higher elasticity (1.704545) within the simlar category compared to pepsodent(.613636) and dabur(.727273) ,While in associated category it is almost neutral and in category with no relationship it cannot be leveraged at all as it had a low score of -2.273. For calculation of Brand equity index (according to Winning brands model), we have taken two metrics into consideration. These metrics are:17 | P a g e
  18. 18.  Brand loyalty  Price premia Both these were given the same weightage while calculation i.e. of 50% each. The Brand equity index for Colgate through this method was found out to be 6.1 out of 10 After the calculation of Brand Equity index from the above said model, the modified brand equity index was calculated. The two metrics which were taken into consideration were:  Brand equity index (Winning brands)  Brand leveragability These two were given the weightage of 70% and 30% respectively. Thus by assigning these weightage, modified Brand Equity Index was calculated. Modified COLGATE PEPSODENT DABUR BEI 6.41518132 3.7033697 2.421136152 Through the brand equity index of winning brand we calculated the attributes and the degree to which they affect brand equity by doing a linear regression: Weighted Adj Adj R2 R2 percentage Awareness 0.8489 0.8489 0.317179794 31.72% Healthy tooth & gums 0.6739 0.6739 0.251793454 25.18% Long lasting freshness -0.4971 0.00% Prevention of tooth decay 0.2451 0.2451 0.091578239 9.16% Whiteness 0.9085 0.9085 0.339448513 33.94% Use of natural herb -0.1106 0.00% sum 2.6764 1 weightage 0.37363622818 | P a g e
  19. 19. Healthy tooth & gums 30 25 20 15 Use of natural Long lasting 10 colgate herb freshness 5 pepsodent 0 closeup dabur Prevention of Whiteness tooth decay19 | P a g e
  20. 20. RECCOMENDATION: In Brand loyalty ,Colgate has got the highest score that is of 0.483 which is high as compared to its competitors. Hence, Colgate is well positioned. In, the calculation of price premia again Colgate came out as the leading brand thus is able to charge premium over other brands which will help it to sustain during adverse market condition. Since, Colgate had a neutral score in associated brand category it should try to cater this market as people will be neutral to its product.20 | P a g e
  21. 21. Annexure
  22. 22. Questionnaire Q.1 Which brands come to your mind when you think of tooth paste? 1. ________________ (This would have the first brand recalled ie. Top of Mind) 2. ________________ 3. ________________ (Other Brands recalled) 4. ________________ 5. _________________ 6. _________________ (Aided Recall) Q.2. Which brands do you associate with the following attributes? 1. Healthy tooth & gums ______________________ 2. Long lasting freshness ______________________ 3. Prevention of tooth decay ______________________ 4. Whiteness _______________________ 5. Use of natural herb _______________________ Q.3 Which of these toothpaste is your favourite brand? 1. Colgate 2. Pepsodent 3. Close-up 4. Anchor 5. Dabur 6. Other(Specify) __________ Q.4 Which of these toothpaste will you say is your next favourite brand? 1. Colgate 2. Pepsodent 3. Close-up 4. Anchor22 | P a g e
  23. 23. 5. Dabur 6. Other(Specify) __________ Q.5 If you were to recommend a brand of toothpaste to somebody, which brand would it be? 1. Colgate 2. Pepsodent 3. Close-up 4. Anchor 5. Dabur 6. Other(Specify) __________ Q.6 Out of last 5 purchases of toothpaste, which of these did you buy and how many times? No. of Times Purchased Brand 1 2 3 4 5 Colgate Pepsodent Close up Anchor Dabur Other Q.7 Now I would like you to think about the price of different brands of toothpaste. Kindly tell us which of the following statements best describes how likely you would be to one pack of toothpaste (BRAND name) o I would buy Whatever it costs o I would buy even if it costs lot more than the cheapest brand o Even if it costs more than any other brand o Even if it costs a bit more than the cheapest brand23 | P a g e
  24. 24. o I wouldn’t buy it at all o Only if it costs the same as the cheapest brand o Don’t know/ Can’t say Q8. If the following brands come up with the following categories, Rate these categories from 1 to 5 according to their acceptance by you (5 being the highest and 1 being the lowest) DABUR 5 4 3 2 1 chewing gum mouth freshener tongue cleaner fairness cream shaving gel deodorants washing machine mobile phones laptop PEPSODENT 5 4 3 2 1 chewing gum mouth freshener tongue cleaner fairness cream shaving gel deodorants washing machine mobile phones laptop TATA 5 4 3 2 1 chewing gum mouth freshener tongue cleaner fairness cream shaving gel deodorants washing machine mobile phones laptop24 | P a g e
  25. 25. COLGATE 5 4 3 2 1 chewing gum mouth freshener tongue cleaner fairness cream shaving gel deodorants washing machine mobile phones laptop25 | P a g e
  26. 26. References Prof. Srinivas Govindrajan’s PPTs Marketing Management : Philip Kotler- 13th Edition www.slideshare.net/sharathghosh www.acnielsen.com The Economic times: Brand Equity:28 sept 2011 Wikipedia.org http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/101.html http://www.acrwebsite.org/volumes/display.asp?id=7644 http://lta.hse.fi/1999/1/lta_1999_01_a4.pdf

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