Brand Equity 2010

Definition

Brand Equity is a set of assets (and

liabilities) linked to a brand’s name and
symbol that adds to (or substracts from)
the value provided by a product or
service to a firm and/or that firm’s
customers.
 Brand equity is the value built-up in a brand.
 The value of a company's brand equity can be
calculated by comparing the expected future
revenue from the branded product with the
expected future revenue from an equivalent
non-branded product.
 This calculation is at best an approximation.
 This value can comprise both tangible,
functional attributes (eg. TWICE the
cleaning power or thrice the whitening
effect) and intangible, emotional attributes
(eg. The brand for people with style and
good taste).
 Aakers’ Brand Equity to Value
diagram
Brand Loyalty

Brand Awareness Value to Customer

Perceived Quality
Brand
Value to Firm
Equity
Brand Associations

Other Brand Assets

Categories of Assets
 Brand name awareness
 Brand loyalty(franchise)
 Perceived Quality(image)
 Brand Associations(image)
 Other Proprietary Brand Assets (e.g.,
channel relationships, patents,…)
Brand Name Awareness
 Brand awareness is composed of the strength
of the brand in consumers' minds, for
example their ability to recall the brand, or the
visual identity.
 Anchor to which other associations can be
attached- Shoppers’ StopShoppersStop.htm
 Familiarity-liking
 Signal of substance/commitment-
 Brands to be considered
Signal of substance/
commitment
Brand considered
 Recall connected to buying decisions by
ensuring product is in consideration set
 Critical for frequently purchased products
like coffee, detergents etc where the
brand is pre-decided
How to achieve awareness
( how to enhance recognition and recall

 Be different,memorable
 Involve a slogan/jingle/mnemonic
 Symbol exposure
 Publicity
 Event sponsorships
 Brand extensions
 Repetition
Awareness pyramid

importance of brand recognition and brand recall depends on where

consumers make decision of purchasing.
the first stage of purchasing is selection of a consideration set of
brands. Therefore, brand recall play a main role to enter the set.
top of mind and brand recall play critical role for products which
purchasing decision is done before going to stores.

Top of mind

Brand recall

Brand recognition

Brand unawareness
Brand Loyalty
 Reduced marketing costs
 Trade leverage
 Attracting new customers
 Create awareness
 Reassurance

 Time to respond to competitive threats

Loyalty pyramid

Brand loyalty is different from other brand equities, because it strongly related to
experience in using.

Committed
Buyer

Like the Brand

Consider It a Friend

Satisfied Buyer with Switching Cost

Satisfied/ Habitual Buyer

Switchers / Price sensitive/ No brand Loyalty

Double – jeopardy line

“There is a wide consensus that brand loyalty does develop systematically in connection
with penetration in stable markets for frequently purchased low-involvement products and
for established brands. There, however , are exceptions.”

1.0
Super – loyalty brands
Repeated purchase probability

Niche brands
Double – jeopardy line

Change – of – space brands

0 0% Market share 100%

From awareness to brand loyalty

Unique 100% brand

(Only accepted) loyalty

Top brand
Top brand
buyers
Consideration
In repertoire
set
Second Repertoire
brand buyers
Not
Spontaneous in repertoire
Not acceptable Occasional
awareness Third brand
buyers
Aware

All brands Aided awareness

only Not
Unaware consideration
 Maintaining and enhancing
loyalty
 Customers do not like to change – inertia
 People do not want to admit that they were wrong…Hence..

 Treat the customer right(There is no brand loyalty that a 20% discount

cannot buy)
 Stay close to the customer
 Measure/manage customer satisfaction
 Create switching costs
 Provide extras
 SELL TO OLD CUSTOMERS INSTEAD OF NEW
 Analyse irritations,reasons for brand exits, plug the holes in the bucket
 Young brand managers should avoid short term “blip” temptations
Perceived Quality
 Reason-to-buy
 Differentiate/Position
 Price
 Channel member interest
 Extensions
Brand Associations
 Help process/retrieve information
 Reason-to-buy
 Create positive attitude/feelings
 Extensions
Measuring Brand Equity
2009 brand values
 Infosys: Rs 17,000 cr
 Tatas: Rs 14,000 cr
 Satyam: 3,500 cr - 560 cr
 Color plus: Rs 70 cr
 Dabur paid 1430 cr for Balsara
 British telecom giant Vodafone has bagged the 67%
Hutch Telecom International (HTIL) stake in Hutch-
Essar at an enterprise value of $19.3 billion (approx Rs
86,000 crore). 30% of this came from the brand alone
Changes in Brand Equity Occur
When…

• Major New Products

• Product Problems

• Change in top Management

• Competitor Actions

• Legal Actions
 Nine ways to manage your
brand as an asset
1. Formally link business and brand strategy

2. Create a unique and relevant Brand Identity

3. Create a clear and distinct Positioning

4. Extend your brand strategically

5. Build a strategic Brand Architecture

6. Evaluate and align touchpoints

7. Consistently deliver on your Brand Contract

8. Practice effective global brand management

9. Set the organization up for success

 Virgin’s Brand Identity
Brand Identity
Essence of
the Brand Richard

Value
Innovation
Core Identity
Elements Irreverence
Service
Personality Quality
Fun &
Entertainment
Extended Underdog
Identity Elements
 The Brand Architecture spectrum
A Branded House
uses a single Master A House of Brands
Brand to span a set consists of independent
of offerings that stand-alone brands,
operate only with each maximizing its
descriptive offerings. Branded House of impact on the market
House Brands with little connection to
its parent.

Sub-Brands Key Issues Driving The Spectrum:

Reinforce comprehensive solution focus

Significant investment in multiple Brands

Build Brand Equity in Master Brand

Stand-Alone
Target unique & separate customer base

Maximize synergies among business units

 A flexible architecture can be
used to address local differences
 The Sony brand system uses the Sony brand in a variety of
ways, in different markets, to target specific customers with
unique value propositions

Endorser brands usually represent

A driver brand has the primary
responsibility for a purchase
decision and owns the
customer’s brand experience.
Sony uses their master brand
with a descriptive, “Pictures,”
to drive the film division
organizations, rather than products, and
provide credibility to the offering. Since the
Sony brand is somewhat insulated from the
product brand, poor performance of Metreon
is unlikely to affect the Sony brand
The ProAudio brand augments
the Sony brand by
Endorser communicating cutting edge
technology across multiple
Sony Electronics product lines
Driver Ingredient

Play Station and Columbia Tri-

Star are not visibly connected to
Sony chooses a Sony, but many consumers know
flexible architecture about the link. This shadow
and leverages their endorsement provides positive
corporate brand in associations, but allows the
several different Corporate Stand-Alone strong brands to stand on their
ways own
Do brands add value ?
 Successful brand producers / owners can:
 Charge premium
 Higher volumes
 Better economies of scale
 Customer recognition and loyalty
 Lower customer acquisition and retention cost
 Enhance corporate value
 Successful brands are valuable to retailers /
suppliers:
 Stimulate customer flow
 Facilitate choice
 Command higher price
The Coca-Cola brand name is
worth $67 billion, a whopping
59 percent of the company’s
market capitalization,
according to Interbrand, a
global brand consultancy
based in New York.
 Why are brands valuable?
 Brands are consistent holistic pledge made by
the company
 Serve as unmistakable symbol of products and
services
 Conveys values and attitudes embodied in
product and company
 In mergers and acquisitions
Approaches for Valuing Brands
1. Cost
 Original cost to develop brand
 Replacement cost
1. Market Valuation
 Premium paid over book value
1. Income
 Discounted value of future net revenues
• Price premium over generic
• Future brand extensions
1. Multi-factor Index
Efforts to measure brand
equities
 Young & Rubicam’s Brand Asset
Evaluator
 Total Research’
 Interbrand’s Top Brands
Young & Rubicam’s Brand
Asset Evaluator
 450 global, 8000 local brands in 24 countries
 32 item questionnaire, 4 sets of measures
 Differentiation
 Relevance
 Brand strength = DxR
 Esteem
 Knowledge
 Brand stature= ExK
Power Grid
 Brand stature vs Brand strength

High Stature Low Stature

High Wipro, Colas, MTNL

Strength Infosys, Maruti

Low strength Lenova Adlabs, Lays?

Total Research’s Equitrend
 700 brands, 100 categories
 Salience
 Quality

 Satisfaction

 Give Equitrend Brand equity score

Brand Valuation Using the Interbrand
Index
Adjusted
less earnings expected for
Brand Equity =Net Income an equivalent unbranded
(after tax) product
x

Brand multiples range from 6 to

Strength 20

• Ability to influence market

• Ability to maintain a consumer franchise
• Vulnerability of market demand to changes in taste or
technology
• International scope
• Long-term appeal to consumers
• Strength of communication support
• Security of legal or property rights
 The Value of the Kellogg Name
1994 World-wide Operating Income = $
1.00 billion
Less: Operating Income of equivalent
unbranded product* - .09
Adjusted Operating Income 0.91
Less U.S. corporate tax (.34) billion
Net income - 0.31
Estimate of brand strength 0.60
brand value x 18.76
= $11.25
*Estimated capital investment to produce sales of $5.5 billionbillion
= .32 x 5.58 = $1.76
billion
ROCE for equivalent unbranded = 0.05 x $1.76 billion = .09 billion