Customer Based Brand Equity

57.4

56.6

55.4

43

US Billion

39.7

35.9

33.7

29.1

28.6

27.4

FORBES

Brand Equity1 Coca-Cola 70,452 ($m)2 IBM 64,727 ($m)3 Microsoft 60,895 ($m)4 Google 43,557 ($m)5 GE 42,808 ($m)6 McDonald's 33,578 ($m)7 Intel 32,015 ($m)8 Nokia 29,495 ($m)9 Disney 28,731 ($m)10 Hewlett-Packard 26,867 ($m)

1 Coca-Cola 70,452 ($m)2 IBM 64,727 ($m)3 Microsoft 60,895 ($m)4 Google 43,557 ($m)5 GE 42,808 ($m)6 McDonald's 33,578 ($m)7 Intel 32,015 ($m)8 Nokia 29,495 ($m)9 Disney 28,731 ($m)10 Hewlett-Packard 26,867 ($m)

1 Coca-Cola 70,452 ($m) 2 IBM 64,727 ($m)3 Microsoft 60,895 ($m)4 Google 43,557 ($m)5 GE 42,808 ($m)6 McDonald's 33,578 ($m)7 Intel 32,015 ($m)8 Nokia 29,495 ($m)9 Disney 28,731 ($m)10 Hewlett-Packard 26,867 ($m)

INTERBRAND – TOP 10 BRANDS - 2010

Interbrands - Criteria• The brand is truly global and has successfully transcended

geographic and cultural differences. It has expanded across the established economic centers of the world and is entering the major markets of the future. In measurable terms, this requires that:

– At least 30 percent of revenues must come from outside the home country, and no more than 50 percent of revenues should come from any one continent.

– It must have a presence on at least three major continents, and must have broad geographic coverage in growing and emerging markets.

• There must be substantial, publicly available data on the brand’s financial performance.

• Economic profit must be positive, showing a return above the operating and financing costs.

• The brand must have a public profile and awareness above and beyond its own marketplace.

What is each brand worth?

Dimension Weightage (%) Remarks

Leadership 25 Leadership in sector

Stability 15 Ability to survive

Market 10 Brand’s trading environment

Geographic spread 25 Ability to cross geographic and cultural borders

Trend 10 Ability to stay contemporary

Support 10 Marcom activity

Protection 5 Legal titles and patents

Interbrand’s brand valuation

Financial Performance Role of Brand Brand Strength

Net Operating Ps after TaxWeighted average cost of Capital

INTERBRAND - METHODOLOGY

Annual Reports5 Year ForecastExpected PerformanceBeyond 5 years

Primary ResearchHistorical DataExpert Opinion

Commitment ProtectionClarityResponsivenessAuthenticityRelevanceUnderstandingConsistencyPresenceDifferentiation

Commitment

Beyond petroleum

11) Close-Up

12) Airtel

13) State Bank of India

14) Glucon D

15) Clinic Plus

16) Pond's

17) LIC

18) Fair & Lovely

19) BSNL

20)LG

21) Good Knight

22) Parle Products

23) Bisleri

24) Tata Tea

25) Vicks

26) Pepsi

27) Ariel

28) Dabur

29) Frooti

31) Mirinda

32) Coca-Cola

33) Hero Honda

34) Bournvita

35) Maggi

36) Bata

37) Tata Indicom

38) Sony

39) Thums Up

41) Surf

42) Philips

43) RIN

44) Godrej

45) Videocon

46) Maaza

47) Amul

48) Samsung

51) Complan

52) Sunsilk

53) Samsung Mobile Phones

54) Fevicol

55) Iodex

56) All Out

57) LG Mobile Phones

58) Limca

59) Cadbury

60) Fanta

61) Rasna

62) Zandu Balm

63) Dabur Amla

64) Onida

65) Asian Paints

66) Cinthol

67) Moov

68) Sony Ericssion

69) 7 Up

71) Amrutanjan Balm

72) Tide

73) Pantene

74) Vim

75) Wheel

76) Parachute

77) Boroplus

78) Boost

79) Vaseline

80) Mortein

81) Motorola

82) Maruti

83) Rexona

84) Dove

85) Sonata Watches

86) Sunfeast

87) Nirma

88) Crocin

89) Medimix

90) Ujala

91) VIP Luggage

92) Bank of India

93) HMT

94) Sprite

95) Pears

96) Boroline

97) Big Bazaar

98) ICICI Bank

99) Nestle

100) Bajaj Motorcycles

-Image advertising-Co- branding- Sponsorships

-Internet-Virtual communities-Ethical growth

-Intercommunity events

-Advertising-In store animations-Store tainment-Street marketing

-Collectors or systematic additions tied to an event

-One to one-Recognition & service-Co creation

-Product quality-Product advantage-Trial Promotion

-Post purchase promotions

-Loyalty programs

• The New Rules of Brand Management

Short term Transaction Re-purchase Long term commitment DepthOfBrand

Func-tional

Experi-ential

Aspira-tional

TIME PERIOD

The New Scope of Brand Management

• From transactions to relationships ( only profitable customers receive repeated attention).

• From purchase to service satisfaction• Bond through aspirational values• Importance of communities . Eg Harley-Davidson

rally• Activate and energize a brand at contact• Licensing : a strategic lever• Co-branding with joint marketing programs

1.16

Mapping the Cell Phone Market

Primary Benefit – advanced functionality

Price

Ultra Low

Basic

Mid Range

Pricey Premium

Super Premium

UltraPremium

Different models of brands like Motorola, LG, Samsung, AppleActivity in pairs : Map the market for the market for Starbucks, HUL and Infy

•What were the cultural forces that have made the brand successful? •Dissect each brand element and discuss its role in brand building.•Write out the Brand Positioning as is seen from the communications of the Brand selected and their major competition.•Analyze the advertising of any ONE medium•What is the brand potential and future opportunities

FJS – Assignment #1 ( 5 marks) – Due in 2 weeks

Brand Deals• Coca Cola paid Rs 40 crore to buy Parle brands –

Thums Up , Limca, Gold Spot and Citra.• Godrej bought over Transelektra’s Good Knight

and Hit for Rs 80 crores• Heinz took over Glaxo’s food brands for Rs 110

crores• Hll bought the Lakme brand : Rs 20 crore for price

of brand, Rs 8 crore for net current assets, Rs 0.96 cr for fixed assets and Rs 30 crores for a non-compete agreement ( also towards brand strength).

Brand Deals

Lenovo bought IBM's PC unit in a deal worth $1.75 billion, and Procter & Gamble purchased Gillette and its stable of brands for more than $50 billion. Lenovo and P&G didn't shell out all that money simply to acquire manufacturing and distribution capabilities. They spent it to buy established brand names like ThinkPad, Braun, Oral-B, and Duracell.

Brand Equity

Brand equity refers to the added value that a

certain brand name gives to a product in the

marketplace.

Brand Value Breakdown

0

20

40

60

80

100

120

Coca-Cola

J&J P&G Unilever Amazon

INTANGIBLE &Goodwill

Net TANGIBLEAssets

$US Billions

Approaches for Valuing Brands

1. Cost– Original cost to develop brand– Replacement cost

2. Market Valuation– Premium paid over book value

3. Income– Discounted value of future net revenues

• Price premium over generic• Future brand extensions

4. Multi-factor Index

Brand Equity =

• 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

Brand Valuation Using the Interbrand Index

AdjustedNet Income

(after tax)

BrandStrength

x

less earnings expected for an equivalent unbranded product

multiples range from 6 to 20

The Value of the Kellogg Name

1994 World-wide Operating IncomeLess: Operating Income of equivalentunbranded product*Adjusted Operating IncomeLess U.S. corporate tax (.34)Net incomeEstimate of brand strength brand value

*Estimated capital investment to produce sales of $5.5 billion = .32 x 5.58 = $1.76 billion

ROCE for equivalent unbranded = 0.05 x $2.76 billion = .09 billion

= $ 1.00 billion

- .09

0.91 billion

- 0.31

0.60

x 18.76

= $11.25 billion

1. Brand Asset Valuator (KERD)– Y&R

FourDimensions of BrandEquity

Knowledge refers to the extent of customers’ awareness of the brand and understanding of what a good or service stands for.

Relevance refers to the real and perceived appropriateness of the brand to a big consumer segment.

Esteem is a combination of perceived quality and consumer perceptions about the growing or declining popularity of a brand.

Differentiation refers to a brand’s ability to stand apart from competitors

Brand Stature

BrandStrength

Brand Equity – David AakerLoyalty

Reduced Mktg costs

Trade Leverage

Reduces Cognitive dissonance

Competitive advantage

Awareness

Anchor to Associations

Familiarity

Signals commitment

Brand to be considered

Perceived

Quality

Reason to buy

Differentiate / Position

Price

Channel Member interest

Extensions

Associations

Create Positive feelings

Reason to buy

Differentiate / Position

Extensions

Propriety Brand Assets

Competitive

Advantage

BrandZ – Milward Brown 1.Presence. Do I know about it ?

2.Relevance. Does it offer me something?

3.Performance. Can it deliver?

4.Advantage. Does it offer something better than others.

5.Bonding. Nothing else beats it.

Customer based Brand Equity

Perspective of consumer or customerPower of a brand = f( what customers have

seen,read, heard, learned, thought ,felt and

experienceddirectly or indirectly about a brand over a period

oftime )

Blocks

1. Basic: Brand Identity / Salience

2. Brand Meaning(strength, favourability, uniqueness)

3. Brand Response

Brand Awareness - depth ( recognition and awareness )

Brand Awareness – breadth ( situations brand is relevant)

Performance – features, price, service,Design, style.

Imagery –user profile, purchase situation, personality, history, experience

Judgement ( Quality, Credibility, Superiority, Consideration)

Feelings – mild, intense, positive, negative

4. Brand Relationships/ Resonance

Behavioral Loyalty – in purchase

Attitudinal attachmentCommunty sense / active engagement

Customer-Based Brand Equity Model

Consumer-BrandResonance

Brand Salience

Consumer Judgments

Consumer Feelings

BrandPerformance

BrandImagery

INTENSE, ACTIVE LOYALTY

INTENSE, ACTIVE LOYALTY

RATIONAL & EMOTIONAL REACTIONS

RATIONAL & EMOTIONAL REACTIONS

POINTS-OF-PARITY &

POINTS-OF-DIFFERENCE

POINTS-OF-PARITY &

POINTS-OF-DIFFERENCE

DEEP, BROAD BRAND

AWARENESS

DEEP, BROAD BRAND

AWARENESS

Brand Resonance Pyramid

4. RelationshipsWhat about you &Me?

3. JudgementWhat about you?

2.Meaning:What are you?

1.Identity:Who are you

Brand Loyalty

Positive Reactions

FavourableBrand associations

Deep BrandawarenessSalience

PerformanceImagery

JudgementtFeelings

Resonance

Sub-Dimensions of CBBE Pyramid

LOYALTYATTACHMENTCOMMUNITYENGAGEMENT

QUALITY CREDIBILITYCONSIDERATIONSUPERIORITY

WARMTHFUNEXCITEMENTSECURITYSOCIAL APPROVALSELF-RESPECT

CATEGORY IDENTIFICATIONNEEDS SATISFIED

PRIMARY CHARACTERISTICS &SECONDARY FEATURES

PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY

SERVICE EFFECTIVENESS, EFFICIENCY, & EMPATHY

STYLE AND DESIGN PRICE

USER PROFILESPURCHASE & USAGE

SITUATIONSPERSONALITY &

VALUESHISTORY, HERITAGE, & EXPERIENCES

What are the strongest brands?

1.37

Top Ten Global BrandsBrandBrand 2006 2006

($Billion)($Billion)2005 ($ 2005 ($ Billion)Billion)

1.1. Coca-ColaCoca-Cola

2.2. MicrosoftMicrosoft

3.3. IBMIBM

4.4. GEGE

5.5. IntelIntel

6.6. NokiaNokia

7.7. ToyotaToyota

8.8. DisneyDisney

9.9. McDonald’sMcDonald’s

10.10. Mercedes-Mercedes-BenzBenz

67.0067.00

56.9356.93

56.2056.20

48.9148.91

32.3232.32

30.1330.13

27.9427.94

27.8527.85

27.5027.50

21.8021.80

67.5367.53

59.9459.94

53.3853.38

47.0047.00

35.5935.59

26.4526.45

24.8424.84

26.4426.44

26.0126.01

20.0020.00