Professional Documents
Culture Documents
Assignment on
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B07009 B07032
Executive Summary
Contents
Contents
Nokia Connecting People ........................................................................................................................... 4 India Mobile Sector ....................................................................................................................................... 5 Stage 2 Brand Equity Measurement .......................................................................................................... 6 Introduction .................................................................................................................................................. 7 Power-Premia Grid Model .......................................................................................................................... 10 Recommendation Model ............................................................................................................................ 21 Net Take Away ............................................................................................................................................ 24 References .................................................................................................................................................. 25 Bibliography ................................................................................................................................................ 26 List of Figures and Tables ............................................................................................................................ 26
0%
10%
20% Nokia
30%
40%
50% Motorola
60%
70%
80% Others
90%
100%
Sony Ericsson
LG / Samsung
Introduction
Introduction
Every organization has a brand, whether they have consciously developed it or not. A brand is simply an expectation or a promise of an experience. Whether that expectation is trusting, authoritative, innovative, or fun, brands are short-hand for describing the way a business, organization, product, service, celebrity or other entity relates to its stakeholders (e.g., customers, donors, employees, investors, volunteers, suppliers, etc.). A strong brand impacts everything from the ability to recruit top talent and to opportunity to grow the bottom line. Little wonder that more and more attention is being paid to measuring and managing brands as assets. The way to build a strong brand is to put customers and their needs at the center of every decision the organization makes. Over time, customer-centric actions create differentiation in the marketplace and build emotional connections with customers. This differentiated bond, called brand equity, is a real and valuable asset with tangible returns in terms of customer loyalty, profitability, and insulation from negative publicity or competitive action. Brand Equity Brand equity is the sum total of learning about the brand by all stakeholders, including consumers, shareholders and employees. It includes all that people feel and think about the brand as a result of direct experience, word-of-mouth; moments-of-truth with the brand and the brands marketing activities. It constitutes a storehouse of future cash flow and profits. Good measures of brand equity can give indications as to the future profit trends. If brand equity is falling, this is an indicator of storing up trouble. If brand equity is rising, youre investing in future performance, even if its not showing through in profits today.
Brand Equity
Brand Awareness
Perceived Quality
Brand Association
Brand Loyalty
Introduction
The goal of the brand leadership paradigm is to create strong brands but what is a stong brand, anyway? In Managing Brand Equity, brand equity was defined as the brand assets (or liabilities) linked to a brands name and symbol that add to (or subtract from) a product or service. These assets can be grouped into four dimensions: brand awareness, perceived quality, brand associations, and brand loyalty. These four dimensions guide brand development, management and measurement. Brand awareness is an often undervalued asset; however, awareness has been shown to affect perceptions and even taste. People like the familiar and are prepared to ascribe all sorts of good attitudes to items that are familiar to them. The Intel Inside campaign has dramatically transferred awareness into perceptions of technological superiority and market acceptance. Perceived quality is a special type of association, partly because it influences brand associations in many contexts and partly because it has been empirically shown to affect profitability (as measured by both ROI and stock return). Brand associations can be anything that connects the customer to the brand. It can include user imagery, product attributes, use situations, organisational associations, brand personality and symbols. Much of brand management involves determining what associations to develop and then creating programs that will link the associations to the brand. Brand loyalty is at the heart of any brands value. The concept is to strengthen the size and intensity of each loyalty segment. A brand with a small but intensely loyal customer base can have significant equity. Brand equity determines a brands health and strength as well as its financial value. Consistent measures of brand equity can help understand a brands progress towards its goals. Although these measures need to be adapted to a particular business context and reflect the brands strategic milestones, Ambler [2000] recommends a mix of the following approaches: Inputs: The amount of advertising and communication spend as a percentage of sales. For many industries this is a prime driver of brand equity. This category can also include other internal measures, such as innovation support and other cultural attributes. Intermediate measures: These try to uncover the stakeholders awareness and perception of the brand as well as their attitude towards it, relative to competitors. Uncovering issues, such as consumer satisfaction or perceived quality, through qualitative research can help the brand owner understand consumer motivations (or lack thereof) to purchase. Behaviour: How stakeholders actually behave? Sales is a key metric here, along-with market share, customer retention, loyalty and frequency of purchase.
Introduction
Evaluating the brands equity is essential to defining efficient and effective: Consumer strategies Marketing strategies Budget allocation Performances tracking Which markets provide most potential? Which aspect of the marketing mix needs more focus? How much to invest and in what? How are we performing over time and in relation to competitors?
By understanding the strength of the consumer relationship with the brand, one can start to gauge how vulnerable the brand is to new entrants or to short-term promotions, as well as how much can be changed without alienating loyal customers. [Hart and Murphy, 1997] Brand equity consists of elements such as the brand associations, market fundamentals and marketing assets that distinguish one brand from another and that influence a customers perceptions of or knowledge about a brand. When brand elements are favourable in a customers mind, brand equity is considered to be positive. When they are not favourable, the brand equity is negative. Positive associations of a brand in a customers mind are generally stronger and more sustainable than those of a product, assuming that sufficient investments are being made in appropriate brand management. Brands with positive equity will consistently generate, maximize and grow cash flows. They achieve this by commanding a price premium, allowing for brand extensions and licensing, creating barriers of entry, attracting and retaining more valuable customers, and reducing the costs of customer acquisition. Positive brand equity drives customer value, which in turn drives shareholder value. To leverage positive brand equity, marketers must take a measured approach to identifying, developing and managing brand elements relevant to the corporation and its products. Benefits of brand equity What are the benefits of strong brand equity? Well, strong brand equity leads to, inter alia, strong market share, customer loyalty, more favorable response to price increases, less vulnerability to competitor activity, brand extension opportunities, and communication messages which reach the consumer. In attaining these benefits, strong brand equity will ensure that a product is of an enduring nature. Ultimately, strong brand equity will improve profitability. To build a winning brand, therefore, is to understand the relationship between brand equity and market share, and to leverage both to their full potential. In so doing, a brand will be successful and sustainable in the long term. It must be kept in mind that increasing market share does not increase brand equity, whereas increasing brand equity invariably leads to increased market share.
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Gender
Male Female 21 years 24 years 13% 3% 17% 87% 30%
Age
22 years 25 years 23 years 28 years
13% 34%
Linkage with Brand Image (1st stage) The model which we are taking in the assessment of the Brand Equity requires a 4*4 matrix in which the 2 most important parameters are taken which has major effects in the assessment of the brand loyalty and affects the buying behavior of a customer. From the laddering method conducted in the 1st stage we could see that the attributes which leads to the values for a customer are the features which are in a handset and thus features plays a pivotal role in the purchasing of a handset. Moreover, price was another vital factor which we could deduce from the laddering method which has a remarkable effect in the decision making of the purchase of a handset.
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Brand Image 3 4 1 1 2 3 4 2 3 4
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The construction of 4x4 matrixes is done for evaluating brand resilience and brand leveragability. The Top Box, meaning these customers believes the brand is superior and price is not a barrier. These customers could be behaviorally classified as Brand Loyal. The model gives us the beliefs and behaviors of the customer about the brand. Both belief and behavior are required to describe loyalty. Many times a customer have a belief that the while buying a brand price is not a barrier and the features of the brand is the best but his buying behavior represents that he has not opted for the brand in which he believes. So the brand loyalty in this case for the brand is not good enough. The first matrix parameters are price and features. Here we check whether the customer has price as a barrier if the features are high or vice-versa. Through this a brand can segment the market and they can cater to the needs of the target audience. Through this exercise we can check the price sensitivities in the market. Some customers would find the product to be too expensive because of the lack of funds even though the buyer may believe completely that the product is a superior quality vis--vis competition. There are customers on the other end of the price sensitivity spectrum for whom the price is never a barrier once they decide to purchase in this category, they would buy the product which has the best quality and in our case it would be the features instead of quality. Strong brands do not have pressures as they already have a Strong Legacy. So they retain customers as they have an advantage but of course they need to work on satisfying them better to get new customers through them The pressure on the middle brands by the brands in the more extreme subcategories, typically emerging from price/ quality segmentation, requires them to fight a dual front warimage/quality on one front and price on another. After completing the first grid we come to know when given a choice, which brand would the customer go for? So in the next matrix we check whether the brand he is going for is purely for the perceived value/ image of the brand and if the customers are ready to pay a price premium even if the same parameters are offered by the competition at a lesser price. So here we can track the brand loyalty of the customers. The parameters like acceptable and low is not applicable in the matrix as if the brand image is acceptable or low, the customer would not be willing to pay a price premium for the concerned brand, the customers might as well buy a brand which does not charge a price premium and satisfies the same needs and wants. Repeat purchases of the customers would give us a picture of the future trend of the brand. Future trends provide a diagnostic tool for forecasting likely shifts in the purchasing behavior of the customers.
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Samsung / LG Features 1 1 2 3 4 0 1 1 0 2 0 1 0 1 3 2 8 5 1 4 2 3 5 0
Nokia
The Top Box meaning these customers believes the features of the brand is best and price is not a barrier. For Nokia, 14% of the respondents believe that it is the best in terms of quality in the mobile phone category. These customers could be categorised as loyal customers in this classification. The Second Box [(P1Q2), (P2Q2), (P2Q1)] means that these customers believe the feature of the brand is best and price is a minor barrier. For Nokia, 20% of the respondents believe that it is best in terms of quality but price is a minor barrier for them. 52% of the respondents said that Nokia is a good brand in terms of features and price could be a minor barrier. These customers could be categorised as less loyal customers because it could be that they are happy with the existing handsets they own. They have a perception that mobile phone is not a utility, so to become mobile-savvy; the customers might have to spend more. Therefore, price becomes a minor barrier for the customers. It is also worth noting that all the respondents belief about Nokia lies in the 2x2 matrix in the upper left hand corner of the grid. For all respondents, the belief about Nokia is thats it is the best or good in terms of features. Price is not a barrier or a minor barrier for the customers. Nokias positioning is superior in the minds of the consumers.
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The customers who find price not a barrier and base their decisions on product features alone contribute disproportionately to category volume. Nokias driver for revenue is not price. The image of the brand is such that all segments in the market can afford to buy the brand.
Sony Ericsson
For Sony Ericsson, 3% of the respondents feel that the brand is best in the features provided and price is not a barrier. The brand loyalty for Sony Ericsson is low when compared with Nokia. The driver f or this could be positioning of both the brands and the Legacy. Nokia has been in the mobile phone market of India for more than a decade. The customers are more loyal towards Nokia. Stronger the loyalty better would be the equity. Strong brand equity will ensure that a product is of an enduring nature. Ultimately, strong brand equity will improve profitability. 52% of the respondents perceive that Sony Ericsson is a good brand in terms of features and price could be a minor barrier. 33% of the respondents perceive that price can be a major barrier when they want to purchase a Sony Ericsson mobile phone. Sony Ericsson is perceived to be priced high vis--vis competition. The views of the respondents show that the features of the brand are comparable. Respondents do not exhibit similar views. Quality is more difficult to fix than price. Sony Ericsson cannot tinker around with the product features but the can work on their pricing as the price perception cumulate to suggest that price is a barrier for the respondents.
Motorola
For Motorola, 3% of the respondents feel that the brand is best in the features provided and price is not a barrier. The brand loyalty for Motorola is low when compared with Nokia and is at par with Sony Ericsson. 3% of the respondents perceive that price of Motorola is an absolute barrier and the features of the product are acceptable. In general 67% of the customers perceive that the features of the product are acceptable. The perceptions of the respondents are scattered for Motorola everywhere in the grid. The message communicated by Motorola is not clear amongst the population. It is trying to concentrate on both the parameters namely features and price.
Samsung and LG
33% of the respondents perceive that the features of both the brands are poor. This could be because of the standards and trends set in the mobile phone segment. The competition is constantly coming with new inventions. Both the brands have not been able to generate loyal customers. The Top Box of their matrix is empty as the consumer will have so many other brands to choose as Samsung and LG have not been able to create differentiation. The matrix is scattered everywhere because customer do relate the brands prices to its other business. Brand Tracker : Stage 2 Product and Brand Management
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Behavior Grid Behavior grid explains out of the total respondents using a handset what is my customers take as to how much do Price affects their affinity towards that brand and how well do they rate its features. The behavior grid is a true measure of the value proposition attached by customers towards the brand they use.
Table 10: Behavior Grid
Samsung / LG Features 1 1 2 3 4 0 0 0 0 2 0 0 0 0 3 0 0 0 0 4 0 0 0 0
1 Price 2 3 4
Nokia
Nokia exhibits a positive belief grid and has been dominant in top left cordon of matrix that represents Nokia has been efficient and strong in their product offering. Consumers of Nokia handset believe the brand is any time superior than competitors and price is either a minor barrier or not a barrier. For a customer who doesnt see price to be a barrier they would aspire best of features in that brand and also in this category Nokia consumers feels features are superior and are liked by them. Nokia one would expect high brand loyal customers
Sony Ericsson
The next grid enlists consumer take on price sensitivity and features for Sony Ericsson here the grid is scattered and price is slightly more important in this category relative to product superiority perceptions. There have been discrepancies among the respondents viewpoint when features were considered because of the less percentage actual consumers using the handset falling all over the matrix. Here probably people feel that brand is good with nice features but maybe because the brand is picking up in market it will take some time to establish itself.
Motorola
For Motorola, the consumers find the price to be a minor or major barrier because the respondents do not find the features to be to be the best. They perceive that in a similar price bandwidth they would get better product offerings from competition.
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Total Market
Table 11: Total Market Grids
Belief Grid
Features 1 1 Price 2 3 4 6 12 3 0 2 9 31 8 1 3 6 15 16 2 4 Price 2 4 5 0 1 2 3 4
Behavior Grid
Features 50% 50% 0% 56% 42% 25% 0 0 0 6% 0 0 0 0 Price premium 1 2 3 4
Preference Grid
Brand Image 1 1 2 3 4 5 10 2 0 2 0 10 2 1 3 0 0 0 0 4 0 0 0 0
Belief Grid
The belief grid represents overall perception of handset users measured relatively on price sensitivity and features. Around 25 percent of respondent feel price is minor barrier and features are thought of as good. Row 2 that is price is considered as a minor barrier when one goes to buy a mobile handset brands which stands good in offering features can leverage this opportunity. Column 1 shows us respondents who considers their handset with best features and their willingness to spend is high as on a higher scale they doesnt feel price as a major barrier while purchasing a mobile handset and getting associated with a particular brand
Behavior Grid
The responses of the total market are mentioned above. 50% of the customers of Top Box from belief grid are ones who look or will purchase a brand which is the best in features and price is not a barrier for them. The majority of the population lies in the 2x2 matrix which is price is no barrier or a minor barrier and the features should be best or good. The behavior grid generalizes the percentage of respondents who stick to their parameter and goes ahead to buy that brand. Here almost the percentage of respondents is high in quadrant where they feel their brand ensures the thing they look out in that brand which is not contrasting when compared in the matrix.
Preference Grid
67% of the customers feel that they would be pay a price premium but it has to be a brand to which they can relate.17% of the entire population of the market responded that they are ready to pay a price premium. For example, a customer is using a Nokia Phone. Now in the market if all the brands come up with a phone with identical phones with same features and looks. All have kept their price to be same, but Nokia have a high price and the user still goes ahead and purchases a Nokia. So he has paid a price higher than other brands because he can relate and trust Nokia. The matrix shows whether the customer is ready to repeat purchase when the brand is charging a price premium.
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Market Summary
Nokia Sales Market Share Loyal Customers %age of Loyal Customers 20 67% 17 85%
Motorola 2 7% 1 50%
Samsung / LG 0 0% 0 0%
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Samsung / LG Features 1 2 1 2 3 4 0 0 0 0 0 0 0 0 3 0 0 0 0 4 0 0 0 0
The table above shows the Loyal Customers Belief Grid. The loyal Customers are those who want the same brand when they go for a repurchase of the product i.e. repeat purchase.
Nokia
In case of Nokia out of all the respondents, 20 are Nokia users and out of them 17 would like to go for a repeat purchase which means 85% of the market share of Nokia (67%) is considered as Loyal Customers. Now, if we see their rating in the price/feature matrix we can see that out of 17, 3 lie in the top box who are the perfect loyal customers and in any circumstances they would remain with Nokia. Another set of 4 respondents lie in the F2P1 matrix which says that they have price as no barrier but would like to have better features in the brand. Thus, Nokia can convert these potential respondents into perfect loyal customers by tinkering with the features no doubt that it is more difficult to fix the quality than price. So, Nokia can also convert the P2Q1 respondents i.e. 3 loyal customers into perfect loyalty as here price plays a major role. But a major chunk of the loyal customers lay in Q2P2 i.e. 7 respondents. Converting these loyal customers into perfect loyalty would be a cumbersome task for Nokia as for these customers both price and features play a minor role.
Sony Ericsson
Sony Ericsson doesnt have any perfect loyal customers who lie in the top box as the new strategies Sony Ericsson would take some time to gain the trust of their customers and turn them into perfect loyalty. But it can be seen that around 63% of the market share of Sony Ericsson lie in the loyal customer zone which is 2nd highest after Nokia.
Motorola/Samsung/LG
The Appropriate inferences cannot be drawn for these brands because of the limitation of small sample size and moreover the respondents are skewed towards Nokia and Sony Ericsson.
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1 2 3 4
4 0 0 0 0
4 0 0 0 0
1 2 3 4
4 0 0 0 0
Price premium
Price premium
Product superiority and price sensitivity are in reality causally-related variables that can be plotted independently. Loyal customers think their brand is superior for some reason, and this superiority has the effect of minimizing their price sensitivity. Thus, the Loyal Customers Preference Grid in which the Price premium is plotted against the Brand Image (or Perceived Quality) can be seen as follows:
Nokia
There are 17 loyal customers i.e. who have agreed for a repeat purchase and out of them 4 have agreed to pay a high price premium and also consider Nokias brand image as the best. Now, Nokia can convert their loyal customers into perfect loyalty by tinkering with the features as 12 customers out of 17 i.e.70.58% are ready to pay a price premium in some range or the other. Therefore, those 7 respondents who lay in Q2P2 in the Loyal Customers Belief Grid can be converted into Q1P1 by tinkering with the features as for them price is a less barrier than the features because they are ready to pay an extra premium.
Sony Ericsson
Since Sony Ericsson has recently changed its marketing strategy and has portrayed itself as a music phone, we can see that though 5 customers have agreed to go for a repeat purchase, none have ranked Sony Ericsson as a high brand image/ high premium product. Therefore, Sony Ericsson will need some time to command a price premium from its customers as till than it need to come up with continuous innovative handsets to continue grabbing the market.
Motorola
The inference for this brand cannot be drawn appropriately because of the limitation of small sample size and moreover the respondents are skewed towards Nokia and Sony Ericsson.
Price premium
Recommendation Model
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Recommendation Model
Methodology In the Recommendation analysis, the same respondents i.e. 30 respondents were asked few questions to derive at certain conclusions w.r.t. the brand loyalty and the trust the respondent has on the brand. The following are the questions asked with their justifications and the relevant outcome: Which brand of handset are you using? Justification: Itll not give us the market share of Nokia, but would give us an idea about the percentage of people using Nokia mobile handsets vis--vis other handsets.
Will you recommend your current brand to your friends/relative? Justification: When he is recommending the brand he is prepared to stake his personal / professional reputation behind the brand. Thus, the above question will help us in determining: The brand loyalty of the customer The faith / trust towards the brand
Which brand you recommend and why? Justification: The respondents also mention the reason as to why they would recommend the brand. So the company could actually go ahead and concentrate on the parameter which the respondents feel can make a differentiation. The number of people recommending the brand shows the customer satisfaction associated with the brand which in turn shows the brand loyalty.
Positive brand equity results in customer behavior that benefits the brand through purchase frequency, brand loyalty, price insensitivity, willingness to recommend, and more. Outcome We would be in a position to recommend as to what the brands should do in order to increase brand loyalty and widen the cake by serving the existing the customers. From the parameters, we would be able to comment on the differentiating factor of a brand and as to how it is positioned in the minds of the consumer. The parameters are: Availability Features Price Ease of use Others ( Place) ( Product) ( Price) ( Product) ( Any one of the 4Ps)
Recommendation Model
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If the customer is dissatisfied with the existing product provider it would in turn lead to losing a number of customers. It is a High Level of Involvement product, word of mouth and advice from family members, friends and relatives play a vital role in the decision making process. So if the brand experience has been dissatisfactory, the brand has to work well in the future to improve the experience of the customers so that they can retain existing customers as well as get new customers from existing users. The brand will be able to more accurately assess and diagnose brand health. Most importantly, they will be better prepared to prescribe strategic approaches to improving ROI-M and brand health through future marketing actions.
Survey: Findings and Conclusion The graph below shows the respective users of different mobile phone brands of the respondents. The majority of the respondents used Nokia (60%) followed by Sony Ericsson, Motorola and LG / Samsung. The market share of the mobile phone users was different from the actual findings (Power-Premia Model) so the answers could be skewed towards the other mobile handset brands.
Figure 2: Respondents Mobile handsets
60% 0% 10% 20% 30% Nokia 40% Sony Ericsson 50% 60% Motorola
10% 90%
7% 100%
LG / Samsung
If the customer is satisfied with his brand of mobile, he is in a position to recommend to his friends / relatives. The recommendation indirectly tests the loyalty of the customer, because he is putting in stake his reputation in the society. Before judging a phone, a customer measures some parameters on which he can built a trust for the brand. The survey revealed that 100% of the Nokia and Sony Ericsson customers were satisfied with their current handsets and were willing to recommend that brand to their friends/relatives. This figure was only 50 % in case of LG mobile users and 33% for Motorola users which indicates us about the customer satisfaction for the mobile phone, which in turn can tell us about how loyal a customer is, because when he is not recommending, he is not making people buy the brand.
Recommendation Model
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According to the survey, 83% of the customers look for Features when going in for buying / recommending. It was followed by the Ease of Use (60%) i.e. how user friendly a phone is and Price (53%) of the handset. Availability i.e. the distribution reach for mobile phones was judged as an important parameter of buying by only a third of the respondents. All Mobile Users
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 83% 60% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Nokia Users
53% 30%
30%
33%
28%
When asked from the Nokia customers specifically, it was found out that Price along-with the Features available in the mobile phone was the driving force for people going in for buying/recommending Nokia. Features was chosen by 78% of the respondents while two-third of the respondents chose Price as the main driving force behind recommending the Nokia mobile phone. This is because Nokia constantly innovates and comes up with the user-centric phones catering to the differentiated needs of the customers and thus, a leader in the low-end mobile handset market which.
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Recommendations Nokia Hail Chief! They are market leaders and they should look at increasing loyalty further which could give them the liberty to charge premium. Nokia need to provide more customized options for their consumer in terms of overall packaging otherwise they could be likened to being stale and boring - the alternatives win here.
Sony Ericsson Emerging Brand! It needs to convert the less loyal customers to the Top Box of the Belief matrix in order to increase the Brand Equity which will lead to an increase in the market share. Motorola Emerging Brand! Motorola must try to position itself as a trade-off between features and price. It has to position itself clearly in the minds of the consumers.
Samsung / LG Next! The companies have a similar business profile of electronic appliances. They have stepped into the mobile market seeing an opportunity to grow as the industry is lucrative but people perceive their pricing and quality similar to what they do in case of electrical appliances. So concentrate on your core competency.
References
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References
REFERENCES
Bibliography
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Bibliography
Primary Power-Premia Grid Model
The survey was carried was carried out on a sample of 30 mobile users among the students/faculty of Praxis Business School, Kolkata.
List of Tables Table 1: Belief Grid Example ....................................................................................................................... 12 Table 2: Preference Grid Example .............................................................................................................. 12 Table 3: Parameters .................................................................................................................................... 12 Table 4: Belief Grid...................................................................................................................................... 14 Table 5: Behavior Grid................................................................................................................................. 16 Table 6: Total Market Grids ........................................................................................................................ 17 Table 7: Market Summary........................................................................................................................... 18 Table 8: Loyal Customer's Belief Grid ......................................................................................................... 19 Table 9: Loyal Customer's Preference Grid ................................................................................................. 20