Customer Based Brand Equity

US Billion

57.4

39.7 29.1

56.6 35.9

28.6

55.4

27.4

43

33.7

FORBES

INTERBRAND TOP 10 BRANDS - 2010

Brand Coca-Cola IBM Microsoft Google GE McDonald's Intel Nokia Disney Hewlett-Packard Equity 70,452 ($m) 64,727 ($m) 60,895 ($m) 43,557 ($m) 42,808 ($m) 33,578 ($m) 32,015 ($m) 29,495 ($m) 28,731 ($m) 26,867 ($m)

1 2 3 4 5 6 7 8 9 10

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
Leadership

Weightage (%)
25

Remarks
Leadership in sector

Stability

15

Ability to survive

Market

10

Brands trading environment

Geographic spread

25

Ability to cross geographic and cultural borders Ability to stay contemporary

Trend

10

Support

10

Marcom activity

Protection
Interbrands brand valuation

Legal titles and patents

INTERBRAND - METHODOLOGY

Financial Performance

Role of Brand

Brand Strength

Net Operating Ps after Tax Weighted average cost of Capital

Annual Reports 5 Year Forecast Expected Performance Beyond 5 years

Primary Research Historical Data Expert Opinion

Commitment Protection Clarity Responsiveness Authenticity Relevance Understanding Consistency Presence Differentiation

Commitment

Beyond petroleum

11) Close-Up 12) Airtel 13) State Bank of India

21) Good Knight 22) Parle Products 23) Bisleri

14) Glucon D

24) Tata Tea

15) Clinic Plus 16) Pond's 17) LIC 18) Fair & Lovely 19) BSNL 20)LG

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

61) Rasna 62) Zandu Balm 63) Dabur Amla 64) Onida 65) Asian Paints 66) Cinthol

57) LG Mobile Phones 58) Limca 59) Cadbury 60) Fanta

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

 The New Rules of Brand Management

Aspirational -Image advertising -Co- branding - Sponsorships -Internet -Virtual communities -Ethical growth -Intercommunity events

Experiential

-Advertising -In store animations -Store tainment -Street marketing -Product quality -Product advantage -Trial Promotion

-Collectors or systematic additions tied to an event

-One to one -Recognition & service -Co creation

Functional

-Post purchase promotions

-Loyalty programs

Depth Of Brand

Short term Transaction

Re-purchase TIME PERIOD

Long term commitment

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

Mapping the Cell Phone Market

Price Super Premium Pricey Premium Ultra Premium

Mid Range

Ultra Low

Basic

Primary Benefit advanced functionality Different models of brands like Motorola, LG, Samsung, Apple 1.16 Activity in pairs : Map the market for the market for Starbucks, HUL and Infy

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

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

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 noncompete 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

$US Billions

120 100 80 60 40 20 0
CocaCola J&J P&G Unilever Amazon

INTANGIBLE & Goodwill Net TANGIBLE Assets

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 Valuation Using the Interbrand Index

Brand Equity =
Adjusted Net Income (after tax) x Brand Strength

less earnings expected for an equivalent unbranded product

multiples range from 6 to 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 Less: Operating Income of equivalent unbranded product* Adjusted Operating Income Less U.S. corporate tax (.34) Net income Estimate of brand strength brand value
= $ 1.00 billion .09 0.91 billion 0.31 0.60 x 18.76

= $11.25 billion

*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. Brand Asset Valuator (KERD) Y&R

Brand Stature

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.

Four Dimensions of Brand Equity

Differentiation refers to a brands ability to stand apart from competitors

Brand Strength

Brand Equity David Aaker

Loyalty 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 Differentiate / Position Extensions Associations Create Positive feelings Reason to buy 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 customer Power of a brand = f( what customers have seen, read, heard, learned, thought ,felt and experienced directly or indirectly about a brand over a period of time )

Blocks 1. Basic: Brand Identity / Salience 2. Brand Meaning (strength, favourability, uniqueness) 3. Brand Response
4. Brand Relationships/ Resonance
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 Behavioral Loyalty in purchase Attitudinal attachment Communty sense / active engagement

Customer-Based Brand Equity Model

ConsumerBrand Resonance

INTENSE, ACTIVE LOYALTY

Consumer Judgments

Consumer Feelings

RATIONAL & EMOTIONAL REACTIONS

Brand Performance

Brand Imagery

POINTS-OFPARITY & POINTS-OFDIFFERENCE

Brand Salience

DEEP, BROAD BRAND AWARENESS

Brand Resonance Pyramid

4. Relationships What about you & Me?

Resonance

Brand Loyalty

3. Judgement What about you?

Judgementt Feelings
Imagery
Performance

Positive Reactions

2.Meaning: What are you? 1.Identity: Who are you

Favourable Brand associations Deep Brand awareness

Salience

Sub-Dimensions of CBBE Pyramid

LOYALTY ATTACHMENT COMMUNITY ENGAGEMENT

QUALITY CREDIBILITY CONSIDERATION SUPERIORITY

WARMTH FUN EXCITEMENT SECURITY SOCIAL APPROVAL SELF-RESPECT

PRIMARY CHARACTERISTICS & SECONDARY FEATURES PRODUCT RELIABILITY, DURABILITY & SERVICEABILITY SERVICE EFFECTIVENESS, EFFICIENCY, & EMPATHY STYLE AND DESIGN PRICE

USER PROFILES PURCHASE & USAGE SITUATIONS PERSONALITY & VALUES HISTORY, HERITAGE, & EXPERIENCES

CATEGORY IDENTIFICATION NEEDS SATISFIED

What are the strongest brands?

Top Ten Global Brands

Brand
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

2006 ($Billion)
67.00 56.93 56.20 48.91 32.32 30.13 27.94 27.85 27.50 21.80

2005 ($ Billion)
67.53 59.94 53.38 47.00 35.59 26.45 24.84 26.44 26.01 20.00
1.37

CocaCoca-Cola Microsoft IBM GE Intel Nokia Toyota Disney McDonalds MercedesMercedes-Benz