Brand & Brand Equity

Dr. Pankaj Jain

Assistant Professor
NIIT University
 Revisiting
Brand & Brand Equity
What is the difference between
Brand & Product
A Job Interview
■ What manifest “your product” here?
■ What manifest “your brand” here?
■ What matters more brand or product?
■ What could be possible methodologies for the
organization to decide your CTC?
If brand is a PERSON, which brand
would you like to go with on a
romantic date??
Identify a picture of a person /
celebrity that best reflect this
brand
A Brand..
■ Exists in the mind of the customer
■ Is something to which consumer relate & to
which one is loyal to (or not)
■ Is social glue that brings people together
■ Exists in & belong to the greater culture
Importance of Brand to Consumers
■ Identification of the source of the product
■ Assignment of responsibility to product maker
■ Risk reducer
■ Search cost reducer
■ Promise, bond, or pact with product maker
■ Symbolic device
■ Signal of quality
Importance of Brand to Firms
■ Identification to simplify handling or tracing
■ Legally protecting unique features
■ Signal of quality level
■ Endowing products with unique associations
■ Source of competitive advantage
■ Source of financial returns
How do brands create value?
Brand Equity…
■ Brand equity is the net economic
contribution the brand makes to the
business as a whole. Capturing where in
the business model brand provides leverage
aids to optimize brand deployment and
investment decisions
How does “brand equity” provide
economic contribution?
Customer Based Brand Equity
Model…
Brand Equity
Valuation Methodologies…
■ Brand Finance’s Brand Strength Index (BSI)
■ Interbrand’s Role of Brand Index (RBI)
■ Brandz
■ BAV Group - Brand Asset Valuator
Brand Valuation Perspectives…
■ Economic Value: Brand’s worth to its current owners, in
its current’s use
■ Strategic Value: Brand’s potential for new products,
segments, geographies
■ Market Value: Brand’s worth to other parties. How
much brand can get in the market if it has to be sold.
Brand Valuation Methods….
■ Cost Based: This is based on investment made into building a
brand, or its replacement / reproduction cost.
■ Market Based: It considers that the price negotiated by
independent parties may reflect strategic values and synergies
that cannot be realized by the current owner.
■ Income Based: This estimates the net present value (NPV) of
the economic benefits expected over the brand’s remaining
useful life. There are several methods available with the most
popular being
Income Based Methods….
■ Price premium estimates are based on how much more customers are
willing to pay for the branded product or service compared to a similar
but unbranded one.
■ Volume premiums are based on how many more units customers are
willing to buy of the branded product or service compared to a similar
but unbranded one.
■ The income split method has the advantage that it considers costs, and
estimates the NPV of profits that are attributable to the brand using
qualitative methods.
■ The royalty relief method calculates the NPV of hypothetical royalty
payments a company would need to make – using similar arrangements
in the industry – if it did not own the brand.
Brand Equity
■ Sources
□ Brand Awareness
□ Brand Image
■ Differentiation on the Base of Brand Equity
□ Vertically
□ Horizontally