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Contents
THE EXECUTIVE SUMMARY.................................................................................. ...3
BRAND EQUITY..................................................................................................... ..4
The 4 Legs of our Table (Model).............................................................................5
RATIONALE FOR QUESTIONNAIRE..........................................................................6
Our Brand Equity Model................................................................................ ........7
RATIONALE – for our metrics..................................................................................7
MODEL 1: (Price and Quality)............................................................................... ..8
Model 2 – (Trust and Recommendation)...............................................................14
MODEL 3 (Price premium )............................................................................... ....18
Conclusion....................................................................................... ....................19
RECOMMENDATIONS FOR HORLICKS...................................................................19
BIBLIOGRAPHY..........................................................................................................
............................21
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Our last finding which was based on the BAV model and laddering method was to
find out the brand image of the brands wherein our brand horlicks emerged as
the leader with its competitors on its back giving it tough competition.
This time round we work towards finding out the brand equity of the brand which
in turn actually means the brand strength. It helps us find out how the brands
exist in the minds of their potential consumers and that what those consumers
think of a particular brand determines the value it has for its owner.
For this we have chosen the Price and quality matrix which will check the
premium that the brand can charge from its consumers for the quality that they
provide. Our next model checks on the parameters of trust and recommendation
which will check the emotional connection that the consumers have with the
brand and the amount of trust it has been able to develop in the last few years
and the relationship it has developed with them in these years. This would also
help us in determining the loyalty the consumers have towards the brand if they
recommend it to others. Our third model checks on the brand strength and if it
has reached that stage of nirvana wherein they can charge a premium for their
product. It will help us to determine the premium that the brand can charge from
its consumers in turn the brand equity.
Through our first model we infer that where quality is concerned Horlicks stand
second and has lost the race to Bournvita which enjoys a 80% loyalty while it is
at 70%.Complan with its 68% is gaining momentum fast and could displace
Horlicks from its second position fast. As far as quality goes Horlicks will need to
work hard to win the gold in this race.
In our second model where the trust factor is tested we infer that though the
quality is perceived not upto mark yet when it comes to trust there is a lot of
trust that consumer have on its brand which could be attributed to its long
existence in the market and because of its market leader position and the brand
is also highly recommended by the consumers to their family and friends.
As far as the last model goes in which we test the brands ability to charge a
price premium we find that the brand has a high ability to charge a premium and
the brand is highly trusted by the consumers. There is high chance of 51% for it
to charge a premium.
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Thus to sum it all up though it may scored a bit low where loyalty is concerned
than the other brands , it had leveraged it by scoring high where trust and a
price premium is concerned.The overall Brand equity of Horlicks is also on the
higher side.
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BRAND EQUITY
Brand equity has become one of the most important marketing concepts since
the late 1980s, both in academic research and business practice “Brand are at
the heart of marketing and business strategy” and building brand equity or
strong brands, is considered to be one of the key drivers of
business success. From this perspective, it is essential to have a brand equity
measurement and management system.
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Product quality
Price
Price is one of the elements of the traditional marketing mix, and price is often
stressed as a driver in customer satisfaction and loyalty models .Especially in
branding, price is important as an explanatory variable, because a significant
contribution to a brand’s financial equity is the price premium, which the
consumers are willing to pay, compared to the price for competing brands or
private labels Accordingly, emphasises price as an “important type of attributes
and benefits that often underlie brand performance” Consequently, it is
important to include perceived price as a functional driver in the brand equity
model, as price and perceived quality result in the perceived value of the brand
emphasise price as a driver of value and thus customer equity.
Trust
An essential and very important part of a brand is the trust consumers have in
the brand living up to their expectations, both regarding functional and
emotional benefits. The consumers’ trust is something that the company should
earn and it may be seen as a prerequisite for the development of an attitude-
based relation between the consumer and the company. As a well known saying
goes:
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From a consumer perspective, trust helps to reduce the perceived risk linked to
the purchase or use of a company’s products. Trust also provides assurance of
quality, reliability, etc. and is thus a factor in providing the consumer with an
experience of dealing with a credible and reliable company – a factor that is
important in connection with the consumer’s decision process. Thus, the
company should be careful not to communicate values that they cannot live up
to.
Recommendation
Brands should create value, but what does that mean in concrete terms? It
means that when the consumer compares the actual brand experience with the
expectations hereof, the experience should equal the expectations or exceed
them .If the perceived quality is less than expected, the consumer will be
dissatisfied. If the actual experience exceeds expectations, positive
disconfirmation results and the customer is assumed to be “delighted”. This
leads the consumer to recommend the brand to friends and family members and
also entails to the consumer using the brand for a long time to come and
ensuring the consumers loyalty towards the brand.
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In order to measure the marketing and financial value of the brand’s strength we
are calculating the brand equity metrics for our brand, horlicks operating in the
malt based drink category.
The rationale behind doing this can be summed up by our health metaphor - just
as all calories are not equally nutritious, not all market share points contribute
equally to the health of the brand; the caloric contribution of loyal customers is
“nutrient rich,” while those of less loyal customers can be thought of as “empty.”
Understanding how a brand is nourished provides useful information for
evaluating brand health and, if necessary, prescribing a new brand diet.
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The parameters that Shave been captured by us relates to the latent value in the
mind of customers -that is exhibited through their impact on buying behaviour.
Positive equity results in behaviour that benefits the brand through purchase
frequency, brand loyalty, price insensitivity, willingness to recommend, etcetera
and by identifying the components of this advantage, it would allow us to create
measures that reflect the true brand equity. Therefore, we propose that there are
two active components—resiliency and leverage.
1. Price,
2. Quality
3. Trust
4. Recommendation.
We need to begin, as always, with the customer. The simple fact that some
brands are more resilient and leverage-able than others suggests, that at the
core of each brand exists a group of loyal customers whose behaviour is different
from less loyal customers and that the size and vitality of this loyal core, varies
brand by brand and in final run turns out as the differentiator between successful
and not so successful brands.
Again, working on the premise that not all share points are equally valuable, the
ability to differentially value share points by understanding the motivations and
behaviour of loyal customers will be our way forward in understanding brand
equity.
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1. Beliefs. The beliefs that drive behaviour across most categories are “price”
and “quality” after considering the distribution of price sensitivities in the
marketplace.
Also, loyal customers think their brand is superior for some reason, and this
superiority has the effect of minimizing their price sensitivity. Non-loyal or
occasional users have differing quality perceptions that result in greater price
sensitivity. Both price sensitivity and quality can be easily measured using a 4-
point scale.
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quality(%)
PRICE / QUALITY "Superio "Good "Accepta "Poor Category
r Quality" ble Quality" Total
Quality" Quality"
Price not a barrier 16% 18% 2% 2% 38%
Price minor barrier 16% 14% 14% 2% 46%
Price significant 0% 4% 6% 2% 12%
barrier
Price absolute 0% 2% 0% 2% 4%
barrier
Total 32% 38% 22% 8% 100%
Table 1(a)- Belief grid - Horlicks
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Analysing, the above 4 belief grids of the 4 brands we can see that 70%
of the respondents view Horlicks as good or superior quality, while the
figure for the other brands stands at Bournvita – 80% Complan – 68%
and Milo – 48%. This is backed up by a large majority of people for
whom price is not a barrier or a minor barrier – Horlicks (84%),
Bournvita (82%), Complan (54%) and Milo (66%). Thus, we can see that
for a superior or good quality product consumers are willing to pay a
higher price.
2. Behaviour:- This is more objectively measured than beliefs, and there could
be many alternatives for obtaining behavioural data including survey self-report,
purchase diary, and store purchase records such as that generated by scanners.
For our product, we have determined loyalty with a minimum of three of the last
five purchases (60 percent) being for a particular brand.
Category Sales by
Price/Quality
perception
Superior Good Acceptable Poor Category
quality quality quality quality Total
Price not a barrier 36% 18% 2% 0% 56%
Price minor barrier 23% 15% 3% 0% 41%
Price significant 0% 2% 2% 0% 3%
barrier
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Price absolute 0% 0% 0% 0% 0%
barrier
Category Total 59% 34% 7% 0% 100%
Table 2 – Category
Table 3 - Horlicks
The above Horlicks table signifies that 58% of the respondents feel that
the brand horlicks is of superior quality and for the same percentage of
people price is not a barrier. The other significant number is captured
by the brand being seen as good quality – 38% and for 42% of them
price being a minor barrier.
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Total
Table 4 - Bournvita
Table 5 - Complan
The drink starting with a “C” Complan gets a C grade as only 29% of
respondents feel it is superior quality and for more than 50 % of them,
its high price is actually a barrier.
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barrier
Price absolute 0% 0% 0% 0% 0%
barrier
Total 55% 18% 27% 0% 100%
Table 6 - Milo
Milo is slightly different from the other brands in the sense that around 45% of
the population view it as good or acceptable quality and also its price being a a
significant barrier for few – a trend that was not visible in the case of earlier
brands.
Loyalt "Good
"Superior
y Qualit
Quality"
Index y"
Bournv Compl Horlic Bournv Compl
Horlicks Milo Milo
ita an ks ita an
Price
Horlick
not a 88% 67%
s
barrier
Bournv
78% 50%
ita
Compl
100% 50%
an
Milo 75% 0%
Price
Horlick
minor 100% 33%
s
barrier
Bournv
100% 33%
ita
Compl
100% 50%
an
Milo 100% 0%
This chart indicates for each cell, the percent of customers who are behaviourally
defined as “loyal” to the brand. For Brand Horlicks, 88 percent of customers lie in
the superior quality and price not a barrier quadrant. We see that for Brand
Bournvita quality is a bigger driver of sales than price, with the reverse being
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true for Brand Complan. For Brand Horlicks & Milo there is equilibrium between
the two factors.
Top Box” classification of price/quality beliefs is loyal; conversely, only 12
percent are not loyal. Examination of the other cells for Brand Bournvita shows
the loyalty percentages are highly consistent with classification: those with more
positive perceptions of the brand exhibit greater loyalty. Interestingly, the
consistent differences across brands between the cells adjacent to the “Top Box”
suggest that the product “superiority” belief is more influential with respect to
loyalty than price.
Brand Equity Vs Market share: This can be analysed table 8 below which
shows conceptually how share can be tiered according to its contribution to
brand health. Thus, even though horlicks enjoys the highest market share, it is
Bournvita that has the highest chunk of loyal customers, but even Horlick’s
brand loyalty is greater than the category loyalty. This helps us in examining
underlying consumer behaviour patterns. The behaviour of the core group i.e.
“loyal” more closely reflects the “true equity” of the brand, or at least the
dynamic underlying its leveragability and resilience at a given point in time, and
as we know all brands can benefit from having the core group representing a
larger share of their total franchise.
Summary of Brand
Equity Metrics
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Trust
The malt based food industry in which we are trying to gauge the brand equity is
highly dependent on trust factor. The product is consumed not only by children
but also from all the other age groups so it become extremely necessary for
these brands to earn and maintain the trust factor of the customer so maintain
their market positions.
Recommendation
Recommendation is the factor which is somewhere dependent on trust. A
particular brand is recommended to someone when the person who is
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recommending it has used the brand and is satisfied with the quality, taste and
other parameters related to the brand. And hence would also like other people to
try the particular brand.
The matrix of these two parameters will highlight that if a person who has used a
particular brand,will recommend the same brand to someone else. This will
show the trust that the consumer has on its brand and his loyalty towards it
which is a result of good quality and a reasonable price which is acceptable by
the consumers. Here this could lead to a increase in the core group of loyal
consumers which will in-turn increase or decrease the brand equity depending
how trustworthy it is.
Category Sales
by
trust/recommend
ation perception
Trust / Very Trustwor Not Don’t Category
Recommend Trustworthy thy trustwor Know Total
thy
Highly 38% 8% 0% 0% 46%
Recommended
Recommended 16% 21% 2% 0% 39%
Not 2% 3% 0% 3% 8%
Recommended
Don’t Know 7% 0% 0% 0% 7%
Category Total 62% 33% 2% 3% 100%
Table 10: Category – trust and recommendation grid
The above matrix indicates that 62% of the people have trusted the brand and
85% (i.e. 46+39 %) people have recommended the brand which they use.
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Recommended %
Recommended 13% 17% 0% 0% 29
%
Not 0% 0% 0% 0% 0%
Recommended
Don’t Know 13% 0% 0% 0% 13
%
Category Total 83% 17% 0% 0% 1
00
%
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When we analyse the matrix, for the brand Horlicks we see that almost 87% of
the respondent are in the matrix of highly recommended and very trustworthy to
recommended and trustworthy. This piece of information shows that brand
horlicks is successful in earning the trust factor from the customer as well as it is
recommended by the people who trust it.
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From the above analysis we can conclude the average price difference after
using the brand name Horlicks and without the brand name comes to Rs 61 per
500 gram pack which is 52 % of total price of Horlicks, indicating that customers
are ready to pay 52% of a premium for the brand. In the case of Bournvita the
premium is 51 %, and in the case of Milo and Complan it is 45% each. Taking an
aggregate sales for all the brands(category sales) which is Rs 1818.18 crore, 49
% of them – Rs 905 crore come from the brand name.
Also, from our study we found out that the highest amount of brand premium is
being charged by Horlicks – around 29% of the total 50% being charged by the
category – which could be a resultant of the high market share that it enjoys.
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Conclusion
Brand equity refers to the marketing effect or outcome that are given to a
product with its brand name compared with those that would be there if the
same product did not have the brand name
In our case the brand loyalty measures for the brand horlicks is 70%, for brand
Bournvita it is 80% and for brand complan it is 68%. So we can see that horlicks
although being the leader in the market is not having the highest brand loyalty.
When we try to measure the brand equity of horlicks on parameters like trust,
recommendation, price and quality, we came with the results showing the brand
equity for each brand wherein we see that brand horlicks scores well on the trust
and recommendation parameters and outperforms its competitors complan,
Bournvita and Milo.
But when we compute these brands on the basis of price and quality perception
of the buyer, we get the results showing that the brand Bournvita score more in
it. This shows that people thinks that quality and the price in comparison with it
is justified for the brand Bournvita while it is not the same in the case of Horlicks.
When we test the consumer on the basis of the price which they are paying for
the individual brands now and price which they will be willing to pay for the
same quality, taste but without the brand name and in this we get the result that
all the brands are charging the premium. In case of horlicks and Bournvita the
premium charged as per the consumer`s perception was almost 50%.
All this analysis throw up the result that the brand equity for brand Bournvita is
highest i.e. 80%, then comes for the brand horlicks which is 70% and then
complan which is 68%.
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BIBLIOGRAPHY
PBM slides (undoubtedly)
http://www.zibs.com/knowles.shtml
Brandcool marketing
http://www.netmba.com/marketing/brand/equity/
http://www.venturerepublic.com/resources/Brand_Equity_-
_managing_by_marketing_metrics.asp
http://www.1000ventures.com/business_guide/marketing_brand_equity.html
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http://www.brandingstrategyinsider.com/brand_equity/index.html
http://www.sdr-consulting.com/article12.html
http://www.bbdo.de/de/home/studien.download.Par.0003.Link1Download.File1Titl
e.pdf
http://brandnbranding.blogspot.com/2007/10/interbrands-brand-equity-
model.html
http://www.solvay.edu/PDF/cours/advancedmarketing4.pdf
http://www.mudvalley.co.uk/collateral/content/32.htm
http://www.brandamplitude.com/brand_equity/page2.htm
http://www.brandamplitude.com/whitepapers/All%20Market%20Share%20Aint%2
0Created%20Equal%20by%20Carol%20Phillips.pdf
http://www.marketingnpv.com/articles/bylined/brandequity
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