PART - II

Ch-8
Brand Value

Chapter

Brand Value

8
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Product and Brand Management

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PART - II
Ch-8
Brand Value

Brand Equity: Is it a Myth or Reality

Brands value can be ascertained by adding the product satisfaction levels, package selection and the value additions made with the help of product quality, the company image, price and its functions. The high brand value helps the company in the following areas: Premium price customers are willing to pay for the brand Increase in intrinsic sales value and volumes Increase in market share for the product

However, one negative factor with the brand value is that the company has to
spend on marketing expenses to maintain the market share as the competition is closely following the market leader with its own plans.
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PART - II
Ch-8
Brand Value Customers love popular brands. Brands on their part do the following for their products: Brands build trust among customers who accept the product as reliable that would give them the known benefits. Brands focus the buyer's mind on the desired satisfaction from the product. Brands provide the sellers promise and guaranty associated with the product Brands start occupying the minds of their satisfied customers like the famous

bike, Harley Davidson.

Brands form economic assets for the company and goodwill. Brands build buyer-seller relationships. Brands promote customer relationships with the sellers as together they can create stories of brand success for convincing other customers, either by Cont. word of mouth, publicity or through advertising.
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PART - II
Ch-8
Brand Value

A brand is not just a product on a shelf but is distinguished from similar products
or services. Coca-Cola, Pepsi, Ivory soap are all world known brands. Thus Brand = Product + Packaging + Added values Added values are: Quality Image

Price
Function

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PART - II
Ch-8
Brand Value

Brand equity can be affected by the following factors:

Volume Business: Higher the sales, greater can be the brand equity. Higher sales signify brand acceptance and thus image. The value goes up if the market size too is big. Thus, larger volume sales in a larger market can have higher brand equity than larger volume in a smaller market. For example
Market Size Sales (Rs Mn) Dexorange Plus Beblex Becosule Glynase Cifran Franco Indian Anglo French Pfizer US Vitamins Ranbaxy Heamatinic Vitamins Vitamins Antidiabetic Antibiotic 388 138 680 146 450 Market Large Larger Larger OK Larger

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PART - II
Ch-8
Brand Value

These brands definitely have high brand equity. Similarly, Becosules brand equity will be higher than Dexorange due to larger market.
Leadership Market Size Relative Price Marketing Expenses to total Sales Actual Quality Satisfaction Score Status of the Product on Product Life Cycle Price Elasticity Profitability

Scope for Line Extension

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PART - II
Ch-8
Brand Equity Measurements Multiple Earning Method: It is normally calculated on the basis of recent net profit. Net profit is multiplied 10 to 20 times. This gives the value of brand equity. For an example, if the net profit is 2mn the brand equity value will be 2 x 10 = 20mn. Multiples are decided on factors like volume sales, market size, market share etc, which can improve brand equity. Brand Value

Brand Equity Index: Under this technique the first step is to find out the index value by determining the factors, which can affect brand equity. This has been discussed earlier.
Giving Weight-age

Arriving at Index score in terms of %

The second step will be to find out the net sales and multiply it by % of Index score. For example, if Dexorange % index score is 40% and sales value is 380 mn, then the brand equity as per this method will be 380 mn 40% = 152mn.
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PART - II
Ch-8
Brand Value
Calculation of brand equity Factors Weight Score (a)
10 15 15

Rating Score (b)

1 2 3 4 5

Weighted Score
(a x b)

Volume business of product Rank in the market Market size > 1%

< 1%
Perceived value Higher Lower Profitability 15 15

Market expense to total sales

Status of product on life cycle Scope of life extension Total 500

10
10 10 100
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Index Score = Total Weighted Score / 500 100 = -------%

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