Pbm phase 2

Praxis Business School

1
BRAND TRACKER

Phase I –Brand Equity Measurement

A report

Submitted to

Prof. Govindrajan

In partial fulfilment of the requirements of the course

Product and Brand Management

On 4th September, 2011

By

Anindita Choudhury B10002

Deepika Agrawal B10007

Sushmita Agrawal B10035

Arunabha Bagchi B10044

LETTER OF TRANSMITTAL

Dove

04/09/2011
2
To, Prof. Srinivas Govindrajan

Subject:

We are enclosing our report on Dove in partial fulfilment of the requirements of the course.

Anindita Choudhury

Deepika Agrawal

Sushmita Agrawal

Arunabha Bagchi

EXECUTIVE SUMMARY
The project is intended to serve as a yardstick to measure brand equity of the brand Dove. The
concept of brand equity is rooted in the importance of a brand to a product. Whilst a brand is
generally simply a name or symbol which is used to identify a product, it can have a much greater
level of importance if properly managed. A strong brand can add significant value to a product in
the mind of the consumer, provided they make positive associations with the brand. Brand equity is
3
an intangible asset that depends on associations made by the consumer.

Advantages of having Brand Equity are as follows:-

 A brand enables a company to generate value because it can often command a price
premium over comparable generic products.
 A strong brand can often be extended to related, or even unrelated, products, providing
these products with a sales boost.
 A strong brand allows the substantial cost of advertising and promoting a brand to be
spread over more products, but the additional exposure can strengthen the core brand.
 A brand with significant brand equity can lead consumers to generate a more positive
association with product itself. As such, many companies looking to strengthen a product’s
performance will often focus on the underlying brand

The brand loyalty is measured using two mathematical models the second one being an improvised
version of the first one. The first model consists of ‘most preferred brand’ and ‘last brand
purchased’ in form of a 2X2 matrix. In this model loyal are those who end up buying their most
preferred brand and the others are switchers. Thus, the likelihood of purchasing a given brand is
the sum of the proportion of that brand’s loyal and some fraction of the remainder. That fraction is
a measure of the brand’s ability to attract potential switchers. The two metrics were identified-
Gravity: the power of the brand to maintain consumers who prefer it & Focus: how many of the
purchases were made with the brand as the ‘preferred brand’.

Model 2 redresses the problem by taking into account the last 5 brand purchases made instead.
This helps give a more uniform loyalty measure. Here, we see that in case of Dove focus is more
(63%) than gravity (47%). This shows that the brand Dove is strong but the supply chain is weak. On
the other hand both in case of Lux and Pears gravity is more than focus which shows that the
promotions or distribution is very strong and the brand enjoys relatively greater preference.

We have then tried to measure the leveragability of the brand by trying to ascertain in which
product categories the brand can be extended and where it will be popular.

Then we have used the share tier approach where we have used the price-quality relationship to
identify how the consumer behaves on these two metrics which helped us gauge the loyalty of the

buyer towards the brand and also the perception of the buyer about the brand which helped us to
quantify the brand equity of the brands under consideration.

For measuring financial aspect we used van Westendorp Procedure to measure the optimum price
which consumer is willing to pay and the market price which the company is charging. The
difference in these two will tell the premium which a company is able to charge due to its brand
equity.

Findings and Recommendations:- 4

We found that respondents but they could not connect with the campaigns and the taglines.
We also found that a weak supply chain and hence we would recommend Dove to work on
its supply chain. Dove is losing out customers because of its high price.
We recommend, Dove could come up with campaigns with which people could more relate
to Dove can improve on its supply chain and spread its tentacles in the rural areas as well.
The product has shown a very high leveragability in case of antiseptic- soaps and hair gel
and should diversify in these categories. Dove needs to build on its pricing strategy in order
to attract more customers.

Table of contents
Sl. No. Particulars Page No.
1 Executive Summary 3
2 i) List Of Figures 6
ii) Abbreviations 7
3 Introduction 8 5
4 Methodology 11
5 Brand Awareness 12
6 Brand Loyalty Measurement 16
7 Leveragability 21
8 Brand Equity Model Based on Share 23
Tier Approach
9 Equity Share Calculation 26
10 Leveragability Index Calculation 27
11 Brand equity Index Calculation 28
12 Van Westendorp Price Sensitivity 30
Meter And Brand Equity
13 Basic Findings 34
13 Recommendations 34
14 References 35

List of figures
Fig 1- Integrating Marketing Communications To Build Brand Equity

Fig 2 Brand Equity

Fig 3- Brand Awareness Cycle

Fig 4- Brand Awareness 6
Fig 5- Identification Of The Image

Fig 6-Identification Of The Campaign

Fig 7-Identification Of the taglines

Fig 8- Colombo Morrison Model 1


Fig 10- Brand Loyalty

Fig 11- Leveragability

Fig 12- Price –Quality Relationship

Fig 13- Loyalty Table

Fig 14- Equity Share Calculation

Fig 15- Leveragability Index Calculation

Fig 16- Brand Equity Index & Share Quality Index

Fig 17- Indifference Price Point & Optimal Price Point

Abbreviations
BAV- Brand Asset Valuator

PSM- Price Sensitivity meter

PMC- Point of Marginal Cheapness

PME- Point of Marginal Expensiveness 7

IPP- Indifference Price Point

OPP- Optimal Price Point

RAP- Range of Acceptable Prices

BEI- Brand Equity Index

SQI- Share Quality Index

IDP- Indifference Price Point

Introduction
In phase-1 we tracked the brand Dove and in this part specifically we measured the brand image of
Dove in the eyes of the consumers. We used both a quantitative method (the BAV method) and a
qualitative method (laddering method).

In phase -2 we will try to measure the ‘equity’ of the brand. According to Wikipedia Brand Equity is
“the marketing effects and outcomes that accrue to a product with its brand name compared with
8
those that would accrue if the same product did not have the brand name.”

It is the incremental contribution (Money) per year obtained by the brand in comparison to the
underlying product (or service). The study of brand equity is increasingly popular as some
marketing researchers have concluded that brands are one of the most valuable assets a company
has. Brand equity is one of the factors which can increase the financial value of a brand to the
brand owner, although not the only one.

Fig 1-
Integrating
Marketing
Communica
tions To
Build Brand
Equity

Elements that can be included in the valuation of brand equity include (but not limited to): changing
market share, profit margins, consumer recognition of logos and other visual elements, brand
language associations made by consumers, consumers' perceptions of quality and other relevant
brand values.

WHY IS BRAND EQUITY IMPORTANT?

Brand equity is important due to the following reasons:-

 Facilitates a more predictable income stream.
 Increases cash flow by increasing market share, reducing promotional costs, and allowing
premium pricing.
 Brand equity is an asset that can be sold or leased.

However, brand equity is not always positive in value. Some brands acquire a bad reputation 9
that results in negative brand equity.

Brand equity aims at:-

 Achieving strong brand differentiation is absolutely fundamental to building a compelling
brand relationship with customers.
 Brand equity can be thought of as the differential effect of brand knowledge on consumer
response to the marketing of the brand.
 Fundamentally, high levels of brand awareness and a positive brand image should increase
the probability of brand choice. That is the fundamental goal of managing one's brand.
 Brand equity only exists as a function of consumer choice in the marketplace. And although
marketing and communications efforts can create and change brand images, brand equity
comes into being when a consumer chooses a product or service.

Methodology
Research Type

My research is based on the primary data. Primary data has been used to understand the scope of
Brand equity of Dove. We have tried to measure the ‘equity’ of the brand Dove and in the end we
have given our recommendations as to how Dove can improve its brand equity.
11
Data Type

Primary data has been used for the purpose of study of Brand Equity of Dove.

Sample Selection

To collect primary data we have surveyed a homogenous population of 40 respondents. The sample
was selected on the basis of simple random sampling.

Data Collection Method

In order to collect the primary data, the method used was personal interview with the help of a
questionnaire and for the secondary data we have taken the help of internet to gather information.

Tools Used for Data Analysis

As no study can be successful without the usage of proper tools and techniques for a better
presentation and right explanation I used tools of statistics and computer very frequently. And I am
very thankful to all those tools for helping me a lot. Basic tools which I used for project from
statistics are-

 Pie Chart
 Bar Graphs
 Line Diagram

Selection of competitors

We have selected Lux and Pears as the competitors for Dove because in our first phase of brand
tracker we found during our survey the respondents coming up with the names of Pears and Lux
frequently and this indicates that these brand enjoy top of the mind recall and therefore we can
conclude that they are the major competitors of the brand Dove.

Brand Awareness
According to John Gerzema and Ed Lebar in their book The Brand Bubble, “Brand imperatives
become business imperatives. A rigorous focus on creating an irresistible, high-energy brand can
transform your entire organization, letting the brand act as a catalyst for collaboration, innovation
and accountability.”

Brand value, however, can just as easily be diminished with inconsistent messaging, awkward
12
appearance or misaligned product launches. Managing competitive information, price shops,
syndicated data and primary research on a single platform makes information easily searchable,
resulting in better brand and category analysis, and ultimately better product decisions. Sharing
that information through on-demand visualization with development partners, like an advertising
agency, helps make sure brand communications are consistent and aligned to the brand promise
and that is how we come to Brand Awareness.

Fig 3- Brand Awareness Cycle

Brand awareness means the extent to which a brand associated with a particular product is
documented by potential and existing customers either positively or negatively. Creation of brand
awareness is the primary goal of advertising at the beginning of any product's life cycle in target
markets, and has influence on buying behaviour of a buyer. All of these calculations are, at best,
approximations. A more complete understanding of the brand can occur if multiple measures are
used.

Brand awareness can be measured by showing a consumer the brand and asking whether or not
they knew of it beforehand. However, in common market research practice a variety of recognition
and recall measures of brand awareness are employed all of which test the brand name's
association to a product category cue, this came about because most market research in the 20th
Century was conducted by post or telephone, actually showing the brand to consumers usually
required more expensive face-to-face interviews (until web-based interviews became possible).
This has led many textbooks to conceptualise brand awareness simply as its measures, that is,
knowledge that the brand is a member of a particular product category, e.g. soft-drinks. Examples 13
of such measures include:

 Brand recognition - Either the brand name or both the brand name and category name are
presented to respondents.
 Brand recall - the product category name is given to respondents who are asked to recall as
many brands as possible that are members of the category.
 Top of mind awareness - as above, but only the first brand recalled is recorded (also known
as spontaneous brand recall).

Fig 4- Brand Awareness

Analysis
Keeping in mind that knowledge an important factor for any brand, the following survey was done.

Firstly, the respondents were asked to identify the brand and were shown an image.

14

The image was related to Dove. Identification of the image would indicate the level of awareness
the respondents had about the brand.

Identified Not Identified

18%
Fig 5-
Identificati
on Of The
Image
82%

A major chunk of the respondents could link the image correctly to the brand and hence their
responses indicate that the respondents were aware of the brand.

Secondly, they were shown a campaign ad and again asked to identify it. The campaign was again
for Dove and the result is here under.

15

Identified Not Identified

39% Fig 6-
Identification
61% Of The
Campaign

From the responses received we can infer that the respondents did connect with the campaign but
the awareness levels were less as compared to the image identification .Hence we can safely
conclude that the campaigns were not very popular with the respondents.

Similarly, another question asked was which was related to taglines. Three taglines were given and
the respondents were asked to relate a brand with them.

Series1

13
Fig 7-
Identification
6 6
Of the
taglines

Lux Pears Dove

The tagline which the respondents could immediately recollect was that of Pears followed by Lux
and Dove. This indicates that the brand has to work on its awareness programme. An ad or

campaign which the consumers can relate with will relatively lead to increase in the awareness
levels of the product.

BRAND LOYALTY MEASUREMENT
We are using the Preference-behaviour model as a metric for measuring brand loyalty. The model is
based on a simple change in the brand switching model as developed by Colombo and Morrison.
The second model which we are using is an improvement on the preference –behaviour model
16
where we have tried to correct a few loopholes that we have found and this model too will be
essentially used to calculate the loyalty index of the brand.

MODEL 1
(Basis- Last Brand Purchased)

It consists of ‘most preferred brand’ and ‘last brand purchased’ in form of a 2X2 matrix. In this
model loyal are those who end up buying their most preferred brand and the others are switchers.
Thus, the likelihood of purchasing a given brand is the sum of the proportion of that brand’s loyal
and some fraction of the remainder. That fraction is a measure of the brand’s ability to attract
potential switchers. The two important parameters of the brand are:-

 It reflects how much the brand relies on its loyal customers.
 How successful it is in attracting brand switchers.

The buyers here can essentially be grouped into two parts:-

 The first group consist of people who prefer the brand and buy it.
 The second group is essentially made up of people who buy the brand in a given purchase
but actually prefer some other brand.

The model assumes every consumer has a preferred brand.

The measures and concepts of the model are illustrated in Table 1. The diagonal entries represent
the number of consumers who last bought the brand they preferred, which would consist of the
loyal and the potential switchers. The off-diagonal entries represent those consumers who last
bought something other than their preferred brand.

Preferred Last
Brand purchased
brand
Dove Lux Pears Others Total
Dove X Z
Lux X
Pears Y X
Others X 17
Total

X represents the number of loyal customers who bought the brand they preferred.
Y represents the switchers i.e. those customers who prefer Pears but end up buying Dove
Z refers to the switchers who prefer Dove but end up buying Pears.

preferred Last Purchased
Brand Brand
Fig 8-
Colombo
Dove 12 1 1 1 15
Morrison
Lux 0 1 0 0 1 Model 1
Pears 2 1 1 0 4
Others 4 3 1 12 20
Total 18 6 3 13 40

Total respondents size is 40. Row indicates that preferred brand is on the row side and last
purchase brand is on the column. 15 respondent Preferred dove, 1 Preferred Lux, 4 Preferred Pears
and 20 Preferred others. The column indicates the last Purchased brand for each preferred brand.

15 respondents identified Dove as their preferred brand out of which 12 respondents had
purchased Dove, 1 had purchased Lux, 1 Pears and 1 had purchased others .The diagonal entries in
the table indicate consumers who last purchased their preferred brands. For example, 12
respondents purchased Dove and preferred Dove.

The preference measures indicate perceptions of brand quality or brand equity. Alone, they
may not be good indicators of competitive strength, because they fail to capture some aspects of
value—particularly price and availability. Nevertheless, a brand with strong consumer preference
has a competitive advantage. In this case, Dove had about 38% of the expressed preferences for
the set of three brands (15/40, from the far right column). On the other hand, Lux had only a 3%

share of preference (1/40). This simple result indicates that Lux must have something else going for
it, and they are price promoting brand.

Another insight about the loyalty of consumers comes from an examination of the
diagonals. The diagonal entries are the number of consumers who last bought their preferred
brands. If we compare those to the total number of consumers who preferred the brand, we get
the proportion of the preferences that were converted into sales. For Dove, this proportion is .80—
12 preferred and bought (on the diagonal) versus 15 total preferred (from the right-most column).
18
This proportion is termed gravity—the power of the brand to maintain consumers who prefer it. A
brand with high gravity has consumers who are very loyal to their favourite brand. For these three
brands, the gravity proportions all fall within a range of .25 to 1 but Pears had the lowest score of
.25. Except for one very low score, pears (.25) and one dove (1). Thus, dove was able to convert
67% of its preferred customers into sales; whereas, Lux and pears covered 17% and 34 %
respectively.

Gravity Focus
(α) (π)
Dove 0.8 0.666666667
Lux 1 0.166666667
Pears 0.25 0.333333333

A high gravity ratio, however, indicates that consumers regard the brand as desirable, available,
and a good value, a brand that is relatively resilient to competitive prices or promotions. These
data suggest that Pears had established preference but may have been priced too high or
distributed too selectively to convert those preferences to sales. Lux had much lower preference
but it did convert into sales. Respondents who preferred Lux bought Lux.

A different perspective on the market is revealed by comparing the diagonals with the total of last
purchased. This ratio represents the proportion of sales that come from consumers who identify
the brand as most preferred and is termed focus. For example, dove has a focus of .67—12
preferred and bought (on the diagonal) versus 18 total purchased (from the bottom row). A brand
with high focus gets sales mostly from consumers who prefer it. Brands with low focus “steal”
customers from other brands. Pears and Lux had .33 and .16 respectively. Dove stole 2 preferred
customers of Pears and converted them into sales, whereas Lux and Pears could only take 1
customer from preferred customer of Dove.

Firms can succeed with either high or low focus. This data suggests that Dove is succeeding
by leveraging strong loyalty (high focus); whereas, Lux is relying on its ability to attract consumers
who preferred other brands, capturing consumers who are attracted by promotions and also the
brand switchers. This interpretation is consistent with the observation that Lux has very

competitive pricing strategy and that Dove and Pears were amongst the highly priced and least
frequently promoted.

MODEL 2

(Basis – No of purchases of each brand)

Model 1 does not serve its purpose of being an efficient indicator of brand loyalty especially so in 19
our case where the sample is relatively small, so we have improvised upon the model by replacing
the ‘last brand purchased’ variable with ‘number of purchases for each brand’. This is helpful
because:-

 It helps to eliminate the bias by certain respondents by taking into account the last five visits
of the respondent to the store for the purchase of the particular product.
 This helps to negate the possibility of the error in the model 1 where a consumer’s ‘last
purchase’ may have been influenced by a non-availability of his preferred brand, giving a
faulty loyalty measure.

Model 2 redresses the problem by taking into account the last 5 brand purchases made instead.
This helps give a more uniform loyalty measure.

preferred
Brand Last Purchased Brand
Dove 36 10 15 15 76
Lux 0 2 0 2 4
Pears 5 2 8 5 20
Others 16 10 6 67 99
Total 57 24 29 89 199


The analysis is yielding results which are similar to model 1 the only difference arising due to the
no. of purchases made. For instance, out of a total of 76 purchases with Dove as the preferred
brand, 36 purchases were of Dove itself (47%: gravity proportion) while Lux and Pears constituted
50% and 40% respectively.

Gravity Focus
(α) (π)
Dove 0.473684 0.631578947
Lux 0.5 0.083333333
Pears 0.4 0.275862069

Quite clearly, Dove was the largest selling brand (57) followed by Pears (29) and Lux (24). The focus 20
ratio tells us how many of the purchases were made with the brand as the ‘preferred brand’ out of
the total no. of purchases for that particular brand. In this case, the total no. of purchases for Dove
was 57, out of which 36 purchases were made with Dove as the preferred brand. This gave it a
focus ratio of 63% while those of Pears and Lux stood at 8.33% and 27.58% respectively. As is
evident, Dove relies on ‘brand switchers’ – a bulk of its sales coming from people who prefer others
and bought Dove (16). Dove made most of its sales from the consumers who preferred Dove (36).
Yet another interesting observation is seen in the case of Pears, where out of a total of 20
purchases with Pears as the preferred brand, only 8 purchases were of its own. Pears recorded
more in the case where consumers preferred Dove and purchased Pears (15). This suggests that
Pears is taking a sizeable chunk of its sales from Dove. Pears is not on a losing side when compared
to Lux but if seen with dove, it’s neither maintaining the customers who prefer it, nor too successful
in stealing customers from other brands.
Lux has the highest gravity ratio (50%) which shows an inherent loyalty of its consumers and its
capability of retaining those who are potential switchers.

It’s considered that when gravity>focus, either more no of promotions are made. It is also indicative
of the brand manager’s mind-set of having more sales promotions or a stronger distribution
network. This implies that the brand is relatively more preferred. On the other hand when
focus>gravity, supply chain is weak in spite of a strong brand presence. This implies that the brand
is not properly leveraged.

Here, we see that in case of Dove focus is more (63%) than gravity (47%). This shows that the brand
Dove is strong but the supply chain is weak. On the other hand both in case of Lux and Pears gravity
is more than focus which shows that the promotions or distribution is very strong and the brand
enjoys relatively greater preference. Dove in this case can try and improve on the distribution
strategy. As Dove is a strong brand it will not be difficult for Dove to improve its distribution
strategy and doing this would improve its preferences.

Loyalty Index measure:
Brand Loyalty comes from 2 stages:
The hard core loyal are those who are extremely loyal to the brand: brand’s ability to maintain loyal
customers.
Switchers from another brand: the brand’s ability to convert potential switchers.

Based on the Colombo-Morrison model, loyalty index can be measured as a weighted average of ρ
and ς which represent repurchase and switching indices respectively. Weights assigned are 67%
and 33% respectively (based purely on assumptions)

ρ=α + (1- α) π (expressed in percentage terms)
ς = Σ (1-αi) πj (expressed in percentage terms)

Loyalty Index = 0.67* ρ + 0.33* ς
21
ρ ς Loyalty Index
Dove 80.61% 69.47% 76.934626038781200%
Lux 54.17% 9.39% 39.389035087719300%
Pears 56.55% 28.31% 47.232667876588000%

Another question was asked from the respondents to check their loyalty. The question says do you
keep experimenting with new brands every time you purchase or you stick to the same brand. The
respondents who said they keep experimenting were marked yes and the others were marked no.
The result of the survey is hereunder:-

21
Fig 10-
Brand
Loyalty

19

Yes No

This showed that 21 out of 40 respondents experimented with the brands every time they
purchased. The trend we saw was it was majority of the boys saying they experiment with the
brands every time. When further asked the reason for this, they replied that their purchases were
mostly based on the availability of the brands in the market or the retailers’ suggestion.

LEVERAGABILITY
Leveragability is the ability of the brand to be launched successfully into related or even unrelated
product categories. Some brands are considered to be more flexible than others in respect to

satisfying needs and wants other than the ones which the brand is currently addressing. A company
wants its brands to be highly leverageable because:-
 It helps the company to diversify in both related and unrelated products and services.
 The company is not required to spend huge amounts on creating a brand from the scratch.
 It helps a company to decide how valuable the brand is to the company.

We have tried to measure the leveragability of the brand by using question number 14 given in
the questionnaire given in the appendix. We have taken 8 categories where we logically felt the
22
brand could extend itself of the company wants to diversify itself into new product categories.
We wanted to measure the brand leveragability by understanding the perception of the
consumer about the categories to which they feel the brand could be appropriately diversified.
We have tried to analyse the responses subjectively and thereby arrive at the comparative
brand leveragability among the three brands under consideration.

Washing Tooth- Chocolates Antiseptic- Hair Shoes Mobile Beverages
Powder pastes soaps Gel Phones

7 7 4 23 23 1 0 4
Fig
Dove 11-
Lux 13 2 2 8 13 0 0 1 Lever
Pears 5 8 4 19 14 0 0 2 agabi
lity

Washing Tooth- Chocolates Antiseptic- Hair Shoes Mobile Beverages
Powder pastes soaps Gel Phones

18% 18% 10% 58% 58% 3% 0% 10%
Dove
Lux 33% 5% 5% 20% 33% 0% 0% 3%
Pears 13% 20% 10% 48% 35% 0% 0% 5%

As can be seen that the categories washing powder, tooth-pastes, chocolates, antiseptic-soaps, hair
gel, shoes, mobile phones, beverages were the product categories where the three brands were
found to be more leveragable.
On a comparative level the brand Dove was found to be more leveragable of the three brands.

Recommendations:-

The product has shown a very high leveragability in case of antiseptic- soaps and hair gel closely
followed by washing powder and tooth-pastes. The brand can diversify in these categories.

Brand Equity Model based on share tier approach

We based our model on the share tier approach and improvised on the model to suit our
requirements for the product for which we are measuring the brand equity. The question 13 in the
questionnaire as given in the appendix was used to identify the Price/Quality classification of all the
three brands for every individual respondent.

We are using the price-quality relationship to identify how the consumer behaves on these two 23
metrics which will help us gauge the loyalty of the buyer towards the brand and also the perception
of the buyer about the brand which will help us to quantify the brand equity of the brands under
consideration.

The data obtained from the Price/Quality classification will be used to calculate the percentage of
sales made by each category of respondents (for instance say a respondent has a perception that
Dove has superior quality and price is not a barrier for him. When this happens then such a
respondent will be classified under the Top box in the grid and so on for other respondents). For
the purpose of our analysis we have assumed that the respondent base represents the total market
and therefore the cumulative sum of percentages will equal the total sales i.e. 100% of the sales of
the brand. The percentage figures are given in the form of a 4x4 grid which will essentially
represent the percentage of total shares for respondents who think that the brand belongs to that
Price/Quality classification.
The loyalty share for the four cells viz. Q1P1, Q2P1, Q1P2, Q2P2 was calculated based on their
responses to the Price/Quality classification and the responses to the loyalty based questions in the
questionnaire. Hence we will be able to find out the percentage of loyal respondents for the three
brands in all the four.

We have then tried to calculate the equity share for the brands using the loyalty contribution data
for each brand which was obtained from the percentage of loyal customers for each brand. This
metric reflects the relative percentage that a brand owns of the sales attributable to all loyal
customers in the category. It represents the brand’s share of the category’s most desirable, and
profitable, customers.
The leveragability index was calculated based on the loyalty data and the sales in the cells of the
price quality grid. This metric is incorporated as an attempt to measure the relative importance of
product quality w.r.t price, suggesting that if the degree of quality perception is much stronger than
price, there is a potential to leverage that perception into other areas beyond the immediate
market.
The measurement of brand equity index and the share tier index to find out a composite index for
brand equity was the next logical step and a model was developed to calculate this which will be
explained in detail in the analysis part.

Dove "Superior "Good "Acceptable "Poor
Quality" Quality" Quality" Quality"

Price not a 20% 25% 10% 0%
barrier
Price minor 10% 15% 0% 0%
barrier
Price 0% 8% 0% 0% 24
significant
barrier
Price 5% 5% 3% 0%
absolute
barrier

Lux "Superior "Good "Acceptable "Poor

Price not a 0% 13% 43% 10%
barrier
barrier
Price 0% 3% 5% 3%
significant
barrier
Price 0% 0% 3% 0%
absolute
barrier

Pears "Superior "Good "Acceptable "Poor

Price not a 5% 30% 20% 0%
barrier
barrier

Price 0% 5% 5% 0%
significant
barrier Fig 12- Price
Price 5% 0% 0% 0% –Quality
absolute Relationship
barrier

As can be seen from the above analysis, 20% of the respondents feel that Dove is of superior quality
25
and price is not a barrier, which is highest of all the three brands. This constitutes the top box
contribution. Dove has the largest percentage of respondents saying it to be of a superior (20%)
and good quality (25%). Both Dove and Pears have respondents considering them of superior and
good quality but with price a significant and absolute barrier. Pears have the largest number of
respondents (18%) who consider price to a minor barrier and the quality to be good and not
superior.
Recommendations
Dove has been ranked of superior and good quality by most of the respondents. Dove needs to
build on its pricing strategy in order to attract more customers as most respondents had the
concept that the brand, though pays off its cost by the quality it provides (value for money), but
overall the price is high and is not convenient for all to purchase it regularly.

Loyalty Table
The following data was obtained from the above mentioned analysis:

Total Loyalty

Purchasers Purchasers % Continuity Continuity%
Dove 21 53% 9 60%
Lux 7 17% 3 75%
Ears 3 8% 0 0%
Others 9 22% 12 60%

Fig 13- Loyalty Table
We asked respondents to choose a brand which they will purchase after choosing their belief about
the price and quality. Out of 40 respondents 21 choose dove giving it a 53% purchasing behaviour.
7 respondent chose lux whereas 3 for ears and 9 for others.

Next we asked them whether they would continue to buy their preferred brand. We found out that
dove had 60 % continuity which means 60% of respondent who preferred dove will continue using

Dove. Similarly loyalty for lux is 75% and for pears it is 0%, probably because 1 respondent only
preferred pears and that respondent did not want to continue buy pears.

Brand loyalty will lead to brand resilience. Brand resilience is a brand’s ability to protect itself and
generate consistent volume and revenue, year after year. Resiliency also describes a brand’s ability
to gain more than its fair share of category revenue and profits in the face of inadequate marketing
or competitive attack. We find that dove has a brand loyalty of 60% amongst the respondents
giving in 60% brand resilience. The brand loyal customers will stick to dove if other brands take out
sales promotion and other techniques to win over dove’s customers. These loyal customers will 26
help dove to generate cash flows and volumes over time to giving it continuity.

EQUITY SHARE CALCULATION
This index helps us evaluate the percentage of sales of a particular brand which it owes to the loyal
customers in the category. This relates to those customers of the brand from whom the company
derives the maximum amount of profit and also pinpoints at the class of customers who are the
most desirable.

Methodology:-

Sales (Rs. Market Proportionate Market Loyalty Equity
Loyalty Sales
Crore) Share Share Contribution Share
Dove 500 6% 24.752475247524800% 76.93% 384.65 38.15%
Lux 1200 15% 59.405940594059400% 39.38% 472.56 46.86%
Pears 320 4% 15.841584158415800% 47.23% 151.136 14.99%
Category
2020 25% 100% 1008.346 100%
Total

Fig 14- Equity Share Calculation

Following Assumption was made for the calculation of the shares:-
1. Due to absence of loyalty contribution, we have not considered others category for calculation
of equity share
2. Since we have measured the loyalty for only 3 brands in the skin care segment so for the
calculation of equity share we will consider the total sales of these three brands (Dove, Lux and
Pears) as the overall sales in the skin care market.

The overall loyalty contributions were determined from the loyalty indices as estimated from the
model for each of the three brands. Then these numbers were multiplied by sales to find out the

figures for the loyalty sales. Then equity share was the share of each brand in loyalty sales out of
the total category sales. Each brand figures were divided by the category total sales.

Analysis
The equity share represents the relative percentage of each brand’s loyal customers on the basis of
the total customers in the category. Here, Lux has the huge equity share as compared to its existing
competitors. Pears have a low equity share. Dove has a fairly good equity share but it still needs to
improve on it when compared to its competitors.
27

LEVERAGABILITY INDEX CALCULATION
The index attempts to measure the relative importance that the buyer attaches to the quality of the
product and whether the buyer perceives quality to be predominant factor or not with respect to
price and hence acts as a yardstick which tells us whether the brand will be able to leverage its
perception of ‘better quality’ in the market. There are various ways to arrive at the leveragability
index.

METHODOLOGY
Here, the two quadrants Q1P2 and Q2P1 that is to say the two adjacent quadrants to the most
desired quadrant were considered. First the sales of these two quadrants were found out by
multiplying the percentage from the Price-Quality Classification Model to the existing sales. Then
the loyalty sales of these quadrants were found out by taking the loyalty index from the loyalty
table. Then the leveragability Index was calculated by considering the loyalty sales of the Q1P2
quadrant and dividing it by the sum of the sales of these two quadrant.

Q1P2 Q2P1 Fig 15-
Q1P2 Q1P2 Q2P1 Q2P1 Leveragability
Loyalty Loyalty Leveragabi
Sales Loyalty Sales Loyalty Index
Sales Sales lity Index
Dove 50 50% 25 125 60% 75 25.00% Calculatio
Lux 36 100% 36 156 40% 62.4 36.59% n
Pears 0 0% 0 96 42% 40.32 0.00%

ANALYSIS
The sales of Q1P2 were considered for calculation of the index because for these customers, the
brand offers superior quality but the price is a minor barrier for them to purchase the brand. These
are the customers who offer the potential for the brand to leverage the future market growth and
extend itself beyond the current segmentations. The customer holds the brand in the high esteem
but the price is a minor barrier. The price barrier can be removed by the company leveraging upon
the perception of the superior quality of the brand.

Here, Lux has the highest Leveragability Index and it is found out to have the highest perception of
being a superior quality offering from the company. As per the conclusions, Dove, in spite of being a
new brand in the market, has a high leveragability index. This shows that the consumer has the
perception that the brand offers quality product to them and the company can use this factor to
capture the future growing market of the industry.

BRAND EQUITY INDEX CALCULATION
28
The next logical step was to calculate the Brand Equity Index of each player in the skincare industry.
This would help us estimate the power of the each brand in the market.

Dove "Superior "Good "Acceptable "Poor
Price not 100 125 50 0
a barrier
Price 50 75 0 0
minor
barrier
Price 0 40 0 0
significant
barrier
Price 25 25 15 0
absolute
barrier

Lux "Superior "Good "Acceptable "Poor
Price not 0 156 516 120
a barrier
Price 36 120 96 36
minor
barrier
Price 0 36 60 36
significant
barrier
Price 0 0 36 0
absolute
barrier

Pears "Superior "Good "Acceptable "Poor
Price not 16 96 64 0
a barrier
Price 0 57.6 32 9.6
minor
barrier
Price 0 16 16 0 29
significant
barrier
Price 16 0 0 0
absolute
barrier

WEIGHTS

W1-15% W2-11% W3-8% W4-6% W5-5% Fig 16- Brand
Equity Index &
BRAND SHARE Share Quality
MARKET EQUITY QUALITY Index
SHARE INDEX INDEX
Dove 6% 42.75 2.67%
Lux 15% 70.44 10.57%
Pears 4% 21.216 0.85%

Methodology

For the purpose of calculation of Brand Equity Index, percentage of customers in each quadrant as
found out in Price – Quality Classification Model and the existing sales of the brand were
considered. The percentage figures were multiplied with the sales numbers to find out the turnover
volume of each quadrant. Then taking the Share Tier Approach as the basis, decreasing order of
weights was assigned to each quadrant. The order taken was as follows: - Q1P1 > Q1P2 > Q2P1 >
Q2P2 > Others. The sales of each quadrant were multiplied by the assigned weights. The least
weight was assigned to all other quadrant sales volumes taken together. The resulting numbers
were added together to find out the Brand Equity Index.

Analysis

The Brand Equity Index (BEI), as it is known as popularly is used to judge the ability of the brand to
capture the market share and the potential of the brand for the future growth. The model used

here captures the essence of the customers belonging to every category as well as the current sales
of each brand.

Lux was found to be having the highest brand equity index (70.44). This brand has the higher
capability to charge a premium as compared to its competitors. Dove is followed by Lux having the
second highest brand equity index (42.75). The brand is the ‘new kid on the block’ in the market as
compared to its competitors but still it has been able to get the market share in spite of the
existence of the established market players. The sales of the brand have been on the rise and it has
30
a sufficient market share given the competition in the industry and the penetration of the market
by its biggest competitors.

Van Westendorp Price Sensitivity Meter & Brand Equity
The Price Sensitivity Meter (PSM) is a market technique for determining consumer price
preferences. It was introduced in 1976 by Dutch economist Peter van Westendorp. The technique
has been used by a wide variety of researchers in the market research industry. The PSM approach
was a staple technique for addressing pricing issues for the past 20 years. It historically has been
promoted by many professional market research associations in their training and professional
development programs. The PSM approach continues to be used widely throughout the market
research industry.

The traditional PSM approach asks four price-related questions, which are then evaluated as a
series of four cumulative distributions, one distribution for each question. The standard question
formats can vary, but generally take the following form:

• At what price would you consider the product to be so expensive that you would not
consider buying it? (Too expensive)

• At what price would you consider the product to be priced so low that you would feel the
quality couldn’t be very good? (Too cheap)

• At what price would you consider the product starting to get expensive, so that it is not out
of the question, but you would have to give some thought to buying it? (Expensive/High Side)

• At what price would you consider the product to be a bargain—a great buy for the money?
(Cheap/Good Value)

The responses to the above four questions are graphed. The point at which the Inexpensive and
Expensive responses intersect is considered the Indifference Price Point (IDP); the point at which
the Too Inexpensive and Too Expensive responses intersect is considered the Optimal Price Point
(OPP).

The intersection of "not cheap" and "too cheap" yields the Point of Marginal Cheapness (PMC). At
this price point, the number of people considering the product to be too cheap is the same as the
number considering it to be expensive, or "not cheap."

The intersection of "not expensive" and "too expensive" yields the Point of Marginal Expensiveness
(PME). At this price point, the same number of people regards the product to be too expensive as
regard it as not expensive.

The range from PMC to PME is the Range of Acceptable Prices (RAP), or the Optimal Price Band. 31

Thus, we are using this method because it will give us the optimum price of the product and the
indifference price. A company whose product is selling above the optimum price is commanding
premium due to its Brand so the company having higher difference between market price and
optimum price is having higher brand equity due to which consumer is ready to pay premium.

OPP is optimal in the sense that the price sensitivity to the product for being cheap is equal to that
of being too expensive, and is often the recommended price

Indifference Price Point

The Indifference Price Point (IPP) tends to show the average price for the product in a mature
market or, if there is a market leader with a predominant share, it can show the average price that
manufacturer/ producer charges.

Van Westendorp theory usually represents either the:

• Median price actually paid by consumers for a known, existing product, or

• The average price of a product produced by a market share dominating, leading producer.

Optimal Price Point

The Optimum Price Point (OPP) is a point where you lose the fewest number of purchasers because
it is either perceived to be too expensive or too cheap. The Range of Competitive Prices helps show
the full range of viable pricing strategies. At the high end of the range, producers will begin to lose
market share, but reap higher-than-normal profits. At the low end of the range, producers will gain
share through a low-cost strategy.

Point at which the number of respondents who reject the product as too expensive = number who
reject it for being too cheap. Some consider this to be the Ideal Price for this product.

Point Of Marginal Cheapness

Point of Marginal Cheapness = Point at which the percentage of respondents who find the price too
cheap (S1) = the inverse of the percentage of people who find the product a bargain (1-S2%) or, in
other words, the percentage of people who at each price point would find the price “not a bargain.

Point Of Marginal Expensiveness

Point of Marginal Expensiveness = Point at which the percentage of respondents who find the price 32
too expensive= the inverse of the percentage of people who found the product expensive but still
worth considering (1-S3%) or, in other words, the percent of people who at each price point would
find the price “not expensive.

Indifference Price Point

Cheap Expensive
100% 100%
98% 98%
93% 93%
85% 76%
63% 41%
35% 18%

Fig 17-
Indifference
Price Point &
Optimal Price
Point

Optimal Price Point

Too Too
Cheap Expensive
100% 100% 33
40% 90%
28% 75%
13% 40%
11% 8%
3% 5%

The indifference Price Point comes out to be 20. The Optimal Price Point comes out to be 49.

Van Westendorp Brand equity index = [(market Price – optimum price)/ optimum price].

Assuming the market price for Dove to be 50, the Van Westendorp Brand equity index comes to be
0.020.

Basic Findings
 When respondents were asked to identify the brand, the image was identified by most of
the respondents but they could not connect with the campaigns and the taglines.
 From the Colombo-Morrison model we can infer that Dove has a strong brand presence but
a weak supply chain and hence we would recommend Dove to work on its supply chain.
 Dove is losing out customers because of its high price. 34

Recommendations
 The brand is high on salience and Imagery. It has a distinct image among consumers. On the
other hand, most of the respondents could not connect to the positioning of Dove (which
brand can you relate when you hear dare to step out without makeup). One problem could
be that Dove has huge number of campaigns running at the same time which prevents the
mass from being updated. So, Dove could come up with campaigns with which people could
more relate to and remember like of Pears which related its saying Masoom. This gave the
product a very personal feel and helped the consumers remember the brand.
 Dove can improve on its supply chain and spread its tentacles in the rural areas as well.
Mostly now Dove is more skewed towards the urban markets.
 Dove has shown a very high leveragability with antiseptic soaps and hair gel. We know that
dove is a highly leveraged brand and it is successful leveraged its product to personal care
brands. From soap to shampoo, conditioner, shower gel, cream etc. The respondent (58%)
would prefer buying hair gel and antiseptic soaps if dove launched them. we would
recommend that dove could further leverage to antiseptic soaps and hair gel.
 Dove needs to build on its pricing strategy in order to attract more customers as most
respondents had the concept that the brand, though pays off its cost by the quality it
provides (value for money), but overall the price is high and is not convenient for all to
purchase it regularly.
 From Van Westendorp analysis we found that optimum point and indifference point are in a
difference of 19 which means brand loyalty is existing in the soap category. So dove can use
its power of brand to convert purchase.

References
 http://en.wikipedia.org/wiki/Brand_equity

 http://www.netmba.com/marketing/brand/equity/

 http://www.brandequitymeasurement.com/ 35

 http://marketresearch.about.com/od/market.research.advertising/ht/How-To-Measure-
Brand-Equity.htm

 http://www.brandingstrategyinsider.com/2007/02/exploring_brand.html

 http://www.ipsos.com/asi/sites/ipsos.com.asi/files/pdf/rc5.pdf

 http://www.sciencedirect.com/science/article/pii/S0167811697000207

 http://www.hul.co.in/

 http://rmsbunkerblog.wordpress.com/

Pbm phase 2

More Related Content

What's hot (20)

Viewers also liked (8)

Similar to Pbm phase 2 (20)

More from Deepika Agrawal (8)

Recently uploaded (20)

Pbm phase 2