abm asnmnt, govind, 06917003909, mba-4

8/7/2019 ABM ASNMNT, GOVIND, 06917003909, MBA-4

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MASTER OF BUSINESS ADMINISTRATION

ASSIGNMENTABM

Submitted to: Submitted by:Mr. Sachin MBA 4TH Semester

Govind Singh Bisht(06917003909)

SESSION: 2010 - 2011

TECNIA INSTITUTE OF ADVANCED STUDIES Approved by AICTE, Ministry of HRD, Govt. of India,

Affiliated To Guru Gobind Singh Indraprastha University, Delhi

INSTITUTIONAL AREA, MADHUBAN CHOWK, ROHINI, DELHI- 11008 5

E-Mail: [email protected] , Website: www.tecniaindia.org

Fax No: 011-27555120, Tel: 011-27555121-24
mailto:[email protected]:[email protected]://www.tecniaindia.org/mailto:[email protected]://www.tecniaindia.org/


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QUESTION: what is brand? Discuss the concept of brand life cycle. What aredifferent methods to measuring band equity? Explain in brief.

SOLUTION:

BRAND

According to Philip kotler: A brand is a name, term, sign, symbol or design intended todistinguish the goods and services of one seller to another and to differentiate them fromcompetitors.

A brand is the identity of a specific product , service , or business . A brand can take many forms,including a name , sign , symbol , color combination or slogan . A legally protectedbrand name iscalled a trademark . The word brand has continued to evolve to encompass identity - it affects the

personality of a product, company or service.

A brand is a product, service, or concept that is publicly distinguished from other products,services, or concepts so that it can be easily communicated and usually marketed. A brand nameis the name of the distinctive product, service, or concept. Branding is the process of creating anddisseminating the brand name. Branding can be applied to the entire corporate identity as well asto individual product and service names. Brands are often expressed in the form of logos ,graphic representations of the brand. In computers, a recent example of widespread brandapplication was the "Intel Inside" label provided to manufacturers that use Intel's microchips.

A company's brands and the public's awareness of them is often used as a factor in evaluating acompany. Corporations sometimes hire market research firms to study public recognition of

brand names as well as attitudes toward the brands.

BRAND LIFE CYCLE

The three phases through which brands pass as they are introduced, grow, and then decline. Thethree stages of the brand life cycle are the introductory period, during which the brand isdeveloped and is introduced to the market; the growth period, when the brand faces competitionfrom other products of a similar nature; and, finally, the maturity period, in which the brandeither extends to other products or its image is constantly updated. Without careful brandmanagement, the maturity period can lead to decline and result in the brand being withdrawn.Similar stages can be observed in the product life cycle.
http://en.wikipedia.org/wiki/Identity_(philosophy)http://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Namehttp://en.wikipedia.org/wiki/Sign_(display_device)http://en.wikipedia.org/wiki/Symbolhttp://en.wikipedia.org/w/index.php?title=Color_combination&action=edit&redlink=1http://en.wikipedia.org/wiki/Sloganhttp://en.wikipedia.org/wiki/Trademarkhttp://en.wikipedia.org/wiki/Identity_(philosophy)http://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Namehttp://en.wikipedia.org/wiki/Sign_(display_device)http://en.wikipedia.org/wiki/Symbolhttp://en.wikipedia.org/w/index.php?title=Color_combination&action=edit&redlink=1http://en.wikipedia.org/wiki/Sloganhttp://en.wikipedia.org/wiki/Trademark


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FIGURE 1: BRAND LIFE CYCLE

Brand Life Cycle and Strategy

Generally speaking, every brand or product has its life cycle which spans from the time it islaunched to the time it exits from the market. This cycle covers five stages, namely productdevelopment, introduction, growth, maturity and decline. The life cycle of each and every brandor product is different, and different advertising strategies should be adopted at different stagesto suit the marketing targets and market environment in order to achieve the best marketingresults.

Product Development -- This is the stage of design, production and research carried out by acompany to ensure that its products can meet consumer needs through sufficient market survey.The company will also improve its products in the light of market response and gradually buildup its brand.

Introduction -- During this stage, the product is introduced into the market and publicitycampaigns are launched to promote its functions, features, quality and usage and attractcustomers to try out or buy the product.

Growth -- The branded product begins to build up its following among consumers during thisstage. The cumulative effect of marketing begins to show and the market share expands.However, the company must further step up its advertising efforts, and the advertising musthighlight the characteristics and value of the product.

Maturity -- Brands or products in the maturity stage have a considerable market share and havereached their sales peak, with growth beginning to slow down. Brand influence at this stage is atits height and the kinds of marketing strategies to be adopted are many.


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Decline -- Brand awareness is high but sales are on the decline. Other characteristics of this stageinclude falling prices, weakening competitiveness and emergence of new products.

The same product or the same company may experience different life cycles in different markets

BRAND EQUITY

Brands represent enormously valuable pieces of legal property, capable of influencing consumer behavior, being bought and sold, and providing the security of sustained future revenues to their owner. The value directly or indirectly accrued by these various benefits is often called brandequityA basic premise of brand equity is that the power of a brand lies in the minds of consumers andwhat they have experienced and learned about the brand over time. Brand equity can be thoughtof as the "added value" endowed to a product in the thoughts, words, and actions of consumers.

There are many different ways that this added value can be created for a brand. Similarly, thereare also many different ways the value of a brand can be manifested or exploited to benefit thefirm (i.e., in terms of greater revenue and/or lower costs).For brand equity to provide a useful strategic function and guide marketing decisions, it isimportant for marketers to fully understand the sources of brand equity, how they affectoutcomes of interest (e.g., sales), and how these sources and outcomes change, if at all, over time. Understanding the sources and outcomes of brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand.

According to a customer-based brand equity perspective, the indirect approach to measuring brand equity attempts to assess potential sources for brand equity by measuring consumer

mindset or brand knowledge. The indirect approach is useful in identifying what aspects of the brand knowledge may potentially cause the differential response that creates brand equity in themarketplace.

Brand awareness can be assessed through a variety of aided and unaided memory measures thatcan be applied to test brand recall and recognition; brand image can be assessed through a varietyof qualitative and quantitative techniques.

Qualitative Research TechniquesThere are many different ways to uncover and characterize the types of associations linked to the

brand. Qualitative research techniques are often employed to identify possible brand associations

and sources of brand equity. Qualitative research techniques are relatively unstructuredmeasurement approaches whereby a range of possible consumer responses are permitted.Consider the following three qualitative research techniques that can be employed to identifysources of brand equity.

Free AssociationThe simplest and often most powerful way to profile brand associations involves free associationtasks whereby subjects are asked what comes to mind when they think of the brand without any


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more specific probe or cue than perhaps the associated product category (e.g., "What does theRolex name mean to you?" or "Tell me what comes to mind when you think of Rolex watches.").Answers to these questions help marketers to clarify the range of possible associations andassemble a brand profile.To better understand the positivity of brand associations, consumers can be asked followup

questions as to the favorability of associations they listed or, more generally, what they like bestabout the brand. Similarly, consumers can also be asked direct follow-up questions as to theuniqueness of associations they listed or, more generally, what they find unique about the brand.

Projective TechniquesProjective techniques are diagnostic tools to uncover the true opinions and feelings of consumerswhen they are unwilling or otherwise unable to express themselves on these matters. The idea

behind projective techniques is that consumers are presented with an incomplete stimulus andasked to complete it or given an ambiguous stimulus that may not make sense in and of itself andare asked to make sense of it. In doing so, the argument is that consumers will reveal some of their true beliefs and feelings. Thus, projective techniques can be especially useful when deeply

rooted personal motivations or personally or socially sensitive subject matters may be operating.Projective techniques often provide useful insights that help to assemble a more complete pictureof consumers and their relationships with brands.

Brand Personality and RelationshipsAnother useful set of measures to assemble the brand profile is brand personality. Brand

personality is the human characteristics or traits that can be attributed to a brand. Brand personality can be measured in different ways. Perhaps the simplest and most direct way is tosolicit open-ended responses to a probe such as: "If the brand were to come alive as a person,what would it be like, what would it do, where would it live, what would it wear, who would ittalk to if it went to a party (and what would it talk about)."

Quantitative Research TechniquesAlthough qualitative measures are useful to identify and characterize the range of possibleassociations to a brand, a more quantitative portrait of the brand often is also desirable to permitmore confident and defensible strategic and tactical recommendations. Whereas qualitativeresearch typically elicits some type of verbal responses from consumers, quantitative researchtypically employs various types of scale questions so that numerical representations andsummaries can be made. Quantitative measures are often the primary ingredient in trackingstudies that monitor brand knowledge structures of consumers over time.

AwarenessBrand awareness is related to the strength of the brand in memory, as reflected by consumers'ability to identify various brand elements (i.e., the brand name, logo, symbol, character,

packaging, and slogan) under different conditions. Brand awareness relates to the likelihood thata brand will come to mind and the ease with which it does so given different type of cues.Several measures of awareness of brand elements can be employed.Choosing the appropriate measure depends on the relative importance of brand awareness for consumer behavior in the category and the resulting role it plays to the success of the marketing

program for the brand. For example, if research reveals that many consumer decisions are made


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at the point-of-purchase where the brand name, logo, packaging, and so on will be physically present and visible, then brand recognition and visual awareness measures will be important. If research reveals that consumer decisions are mostly made in other settings away from the

pointof- purchase where the brand elements are not physically present, on the other hand, then brand recall and verbal measures will be more important. As a cautionary note, even though

brand recall per se may be viewed as less important when consumer decisions are made at the point-ofpurchase, consumers' brand evaluations and choices will still often depend on what elsethey recall about the brand given that they are able to recognize it there.

RecognitionIn the abstract, recognition processes require that consumers be able to discriminate a stimulus --a word, object, image, etc. -- as something they have previously seen. Brand recognition relatesto consumers' ability to identify the brand under a variety of circumstances and can involveidentification of any of the brand elements. The most basic type of recognition procedures givesconsumers a set of single items visually or orally and asks them if they thought that they had

previously seen or heard these items

By applying direct and indirect measures of brand recognition, marketers can determine which brand elements exist in memory and, to some extent, the strength of their association.

RecallBrand recall relates to consumers' ability to identify the brand under a variety of circumstances.With brand recall, consumers must retrieve the actual brand element from memory when givensome related probe or cue. Thus, brand recall is a more demanding memory task than brandrecognition because consumers are not just given a brand element and asked to identify or discriminate it as one they had or had not already seen.Different measures of brand recall are possible depending on the type of cues provided toconsumers. Unaided recall on the basis of "all brands" provided as a cue is likely to identify onlythe very strongest brands. Aided recall uses various types of cues to help consumer recall.

ImageBrand awareness is an important first step in building brand equity, but usually not sufficient.For most customers in most situations, other considerations, such as the meaning or image of the

brand, also come into play. One vitally important aspect of the brand is its image, as reflected bythe associations that consumers hold toward the brand. Brand associations come in manydifferent forms and can be classified along many different dimensions. Consistent with theladdering concept described above, it is useful to make a distinction between more "lowerlevel"considerations related to consumer perceptions of specific attributes and benefits versus more"higher-level" considerations related to consumer responses and their judgments and feelingstoward the brand. There is an obvious relationship between the two levels as consumers'responses typically are a result of perceptions of specific attributes and benefits about the brand.

Measuring Outcomes of Brand EquityA product with positive brand equity can potentially enjoy the following seven importantcustomer-related benefits:

1) Be perceived differently and produce different interpretations of product performance;


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2) Enjoy greater loyalty and be less vulnerable to competitive marketing actions;3) Command larger margins and have more inelastic responses to price increases and elasticresponses to price decreases;4) Receive greater trade cooperation and support;5) Increase marketing communication effectiveness;

6) Yield licensing opportunities;7) Support brand extensions.

These benefits, and thus the ultimate value of a brand, depends on the underlying components of brand knowledge and sources of brand equity. Via the indirect approach, individual componentscan be measured, but to provide more direct estimates, their resulting value still must beestimated in some way. The direct approach to measuring customer-based brand equity attemptsto more explicitly assess the impact of brand knowledge on consumer response to differentaspects of the marketing program for the firm. The direct approach is useful in approximating the

possible outcomes and benefits that arise from differential response to marketing activity due tothe brand, either individually or in aggregate.

Comparative MethodsThe main way to measure the outcomes and benefits of brand equity is with comparativemethods. Comparative methods involve experiments that examine consumer attitudes and

behavior towards a brand to more directly estimate the benefits arising from having a highawareness and a positive brand image.There are two types of comparative methods. Brand-based comparative approaches useexperiments in which one group of consumers respond to the marketing program or somemarketing activity when it is attributed to the target brand and another group responds to thatsame activity when it is attributed to a competitive or fictitiously named brand. Marketing-basedcomparative approaches use experiments where consumers respond to changes in the marketing

program or marketing activity for the target brand or competitive brands. We describe each of these two approaches in turn. Conjoint analysis is then identified as a technique that, in effect,combines the two approaches.

Conjoint AnalysisConjoint analysis is a survey-based multivariate technique that enables marketers to profile theconsumer buying decision process with respect to products and brands. Specifically, by askingconsumers to express preferences or make choices among a number of carefully designeddifferent product profiles, marketing researchers can determine the "trade-offs" consumers aremaking between various brand attributes and thusthe importance that consumers are attaching tothose attributes.

Holistic MethodsComparative methods attempt to approximate specific benefits of brand equity. Holistic methodsattempt to place an overall value for the brand in either abstract utility terms or concrete financialterms. Thus, holistic methods attempt to "net out" various considerations to determine the uniquecontribution of the brand. The residual approach attempts to examine the value of the brand bysubtracting out consumers' preferences for the brand based on physical product attributes alonefrom their overall brand preferences. The valuation approach attempts to place a financial value


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on brand equity for accounting purposes, mergers and acquisitions, or other such reasons. Wedescribe each of these two approaches in turn.

Residual ApproachesSeveral researchers have employed "residual approaches" to estimate brand equity. A basic tenet

behind these approaches is that it is possible to infer the relative valuation of brands through theobservation of consumer preferences and choices if as many sources of measured attribute valuesare taken into account as possible. According to these approaches

Valuation ApproachesThe ability to evaluate and put a price tag on a brands value may be useful for a number of reasons: 1) mergers and acquisitions -- both to evaluate possible purchases as well as to facilitatedisposal; 2) brand licensing -- internally for tax reasons and to third parties; 3) fund raising -- ascollateral on loans or for sale or leaseback arrangements; and 4) brand management decisions --to allocate resources, develop brand strategy, or prepare financial reports. For example, manycompanies are attractive acquisition candidates because of the strong competitive positions of

their brands and their reputation with consumers. Unfortunately, the value of the brand assets inmany cases is largely excluded from the company's balance sheet and therefore of little use indetermining the firms value. It has been argued that adjusting the balance sheet to reflect thetrue value of a company's brands permits a more realistic view and allows assessment of the

purchase premium to book value that might be earned from the brands after acquisition. Such acalculation, however, would require estimates of capital required by brands and the expectedafter-acquisition return-on-investment (ROI) of a company. Separating out the percentage of revenue or profits that is attributable to brand equity is a difficult task.

In determining the value of a brand in an acquisition or merger, three main approaches are possible:

Cost approach. This view maintains that brand equity is the amount of money that would berequired to reproduce or replace the brand (including all costs for research and development, testmarketing, advertising, etc.). One commonly noted criticism of approaches involving historic or replacement cost is that it rewards past performance in a way that may bear little relation tofuture profitability -- e.g., many brands with expensive introductions have been unsuccessful. Onthe other hand, for brands such as Heinz, Kelloggs, and Chanel who have been around for decades, it would be virtually impossible to find out what was the investment in branddevelopment and largely irrelevant too. Finally, it obviously is easier to estimate costs of tangible assets than intangible assets but the latter often may lie at the heart of brand equity.Similar problems would exist with a replacement cost approach e.g., the cost of replacing a

brand would depend a great deal on how quickly the process were to take and what competitive,legal, logistical obstacles that might be encountered.

Market approach. According to this view, brand equity can be thought of as the present value of the future economic benefits to be derived by the owner of the asset. In other words, the amountan active market would allow such that the asset would exchange between a willing buyer andwilling seller. The main problem with this approach is the lack of open market transactions for


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brand name assets and the fact that the uniqueness of brands makes extrapolating from onemarket transaction to another problematic.

Income approach. The third approach to determining the value of a brand argues that brandequity is the discounted future cash flow from the future earnings stream for the brand. Three

such income approaches are:1) Capitalizing royalty earnings from a brand name (when these can be defined);2) Capitalizing the premium profits which are earned by a branded product (by comparing its

performance with that of an unbranded product);3) Capitalizing the actual profitability of a brand after allowing for the costs of maintaining it andthe effects of taxation.

The Brand Value Chain

Keller and Lehmann provide a broad, integrative perspective on measuring brand equity thatencompasses much of the above discussion. The brand value chain is a structured approach to

assessing the sources and outcomes of brand equity and the manner by which marketingactivities create brand value. The brand value chain assumes that the value of a brand ultimatelyresides with customers.According to the model, the first step in value creation is when an investment in marketingactivity affects the customer mind set or brand knowledge; the second step is when the mind setor knowledge, in turn, affects market performance and the different benefits accrued by the

brand; Finally, the third step is when market performance affects shareholder value. The modelalso includes a set of filters or moderator variables that impact the transfer or flow of value

between stages of the model

abm asnmnt, govind, 06917003909, mba-4

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