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EXECUTIVE SUMMARY
The objective of this phase of the project is to measure the Brand Equity for
the brand “Dove”.
There are at least two perspectives from which to view brand equity:
The basic reason for doing so is to use a combination of both Price Based and
Customer-Based Equity methods, as both the methods applied independently
have some inherent advantages and shortcomings. The Price Premium at
Product and Brand Management Project- Phase 2
• Although the brand equity of Dove compared to the other two brands is
pretty high but the brand awareness of all the brands is almost similar.
This indicates that brand awareness does not contribute substantially
to the brand equity presently. So, there is a lot of scope to increase
brand equity further by increasing the brand awareness of Dove.
• Some of the respondents were willing to pay very high prices for Dove as
compared to Lux. This was not because of brand loyalty to the brand Dove. It
was due to the fact that they were not willing to use Lux until and unless
compelled by extremely high price of Dove. This improves the brand equity
of Dove in comparison to Lux. The survey reveals that the people are willing
to pay a further premium of Rs. 10 on the current price of Rs. 33 (100 gm
bar) before they switch over to the “Lux” brand.
• On an average, the respondents felt that Dove and Pears are in the same
league and jumping from one brand to another was highly price sensitive.
But still, the survey brings to light the fact that the respondents are willing to
pay a further premium of Rs. 4.65 on the current price before switching to
the “Pears” Brand.
• According to factor analysis method (Model 2), Brand Dove has a high
differentiation and unique in all attributes. The overall brand equity of Dove
is higher than Lux and Pears. However, people who are users of Dove have
high degree of loyalty for Dove.
• The brand is high on salience and Imagery. It has a distinct image among
consumers. Hence there is no need to improve or change the product
differentiation.
Product and Brand Management Project- Phase 2
• Since the users of Dove are pretty loyal to the brand, Dove can gain
competitive advantage by increasing the consumer base. This can be
triggered by increasing the trials for the products.
For the measurement of brand equity, the group has used a combination of
Price Based Method and Customer-Based Brand Equity methods. To measure
the Brand equity of Dove, we have derived inputs from
The group has chosen to work on a combination of both Price Based and
Customer-Based Equity methods, as both the methods applied independently
have some inherent advantages and shortcomings
1
Source: Brand Management – The Indian Context, Y. L. R. Moorthy, 1999
Product and Brand Management Project- Phase 2
The premise of the price premium approach is that a branded product should
sell for a premium over a generic product (Aaker, 1991). The value of the
brand is therefore the discounted future sales premium.
This method tries to compare the free prices of brands at the price of
indifference. For our brand Dove, we have used two brands for comparison:
Lux and Pears. We conducted a survey whereby two of the three brands were
compared with each other and the prices of the brands were presented to
the respondents. So, we had six combinations where one acts as the base.
The respondents were then asked as to which brand of soap they would buy
and the price of the base was increased if the person opted for that one until
the respondent jumps to the other brand. The six combinations were:
2
Source: Valuing Brands and Brand Equity,
http://www.geocities.com/akottolli/valuing_brands_and_brand_equity.htm as on August 31,
2009
Product and Brand Management Project- Phase 2
In all of the above the first one is taken as the base. So, if in the first
combination, the respondent opted for Pears, then the revised price for Dove
would be Rs 33. However, if the respondent said that he/she would buy Dove,
then the price of Dove would be raised until the respondent jumps to Pears.
This becomes the revised price for Dove. The similar procedure has been
followed for all the combinations.
So, for example, a customer jumps from Dove to Pears at Rs. 40.
= {(40/28)-1}*100
= 42.857
= {(40/17)-1}*100
= 135.29
To calculate the brand equity of Dove in comparison to both Lux and Pears,
we calculate the mean of the two values obtained above.
= 89.08
Similarly, brand equity is calculated for other two brands as well. The brands
may also have negative brand equity. But since equity is relative, it should
not matter. To calculate the overall brand equity for the brands, we have
calculated the average of the brand equity values.
FINDINGS
Price Chart
Dove ( 100gm) 33
Pears ( 100 gm) 28
Lux ( 100 gm) 17
From the data collected, the brand equity of Dove in comparison to Lux and
Pears is 94.44. The brand equity of Pears in comparison to Dove and Lux is
74.71 and the brand equity of Lux in comparison to Dove and Pears is -38.41.
Taking the brand equity of Lux to be the base at 0, the brand equity of Dove
is 132.85 and the brand equity of Pears is 113.12.
• Some of the respondents were willing to pay very high prices for Dove
or Pears compared to Lux. This was not because of brand loyalty to
either of the two brands. It was due to the fact that they were not
willing to use Lux until and unless compelled by extremely high prices
of the other brands. This improves the brand equity of both Dove and
Pears in comparison to Lux.
• On an average, the respondents felt that Dove and Pears are in the
same league and jumping from one to another was highly price
sensitive. But that was not the case with Lux in comparison to the
other two brands.
The idea behind Yoo and Dinthu’s Brand Equity Model is that brand equity
can be measured by using a customer oriented approach. This model focuses
on the customer’s knowledge and experiences about the brand through five
variables:
Product and Brand Management Project- Phase 2
• This method argues that equity does not lie in the price at which a
brand can be sold but in the mind of the customer. Even if
consideration for selling a brand can be a measure, it is argued that
this consideration itself depends on how many people like the brand or
its customer based brand equity.
o Brand loyalty
o Perceived Quality
Product and Brand Management Project- Phase 2
o Differentiation
o Overall preference
Method 1:
Findings:
Method 2
This model uses Factor Analysis to group all the variables chosen into
suitable factors. The basic difference between Model 1 and Model 2 is that
where as Model 1 is a simple linear average of all the variables taken, Model
2 takes the weighted average of all the variables which have factor loadings
( >0.5) on the Factors.
The KMO and Bartlett’s test of Sphericity tables of the data set for Dove,
Pears and Lux has been given below. The KMO values (all >0.6) and the
significance levels of Bartlett’s (>0.95) indicate that the data is adequate for
factor analysis.
2) Next we have calculated the Factor 1 score and Factor 2 score for
Brand Dove as given below
Wi is the weightage of those variables whose factor loadings ( > 0.5) on the
Factor 1
Wi is the weightage of those variables whose factor loadings ( > 0.5) on the
Factor 2
1)
According to the factor analysis method, the Brand Equity of dove is the
highest as we had calculated by the Model 1 method. However, according to
Model 2, Pears has a higher Brand equity than LUX. This is because of
factoring in of all variables and using a weighted average method of
calculating Brand Equity.
brand. They are able to spot brand dove from across all brands. Also there
Dove enjoys high level differentiation from other brands. Dove is unique in all
attributes than other brand of soaps. Finally dove enjoys overall brand equity
than other brands like Pears and LUX.
3) On the second Factor (Factor 2), we find that Dove builds its brand equity
by inculcating a high level of Loyalty among the current users. (Variable 1, 2
and 3 have the highest loadings). This probably means that people who start
using dove become very loyal to the brand.
1. Price premium
2. Customer satisfaction or loyalty
3. Perceived quality
4. Leadership or popularity
5. Perceived value
6. Brand personality
7. Organizational associations
Awareness measures
8. Brand awareness
9. Market share
10. Market price and distribution coverage
Like Yoo and Dinthu’s Brand Equity Model, Aaker’s model also uses the
customer based approach. But in addition it also uses price premium method
Product and Brand Management Project- Phase 2
and market share and distribution strength method. So, it is a more complete
method than the other two methods.
OUR MODEL
For the customer based approach, we have merged the common aspects of
Yoo and Dinthu’s Brand Equity Model and Aaker’s model. We have also
added one more measure for the estimation of brand recall, which was not
sufficiently measured by Yoo and Dinthu’s Brand Equity Model. The use of
brand recall thus completes the customer based approach.
BRAND RECALL
The brand recall for the brand Dove has been calculated using the following
four questions:
• Which bathing soap comes to your mind when I say, “A premium soap
with ¼ (Ek chauthai) moisturizer”?
If the answer to the first question is “Dove”, then its Brand Recall is very
high. It can be given a score of 5. If the respondent does not have any brand
Product and Brand Management Project- Phase 2
Findings:
= 4.9 (Scale of 5)
Dove 50 45 5 0 4.90
Pears 50 37 7 6 4.62
Lux 50 40 4 6 4.68
RECOMMENDATIONS
• The awareness scores of all the three brands are very close, owing to
the fact that they are all well known brands. But, this also shows that
there is a potential for Dove to build a stronger brand equity by
building higher brand awareness and experience through promotion.
• The survey reveals that the people are willing to pay a further premium
of Rs. 10 on the current price of Rs. 33 (100 gm bar) before they switch
over to the “Lux” brand. The survey also brings to light the fact that
the respondents are willing to pay a further premium of Rs. 4.65 on the
current price before switching to the “Pears” Brand. So, there is a
possibility of charging a further premium over the current price.
ADDITIONAL SOURCES
http://en.wikipedia.org/wiki/Brand_equity
http://www.dobney.com/Research/Brand_equity_research.htm