Difference Between Product and Brand

1.Product is made in

1. A brand is bought

a factory
2. A product can be
copied.
3. A product can be quickly
outdated.

by the customer .
2. A brand is unique.
3. A successful brand is
timeless

BRAND EQUITY
BRAND EQUITY : is a set of brand assets and

liabilities linked to a brand , its name and symbol ,

that add to or subtract from the value provided by
a product or service to a firm and /or to that firms
customers.
For assets or liabilities to underlie brand equity
they must be linked to the name and/or symbol of
the brand.

BRAND EQUITY
The assets and liabilities on which brand equity is

based can be grouped into 5 categories

1) Brand Loyalty
2) Name awareness
3) Perceived quality
4)Brand associations in addition
to perceived quality
5)other proprietary assets :
patents, trademarks,channel relationship etc.

BRAND EQUITY
Name Awareness
Brand Loyalty
Brand Equity
Provides value to customer by
enhancing customers
Interpretation /Processing of
information.
Confidence in the purchase
decision.
Use satisfaction/delight

Perceived quality
Brand Associations
Other proprietary
brand assets
Provides value to firm by
enhancing:Efficiency and effectiveness
of marketing programs
Prices/Margins
Brand Extensions
Trade Leverage
Competitive advantage

What is the value of a brand

Price premium generated by the name:
Impact of the name on customer preference
Replacement value of the brand
Stock price
earning power of a brand

Replacement value of the brand

Replacement cost: cost of establishing a comparable name

and business .
It is estimated that it costs $50 -100 million to develop
and launch a new consumer product and chances of
success is around 12-15%..
Thus on an average a firm will have to make 6 products
costing $ 300 million (taking the lower estimate)to ensure
atleast one winner.
A firm thus should be willing to pay $ 300 million to an
established brand in the category of interest.

Brand value based on stock price movements

Stock market adjusts the price of a firm to reflect future prospects of its

brands.
1) Find market value of firm --> function of stock price and number of shares
2) Find the replacement cost of tangible assets (plant, machinery, inventories,
cash)
3) Subtract 2 from 1
4)The balance intangible assets is apportioned into three components : value
of brand equity , value of nonbrand factors (R&D, PATENTS)
and
value of industry factors (regulation and concentration)
5) Brand equity is presumed to be a function of age of the brand, entry of the
brand in the market (older brand has more equity), cumulative advertising
(advertising creates equity) and the current share of industry advertising
(current advertising share is related to positioning advantages).

Brand value based on Future Earnings

Find the discounted present value of future earnings

attributable to brand -equity assets.

Approach No.1 :-- discount the profit stream that is
projected
Approach No. 2 : when brand profit plan is not available ,
estimate current earnings and apply an earnings multiplier.
If the current earnings are not representative because
they reflect an up or down cycle , then average of the past
few years is more appropriate.
The multiplier range
could be 7 to 12 or 15 to 25 depending on the industry.

 The actual multiplier is a function of the competitive advantage of the brand.

The estimate is based on weighted average of appraisal of the brand on the 5

dimensions of brand equity.

Appraising Brand Assets 1) brand Loyalty :
a) What are the market shares and sales trends
b) What are brandloyalty levels by segment
c) Are customers satisfied/delighted ?
D)
are they dissatisfied? What is the reason/extent of
dissatisfaction
2) Awareness :
a) Brand awareness level exists as compared to that of
competitors? B) What are the trends
c) Is the brand being considered?

 Perceived quality :

What drives perceived quality?

What is
important to the customer
What signals quality
Is perceived
quality valued- or is the market moving towards a commodity business
Are prices and margins eroding How do competitors stack up with respect to
perceived quality.
Other brand assets:
Is there a patent or trademark that is important?
Are there channel relationships that provide barriers to competitors? Are
sustainable competitive advantages attached tot he brand name that are not
reflected in the other four equity dimensions?

 Brand Associations :

What mental image does the brand stimulate/evoke?

Is that image a competitive advantage
Is there a slogan/ punch line /tagline /symbol that is a
differentiating asset?
How are the brand/competitors positioned.
Evaluate each position with respect to its value/relevance to consumers
and how protected /vulnerable it is to competitors.Which position is
the most valuable and protected
What does the brand mean?
What are its strongest associations?

P& G- Believers in Brand Management

In 1879 , Harley Procter named his soap IVORY
The soap was promoted as 99 44/100 % pure and that it floated.
The floatation property was created by production mistake which fed air into

the soap mixture.

Ivory was a remarkable product in a time when most soaps were yellow or
brown , irrated skin.
Also during those times the floatation value had practical value for those who
were frustrated trying to find their soap in water.
Well positioned soap----> pure, mild and floated.
The claims of purity and mildness were supported by white color, name Ivory,
the twin slogans and association with babies.
In 1941 , Lever Brothers launched Swan to challenge Ivory, but as there
was no product difference , the brand failed.

P& GS Product Portfolio - launched from

1940-1980
Tide- Detergent
Prell - Shampoo
Joy - dishwashing detergent
Crest - Toothpaste
Secret - cream deo
Jif - peanut spread
Ivory - Liquid soap
Pampers - disposable diapers
Folgers - coffee
Scope - Mouthwash
Bounty - paper towels
Pringles- potato chips
Bounce - fabric softeners
Duncan Hines - cookies

 A striking aspect of P& G has been its willingness to develop

competing brands (multi brand concept) in order to serve new

segments , even if new brands threaten existing brands.
P&G has 10 brands in laundry detergent category which reach
a variety of segment s and has given P&G a 40%+ market
share .
1) Ivory Snow : ninety-nine and forty-four one-hundredths
percent pure,, the mild gentle soap for diapers and baby
clothes
2) Tide--- For extra-tough family laundry jobs-Tides in ,
dirts out

 Cheer -works in cold, warm or hot water- All temperature Cheer

Gain- detergent with fragrance - Bursting with freshness.
Bold 3 - includes fabric softener - Cleans , softens and controls static
Dash- concentrated power, less suds to avoid clogging washing

machines
Dreft- with Borax, natures natural sweetener for babys clothes
Oxydol:- contains bleach-for sparkling whites -with color safe bleach.
Era- concentrated liquid detergent-with proteins to clean stains
Solo- heavy duty with fabric softener

Brand Loyalty
Brand Loyalty pyramid
Committed
buyer
Likes the brand, considers
brand as a friend

Satisfied buyer with switching

costs
Habitual buyer- no reason to change
Switchers /price sensitive- indifferent- no brand loyalty

Measuring Brand Loyalty

Behavior Measures:

Repurchase rates: What % of Maruti Zen owners

purchase Zen on their next purchase
% of Purchases: of the last five
purchases made by a customer, what % went to each brand purchased?
Number of Brands Purchased: What % of coffee buyers bought only
a single brand?, two brands?

Switching costs: If it is expensive or risky for a firm or consumer to

change suppliers, then the brand loyalty is on the higher side.

Investment in computer system or software like SAP

E.g :

Strategic value of Brand Loyalty

Reduced Marketing Costs: It is much less costly to retain

customers then to attract new one ( COST RATIO IS 1:4)

Trade leverage: Strong pull (brand loyalty) from consumers
will ensure preferred shelf space because stores know that
customers will have such brands on their shopping list.
Attracting new customers:
Time to respond to competitive threats:If a competitor
develops a superior product , a loyal following will allow
the firm time needed for the product improvements to be
matched and neutralized.

Creating & Maintaining Brand Loyalty

Treat the customer Right
Stay close to customer
Measure/Manage Customer Satisfaction
Create switching cost
Provide extras

Creating & Maintaining Brand Loyalty

Measure / Manage Customer Satisfaction :

Regular
surveys of customer satisfaction are useful in understanding
how customers feel and it also helps in adjusting product and
services. Dominos Pizza conducts weekly phone surveys
of customers measuring dimensions like response time,
lumpiness of dough, freshness of pepperoni and attitude of
delivery people. A bonus pool is distributed based upon
these measures.
Create Switching costs: Reward loyalty directly. For e.g The
airlines frequent flyers program .

Brand Awareness
Ability of a potential buyer to recognize or recall that a

brand is a member of a certain product category.

Top of
Mind

Brand recall
Brand Recognition
Unaware of brand
The awareness Pyramid

 Brand awareness creates value in the following\g ways : 1)

Anchor to which other associations can be attached : for

e.g McDonalds:- Golden arches, clean/efficient, kids , fun
etc. 2) Familiarity/Liking: recognition provides the brand
with familiarity and people like the familiar.
3)Substance /commitment:
The firm has been in
business for a long time. The firm is widely distributed and
the brand is successful.
4) Brands to consider ----- it
enters the evoked or consideration set.

How to achieve Awareness

Be different , Memorable:
Involve a slogan or jingle: e.g Lifebuoy hai jahan , tandorosti

hai wahan.
Symbol exposure: colonel sanders --KFC, golden archesMcdonalds---> symbol should closely associate with the brand.
Publicity--- advertisement.
Event Sponsorship --- Femina Miss India, Manikchand Filmfare

awards.
Consider brand Extensions : one way to gain brand recall is to

put the name on other products.

Perceived Quality
Defn : customers perception of the overall

quality or superiority of a product or service

with respect to its intended purpose, relative
to alternatives.

Perceived Quality
Quality dimensions :

1) Performance : How well does a washing

machine wash clothes---> primary operating characteristics of service
2) Features: secondary elements like on/off timer in washing
machine etc. 3) Conformance with specifications: --- absence of
defects----- trouble free .
4) Reliability--- will the vacuum cleaner
work the same way each time it is used. 5) Durability: How long will the
washing machine last 6) Serviceability: is the service system efficient ,
competent and convenient.
7) Fit and finish:- does the product look
and feel like a quality product.

Perceived Quality
Research has shown that in many product classes a key

dimension which is visible can be pivotable in affecting

perceptions.
1) Stereo Speakers: larger size means better sound
2) Tomato ketchup-- thickness means quality.
3) Supermarkets--- fresh products means overall
quality.
4) cars: a solid door-closure sound implies good
workmanship and a solid safe body.
5) lawn mover-- noise signals quality