1

Praxis Business School

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

2

LETTER OF TRANSMITTAL

Dove

04/09/2011

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

3

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

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

4

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:-

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.

5

Table of contents

Sl. No. Particulars Page No.

1 Executive Summary 3

2 i) List Of Figures 6

ii) Abbreviations 7

3 Introduction 8

4 Methodology 11

5 Brand Awareness 12

6 Brand Loyalty Measurement 16

7 Leveragability 21

8 Brand Equity Model Based on Share

Tier Approach

23

9 Equity Share Calculation 26

10 Leveragability Index Calculation 27

11 Brand equity Index Calculation 28

12 Van Westendorp Price Sensitivity

Meter And Brand Equity

30

13 Basic Findings 34

13 Recommendations 34

14 References 35

6

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

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 9- Colombo Morrison Model 2

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

7

Abbreviations

BAV- Brand Asset Valuator

PSM- Price Sensitivity meter

PMC- Point of Marginal Cheapness

PME- Point of Marginal Expensiveness

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

8

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

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.

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?

Fig 1-

Integrating

Marketing

Communica

tions To

Build Brand

Equity

9

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

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.

10

Fig 2 Brand Equity

11

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.

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.

12

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

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.

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.

Fig 3- Brand Awareness Cycle

13

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

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

14

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.

The image was related to Dove. Identification of the image would indicate the level of awareness

the respondents had about the brand.

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.

82%

18%

Identified Not Identified

Fig 5-

Identificati

on Of The

Image

15

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.

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

39%

61%

Identified Not Identified

Lux Pears Dove

6

13

6

Series1

Fig 6-

Identification

Of The

Campaign

Fig 7-

Identification

Of the

taglines

16

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

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.

17

Preferred

Brand

Last

purchased

brand

Dove Lux Pears Others Total

Dove X Z

Lux X

Pears Y X

Others X

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

Brand

Last Purchased

Brand

Dove Lux Pears Others Total

Dove 12 1 1 1 15

Lux 0 1 0 0 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%

Fig 8-

Colombo

Morrison

Model 1

18

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).

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

(α)

Focus

(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

19

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

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 Lux Pears Others Total

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.

Fig 9- Colombo Morrison Model 2

20

Gravity

(α)

Focus

(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

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.

21

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

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:-

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

Yes No

21

19

Fig 10-

Brand

Loyalty

22

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

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

Powder

Tooth-

pastes

Chocolates Antiseptic-

soaps

Hair

Gel

Shoes Mobile

Phones

Beverages

Dove

7 7 4 23 23 1 0 4

Lux 13 2 2 8 13 0 0 1

Pears 5 8 4 19 14 0 0 2

Washing

Powder

Tooth-

pastes

Chocolates Antiseptic-

soaps

Hair

Gel

Shoes Mobile

Phones

Beverages

Dove 18% 18% 10% 58% 58% 3% 0% 10%

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.

Fig

11-

Lever

agabi

lity

23

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

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.

24

Dove "Superior

Quality"

"Good

Quality"

"Acceptable

Quality"

"Poor

Quality"

Price not a

barrier

20% 25% 10% 0%

Price minor

barrier

10% 15% 0% 0%

Price

significant

barrier

0% 8% 0% 0%

Price

absolute

barrier

5% 5% 3% 0%

Lux "Superior

Quality"

"Good

Quality"

"Acceptable

Quality"

"Poor

Quality"

Price not a

barrier

0% 13% 43% 10%

Price minor

barrier

3% 10% 8% 3%

Price

significant

barrier

0% 3% 5% 3%

Price

absolute

barrier

0% 0% 3% 0%

Pears "Superior

Quality"

"Good

Quality"

"Acceptable

Quality"

"Poor

Quality"

Price not a

barrier

5% 30% 20% 0%

Price minor

barrier

0% 18% 10% 3%

25

As can be seen from the above analysis, 20% of the respondents feel that Dove is of superior quality

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%

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

Price

significant

barrier

0% 5% 5% 0%

Price

absolute

barrier

5% 0% 0% 0%

Fig 12- Price

–Quality

Relationship

Fig 13- Loyalty Table

26

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

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.

Crore)

Market

Share

Proportionate Market

Share

Loyalty

Contribution Loyalty Sales

Equity

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

Total 2020 25% 100% 1008.346 100%

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

Fig 14- Equity Share Calculation

27

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.

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

Sales

Q1P2

Loyalty

Q1P2

Loyalty

Sales

Q2P1

Sales

Q2P1

Loyalty

Q2P1

Loyalty

Sales

Leveragability

Index

Dove 50 50% 25 125 60% 75 25.00%

Lux 36 100% 36 156 40% 62.4 36.59%

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.

Fig 15-

Leveragabi

lity Index

Calculatio

n

28

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

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

Quality"

"Good

Quality"

"Acceptable

Quality"

"Poor

Quality"

Price not

a barrier

100 125 50 0

Price

minor

barrier

50 75 0 0

Price

significant

barrier

0 40 0 0

Price

absolute

barrier

25 25 15 0

Lux "Superior

Quality"

"Good

Quality"

"Acceptable

Quality"

"Poor

Quality"

Price not

a barrier

0 156 516 120

Price

minor

barrier

36 120 96 36

Price

significant

barrier

0 36 60 36

Price

absolute

barrier

0 0 36 0

29

Pears "Superior

Quality"

"Good

Quality"

"Acceptable

Quality"

"Poor

Quality"

Price not

a barrier

16 96 64 0

Price

minor

barrier

0 57.6 32 9.6

Price

significant

barrier

0 16 16 0

Price

absolute

barrier

16 0 0 0

WEIGHTS

W1-15% W2-11% W3-8% W4-6% W5-5%

MARKET

SHARE

BRAND

EQUITY

INDEX

SHARE

QUALITY

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

Fig 16- Brand

Equity Index &

Share Quality

Index

30

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

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).

31

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.

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.

32

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

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.

Cheap Expensive

100% 100%

98% 98%

93% 93%

85% 76%

63% 41%

35% 18%

Indifference Price Point

Fig 17-

Indifference

Price Point &

Optimal Price

Point

33

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.

Optimal Price Point

Too Cheap

Too Expensive

100% 100%

40% 90%

28% 75%

13% 40%

11% 8%

3% 5%

34

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.

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.

35

References

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

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

http://www.brandequitymeasurement.com/

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/

36

Thank You