Brand Equity Measurement: Happydent

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Brand Equity Measurement of Happydent ANTON BABU (U108009) AYAN DASGUPTA (U108014) GAURAV KAYAL (U108019) ISHITA GOEL (U108020)

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Brand Loyalty, Adhesion, gravity

Transcript of Brand Equity Measurement: Happydent

BrandEquityMeasurementof Happydent ANTONBABU(U108009) AYANDASGUPTA(U108014) GAURAVKAYAL(U108019) ISHITAGOEL(U108020)

CONTENTS ExecutiveSummary.................................................................................................................................3 BrandEquityMeasurement....................................................................................................................5 BrandEquityModel............................................................................................................................6 ThreePillarModel...............................................................................................................................7 StochasticShare..................................................................................................................................8 Analysis...................................................................................................................................................9 BrandLoyalty(AnoffshootofthePreferenceBehaviourModelandMeasures)..............................9 BrandAdhesion.................................................................................................................................11 PriceSensitivity.................................................................................................................................14 StochasticShare................................................................................................................................16 BrandGravityandBrandFocus.........................................................................................................21 BrandElasticity .................................................................................................................................23 . Conclusion................................................................................................Error!Bookmarknotdefined. References............................................................................................................................................26

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ExecutiveSummary InthePhaseIofourproject,wemeasuredthebrandimageofthebrandHappydent,inthecandy mouthfreshenercategory,usingacombinationoftheBAVmodelandladderingmethod.Ourlast findingindicatedthatHappydentwasaleaderinitscategory,beatingoffcompetitionfromtherival brands. InPhaseII,weworktowardsmeasuringtheequityofbrandHappydentusingamodelwhichisa modificationtoexistingmodelsavailableforcalculatingbrandequity.WeuseaThreePillarmodel factoring in the components Price Premium, Brand Loyalty and Market Share to arrive at a definitivemeasureofbrandequity. While evaluating the Brand Loyalty component, the results showed that in the case of Happydent (andthecategoryingeneral),thecustomerattitudecouldbebestdescribedasbelongingtothelow involvement hierarchy (act feel think). The study reflected the brands reliance on highly loyal customerstodriveitsfortunes. To determine the Market Share we based our findings on a combination of Stochastic share and operationalsharetoarriveatasuggestivefigure.Wedeterminedthestochasticsharetofigureout theprobabilityofthebrandbeingselectedon the next purchasedecision.Beingadeterminantof themindshare,thestochasticpreferenceshareofthedifferentbrandswasaclearpointertothe factthatHappydenthadthehighestshareoftheconsumersmind. WealsocalculatedtheOperationalshareofthedifferentbrands,anindicatorofthemarketshare of these products in the candy mouth freshener category. Happydent yet again scored over its competitorslikeChloromintandMentos. Price Premium being very important to measuring the brand equity, we relied on the Price and qualitymatrixwhichwillcheckthepremiumthatthebrandcanchargefromitsconsumersforthe qualitythattheyprovide.Throughthismodelweinferredthatasignificantnumberofrespondents viewedHappydentasgoodorsuperiorquality,whileasimilarpercentageofrespondentsconsidered thepricetobenotabarrieroratbestaminorbarrier;implyingthatforasuperiororgoodquality product (even for a low involvement product category as this) the customer was willing to pay a higherprice. We also tried to figure out the brand gravity and brand focus of Happydent with the results implying that the brand has a huge potential market waiting to be tapped and increasing its marketing efforts would be worthwhile. The results also confirmed an earlier inference that Happydentreliedheavilyonsalestoitsloyalcustomers.

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IntermsofbrandadhesionHappydentisperceivedlessasacommodityascomparedtothe"mouth freshener category". There are strong loyalists to the brand, despite the category being a low involvement one. Consumers have strong attitudes towards the brand "Happydent" and they can identifywithit. To sum it up, the brand Happydent scored high on all three parameters price premium, brand loyalty, and market share (the market share was determined as a function of the operational share). However we also found out that most of its sales were derived from its (highly) loyal customers,andeffortswereneededtobedirectedtowardsincreasingitscustomerbasesincethere wasapotentialmarkettobetapped.TheoverallBrandEquityofHappydentwasonthehigherside.

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BrandEquityMeasurementTheconceptofBrandEquitybegantobewidelyusedinthe1980sbyadvertisingpractitionersand was then popularised by Aaker through his bestselling book on the subject. Advertising agencies suchasLeo Burnett,DDBNeedhamandYoung& Rubicamhavecontinued tochampion the cause anddevelopedtheirowndefinitionsandmeasurementsystems. Traditionally marketers have emphasized shortterm measures such as current sales, profitability, and market share. However, these measures dont always reflect the real success of marketing, whichistosecurethelongtermpreferencesofconsumers,generatefuturecashflow,andmaximize returnsforshareholders. Thereshouldindeedbeabalancebetweenshorttermandlongtermperformancemeasurement.A brand manager who cuts advertising to meet this years profit target may also end up reducing brand equity (and the likelihood of future purchases) because of lower awareness levels and weakeningbrandattitudes.Thismaynotshowupinthisyearsshorttermperformancemeasures, suchassales,butmaystarttoimpactthemnextyear.Bymeasuringbrandequityinadditiontothe yearssales,thelongtermdamagetothebrandwillbeevident. Sowhatisbrandequity?Itconsistsoftheoutcomesthataccruetoaneed/wantsatisfierwhenthe brand name is added on. In case of acommercial brand, these outcomes include the capability to chargeapremium,capabilitytoincreasesales,capabilitytogetadiscount,capabilitytowithstand attacks like price cuts, sales promo schemes, margin attacks etc. Sales is not a good measure of these outcomes because it is not the best indicator of the future as it ignores the impact of the increased competition, and sales could be bought by using shortterm measures like sales promotion. Key steps to measuring brand equity include determining which relationships are important,identifyingthemajorfactorsthatdeterminethestrengthofeachrelationship,developing reliableindicatorsofeachrelationship,andtestingthemeasurestoidentifythosethatmattermost andtrackthemregularly. Thusemphasisshouldbeonbrandequityasakeyperformanceprioritysothatmanagementcanbe focussedontheimmediateaswellaslongtermimpactsoftheiractionplans.

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BrandEquityModelAakeroriginallyoutlinedfivecomponentsofbrandequity Brandloyalty Brandawareness Perceivedquality Brandassociationsinadditiontoperceivedquality Intellectualpropertiessuchastrademarksetc. Inthemodelthatwehavedevelopedforcalculatingbrandequity,wehaveconcentratedonspecific aspectsofthebrandlikeavailability,functionaluse,pricesensitivity,trustthatoneassociateswith the brand, and whether it is worth recommending to others; besides the perceived quality. These willencompassallofthecomponentsofBrandEquityasdefinedbyAaker. Forexample,brandloyaltyisafunctionoftwofactorsbeliefsandbehaviour.Pricesensitivity(or value for money as defined in the questionnaire) constitutes the belief which is what drives the loyalcustomertochooseonebrandovertheother.Similarlypurchasefrequencynumberoftimes thebrandwaspreferredwhenpurchasewasmadeforthecategoryisanindicatorofbehaviour becauseonecannotbeloyaltoabrandunlessitisboughtfrequently. Wealsosoughttotestthebrandsleveragability,onwhetheritcanbeextendedtootherrelated,or unrelated,productcategories.Leveragabilityisthecapabilityofthebrandtostraddleotherneedor wantsatisfiers. In order to test the consumer attitude towards the brand, we tried to analyse the attitude shown while purchasing the brand in terms of the different hierarchies possible the learning hierarchy (think feel act), the emotional hierarchy (feel act think), and the low involvement hierarchy (act feel think). This gives further insight into the brand associations, which is an important componentofbrandequity.BrandPersonalityisalsotested,asalsohowdifferentiatedthebrandis withrespecttootherproductsinthecategory.

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ThreePillarModel

Price Premium

Brand Loyalty

Market Share

PricePremium Onewaytomeasurebrandequityistodeterminethepricepremiumthatabrandcommandsovera genericproduct.Ifconsumersarewillingtoshelloutafewrupeesmoreforabrandedproductover thesameunbrandedproduct,thenthispremiumprovidesimportantinformationaboutthevalueof the brand. However expenses such as promotional costs must be taken into account when using pricepremiumtomeasurebrandequity. BrandLoyalty Thisrepresentswhatportionofabrandssalesisdrivenbyloyalchoicebehaviourandwhatportion isdrivenbydifferentlymotivatedchoicebehaviour.Thismetric,calledloyaltycontributionmakes it easier to compare brands. It not only provides insights about the true equity component of a brandsshare,butitisalsopossibletorelateit,tothebrandsoverallperformance. MarketShare Yetanothermetricforcalculatingbrandequityistofindouttheeffectivemarketsharei.e.thesum ofweightedmarketsharesineachmarketsegmentthatoneoperatesin.However,evenifabrand enjoysthehighestmarketshare,anotherbrandmayhavethehighestchunkofloyalcustomers.This helpsusinunderstandingtheunderlyingconsumerbehaviourpatterns.The behaviourofthecore groupi.e.loyalmorecloselyreflectsthetrueequityofthebrand,andweknowthatbrandscan benefitfromhavingthecoregrouprepresentingalargeshareoftheirtotalfranchise.Thisillustrates whymarketsharealoneisaninadequatemetricforquantifyingthequalityofbrandequitywithin theworkplace.

WhytheThreePillarmodel? The threepillar model is a modification to the Aakers model that is generally suggested for calculating brand equity. It takes into account the fact that Happydent is a high impulse, low involvementproductandthusfactorslikepricepremiumandbrandloyaltycontributeheavilytothe brandequity(asdoesmarketshare,obviously)comparedtoothercomponentsofBrandEquityas outlinedbyDavidAaker.Strongbrandequitybasedonthese,simplifiesthedecisionprocessforlow costandnonessentialproducts(likeHappydent)andinsuresthattheproductisconsideredbymost buyers.

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StochasticShareStochastic share in the simplest of terms can be defined as a mind share that reflects the probabilityofabrandbeingselectedonthenextpurchasedecision.Itsaprobabilitymarketshareof thebrandbasedonattitude,andiscalculatedfrom The proportion of Insisters and Preferrers (the two categories of consumers out of the branddispositionladder) Thesizesofthepreferredsets

Itisthereforeatruemeasureofbrandstrength,sinceitreflectsexpressedpreferencesindependent ofbehaviour.Thestochasticsharecanbeusedtointerpretthefollowing Shareofmindofthebrandamongsttheconsumers Ameasureoftheefficacyofthestrategicinputsbythecompany Areflectionofwhattheconsumerswouldliketodo

The Operational Share of a brand is the representation of the Market share of the brand when appropriate market data is not available. The Operational share data is usually used to determine thesuccessofthesellingeffortsandreflectswhattheconsumersarepersuadedtodoapartfrom reflectingthemarketsharesofthebrands. ThestochasticsharegeneratedisalwayscomparedwiththeMarketshareorOperationalShare ofthebrandtodeterminethefollowing FailureorSuccessinmaximizingthemarketpotentialofthebrand Whethertheexistingbrandfranchiseisvulnerableornot

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Ana alysisBran ndLoyalty Stoch hasticShar re Majo orAttribut tes Bra andElasticity

Beh havioral Attitudinal Brand Loyalty (An off shoot o the Preference f of P eBehavio our Mode and el Measu ures)Behavio oural Measu The m ure main indicat of behavioural mea tor asure is rep peat purchases. The advantages of the behavioural measure include the focus on t the most re elevant crite erion for managerspurchase, the avoid dance of situ uational effe ects by mea asuring over time across several s incident ts,andthere elativelystraightforwardnatureofth hedata. The maj limitation of behavioural measu jor ures is the failure to id f dentify motiv and the resulting ve confusio onbetween brandloyalt tyandother formsofrepeatbuying. .Forexamp ple,repeatpurchases may res sult from ei ither low in nvolvement or distribut tion limits. Two consu umers may regularly purchaseHappydentfromapar rticularbakery.Onedoe essobecaus sehelovesH Happydent;h hewould driveacrosstownto ogetthem.T Theotherbu uysthembecausehecat tchesthebusoutsidethe ebakery. AlthoughhelikesHa appydent,he eactuallypr refersother brandstoHappydent,ju ustnotenou ughtogo outofhiswaytobuy ythem. Purchasebehaviour raloneisins sufficient.Themajordis sadvantaget tobehaviourbasedmea asuresof loyaltyistheinabilit tytoidentify ythestrengt thorqualitat tivenatureo oftheconsumersrelatio onshipto thebran nd.Multiple epurchases mayreflect aweakpref ferencebase edonlimited dknowledge e.Or,no preferen ncebutmere ehabit.Or,nopreferenc cebutlimite edavailability yofbetterlikedalternat tives. Attitudinalmeasure eThemajor ralternative eoperationaldefinitioni isbasedon consumera attitudes, preferen nces, and pu urchase inte entions. The following chart shows the breaku of most preferred e c up p brandin nthemouthfreshenerca ategory.

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CentreFr resh 14% Ment tos 14% %

Happydent 32% 3

Orb bit 20% %

Chlo oromint 20% 2

5Responden nts Base:35 Theadv vantagesofa attitudinalm measuresmay yincludeide entificationo ofthereasonsunderlyin ngloyalty andgrea aterprotectionagainstt theeffectso oftemporary yconditions, ,suchassto ockoutsors shortrun competi itivepromotions. In case of Happydent and the c category in g general we find the customer attitu to be of the low f ude f involvem ment hierarc that is, First Act (be chy ehaviour) th feel (em hen motion) and finally think (belief). k When a asked to def fine what H Happydent st tands for th hem the ma aximum num mber of resp pondents respond with Re ded ejuvenating and refresh hing followed by Whi teeth w ite which indicat their tes positive attitudetow wardsthebr rand.Weals soseethatitisinthepr referredset for33outo ofthe35 dentswhicha againindicat testhehighp preferenceg giventotheb brand respond Thus, th two imp he portant para ameters of the model reflect a b brands reliance on high loyal hly custome and its s ers success in a attracting brand switche The firs group are those who have a ers. st e o positiveattitudetow wardthebrand(preferit)andwhobuyit.These econdgrouparethosewhobuyit onagivenpurchase ebutwhomaypreferan notherbrand d.Happydent tscoreshigh hwiththefir rstgroup whileitscoresloww withtheseco ondgroup.

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BrandAdhesionBrand Adhesion measures the attitude of the consumers towards a product. It categorizes the customersinfourcategories: LoyalistsConsumerswhothinkthatthereisarealdifferencebetweenbrandsandalwaysbuythe samebrand HabitualistsConsumerswhothinkthatthereisNOrealdifferencebetweenbrandsBUTalwaysbuy thesamebrands Discriminators Consumers who think that there is a real difference between brands but DONT alwaysbuythesamebrands Commodity Buyers Consumers who think that there is NO real difference between brands and DONTalwaysbuythesamebrands Acategoryadhesionismeasuredwhentherespondentschoosefortheproductsingeneralforthat category.Followingwhich,adhesionforHappydentismeasured. Followingarethequestionsusedtomeasureadhesion:

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Implica ations 16customer rsgoforapa articularbrandinthemo outhfreshen nercategory, ,outofthese eonly11 are brand l loyal to Hap ppydent. That is, there is 68.75% of the consumers are loyal to Happydent outofthetotalconsum merswhobuy yaparticula arbrandin t mouthfreshener the hus,itcanbeinferredth hatconsume ershavestro ongattitude estowardsth hebrand category.Th "Happydent t"andtheyid dentifywithit. 4consumersgoforapa articularbrandintheca ategoryouto ofhabit;how weverthenu umberin scanbeattr ributedtoth hefactthat therearestillstrong caseofHappydentismore(5).This loyaliststot thebrand,d despitethec categorybein ngalowinvolvementon ne.Thusthe enumber ofhabitualis stsincreases. Page12

BrandE EquityMeasurement

Happydentisperceivedlessasacommodityascomparedtothe"mouthfreshenercategory" as a whole as the number of consumers in the Commodity Buyer grid falls for the brand Happydent as compared to the category. Thus Happydent is more of a brand than a commodity.

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PriceSensitivityThebeliefthatdrivebehaviouracrossmostcategoriesarepriceandqualityafterconsideringthe distributionofpricesensitivitiesinthemarketplace.Thesetwosituationsrepresentscenarioswhere consumers make a decision based on either quality/price. At the other end of the pricesensitivity spectrum are consumers for whom price, at least in this category, is never a barrier; once they decidetopurchaseinthecategory,onlythebestwilldo.Also,loyalcustomersthinktheirbrandis superior for some reason, and this superiority has the effect of minimizing their price sensitivity. Nonloyal or occasional users have differing quality perceptions that result in greater price sensitivity. ThefollowingquestionswereaskedtomeasuretherelationbetweenPriceandquality

Happydent Pricenotabarrier Priceminorbarrier Price significant barrier Priceabsolutebarrier Total Orbit Pricenotabarrier Priceminorbarrier "Superior 28.57% 20.00% 0.00% "Good 14.29% 5.71% 8.57% 28.57% "Acceptable 11.43% 5.71% 2.86% 20.00% "Poor" 2.86% 0.00% 0.00% 2.86% Brand Total 57.14% 31.43% 11.43% 0.00% 100.00%

48.57%

"Superior "Good 28.57% 22.86% 11.43% 2.86% 8.57% 22.86%

"Acceptable 8.57% 5.71% 2.86% 2.86% 20.00%

"Poor 0.00% 0.00% 5.71% 5.71%

Brand Total 48.57% 31.43% 17.14% 2.86% 100.00% Page14

Price significant 0.00% barrier Priceabsolutebarrier Total 51.43%

BrandEquityMeasurement

Chloromint Pricenotabarrier Price minor barrier Price significant barrier Price absolute barrier Total "Superior 34.29% 20.00% 0.00% 54.29% "Good 17.14% 5.71% 2.86% 25.71% "Acceptable 8.57% 5.71% 2.86% 17.14% "Poor 2.86% 0.00% 0.00% 2.86% Brand Total 62.86% 31.43% 5.71% 0.00% 100.00%

CentreFresh Pricenotabarrier Price minor barrier Price significant barrier Price absolute barrier Total "Superior 22.86% 20.00% 2.86% 45.71% "Good 14.29% 5.71% 8.57% 5.71% 34.29% "Acceptable 5.71% 2.86% 5.71% 2.86% 17.14% "Poor 2.86% 0.00% 0.00% 2.86% Brand Total 45.71% 28.57% 17.14% 8.57% 100.00%

Mentos Pricenotabarrier Price minor barrier Price significant barrier Price absolute barrier Total "Superior 42.86% 14.29% 2.86% 60.00% "Good 20.00% 5.71% 2.86% 0.00% 28.57% "Acceptable 5.71% 2.86% 2.86% 0.00% 11.43% "Poor 0.00% 0.00% 0.00% 0.00% Brand Total 68.57% 22.86% 8.57% 0.00% 100.00%

ImplicationsAnalysing,theabove4beliefgridsofthe4brandswecanseethat42.86%oftherespondentsview Happydentasgoodorsuperiorquality,whilethefigurefortheotherbrandsstandsatOrbit40% Chloromint 51.43%, Centre fresh 37.15% and Mentos62.86%. This is backed up by a large majority of people for whom price is not a barrier or a minor barrier Happydent48.57%, Orbit

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(51.43%),Chloromint54.29%,Centrefresh(42.86%)andMentos(57.15)Thus,wecanseethatfor asuperiororgoodqualityproductconsumersarewillingtopayahigherprice.

StochasticShareA separate questionnaire for stochastic share was used and a sample size of 95 customers respondedtothequestions.Twoquestionwereaskedtotherespondents 1. The first question asked the respondents to list down the brands in the branded mouth freshenercategorythattheyintendand/orwouldprefertopurchase.Fromthiswegotthe preferredsetsofeachofthebrands.

2. Due to unavailability of Market Share data in the branded mouth freshener category, the OperationalShareofeachofthebrandswasfoundout.Thequestionaskedforthisasked therespondentthebrandofmouthfreshenerpurchasedbyhim/heratthetimeofthelast purchase.

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StochasticShareAnalysis1. ThepreferredsetsizeforeachBrandPreferrerswascalculatedi.e.Averagepreferredset size. This indicated how many brands were being preferred on an average among the Happydentpreferrers,amongChloromintpreferrersandsoon. 2. The size of each brand preferrers was calculated next. It indicated the proportion of HappydentpreferrersinthesampleproportionofChloromintpreferrersandsoon. 3. Then the size of the preferrers was divided by the preferred set size for the respective brandsandtheratioforeachbranddetermined. 4. Summatedalltheratiosofallthebrands 5. Thestochasticshareofeachbrandwasdeterminedfinally,byextrapolatingthesummated ratioto100andconsequentlytheratiosofeachbrandalso.

ImplicationsTheStochasticpreferenceshareofthedifferentbrandswascalculated.Thefindingsareasfollows StochasticShareMarket Happydent Chloromint Mentos Orbit CentreFresh ItcanbeclearlyseenthatthestochasticshareofHappydentisthehighest,followedbyChloromint, Orbit, Mentos and Centre Fresh. It thus indicates that Happydent has the highest share of mind amongst the consumers. The strategic inputs of the company have been very effective. In other words,Happydenthasthehighestshareoftheconsumersmindwhichcanbeattributedtoallthe marketingactivitiesundertakenbythecompanytilldate.Thustheconsumerswouldliketobuythe brandHappydentmore,orconversely,everyoneoutofthreeconsumersonanaveragewouldwant tobuyaHappydentmouthfreshener. 30.327 20.819 12.232 16.845 19.777

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StochasticShareCentrefres h 20% Happydent 30%

Orbit 17% Mentos 12% Chloromint 21%

Outofthe95consumerswhoresponded,24consumershadboughtaHappydentmouthfreshener attheirlastpurchase.Similarly,22consumershadboughtaChloromintmouthfreshenerattheirlast purchase,andsoon. Happydent Total 24 respondents % 25.26 respondents TheOperationalSharerepresentedbelow,canbetakenasaproxyfortheMarketshareofbrandsin thebrandedmouthfreshenercategory.ItcanbeseenthatHappydenthasthehighestmarketshare (25%), closely followed by Chloromint (23%) and Mentos (19%). Thus it can be predicted that the selling efforts of the brand Happydent and Chloromint have paid off, as can be seen by operationalsharesofmorethan20%inahighlyclutteredcategory.Aninterestingthingtonoteis, that the others category (including brands like Pass Pass, Big Babol, etc.) occupies an operational shareof10%. Chloromint Mentos Orbit 22 18 14 23.16 18.95 14.74 CentreFresh 8 8.42 Others 9 9.47

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Others 10% centrefresh 8% Orbit 15%

OperationalshareHappydent 25%

Mentos 19%

Chloromint 23%

Oncomparisonofthestochasticshareandoperationalshareobtained,therearethreepossibilities thatcanexist 1. IfOperationalShare>StochasticShare,thebrandisperformingabovepotential 2. IfOperationalShareStochasticShare,thereforethebrandisperformingabove potential. OrbitTheOperationalShare