8/31/2009

PRODUCT AND BRAND MANAGEMENT PROJECT

XIMB
PHASE 2

Brand Equity | DOVE

 Product and Brand Management Project- Phase 2

Part 2: Brand Equity Measurement

EXECUTIVE SUMMARY

The objective of this phase of the project is to measure the Brand Equity for
the brand “Dove”.

Brand equity refers to the marketing effects or 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. In a market where products are
similar, branding can have a large effect on the price that customers will pay.
Brands therefore add value to a basic product or service by enabling the
product or service to command a higher price, or higher market share than
an unbranded equivalent. Its value may be a monetary value (which may be
discounted to a net present value), an increase in a rate of return or any
number of softer market research measures such as awareness or
consideration.

There are at least two perspectives from which to view brand equity:

• Financial or pricing based approach: One way to measure brand

equity is to determine the price premium that a brand commands over
a generic product.

• Consumer based: A strong brand increases the consumer’s attitude

strength toward the product associated with the brand.

In this part of the project we have used a combination of three techniques to

measure the brand equity of the brand Dove:

1) Price Premium at Indifference ( Price Based Method of calculating

Brand Equity)

2) Yoo and Dinthu’s Brand Equity Model

3) David Aaker’s Brand Equity Model.

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

Indifference method concentrates only on the financial aspect of brand

equity and the price premium that the brand can command in the category
over generic products. This shortcoming is overcome by using the other two
methods which concentrate on the other factors that influence the mind of
the consumer and emphasizes on the fact that equity does not lie in price
alone.
The brand equity has been calculated by comparing Dove with two other
brands: Pears and Lux.

The major findings are:

• 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 major recommendations:

• 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

• Knowledge about the brand is fairly high and is comparable to popular

category brands like LUX. Basis the awareness is comparable to highly
popular brands like Lux, it can leverage this by catering to any lapses in other
premium category soaps like Camay etc.

• 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

4) Price Premium at Indifference ( Price Based Method of calculating

Brand Equity)

5) Yoo and Dinthu’s Brand Equity Model

6) David Aaker’s Brand Equity Model

JUSTIFICATION FOR CHOOSING THE BRAND EQUITY MODELS

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

PRICE PREMIUM METHOD1

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.

Advantages of Price Premium Method2:

• Transparent and easy to understand

• Relationship between brand equity and price is easily explained

Disadvantages of Price Premium Method:

• When a branded product does not command a price premium, the

benefit arises on the cost and market share dimensions

Approach and Implementation

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:

1) Dove v/s Pears

2) Dove v/s Lux

3) Pears v/s Dove

4) Pears v/s Lux

5) Lux v/s Dove

6) Lux v/s Pears

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.

Brand Equity of Dove compared to Pears= {(Revised Price of Dove/Price of

Pears)-1}* 100

= {(40/28)-1}*100

= 42.857

Similarly, in comparison with Lux, the customer switches over to Lux at a

price of Rs. 40. So,

Brand Equity of Dove compared to Lux= {(Revised Price of Dove/Price of

Lux)-1}* 100

= {(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.

Brand Equity of Dove= (42.857+135.29)/2

= 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

Product and Price

SKU (Rs.)
 Product and Brand Management Project- Phase 2

Dove ( 100gm) 33
Pears ( 100 gm) 28
Lux ( 100 gm) 17

Brand Equity Calculations for each respondent

Revis Revis Revis Revis Revis Revis Bran Brand Brand

ed ed ed ed ed ed d Equity Equity
Price Price Price Price Price Price Equit of of Lux
(Dove (Dov (Pears (Pear (Lux (Lux y of Pears
v/s e v/s v/s s v/s v/s v/s Dove
Pears Lux) Dove) Lux) Pears Dove
) ) )
35 35 28 28 17 17 65.44 24.78 -43.89
33 80 120 120 17 17 194.2 434.76 -43.89
2
33 51 56 51 17 17 108.9 134.85 -43.89
3
33 33 33 28 28 25 55.99 32.35 -12.93
33 40 40 40 17 17 76.58 78.25 -43.89
40 40 28 33 17 17 89.08 39.48 -43.89
50 50 28 33 17 17 136.3 39.48 -43.89
4
33 50 40 40 17 17 105.9 78.25 -43.89
9
50 50 28 28 50 17 136.3 24.78 6.11
4
33 40 40 32 17 17 76.58 54.72 -43.89
43 33 28 28 24 24 73.84 24.78 -20.78
33 37 30 35 17 17 67.75 48.40 -43.89
33 45 40 40 17 17 91.28 78.25 -43.89
33 50 50 50 17 17 105.9 122.82 -43.89
9
43 40 28 40 17 17 94.43 60.07 -43.89
33 33 30 32 17 20 55.99 39.57 -38.53
40 40 28 35 17 17 89.08 45.37 -43.89
40 40 28 40 17 17 89.08 60.07 -43.89
45 45 28 32 17 17 112.7 36.54 -43.89
1
37 33 28 32 17 17 63.13 36.54 -43.89
 Product and Brand Management Project- Phase 2
AVERA 94.44 74.71 -38.41
GE
VALUE
S
AVG. 132.8 113.12 0
VALU 5
ES
(Lux
as
base)

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.

Insights from the survey:

• 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.

YOO AND DINTHU’S BRAND EQUITY MODEL

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

• Brand loyalty: Captures the loyalty of the customer towards the

brand both independently and in the presence of availability
constraints & competitive pressure.

• Perceived Quality: Captures the perception of the customer with

respect to the quality offered by the brand and its brand promise.

• Brand awareness and associations

• Differentiation with respect to the competitors

• Overall preference measures the customers’ preference for the

brand above and beyond the objective benefits offered by it.

Advantages of Yoo and Dinthu’s Brand Equity Model:

• 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.

Disadvantages of Yoo and Dinthu’s Brand Equity Model:

• This method needs extensive validation from a large sample of

customers

• The interpretation of this method becomes clear only when a large

number of brands is compared simultaneously

Approach and Implementation

• 53 respondents were surveyed using a questionnaire which determined

the preferences and beliefs of customers regarding the brands Dove,
Lux and Pears on five parameters:

o Brand loyalty

o Perceived Quality
 Product and Brand Management Project- Phase 2

o Brand awareness and associations

o Differentiation

o Overall preference

• Each respondent had to answer the questions based on a 5-point Likert

scale for Agreement or opinion. The options were Strongly Agree (5),
Agree (4), Neutral (3), Disagree (2) and Strongly Disagree (1).

Method 1:

o The scores for questions under every parameter were summed

up and averaged to obtain a score out of 5 for the parameter.

o All the parameters were averaged to find a value for customer

based brand equity under Yoo and Dinthu’s Brand Equity Model

PARAMETER DOVE PEARS LUX

Brand 3.115 2.822 3.024
Loyalty
Quality 4.064 3.571 3.571
Perception
Brand 4.212 4.000 4.144
Awareness
Overall 3.737 3.276 3.321
Preference
Differentiatio 4.038 3.346 3.423
n
BRAND 3.833 3.403 3.496
EQUITY
FACTOR

Findings:

• Dove was found to have the highest brand equity from a

customer’s perspective. Lux came as second and Pears was
third as compared to Dove.

• When it comes to awareness, the scores for Dove, Pears and

Lux were very close, signifying that “awareness” contributes
little to cause the differentiation between the brands based on
brand equity. Thus brand awareness of Dove can be increased
 Product and Brand Management Project- Phase 2

through promotions to further enhance the brand equity of

Dove.

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.

Factor Analysis for Dove

Factor Analysis for Pears

Factor Analysis for LUX

 Product and Brand Management Project- Phase 2

Factor Analysis tables for Dove

Factor Analysis for Dove

Factor 1 Factor 2
Variable 1 0.24 0.84
variable 2 0.37 0.84
Variable 3 0.21 0.88
Variable 4 0.38 0.74
Variable 5 0.64 0.41
Variable 6 0.70 0.42
Variable 7 0.64 0.37
Variable 8 0.82 0.10
Variable 9 0.74 0.16
Variable 10 0.69 0.48
Variable 11 0.63 0.60
Variable 12 0.79 0.38
Variable 13 0.73 0.47
Variable 14 0.75 0.31
Note : All the questions are treated as separate variables

Steps involved in the calculation of Brand Equity

1) On the basis of Eigen values, two major factors emerged. We have

considered all the variables which have factor loadings > 0.5 on the
corresponding factor.

2) Next we have calculated the Factor 1 score and Factor 2 score for
Brand Dove as given below

Factor Score 1 = ( ∑ Wi*Xi/∑ W i)

 Product and Brand Management Project- Phase 2

Wi is the weightage of those variables whose factor loadings ( > 0.5) on the
Factor 1

Xi is the respondents’ response data set value

Factor Score 2 = ( ∑ Wi*Xi/∑ W i)

Wi is the weightage of those variables whose factor loadings ( > 0.5) on the
Factor 2

Xi is the respondents’ response data value

3) Next we have multiplied the percentage of variance explained by

Factor 1 and Factor 2 to the factor scores (1 & 2) to come up with the
final Brand Equity Value of the considered brands.

Factor Analysis table for pears

Factor Analysis for Pears

Factor 1 Factor 2
Variable 1 0.77 0.22
variable 2 0.84 0.23
Variable 3 0.79 0.07
Variable 4 0.75 0.23
Variable 5 0.54 0.55
Variable 6 0.67 0.40
Variable 7 0.61 0.56
Variable 8 0.11 0.86
Variable 9 0.08 0.78
Variable 10 0.61 0.55
Variable 11 0.51 0.54
Variable 12 0.56 0.66
Variable 13 0.66 0.61
Variable 14 0.55 0.66
 Product and Brand Management Project- Phase 2

Factor Analysis table for LUX

Factor Analysis for Lux

Factor 1 Factor 2
Variable 1 0.58 0.51
variable 2 0.71 0.43
Variable 3 0.70 0.50
Variable 4 0.64 0.32
Variable 5 0.72 0.32
Variable 6 0.81 0.40
Variable 7 0.80 0.28
Variable 8 0.15 0.71
Variable 9 0.12 0.84
Variable 10 0.76 0.34
Variable 11 0.68 0.36
Variable 12 0.88 0.10
Variable 13 0.93 0.12
Variable 14 0.81 0.00

Findings from Factor Analysis Method

1)

Brand Equity on the Basis of Factor Analysis Score

Dove 15.21
Pears 14.64
Lux 13.2

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.

2) The Brand Equity of Dove is built by variables 8, 12, 14 (refer to

corresponding questions of the same number) which have maximum loading
on Factor 1. The Brand equity of Dove is built as people are aware of the
 Product and Brand Management Project- Phase 2

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.

DAVID AAKER’S BRAND EQUITY MODEL

Aaker’s “Brand Equity Ten” utilizes five categories of measures to assess

brand equity (Aaker, 1996):

1. Price premium
2. Customer satisfaction or loyalty

Perceived Quality or Leadership Measures

3. Perceived quality
4. Leadership or popularity

Other customer-oriented associations or differentiation measures

5. Perceived value
6. Brand personality
7. Organizational associations

Awareness measures

8. Brand awareness

Market behavior measures

9. Market share
10. Market price and distribution coverage

Advantages of Aaker’s model:

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.

Disadvantages of Aaker’s model:

The model is very complicated and difficult. Also, a lot of subjectivity is

involved while providing weightings to different measures. Data regarding
market share and distribution coverage also needs a lot of secondary
research.

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:

• What comes to your mind when I say “premium moisturizing soap “?

• Which bathing soap comes to your mind when I say “a premium

moisturizing white bar soap from HUL “?

• Which bathing soap comes to your mind when I say, “A premium soap
with ¼ (Ek chauthai) moisturizer”?

• The advertisement tagline of this soap is “it is not a soap it is ek

chauthai moisturizer” and the logo of the soap brand is a small white
pigeon like bird?

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

on top-of-mind awareness identifies Dove for question 2 which contains a

stronger clue, his/her association with Dove is that much weaker. The brand
recall score assigned in this case is 4. The respondent gets a brand recall
score of 3 if he/she identifies Dove in the third question in which a further
stronger hint is being provided. The fourth question is almost a giveaway
which points straight to the Dove advertisement. If the respondent identifies
Dove in this question, he is given a brand recall score of 2. If the respondent
is not able to identify the brand even after the four questions, he/she is given
a brand score of 1.

Findings:

The survey was conducted on 50 respondents. 45 out of 50 respondents

recognized the brand as Dove in the first question itself. 5 out of 50
respondents recognized the brand as Dove after the second question was
posed to them. So,

Brand recall for Dove= (45*5+5*4)/50

= 4.9 (Scale of 5)

Brand Recall Scores for Dove, Pears and Lux

Bran No. of Recall at Recall at Recall at Brand

d Responden First Second Third Recall
ts Question Question Question

Dove 50 45 5 0 4.90

Pears 50 37 7 6 4.62

Lux 50 40 4 6 4.68

Customer based approach for the brands

Parameter Dove Pears Lux

Brand 3.115 2.822 3.024
Loyalty
 Product and Brand Management Project- Phase 2

Quality 4.064 3.571 3.571

Perception
Brand 4.212 4.000 4.144
Awareness
Overall 3.737 3.276 3.321
Preference
Differentiati 4.038 3.346 3.423
on
Brand 3.833 3.403 3.496
Equity
Factor from
Yoo and
Dinthu’s
Brand 4.90 4.62 4.68
Recall
Factor
CUSTOMER 4.01 3.61 3.69
BASED
BRAND
EQUITY
SCORE

RECOMMENDATIONS

• 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.

• Knowledge about the brand is fairly high and is comparable to popular

category brands like LUX.

• 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.

• Brand Dove has to build on its leadership in the segment to enjoy

overall economies of scale in both communication and distribution and
become more stable than brands in the second third and fourth
position
 Product and Brand Management Project- Phase 2

• 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