Brand Equity

S.K SOMAIYA COLLEGE VIDYAVIHAR, MUMBAI

PROJECT TITLE:

BRAND EQUTIY

SUBMITTED BY:

MR. RITESH JAGTAP

ROLL NO : 81

ACADEMIC YEAR 2012-2013

SEMESTER – V

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DECLARATION

I, Ritesh Jagtap, of S.K.SOMAIYA College, of T.Y.BMS (SEM - V)

hereby declare that I have completed this project on Brand Equity in the

academic year 2012-2013.

The information submitted is true and the original to the best of my

knowledge.

Signature of the student

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Acknowledgement

I would like to extend my sincere gratitude to all those people who have

helped me in the successful completion of my project.

It gives me immense pleasure in expressing my gratitude to my project guide

Mrs.Aparna Jain for giving his precious time and help me in completing my

project and, I would also like to thank our Principal Mrs.Sangeeta Kohli and

Prof.(Mrs).Aparna Jain (Co-Ordinator), for their valuable suggestion and

support during the project and also the library staff providing the books

whenever demanded by us.

I thank them for being informative and tolerant, I would not have been able

to complete my project without sincere guidance and efforts of above

mentioned people, whose presence was blessing in disguise for me, which

motivated me to complete my project on time.

And at last, a special thanks to my parents for their constant support &

assistance, to make this project worth presenting before you.

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TABLE OF CONTENTS

Executive Summary

Introduction

Brand - Meaning

What can be branded?

Brand Power

Brand Equity

Brand Equity & Market Share

Brand Equity V/s In Market Performance (Case Studies)

Measuring Brand Equity

Increasing Brand Equity

Building Brand Equity

Managing Brand Equity

Brand Image

Importance of Brand Equity

Laws of Brand Equity

Benefits of Brand Equity

Do’s & Don’ts of Brand Equity

Conclusion

Indian Brand Equity Foundation ( IBEF )

CASE STUDIES

McDonalds Case Study

TATA Case Study

Executive Summary

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Brand Equity

The brand equity of a product cannot be known until & unless the product is branded &

has become known in the market. Brand Equity follows branding.

Brand equity can be defined in many different ways. For a brand to be strong it must

accomplish two things over time: retain current customers and attract new ones. To the

extent a brand does these things well, it grows stronger versus competition, and delivers

more profits to its owners.

Further, the importance of brand equity is that, by understanding how brand equity drives

market share, it is then possible to make use of this knowledge in order to grow the

market share of a brand.

Brand equity does not exist in nature, to be assayed like gold ore in rock. It’s

measurement depends on how you define it. The measurement can be in terms of

customers by way of quality , by financial perspectives to help the financiers.

A brand equity is comprised of its loyalty rate & relative price as per our definition thus

using the measures given we can determine our brand equity of the product & thus

eventually it will help us in getting solutions for increasing brand equity.

It is very essential to adopt the correct method to build a brand & managing brand

equity . a company who is unsuccessful to do will have to bare losses.

There are many great marketers who have helped in giving a guideline to managing brand

equity which can be of a great help if the company uses them diligently.

Brand Equity is important for three major reasons:

1. Brand Equity creates shareholder value

2. Brand Equity Building is a competency that can be mastered to create competitive

advantage

3. Brand Equity management creates an array of growth opportunities for the business

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thus it helps in increasing the overall profits of the firm . There are lots of benefits of

brand equity if a company can manage & build its brand equity well & realize the

importance of doing so.

There are laws of brand equity which are involved; if a company follows the law

sincerely it will always be in a surplus state. It jus has to take care of the ‘do’s and don’ts

of brand equity ‘

India too have realized the importance of Brand Equity & thus have established the

Indian Brand equity Foundation. (IBEF)

In conclusion, brands must be carefully and constantly nurtured over time. This is not a

one shot deal; this is something that we have to be in for the long run.

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Introduction

The concept of brand is integral to the success of any given product. But what measures a

strong brand or the success of a brand? Is it high market share, popular advertising,

effective point of sale, or the ability to command a price premium?

But before we get deeper into the subject of brand equity it is necessary for us to know a

few things like

Meaning of Brand

How is a product branded? & what products can be branded?

What is the power of a brand?

Thus we will move along the subject after a brief description on the above mentioned

questions.

BRANDBrands are an integral part of today's marketplace. Everywhere one looks

there are brands, and strong brands are the most successful products across a wide variety

of product categories.

The quote `An orange is an orange, is an orange, unless, of course, that

orange happens to be a Sunkist', a name 80 per cent of consumers know and trust, gives

an indication of what a successful brand does. The two concepts- consumer knowledge

and trust - sum up what brands and brand equity develop; those are the issues that are at

the heart of the brand and of building a brand that has a good relationship with the

customer.

The American Marketing Association defines a brand as: 'a name, term, sign, symbol or

design, or a combination of these, that identifies the goods or services of one seller or

group of sellers and differentiates them from those of the competition.' The notion that a

brand is something that identifies the goods from one person, as separate from the goods

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of another person, is a `historically-based' look at brands. It is the notion of a 'mark'

placed on a product to separate it from the rest.

A brand however, is much more than this. A brand is a promise a company makes to the

customer, of what this product is going to deliver. That is,how the brand is going to fit

into the business of the customer. The brand promise is a commitment by the

organisation, as making a promise to the customer is something that has to be followed

through. It is important that the organisation understands that by making this brand

promise, they have to live up to it. The creation of a strong brand is something the

company is going to have to commit to, in order to make it work.

WHAT CAN BE BRANDED? Many people ask whether everything can be branded, or if there are types

of products that cannot be branded. People say, `Oh sure, you know, consumer goods

products; it makes a lot of sense to brand those. But what about if I'm in hi-tech? What if

I'm in medical marketing? What if I have rational customers? Does the brand matter in

this situation as well?'

The research that has been done on this shows that, yes, branding does

matter in these circumstances. Brands have been found to give an important competitive

advantage across a wide variety of industries. In commodities, for example, Morton Salt

is the most successful brand of salt with the most successful sales. It is however, mined

from the same mine as other brands of salt.

Novar is a high technology business-to -business company that builds climate controls for

large buildings. In the 1990s they were doing well, but not outstandingly so. In 1999,

they began a branding campaign that involved a variety of strategies. They specifically

rationalised names, by choosing names that had meaning. They started to concentrate on

branding the sub-product as well as the Novar brand itself They found that within the first

seven months of their campaign, they had a 26 per cent increase in profitability, which

they attributed to their branding.

What about medical products? Brands clearly have power in this industry,

with over-the-counter products. For example, people know and trust certain headache

brands. Prescriptions have also clearly seen a big change, where brands that are being

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built, are aimed at the consumer, i.e. the end-user, rather than just at the intermediary

level.. This is also true for devices: Perclose and HP Ultrasound Monitors are examples

of brands that have been built in these areas and which haveadded to the power of those

products.

This is the basic idea of what a brand is, and an indication that brands

are important and relevant in different domains. But what is the basis

of this importance, and where is the brand's power within the marktplace?

BRAND POWER

There are two real sources of power: One derives from the customers' perspective and

whether customers perceive that the brand provides value and meaning. If they do believe

it does, then the brand reduces search costs, and this is important to consumers who lead

busy lives, and have too many choices to make. Brands help customers by reducing the

effort required to choose a good product. Once the initial search is completed by the

consumer, and the consumer has built trust and understanding in the brand, this may be

carried through to an extended product, which then cuts down the search process in the

extended category.

Trust in the brand also mitigates perceived risks. For example, if a parent has to go out in

the middle of the night to buy a pain-killer for his child, then the name, eg Tylenol, is

going to be very helpful in that purchase.

They understand what they are getting, and they believe that it is a less risky choice

because it is a brand they know. Thus, the brand also helps with interpretation, with

processing and the confidence that people have in the choices that they make.

The brand also gives other benefits of self-expression. These tend to apply more in the

consumer goods, and business-to-business realms.

In business-to-business, branding can be of great importance:

for example,there is a professional food mixer called the 'Hobart' brand, which is

the 'Mercedes' of professional mixers. There is also the issue of providing user

satisfaction. The idea that `by using this particular brand I am benefiting, because I know

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that I'm using the best. I know that I'm using something that has quality and in which I

have faith'. From the marketer perspective, it can be seen that brands are very important,

because they are an effective way to secure a sustainable, competitive advantage. The

brand allows improved identification of the product, and the likelihood of a repeat

purchase. Brands are a real way to build customer loyalty. They increase the ability to

differentiate products, within a line and apart from competitors. They allow for

segmentation, and enable a company to produce different brands for different groups of

customers. Brands provide a means for legal protection - and this is an added protection

for the particular bundle of attributes on offer.

A very important part of branding is the facilitation of new product introduction; the

notion of 'extending'. The thing that allows you to extend to a new territory, into a new

country, is very often the brand and the faith that people have in that.

Finally, the brand offers a source of financial return. The research on

the benefits of strong brands, looking across companies, shows that companies gain

greater loyalty because of brands. A strong brand makes people purchase it more often. It

creates resistance to competitive marketing action. This means that when the competitor

comes up with a new campaign, lowers the price, etc, a strong brand will help the

customer to stay with you. Larger margins can stem from strong brands. Strong brands

gain the ultimate in pricing.Strong brands are able to raise their prices without having as

many people switch, but when a strong brand lowers the price, more consumers come in

than in the case of the less strong brand. When a strong brand makes a mistake, people

treat it with more leniency and with more kindness than they do if it is a mistake from a

weaker brand.

Thus it is important for a company to realize what product is important for what kind of

customer & in what kind of regions thus the brand preference will differ from person to

person, place to place & time to time .Brand Equity determines the value & importance

of the product once the product produced is correctly branded & executed.

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What is Brand Equity?

In lay terms, brand equity is the value that a consumer attaches to a certain brand.

Although brand equity can be measured tangibly by way of certain indicators, a large

component of the concept is intangible, i.e. what perceptions and associations people

have of a certain brand, and the familiarity of those brands in the mind of the consumer.

The diagram below illustrates how brand equity is made up:

From the diagram, it is evident that the sources that drive brand equity (brand awareness,

consideration and the factors associated with it) will lead to certain outcomes. And the

more powerful the sources are, the more significant these outcomes will be. Thus, a

strong brand loyalty and ability to command a price premium will lead to resilience

against any negative short-term market factors. And this is why brand equity is essential

in assessing the performance of a brand: it has the potential to secure the success of the

brand against many variable in-market factors.

Brand Equity is defined as follows:

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Brand equity represents the value (to a consumer) of a product, above that which

would result for an otherwise identical product without the brand's name. In other words,

brand equity represents the degree to which a brand's name alone contributes value to the

offering (again, from the perspective of the consumer)."

Brand equity can be defined as three distinct elements:

The total value of a brand as a separable asset -- when it is sold or included on a

balance sheet. (Brand Valuation)

A measure of the strength of consumers' attachment to a brand. (Brand Loyalty)

A description of the associations and beliefs the consumer has about the brand.

(Brand Description)

Brand Equity as Brand Value

Brand value involves actually placing a dollar or rupee value on a brand name. The

reasons for doing this are usually to set a price when the brand is sold and also to include

the brand as an intangible asset on a balance sheet (a practice which is not used in some

countries).

It is important to note that there is a significant difference between an "objective"

valuation created for balance sheet purposes, and the actual price that a brand may get

when sold.

A brand is likely to have a much greater value to one purchaser than another depending

on the synergy that exists. For acquisitions, the value of a brand to a certain purchaser is

often estimated through scenario planning. This involves determining what future cash

flows the company could achieve if it owned and took advantage of the brand.

Brand Equity as Brand Loyalty

Loyalty is a core dimension of brand equity and is a way to gauge the strength of a brand.

It represents a barrier to entry, a basis for a price premium, and time to respond to

competitive innovations. The variety of measures used for brand loyalty usually is a

combination of one or more of the following:

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Price/demand measures--focus on a brand's ability to command a higher price or

make consumers less sensitive to price increases than price increases for

competing brands.

Behavioral measures--focus on consumers' behavior.

Attitudinal measures--focus on general evaluative measures such as 'liking' or

'disliking.'

Awareness measures--focus on identifying a brand as being associated with a

product category.

Brand Loyalty and Equity refer to the notion that some brands are "stronger" or better

than others.

Brand Equity as Brand Description

Brand description, the final component of brand equity, concerns the actual attributes of

the brand. These attributes or associations are major creators of brand loyalty. A wide

variety of techniques exist for matching consumer associations with perceptions of a

brand. These techniques can be both qualitative and quantitative. They work by getting

the respondent to link each brand with pictures or words. These attributes then can be

measured with multi-dimensional scaling to position the attributes relative to one another.

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Brand equity and market share

Further, the importance of brand equity is that, by understanding how brand equity drives

market share, it is then possible to make use of this knowledge in order to grow the

market share of a brand. Understanding the link between brand equity and market share

will thus assist marketers in which strategies are required to grow market share.

The concept of brand is integral to the success of any given product. But what measures a

strong brand or the success of a brand? Is it high market share, popular advertising,

effective point of sale, or the ability to command a price premium?

Very often only the market share of a brand is looked at as a means of determining how

successful the brand is. Although market share is of importance in assessing the

performance of a brand, its relationship with brand equity is of great significance, as this

relationship can be an indication of the potential success of a brand, or alternatively can

direct strategy on how to attain such success. The following diagram illustrates the

relationship between brand equity and market share:

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Brand equity and market share are not always proportionate. As can be seen from the

diagram, the ideal place for a brand to be situated is in the top-right quadrant. This shows

that the brand is successful in that it has a strong brand equity and high market share.

However, this may not always be the case. It is possible that a brand may have high brand

equity, but may not have an accordingly high market share (top-left quadrant). In order to

improve the market share of a brand in cases such as this, regard must then be had to in-

store issues such as display, shelf space, distribution etc. Thus, understanding brand

equity plays an important role in that it gives an indication of how a brand's performance

can be improved.

Where there is low brand equity and a strong market share (such as the bottom right-hand

quadrant), the situation is extremely tenuous. Although the picture may look good owing

to the strong market share, the reality is that, with weak brand equity, the product is

vulnerable to competitor or other in-market activity. Therefore, measuring only the strong

market share does not give the complete picture - brand equity must also be considered,

and by improving this, the full potential of the brand can be secured.

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Brand Equity v/s In-Market Performance: Strategies for Growth

A comparison of Brand Equity Indices – from ACNielsen | Winning Brands – with in-

market performance data reveals that Brand Equity valuation can be a tangible and

accountable measure for understanding the extent to which Brand Equity drives market

share. Marketers can therefore develop strategies to build market share based on

strengthening the sources driving brand equity or other marketing variables – such as

distribution, pricing or targeting – that may be impeding the brand’s in-market

performance.

A comparison of the Brand Equity Indices of FMCG brands, as well as a few in other

industries, reveals that for most, their BEIs relative to the competition are in proportion to

the market shares for the category. This demonstrates that brand equity is a strong driver

of market share, and the sources of brand equity – familiarity and brand associations –

should be examined to determine how share can be built.

However, in some cases, BEIs do not correlate with the brand’s in-market performance,

indicating there are factors other than Brand Equity, eg distribution, pricing or targeting,

that must be addressed to build share.

Strengthen Sources of Brand Equity to Drive Market Share

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Case Study 1: Food

Brand A should increase its distribution

In the absence of brand equity valuation it could be concluded that Brand A’s equity must

be strengthened to increase market shares. However, Brand A has stronger equity than

Brand B, but lower distribution, resulting in weaker market performance. Brand A should

maintain its familiarity levels and current positioning but increase its distribution

coverage.

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Case Study 2: Multinational Personal Care Brand

Brand A should strengthen its brand image in Country X & familiarity in Country Y

All key brands in the category across two countries are multinational with relative brand

equity indices in proportion to market shares. In both countries, Brand A must strengthen

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its equity to drive market share. The relative importance of the sources of brand equity

for the category in both countries is fairly similar. In Country X, Brand A and B are level

on familiarity but A has negative 'old-fashioned' brand associations. Brand A must focus

on becoming more contemporary and create a distinct positioning on associations that are

strong drivers of brand equity. In Country Y, however, Brand A has very low familiarity

and must focus on strengthening its awareness and brand consideration.

Case Study 3: Baby Food

Brand A should leverage its equity and launch a low price line extension

Equity for Brand A is significantly stronger than for Brand C, but their market shares are

comparable. Brand A is priced at a 151% premium over C, which results in a lower brand

equity to market share ratio for Brand A. Brand A has strong brand awareness and a

distinctive image on attributes that are important in the category, which drive its strong

brand equity. However, due to its price premium, its brand equity does not translate into

an equitable market share. Brand A can leverage its equity and launch a lower price line

extension to compete with Brand C and increase overall brand share.

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Thus the above three case study examples clearly shows the relevance of brand equity in

the market & its relationship with the market factors in accordance with its in market

performance affecting its overall market share & company’s profits

Measuring Brand Equity

Brand equity does not exist in nature, to be assayed like gold ore in rock. It’s

measurement depends on how you define it.

Brand equity is a concept. It does not exist in nature in the manner that the specific

gravity of elements exists as a physical entity. It cannot be assayed like the gold content

in a piece of ore. Those who argue that brand equity cannot be measured miss the

essential point. Its measurement depends on how it is defined. That definition must have

pragmatic value to a marketer of consumer products or services. It should help improve

marketing effectiveness and efficiency by providing a yardstick with which to evaluate

these things. Also, the definition should reflect the role of the brand in the dynamics of

consumer choice in a competitive environment.

To its buyers, a brand is a promise

A brand is a symbol carrying with it certain associations and images. In customer terms, a

brand represents a promise. Its value to consumers is that it reduces risk, saves time and

provides reassurance. Predictable results are the promise of a brand.

As long as a product or service meets a customer’s expectations with no unexpected

negative results, a buyer is likely to continue to buy the brand. It is the customer-oriented

definition of a brand that is at the heart of the concept of brand equity. Thus it is a

promise expressed in the form of providing quality to its customers

Qualitative Measures: The Brand Equity Ten

The Brand Equity Ten are ten sets of measures grouped into five categories, which

attempt to gauge the strength of a brand. The first four categories represent customer

perceptions of the brand along the four dimensions of brand equity- loyalty, perceived

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quality, associations and awareness. The fifth includes two sets of market behavior

measures.

Loyalty

1. Price Premium: A basic indicator of loyalty is the amount a customer will pay for a

product in comparison to other comparable products. A price premium can be

determined by simply asking consumers how much more they would be willing to

pay for the brand.

2. Customer Satisfaction: A direct measure of customer satisfaction can be applied to

existing customers. The focus can be the last use experience or simply the use

experience from the customer's view.

Perceived Quality and Leadership Measures

3. Perceived Quality is one of the key dimensions of brand equity and has been shown

to be associated with price premiums, price elasticity’s, brand usage and stock return.

It can be calculated by asking consumers to directly compare similar brands.

4. Leadership/Popularity has three dimensions.

First, if enough consumers are buying into the brand concept it must have merit.

Second, leadership often taps innovation within a product class.

Third, leadership taps the dynamics of consumer acceptance. Namely, people are

uneasy swimming against the tide are a likely to buy a popular product. This can

be measured by asking consumers about the product's leadership position, its

popularity and its innovative qualities.

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Associations/ Differentiation Measures

5. Perceived Value : This dimension simply involves determining whether the product

provides good value for the money and whether there are reasons to buy this brand

over competitive brands.

6. Brand Personality : This element is based on the brand-as-person perspective. For

some brands, the brand personality can provide links to the brands emotional and self-

expressive benefits.

7. Organizational Associations : This dimension considers the type of organization that

lies behind the brand.

Awareness Measures

8. Brand awareness reflects the salience of the product in the consumer's mind and

involves various levels including recognition, recall, brand dominance, and brand

knowledge and brand opinion.

Market Behavior Measures

9. Market Share : The performance of a brand as measured by market share often

provides a valid and dynamic reflection of the brand's standing with customers.

10. Price and Distribution indices : Market share can prove deceptive when it increases as

a result of reduced prices or promotions. Calculating market price and distribution

coverage can provide more accurate picture of the product's true strength. Relative

market price can be calculated by dividing the average price at which the product was

sold during the month by the average price at which all the brands were sold.

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To Financiers, brand equity = retained earnings.

There are several possible ways to measure brand equity in financial terms.

Brand Equity Index Model

Under this model brand equity is calculated by multiplying the relative price of the

product by market share in units. The product is then multiplied by a measure of loyalty

or durability representing the staying power of the brand.

Book or Replacement Values  

Brand equity is estimated as the replacement cost of the brand over a generic equivalent.

A generic equivalent is a product that is sold only on the basis of product attributes.

Alternatively, replacement value can be estimated as book value. The challenge with this

latter method is that marketing expenditures do not appear on the balance sheet. For

either method, replacement cost is difficult to estimate accurately.

Market Transactions  

Brand equity is estimated by identifying comparable mergers or acquisitions. The

premiums paid for those companies are associated with the equity in their brands. Data is

scarce for comparable M&A's, however, and buyers could have paid more or less than the

true value of brands.

Incremental Cash Flow from Branding  

Determining the cash flows of a brand and subtracting the cash flows from unbranded

product estimate brand equity. The estimation challenge becomes more difficult as the

product of interest belongs to an increasingly differentiated category. For example, it is

harder to find a generic equivalent for cars than for cigarettes.

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Discounted Value Of Future Earnings Projections  

Brand Equity is evaluated by discounting the value of future earnings projections and

adding to the value the cost competitors would incur if they duplicated the brand.

Price/Earnings Multiple  

Multiplying current earnings by an estimate for P/E multiple yields an equity price. The

critical step is estimating the P/E multiplier. One approach that has been taken is to

measure brand strength by a weighted average of seven factors. (Penrose, 1989) Next, the

P/E multiplier is estimated using and S-shaped relationship between brand strength and

the P/E multiple that is based on similarities to risk free rates, industry rates, and other

factors.

Value of Avoided Advertising  

Advertising is a key tool for developing brand strength that management can leverage

into equity. Advertising can affect how readily a consumer associates attributes with a

brand, what brands consumers include in their evoked set, and other behavioral and

perceptual factors. The effect of advertising builds up over time and leads to extending

brands with greater ease and less cost. An estimate of Brand Equity is the value of

advertising avoided to achieve the current level of performance.

To marketers, brand equity = retained customers

To a marketer, creating and maintaining brand equity can provide for increased

profitability, reduced vulnerability to competition, the ability to charge premium prices,

and a platform for introducing new to market products carrying the brand name.

There is general agreement among marketing theorists that brand equity is a composite of

a brand’s image, its awareness level, and its level of consumer preference. However,

there is no generally agreed-upon definition nor is there an accepted method for

calculating the value of brand equity. In the financial community, equity = retained

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earnings. In the marketing community, a more relevant definition would be: equity =

retained customers

“A brand’s equity is comprised of its loyalty rate and its relative price”

The proposed definition of brand equity is the aggregate value of the purchases of

customers who buy the brand repetitively. Its magnitude is a function of their

frequency of purchase, the extent of repetition and the relative price they pay for the

brand.

Relative price reflects the perceived value of a brand. A high relative price (over

1.00) indicates that a brand’s buyers value it more than the others in the category.

Conversely, a low relative price reflects weak brand “pull”. By using relative price in

the calculation of brand equity, we introduce the element of perceived value for the

money.

This approach to equity will “credit” brands that are capable of commanding

premium prices among minority sized segments.

Relative price is expressed as the ratio of the average retail selling price of the brand

to the category average. For example, for the Canadian whiskey category, a leading

brand’s relative price based on 1992 averages is 1.0; while that of a leading “super-

premium” brand is 1.75. In the Gin category, a major import’s relative price is 1.26, a

leading domestic brand’s is .64 and another popular import’s is 1.23.

Loyalty rate is defined as the percent of category purchases of the brand by people

who buy the brand. For example, if Cognac brand “A” buyers report that 65% of their

cognac purchases are of brand “A”, its loyalty rate would be .65. If people who buy

scotch brand “C” report that in the course of the past year, 40% of their scotch

purchases were of brand “C”, its loyalty rate would be .40.

Taking these two dimensions--loyalty rate and relative price--we propose the

equation: EQ = L x Prel where EQ = Brand Equity, L = loyalty rate and Prel =relative

price.

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By giving equal weight to each of the variables, the formula allows for the use of the

equation as a barometer of marketing effectiveness, in that increases in loyalty rate or

relative price can be produced by improvements in marketing effectiveness or

efficiency

INCREASING BRAND EQUITY

We believe this approach to defining and measuring brand equity helps to focus

marketing strategy and make it easier to choose among alternatives. If, for example, a

major goal is to increase brand equity, the marketing strategies and tactics to be used

must either increase brand loyalty or pave the way for a price increase while not losing a

significant number of customers.

Experience shows that brand loyalty can be strengthened in one of several ways:

increasing continuity of purchase via such techniques as “frequent flier” or “frequent

buyer” programs, “members clubs”, “continuity promotions” that reward cumulative

purchases; affinity programs, that create identification between the users of a brand and

some recognizable organization, cause, lifestyle or movement. Marlboro uses such

programs prominently in its brand promotions; brand differentiation, that creates real or

perceived differences between the brand and its competitors; presence marketing, that

increases the visibility of the brand as well as its salience, so that customers have less

opportunity to even consider alternative brands when they are in the marketplace for the

product. Anheuser-Busch has used this strategy effectively to keep its Budweiser brand at

the top of the category for years.

Increasing price can be an effective strategy if a large enough number of the brand’s

customers believe it will deliver value at the higher price. We’ve known cases where

increasing price has actually help to build business. In one case, the managers of a small

little known spirits brand raised its price as a way of committing “brand suicide”. They

were amazed and delighted to see the brand’s sales increase shortly thereafter. Thus

emboldened, they raised the price again and saw sales continue to rise. Today this brand

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is reported to be the biggest profit contributor to the company’s stable and research shows

its user base to be very loyal.

Grey Poupon was successfully positioned atop the seemingly mundane mustard category

by a combination of premium pricing and adroit advertising. Its equity is likely to be

much greater (on a per case basis) than its larger selling rivals.

Trading up can be an effective way to increase price while protecting a brand’s original

user base. This is accomplished by introducing a justifiably more expensive line

extension while continuing to offer the “parent” product at the same price. The key word

is “justifiably”, so that the new entry does not denigrate the quality of the parent.

In sum, we believe that a brand is a promise made to its customers and to its

owners. Promises kept yield loyal customers and will produce a steady stream of

profits for years to come. Brand equity is at its root the aggregate value of the future

purchases of its customers. And that is what brand marketing must maintain and

grow.

BUILDING BRAND EQUITY

The basis of brand equity lies in the relationship that develops between a consumer and

the company selling the products or services under the brand name. A consumer who

prefers a particular brand basically agrees to select that brand over others based primarily

on his or her perception of the brand and its value. The consumer will reward the brand

owner with dollars, almost assuring future cash flows to the company, as long as his or

her brand preference remains intact. The buyer may even pay a higher price for the

company's goods or services because of his commitment, or passive agreement, to buy

the brand. In return for the buyer's brand loyalty, the company essentially assures the

buyer that the product will confer the benefits associated with, and expected from, the

brand.

In order to benefit from the consumer relationship allowed by branding, a company must

painstakingly strive to earn and maintain brand loyalty. Building a brand requires the

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Brand Equity

company to gain name recognition for its product, get the consumer to actually try its

brand, and then convince the buyer that the brand is acceptable. Only after those triumphs

can the company hope to secure some degree of preference for its brand.

Name awareness is a critical factor in achieving brand success. Companies may spend

vast sums of money and effort just to attain recognition of a new brand. But getting

consumers to recognize a brand name is only half the battle in building brand equity. It is

also important for the company to establish strong, positive associations with the brand

and its use in the minds of consumers. The first step in building brand equity is for the

company to define itself and what it hopes to represent for consumers. The next step is to

make sure that all aspects of the company's operations support this image, from its

product and service offerings to its marketing programs to its customer service policies.

When all of these elements support a distinctive image of the company and its products in

the minds of consumers, the company has established brand equity.

Managing Brand Equity

Consistency is the key to successfully building and managing brand equity. Having a

long-term outlook and projecting a consistent image of your brand to the customer will

maximize the results of building brand equity. It is critical for managers to realize that

brand equity can have positive as well as negative effects on a product or company. In the

end, it is the customer that truly defines what brand equity means.

If management feels it is necessary to change the direction of a brand or change a product

it must be careful not to change too quickly. There are many examples of companies that

have changed a product or brand too much or too quickly. On these occasions, consumers

met changes with adverse reactions. The most famous example is Coca-Cola. They

changed the formula of their flagship product Coke, and consumers reacted so poorly to

the new product that the old formula was reintroduced and the new formula eventually

was discontinued. The consumer through the product experiences brand equity. The

product has certain attributes or characteristics that deliver the equity to the consumer. If

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Brand Equity

any of these attributes are changed or eliminated, the equity delivered to the consumer is

also changed.

Managing brand equity is a continual process with long-term implications. Unfortunately,

many brand managers are forced to focus on short-term goals such as market share and

profits. Many programs that are implemented to boost short-term sales or market share

may be detrimental to the long-term viability of the brand. For example, Proctor &

Gamble has started to test market a program to move away from using coupons to a

system of every day low prices. This is, in part, because consumers may become loyal to

the coupon or promotion and not to the product itself. Constant promotional programs

erode margins and eventually brand loyalty. Ultimately, brand equity is damaged.

In 1988, Graham Phillips, Chairman of Ogilvy and Mather Worldwide, said, "I doubt that

many would welcome a commodity marketplace in which one competed solely on price,

promotion and trade deals, all of which can be easily duplicated by competition. This

would lead to ever decreasing profits, decay, and eventual bankruptcy. About the only

aspect of the marketing mix that cannot be duplicated is a strong brand image." This

quote clearly demonstrates the importance of managing brand equity. In many categories,

brand equity is the only point of differentiation between products.

Many people may think that building and maintaining brand equity is solely the

responsibility of brand managers, but it is actually a cross-functional team effort.

Financial managers are important because they can fully analyze the costs of maintaining

and building brand equity. For example, launching a new brand is extremely consuming

in terms of money and time. It may be more cost effective to extend a current brand than

introduce a new brand. Marketing research is critical for many obvious reasons. It

develops most, if not all, of the research and data that companies will use for deciding

strategic issues. Marketing research can also help determine how brand equity is actually

measured. Once a definition of brand equity is established, the responsibility of tracking

According to Keller, to maximize long-term brand equity, managers must take 10

key steps:

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Brand Equity

1) Understand brand meaning and market appropriate products in an appropriate

manner.

2) Properly position the brand.

3) Provide superior delivery of desired benefits.

4) Employ a full range of complementary brand elements and supporting marketing

activities.

5) Embrace integrated marketing communications and communicate with a

consistent voice.

6) Measure consumer perceptions of value and develop a pricing strategy

accordingly.

7) Establish credibility and appropriate brand personality and imagery.

8) Maintain innovation and relevance for the brand.

9) Strategically design and implement a brand hierarchy and brand portfolio.

10) Implement a brand equity measurement system to ensure that marketing actions

properly reflect the brand equity concept.

Brand Image

Images evoked by exposure to a named brand like brand personality, brand image is not

something you have or you don't! A brand is unlikely to have one brand image, but

several, though one or two may predominate. The key in brand image research is to

identify or develop the most powerful images and reinforce them through subsequent

brand communications. The term "brand image" gained popularity as evidence began to

grow that the feelings and images associated with a brand were powerful purchase

influencers, though brand recognition, recall and brand identity. It is based on the

proposition that consumers buy not only a product (commodity), but also the image

associations of the product, such as power, wealth, sophistication, and most importantly

identification and association with other users of the brand. In a consumer led world,

people tend to define themselves and their Jungian "persona" by their possessions.

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Brand Equity

According to Sigmund Freud, the ego and superego control to a large extent the image

and personality that people would like others to have of them.

Good brand images are instantly evoked, are positive, and are almost always unique

among competitive brands.

Brand image can be reinforced by brand communications such as packaging, advertising,

promotion, customer service, word-of-mouth and other aspects of the brand experience.

Brand images are usually evoked by asking consumers the first words/images that come

to their mind when a certain brand is mentioned (sometimes called "top of mind"). When

responses are highly variable, non-forthcoming, or refer to non-image attributes such as

cost, it is an indicator of a weak brand image

Importance of Brand Equity

Brand Equity is important for three major reasons:

1. Brand Equity creates shareholder value

Building Brand Equity establishes a bond with consumers.

Identifying, rationalizing, and taking steps to own the Brand Promise can ensure

that the brand is emotionally connected with consumers.

This establishes loyalty and commitment and therefore the ability to command a

premium price.

Examples of Brands that have understood this include:

Brand Brand Promise

Pantene Healthy Hair

Dove Enhanced self-image through skin care

Heinz Ketchup (2001+) Ability to protect loved ones

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Brand Equity

Volvo Fun, family and entertainment

Nike Self realization through athletic activity

These brands have created long-term, consumer-preferred franchises that deliver reliable

streams of revenue and profit to their brand owners.

2. Brand Equity Building is a competency that can be mastered to create competitive

advantage

Few brands manage their Equity consistently and at every consumer touchpoint.

Even fewer link their Brand Equity to marketplace and financial performance

indicators.

Brand Equity often becomes a facet of the brand that is misunderstood and under-

used.

Developing a process to consistently measure, plan and develop Brand Equity is the

true path to strong brands and sustainable competitive advantage.

3. Brand Equity management creates an array of growth opportunities for the business

The process of defining the Brand Vision requires intense consumer interaction. The

very action itself reveals the opportunities for the brand – both within the current

business category and in new categories and businesses.

For example, Dove’s Equity of enhanced self-image through skin care enabled the

brand to extend from soap into moisturizer and other beauty care categories (where

growth and margins are higher).

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Brand Equity

Virgin's Equity of a “Good deal for consumers” enabled the brand to extend to categories

as diverse as insurance, phones, airlines, and even wedding

Laws of Brand Equity

The Law of Contraction : A brand becomes stronger when its focus is narrowed. This

does not imply carrying a limited product line, but rather limiting and focusing a

brand on only one type of core product, which in Titan's case happens to be watches.

Titan, though possessed of a wide product line, has stuck to its focus. It hasn't

launched other types of products and stuck them with the Titan name, which would

have only gone on to cannibalize the value of the core brand. As a result of this, Titan

has developed for itself an image of being "time-keeping experts" in the minds of the

consumers.

The Law of Advertising : Once born, a brand needs to actively advertise in order to

stay healthy and maintain market share. If done right, advertising is more of an

investment than an expense. Titan has implemented this by always maintaining a high

degree of visibility when it comes to its advertising. In addition, it possesses one of

the most recognizable ad-jingles in the history of Indian advertising.

The Law of the Word : Any brand worth its salt should strive to "own" a word or

words in the mind of the consumer. Examples of such brands are Volvo, who owns

the word "safety", Mercedes, who own the word "prestige" and Coca-Cola, who own

the word "cola". Titan, at least when viewed in the context of the Indian watch

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Brand Equity

market, seems to own the word "quality". Though unsubstantiated by any formal

market research, in an informal survey we conducted among a sample of 30 people

we know (including friends, family, neighbors and acquaintances), 19 of them, when

asked what one word came to mind when they heard 'Titan Watches' answered

"quality". A further 8 answered "Indian", another word that would do Titan absolutely

no harm to own in the minds of their prospects.

The Law of Quality : Though quality is essential to the survival and growth of any

brand, the fact remains that brands are not built by quality alone. The perception of

the brand is as, if not more significant than mere quality. It is here that Titan "scores".

As mentioned previously Titan more or less owns the word "quality" in the minds of

the consumers, thereby implying that it is perceived as a quality product. Thus, it's

actual quality, as well as it's perception of being a quality product combine to work

towards building the strength of the Titan brand.

The Law of the Name : In the long run, a brand is nothing more than a name. The

difference between products is thus not so much between the products, as it is

between their names, or perceptions of the names. Seeing as how its name is perhaps

the most important element of a brand, we feel that this point warrants a slightly more

in-depth discussion.

Joe Marconi identifies 4 major factors to be kept in mind while naming a

brand:

1) It should suggest stability and integrity.

2) It should avoid negative imagery.

3) It should avoid acronyms, the use of which Ries and Trout call "the no-name trap".

(Perhaps the sole exceptions to this are BMW & IBM).

4) It should avoid anything-generic sounding (General, National, Standard, etc), as this

would not help in defining a brand's personality.

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Brand Equity

Let us see to what extent Titan satisfies these conditions. First of all, the name 'Titan'

itself comes from Greek mythology, and symbolizes greatness, grandeur and power.

Remember the Titanic? It is easy to pronounce, as well as to remember. One only has to

compare its name to that of its biggest competitor, HMT to see how well thought out the

name Titan is. HMT, while being an acronym, expands out to 'Hindustan Machine Tools',

a generic name if we ever heard one. Asides from all these differences, the question of

perception arises. A watch is a product, the purchase of which is perhaps driven more by

perception than anything else. What sounds more classy and sophisticated? Titan or

Hindustan Machine Tools?

The Law of the Company : Brands are brands, and companies are companies. There is

a difference. Titan is owned by the Tata Group, who though highly regarded in Indian

industry are associated more with heavy industries such as steel and truck building,

than with watch making. Chances are that no one would buy a Tata watch (its name

invoking the same, if not greater reaction than an HMT). People would, however buy

a Titan.

The Law of Siblings: There is always a time and a place to launch a second brand, but

when this is done it should be ensured that both brands have separate and distinct

identities. Each brand should be kept unique and special. When Titan decided to

diversify into the jewellery segment, they did not call their new brand 'Titan

Jewellery', inspite of the high standing of the Titan name in the minds of the Indian

consumers. To do so would be to undermine the power of the Titan brand; this is that

of being “watch experts”. Hence, the jewellery was called Tanishq.

The Law of Shape : A brand's logotype should be well designed, in order to fit the

eyes. Visual symbols (again with the possible exceptions of Nike's "swoosh" or

Mercedes' 3-pointed star) are highly overrated. The meaning lies in the words, not the

symbol. The Titan logo, though well recognizable (please refer to the cover page in

the rare event that you do, in fact actually NOT recognize it) is always accompanied

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Brand Equity

by the words "TITAN" in a clear, crisp typeface-denoting power (through the use of

capital letters) and class at the same time.

The Law of Color : A brand should use a colour and typeface that is the opposite of its

major competitor. For example, while Coca-Cola stands for red and appears in

running handwriting, Pepsi stands for blue and appears in capital, modern looking

letters. Similarly, while HMT appears in small silver lettering, Titan appears in

capital letters, and is usually in black.

The Law of Borders : Finally, a brand should know no borders or boundaries. With a

name that stands for Hindustan Machine Tools, HMT would be hard-pressed to sell a

single watch outside Indian Territory. Such is not the case with the more globally

oriented name, Titan. As mentioned previously, Titan is sold in over 40 countries

through marketing subsidiaries in London, Singapore and Dubai.

Thus far, we have restricted ourselves to issues exclusively concerned with the role of the

brand in building brand equity. The fact however remains that brand building is an

exercise that requires effort in a number of ways, many of them unrelated to the actual

"brand" as such. These could be related to the product's image, the company's image,

public perception of the parent company, and efficiency of promotional measures, to

name but a few.

The Benefits of Brand Equity

What are the benefits of strong brand equity? Well, strong brand equity leads to, strong

market share, customer loyalty, more favorable response to price increases, less

vulnerability to competitor activity, brand extension opportunities, and communication

messages which reach the consumer. In attaining these benefits, strong brand equity will

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Brand Equity

ensure that a product is of an enduring nature. Ultimately, strong brand equity will

improve profitability.

To build a winning brand, therefore, is to understand the relationship between brand

equity and market share, and to leverage both to their full potential. In so doing, a brand

will be successful and sustainable in the long term. It must be kept in mind that

increasing market share does not increase brand equity, whereas increasing brand equity

invariably leads to increased market share.

Do’s & Don’ts in Brand Equity

Define the core brand's position and value clearly:

A product should be properly positioned and its value (which includes price, quality and

image) should be properly defined. As mentioned in the section regarding the law of the

word, the two words most highly identified with Titan are “quality" and "Indian". These

should thus be emphasized upon. This is exactly what Titan has done, positioning it's

watches as high quality, Indian made watches, and emphasizing upon it's value for money

as well as it's classy image.

Don't neglect Public Relations:

Public Relations, or PR, are vital to the success and survival of any brand. Unfortunately,

its value as a brand building tool has more often than not, been undervalued. Newsletters,

event and entertainment sponsorships, and other forms of PR help to define the

personality of a company or brand, positioning it as a good corporate citizen, and

someone nice to do business with. In keeping with India's obsession with cricket,

Titan has often sponsored cricket tournaments, including the now legendary 1997

Titan Cup. Titan also sponsors a number of popular television programmes, a prime

example of which is Star World's "The Practice".

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Brand Equity

Realize that promotions can be tricky:

Promotions ought to be used to create recognition and build brand loyalty. Needless and

irrelevant contests tend to shift the customer's attention from the product being promoted

to the prize being offered (be it a trip to the US or a new car). A better (and far less

expensive) way to promote a brand would be to allow it to be used by other companies in

their promotional offers. Titan is currently being offered by both Outlook magazine

and Welcome Award (the privileged customer programme of the Welcome Group

chain of hotels) in their various promotional offers. The most sensible and effective

forms of promotions are measures such as establishing a privileged customer club

offering customer points redeemable for discounts and rebates. Titan has their own

privileged customer club, Titan Signet, which has an impressive 1.6 lakh members.

Always remember the USP:

A USP (Unique Selling Proposition) is not only what gives the customer a reason to buy

the brand, but is also what helps him distinguish the brand from its competitors. Titan's

USP is two fold, and can perhaps best be described in six words. "An Indian company

offering international quality". This works for Titan in two ways. First of all, it's

emphasis on 'international quality' successfully negates it's major Indian competitor,

HMT, who is still perceived as a company offering solid and reliable, yet singularly

unstylish and staid looking watches. Secondly, with the plethora of foreign brands

available in the country today, Titan emphasis on being Indian enables it to effectively

meet their threat. Interestingly, while Titan has never actively promoted the fact that its

parent company is the Tata Group, at the same time it has never really done much to

hide the fact. Thus while capitalizing on the Tata name; it has built its own identity as an

Indian brand offering high quality watches at prices significantly below those of

comparable foreign brands.

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Brand Equity

If you can't be first, be better:

Being the first entrant in any category earns pioneer status for a brand and gives it the

advantage of being the probable market leader. Such was the case with HMT. However

with its emphasis on its USP and aggressive advertising, Titan convinced the market that

it produced the better product and thus destroyed HMT's near monopoly of the Indian

watch market.

Expand sensibly:

Extensions should always be logical and market driven and not mere "product

explosions". As the market environment changes with the addition of say, greater

competition, or changing customer wants and perceptions, brand extension should be

undertaken. It should not, however be undertaken arbitrarily. When Titan entered the

market in 1987, its main competitor was HMT, a company offering reliable and

economically priced watches. Titan thus started out being a company offering a wide

variety of models, most of which were priced economically, with the added USP of being

a more stylish alternative to HMT. As times changed, however, so did Titan. With the

growing entry of foreign brands into the market, Titan continued to introduce sub brand

after sub brand to meet every new challenge. With the entry of the "high performance"

sports watch brands in the form of Tag Hauer, Omega and Breitling, Titan introduced

it's own line of chronographs priced significantly lower than the competition at a mere

Rs. 5000-6000. Similarly, to counter the entry of foreign, youth oriented "style" brands

such as Esprit and Swatch, Titan introduced the 'Fast Track' sub brand, again priced

extremely competitively.

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Brand Equity

Conclusion

Strong brands provide value and have a variety of benefits. To customers,

brands provide direction, they provide reassurance. Brands reduce risks

and they provide a way to self-express. To marketers, brands provide a

competitive advantage. They provide the means and the way of differentiation. Brands

provide a means for segmentation for different markets, and a point of entry into new

categories that are going to bring greater financial return. Strong brands are based on a

relevant differentiated position. Without that, you cannot build a strong brand. A variety

of associations are linked to a strong brand. Sometimes we can get carried away, saying

This is the most important thing to customers; this is what we should link', and we forget

there needs to be more than any one single association. If you look at strong brands, they

have a couple of very good sources of strength and a bigger picture of what the brand

means and how it is relevant to the customer.

The associations that are built for the brand need to be based on careful

and thorough analyses of the customers, of the competitors and of the company.

It must be emphasised that the organisation must be committed to the brand, both

philosophically and financially. Only a small portion of brand efforts will have a payoff

in the short run. In fact, much of the process of brand building will cost the organisation

in the short run. Branding is a long-run proposition that the organisation must be

committed to in order to live up to the brand promise that is made.

Strong brands arise from the thorough integration of the brand throughout

the entire marketing mix. The three Cs of branding, are Consistency, Clarity and

Convergence. Everything has to work together to build identified brand content.

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Brand Equity

Companies work hard building the strength of their brands - it is critical to the ongoing

brand management process to have meaningful and actionable data-driven measures of

these efforts.

Building a brand, cultivating its strengths, pruning its weaknesses, and making it more

valuable to its owners is the bottom line job of marketing. Everything marketing does

should ultimately work in concert to make a firm's brands more valuable. There are many

different tactics and strategies that go into strengthening a brand name: advertising,

promotions, public relations, and research and development, to name a few. While

companies use these and many other methods to strengthen their brands' positions in

increasingly competitive markets, how can they measure the return on this work? More

precisely, how can a company determine the worth of one or any its brands?

Putting the brand to a true test, the company can better judge how much that brand is

worth and how much opportunity for improvement might exist.

Thus it is essential to determine the brand equity of the product in order to acquire

solutions to the above mentioned questions.In conclusion, brands must be carefully and

constantly nurtured over time. This is not a one shot deal; this is something that we have

to be in for the long run.

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Brand Equity

Indian Brand Equity Foundation

One and a half decades into the process of economic liberalization and global integration,

India, today, is well established as a credible business partner, preferred investment

destination, rapidly growing market, provider of quality services and manufactured

products; and, stands on the threshold of years of unprecedented growth.

Achievements. Successes. Growing consuming class driving demand. Vibrant

democracy. People who dare to dream. Indians and India have a story to tell. IBEF

collects, collates and disseminates accurate, comprehensive and current information on

India. In the overall nation branding campaign for India, IBEF plays three well defined

roles:

Forum for brand vision development

Co-ordinator of strategic marketing initiatives

India Resource Centre

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Brand Equity

CASE STUDIES

CASE STUDY 1: McDonalds

What is McDonald’s?

McDonald’s is the world’s largest and best-known global leaders in food service

retailing, with more than 27,000 restaurants serving more than 43 million customers a

day in 119 countries. Approximately 80 percent of McDonald’s global restaurants are

owned and operated by independent franchisees. Yet on any day, even as the market

leader, McDonald’s serves less than one percent of the world’s population. McDonald’s

out-standing brand recognition, experienced management, high-quality food, site

development expertise, advanced operational systems and unique global infrastructure

position it to capitalize on global opportunities.

How it all started:

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Brand Equity

Dick and Mac founded the first McDonald’s restaurant in 1937 in a parking lot in

California. It did not serve burgers, had no happy meals or a playground. The most

popular item on the menu was the hotdog and people ate either on outdoor stools or in

their cherished new autos while being served by teenage carhops.

MR. RAY KROC (1954) first franchisee appointed by Mac and Dick McDonald in San

Bernardino, California. The first McDonald’s built in 1940 by the McDonald brothers

(Dick and Mac). Ray Kroc was the founder of the McDonald’s Corporation. First day’s

revenues-$366.12 and the McDonald’s Corporation was created. Quality, Service,

Cleanliness and Value (Q.S.C. & V.) became the company motto. The 100th McDonald’s

opened in Chicago. Ray Kroc bought all rights to the McDonald’s concept from the

McDonald’s brothers for $2.7 million.

McDonald’s now has over 20,000 stores in 90 countries.

The company claims it serves 29 million people a day and that a new store opens some-

where in the world every seven hours.

History Of McDonald’s Brand

Mac and Dick McDonald established McDonalds brand in 1940 by using their surname.

In 1962, When Dick McDonald sent Kroc an illustration of the McDonald family crest,

Kroc had it added to the sign as a symbol of quality, replacing Speedee, the boyish chef

character that the McDonald brothers had developed to designate the Speedee Service

System. When others insisted that the crest was gaudy, the search was on for a more

stylish corporate symbol. Turner fiddled with the logo, based on the Cdl in the Cadillac

insignia, and Schindler used that to sketch a logo that pictured the slanted roofline of the

store piercing a line drawing of the golden arches in the form, as it is seen world over. In

1968, the roofline image was dropped and the McDonald’s name was added to derive the

current logo. Since then logo has not undergone any major changes. The introduction of

the Ronald McDonald character later developed a human element in the McDonald’s

brand, and provided an instant link with children.

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Brand Equity

Offering

A brand is an offering from a known source. McDonald’s carries many associations in

the minds of people: hamburgers, fun, children, fast food, Golden Arches. These

associations make up the brand image.

Attribute

A Clean Fast Food Brand which tastes the same any where you eat in the World.

Benefits

You don’t have to stay hungry for a long time. McDonalds ready to eat available

Values

The World leader in Fast Food Restaurants.

Culture

The brand represents culture of social gathering for families and groups.

Personality

The World leader, A giant M.

User

All kinds of consumers buy McDonald’s products irrespective of age, sex all over the

world. One can see all types of personalities in the McDonalds restaurant.

Strategy Of The Management In The Whole Brand Life Cycle

Our observation of McDonald’s Brand tell us that McDonalds as a Brand is in its growth

stage whereas, in countries like America and West Europe it is on its way towards

maturity. Following is the stage wise development and growth of McDonalds Brand.

1940’s (Introduction Stage)

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Brand Equity

Despite being a time when there was a hamburger store or a food franchise on every

corner in America’s cities, the business that Ray was so fascinated with had customers

lining up to buy hamburgers, fries and milkshakes. McDonald brothers in their operation

of business found that they had developed a crude but effective method of processing

food in seconds. This fast food production, combined with low prices and a limited menu

was a run away success.

1950’s (Development of McDonalds as a Brand)

McDonald’s success was stage on an illusive dream, which Mr. Ray Kroc had. Despite

being a time when there was a hamburger store or a food franchise on every corner in

America's cities, the business that Ray was so fascinated with customers lining up to buy

hamburgers, fries and milkshakes. This fast food production, combined with low prices

and a limited menu could be duplicated across the country, and he wanted to be the one to

do it.

Mr. Ray Kroc felt that the operations of McDonalds could be replicated in every

franchise. He began developing exact specifications for the ingredients so that the taste

and cooking times would be consistent. He then went on to develop precise systems that

could be documented to cover every aspect of how the business should be run from

cooking a burger and serving a customer, to washing the floor and emptying the bins.

Ray also knew that his systems needed to extend beyond the internal operations of the

business, and into the external design of the buildings and how they were presented and

maintained. This cloned and consistent style would maximise the value of the McDonalds

brand through the buildings appearance.

Ray was so committed to perfection, that he set up his own laboratory to develop the

perfect fries. This was a revolutionary experience for the hamburger industry, and was

not seen by many as being particularly necessary, including his business associates. This

was the success in selling franchises (McDonald’s early establishment as a Brand)

1960’s (The real growth of McDonald’s Brand took off from here)

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Brand Equity

Ray Kroc bought all rights to the McDonald's concept from the McDonald's brothers for

$2.7million in 1961.Ronald McDonald made his debut (used as an Advertising tool) in

1963 which saw a new image on McDonald’s brand building in the consumers mind in

the form of a human element in the McDonalds brand, and provided an instant link with

children. The rest as they say is history. There would be barely a man women or child in

the developed world who has not tasted a McDonald’s product. Ray Kroc’s systems were

so highly developed and repeatable that a customer could eat a McDonald’s product,

regardless of which country they were in, and still experience the same taste and service

in a restaurant that was identical to any other in the world.

The growth of this brand has led to McDonalds becoming a global brand example of that

is in 1996; McDonald’s overtook Coca-Cola as the best known brand in the world

McDonalds has 48 percent of the globally branded quick service restaurants and 63

percent of sales.

List of acquisitions by McDonald’s that helped further growth in the market.

Owns Donatos Pizza with 148 outlets from Michigan to Georgia

23 units of coffee bars in London called Aroma Cafe™

Chipotle Mexican Grill, a fast growing chain of 56 burrito shops

859 Boston Markets

Equity stake in food.com

Figures to support growth of McDonalds:

World Wide Restaurants:

2002 2001 2000

U.S. 12,629 12,472 12,380

Europe 4,943 4,421 3,886

Asia/Pacific 5,655 5,055 4,456

Latin America 1,789 1,405 1,091

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Brand Equity

Other 1,790 1,465 1,319

Total 26,806 24,818 23,132

Another proof of that is our Indian market, which has provided a good boost to

McDonald’s advent into India.

Future Growth:

The opportunities for McDonalds are truly global with a policy of continuous innovation

of product and service spreading the enormous depth and breadth of the McDonalds

brand, which is being well received around the world.

Brand Equity of McDonald’s

In terms of corporate valuations McDonalds is valued at approx. US$39 billion.

In Marketing terms:

Brand Awareness

The American awareness of McDonalds as a brand is very high. Today McDonalds is a

Global name, famous for its delicious burgers and mouth watering French fries. The

customer’s awareness of the brand goes back to the earlier days when the McDonalds

brothers had decided to start off with the restaurant. The consistent taste of the Mac meals

is one of the reasons for uniformity in the product. Today the brand is well known for its

affordability and high quality standards. Over the years the company has managed to live

upto its image by providing prompt service unfailingly, constantly improving the

standards of its burgers and providing entertainment to its target customers mainly

children who are always in the lookout for a fun filled hour with Ronald McDonald the

McDonald’s mascot. These critical improvements have helped the brand to be popular

among the millions who visit the joint for a quick bite. One of the major recallers of the

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brand is the golden arch of the McDonalds logo. The red sign with the golden M is a

symbol synonymous with burgers.

In a market like India, the brand is still in its infant stage. Launched in 1996, the company

has done quite well for an initial beginning. Catering to a customer base which is used to

eating the many delicacies offered by the Indian cuisine which is spicy unlike the

McDonalds burgers, the company has definitely faced a few rejections from the

consumer, but it was not long before the brand took over the hearts of the younger

customers, mostly the average urban teenagers who found the place very happening and

ideal for an evening with friends.

Perceived Quality

In a recent survey conducted by a leading agency, it was found that in India, although

most of the McDonalds found the pricing of the product quite high, but the perceived

quality of the products were rated as high as 4 or 5 out of a scale of 5. This shows that the

company has been able to live upto its high quality standards set through operational

excellence.

Brand Loyalty

From a recent survey it has been found that an average American has visited at least one

of the many outlets in a city at least once in the last year. This can be directly related to

the brand loyalty of the customer. An average McDonald’s consumer visits the store at

least once a week.

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Brand Equity

CASE STUDY 2: TATA MOTORS

Profile Of TATA Motors

Established in 1945, Tata Motors is India's largest and only fully integrated automobile

company. Tata Motors began manufacturing commercial vehicles in 1954 with a 15-year

collaboration agreement with Daimler Benz of Germany. Since 1969, the company's

products have come out of its own design and development efforts. 

Today Tata Motors is India's largest commercial vehicle manufacturer with a 59-per cent

market share and ranks among the top six manufacturers of medium and heavy

commercial vehicles in the world.

Area of Business

Tata Motors' product range covers passenger cars, multi-utility vehicles and light,

medium and heavy commercial vehicles for goods and passenger transport. Seven out of

10 medium and heavy commercial vehicles in India bear the trusted Tata mark. 

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Brand Equity

Commercial vehicle business unit

The company has over 130 models of light, medium and heavy commercial vehicles

ranging from two tonnes to 40 tonnes, buses ranging from 12-seaters to 60 seaters,

tippers, special purpose vehicles, off-road vehicles and defence vehicles. 

Passenger car business unit

The company's passenger car range comprises the hatchback Indica and the Indigo sedan

in petrol and diesel versions. The Tata Sumo, its rural variant, the Spacio and the Tata

Safari (the country's first sports utility vehicle) are the company's multi-utility offerings.

The Tata Indica, India's first indigenously designed and manufactured car, was launched

by Tata Motors in 1999 as part of its ongoing effort towards giving India transport

solutions that were designed for Indian conditions. Currently, the company's passenger

cars and multi-utility vehicles have a 16-per cent market share.

In addition to the growth opportunities in the buoyant domestic market, the company is

pursuing growth through acquisitions (it acquired Daewoo Commercial Vehicles, Korea,

in 2003) and alliances (it has entered into a tie-up with MG Rover, UK, to supply

1,00,000 Indica’s to be badged as City Rover) in other geographies. 

Environmental Responsibility

Tata Motors has led the Indian automobile industry's anti-pollution efforts through a

series of initiatives in effluence and emission control. The company introduced emission

control engines in its vehicles in India before the norm was made statutory. All its

products meet required emission standards in the relevant geographies. Modern effluent

treatment facilities, soil and water conservation programmes and tree plantation drives on

a large scale at its plant locations contribute to the protection of the environment and the

creation of green belts. 

Exports

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Tata Motors' vehicles are exported to over 70 countries in Europe, Africa, South

America, Middle East, Asia and Australia. The company also has assembly operations in

Malaysia, Bangladesh, Kenya, South Africa and Egypt. 

Brief History of Tata Motors

It has been a long and accelerated journey for Tata Motors, India's leading automobile

manufacturer. Some significant milestones in the company's journey towards excellence

and leadership are given below:

1945 – 1966

Tata Engineering and Locomotive Co. Ltd. was established to manufacture locomotives

and other engineering products. Steam road roller introduced in collaboration with

Marshall Sons (UK). Collaboration with Daimler Benz AG, West Germany, for

manufacture of medium commercial vehicles. Research and Development Centre set up

at Jamshedpur. Exports begin with the first truck being shipped to Ceylon, now Sri

Lanka..

1971 – 1989

Introduction of DI engines. First commercial vehicle manufactured in Pune. Manufacture

of Heavy Commercial Vehicle commences. First hydraulic excavator produced with

Hitachi collaboration. Production of first light commercial vehicle, Tata 407,

indigenously designed, followed by Tata 608 &Tatamobile 206 - 3rd LCV model.

1991 – 1995

Launch of the 1st indigenous passenger car Tata Sierra. TAC 20 crane produced. One

millionth vehicle rolled out. Launch of the Tata Estate.. Launch of Tata Sumo - the multi

utility vehicle. Launch of LPT 709 - a full forward control, light commercial vehicle.

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Joint venture agreement signed with M/s Daimler - Benz / Mercedes - Benz for

manufacture of Mercedes Benz passenger cars in India. Mercedes Benz car E220

launched.

1996 – 2004

Tata Sumo deluxe launched. Tata Sierra Turbo launched. Tata Safari - India's first sports

utility vehicle launched. Indica, India's first fully indigenous passenger car launched.

115,000 bookings for Indica registered against full payment within a week. Commercial

production of Indica commences in full swing. Launch of CNG buses.Indica V2 launched

- 2nd generation Indica. 100,000th Indica wheeled out. Launch of CNG Indica. Launch of

the Tata Safari EX Indica V2 becomes India's number one car in its segment. Exits joint

venture with Daimler Chrysler. Unveiling of the Tata Sedan at Auto Expo 2002. Launch

of the Tata Indigo. Tata Engineering signed a product agreement with MG Rover of the

UK. Launch of the Tata Safari Limited Edition. The Tata Indigo Station Wagon unveiled

at the Geneva Motor Show. On 29th July, J. R. D. Tata's birth anniversary, Tata

Engineering becomes Tata Motors Limited. Tata Motors unveils new product range at

Auto Expo '04.Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment

agreement. Indigo Advent unveiled at Geneva Motor Show. Tata Motors completes

acquisition of Daewoo Commercial Vehicle Company. Sumo Victa launched. Indigo

Marina launched. Tata Motors lists on the NYSE.

Leveraging the Tata brand

The Tata Finance controversy notwithstanding, Tata Sons is making a concerted attempt

to shift focus from a commodity-oriented conglomerate to a brand-oriented corporate

group.

It is an image that has stuck to the Tata Sons conglomerate all these years. But now the

image is in for a makeover. Put differently, the winds of change are blowing within the

organisation's formidable corridors. The corporate's portfolio is changing from 40-50 per

cent commodity orientation to an equal percentage of brand orientation.

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Brand Equity

The ambitious branding exercise being undertaken by the Tata Sons group would include

primarily steel, salt and trucks. The perception of Tata Chemicals, for example, is hardly

that of a marketing company. But Tata Salt, marketed by Tata Chemicals, ranks upfront

as a leading FMCG brand in most consumer surveys, besides, of course, being the market

leader among branded salts.

The marketing makeover exercise is on in full swing.

The moment of reckoning for Brand Tata may have just arrived.

About four years back, some amount of the Tata brand value was estimated at Rs 3,800

crore. The company has extrapolated that to arrive at the Rs 10,000 crore figure - and that

a couple of years back.

Consumer perception

Tata’s set to unleash global branding drive

The $11.2 billion Tata Group is planning to unleash a major global branding initiative.

Tata Sons, the group has selected some key foreign markets to introduce a brand building

drive to give effect to the group’s vision of becoming a major global brand.

Tata Motors has forayed into the UK markets, TCS has a presence in US and south-east

Asian countries.

The Tata group has fared well on the twin brand values of ‘emotionality and relevance.’

The perception that Tata group companies are not as aggressive as competitors is

gradually changing. It is now also perceived as a more youthful brand, despite being a

100-year old brand.

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Brand Equity

Tata Motors is known as a low-cost manufacturer, not necessarily a high-quality one. The

company is looking to provide value for money—or more car per car. 

In fact, Indica has never been rated highly by JD Power, which conducts consumer-based

surveys. In its latest 'initial quality study' in December '03, Indica was placed fifth,

second from the bottom, among the premium compact cars with 237 problems per 100

vehicles. Wagon R topped the list with 118. A caveat though: this survey takes into

account actual problems as well as perceptions. Another indicator: for the UK market, the

City Rover has been spruced up quite a bit. Apart from cosmetic changes like a new

bumper and grille, it has different engine diagnostics and comes with airbags and anti-

lock brakes. In addition, the City Rovers are petrol-driven, unlike the diesel models that

form an overwhelming share of Tata Motors' India sales. 

But even the diesel models of Tata Motors are in for fresh competition. Hyundai has

launched the diesel version of Accent, which it claims is superior as it has the latest

microprocessors-based common rail direct injection (CRDi) technology that supposedly

increases fuel efficiency and reduces pollution. It also plans to have diesel options for its

forthcoming compact model, Getz, as well as Santro. Maruti, which imports the engines

for its diesel Zen and therefore doesn't find it viable to make more than 500-900 vehicles

a month, is also thinking of tying up with a global manufacturer for diesel technology.

Revitalizing Brand Tata

The Tata group has launched a deliberate and comprehensive effort to re-energise its 124-

year-old brand equity, and to connect with youth. Catalyst takes a look at how this is

being done.

For the Rs 49,000-crore Tata group, Tata Open tournament T2 held at Chennai which is

sponsored by the TATA is just one visible face of a deliberate and comprehensive effort

to re-energise the 124-year-old Tata brand. With 80 group companies and its share of

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Brand Equity

controversy and failures in recent years, the group is still among the most respected and

trusted brands in the country. But it is only recently the group began a concerted effort to

protect and enhance its brand, which it acknowledges as its "most important asset," and

which was valued at over Rs 10,000 crore four years ago.

"The Tata brand represents assurance, reliability, a sense of nationalism (and) value for

money, irrespective of the product - whether it is a wrist watch, tea, salt, a piece of

software or a car," said R. Gopalakrishnan, Executive Director, Tata Sons Ltd. "When

you have an asset that size, you have to ensure that whatever you do enhances the asset's

value, and also make it more relevant and contemporary on a continuous basis," adds

Romit Chaterjee, Vice-President - Corporate Affairs, Tata Services.

In recent years, the group has designed a common logo, centralised its media buying and

PR operations, devised a system for group companies to pay a fee for using the Tata

name, and has aligned itself with vehicles that contemporarise the brand and connect with

the youth. The group has committed Rs 300 crore over the next five years to target the

younger demographic.

Towards this end, the Brand Equity Business Promotion Fund was created about four

years ago; a Tata-name company, like Tata Steel, pays 2.5 per cent of its revenues to the

fund, and a non-Tata name company, like Voltas, pays 0.01 per cent. The money is used

to consistently enhance the brand image.

The group also undertook extensive research a few years ago; every six months, a brand

track study, by Pathfinders, tracks brand perception vis-à-vis five other major corporate

brands, among 5,000 respondents in 13 cities. The study plots the Tata brand against the

others on two metrics, affinity (how close the brand is to the consumer, and how warmly

it is perceived) and relevance (how relevant the brand is to the consumer's life). On both

parameters, the Tata brand has risen steadily in value since December 2000, when the

study was first commissioned, and continues to be ahead of the other brands.

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Two of the primary findings of the research were that the Tata brand is not perceived as

youthful, and that it is not into technology in a big way. So there is a concerted effort to

connect with the youth, and to communicate its involvement with technology.

According to TATA’s young people are the "consumers, stakeholders and employees of

tomorrow," and to connect with them, the group uses contemporary media such as the

Internet and SMS, and events and personalities.Its stake in the Barista chain, for example,

provides a popular venue to connect with the desired demographic, and the group has

done interactive sessions with ace driver Narain Karthikeyan, a brand endorser, at sports

bars and pubs in some cities.

Their research indicated that the three most effective vehicles to reach the youth are

movies, music and entertainment, and sports. Movies were ruled out - although Marg, a

Tata group company makes documentary films - but the group has associated with select

music and entertainment events: it has sponsored a Shakti concert and one dedicated to

Bob Dylan, and considers them big successes.

The group also signed a three-year title sponsorship deal for India's only ATP

tournament, beginning 2002.It also signed on India's F-1 aspirant, Karthikeyan, to

endorse some of its brands, including Titan's Fastrack. The $400,000 Tata Open provides

a platform for a host of Tata products and services, including Titan, the Taj group of

hotels, Tata Indicom and Trent's Westside.They are trying to exemplify the `Tata One

World' concept more and more, so any marketing activity is thus an integrated effort. A

combination of Tata and MTV is undertaken in order to make themselves relevant to the

younger generation.The two have a deal to do some programmes on the Tata Open

tournament.

In tennis and motor racing, the group has found very strong personality matches

according to TATA. Formula Motor racing is about speed, energy, aggression, and

fighting against tough international competition; tennis, too, is about speed, dynamism,

aggression, and slugging it out against international competition in the tournament.

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Another focus is B-school campuses, where the group is emphasising greater interactivity

with students, and raising its profile as an employer. It sponsors the annual inter-

collegiate event, Confluence, in IIM-A, and the Business Leadership Award; its senior

managers also go on lecture tours and present case studies of group companies as this is

where they are going to get our future employees thus ensuring the Tatas are in the

consideration set, along with the consultancy firms and foreign banks.

In ORG-MARG's recent `Campustrack' survey of most preferred employers on B-school

campuses, Hindustan Lever, Infosys and McKinsey headed the list of 48 corporates;

Titan, Tata Engineering and Tata Steel were among the companies at the other end.

However the Campus Recruiter Index for the Tata group has improved since the last

time, particularly for TCS, Tata Administrative Services and Tata Engineering, according

to ORG-MARG.

The Tata group was rated highly on the parameters of "good standing in the market" and

"large-sized company," and found to lag in the aspects of compensation/salary package,

and international postings and overseas travel. "By all accounts, the image of a youthful,

techie corporate seems to belong to TCS and, to some extent, to Tata Administrative

Services. There is still some way to go before we can say this about the group as a

whole," says ORG-MARG.

Internally, too, there has been a concerted effort to create a sense of synergy and

belonging among the group companies. On the group's Intranet, there are forums for

secretaries, HR managers, CFOs and others to share knowledge and best practices across

companies and regions. The flip side of the coming together of the companies is that a

negative fallout, like the Tata Finance debacle, can impact the image of the other group

companies.

On the communications front, the group has integrated its activities: Media Edge is the

group's AOR for media buying, and Vaishnavi Communications handles PR for the

largest group companies. Brand experts say the Tata group is on the right track: today,

the brand stands for trust and integrity, optimism and a dogged spirit to move ahead.

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Although the group has been seen as an ageing patriarch, or a fuddy-duddy one But, with

its increasing consumer focus, its realisation of the value of the Tata brand name, and its

new product and service initiatives, there is "a sea-change from the `we also make steel'

days: this is the new energy that is driving the group forward. Indeed, the company's Web

site informs: "The Tata name is a unique asset representing leadership with trust.

Leveraging this asset to enhance group synergy and becoming globally competitive is the

route to sustained growth and long-term success."

Bibliography

While working on this project I visited some of the companies and they gave me

some information. However to support the same I have done some of the research work

from the following:

Text Books:

Managing Brand Equity – David A Aaker

Strategic Brand Management- by Jean-Noel Kapferer

Brand Equity & Advertising - edited by David A. Aaker, Alexander L. Biel

Newspapers and Magazines.

Times of India

Supplement – Brand Equity

Economics Times

Business Standard

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Brand Equity ( magazine )

Weblography

www.brand-equity.com

www.businessweek.com/innovate/brandequity/

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

www.ibef.org

www.economictimes.indiatimes.com

www.biz-community.com

www.biz360.com

Also visited websites of McDonald’s & Tata for case study research.

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