perceived brand equity: a journey from efficiency to ... from the consumer/customer perception or in...

Copyright © 2015 by Prof. Dr. V. Charles

Perceived Brand Equity:

A Journey from

Efficiency to Effectiveness


Copyright © 2015 by Prof. Dr. V. Charles Copyright © 2015 by Prof. Dr. V. Charles

In recent decades, brands have become comparable

across the industries, based on their value derived

either from the consumer/customer perception or in

terms of the firm financials. There is always a trade-off

between perception and financials, so as a trade-off

between efficiency and effectiveness.

Ever since the inception of brand values, these have

become a benchmark for many data-driven strategies,

eventually providing a basis for vertical/horizontal

integrations, as well.


Such an attempt allows the firm to create virtual

brands, which provides room for benchmarking not

only the existing brands, but also the virtual brands;

this certainly provides an avenue to create new brands

in virtue of virtual brands.

The present research provides the scope to design

frontiers for the brands from developed and emerging

economies, as well as it substantially allows to compare

brands under various frontier technologies of interest.


Profit- seeker User-oriented,

friendly

The perception of brands is key to the development of the brand value. The image of a profit-seeking company affects the brand value in a bad way, whereas the user-oriented, friendly

brand has a more appealing approach towards consumers.

Brand perception


The recession gave consumers important lessons about consumption.

The true value

of goods. Are products

really needful?

What is the real satisfaction I get from products?

Change in consumption habits


Advertising plays a vital role in

promoting the brand; however,

there are extreme and

exceptional cases: for instance,

on the one hand, Starbucks has

hardly spent money on

advertisement, while on the

other hand, Disney has spent

huge amount of money on

advertisement.


Data Envelopment Analysis (DEA)

• DEA is widely known as a technique for the evaluation of efficiency.

DEA is an extreme-point method and compares each decision-making unit (DMU) with the best DMU.

No need of assumption on the functional form.

Flexibility to incorporate multiple inputs and outputs.

Works well with a small sample size.

Advantages


1 2

1 2

Let be the number of DMUs. Each DMU 1,2,..., consumes a

vector of inputs, , ,..., to produce a vector of outputs,

, ,..., , where T is transpose. We define the DMU to be

eval

j

T

j j j nj

T

j j j nj

n j n

x x x x

y y y y

0uated as DMU .

0

1 1

1

0

1

. .

0, 1,2,..., ,

, 1,2,..., ,

0, 0, 0, 1,2,..., ; 1,2,..., ; 1,2,..., .

s s

r i

r i

n

r rj j r

j

n

ij j r i

j

j r i

Max s s

s t

y y s r s

x s x i m

s s j n r s i m

DEA basic model

This is an output-

oriented CRS model.

The efficiency of DMU0

is one over Phi .


FRH

CRS

FDH

VRS

,

o

o

Y Y ,

X X ,

0 .n

Max

1.Te

VRS

1,

0,1 .

T

FDH

e

0

free,

.

T

FR

e

H

CRS, VRS, FDH, and FRH


Brand Value Vs. Advertising Costs


Developed countries


Axis


Country: USA Abbreviation Brand

AEX AMERICAN EXPRESS

AMZ AMAZON

APL APPLE

ATT AT&T

CCL COCA-COLA

DSN DISNEY

FCB FACEBOOK

GET GENERAL ELECTRIC

GOG GOOGLE

IBM IBM

MCD MCDONALD'S

MLB MARLBORO

MSF MICROSOFT

MTC MASTERCARD

NKE NIKE

SBU STARBUCKS

UPS UPS VIS VISA

VZN VERIZON

WMT WALMART

WSF WELLS FARGO

Abbreviation Brand Country SAP SAP Germany

TMO T- MOBILE Germany

TOY TOYOTA Japan

VDN VODAFONE UK

Developed Countries


Abbreviation Brand Country FBC FACEBOOK USA MLB MARLBORO USA MCD MCDONALD´S USA VIS VISA USA APL APPLE USA IBM IBM USA

Developed Countries

FDH

IBM and Visa have the same output level; however, still IBM can reduce its

advertising cost by 5.2% without affecting its efficiency level.


Developed Countries

FRH

Abbreviation Brand Country FBC FACEBOOK USA MLB MARLBORO USA MCD MCDONALD´S USA VIS VISA USA APL APPLE USA


Developed Countries

VRS

Abbreviation Brand Country

FBC FACEBOOK USA APL APPLE USA


Input/Output orientation VRS


FBC FACEBOOK USA APL APPLE USA TOY TOYOTA JAPAN

Decrease 40.1%

Increase 20.9%


Efficiency

Efficient

• We have cases such as Mastercard (MTC),

which holds the 20th place in the Brand

ranking; nevertheless, it has the 4th place in the

efficiency ranking.

• Another case is Facebook (FCB), which holds

the 12th place in the Brand ranking;

nevertheless, it is listed as efficient under every

technology of interest.

Inefficient

• Microsoft, which holds the 3rd place in the Brand ranking, but holds the 12th place in the efficiency ranking.


Legend

FRH

FDH

VRS

Developed Countries


Emerging countries



ABB ALIBABA China AIT AIRTEL India

BDU BAIDU China CMB CHINA MOBILE China

HDF HDFC BANK India

ICB ICBC China

SBI STATE BANK OF INDIA

India

TNC TENCENT China

Emerging Countries



HDF HDFC BANK India

BDU BAIDU China ABB ALIBABA China TNC TENCENT China

Emerging Countries FDH



HDF HDFC BANK India

BDU BAIDU China ABB ALIBABA China TNC TENCENT China

ICB ICBC China

FDH Emerging Countries

ICBC and Baidu have the same output level;

however, ICBC can reduce its advertising cost by

43.84% without affecting its efficiency level.


Emerging Countries

FRH


HDF HDFC BANK India

BDU BAIDU China ABB ALIBABA China


Emerging Countries


HDF HDFC BANK India BDU BAIDU China TNC TENCENT China

VRS


VRS

Input/Output Orientation


HDF HDFC BANK India

BDU BAIDU China

TNC TENCENT China

ICB ICBC China

Decrease

43.85%

Increase

6.43%


Efficient

The outstanding cases of Baidu and HDFC,

which are ranked in the 21st place and 72nd

place in the Brand ranking, respectively;

nevertheless, they are efficient under every


Inefficient China Mobile is ranked in the 15th place in the Brand ranking, nevertheless, it is ranked in the 21st place in the efficiency ranking.

Efficiency


Emerging Countries

Legend

FRH

FDH

VRS


Developed & Emerging Countries


Country: USA Type Brand

D1 APPLE D2 GOOGLE D3 MICROSOFT D4 IBM D5 VISA D6 AT&T D7 VERIZON D8 COCA-COLA D9 MCDONALD'S D10 MARLBORO D11 FACEBOOK D12 AMAZON D13 WELLS FARGO

D14 GENERAL ELECTRIC

D15 UPS D16 DISNEY D17 MASTERCARD

D20 AMERICAN EXPRESS

D21 WALMART D23 NIKE D24 STARBUCKS

Type Brand Country

D18 VODAFONE UK

D19 SAP Germany

D22 T- MOBILE Germany

D25 TOYOTA Japan

Country: China

Type Brand

E1 TENCENT

E2 ALIBABA

E3 CHINA MOBILE

E4 BAIDU

E5 ICBC

Country: India

Type Brand

E6 HDFC BANK

E7 AIRTEL

E8 STATE BANK OF INDIA

Developed and Emerging

Countries


Type Brand Country

E6 HDFC BANK India

E4 BAIDU China D11 FACEBOOK USA

D10 MARLBORO USA D9 MCDONALD'S USA

D5 VISA USA D1 APPLE USA


Countries FDH


Input Orientation

FDH

Type Brand Country

E6 HDFC BANK India E4 BAIDU China

D11 FACEBOOK USA

D10 MARLBORO USA

D9 MCDONALD'S USA D5 VISA USA D1 APPLE USA

E1 TENCENT China


Output Orientation

FDH

Type Brand Country


D11 FACEBOOK USA D10 MARLBORO USA

D9 MCDONALD'S USA D5 VISA USA

D1 APPLE USA E2 TENCENT China

D13 WELLS FARGO USA

D15 UPS USA



Countries

FRH

Type Brand Country



D9 MCDONALD'S USA


Input Orientation

FRH

Type Brand Country



D9 MCDONALD'S USA E7 AIRTEL India


India


Output Orientation

FRH

Type Brand Country



D9 MCDONALD'S USA E7 AIRTEL India


India


Type Brand Country


D11 FACEBOOK USA

D1 APPLE USA


Countries VRS


Input/Output Orientation

Type Brand Country

E6 HDFC BANK India

E4 BAIDU China D11 FACEBOOK USA

D1 APPLE USA D10 MARLBORO USA

VRS Marlboro (D10) can reduce its advertising

costs by 15.85% or increase its output level

by 4.87% to become efficient.



Countries

Legend

FRH

FDH

VRS


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0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

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BA

IDU

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Efficiency ranking - Input-oriented

Efficient Inefficient

Developed

Emerging


Developed & Emerging Countries (VRS)

Developed VRS

frontier

Emerging

VRS frontier


High

Low

Low High

Efficiency vs. Effectiveness


Low

Low

Type Brand Country D6 AT&T USA D8 COCA-COLA USA

D16 DISNEY USA D18 VODAFONE UK D19 SAP Germany D22 T- MOBILE Germany D23 NIKE USA

Low efficiency and low effectiveness


High

Low

Type Brand Country D7 VERIZON USA

D14 GENERAL ELECTRIC

USA

D15 UPS USA

D20 AMERICAN EXPRESS

USA

D21 WALMART USA D25 TOYOTA Japan

E3 CHINA MOBILE

China

E5 ICBC China


India

Low efficiency and high effectiveness


Hig

h

High

Type Brand Country D1 APPLE USA D2 GOOGLE USA D3 MICROSOFT USA D4 IBM USA D5 VISA USA D9 MCDONALD'S USA

D10 MARLBORO USA D11 FACEBOOK USA D13 WELLS FARGO USA D17 MASTERCARD USA D24 STARBUCKS USA E1 TENCENT China E2 ALIBABA China E4 BAIDU China E6 HDFC BANK India E7 AIRTEL India

High efficiency and high effectiveness


The present research provides the scope to design

frontiers for the brands from developed and emerging

economies, as well as it substantially allows to compare

brands under various frontier technologies of interest.

Advertising plays a vital role in promoting the brand…

but how much money should be spent on advertising?

Or, otherwise stated, how much can we cut down on

advertising costs without affecting the efficiency of the

brand?

Takeaways


For example:

1. Developed countries: We have the outstanding case of

Facebook, which holds the 12th place in the Brand

ranking; nevertheless, it is listed as efficient under every


2. Developing countries: We have the outstanding case of

HDFC Bank, which is ranked in the 72nd place in the

Brand ranking; nevertheless, it is efficient under every


The analysis shows that the brand value ranking of the brands

differs significantly from the efficiency ranking under different

technologies of interest.

Takeaways…


It is to be noted that the brands from developed

countries which are inefficient are furthermore

inefficient even under the emerging countries frontier!

Apple and Facebook (Developed Countries) and Baidu

and HDFC Bank (Emerging Countries) are efficient

under every technology of interest and represent the

peers for the rest of the brands analysed.

Takeaways…


1. A substantial number of brands can be found with

higher effectiveness.

2. 50% of the selected sample is sustaining with higher

efficiency and higher effectiveness.

The brands have been classified into four quadrants,

based on their efficiency and effectiveness:

Takeaways…


© reserved to Prof. Charles Vincent, PhD, PDRF

THANK YOU Perseverance, Persistence: Thomas Edison Quote

Nearly every man who develops an idea works at it up to the point where it looks impossible, and then gets discouraged. That's not the place to become discouraged.

perceived brand equity: a journey from efficiency to ... from the consumer/customer perception or in...

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