Relationship Between the Brand Equity and the Sales of Bottled Water Industry Essay Example for Free

Relationship mingled with the Brand Equity and the Sales of Bottled Water Industry EssayThis enquiry basic onlyy pertains to find give away the consanguinity between the put up rectitude and the gross revenue of the crossroad. The questionnaire was constructed and the pilot get hold of development 15 respondents from ICBS was carried start to ensure that there were no confusions or ambiguities in the questionnaire. All ambiguities or confusions piece were removed onwards administering the final questionnaire. The questionnaires were divided into twain parts.On first of June the questionnaires were administered among half of the smack. The former(a) half of the questionnaires among the remaining samples on 1st July 2007. As our enquiry was basically descriptive in nature, we then quantified the values we were aban have oned in the questionnaire results and roled them to graph the responses of the elements of the research. The results were then analyzed. Introduct ion The broad atomic number 18a of the research is related to the currently exist situation in the bottled piss industry.As the bottle piss industry is flourishing in Pakistan and naked as a jaybird(a) competitors be entering the grocery store but still pure(a) flavour has managed to maintain the considerable essence of foodstuff piece of land due to its taint truth. The concept of chump is integral to the success of any given product. Brand justness necessarily affects the performance of a product. The concept of bulls eye loveliness skunk keep a label effect on the foresightfulevity of a products performance. Brand lawfulness is defined as the bundle of intrinsic features/attributes delivered by a shuffle product or serve up.It is measured as the determine differential someone is go outing to pay for a particular provokered product or service over an identical product or service that is un give awayed. Alternatively, this definition toilette be re-craf ted to state that fire defect justice is the difference in utility between two products or services that are perceive to deliver an identical set of tangible benefits at the identical scathe. Consumers see a particular home run call forth as a contract. A punctuates name whitethorn reduce consumers sense of un realty, allowing them to purchase, uncertainty reduction, or trust, thus improving their sense of value.Background Nestle have becomen a hard fill in Pakistan at a time when the countrys food, drink and retail industries in planetary are all actually struggling to attract large- plateful multinational investments of this nature. Although these companies all have more than profitable product categories, which are their primary concerns in more developed trades, in Pakistan a severalise element of their business strategy at the present time is a untouchable presence in the increasingly competitive bottled irrigate industry.Should economic growth continue, the i ntroduction of their added-value, more premium products, go forth but prove a bonus at a later date? Such investment natesnot do but drive bottled irrigate gross revenue in Pakistan, while inflows from multinationals also provide much unavoidable jobs and contribute to essential infrastructural developments in the country. However, there is a huge flipside to these advantages the creation of a population, which rear and afford to spend beyond necessity, reliant on a product that is still considered a sumptuousness item in some of the worlds some developed economies.Pakistans response to this dilemma affects not entirely its population, but its likelihood of establishing itself as a destination for much sought after food, drink and retail industry investment in the future. Literature Review Brand equity is the value built-up in a carry. It is measured based on how much a customer is aware of the place. The value of a companys sucker equity can be calculated by comparing the expected future revenue from the crossed product with the expected future revenue from an equivalent non- imperfectioned product. This calculation is at best an approximation.This value can comprise both tangible, functional attributes (e. g. TWICE the cleaning power or HALF the fat) and intangible, emotional attributes (e. g. the leaf blade for battalion with style and good taste). It can be positive or negative. Positive marque equity is created by effective promotion and consistently meeting or exceeding customer thoughts. Negative pock equity is usually the result of bad management. In the early 2000s, the Ford Motor Company do a strategic decision to brand all new or redesigned cars with names starting with F.This line up with the previous tradition of naming all sport utility vehicles since the Ford Explorer with the letter E. The Toronto booster cable quoted an analyst who warned that changing the name of the well known Windstar to the Freestar would cause confus ion and discard brand equity built up, while a foodstuffing manager believed that a name change would highlight the new redesign. The aging Taurus, which became one of the most significant cars in American auto history, would be abandoned in favor of three entirely new names, all starting with F, the Five Hundred, Freestar and Fusion.By 2007, the Freestar was discontinued without a replacement, and Ford announced record losses. In a surprise announcement, the discarded Taurus nameplate would be re-used on an improved Five Hundred which had disappointing sales and whose nameplate was recognized by less than half of most great deal, but an overwhelming majority was familiar with the Taurus. Brand Equity and Market Share Very frequently only the merchandise share of a brand is looked at as a means of ascertain how thriving the brand is.Although market share is of grandness in assessing the performance of a brand, its relationship with brand equity is of great significance, as thi s relationship can be an indication of the potential success of a brand, or alternatively can direct strategy on how to attain much(prenominal) success. The following plat illustrates the relationship between brand equity and market share 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 and so forth Thus, understanding brand equity plays an important role in that it gives an indication of how a brands performance can be improved.Where there is low br and 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. What is Brand Equity?In layman 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 populate have of a certain brand, and the familiarity of those brands in the bear in 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 bra nd equity (brand awareness, consideration and the factors associated with it) will plump to certain outcomes.And the more powerful the sources are, the more significant these outcomes will be. Thus, a strong brand dedication 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. Further, the importance of brand equity is that, by understanding how brand equity drives market share, it is then possible to pay off use of this knowledge in order to grow the market share of a brand.Understanding the tie beam between brand equity and market share will thus assist marketers in which strategies are required to grow market share. The Benefits of Brand Equity What are the benefits of strong brand equity? Well, strong brand equity leads to, inter alia, stron g 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 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. Another benefit of brand equity is that its an asset which can be sold or leased. The importance of brand equity to customer loyaltyKeller (1998) argues that brand equity is unique from customer loyalty, and can be defined as the different ial effect that brand knowledge has on consumer response to the merchandise of that brand. He argues that a brand possesses positive customer-based brand equity when customers act more favorably to a (brand determine) product and the way that it is marketed as compared to when it is not. Brands can also possess negative customer-based brand equity, expressed when consumers react less favorably to the marketing activities associated with a brand, as compared to an unnamed or fictitious named version of the product.Keller (1998) advertize states that one of the characteristics of brands possessing strong brand equity is stronger brand loyalty. This position appears consistent wit that of Aaker (1991) who argued that brand loyalty could be considered both a dimension and an outcome of brand equity. Problem Statement The problem literary argument of the research is to find out that Are pure life sales great than competitors due to brand equity of Nestle? Nestle pure life was laun ched in Pakistan in 1998.The brand now holds a solid position as number 1 in Pakistan by having more than 50 per centime of the countrys small bottled-water system market of 33 million liters (35 million quarts) a year. Pure Life is everywhere at roadside stalls, gas stations and rest stops. Its hawked at street corners in traffic-clogged Lahore. Middle-class shoppers obtain it by the case in supermarkets. On the remote mountain road leading from Islamabad to the hill town of Murree, Pure Life billboards urge drivers to drive only Nestle Pure Life. At small stores along the way, a flurry of banners proclaim Pure Safety, Pure Trust.The ideal water. From Nestle with love. As the purchase of the bottled water involves low occasion of consumers therefore factors such as price, packaging and taste are not as important as compared to the brand image of the product. Therefore, the research is conducted to find out whether the equity of a brand affects the sales of the product or not Limitations, Delimitations and Assumptions The concept of brand equity is important to every brand therefore it can be applied to every product in the Pakistani market.For the purpose of simplicity, researchers chose water bottled industry of Pakistan. In this industry Nestle Pure Life was chosen due to the fact that as purchase of bottled water involves low involvement of consumer so the only thing that matters for the consumer is the brand name. Furthermore another(prenominal) argue for choosing Nestle Pure life was that the researchers assumed that the sales of Nestle Pure life were greater than competitors due to brand equity of Nestle. There was another limitation that the researchers would only focus on a particular age group of pack i. . people between 20-25 yrs of age. Theoretical Framework In the research the single-handed variable is brand equity, the dependent variable is sales, whereas there are three intervening variables identified which affect the relationship of independent variable and the dependent variable which are, product mental ability, distribution and availability. There is a positive relationship between the independent variable and the dependent variable because its assumed that the brand equity causes an increase in the sales of a product which is Nestle Pure Life.Coke and Pepsi entered the bottled water industry as their production capacity was 18000 crates but after production of sodas their production plant was laze so they decide to jump in the bottled water. industry. They had the advantage that the industry is developing and consumers are becoming sure of the importance of pure drinkable water. And their setup was already developed. Their distribution is extensive and they can capture all the consumers who buy their sodas. There is a positive relationship between sales and the intervening variables that are production capacity, distribution and availability.Nestle has an advantage over the other bottled water competitor s due to the fact that they are the market leaders and their production and distribution is much more then the other competitors and their production plant and capacity is only used for the bottled water only. Their availability is much more extensive because nestle food products are distributed all over the country and hence they utilize their already developed distribution setup. Hypothesis The venture that the researchers intended to test was the following Pure life sales are greater than competitors due to brand equity of Nestle Nature of needThe type of research is basic or pure because the information aimed to find out the affect of brand equity on sales of Nestle Pure Life and literature review was done to find out the relationship between brand equity and sales and primary study was also conducted by distributing questionnaires to MBA students of various universities. The relationship between the brand equity and sales is also generalizable. No matter what the product is there is always the positive relationship between them. answer of Study The purpose of the study is descriptive.The study will help in better understanding of the relationship of brand equity of a product and its sales. It will also help the organizations to make decisions related to brand awareness, brand loyalty and brand optence that will affect the brand equity of a product. It will also help other researchers to work on the similar concept. Throughout the study the researcher preventive was minimal as there was no control of researcher on the independent variable which was brand equity. The type of investigation was correlation as the study aimed at finding the relationship between the independent variable and dependent variable.It was a field study done in non contrived settings. Methodology entropy Collection The initial data for research was obtained through secondary sources of information, which included internet articles, journals and books. It would not be enough to substantiate the hypothesis therefore, the data collection technique of questionnaire survey shall be used. Population Our stooge population consists of business schools students in the age group of 20-25 years using Nestle Pure Life. sample distribution Proportionate stratified random sampling technique was used for the sample.UniversitiesNumber of Elements Proportionate sampling NCBA250250 * 32% = 80 LSE350350 * 37% = 130 GCU200200 * 25% = 50 Sample Size Out of the total of 800 students the size of the population, the sample was 80 students of National College of Business Administration, 130 Students of Lahore Scholl of Economics and 50 students of Government College University Lahore. The sample sizes were determined using table given by Uma Sekeran, using 90% confidence interval and standard demerit of 9. 5. Instruments Questionnaires were used as a tool to gather the primary data for the research.The questionnaire consisted of 7 questions and was administered among NCBA, LSE and GCU students. The questionnaire used in this study was a non-standardized instrument constructed solely for the purpose of this study. Copy of the questionnaire is attached in Appendix I in the report. Scale Dichotomous scale was used for five questions. YesNo Category scale was also used. treble items were given to elicit a single response from the respondent. From ranking scale forced choice scale was used which enabled the respondents to rank the brands of water bottles according to their preferences. Pilot StudyA pilot study using 15 respondents from ICBS was done to ensure that there were no confusions or ambiguities in the questionnaire. All ambiguities or confusions found were removed before administering the final questionnaire. Reliability The reliability of the instruments was ensured through split- half reliability method. The instrument of the study which was questionnaires was divided into two halves. On first of June the questionnaires were administered among 40 NCBA students, 75 LSE students and 25 GCU students. The other half of the questionnaires among the same number of students on 1st July 2007.The reliability test will reflect the correlation between the two halves of the questionnaires. Validity The validity of our instrument was checked by the content and construct validity test. Results Question 1 Do you buy bottled water? Our population included only those elements who are users or buyers of the bottled water. So as the sample is the replica of the population then it can be said that the sample contained all the users or buyers of the bottled water. Question 2 Rank the following brands of water bottles according to your preference.As this question asked to rank the brands in order of preference it helped us to find out what brand people prefer. The results showed that 45% or 117 consumers prefer Nestle Pure life. Aside from that the other preference were 20% or 52 prefer cobalt ultramarine Fina , 15% or 39 prefer kinley, 13% or 34 prefer Sufi and the least was aqua safe which is 7% or 18. It showed that the highest demand or preference is of Nestle Pure life. The name Nestle Pure Life was used because it is known as Nestle or Nestle Pure Life among people. Question 3 What are the reasons of your preference?This question asks about why the brand is favorite(a)? And what is the reason for there preference? The results showed that 37% or 96 for international brand, 21% or 55 marked companied credibility, 18% or 47 went for quality seal, 11% or 29 marked packaging, 9% or 23 for price and 4% or 10 for certification. By these results we concluded that most people dont know about quality seal and certification and some brand dont have them so it wasnt marked. One aspect was that those who marked nestle as their preferred brand marked international brand and companys credibility as their reason for preference. toll and packaging was not such a major factor in their reason for the preference. It was only marked by consumers who use aqua safe and Sufi. Question 4 Do you recall any advertising of your preferred brand? The results showed that 83% or 216 answered yes and 17% or 44 answered no. It showed that one reason of preference was the advertisement showed. Research shows that it has a major impact on people as it repetitive. It leaves the stamp and the companies or brands qualities and messages in peoples mind. They do remember and recall it when buying a product.Question 5 How long have you been using your preferred brand? The results showed that most of the people have been using the brand for more than a year 45% or 117. 37% or 96 were using it for a year, 12% or 31 for 6 months and 6% or 16 for a month. The results also showed that most of the people have been using Nestle and Aqua Fina and Sufi and Aqua safe had a few consumers as they have not been using it for so long. Question 6 In your opinion are you brand loyal to your preferred brand? The results showed that 87% or 226 were br and loyal and 13% or 34 were not.The result showed that students are not brand loyal. But it has been observed that when people ask for drinking water they ask for nestle water. We also observed this at super stores that while passing by the water bottle shelves they pick Nestle. This behavior is same as schools and colleges. Question 7 What if your preferred brand is touch on in an unethical business or fraud, will you still buy it? The results for this were that 64% or 166 answered as Yes and 36% or 94 answered as No. It showed that if a companied credibility is in doubt people back of from it.It does show a sense of rightness in people and also that for a brand to be successful its important that the company should be credible. As brand equity is the good will of the company and its important for a company to succeed and be reputable. Is also important because now, with media awareness people are becoming more conscious to these factors, so, the companies have to be conscious of these factors. Question 8 Would you prefer a brand which is popular in your social circle? The results of this question were that 55% or 143 answered as Yes and 45% or 117 answered as No. t helped to show that is the preference dependent on the social behaviors. But the result showed that it has a 10 % difference so it is slightly significance. For some people it who look for acceptance from their circle but its not that important as it low involvement purchase and it related to thirst which know no boundaries. But for some its status symbol to use bottled water as some people dont care as long as its water. Discussion If the hypothesis is selected it would mean that the brand equity and brand image is important for the customers.They do take it into consideration while buying as its imprinted in their minds. Advertisement helps the customers to see the attributes of the company and the product . It keeps the brand equity in the minds of the customers. If the hypothesis is not subs tantiated by the questioners results, it would mean that some other factors are involved in the greater sales of the brand besides it brand name and the research would have to be conducted again with a new hypothesis. . Conclusions The conclusion of the study is that the Pure Life sales are greater than competitors due to brand equity of Nestle.The company should concentrate on things like brand preference and brand loyalty. They can do this by a lot of advertising and other promotional campaigns like public relations. Brand preference, brand loyalty and trust leads to establishment of brand equity which can be said as goodwill. Implications Brand equity is the customers subjective and intangible judgement of the brand, supra and beyond its purely perceived value. In a market where many products are quite a similar (i. e. commoditization), the brand can have a large effect on whether customers want to buy the product and what price theyre willing to pay.Brands therefore add more a nd more value to the basic product or service. Example although a blind test panel taught researchers that most people prefer Pepsi above Coca-Cola, yet Coca-Cola is much stronger on the market. Our research findings shall help marketers understand the relation between brand equity ad sales. We have used Nestle Pure Life as a model for the study to illuminate the same relationship. As mentioned earlier, if there is a relationship between the variables, the marketers need to take it into cypher while designing their marketing strategies and policies.