Ms. Richa Joshi , Research scholar

(Delhi Technological University)

EXAMINING THE RELATIONSHIP

BETWEEN SALES AND BRAND EQUITY

IN GLOBAL FMCG BRANDS Paper Presented at International Conference on Contemporary Management Practices Creative or Dogmatic

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AGENDA

01 02 03 04

Objective Research

Methodology R Square Conclusion

OVERVIEW

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In this paper we are trying to analyze the impact of Brand Equity on the sales with respect to various brands .

PURPOSE

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To demonstrate the pattern of sales of three Global FMCG Brands for a period of 8 years.

To Present the Brand Equity of all the three Global FMCG Brands for past 8 Years.

To determine the impact of Brand equity on sales.

OBJECTIVES

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INTRODUCTION

Brand Equity is termed as set of asset and liabilities linked with the brand that add or subtract value provided by the product to firm and its competitors.

In order to analyze impact in global context we have taken three global FMCG brands ( Nestle, Johnson & Johnson and Danone) which have been listed in top 100 brand in terms of brand equity for the last 8 years by interbrand.com.

The three brands belong to different countries i.e. Johnson & Johnson is U.S based firm, Nestle is Switzerland based firm and Danone is france based firm.

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The Research Design is exploratory in nature. The data used is entirely secondary data collected from the balance sheets of all the three companies i.e. Nestle, Danone & Johnson & Johnson.

The data for Brand Equity is collected from www.interbrand.com , it is a U.S based brand consultancy firm.

The data collected has gone through correlation and regression analysis since the data of dependent and independent variable is in metric form.

RESEARCH METHODOLOGY

For implementing correlation & regression analysis SPSS V 20.0 is used. The sales data and brand equity data has been analyzed for the past 8 years i.e. 2006-2013. The data is time series data .

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HYPOTHESIS TESTING

H1 Sales and Brand Equity are associated. (β≠0)

H10 Sales and Brand Equity are not associated (β=0)

H2 Brand Equity does impact Sales.

H20 Brand Equity does have no impact on sales.

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Johnson & Johnson Danone Nestle

Years Sales in

Million $

Brand Equity in Million $

Sales in Million €

Sales in Million $

Brand Equity in Million $

Sales in Million $

Brand Equity in Million $

2006 53324 3193 12038 15854.05 4638 98500 4932

2007 61095 3445 12776 18807.55 5019 107600 5314

2008 63747 3582 15220 21181.67 5408 109900 5592

2009 61897 3847 14982 21583.07 5960 107600 6319

2010 61587 4155 17010 22728.76 6363 930200 6548

2011 65030 4072 19318 24995.56 6936 836400 6613

2012 67224 4378 20869 27534.56 7498 897200 6916

2013 71312 4777 21298 29372.07 7968 921600 7527

The sales & brand equity for all the three FMCG companies have been listed in the following table.

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CORRELATIONS

Correlations

Sales in Million $ ( Johnson & Johnson)

Brand Equity in Million $

( Johnson & Johnson)

Sales in Million $ ( Johnson &

Johnson)

Pearson Correlation 1 .880**

Sig. (2-tailed) .004

N 8 8

Brand Equity in Million $ ( Johnson & Johnson)

Pearson Correlation .880** 1

Sig. (2-tailed) .004

N 8 8

**. Correlation is significant at the 0.01 level (2-tailed).

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CORRELATIONS

Correlations

Sales in Million $ (Danone)

Brand Equity in Million $ (Danone)

Sales in Million $ (Danone)

Pearson Correlation

1 .986**

Sig. (2-tailed) .000

N 8 8

Brand Equity in Million $ ( Danone)

Pearson Correlation

.986** 1

Sig. (2-tailed) .000

N 8 8

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CORRELATIONS

Correlations

Sales in Million $ (Nestle)

Brand Equity in Million $ (Nestle)

Sales in Million $ ( Nestle)

Pearson Correlation 1 .842**

Sig. (2-tailed) .009

N 8 8

Brand Equity in Million $ (Nestle)

Pearson Correlation .842** 1

Sig. (2-tailed) .009

N 8 8

**. Correlation is significant at the 0.01 level (2-tailed).

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R SQUARE

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .880a .775 .737 2682.73789

Predictors: (Constant), Brand Equity in Million $ ( Johnson & Johnson) The regression Equation for sales of Johnson & Johnson is:

The value of R square for Johnson & Johnson is 77.5%. It indicates that 77.5% of changes in sales are being explained by brand equity. The regression Equation for sales of Johnson & Johnson is: YS(J) = 28330.234 + 8.858 BE(J) Where , YS(J) is the sales of Johnson & Johnson and BE(J) is the Brand Equity of Johnson & Johnson

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R SQUARE

Model Summary

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 .986a .972 .967 809.73669

a. Predictors: (Constant), Brand Equity in Million $ ( Danone)

The value of R square for Danone is 97.2% which indicates that 97.2% of changes in sales of Danone are being explained by the Brand Equity of Danone. The Regression equation for sales of Danone is: YS(D) = -213.176 + 3.691 BE(D) Where YS(D) = Sales of Danone and BE(D) = Brand equity of Danone

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R SQUARE

Model Summary

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 .842a .709 .660 246725.13259

a. Predictors: (Constant), Brand Equity in Million $ ( Nestle)

The value of R square for nestle is 70.9% which indicates that 70.9% of changes in sales of Nestle are being explained by the Brand Equity of Nestle. Hence by observing the R square values of all the three FMCG Brands , it can be estimated that H20 is rejected and H2 is accepted i.e. the Brand Equity does impact sales. The Regression Equation for sales of Nestle is: YS(N) = -2038316.246 + 408.262 BE(N) Where YS(N) is the sales of Nestle and BE(N) is the Brand Equity of Nestle

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CONCLUSION

Results suggest that Brand Equity plays a very important role in enhancing and increasing sales , since the study has taken three major FMCG brands which have marked their presence globally and the data which has been taken is covering a time span of eight years , hence it can be concluded that the Brand Equity is an important variable which effect sales.

However the results can only be generalized when the research extend beyond the three companies to each and every company in FMCG sector , it can be regarded as the scope of this study for the near future.

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REFERENCES

• Aaker, David A. (1991). Managing Brand Equity: Capitalizing on the Value of a Brand Name, New York: The Free Press, 224 p.

• Aaker, David A. and Keller, Kevin Lane (1990). Consumer Evaluations of Brand Extensions, Journal of Marketing, 54, (January), pp. 27-41.

• Abhishek Dwivedi, Bill Merrilees, (2013). Brand extension feedback effects: towards a mediated framework, Journal of Consumer Marketing, Vol. 30 Iss: 5, pp.450 – 461.

• Abosag Ibrahim etal. (2012). Examining the relationship between brand emotion and brand extension among supporters of professional football clubs , European Journal of Marketing Vol. 46 No. 9, pp. 1233-1251.

• Afzal Sarwat (2013). Factors influencing successful brand extension into related and unrelated product categories, Asian Economic and Financial Review, 3(2):216-226.

• Dacin, Peter A. and Smith, Daniel C. (1994). The Effect of Brand Portfolio Characteristics on Consumer Evaluations of Brand Extensions, Journal of Marketing Research, 31 (May), pp. 229-242.

• Chernatony, L., de . , L. Hem, E. and M.I. Nina, (2003). Factors influencing successful brand extensions. Journal of Marketing Management, 19: 781-806.

• Swaminathan, F. and Reddy., (2001). The impact of brand extension introduction on choice. Journal of Marketing, 65: 1-15.

• Ramanathan Jayasankar (2013). Consumer Evaluation of Brand Extensions: Good to Service and Service to Good, vikalpa, volume 38 No. 2 .

• Vanitha Swaminathan, Richard J. Fox, Srinivas K. Reddy (2001). The Impact of Brand Extension Introduction on Choice. Journal of Marketing, Vol. 65, No. 4, pp. 1-15.

• Vukasovi Tina (2012). Launching of a new product with the brand extension strategy , Management knowledge and learning International Conference.

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