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Perceived Brand Equity: A Journey from Efficiency to Effectiveness
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Transcript of Perceived Brand Equity: A Journey from Efficiency to Effectiveness
Copyright © 2015 by Prof. Dr. V. Charles
V. Charles, PhD, PDRF Director of CENTRUM Research
Distinguished Research ProfessorEditor-in-Chief,
JCC: The Business and Economics Research JournalCENTRUM Católica Graduate Business School
PUCP, Lima, Peru.
Perceived Brand Equity: A Journey from
Efficiency to Effectiveness
Copyright © 2015 by Prof. Dr. V. Charles
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 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.
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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.
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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.
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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 beeval
jT
j j j njT
j j j nj
n j n
x x x x
y y y y
0uated as DMU .
0
1 1
1
01
. .
0, 1,2,..., ,
, 1,2,..., ,
0, 0, 0, 1,2,..., ; 1,2,..., ; 1,2,..., .
s s
r ir i
n
r rj j rj
n
ij j r ij
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 .
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Brand Value Vs. Advertising Costs
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Developed countries
Copyright © 2015 by Prof. Dr. V. Charles
Axis
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Country: USAAbbreviation Brand
AEX AMERICAN EXPRESSAMZ AMAZONAPL APPLEATT AT&TCCL COCA-COLADSN DISNEYFCB FACEBOOKGET GENERAL ELECTRICGOG GOOGLEIBM IBMMCD MCDONALD'SMLB MARLBOROMSF MICROSOFTMTC MASTERCARDNKE NIKESBU STARBUCKSUPS UPSVIS VISAVZN VERIZON
WMT WALMARTWSF WELLS FARGO
Abbreviation Brand CountrySAP SAP GermanyTMO T- MOBILE GermanyTOY TOYOTA JapanVDN VODAFONE UK
Developed Countries
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Abbreviation Brand CountryFBC FACEBOOK USAMLB MARLBORO USAMCD MCDONALD´S USAVIS VISA USAAPL APPLE USAIBM 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.
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Developed CountriesFRH
Abbreviation Brand CountryFBC FACEBOOK USAMLB MARLBORO USAMCD MCDONALD´S USAVIS VISA USAAPL APPLE USA
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Developed CountriesVRS
Abbreviation Brand CountryFBC FACEBOOK USAAPL APPLE USA
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Input/Output orientationVRS
Abbreviation Brand CountryFBC FACEBOOK USAAPL APPLE USATOY TOYOTA JAPAN
Decrease 40.1%
Increase 20.9%
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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.
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
LegendFRHFDHVRS
Developed Countries
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Emerging countries
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Abbreviation Brand CountryABB ALIBABA ChinaAIT AIRTEL India
BDU BAIDU ChinaCMB CHINA MOBILE ChinaHDF HDFC BANK IndiaICB ICBC China
SBI STATE BANK OF INDIA India
TNC TENCENT China
Emerging Countries
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Abbreviation Brand CountryHDF HDFC BANK IndiaBDU BAIDU ChinaABB ALIBABA ChinaTNC TENCENT China
Emerging CountriesFDH
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Abbreviation Brand CountryHDF HDFC BANK IndiaBDU BAIDU ChinaABB ALIBABA ChinaTNC TENCENT ChinaICB ICBC China
FDHEmerging Countries
ICBC and Baidu have the same output level; however, ICBC can reduce its advertising cost by
43.84% without affecting its efficiency level.
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Emerging CountriesFRH
Abbreviation Brand CountryHDF HDFC BANK IndiaBDU BAIDU ChinaABB ALIBABA China
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Emerging Countries
Abbreviation Brand CountryHDF HDFC BANK IndiaBDU BAIDU ChinaTNC TENCENT China
VRS
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
VRSInput/Output Orientation
Abbreviation Brand CountryHDF HDFC BANK IndiaBDU BAIDU ChinaTNC TENCENT ChinaICB ICBC China
Decrease 43.85%
Increase 6.43%
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
EfficientThe 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 technology of interest.
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
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Emerging Countries
LegendFRHFDHVRS
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Developed & EmergingCountries
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Country: USAType Brand
D1 APPLED2 GOOGLED3 MICROSOFTD4 IBMD5 VISAD6 AT&TD7 VERIZOND8 COCA-COLAD9 MCDONALD'SD10 MARLBOROD11 FACEBOOKD12 AMAZOND13 WELLS FARGO
D14 GENERAL ELECTRIC
D15 UPSD16 DISNEYD17 MASTERCARD
D20 AMERICAN EXPRESS
D21 WALMARTD23 NIKED24 STARBUCKS
Type Brand Country
D18 VODAFONE UK
D19 SAP Germany
D22 T- MOBILE Germany
D25 TOYOTA Japan
Country: ChinaType Brand
E1 TENCENTE2 ALIBABAE3 CHINA MOBILEE4 BAIDUE5 ICBC
Country: IndiaType Brand
E6 HDFC BANK
E7 AIRTEL
E8 STATE BANK OF INDIA
Developed and Emerging Countries
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD10 MARLBORO USAD9 MCDONALD'S USAD5 VISA USAD1 APPLE USA
Developed and Emerging Countries
FDH
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Input Orientation
FDH
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD10 MARLBORO USAD9 MCDONALD'S USAD5 VISA USAD1 APPLE USAE1 TENCENT China
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Output Orientation
FDH
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD10 MARLBORO USAD9 MCDONALD'S USAD5 VISA USAD1 APPLE USAE2 TENCENT China
D13 WELLS FARGO USAD15 UPS USA
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Developed and Emerging Countries
FRH
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD10 MARLBORO USAD9 MCDONALD'S USA
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Input Orientation
FRH
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD10 MARLBORO USAD9 MCDONALD'S USAE7 AIRTEL India
E8STATE BANK OF INDIA India
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Output Orientation
FRH
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD10 MARLBORO USAD9 MCDONALD'S USAE7 AIRTEL India
E8STATE BANK OF INDIA India
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD1 APPLE USA
Developed and Emerging Countries
VRS
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Input/Output Orientation
Type Brand CountryE6 HDFC BANK IndiaE4 BAIDU China
D11 FACEBOOK USAD1 APPLE USA
D10 MARLBORO USA
VRSMarlboro (D10) can reduce its advertising costs by 15.85% or increase its output level
by 4.87% to become efficient.
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Developed and Emerging Countries
LegendFRHFDHVRS
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
APP
LE
FAC
EBO
OK
BA
IDU
HD
FC B
AN
K
MA
RLB
OR
O
MA
STER
CA
RD
GO
OG
LE
VIS
A
MC
DO
NA
LD'S
IBM
ALI
BA
BA
MIC
RO
SOFT
STA
RB
UC
KS
TEN
CEN
T
WEL
LS F
AR
GO
AIR
TEL
STA
TE B
AN
K O
F IN
DIA
UPS
VER
IZO
N
AT&
T
CO
CA
-CO
LA
GEN
ERA
L EL
ECTR
IC
AM
AZO
N
AM
ERIC
AN
EX
PRES
S
ICB
C
T- M
OB
ILE
CH
INA
MO
BIL
E
SAP
DIS
NEY
WA
LMA
RT
VO
DA
FON
E
NIK
E
TOY
OTA
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Efficiency ranking - Input-orientedEfficient Inefficient
Developed Emerging
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Developed & Emerging Countries (VRS)Developed VRS
frontier
Emerging VRS frontier
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
High
Low
Low High
Efficiency vs. Effectiveness
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Low
Low
Type Brand CountryD6 AT&T USAD8 COCA-COLA USA
D16 DISNEY USAD18 VODAFONE UKD19 SAP GermanyD22 T- MOBILE GermanyD23 NIKE USA
Low efficiency and low effectiveness
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
High
Low
Type Brand CountryD7 VERIZON USA
D14 GENERAL ELECTRIC USA
D15 UPS USA
D20 AMERICAN EXPRESS USA
D21 WALMART USAD25 TOYOTA Japan
E3 CHINA MOBILE China
E5 ICBC China
E8 STATE BANK OF INDIA India
Low efficiency and high effectiveness
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
Hig
h
High
Type Brand CountryD1 APPLE USAD2 GOOGLE USAD3 MICROSOFT USAD4 IBM USAD5 VISA USAD9 MCDONALD'S USA
D10 MARLBORO USAD11 FACEBOOK USAD13 WELLS FARGO USAD17 MASTERCARD USAD24 STARBUCKS USAE1 TENCENT ChinaE2 ALIBABA ChinaE4 BAIDU ChinaE6 HDFC BANK IndiaE7 AIRTEL India
High efficiency and high effectiveness
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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
technology of interest. 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
technology of interest.
The analysis shows that the brand value ranking of the brands differs significantly from the efficiency ranking under different
technologies of interest.
Takeaways…
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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…
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
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…
Copyright © 2015 by Prof. Dr. V. CharlesCopyright © 2015 by Prof. Dr. V. Charles
© reserved to Prof. Charles Vincent, PhD, PDRF
THANK YOUPerseverance, 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.