Beruflich Dokumente
Kultur Dokumente
FROOTI
PART 3: BRAND VALUE MEASUREMENT
Submitted by:
Bhavna Bhaswati
Kiran Thakur
Punam Garu
Saranya Roy
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CONTENTS
S. No TOPICS PAGE
1 Executive Summary 3
6 Royalty Method 14
8 Recommendations 16
9 Annexure 17
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EXECUTIVE SUMMARY
PHASE- I
In Phase- I of our project, we measured the brand image of the brand Frooti in the
mango drink category, using a combination of the BAV model and laddering method. Our last
findings indicated that Frooti was the market leader in the mango drink category beating off its
competitors.
PHASE- II
In Phase – II of the project, we measured the brand equity index of the brand Frooti in the
mango drink category, using Brand Loyalty, Price Premia, Brand leveragability and Brand
Association parameters. Maaza was the leader in all three parameters viz. Brand Loyalty, Price
Premia, and Brand Association. Frooti is the second most preferred brand among the proposed
brands.
PHASE- III
Brand valuation is the process used to calculate the value of brands. Historically, most of a
company’s value was in tangible assets such as property, stock, machinery or land. This has now
changed and the majority of most company’s value is in intangible assets, such as their brand
name or names.Over recent years, intangible assets have become more important to businesses
operating in a wide variety of industries. This in turn has put a premium on being able to come
up with credible ways to value brands. With high levels of competition and excess capacity in
virtually every industry, strong brands help companies differentiate themselves in the market and
communicate why their products and services are uniquely able to satisfy customer needs. Hence
it becomes very crucial to estimate the brand value.
OBJECTIVE:
METHODOLOGY:
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Sampling Technique: Here we collected data from correspondents who were present in
the survey of phase I & II.
The reason to do so is because a lot of questions needed for the Shafer and Relief were
already answered in our findings done in Phase I and II of the project.
Therefore, instead of asking the same question we only asked the questions that were not
repeatable. The data of repeated questions are taken from previous two phases.
Findings-
TOTAL SCORE
After assigning scores individually for each of brand across the 4 components and assigning
scores as the Shafer model, Maaza has emerged as a leader by a huge margin followed by Frooti
and Slice. Maaza was the eader with huge margins in more than one component which clearly
shows the strong value the brand has on the consumers.
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RELIEF-FROM-ROYALTY METHOD
Every brand has a power to charge premium from its customers. Some brands have
more premiums compared to others. If a company does not own that brand then it has
to pay a royalty fee for using that brand. Here we are trying to find that royalty fee of
Frooti and its major competitors.
FINDINGS
The price of a 200ml tetra pack of Frooti (and others) costs Rs 12. Therefore, the sales of
Frooti would be Rs 108. Hence the Royalty fees that Frooti can charge is 64.20% of 108
i.e. Rs 69.33. Similarly the royalty fees that Maaza and Slice can charge are Rs. 90.00, and
Rs 20.67 respectively.
Hence, we see that here also Maaza is the leader in charging a royalty fee.
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IMPORTANCE OF BRAND VALUATION
Brand valuation is the process used to calculate the value of brands. Historically, most of a
company’s value was in tangible assets such as property, stock, machinery or land. This has now
changed and the majority of most company’s value is in intangible assets, such as their brand
name or names.
The value of brand has been recognized for over a hundred years. John Stuart, Chairman of
Quaker said in about 1900, "If this business was split up, I would give you the land and
bricks and mortar, and I would take the brands and trademarks, and I would fare better
than you."
Brands are valued for many different reasons, such as for legal disputes, strategic
management, internal communications, business management, brand
securitisation and M&A. Brand valuation models follow standard guidelines. Models for
valuing brands follow the same principles of valuation that are used for valuing other tangible
assets – economic income approach, market approach and cost approach.
1. Valuation based on the aggregate cost of all marketing, advertising and research and
development expenditure devoted to the brand over a stipulated period.
3. Gross Margin Approach: Valuation based on premium pricing of a branded product over a
non branded product.
7. Royalty relief method: We assume what royalty the firm would have to pay if the brand was
not owned by them as a percentage of sales
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RATIONAL FOR SELECTING THE TWO MODELS
We have selected the Chip Safer and Relief Royalty model for valuing the brand.
The other methods cannot be used due to non-availability of financial data. Parle Agro is a
Private Limited Company. Because of this its balance sheet is not available online.
Keventer Agro a Limited Company is a full fledged franchisee for Frooti and few other Parle
brands. It manufactures, packages, distributes and markets Parle’s Frooti. Though Keventer is a
Limited Company, its balance sheet is not available on its website. It says it’s under construction.
Hence, by using Chip Safer and Relief Royalty model, which does not requires financial data and
can be done through survey we were able to find the Brand Valuation of Frooti.
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CHIP SHAFER MODEL
Chip Shafer model is used to estimate the brand value. According to Shafer, CEO of Trajectories
Grouping Irvine, California; only a third of Fortune 500 company market value can be
accounted for by shareholders’ equity (assets- liabilities+ earnings). The rest is called “intangible
assets,” which consists of such things as patents, intellectual property, goodwill and brands.
Shafer estimates only about 5% of these intangibles are quantifiable assets such as patents and
intellectual property. A majority of this 5% value is do with the expectations and perceptions
about how a company will do in future.
Formula: B = (R + M + V) C, where
R equals reputation
M equals momentum
V equals vision
C equals connection
Brand valuation has been broken into these four components that largely have to do with
The past performance components deals primarily with things that have been done to build
trust in your brand.
Do we like you?
Do you offer high quality?
Do you deliver on your promises?
Are your customers satisfied?
The present performance component attempts to determine your momentum in the market
place. Shafer refers the old physics law of mass*speed= momentum. Big companies don’t have
to move too fast to have huge momentum, whereas fast-moving companies don’t have to be big
to make sizable gains in market position. The objective in this section is to determine how well
you are implementing your game plan.
The future, or vision component, looks not only at measures of whether customers and
prospects regard your enterprise as a forward-thinking company, but more importantly, whether
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they think you have the credibility to pull off your vision of the future. “Having a clear,
compelling vision based on a deep understanding of customer dynamics is incredibly important,”
The fourth area concerns connection to the marketplace. It’s more than simple awareness
because it deals with familiarity, understanding of company values and the likelihood of doing
business with your company. As you can see from the formula, if you score well in all three basic
performance areas (past, present and future) but fail to show connectedness to customers and
prospects, your brand score will suffer accordingly.
Reputation Momemtum
Respondents were asked questions related to the four components of this model.
A comparative study was done and the brands were assigned scores in each of the
component.
Then by putting the formula B = (R + M + V) C , the brand value score was assigned to
each of the brand.
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FINDINGS
REPUTATION
The component ‘Reputation’ which measures the past performance of the brand, includes
questions judging the brand on its attribute i.e. taste, and brand image.
Frooti is the leader, scoring 163 points followed by Maaza with 161 points and Slice with 145
points.
MOMENTUM
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On the component Momentum, there is a new leader, Maaza scoring 49points, followed by Slice
with 32points & Frooti with 23points.
For this particular question we asked respondent to assume the tetra pack size to be 200ml and
purchase rate of the brand to be for 1 week and then we arrived at the score applying the
formula of Mass * Speed = Momentum.
This component was included to have an idea of how strong the brand is doing in terms of
actual and potential sales in volumes.
VISION
This component included questions like brand’s ability to innovate and keep
consumers interested and anxious to have something new and their willingness to recommend
this brand to family and friends. Here Maaza emerged as the leader with 104 points, followed by
Frooti with 79 points and Slice with 45 points.
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CONNECTION
This was the last component to judge the familiarity of the consumers that they had with the
brand and the willingness to get associated with the brand.
This was to basically judge the kind of trust the consumer showed on the brand and the level of
knowledge the consumers had about the brand. Here Frooti slightly edged Maaza as the leader of
the pack with 56 points followed by Maaza with 54 points and Slice with 24 points.
TOTAL SCORE
After assigning scores individually for each of brand across the 4 components and assigning
scores as the Shafer model, Maaza has emerged as a leader by a huge margin followed by Frooti
and Slice. Maaza was the eader with huge margins in more than one component which clearly
shows the strong value the brand has on the consumers.
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RELIEF-FROM-ROYALTY METHOD
(Also, known as royalty savings method)
The relief-from-royalty method determines the value of an intangible asset by reference to the
capitalised value of the hypothetical royalty payments that would be saved through owning the
asset, as compared with licensing the asset from a third party, where you have to pay a license
free.
It involves estimating the total royalty payments that would be needed to make over the asset’s
life, by a hypothetical licensee to a hypothetical licensor. Royalty rates are typically applied as a
percentage of the turnover expected to be generated when using the asset.
HOW TO GO ABOUT IT
The turnover is calculated on the basis of no of brands the correspondence buys. This is
question 1 in the ‘Royalty Method’.
In the subsequent question 2,3, 4 the brands are answered on a scale of ‘yes and no’. They
gather maximum point of 3x1=3
How to calculate:
(The below data is only given as an example and does not represent the actual findings)
Royalty Rate:
Total Sales
As per the correspondents if 10 persons prefer to buy Frooti and a 200ml pack of Frooti
comes for Rs.12.
Therefore, total sales is 10x12 = 120
Royalty Fee
Royalty Fee of Frooti = 27.77% x 120 = 33.32%
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FINDINGS
Out of the 22 respondents, 9 of them preferred Frooti over other brands. The maximum
points that an individual can give is 18. Therefore the maximum score Pepsi can that
Pepsi can obtain is (9*18) 162.
Similarly the royalty rate for Maaza and Slice are75.00% and 57.41%respectively.
There are 9 users of Frooti. The price of a 200ml tetra pack of Frooti (and others) costs Rs 12.
Therefore, the sales of Frooti would be Rs 108. Hence the Royalty fees that Frooti can charge is
64.20% of 108 i.e. Rs 69.33. Similarly the royalty fees that Maaza and Slice can charge are Rs.
90.00, and Rs 20.67 respectively.
Hence, we see that here also Maaza is the leader in charging a royalty fee.
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RECOMMENDATIONS
RECOMMENDATION 1:
Rational 1
According to the Shafer Model we see that Frooti is the highest in reputation and connection.
This means that consumers have very high esteem towards Frooti as compared to its
competitors also they connect more to Frooti than Maaza and Slice. This indicates given a choice
maximum consumers would buy Frooti.
How ever, the momentum of Frooti is the least. This strongly indicated that there are some
problems regarding the distribution network of Frooti
Rational 2
Also, as per Royalty method the purchase rate of Frooti is lesser than Maaza.
RECOMMENDATION 2:
Frooti should be more innovative and have broader brand values. Should not strict itself to
narrow brand values.
Rational 1
In the Shafer model its seen that Maaza has higher Vision than Frooti. This means consumers
think Maaza to be more innovative as a brand. This gives Maaza better leveragability than Frooti.
Rational 2
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Annexure
a. Maaza
b. Frooti
c. Slice
a. Maaza
b. Frooti
c. Slice
3. How many packs of mango drinks out of the following brands do you consume in a
week? (Pack size: 200ml tetra pack)
(5 being the highest 1 being the lowest) (This is a measurement of Momentum)
a. Maaza
b. Frooti
c. Slice
4. Rate the following brands according to their ability to diversify to other areas and
products.
(5 being the highest 1 being the lowest) (This is a measurement of Vision)
a. Maaza
b. Frooti
c. Slice
6. Match the taglines: Write the corresponding serial number against the correct tag line:
1-Frooti 2-Slice 3-Mazza
(This is a measurement of knowledge i.e connection with the brand)
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ROYALTY METHOD QUESTIONNAIRE
Following questions are related to the brand that you have selected to buy in the previous
question.
2. Would you continue to buy the brand even if it is not easily available?
a. Yes
b. No
a. Taste
b. Innovation
c. Leadership
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