Impact of Brand Equity on Sales in Nestle, Johnson & Johnson & Danone

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In order to analyse impact of Brand Equity on the sales in global context we have taken three global FMCG brands (Nestle, Johnson & Johnson and Danone) and the study showed that the impact of brand equity on sales is highly relevant.

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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 Jagan Institute of Management Studies JIMS | www.JimsIndia.org

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2 AGENDA 01 02 03 04 Objective Research Methodology R Square Conclusion

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OVERVIEW

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4 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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5 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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6 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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7 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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8 Jagan Institute of Management Studies JIMS www.JimsIndia.org HYPOTHESIS TESTING H1 Sales and Brand Equity are associated. β≠0 H10 Sales and Brand Equity are not associated β0 H2 Brand Equity does impact Sales. H20 Brand Equity does have no impact on sales.

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9 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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10 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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11 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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12 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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13 Jagan Institute of Management Studies JIMS www.JimsIndia.org R SQUARE Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .880 a .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: YSJ 28330.234 + 8.858 BEJ Where YSJ is the sales of Johnson Johnson and BEJ is the Brand Equity of Johnson Johnson

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14 Jagan Institute of Management Studies JIMS www.JimsIndia.org R SQUARE Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .986 a .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: YSD -213.176 + 3.691 BED Where YSD Sales of Danone and BED Brand equity of Danone

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15 Jagan Institute of Management Studies JIMS www.JimsIndia.org R SQUARE Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .842 a .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: YSN -2038316.246 + 408.262 BEN Where YSN is the sales of Nestle and BEN is the Brand Equity of Nestle

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16 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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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17 Jagan Institute of Management Studies JIMS www.JimsIndia.org 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 32:216-226. • 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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Jagan Institute of Management Studies

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19 Jagan Institute of Management Studies JIMS www.JimsIndia.org About JIMS JIMS Rohini is one of the leading MBA institutes of Delhi. We impart professional education both at post graduate and undergraduate levels in the fields of management and information technology. Our PGDM program is approved by the AICTE and is accredited from NBA for excellence in quality education. PGDM program has also been granted equivalence to MBA degree by the AIU. We offer specialized PGDM programs in International Business and Retail as well. JIMS Rohini Sector 5 also offers technical programs viz BBA BCA MCA affiliated from GGSIPU. Established in 1993 JIMS completed its 20 years of Excellence in 2013. We offer excellent academic structure industry interaction and job opportunities.

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