Project: Brand Dossier – Nescafe

A report submitted to
Prof. Govindrajan Srinivasan

In Partial fulfilment of the requirements of the course

Brand Management

By
Group 11

Akash Yadav - 188020

RVS Soumya - 188204
Siddhartha Bang -188238
Simarpreet Singh -188240
Ravindrasingh Shekhawat - 188225

On
13 August 2019
Contents
ABOUT Nescafé ..........................................................................................................................3
BRAND HEALTH MEASUREMENT ...............................................................................................5
QUESTIONNAIRE FOR BAV STUDY .........................................................................................7
VARIABLES IN BAV STUDY ......................................................................................................8
BAV ANALYSIS ......................................................................................................................14
LADDERING TECHNIQUE ......................................................................................................15
BRAND EQUITY MEASUREMENT ..............................................................................................18
BRAND LOYALTY ...................................................................................................................18
BRAND PREMIUM ................................................................................................................21
BRAND LEVERAGABILITY ......................................................................................................22
BRAND VALUATION..................................................................................................................24

2
 ABOUT Nescafé
The Great Depression of the 1930s in United States was equally disastrous for coffee sales
as was for the economy. The coffee growers were forced to think out of the box. The
helping hand then was Nescafe from Nestle.

Henri nestle, a German chemist in Switzerland, had invented a baby formula in 1867, for
women who could not nurse their children. By 1900 he had established production facilities
in many countries including United States where he also produced condensed milk. The
company(Nestle) expanded the product range in the next 30 years, to include powered
chocolate milk mix and other confectionary products.

At the initiative of the Brazilian government in 1930, Nestlé began developing a coffee
brand to preserve the substantial surplus of the annual Brazilian coffee harvest. This gave
birth to Nescafe in 1938.

The inventor of instant coffee, however, was a Japanese chemist named Satori Kato. It was
being marketed and sold by many companies since1901, however, Nestle contributed
greatly to the positive popularity of instant coffee.

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Contrary to the extant processes - brewing a batch of high strength, concentrated coffee
and boiling until dry, Nestle developed a new process - dehydrating concentrated coffee and
spraying the fine mist of the solution into heated tower that almost instantly converted the
droplets into powder. This greatly improved the quality. The addition of carbohydrates
helped in preserving the flavor, which was icing on the cake.

Nestle then came up with the name Nescafe which is a portmanteau of the words "Nestlé"
and "café", the Italian word for coffee. The aggressive and expensive ad campaign targeted
the American housewives and soon became a global success. The soluble powdered coffee
became an American staple during World War II. Although instant coffee accounts for only
25% in the world-wide coffee sales, Nescafe is by far the dominate player. Nescafe brags to
be the most recognized brand name in the world, second only to Coca-Cola.

Nescafé was ranked 124th among India's most trusted brands according to the Brand Trust
Report 2018, a study conducted by Trust Research Advisory.

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 BRAND HEALTH MEASUREMENT
Brand Asset Valuation or BAV is measure of value of brand of an entity. It was developed by
an advertising agency Young and Rubicam (Y&R), which built up a model of brand value
called Brand Asset Valuator (BAV). In view of research with right around 200,000 buyers in
40 nations, BAV gives near proportions of the brand value of thousands of brands crosswise
over many various classes.

Brand Asset Valuation measures any brand under the below mentioned 2 broad heads:

Brand Vitality: It refers to the present and future growth potential which a brand holds in
the current market situation.

Brand Stature: it refers to the power of the brand in market.

The above-mentioned heads can be further divided into following parameters to judge the
brand:

1. Differentiation: It is the capacity of a brand to stand separated from its rivals. Separation
has three constituents to it. These are
Different: alludes to how do the brand's offering varies from its adversaries.
Unique: alludes to the brand's quality and conveys the quintessence of its existence. It has
more to do with the validity, legitimacy and inventiveness of the possibility that the brand
conveys.
Distinctive: refers to the value of a brand.

2. Relevance: It refers to how can the customers relate to the offering offered by the brand
and is also an important driver for brand penetration.

3. Esteem: This alludes to the customer recognition about the brand. Regardless of whether
a brand is mainstream or not, whether it conveys on its expressed guarantees this
contributes in structure up the regard of the brand.

4. Knowledge: This alludes to the level of mindfulness about a brand in the brains of its
purchasers. This is significant in structure a brand and causing the purchasers to
comprehend of what the brand really relies on and its verifiable message to the customers.

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Differentiation and Relevance consolidate to decide Brand Strength. These two columns
point to the brand's future worth, instead of simply mirroring its past. Esteem and
Knowledge together make Brand Stature, which is to a greater degree a "report card" on
past execution.

Inspecting the connections among these four measurements—a brand's "column design"—
uncovers much about its present and future status. Brand Strength and Brand Stature can
be joined to frame a Power Grid that portrays the phases in the cycle of brand
advancement—each with its trademark column designs—in progressive quadrants. New
brands, soon after they are propelled, show low levels on every one of the four columns.
Solid new brands will in general show more elevated amounts of Differentiation than
Relevance, while both Esteem and Knowledge are lower still. Authority brands show
abnormal states on every one of the four columns. At long last, declining brands show high

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Knowledge—proof of past execution—with respect to a lower level of Esteem, and even
lower Relevance and Differentiation.

BAV Model for Nescafe – a primary research (online survey) was conducted to assess the
brand Nescafe on the 4 pillars of the BAV model – brand differentiation, brand relevance,
brand esteem, brand knowledge. Some direct questions were asked and most of the
questioned were quantified on a 5-point scale from “Strongly disagree” to “Strongly agree”
and “Highly inappropriate” to “Highly appropriate” (1-5). Some questions were quantified
on a 4-point scale only like “Not desired” to “Highly desired” (-1 to 2) in the case of
attributes.

Sample size: 67 respondents

Respondent profile: coffee drinkers in the age group 21-50, both males and females

QUESTIONNAIRE FOR BAV STUDY

1) Name

2) Gender

3) How often do you drink coffee (hot/cold)? (select only one)

• Daily
• Few times a week
• Once a week
• Few times a month
• I normally don’t drink coffee

4) Which brands come to your mind when you think of buying coffee powder for home use?

5) Please select the variants that you are aware of (select all that are applicable)
• Nescafe Classic
• Nescafe Gold
• Nescafe Sunrise
• Nescafe Latte
• Nescafe Gold Cappuccino
• Bru Instant
• Bru Gold
• None

6) I ask/look for this coffee brand in a store/supermarket when buying coffee

BRAND Strongly disagree Disagree Neutral Agree Strongly agree

Nescafe
Bru

7) Please select your preference for every attribute in a cup of coffee

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 Not desired (0), Indifferent (1), Desired (2), Highly desired (3)

ATTRIBUTE Not desired Indifferent Desired Highly desired

Flavour
Aroma
Colour
Strong
Froth

8) Please select the attributes that you think describes Nescafe and Bru coffee (separately)

ATTRIBUTE Strongly disagree Disagree Neutral Agree Strongly agree

Good flavour
Good aroma
Nice colour
Strong coffee
Frothy coffee

9) Please select the feelings you associate with Nescafe and Bru brand (separately)

FEELING Strongly disagree Disagree Neutral Agree Strongly agree

Companionship
Enthusiasm
Confidence
Arrogance
Unfriendly

10) I would like to serve coffee of this brand to my guests at home

BRAND Strongly disagree Disagree Neutral Agree Strongly agree

Nescafe
Bru

VARIABLES IN BAV STUDY

Brand Differentiation

Question 8 assesses the attributes (flavour, aroma, colour, strong, froth) that respondents
associate with both brands. The level of association of each attribute gives us how well the
brand is perceived in the mind of the respondent. The score generated does not account for
different weightage given to each attribute which will be calculated in the study of the next
variable. The higher the score, higher is the brand quality perception of the brand with
respect to its competitor and is hence differentiated with respect to its competitor.
Moreover, if the score difference between brands is high for an attribute, then we can say
the brand is differentiated on that attribute for the respondent.

The survey data results show that respondents perceive Nescafe coffee to have a better
flavour, aroma and colour in addition to the coffee being stronger. Bru coffee is perceived as
frothier than Nescafe, but only marginally. Nescafe scores better than Bru considerably only
in flavour and colour while less in aroma.

8
The overall score was taken as the average of all attribute scores for each brand. We have
taken equal weightage in this case as it is more to do with product attributes in general than
what is relevant to the respondents. We will take weightage based scores while studying
brand relevance.

Brand
Good Good Nice Strong Frothy
BRAND OVERALL differentiation
flavour aroma colour coffee coffee
Score
Nescafe 4.04 3.88 3.84 3.71 3.41 3.78 75.5%
Bru 3.62 3.60 3.44 3.56 3.51 3.55 70.9%

Nescafe

Bru

Brand Relevance

Question 3 tests a respondent’s level of involvement with the product category. It shows
the potential of the importance of the product category for the respondent as absolute
importance cannot be understood from the frequency of consumption as a respondent
might require it less frequently but may require it ‘badly’ whenever the requirement arises.
As the survey results show, just over half the respondents consume coffee at-least once a
week. Giving a weightage of 4 to daily consumers and going down till 0 for those who
generally don’t drink coffee, we arrived at a weighted score of 53.7% while considering the
percentage of users consuming coffee with different frequency of usage.

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 Frequency of drinking
Daily 17 25.0%
Few times a week 18 26.5%
Once a week 4 5.9%
Few times a month 16 23.5%
I normally don't drink coffee 13 19.1%

Questions 7 and 8 taken together test the relevance of the brand based on attributes
(companionship, enthusiasm, confidence, arrogance, unfriendly) as we check the perception
of the respondent based on the weightage given to every attribute and the scores given to
each brand on the specific attribute. The data is processed by considering every
respondent’s weightage and score individually and not by taking average weightage given
by all respondents for every attribute and average score given by all respondents for each
attribute of each brand.
The survey results of Question 7 showed the desirability of each attribute on a scale of 3
(Not desired - 0 to highly desired - 3). We can see that flavour and aroma are the most
desired attributes while froth is the least desired one. Overall, most of the attributes are
desired signalling that there is scope for differentiation is the segment.

Flavour Aroma Colour Strong Froth OVERALL

2.38 2.29 1.88 2.07 1.75 2.08

Combining results from Questions 7-8 and accounting for the weightage for each
respondent line-by-line, we arrived at the following results.

BRAND Weighted attribute score

Nescafe 77.0%
Bru 71.7%

Combining scores calculated from Question 3 and Questions 7-8 taken with equal
weightages, we came up with the following brand relevance scores for both brands (result
from Question 3 is taken as same for both brands as it with respect to the product category
and not with respect to the brand).

BRAND Brand relevance score

Nescafe 65.4%
Bru 62.7%

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Brand Knowledge

Questions 4-6 assess the presence of the brand in the minds of the respondents by testing
which brands they think of when it comes to coffee and which brands they ask/look for
while buying along with the awareness of the variants of each brand.

Question 4 tests the awareness of each brand. Respondents were asked to write the brands
that came to their minds and we are also separately mentioning the brands that they wrote
first although these cannot be taken as top-of-the-mind brands. Nescafe was cited by
almost twice as many people who cited Bru. Some even cited Nestle as they did not know
Nestle’s coffee brand name. For calculating score from this question, we will take both
Nescafe and Nestle’s combined results as Nestle has only one coffee brand. So Nestle’s
score is 88.3% and Bru’s score is 39.7% from this question.

Brands in consumer's TOTAL % Wrote as % of those

minds for home coffee first brand aware
Nescafe 52 76.5% 49 94.2%
Bru 27 39.7% 8 29.6%
Nestle 8 11.8% 8 100.0%
Davidoff 3 4.4% 2 66.7%
Tata 2 2.9% 0 -
Lavazza 1 1.5% 0 -
Colombian Brew 1 1.5% 0 -
Reliance kappi 1 1.5% 0 -

Question 5 tests the variants awareness of the brands in the respondents’ minds. The
options were given to the respondents and they had to choose as many as they were aware
of. Nescafe’s Classic and Gold variants came out as the winners in this survey. For Bru also,
the flagship variant Instant and the premium variant Gold came out on top although they
were lower than Nescafe’s variants. One thing to notice is that a lot of people who did not
write Bru in their ‘brands aware’ question have reported that they are aware of Bru Instant
and Bru Gold. This means that Bru’s recall requires help whereas Nescafe scores high on
unaided recall. The same is true for Nescafe although much more so for Bru.

From this question, we will be taking the scores of the highest variant – Nescafe 83.8% and
Bru 69.1%. The weightage for this question will be half as that of the Question 4 scores as
there is a deliberate element of aiding in the recall.

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Question 6 tests the recall of buyers when they visit a store or a supermarket to buy coffee.
The respondents were requested to answer on a 5-point scale from “Strongly disagree” (1)
to “Strongly agree” as to which brand they ask/look for while buying coffee. From the image
below, the results as shown are heavily skewed towards Nescafe. The scores for both
brands are given in the table below the image and the percentage score is calculated on a
base of 5.

BRAND Purchase point recall Score %

Nescafe 4.06 81.2%
Bru 3.37 67.4%

The score from Question 6 will be taken with same weightage as Question 4. So, combining
scores of Questions 4-6 with the said weightages, we arrive at the following result for brand
knowledge.

BRAND Brand knowledge

score
Nescafe 79.8%
Bru 56.7%

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Brand Esteem

Questions 9 and 10 assess the feelings respondents associate with the brands along with the
strength of those feelings and the prestige with which the respondents would like to share
the brand with others. Question 9 results show us that both brands are ‘felt’ similarly by the
respondents with Nescafe marginally taking the lead.

FEELING Nescafe Bru

Companionship 3.75 3.44
Enthusiasm 3.69 3.44
Confidence 3.49 3.26
Arrogance 2.19 2.24
Unfriendly 2.03 2.19
POSITIVE OVERALL 3.64 3.38
NEGATIVE OVERALL 2.11 2.21

To calculate score from Question 9, we give a positive equal weightage (+1) to all the
positive feelings and an equal negative weightage (-1) to each negative attribute and
calculate the total on a base of 13 (+5 x3 -1 x2 = 13 - best possible score).

BRAND Feelings Score

Nescafe 51.6%
Bru 44.0%

Feelings associated with Nescafe brand

Feeling associated with Bru brand

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Question 10 tests the pride (or as a hygiene factor) a respondent would associate with
serving coffee of a particular brand to his/her guests. Respondents were asked to rate their
willingness to serve a particular brand of coffee to their guests on a 5-point scale with 1
being the lowest and 5 being the highest.

I will serve this brand of coffee to my guests at home

BRAND Pride score %

Nescafe 4.26 85.3%
Bru 3.65 72.9%

Combining both scores with an equal weightage, we get the following brand esteem scores.

BRAND Brand esteem

score
Nescafe 68.5%
Bru 58.5%

BAV ANALYSIS

Nescafe scores better than Bru an all variables, most significantly on the Brand Knowledge
variable. With over 65% score on each variable, it can be said that Nescafe is a strong brand
with high stature. It has high recall and is evident from the fact that it occupies about half
the Indian instant coffee market faring marginally over Bru. Nescafe’s high brand
differentiation and knowledge reinforce the fact that Nescafe is the market leader in the
Indian instant coffee segment. While relevance may seem a little low for the general Indian
consumer, it should be noted that most of India is a tea drinking country while coffee is a
staple only in the south where lot of regional and unorganized players are present in the
market. Bru’s Brand Stature is quite low given the fact that it also occupies almost half the
market.

Nescafe Bru
Brand Brand Differentiation 75.5% 70.9%
Strength Brand Relevance 65.4% 62.7%
Brand Brand Knowledge 79.8% 56.7%
Stature Brand Esteem 68.5% 58.5%

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 BAV Analysis
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Brand Brand Relevance Brand Knowledge Brand Esteem
Differentiation

Nescafe Bru

LADDERING TECHNIQUE

The respondents were asked about the particular features and information of the brand
that attracted or repelled them and their reasons behind the same. The appropriate
responses were utilized for a subjective appraisal & qualitative assessment of the brand.
Through this method we try to find the second or deeper level of association to things which
may not be directly linked to coffee but impacts the person in a greater sense.

Functional Psychological
Attribute Values
Consequences Consequences

Concrete Terminal
Abstract Instrumental

INTERVIEW
• You mentioned, flavour is important to you in deciding a brand to purchase. Can you
tell why?

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 Yes because I like it strong and dark.
(Psychosocial consequence, concrete attributes)
• Why is it important for a coffee to be strong?
Because it keeps me alert
(Functional consequence)
• Why is it important to stay alert?
To work passionately
(Psychosocial consequence)
• Why is it important to be passionate about your work?
To achieve great result
(Instrumental value)
• Why is it important to achieve great results
So that everyone appreciate my work and knows me
(Psychosocial consequence)
• Why is it important to receive appreciation from people?
It would make me feel, I am a leader or I am on the top
(Terminal value)
• Why is important to feel that?
Because it would make me more confident about myself
(Psychosocial consequence)

After taking more than 15 laddering interviews of different nature. We tried to map the
different attributes which are linked to different consequences and what are the deep and
core values they associate to in terms of coffee drinkers. Nescafe advertisements and brand
perception is aligned to a few core values such as confidence, accomplishment and self-
esteem and this is also one of the underlying reasons that people prefer buying Nescafe.
When we asked the candidates the same question, many people said they find the brand to
be representing these core values.

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 Values

Accomplishment Self Esteem Confidence

REWARD MYSELF IMPRESS OTHERS

Consequences
Indulgence sophisticated Socially accepted Controlled lifestyle

Affordable Quality Health concerns Convenience

luxuries

Expensive Foreign Elegant Low Fat Various Available

Excellent Sensory
Flavour Taste sounding Packaging
sizes

Attributes

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 BRAND EQUITY MEASUREMENT
Brand equity is the added value that a product gets from having a well-known brand or
brand awareness is high for that specific brand. It is the price distinction a customer pays
when buying the product of a recognized brand over a lower established, generic variant of
the same item. Brand equity is the competitive advantage which leads to higher revenues
through higher sales and lower costs. Recognized brand’s marketing expenses are smaller as
many customers already know about the products. They don’t have to endure the trouble of
educating the public about the products of the company. By making the products
memorable, readily recognizable and superior in quality and reliability, companies can
generate brand equity for their products. The campaigns for mass marketing can also assist
build brand equity.

Let’s discuss the reasons why do we measure brand equity

• To evaluate the brand’s importance for licensing or selling purpose
• To assess brand management efficiency in raising equity over time
• To assess the effectiveness of brand building programs

Methods of Brand Equity Measurement

Brand equity can be measured on the below mentioned three parameters

• Brand Loyalty
• Price premium charged
• Brand Leveragability

BRAND LOYALTY

Brand loyalty is defined as a favourable feeling towards a brand and a commitment to buy
the same product or service from the same brand constantly now and in the future,
irrespective of a competitor’s actions or modifications in the environment. Brand loyalty can
also be demonstrated by other favourable behaviours like word of mouth advocacy.

Brand loyalty is not restricted to repeating buying behaviour, as there is greater

psychological reasoning as to why a person will continually buy products from a single
brand. In short, brand loyalty can be described as "behavioural willingness" to preserve a
consistent relationship with a specific brand. Out of the total respondents, 51.5% of them
drink coffee at least few times a week

• 75% of respondents said they look for Nescafe’s instant coffee when they visit a
store/supermarket to buy coffee.

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 • At least 49% of respondents have associated the positive attributes of coffee
mentioned in the survey form to Nescafe
• 84% of respondents have shown willingness to serve Nescafe’s instant coffee to their
guest as compared to 54% for Bru
• 71% of respondents have purchased Nescafe’s coffee at least twice in the last three
purchases
• The brand recall is highest for Nescafe’s Classic as 84% of the respondents were
aware of the brand

Price-quality matrix

We have studied brand loyalty with the help of the price-quality matrix. This matrix maps
respondents by their perceptions of the quality of the brands against their sensitivities to
the price of the product while also considering the brand loyalty exhibited by the
respondents. We asked three questions in a survey to each respondent for this study.

1) In the last 3 purchases of a coffee jar, how many times have you bought the given brands?

Frequency of purchase Nescafe Bru

Not purchased at all 7 38
Purchased once 13 17
Purchased twice 19 5
Purchased thrice 29 8
Loyal (purchased more than once) 48 13
Loyalty % 70.6% 19.1%

On an average, a respondent bought Nescafe 2.03 times in the last 3 coffee purchases while
a respondent bought Bru only 0.75 times in the last three coffee purchases.

2) Please state your quality perceptions of the given brands on the following scale:
Unacceptable – 1, Acceptable – 2, Good – 3, Superior – 4

3) Please state your price sensitivity for the given brands on the following scale:
Price is an absolute barrier – 1, Price is a significant barrier – 2, Price is a minor barrier – 3,
Price is not a barrier – 4

Results of Questions 2-3 were mapped on a 2x2 matrix (created from data using advance
filter, please see sheet named “Price-quality matrix – 2” in excel sheet).

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 Nescafe
#respondents QUALITY
Superior Good Acceptable Unacceptable
Not a barrier 17.6% 11.8% 2.9% 1.5%
Minor barrier 25.0% 11.8% 2.9% 0.0%
PRICE

Significant barrier 4.4% 7.4% 13.2% 0.0%

Absolute barrier 0.0% 0.0% 1.5% 0.0%

Nescafe
#respondents loyal QUALITY
to the brand Superior Good Acceptable Unacceptable
Not a barrier 91.7% 62.5% 50.0% 0.0%
Minor barrier 88.2% 37.5% 100.0% -
PRICE

Significant barrier 33.3% 60.0% 66.7% -

Absolute barrier - - 100.0% -

Most respondents find Nescafe to be of superior quality and the loyalty rate increases with
the quality perception of the brand. It can also be seen that most respondents report that
price is either not a barrier while buying Nescafe or it is a minor one. This shows that
Nescafe brand does enjoy loyalty in the market. Loyalty also drop significantly for those who
consider price to be a significant barrier while buying Nescafe.

Bru
QUALITY
#respondents
Superior Good Acceptable Unacceptable
Not a barrier 5.9% 11.8% 8.8% 0.0%
PRICE

Minor barrier 2.9% 19.1% 7.4% 0.0%

Significant barrier 4.4% 13.2% 19.1% 1.5%
Absolute barrier 0.0% 1.5% 4.4% 0.0%

Bru
#respondents loyal QUALITY
to the brand Superior Good Acceptable Unacceptable
Not a barrier 100.0% 12.5% 0.0% -
PRICE

Minor barrier 100.0% 7.7% 0.0% -

Significant barrier 66.7% 0.0% 15.4% 0.0%
Absolute barrier - - 33.3% -

It is evident from the above table that respondents find Bru to be of “Good” quality which
means inferior to Nescafe from the responses of the majority. Brand loyalty is very low for
Bru and is shown only by those who consider it to be of superior quality.

25% of the respondents find buying price to be a significant barrier while buying Nescafe
while 36.7% feel the same for Bru. 47% of respondents feel Nescafe’s quality is superior
while 13.2% feel the same about Bru. Respondents showed much higher loyalty for Nescafe
even when they felt it was of “Acceptable” quality only.

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From the above analysis, it is evident that Nescafe enjoys more brand loyalty and is in a
better position than Bru to charge a price premium.

BRAND PREMIUM

Brand equity is also what allows premium prices to be charged for branded goods or
services. Many significant brands are placed as quality products, and many individuals are
prepared to pay more for a quality product they are acquainted with, especially if the brand
has an image which they want to associate with.
The price premium due to brand equity offers the extra price that the customer is presently
prepared to pay for the brand while keeping its market share fixed. Market share and price
premiums are significant summary brand equity measures because they are strongly related
to brand profitability

• 46% of respondents have shown willingness to purchase Nescafe’s coffee even if the
prices are increased 15-20% as compared to 21% for Bru
• 47% of respondents believe that Nescafe has superior quality of instant coffee as
compared 13% for Bru
• 34% of respondents said that price is not a barrier for them while making a purchase
for Nescafe’s instant coffee

Van Westendorp Price Sensitivity Meter (PSM)

This model is a business method used to determine price preferences for consumers. The
Dutch economist Peter van Westendorp launched it in 1976. A broad range of scientists in
the market research sector have used the method. The fundamental hypothesis of PSM is
that participants are able to imagine a price landscape and that price is an intrinsic value or
utility measure.

Four price-related queries are used by the traditional PSM model, which are then assessed
as a sequence of four cumulative distributions, one distribution per query. The conventional
formats of questions may differ, but usually take the following form:

1. At what price would you consider the product to be expensive enough that you
would consider not buying?
2. At what price would you consider the product to be priced so low that you have a
doubt on its quality?
3. At what price would you consider the product starting to get expensive, so that it is
not out of the question, but you would have to give some thought before buying
4. At what price would you consider the product to be value for money?

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After analysing the responses that we gathered from the survey form:

294.8181818 AVERAGE

265.9090909

208.4090909
142.2727273

1 2 3 4

➢ For 1,2,3,4, refer to the above mentioned questions

• On an average, respondents considers Rs. 295 price point for 100gm jar expensive
enough that they wouldn’t consider to purchase it
• If the product is marked at Rs. 142, the respondents start considering the price of
the product so low that they start doubting about the quality of the product
• If the product is priced at par Rs. 266, respondents will think about it before making
a purchase as they believe that the product is getting expensive
• At Rs. 208, respondents believe that the product offers value for money.

BRAND LEVERAGABILITY

Leveragability is the ability to effectively extend a brand into associated categories of

products, or even unrelated ones. Some of the products are regarded more flexible than
others when they are deemed to satisfy prospects ' needs and desires. A business would like
its brand to be highly leverage able because it will assist the business in its associated and
unrelated diversification.

Brand extensions are common among brands that want to leverage their position to other
categories / markets in the current category / market. Consumers tend to react to
extensions that suit their parent brand perceptions more positively. Usually the perceived fit
is greater for: Extensions in product categories close to the parent brand, Extensions in
product categories in which an appealing attribute can be supplied by the parent brand and
Extensions that can be used with other products sold by the parent brand.

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On a scale of 1-5 for index of appropriateness, 1 represents highly inappropriate and 5 being
the highly appropriate.

Nescafe Bru
(respondents (respondents
CATEGORY Nescafe giving Bru giving
>neutral >neutral
scores) scores)
Cafe outlet chain 3.99 76.5% 3.8 66.2%
Soft drinks 2.60 22.1% 2.6 20.6%
Fruit juices 2.62 23.5% 2.5 17.6%
Malt drinks 3.75 72.1% 3.4 55.9%
Breakfast cereals 3.01 41.2% 2.8 27.9%
Online fashion apparel 1.78 10.3% 1.9 7.4%
Bicycles 1.72 8.8% 1.8 8.8%
Kitchen appliances 2.12 17.6% 2.0 14.7%
Music TV channel 2.29 20.6% 2.1 17.6%

• 43% of respondents agree that it is appropriate for Nescafe to venture into their own
café outlet chain, launch malt drinks. The figures are high for Bru also but less than
Nescafe.
• A considerable 41.2% respondents find it appropriate for Nescafe to venture into
breakfast cereals
• Soft drink, fruit juices and Music TV channel from Nescafe and Bru will be received
poorly while online fashion apparel and bicycles are a big no
• It is also evident that Nescafe is more ‘leveragable’ than Bru for every category with
the gap widening for malt drink and breakfast cereals.

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 BRAND VALUATION
Brand valuation can be defined as the method used to calculate a brand's value or other
party's willingness to pay for it or the brand's economic value. A brand is an asset for the
company, and like all assets, it is also bound by the definition of an asset, i.e. a resource of
economic value owned or controlled by an individual, corporation or country, with the
expectation that it will provide future benefit.

Brands are one of the most important intangible assets of a company due to its significant
economic impact. They affect customer, employee, investor and public decisions. Such
impact is essential to business achievement and shareholder value creation in a globe of
abundant decisions. Marketplace competition has made the brand the most significant
factor when it comes to company differentiation.

The estimated market value of instant coffee in India is $361 million for year 2019. The
instant coffee market of India is expected to grow at a compound annual growth rate
(CAGR) of 7.5 % from year 2019 to 2023. Estimating a market share of roughly 51%, Nescafe
is the market leader in instant coffee segment. The net annual revenues of Nescafe India
amount to $184 million. The industry average of P/E ratio for instant coffee market is 25.6.
Brand valuation can be calculated by multiplying the net revenues generated by the with
the P/E ratio of the company. As we don’t have Nescafe’s P/E ratio, we’ll use industry
average. We have taken Nestle’s PAT margins from its annual report (13.9%).

Brand valuation = Total Revenues * PAT Margin * P/E Ratio

= $184 million * 13.9% * 25.6
= $654.75 million.

The brand value of Nescafe’s instant coffee for Indian market is $ 654.75 million.
Considering an exchange rate of 1 USD = 70 INR, we value Nescafe India at INR 4583 crore.

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