Customer perception on brand value

INTRODUCTION

Customer perception is one of the base factors which build a Brand and of course the main mantra of success of any product.

In case of mobile phones it is even more evident as the market is flooded with mobiles and service providers. Even the same company has such extensive range of products that the customer gets confused to select a product.

Reliance is a leading brand in this field and is the only company which operates in both GSM and CDMA fields. It has got an extensive customer base. Apart from this its exclusive marketing and advertisement techniques has helped it to build up a great brand value.

CUSTOMER PERCEPTION

The concept of customer perception does not only relate to individual customers in consumer markets. It is also valid in business to business situations. For example, a competitor benchmarking survey of a large industrial supplier revealed that the market leader, although recognised for excellent quality and service and known to be highly innovative, was perceived as arrogant in some regions. If we take into consideration that there are about four other large players with a similar level of quality and innovative ideas, this perceived arrogance could develop into a serious problem. Customers here are well aware the main characteristics of all the offerings available at the market are largely comparable. So they might use the development of a new product generation of their own to switch to a supplier that can serve them not better or worse, but with more responsiveness and understanding.Companies have done a lot to improve customer satisfaction and customer relationships in the past. As discussed above, this will not be enough any more. Any serious effort to manage customer perceptions starts with a good measurement system. Companies must be truly willing to look at the whole process of interaction through the customers eyes. For many companies, this requires a more or less extensive shift in mindset, since most departments from development to sales will be involved.

BRAND EXTIONSION

Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. Organizations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name). An example of a brand extension is Jello-gelatin creating Jello pudding pops. It increases awareness of the brand name and increases profitability from offerings in more than one product category.

A brand's "extendibility" depends on how strong consumer's associations are to the brand's values and goals. Ralph Lauren's Polo brand successfully extended from clothing to home furnishings such as bedding and towels. Both clothing and bedding are made of linen and fulfill a similar consumer function of comfort and hominess. Arm & Hammer leveraged its brand equity from basic baking soda into the oral care and laundry care categories. By emphasizing its key attributes, the cleaning and deodorizing properties of its core product, Arm & Hammer was able to leverage those attributes into new categories with success. Another example is Virgin Group, which was initially a record label that has extended its brand successfully many times; from transportation (airplanes, trains) to games stores and video stores such a Virgin Megastores.

In 1990s, 81% of new products used brand extension to introduce new brands and to create sales. Launching a new product is not only time consuming but also needs a big budget to create awareness and to promote a product's benefits. Brand extension is one of the new product development strategies which can reduce financial risk by using the parent brand name to enhance consumers' perception due to the core brand equity.

While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a diluted or severely damaged brand image. Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity. Most of the literature focuses on the consumer evaluation and positive impact on parent brand. In practical cases, the failures of brand extension are at higher rate than the successes. Some studies show that negative impact may dilute brand image and equity. In spite of the positive impact of brand extension, negative association and wrong communication strategy do harm to the parent brand even brand family.

MOBILE PHONES

India posted the world's largest sales of mobile phones to end users in the third quarter, helping the Asian market expand 26%, according to a global survey.

Sales of mobile phones using both CDMA and GSM technologies reached 24.5 million units during the three months ended 30 September 2007 in the world's second-most populous nation, said the survey by market research firm Gartner.

That came out of overall mobile-phone sales of 101.8 million units in the Asia-Pacific region.

"India's performance was driven by CDMA phones and fierce competition among operators of GSM networks, which stimulated sales of replacement phones and allowed operators to penetrate rural areas quickly," said Gartner analyst Ann Liang in a statement.

The number of Indian mobile phone subscribers passed the 200 million mark in August after another eight million customers were added that month, according to figures from the Telecom Regulatory Authority of India.

India's mobile revolution is mainly confined to the cities, but the real prize for phone companies is the vast rural market, where nearly 70% of India's 1.1 billion population live, analysts say.

The government is aiming for more than half a billion mobile phone subscribers by 2010.

By the end of 2008, three-quarters of India's population will be covered by a mobile network. Many of these new areas are poor, rural districts with scarce health and education facilities and high illiteracy rates.

Indian sales of mobile phones made up about 8.5% of the worldwide figure of 289 million units, a 15% increase from a year earlier, according to Gartner.

The top five vendors — Nokia, Samsung, Motorola, Sony Ericsson and LG — increased their market shares and made up 81.6% of the global sales, it said.

"Even though relatively few models were introduced this quarter, overall sales exceeded expectations," Carolina Milanesi, director for mobile devices research at Gartner, said in the statement.

"Mobile phone sales were mainly driven by strong performance in Asia-Pacific and Eastern Europe, the Middle East and Africa."

RELIANCE MOBILES

The Late Dhirubhai Ambani dreamt of a digital India — an India where the common man would have access to affordable means of information and communication. Dhirubhai, who single-handedly built India's largest private sector company virtually from scratch, had stated as early as 1999: "Make the tools of information and communication available to people at an affordable cost. They will overcome the handicaps of illiteracy and lack of mobility."

It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm) started laying 60,000 route kilometres of a pan-India fibre optic backbone. This backbone was commissioned on 28 December 2002, the auspicious occasion of Dhirubhai's 70th birthday, though sadly after his unexpected demise on 6 July 2002.

Reliance Communications has a reliable, high-capacity, integrated (both wireless and wireline) and convergent (voice, data and video) digital network. It is capable of delivering a range of services spanning the entire infocomm (information and communication) value chain, including infrastructure and services — for enterprises as well as individuals, applications, and consulting.

Today, Reliance Communications is revolutionising the way India communicates and networks, truly bringing about a new way of life.

LITERATURE REVIEW

Boris et al (2004) Boris Snoj & Aleksandra Pisnik Korda observe that perceived product quality and perceived product risk are two of the most important factors, for the brand extension and brand value. In case of reliance the perception of the customers has been positive through out. Hence the brand extension was also a forgone conclusion.

Goode et al (2005) Another study using the input factors such as product quality, level of service charges, level of call charges and level of satisfaction with the service provider derived the results that customer keeps track of these key factors before selecting a mobile or a service provider. Reliance has a good customer satisfaction among its value as far as its CDMA service is concerned but GSM network is relatively new and has got its own problems and need to be sorted out.

(The Times of India) The article in "The Times of India" suggested that Reliance with its aggressive marketing has given a tough competition to its rivals such as Airtel and BSNL. Reliance has grown faster than any other service provider in GSM arena.

(The Hindu) Considering another article which says that Reliance has great problems on the GSM front as it faces tough competition from the other players in the market specially Airtel which is largest GSM subscriber base network in India.

(http://www.iimahd.ernet.in/icmpee2005/MktgConfProceeds.pdf). Research conducted by IIM Ahmedabad tells us that reliance has build up a great brand value and is heading towards Brand extension at a great pace more on the facts that it has a better marketing strategy than its rivals and not that it excels in service in comparison to them.

(http://indianinnovatorsforum.org/ebook/chapter8.pdf). Reviewing another article it was noticed that to launch a product or a service proper forecasting has to be done. Now this was very clear in case of Reliance as it has launched its CDMA services just at the right time and reaped the high benefits of been one of the initials to be in this fray.

Bhat & Reddy (1998) Bhat & Reddy reveal that there is a difference between symbolic and functional positioning of the brands. Reliance is more of a symbolic brand than a functional one. Its name itself speaks more than its product.

Mehta (1999) A Mehta has observed that advertising has a great psychological effect on the minds of the customers. Reliance has proved to be the one which has used this concept quite well. It has build up its brand more through advertisement and its brand extension seems to catch the same lines.

Sidhu (2003) Observing the article by BK Sidhu the fight between Airtel and Reliance to be No. 1 was clearly looked through. Both of them want to be the No 1 subscriber base network in India and they even tried to influence the government policies to favor there positions

Sidhu (2003) Further more to add in another article BK Sidhu has written that the rivalry between the telecom sectors has heated up. Especially in context with Airtel and Reliance as Reliance wanted to get in to the GSM front and the existing companies were against the dual license to the Reliance. This was affecting the Brand Extension plans of Reliance to a great deal.

Concluding the above articles it clearly shows that Reliance is a leader in CDMA field but its Brand extension programme to be in the GSM fray is not that easy. Though through extensive advertising and exclusive marketing techniques it has build up a great brand value, and is in consistent move to be a leader in this field. It has to face tough competition from Airtel and BSNL who are the leaders in this field and Airtel the largest subscribe base in India. It has to be an interesting battle to watch for the leader of the future.

RESEARCH NEED

  • To asses customers views on Reliance credibility in the field of mobile networks.
  • Understand the impact of Reliance brand on its Mobile Network business.
  • To correlate the consumer perception of Reliance brand and its brand extension to Mobile networks.

OBJECTIVES OF STUDY

  • Establish a relation between consumer perception and brand extension.
  • To get an in depth view of customers preference for the Reliance as a brand in mobile networks.
  • Impact of brand extension on the sales and diversion of customer towards Reliance networks.

IMPORTANCE / BENEFITS

The core of the study will be focused to know the relation of customer's perception and brand extension. With this study it will also be assessed as to whether brand extension helps in sales and further it will also help us to know as to how much impact a brand name can make on the minds of customers when the company is new in the business.

RESEARCH METHODOLOGY

PART I

Interview will be conducted on the randomly selected peoples from Jalandhar. It will consist of following groups:-

Group 1: Customers will be interviewed for their views on Reliance as a Company and there preference towards Reliance Mobile Networks.

Group 2: Retail outlets and Dealers will be interviewed for their opinion on sales impact of Reliance Brand.

PART II

To study the secondary sources such as articles, studies and data on Reliance and its impact on the Mobile Networks.

RESEARCH CENTER

The research will be conducted around the area of Jalandhar.

SAMPLE SIZE

  • Total of 02 samples from the Jalandhar city. Sample will be as :-
    1. Customers
    2. Dealers and Retailers
  • Interview of respondents:-
    1. 50 customers
    2. 50 Dealers or Retailers.

DATA COLLECTION

A total of 50 consumers and 50 dealers/retailers were interviewed to collect the required primary data for our research. Both were asked separate questions according to the data required for the objectives set for the research. Consumers varied from different sections of the society with variance in their age, income group and marital status. The method was also followed for the dealers/retailers. Area in and around Jalandhar was selected to collect the data as the city has the scope both city as well as rural background people.

DATA PREPRATION

The data collected was prepared on the basis of objectives set for our research and SPSS software was used to process data and get the desired outputs. One sample T-test and Paired sample T-test were used to interpret the data. Also Pie chart was used to represent the data graphically. The means were also compared in some cases and the interpretation was done on the basis of the objectives set for the research.

DATA INTERPRETATION AND OBSERVATIONS

FOR CONSUMERS

One sample Z-test was conducted on the 05 variables and the following output of the SPSS was obtained:-

Looking at the above data obtained we can find that:-

  1. Significance level in all the cases was more than the P value.
  2. The Ho was rejected and a relationship was established with the variable.
  3. Mean values was also observed and found out that it favored the reliance networks in all the cases.

Observations

  1. Reliance network was preferred by most of the consumers.
  2. Consumers have rated the reliance as good, in terms of their opinion about the network.
  3. Also they thought that the reliance network was as good as other reliance products.
  4. Considerable No of people wanted to switch over to reliance networks.
  5. Most consumers thought that reliance network would meet their expectations.

FINDING AND SUGGESTIONS

FINDINGS

On the basis of the Data collected and the different analysis of data performed following findings have come out:-

  1. Consumer perception favored the Reliance networks and people have good opinion about Reliance networks.
  2. Consumers are not sure of Reliance as a brand in mobile networks though they want to switch over to reliance networks.
  3. Reliance is preferred by most of the consumers and they feel that it can meet there expectations.
  4. Consumers need following in a mobile networks:-
    1. Quality Roaming
    2. Affordability
    3. Distant Reach
  5. Most retailers feel that people have switched over to reliance networks. Around 20% of the existing consumers switched over to reliance networks.
  6. Retailers feel that Reliance networks have good initial sales on launch but were not sure that it was due to its brand name.

SUGGESTIONS

  1. Target Customers: - It is observed that a considerable amount of consumers are not sure of reliance networks for quality and brand. They can be that target customers.
  2. Company should look into the following aspects of the mobile networks:-
    1. Roaming should be across the country with high quality of voice clarity.
    2. It should launch affordable network plans so that more customers can be attracted.
    3. Try to set up networks which reach to remote areas.
  3. The brand name does not have any considerable effect on the sales but the intial sales were due to brand name. Hence the brand extension has not helped much. The company should try to build its brand in mobile networks with different marketing techniques.

CONCLUSION

Reliance Networks launch has been good and people have a lot of expectation with the brand. But an uncertainty prevails and that can be a marketing opportunity for the company. The unsure customers can be targeted and a sales boost can be achieved.

References

  1. Boris S, Aleksandra P K, Damijan M, Journal of Product & Brand Management Year: 2004 Volume: 13 Issue: 3 Page: 156 - 167, Emerald publications
  2. Goode M M.H.,Davies F,Moutinho L &Jamal A, Journal of Marketing Management, Volume 21,Number 7, August 2005 , pp. 755-778(24), West burn Publishers Ltd
  3. Accessed from "http://www.iimahd.ernet.in/icmpee2005/MktgConfProceeds.pdf"
  4. Accessed from "http://indianinnovatorsforum.org/ebook/chapter8.pdf"
  5. "The Times of India" Hyderabad , Thursday 22Aug 2008
  6. "The Hindu" New Delhi , Wednesday 10 Sep 2008
  7. Bhat S & Reddy SK(1998) "Symbolic and functional positioning of brands", Journal of Consumer Marketing Vol 15 No1 pp 32-43
  8. Mehta A (1999) " Using self concept to access advertising" Journal of Advertising Research, Vol 39 pp 81-90
  9. Sidhu BK (2003, 9 Aug) " Fierce battle for No1 slot in cellular market", Star Biz , The Star
  10. Sidhu BK (2003, 29 Aug) "Fierce battle for No1 slot in cellular market", Star Biz, The Star

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