EXAMINING THE RELATIONSHIP

BETWEEN SALES AND BRAND EQUITY

IN GLOBAL FMCG BRANDS
Paper Presented at International Conference on Contemporary Management Practices Creative or Dogmatic

Ms. Richa Joshi , Research scholar

(Delhi Technological University)

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

AGENDA

01

02

Objective

Research
Methodology

03

04

R Square

Conclusion

OVERVIEW

PURPOSE
In this paper we are trying to analyze the impact of Brand Equity on the sales with
respect to various brands .

Jagan Institute of Management Studies (JIMS)

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OBJECTIVES
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.

Jagan Institute of Management Studies (JIMS)

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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.

Jagan Institute of Management Studies (JIMS)

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RESEARCH METHODOLOGY
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.

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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HYPOTHESIS TESTING
H1

Sales and Brand Equity are associated.

(0)

H10

Sales and Brand Equity are not associated

(=0)

H2

Brand Equity does impact Sales.

H20

Brand Equity does have no impact on sales.

Jagan Institute of Management Studies (JIMS)

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The sales & brand equity for all the three FMCG companies have been listed in the following
table.
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

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10

CORRELATIONS
Correlations

Pearson Correlation
Sales in Million
$ ( Johnson &
Johnson)

Brand Equity in
Million $ (
Johnson &
Johnson)

Sales in Million $
( Johnson & Johnson)

Brand Equity in Million

$
( Johnson & Johnson)

.880**

Sig. (2-tailed)

.004

Pearson Correlation

.880**

Sig. (2-tailed)

.004

**. Correlation is significant at the 0.01 level (2-tailed).

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11

CORRELATIONS
Correlations

Pearson
Correlation
Sales in Million $
(Danone)

Brand Equity in
Million $ ( Danone)

Sales in Million $
(Danone)

Brand Equity in Million $

(Danone)

.986**

Sig. (2-tailed)

.000

Pearson
Correlation

.986**

Sig. (2-tailed)

.000

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12

CORRELATIONS
Correlations

Pearson Correlation

Sales in Million $
( Nestle)

Brand Equity in
Million $
(Nestle)

Sales in Million $
(Nestle)

Brand Equity in Million $

(Nestle)

.842**

Sig. (2-tailed)

.009

Pearson Correlation

.842**

Sig. (2-tailed)

.009

**. Correlation is significant at the 0.01 level (2-tailed).

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13

R SQUARE
Model Summary
Model

R Square

Adjusted R Square

Std. Error of the Estimate

.880a

.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:
YS(J) = 28330.234 + 8.858 BE(J)
Where , YS(J) is the sales of Johnson & Johnson and BE(J) is the Brand Equity of Johnson & Johnson

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14

R SQUARE
Model Summary
Model

R Square

Adjusted R Square

Std. Error of the

Estimate

.986a

.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:
YS(D) = -213.176 + 3.691 BE(D)

Where YS(D) = Sales of Danone and BE(D) = Brand equity of Danone

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R SQUARE
Model Summary
Model

R Square

Adjusted R Square

Std. Error of the

Estimate

.842a

.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:
YS(N) = -2038316.246 + 408.262 BE(N)
Where YS(N) is the sales of Nestle and BE(N) is the Brand Equity of Nestle

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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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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,
3(2):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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