Profitability of Company in Retail Sector

Question: Discuss about the Profitability of Company in Retail Sector. Answer: Introduction Brand equity is the phrase which is used in marketing industry and it defined as the advantage of having a well known name of the brand. Brand equity helps is increasing the business of the particular brand over other brands in the same industry (Chkanikova and Lehner 2015). Retail industry is one of the most popular industries in todays business world. They sell similar products of various companies and the consumers get ample choices to make during their purchase. In this assignment, the importance of brand equity on the profitability of a company in retail industry would be explored. Since retail industry houses various companies for same products, it is important to understand the impact of brand equity on the profitability of an organization in the retail industry. This assignment would give an idea about the methods that could be used to understand this impact of brand equity on the profitability of the organization in retail industry. Background Retail industry, being one of the dominant industries in the business world, has its own importance in the profitability in business. Retail industry houses various organizations who have similar products and thus, there arises severe competition among the brands of the same products (Huang and Sarigll 2014). Having a good brand image help the organizations to have a better business over other brands of same products. Thus, it is important to study the impact of the brand equity on the profitability of any organization. The problem statement of the assignment is to find the impact of brand equity on the profitability of an organization of the retail industry. The aim of the research is to find the impact of brand equity on the profitability of an organization of the retail industry. Research objective The objectives are as follows: To evaluate the importance of brand equity help the organizations in business To analyze the impact of brand equity in retail industry To understand the impact of brand equity on profit of any organization in retail industry Research questions The questions of the research are as follows: How does brand equity help the organizations in business? How is the impact of brand equity in retail industry? How is the impact of brand equity on the profit of any organization in retail industry? Literature review According to the viewpoint of ifci et al. (2016), it was seen that the movements and decisions taken by any organization is judged by the relationship of a brand with its customers. The decisions and movements are also judged by the satisfaction level of the customers and commitment of the customers towards the brand. Brand loyalty is an important aspect of the business of any organization as it provides competition in various forms, functions, sizes and features. Brand is found to be the vital capital in most of the trades. Crass et al. (2016) opines that brand equity is defined as the popularity of a brand among the customers. Brand equity is described as the value of having a good name of their brand. It is seen that the there are various brands that sell similar products in the retail industry. Customers usually prefer ample of choice when they buy their products. When different brands produce similar type of products, customers tend to try those new products in order to experience different brands. When the customers find that the products of other brands better than another brand, they tend to switch the brands. This decreases the customers loyalty of one brand thereby decreasing the brand equity of that brand. According to the viewpoint of Chkanikova and Lehner (2015), it is seen that brand equity helps the owner of the brand to increase the business by gaining the loyalty of the customers. When the brand equity of a brand increases, the owner of the brand can gain more money by selling the products. In retail industry, when the customers get ample of choice to select the best products for their use, there arises competition between multiple brands. As per the viewpoint of Kapferer (2012), it is seen that with the increase in population, there is an increase in demand of the customers for various products. This had resulted in establishing new brands of same products. These new brands use modern technologies to reach out to the customers and advertise their products in a innovative ways. The advertisements are attractive enough to draw more customers to buy their products. This is a threat to the old brands as they had the concept of brand equity to earn their profits. The brand equity have a pivotal role in influencing the profit of an organization. It is seen that the strong brand name plays an important role in determining the structure of the price of any product of the brand. Luo et al. (2015 opines that an effective brand name can be listed as a credible signal of the quality of the product. It also helps to generate price premiums in the form of return from the investments in branding. According to the viewpoint of Kumar et al. (2016), it is seen that brand equity is one of the most valuable asset of the company as it is the major factor that influences the financial values of the company and its owner. There are various factors that influence the brand equity of an organization. Changing in market share, recognition of the logos by the customers, margins of the profit and other visual elements help to increase the popularity of the brand and create a better image of the respective product. The knowledge of the customers regarding the brand is important to increase the popularity of the brand. This knowledge can be gained by the customers if the brand and its organization advertise about them and reach out to the customers. When the customers will come to know about a brand and its goodness, they will prefer to purchase that brand over other brands. This would increase the sale of the products of that company and it will increase the profit of the company. This would in turn lead to increase in profit margin of the company and help them to increase their business in the retail industry. As per the viewpoint of Das (2015), it is seen that brand equity provides an advantage to the owner of the company as most of the products of the company are sold due to their brand name. They do not have to invest in the advertisement of the products. However, the company can earn their revenue from their popularity among the customers and their image among the customers. Thus, brand eq uity would increase the sale of the products of a particular brand over other brands. Data would be collected for the purpose of the research. Primary and secondary data would be collected for the research. These data would undergo various statistical analysis in order to fulfill the objective of the research. Both primary and secondary data would be collected for the purpose of the research. Primary data would be collected in order to know the views and satisfaction level of the customers of a particular brand while secondary data would be collected from the records of the organizations about the change in their sales on introduction of similar products of different brands. 30 customers would be chosen for the collection of primary data and they would be surveyed in order to collect the data. Close ended questions would be asked to the respondents and Likerts scale would be used in the research. The collected data would be analyzed using various statistical techniques. Methods of frequency distribution, descriptive statistics, correlation and regression would be used to analyze the collected data. Graphs and tables will also be provided to support the analysis. Ethical consideration Various ethical issues would be considered while performing the survey of the research. The respondents would not be forced to participate in the research. The respondents would be mentioned clearly about the objectives of the research. The responses of the respondents will not be tampered and it will be used in its original form. The researcher will not use any arms and threaten the respondents of the survey. The researcher will also keep the identity of the respondents confidential. Expected outcome It is expected that brand equity would be influenced by the preferences of the customers of that brand over other brands. This would increase the revenue of the organization and its owner. It is expected that the margin of the profit would be increased on increasing the brand equity of the organization. Thus, the influence of the brand equity of a brand in the retail industry is expected to be strong for the profit of that organization. References Chkanikova, O. and Lehner, M., 2015. Private eco-brands and green market development: towards new forms of sustainability governance in the food retailing.Journal of Cleaner Production,107, pp.74-84. ifci, S., Ekinci, Y., Whyatt, G., Japutra, A., Molinillo, S. and Siala, H., 2016. A cross validation of Consumer-Based Brand Equity models: Driving customer equity in retail brands.Journal of Business Research,69(9), pp.3740-3747. Crass, D., Czarnitzki, D. and Toole, A.A., 2016. TheDynamic Relationship between Investments in Brand Equity and Firm Profitability: Evidence using Trademark Registrations. Das, G., 2015. Impact of store attributes on consumer-based retailer equity: An exploratory study of department retail stores.Journal of Fashion Marketing and Management,19(2), pp.188-204. Huang, R. and Sarigll, E., 2014. How brand awareness relates to market outcome, brand equity, and the marketing mix. InFashion Branding and Consumer Behaviors(pp. 113-132). Springer New York. Kapferer, J.N., 2012.The new strategic brand management: Advanced insights and strategic thinking. Kogan page publishers. Kumar, V., Anand, A. and Song, H., 2016. Future of Retailer Profitability: An Organizing Framework.Journal of Retailing. Luo, A., Lehmann, D.R. and Neslin, S.A., 2015. 15. Co-managing brand equity and customer equity.Handbook of Research on Customer Equity in Marketing, p.363.