Brand Strength Brand Equity Pricing and Branding

1. UNIVERSITY OF JAFFNA-SRI LANKA
FACULTY OF MANAGEMENT STUDIES & COMMERCE
DEPARTMENT OF MARKETING
BBAM 3233: BRAND MANAGEMENT
ASSIGNMENT-I
SUBMITTED BY
MR. J.S.S. KARUNATHILAKE
2014/BAD/300
INDEX NO:BAD14300
DATE OF SUBMISSION: 10h
October, 2017

2. 01. Brand Strength of VISA.
Visa, Inc. is a technology company, which engages in connecting consumers,
businesses, banks, governments, and territories to electronic payments. It offers
fraud protection for account holders and
payment for merchants. It operates through:
Payment Services segment. According to
Forbes magazine’s brand ranking list VISA
has the 28th place today. VISA has $106.24
share value in the market recently (Figure
1.1) The Company was founded by Hock
Dee in 1970 and is headquartered in San
Francisco, CA. Visa is the market-leader in
the very profitable credit card networks industry.
However, industry may be generous as, Visa and MasterCard are the only two
open-loop networks in the world, and thus make-up a stable and lucrative
duopoly.
Visa is well-positioned to further increase its market leadership, as we expect it
to increase its market share of
non-cash transactions, from 58%
to 64% by 2017. Defining a
market is always difficult, but
since card based transactions
ultimately drive network
revenue, examining market
share from that perspective can be informative. More specifically, per the most
recent data in 2014, Visa owns at least 58% (Figure 1.2) of the card transaction
(Figure 1.1)
(Figure 1.2)

3. market. Visa is not just the market leader, but also the most profitable of the
card networks, open or closed loop notwithstanding. Suffice it to say, Visa
enjoys a strong competitive advantage – one we expect it to maintain, at the
least. In numeric terms, Visa has increased its operating margin each of the last
5 years and we expect it to increase again this year before stabilizing at around
66% from 2017-2023.
02. Brand equity concept with application of VISA.
The American Marketing Association defines a brand as “a name, term, sign,
symbol or design, or a combination of them, intended to identify the goods or
services of one seller or group of sellers and to differentiate them from those of
competitors”. Consumers may evaluate the identical product differently
depending on how it is branded. Consumers learn about brands through past
experiences with the product and find out which brands satisfy their needs.
Simplify decision making and reduce risk. Visa and master card are both the
only two players who are known for their payment systems across the world.
There are other cards but none of them reach the popularity of Visa or
Mastercard. Amongst them both, Visa has the higher brand equity and market
coverage due to its aggressive expansion strategy.
1. Visa has been ranked 27 in the list of most innovative companies in
the world.
2. It is ranked 30th
in the list of world’s most valuable company as
per Forbes magazine.
3. It has been ranked 6 in “BrandZ” Top 100 Most Valuable Global
Brands ranking.
4. It’s ranked 61 in Interbrain’s 2016 Best Global Brands.
5. It has been valued at $ 189.8 billion based on market capitalization
method. (As of May 2016)

4. 03. Brand Image of VISA.
The Branding Process of VISA.
Once the decision was taken to revisit the current structure, the Visa
International Brand Management group embarked on a comprehensive
assessment covering all aspects of the brand.
Research revealed that consumers responded to the name Visa rather than the
logo itself. The Visa logo continues to have positive associations but it was
recognized that it no longer told the whole story of Visa in 2005 and beyond.
Time and again, the research came to the same conclusions: current and
potential customers in retail, commercial and processing areas consider the Visa
name to be sacrosanct but were open to other changes, most especially the
borders of the Visa logo design that closely resembled a card shape.
The challenge for the design team was to develop concepts that maintained the
positive values associated with Visa, while more accurately reflecting the
breadth, depth and diversity of the organization’s platforms and services. Visa
worked with a number of leading design firms to develop design concepts that
ran the gamut from the conservative to the more radical. These designs were
then shown to a number of focus groups yielding fascinating and unexpected
results. All the groups were extremely open to most design changes with the
caveat: the Visa name should be clear and legible. With so much trust invested
in Visa, consumers wanted a visual assurance of the brand promise when they
paid with Visa.
An Evolution in Four Letters.
The qualitative research findings, coupled with multiple internal reviews,
helped narrow down the design concepts to one that retains elements of both the
Visa logo and the corporate identity mark. (Figure 3.1) In contrast to many
other branding exercises in other organizations, Visa itself was instrumental in
progressing the design process using in-house talent. In fact, Visa designers
developed the final brand design themselves. By driving the design process
from beginning to end, the Visa Brand team is continuing the traditions of
entrepreneurship and self-reliance that echo the birth of the original Visa brand.

5. 04. Evaluation methods of VISA.
Given that Visa is currently trading at approx. $71, and the EP/DCF model
produces an intrinsic value of approx. $91, there is approx. 27% upside
available to capture.
Time horizon: We set it at 8 years because the Visa Europe acquisition should
close by the end of 2016.Hence, we expect growth stemming from the Visa
Europe acquisition to kick-in by 2017 and be fully phased-in by 2021, before
beginning to stabilize in 2023.
Cost structure: Given Visa’s capital lightness, scalability, and historical
decline of costs, we fixed Visa’s expenses at stable percentages of revenue for
our forecast. For depreciation/amortization, we fixed that as a percentage of
PP&E, in line with historical trends.
Service revenue growth: Payments volume drives service revenues – the
largest portion of Visa’s top-line growth. Accordingly, the most important
assumptions relate to this driver. Non-cash transactions and market share of
such transactions seem to be the most significant factors for payments volume
(Figure 3.1)

6. growth. This makes sense: the more non-cash transactions that occur globally,
the more money is likely to flow through Visa’s network. Non-cash transactions
grew from 2009-2013 at a CAGR of 7.90% per the most recent data from the
World Payments Report. We project a higher CAGR from 2016-2023 of
10.47%.
Relative to analyst estimates: According to Fact Set data, our projected top-
line revenue growth is a bit more aggressive than analyst estimates.
Specifically, by about$500M in 2016, $1B in 2017, and $800M in 2018.
However, analysts’ are projecting a lower cost structure, and failed to include
the interest expense, from Visa’s December bond issuance, in their projections.
Therefore, despite higher top-line projections, our EPS is a bit lower than
consensus. Specifically, we project $2.75, $3.19 and $3.56, whereas they
project $2.80, $3.25, and $3.77. They may also be expecting larger repurchases
than we are, which would also explain the discrepancy.
05. Brand Strength and Pricing.
Price adjustment strategies
Psychological pricing: Visa card developed pricing based on consumer mind
set Gold is more expensive then silver this strategies. (Figure 5.1)

7. Segmented pricing: HBL ATM Cash Withdrawal provide facility of Rs.25,
000 per day for Silver Card Rs.50, 000 per day for Gold Card
Discount & allowances pricing: Visa gold /platinum card holder can enjoy
10% discount when spend some quality time with friend and loves once over
coffee and desert at Gloria jean’s coffee, Pakistan offer valid till 30 June 2014
Promotional pricing: IN Olympics games visa card provide special discount to
its customer On 11 may is a mother day As a Visa Gold or Platinum card holder
enjoy 10 per cent off on all regular priced items and indulge in the complete
“Mother care” experience.
Reference: http://www.forbes.com/companies/visa/
http://fortune.com/worldsmost-admired-companies/visa-47/
http://www.businessinsider.com/visa-nowowns-999-of-square-2016-2
(Figure 5.1)