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Tag: Equity

  • Equity Theory of Motivation

    Equity Theory of Motivation

    Equity theory exists in the real world, and with the help of social media, this is rising. In organizations, we can feel that people are suffering from this theory, and that’s why they are lacking motivation. Now without further delay, let us understand this theory in detail. And let us first start with a real-life incident I faced.

    WHAT’S IN IT

    Example of equity theory of motivation

    This incident will help you in understanding how the problem arises. 

    One of my friends got placed from campus at an excellent salary package in a multinational company. After joining, he was delighted as the salary was high, he was getting it on time, and the job was challenging as well as exciting. After a few months, he called me, and he was sounding like really low. So I asked him what happened, you were delighted when you joined. Then he replied and told an exciting thing. He said that this company hires from IIT(Indian Institute of Technology) as well as from NIT(National Institute of Technology).

    My friend was from NIT. In that situation he said that there is a huge difference in salaries, he was getting a very much lower wage than from IIT guys, almost half from them. And one important thing he said was that the designation, job profile, job nature everything was the same; the only difference is in terms of salary. In some positions, freshers from IIT have been positioned on senior posts than him. This all made him demotivated in the situation. 

    If you observe this situation, my friend is comparing himself with others. Our society has got this notion; we keep on comparing things, jobs, children, etc. This must be happening with you also. 

    So, my friend was unhappy due to a comparison of his salary and salary of IIT students. He is suffering from equity distress.

    EQUITY THEORY

    John Stacy Adams proposed equity theory in 1963. The theory says that employees tend to compare their job inputs with job outputs relative to others. But now this theory is not only limited to employees; every person feels it. 

    The inputs are– effort, experience, educational qualifications, and competence ( skills). We take all four things as inputs that we are putting efforts into; we have the best experience, we come from an excellent educational background, and we have the best skills.

    The outputs are – salary levels, appraisals, recognition. We usually take these three things as outputs that how much salary we are getting, what promotions or evaluations are we getting at year-end and how are we recognized in the company.

    Research shows both males and females make comparisons, one engaging thing in the study is that they both prefer same-sex analogy; a male would likely to compare with another male and a female will probably compare with another female.

    But, the way women empowerment is on the rise, this same-sex comparision part of theory will get failed. It will be more common in the future that males and females will be compared with each other, which is already started. 

    EQUITY THEORY OF MOTIVATION

    After Comparison, there are three situations which can be generated, let’s talk about those situations:

    SITUATIONS OF EQUITY THEORY

    1. the ratio of output to the input of an employee is equal to the ratio of output to the input of another employee ( referent). In this condition, you feel equality, fairness, and organization are very good. Here equity exists, and this is the ideal condition that rarely exists.

    2. The ratio of output to the input of an employee is more than the ratio of output to the input of another employee ( referent). In this condition, there is inequity due to overrewarded. It feels suitable for a few days for being the employee in this situation. But  Sometimes, this also creates a problem because when you think overrewarded than anyone else who has done the same hard work as you; you start developing a feeling of guilt. 

    3. In this condition, the ratio of output to the input of an employee is less than the proportion of output to the input of another employee ( referent). This is the most common situation, and here also inequity exists due to being under-rewarded. Most employees find themselves in this situation that their organization is not recognizing their hard work well.

    EQUITY THEORY OF MOTIVATION

    WITH WHOM EMPLOYEES COMPARE

    1. Co-workers– This is the person with whom we compare the most.

    2. Neighbours–  We compare our houses, cars, living standards, etc. with them. Sometimes we also compare our children.

    3. Friends- We have a regular comparison with friends also in terms of education, hard work, money, etc.

    4. Present Job with Past job– Sometimes if you do not compare with the above three ones then you compare your past career with the present one. 

    Comparision has become our natural trait, every time we keep comparing. Nobody is immune to it particularly more due to social media. 

    These comparisons create four types of referent comparisons.

    TYPES OF REFERENT COMPARISONS IN EQUITY THEORY

    1. Self Inside

     It means we compare the personal experience in different positions in the current organization. Sometimes we work at different positions in the same organization, then we start comparing those positions. For example, – I was working in marketing. Still, I was shifted in HR ( Human Resource), Now will think that I used to get more incentives in marketing jobs or I was not getting a sitting position in marketing, but I am getting a sitting job in HR.

    2. Self Outside

    Here, we compare personal experience in a situation or position outside the organization. In another organization, either our friend is working or our roommate who is in the same position with whom we share our experiences.  Now we start comparing our position with the same position but in another organization. 

    3. Other’s inside

     here, we start comparing other individuals or groups inside the organization.

    This is the most common one.

    4. Other’s outside

     here, we start comparing other individuals or groups outside the organization. 

    How Employees deal with Inequity experience

    Investigating Workplace Bullying Allegations: 10 Tips for Success | i-Sight

    1. Change the Input

    The day you feel that whatever hard work you do, nothing happens and the company prefers someone else; the same day you change your input. And you think why I should be hard for the company when I know someone else will be rewarded.

    We can compare this with our school life when the teacher used to favor another student, and on the same day, we stop giving responses to teachers.

    2. Change the output

    When an employee observes his talent is not appreciated, he starts focusing on quantity more than quality. He tries to increase his production because his class is not being measured. If a company does not take care of employees’ self-respect, then why will employees take care of the company’s reputation for quality.

    3. Choose a different referent

    This is a good trick. If you compare yourself with others and you feel frustrated with it, then change the referents. You should see yourself ahead of those who are behind you, rather than thinking yourself behind of those who are ahead of you. For example, when I used to rank 10th in school exams, then I used to think that I am ahead of 30 students rather than I am behind 9 students.

    4. Quit the Job

     If you feel that this inequity tension has increased so much that it is unbearable, then simply you quit the job. But when you join another organization then the same process starts happening there also.

    5. Change the self-perception

     you start thinking that the input I am giving is not sufficient for getting the desired results. You start pushing yourself.

    6. Change the perception of others

    Here you start thinking that the job of others is more important than yours, that’s why they are getting more rewards.

    Although in the first place, people should not make comparisons, they follow the above-told strategies because it somewhere it gives them relief from inquiry distress.

    Conclusion

    Adam’s Equity Theory of motivation states that a higher level of motivation and positive results can be expected only when employees feel their treatment is fair. The situations of equity theory depend on the ratio of output to input. The people with whom employees compare themselves are co-workers, neighbors, friends, and themselves. The people develop inquiry stress within themselves due to these comparisons, and they deal in different ways, as discussed above.

    Also you can read our blog on Role Of Brikshaw four-dimensional model

    FAQ’s

  • The Ultimate Guide of Brand Equity in Marketing

    The Ultimate Guide of Brand Equity in Marketing

    Every organization wants to advertise the products and services in the market, which can impact consumers. 

    ‘Brand equity’ is the best way to rule your company’s marketing and earn a profit.

    It is a strategy that provides the best experience to the stakeholders of your company.

    Brand equity is a known phrase in the marketing industry that defines the value of a label. Fundamentally defined by customers, It acts a vital role in pushing success in business sales.

    When a customer has a good thought of a brand, it has large brand equity. Likewise, If a customer has a poor impression of a brand, the brand has moderate brand equity.

    For example, Apple’s customers pay more for a mobile phone than its competitors because it has high-value brand equity.

    So, to overcome the challenge of establishing a one and have a high-profit margin read this detailed guide.

    WHAT’S IN IT

    So, let’s talk more about brand equity.

    What is Brand equity?

    Brand Equity Definition and Importance | Marketing91

    It is a value premium for a company’s products and services created by the perception of customers as a result of the products and services. 

    The marketing makes products and services memorable, reliable and presents it with high quality. 

    It is the worth of a brand that is perceived in the market and makes it socially valuable as a brand name.

    Two perspectives are considered informative where branding investments bring revenue from unaware buyers. 

    Meanwhile, cognitive psychology creates awareness among customers about the brand features and generates revenue.

    It has a different meaning in three contexts. First is the accounting context, which is the value of the brand. 

    The second is the marketing context, which we are going to discuss, basically qualitative where consumer perception and association are the parameters. 

    Lastly, brand equity has meaning in the consumer-based context, measurable in quantity as brand loyalty.

    I hope now you know the meaning of brand equity. So, let’s delve deep into this and discuss its components.

    Fundamental Components of Brand Equity

    In this session, we will discuss some fundamental components of brand equity. To create brand equity in your company, what you need to focus on is the ten components.

    Flexibility

    The brand must cover a broader scope, so the product and services related to it or added on must be relevant to it. The brand should leverage the demand in the future and not be dependent on very few products and services.

    Relevance

    The products and services under the brand should be relevant to the needs of the targeted customers. If there is no utility of what you sell, then putting efforts and resources is waste.

    Innovation

    Bringing innovation to the brand creates a perception that it is full of energy and something new to sell to your customers. Try to improve the brand or redesign it over the period.

    Uniqueness

    The brand, which is different from its competitors, can create an influence without much awareness. A unique personality makes your brand stand out.

    Image and reputation

    Positive influence, brand value, high-quality services, and products, as well as the perception of its premium nature, help build a brand model and status.

    Loyalty

    Is Customer Loyalty Dead?

    Customers can be counted as loyal when another brand is offering price cuts or additional services. Identify what makes your customer loyal and what you have to do to make them loyal to the brand. 

    Awareness

    Do your customers know what you have to offer in the market? Is your logo, and the brand name is easily recognizable, is the brand famous besides its existence?

    Try to create awareness about your brand as much as possible.

    Quality

    Providing low quality in the market will create a negative influence on the market. There are many parameters like competitors’ prices and offerings and know that your brand gets compared by customers for overall quality. In other words, it offers the best variety to create loyalty and brand value.

    Proprietary Brand Assets

    Use patents, trademarks, relationships, and acquisition your strength to expand your brand equity.

    Brand’s Associations

    Try to communicate with the customers by your advertising, pricing, after-sales service, as it creates a strong and positive brand association, which helps in earning more revenue.

    So, these are the fundamental components of brand equity and I hope it is now clear to you.

    Different Models Implemented to Create Brand Equity

    Three effective models are used to build a powerful brand. The following are the models implemented to create brand equity.

    Keller’s Model of Brand Equity

    Reviewing the Concept of Brand Equity and Evaluating Consumer-Based Brand Equity (CBBE) Models - Research leap | Equity, Brand, Of brand

    Kevin Keller’s model is the most appropriate theory in marketing as it emphasizes the brand to create brand equity instead of the customer.

    It wants you to answer the four questions of brand identity, brand meaning, brand response, and resonance.  

    Firstly, create awareness and know what your customers want to build a strong brand identity and grab the attention in the market.

    The second step is to interact with the customers so that you can explain to them what does your brand has to offer, the quality, and the price of the product and service.

    The third step is to attract the judgment of consumers by meeting their expectations. The product or service must be attractive and satisfying. It helps you to obtain a brand response.

    The last step is to create a bond between your brand and the customer to establish an association. It is the hard part of the process, but it is not impossible to achieve it. 

    Aaker Model

    The Aaker model suggests that brand equity is an added value to the product and services associated with the group of assets and liabilities to the brand. 

    The five pillars that give structure to the model are brand awareness, brand loyalty, perceived quality, brand association, and assets. The explanation of all the five components is discussed in the above section.

    Brand Asset Valuator Model

    The brand asset valuation model collects consumer insights to know and improve the health of the brand. We can compare brand equity with other brands under this model.

    The four components of the model are differentiation which is uniqueness, reputation, awareness, and relevance. 

    How to Measure Brand Equity

    You may consider many factors while measuring brand equity like the perception of your consumer, the nature of the opinion, and the knowledge’s value. So, you need to consider three metrics for measuring your brand equity.

    1. Financial metrics: it measures the monetary value of the brand, both internally and externally. It provides analyses based on market share, transactional value, revenue generation, growth rate, and sustainability rate and at last price premium.
    2. Knowledge metrics: it measures the popularity of your brand by its consumer awareness and association with consumers.  There are two kinds of association firstly, a functional association where you measure the utility of the brand, and secondly, emotional associations are how the consumer feels about your brand. For example, the Mercedes can just be a car to someone associated with it functionally, whereas, for someone, it’s the dream car that establishes an emotional association. Knowledge metrics gathers data and information about the customer and brand.
    3. Preference metrics: It measures the perception of the brand and your position within your industry. It measures factors like brand relevance, value, accessibility, and emotional connection established. 

    For example, the Lays of Pepsico, and Bingo of ITC. The brand Pepsico has established a relationship, brand value, and relevance within its industry, whereas the product of ITC, bingo, is not known to everyone.

    Relationship Between Brand Equity and Marketing 

    Do you know the recognized brand’s cost of marketing is lower than its competitors? 

    In marketing, high brand equity has many competitive advantages like higher revenue and less expensive marketing campaigns. 

    The process of marketing becomes easy. The brand can launch a new product line as it already has a large customer base and does not need to create awareness among the customers every time.

    Importance of Brand Equity 

    What Is Brand Equity and Why Is It Valuable In Business? | by Inkbot Design | Medium

    Your company needs increased market share and valuation, which will be gained by brand equity. The following are the reasons why your company needs brand equity. 

    1. It serves as an intangible asset that can easily convert into cash in times of need, or it can be leased or licensed for the profit of the company.
    2. Positive brand equity helps the company to generate more revenue by charging more money than other companies.
    3. It helps increase the share of the company’s market as consumers become loyal to the particular brand, and the company gets a large consumer base.
    4. The cost of marketing and launching new products gets reduced as the brand is already famous.
    5. The products and services get improved and more relevant as the experience of stakeholders increases with the brand. 

    In brief, brand equity endures vital importance for a business. This is because it not only enhances the market share of the business; it also expands its estimate within the market place.

    Conclusion

    I would like to conclude by saying that the management of your brand in a company needs brand equity as it creates brand loyalty and adds value to it in the market.

    The growth and success of the company are directly related to it. You need to manage your brand efficiently to prevent it from brand decay.

    It is a strategy used to differentiate your products from competitors and other brands, and it creates competitive barriers that provide you with a meaningful competitive advantage in your industry.

    Brand equity is casting in the long term, which needs detailed strategy and marketing investments designed precisely. It is a reliable and valuable asset. 

    You need to put marketing efforts, and the managers need to find out the plan to manage the brand to create its highest value in the market.

    You need to make investments in the advertisement, sell brands to retailers with reputation, reduce the use of paid promotions, and intensify the process of distribution in the market to make your brand more powerful.

    Also You can Read our Blog on How To Calculate Customer Value, Satisfaction & Loyalty | Complete Guide

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