Brand Equity

What is brand equity?

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 competitors”(Kotler, 2003, p. 418).

In essence, to brand a product or a service is to create marketable differences to differentiate it from other similar products or services in order to derive excessive profits to the company providing the service or product.

Although marketing activities and other activities create an impetus for brand creation, a brand ultimately resides in the minds of customers. Thus for the branding to be successful, it is essential for the customers to be convinced that there are meaningful differences among brands in the product or service category.

Brand equity is the added value endowed to products and services. This value may be reflected in how consumers think, feel and act with respect to the brand, as well as the prices, market share, and profitability that the brand commands for the firm. Brand equity is an important intangible asset that has psychological and financial value to the firm.

Srinivasan et al. (2001, p. 1) defines brand equity as “the incremental contribution ($) per year obtained by the brand in comparison to the underlying product (or service) with no brand-building efforts.” Furthermore he outlines the sources of brand equity through (1) brand awareness, (2) incremental attribute perception biases and finally through (3) incremental non-attribute preferences.

: 24 Nov 2008 14:39 |  Tags: Brand Equity Intangible Research |  Comments (0) |  Close comments |  Report a problem

Haya – Modesty

The following article has been published in the As-Salaam Newsletter Issue 1 published in November 2008

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The Arabic word haya is translated into English as modesty but can also mean, shyness, dignity, self-respect and even honour. Our beloved Prophet Muhammad, peace and blessings be upon him, (p.b.u.h.) has been recorded to have said:

“Verily know that haya (modesty)part of your very iman (faith).” (Bukhari & Muslim)

Thus, haya (modesty) is all about controlling our gaze and taming our desires. In reality, being modest is the number one obstacle for the majority of us, irrespective of our age, gender and colour and it is this lack of modesty that keeps us away from our Lord (Allah). No matter how many good deeds we do or love we may have for Allah (All Mighty), it is like a hole in our hearts where everything gets sucked down when we fail to be modest in our actions. This is when one commits obscene acts (fahsha) that may be unbecoming to a believer in terms of faith. The purpose of this article is to shed some light on the importance of the subject of modesty and to try to get rid of the sins connected with the negligence of modestywith evidence extracted from the words of Allah (i.e. from the Holy Qur’an) and from the sayings of the Holy Prophet (p.b.u.h).

The aforementioned hadith of the Prophet (p.b.u.h) suggests that modesty is the basic form of iman (faith). In fact, scholars say that when Prophet equated modesty with faith, it meant that they complemented each other. The more immodest one might be, the more deficient their faith would be and vice-versa. The great scholar, Imam Bukhari, (may Allah be pleased with him), regarded modesty at such a high position that he coined the entire Islamic Jurisprudence (fiqh) as being based on it, by including it as a chapter heading: “Haya is verily a branch [a part] of faith.”

Unfortunately today in our modern, educated,world, we are sometimes taught consciously or subconsciously that haya or shyness is not such a good thing. We should know that once the Messenger of Allah (p.b.u.h) was passing by a companion and he heard him telling his younger brother that one should not beandshould be bolder and more outgoing.When Prophet (p.b.u.h) heard this, he stopped and addressed both of the companions and said that if one is, it will only bring goodness (khair). 'So why do you counsel one another to not have haya when the only thing it can bring is goodness (khair).' (Bukhari & Muslim)
At another situation, the Prophet Muhammad (p.b.u.h.) has been quoted to have said,“Al haya –u-khairu kuluhu.” The scholars have translated this to mean either that “everything about modesty is good” or “all of good is to be found in modesty.”

Therefore, the purpose of this life is not to fulfil our own desires and to seek the pleasures of this world, but rather to please our Lord: modesty is a means to such an over-arching goal. Unfortunately, today, we live in a society where advertisements, billboards, magazines, television, and otherbombard us with obscene images. Anyone who even tries to save himself from it is unable to do so. It has the effect of destroying one's haya and of making one immune to such obscenity. Such immunity occurs when one is repeatedly made to see such images and thusspiritual heart, casting a veil over it. If we do not cast a veil over our eyes, thenveil will be casted over our hearts.

Here are two quick recommendations  that one may put into practice straight awayprotect oneself from immodesty:

Start doing invocations (zikr) and the remembrance of your Lord at all times – in the bus, on the train, in the tube, even on your Ipods. It is this remembrance of our Lord during the daily chores that will remind us at all times that there is one great deity always watching our every move. Allah enjoins invocations with guiding our private parts together in following verse from the Holy Qur’an:
“And those believing men who guide their private parts and those believing women who guide their private parts. And those who remember Allah frequently and those female believer who remember Allah frequently” (24:31).

Lower one's gaze: Lowering the gaze is not something for the scholars or the saints but for all of us. It is not something that is optional but rather a commandment from our Lord in many different verses in the Qur’an. To get rid of evil or bad things, one has to fight the battle from the start as it is much easier to defeat the sin, when it’s just about to start. It is much harder to persist and march down from that path of sin. This is our Lord’s mercy to make it easy for us by reminding us to draw the battle line much earlier to save us from the sins. 

: 23 Nov 2008 15:00 |  Tags: Bukhari Dhikr Hadith Islam Modesty Muslim Prophet |  Comments (2) |  Close comments |  Report a problem

Halal and Haram: Not just food!

Follow-up to The Heart from Saya's Ramblings...

The following article has been published in the As-Salaam Newsletter Issue 2 published in January 2009

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Nu'man b. Bashir (Allah be pleased with him) reported: I heard Allah's Messenger (may peace be upon him) as having said : What is lawful is evident and what is unlawful is evident, and in between them are the things doubtful which many people do not know. So he who guards against doubtful things keeps his religion and honour blameless, and he who indulges in doubtful things indulges in fact in unlawful things, just as a shepherd who pastures his animals round a preserve will soon pasture them in it. Beware, every king has a preserve and the things God has declared unlawful are His preserves. Beware, in the body there is a piece of flesh; if it is sound, the whole body is sound and if it is corrupt the whole body is corrupt, and hearken it is the heart.

Narrated in Sahih-Al-Bukhari and Al-Muslim

The aforementioned saying of our beloved Prophet Muhammad (p.b.u.h.) touches on the concept of lawful (halal) vs. the unlawful (haram) matters (in light of shari’ah), the doubtful (ambivalent) matters and the biology of the heart.

The scholars of Islam differ in the precise definition of halal and haram. Abu Hanifah, the leader of the Hanafi School of Jurisprudence, has said, “The halal is that for which there is a proof which shows that it is halal.” While the leader of the Shafi’i school, Ash-Shafi’i said, “The haram is that for which there is a proof which shows that it is haram.” Thus, irrespective of whichever school we follow, it is safe to suggest that if one finds lack of evidence to support otherwise, then the matter is left where it is. Having said that, those ambiguous matters that have characteristics of both the halal and the haram, are the matters that are unclear. These matters distinguish oneself from others in terms of religion and honour. Where the ambivalence is absent, then disapproval of that matter is absent and to ask further about it is an innovation (bidah).

It is further suggested that one may have sought to have his religion free from any blame and safe from any uncertainty. As for the freedom of his honour from blame, if he does not give up the ambivalent matter, ignorant people would show arrogance towards him by backbiting. They would attribute to him that he consumed the haram and it would then be the decisive factor in their falling into wrong actions.

At another instance the Holy Prophet (p.b.u.h.) has been reported to have said, “Whoever believes in Allah and the Last Day, let him not take a stance that causes suspicion.” In Sahih at-Tirmizi it has been reported that the Holy Messenger of Allah once said, “When any of you break wind in the prayer, let him take hold of his nose and then leave.” That is so that it will not be said about him, “He broke wind.”

The aspect of falling into the “ambivalent matters” that it may “lead to haram,” may mean two things, one of which is that he will fall into the haram, thinking that it is not haram. The second meaning would be that he would almost fall into the haram, as is said, “Acts of disobedience are the postal service of disbelief.” Because when a person falls into infringements, he will advance step by step from one corruption to another greater than it.

This has been indicated by the words of our Lord, in the Holy Qur’an in chapter 3, verse 112, “and the (Children of Isra’il) killed the Prophets without any right to do so. That was because they disobeyed and went beyond their limits,” meaning that they went gradually from acts of disobedience to killing the prophets. The mention of the shepherd and his flock is analogous to the ambivalent matters leading to haram, whereby the flock wandering near the boundaries of it's owner's land (pasturage), may encroach into forbidden pasture.

Know that every forbidden thing has its protected pasturage surrounding it. The private parts are forbidden and the two things are their protected pasturage because they are a sanctum (harem) for that which is forbidden. Similarly, seclusion with a woman [other than wives, slave-women or family] is the protected zone around that which is forbidden, so that a person must avoid both that which is forbidden and the protected zone around it.

The body has a morsel of flesh, which, when in humility then the limbs have humility, and when it is corrupt then the limbs are corrupt. The scholars have said that the body is the kingdom of the self and its city. The heart is in the middle of the kingdom. The members are like servants and the inner faculties are like landed estates in the city. The intellect is like a concerned minister (wazir) who advises him (the king). Appetite is a seeker of the servants’ provisions. Anger is a policeman and a foul cunning slave who assumed the aspect of a counsellor but whose advice is deadly poison, and whose untiring habit is always to quarrel with the counselling minister (i.e. the intellect).

The faculty of imagination is at the front of the brain like a treasurer, the faculty of thought is in the middle of the brain and the faculty of memory is in the rear of the brain. The tongue is an interpreter. The five senses are spies. Each one of them has been entrusted with making one of the arts, so the eye has been entrusted with the worlds of colours, hearing with the worlds of voices, and so on for all the others, for they are means of information.

Then it is said that they are doorkeepers which bring that which they have grasped to the self. It has been said that the hearing, sight and the faculty of smell are like capabilities from which the self looks. The heart is the king, so that if the shepherd is sound, the flock will be sound and if he is corrupt, the flock will be corrupt. His soundness is only obtained by his safety from inner sicknesses such as malice, spite, greed, miserliness, pride, ridicule, showing off, seeking reputation, deceit, covetousness, ambition and discontent with the decree.

There are many illnesses of the heart amounting to almost forty. May our Lord heal us of them and make us of those who come to Him with a sound healthy heart.

: 20 Nov 2008 15:51 |  Tags: Bukhari Hadith Halal Haram Health Heart Islam Lawful Muslim Unlawful |  Comments (0) |  Close comments |  Report a problem

The Heart

The body has a morsel of flesh, which, when in humility then the limbs have humility, and when it is corrupt then the limbs are corrupt. The scholars have said that the body is the kingdom of the self and its city. The heart is in the middle of the kingdom. The members are like servants and the inner faculties are like landed estates in the city. The intellect is like a concerned minister (wazir) who advises him (the king).

Appetite is a seeker of the servants’ provisions. Anger is a policeman and a foul cunning slave who assumed the aspect of a counsellor but who advice is deadline poison, and whose untiring habit is always to quarrel with the counselling minister (i.e. the intellect). The faculty of imagination is at the front of the brain like a treasurer, the faculty of thought is in the middle of the brain and the faculty of memory is in the rear of the brain.

The tongue is an interpreter. The five senses are spies. Each one of them has been entrusted with making one of the arts, so the eye has been entrusted with the worlds of colours, hearing with the worlds of voices, and so on for all the others, for they are means of information. Then it is said that they are doorkeepers which bring that which they have grasped to the self.

It has been said that the hearing, sight and the faculty of smell are like capabilities from which the self looks. The heart is the king, so that if the shepherd is sound, the flock will be sound and if he is corrupt, the flock will be corrupt. His soundness is only obtained by his safety from inner sicknesses such as malice, spite, greed, miserliness, pride, ridicule, showing off, seeking reputation, deceit, covetousness, ambition and discontent with the decree.

There are many illnesses of the heart amounting to almost forty, may our Lord heal us of them and make us of those who come to Him with a sound healthy heart. Ameen

: 16 Nov 2008 20:20 |  Tags: Health Heart Islam |  Comments (0) |  Close comments |  Report a problem

Is there hope at the end of the tunnel?

The following the new research areas within "Intangible Assets" that I might focus on, depending on my meeting with the supervisor:

"Research and Development"

Research and Development expenditure: issues concerning capitalisation, amortisation, or value-relevance to firms within health-care, technology or financial services industry where R&D has greater impact.

The paper by Lev and Sougiannis (1996) suggests that R&D capitalization process yields value-relevant information to investors. Since R&D capital is associated with subsequent stock returns, there is a systematic mispricing of the shares of R&D-intensive firms (underreaction to R&D information), which is in contradicting to FASB Statement No. 2: 'A direct relationship between research and development costs and specific future revenue generally has not been demonstrated

Chan and Sougiannis (2001), go deeper into the relevance of accounting disclosure of R&D expenditure on stock market returns and uncertainty in valuation of companies.

2. Brand valuation – capitalisation issues, affect on capital market performance of listed companies, or ability to leverage marketing expenses to stock returns

3. Human Capital – development, valuation, capitalisation, health-care and technology sector

4. Trademarks – to forecast sales, profits, return-on-investment, relevance of investing in such intangibles

: 11 Nov 2008 20:14 |  Tags: Intangible Research |  Comments (0) |  Close comments |  Report a problem

Possible Research areas within Intangible Assets

From my preliminary literature review I have found the following aspects concerning Intangible Assets within both Accounting and Marketing Journals, although I am still unclear which strand of business I wish to pursue for this project.

From the accounting standpoint, “…the fair value of tangible assets [in the old days,] was routinely determined and the difference was simply thrown into the balance sheet as goodwill.”[1] Nowadays the markets are focussing more on the origination of this non-financial measure and their differing treatments such as for internally generated intangibles or post-acquisition balance sheets goodwill. Historically the accounting profession has had the capitalisation of intangibles as the centre of debate to determine its scope, valuation methodologies and widespread acceptance by the capital markets. The production of IAS 38 and its revisions during 2008 provides the key definitions, recognition criteria, measurement methodology and disclosure requirement governing intangible assets in financial accounts. Such a standard has been the result of the on-going convergence projects of the two of the world’s major accounting standards boards: IASB and FASB. A possible research focus would mean I start from the development of goodwill and intangible assets within the accounting profession and how the standards have evolved under the various named boards (ASB, FASB and IASB). I could then focus on a specific type of intangible or narrow it down to a specific industry and do some case-studies or survey type analysis. The research could focus on the purpose of valuation of intangibles via the cost, income or market approaches, whether for tax purposes, litigation purposes, corporate planning or defensive strategies in light of take-over bids or for any other commercial purposes that may arise in businesses.

On the other hand, the marketing profession has focussed on defining the “nature and substance,”[2] of specific intangibles types (such as brands, customer loyalties, employee equity, etc.) to focus on the construct in order to clearly define its role for marketing managers and value it accordingly. Thus, the roadmap is much clearer after defining specific intangibles and subsequently valuing them as a result. A basic literature review revealed vast amounts of information concerning specific type of intangibles such as brands, intellectual properties, employee assets, customer loyalty and so on. In this respect, I could not narrow my approach myself to restrict myself on any specific type of intangible and therefore you may enlighten me with some leads as to where I may begin if I were to pursue this side of intangibles.

An alternative approach to “intangible” research is within the capital markets. I could focus on the efficient market hypothesis to test stock trading strategies to the level of intangibles in a specific industry sector. This strand of research would demand first a literature review of the various stock-trading strategies and subsequently refining the thesis question. Again I haven’t done much research in this strand of intangibles, but could dig deeper to refine the topic.

A final note on intangibles: research on intangibles is quite a complex one as illustrated an extract from a literature review.[3]

The different classifications are rather confusing for practitioners who want to apply the concept in practice. However, it is important to realize that the concept of intangible assets is discussed from various perspectives, including accounting, strategy, human resource management, information systems, knowledge management, among others (Marr, 2004), and these different perspectives can lead to different emphasis in the definitions (Marr et al., 2003).

Some possible ambiguous terminology or phrases that I came across while I was conducting the basic literature review included:

International Valuation Standards Committee (IVSC)

“Royalty Relief”

Brand valuation

Brand strategy

Effect of brand equity on business performance

Brand switching behaviour

Value relevance of intangible assets

Book “Valuing Intangible Assets” by Reilly and Schweihs (1999)

: 20 Oct 2008 10:57 |  Tags: Accounting Capital Markets Intangible Marketing Research |  Comments (2) |  Close comments |  Report a problem

Short Selling

Writing about web page http://news.bbc.co.uk/2/hi/americas/7626613.stm

As per my basic finance knowledge, "short selling" is defined as selling a security, already being traded in any of the organised exchanges across the globe, without effectively owning it (hence it is usually borrowed from a market-maker/stock-broker), in the hope that it will fall in value, thereby allowing one to buy it back at a lower price at a later date to return the borrowed security to the broker/market-maker. Thus effectively hedging oneself from expected dips in the stocks being traded on any organised exchanges across the globe. 

The possibility of selling a particular stock via such a mechanism adds to liquidity in the market of the particular stock, thereby artificially increasing the supply and further exhaserbating the downward spiral in the value of this particular security. This is why we see a control on such instruments in the financial markets nowadays:

As a result of the financial debacles in the west, we see that the the Securities and Exchange Commission temporarily banned "short-selling" in the stocks of 799 companies as highlighted in the press release on BBC [linked here]

Does this mean that even the SEC Chairman knows that short selling does more bad than good in the market?

: 27 Sep 2008 12:00 |  Tags: Financial Stocks Wall Street |  Comments (1) |  Close comments |  Report a problem

Al–Salam Institute UK: New semester courses

Writing about web page http://www.al-salam.co.uk

An annoucement I thought I'd share with my viewership

: 26 Sep 2008 12:14 |  Tags: Annoucements Islam Shariah |  Comments (0) |  Close comments |  Report a problem

Rights of Women after Marriage in Islam

I just recently found about this fact and thought I'd share here:

A woman has the right to be maintained at the socio-economic status that she was accustomed to before she was married, unless she relenquishes that right herself. So if a woman is wealthy before and marries a wealthy man who can not maintain her at the status she was accustomed to before, she has the right on the grounds of shariah for divorce.

There is an understanding that women need help inside the house for domestic affairs, managing the children, etc. With regards to servicing the house, the scholars have said that she is not obliged to work within the house but is preferred if she is not working. In fact, it is not considered to be "disobedient" to be obliged to serve the guests of the man. These are the facts mentioned in the Shairiah in books of fiqh which were written centuries ago. Women get burnt out, tired and thus marriage gets deteriorated because of these things. But it works both ways, and the Prophet salalaualahywasalam warned us of the dangers of women as well refered to as Kufraan-al-Asheera that women can not appreciate what the man does. It works both ways, it is a two-way street, there is a type of women that you good to her all her life and then once you do something wrong, she will say "I never knew any good from you." In other words, that she forgets all what you have done your whole life. Thus caution must be from both sides of the relationship.

: 23 Sep 2008 11:00 |  Tags: Islam Shariah Women |  Comments (3) |  Close comments |  Report a problem

Belief in Devine Guidance

The foremost belief around which all the Islamic concepts revolve is that the whole universe is created and controlled by One, the only One God. He has created man and appointed him as His vicegerent on the earth to fulfil certain objectives through obeying His commands. These commands are not restricted to some modes of worship or so-called religious rituals. They, on the contrary, cover a substantial area of almost every aspect of our life. These commands are neither so exhaustive that straiten the human activities within a narrow circle, leaving no role for human intellect to play, nor are they so little or ambiguous that they leave every sphere of life at the mercy of human perception and desire. Far from these two extremes, Islam has a balances approach to govern the human life. On the one hand, it has left a very wide area of human activities to man’s own rational judgement where he can take decisions on the basis on his reason, assessment of facts and expedience. On the other hand, Islam subjected human activities to a set of principles which have external applications and cannot be violated on a superficial grounds of expediency based on human assessment.

The fact behind this scheme is that human reason, despite its vast capabilities, cannot claim to have unlimited power to reach the truth. After all, it has some limits beyond which it either cannot properly work or may fall prey to errors. There are numerous domains of human life where ‘reason’ is often confused with ‘desires’ and where unhealthy instincts, under the disguise of rational arguments, misguide humanity to wrong and destructive decisions. All those theories of the past which are held today to be fallacious, claimed, in their respective times, to be ‘rational’ but it was after centuries that their fallacy was discovered and their absurdity was universally proved.

It is thus evident that the sphere of work delegated to human ‘reason’ by its Creator is not unlimited. There are areas in which human reason cannot give proper guidance or, at least, is susceptible to errors. It is these areas in which Allah Almighty, the Creator of the universe, has provided guidance through His revelations sent down to His prophets. On the basis of this approach it is the firm belief of every Muslim that the commands given by the divine revelations through the last messenger (May God Be Pleased With Him) are to be followed in letter and spirit and cannot be violated or ignored on the basis of one’s rational arguments or his inner desires. Therefore, all the human activities must always be subject to these commands and must work within the limits prescribed by them. Unlike other religions, Islam is not confined to some moral teachings, some rituals, or some modes of worship. It rather contains guidance in every sphere of life including socio-economic fields. The obedience from servants of Allah is required not only in worship, but also in their economic activities, even though it is at the price of some apparent benefits, because these apparent benefits may go against the collective interest of the society.

Extract from “An Introduction of Islamic Finance” by Muhammad Taqi Usmani

Some great words of Muhammad Taqi Usmani, one of the great scholars of our present day time, who has worked extensively in the field of Islamic Financing.

Thus the question then arises: even though we know that our rational reasoning may be affected by our desires, how do we control them?

: 22 Sep 2008 14:00 |  Tags: Financial Islam Islamic Finance |  Comments (2) |  Close comments |  Report a problem