Brand Update : Knorr

Knorr recently launched another product line extension - Soupy Noodles. The brand is currently running the campaign featuring its brand ambassador Kajol. Soupy Noodles combines both the properties of soup and noodles. The brand is promoting this variant as a new category to be carved out of Noodles .

Knorr brand was doing well in the market after the company shed all the unwarranted product extensions and concentrated on soup category alone. Knorr retained its lost brand equity and is currently the market leader in the soup market in India.Knorr later extended itself into ready to cook range to expand the portfolio.

The launch of soupy noodles can be looked upon as just another interesting variant of soup product line or as a planned foray into Noodles segment. If the soupy noodles remain as a variant in the soup product line, the brand has done the right move in creating excitement in the market. Soupy Noodles will be attractive to the kids who has now the option of best of both worlds. Having said that Soupy noodles is not entirely an innovation since a similar version called Curry Noodles exists in the market.

The second scenario is where Soupy Noodles is a first step of Knorr into extending itself into noodles. If that is the case, then Knorr has not learned from its previous mistakes. Extension of Knorr brand to noodles will make the brand lose its generic status on the soup category. Of course the brand can point out the case of Maggi extending itself to various other categories. But Knorr had a bad history of extension failures and brand name confusion unlike Maggi.

I think soon Maggi will also launch its version of soupy noodles. If the taste is good, Indian market will see the emergence of a new category of soup + noodles.

Related Brand
Knorr
Maggi

Marketing Strategy : How to Brand a Commodity

How to Brand a Commodity

First published here at Adclubbombay.com.

We are living in an era where brands are becoming commodities and commodities increasingly being branded. Commodity can be broadly defined as those products which are undifferentiated and consumers buy these products on the basis of the price. Price is the most critical factor that determines the choice of purchase of commodities.

Many product categories are becoming commoditized owing to the huge number of products that enter the market and the inability of marketers to find meaningful differentiation. Consumers do not see much difference between the products/brands and make their choice based on price. Marketers worried about this trend increasingly concentrate on cutting costs and selling products at the lowest possible price and thus effectively making the product a commodity. While marketers should prevent products becoming commodities, increasingly companies are looking towards branding product categories which was usually considered as commodities.

Indian market has witnessed lot of success stories of marketers successfully branding commodities like salt, atta etc.

Moving away from Price

One of the major challenges for marketers trying to brand commodities is to move away from price based competition. It is not easy to convince the customers to make choices independent of price while buying a commodity. The task for the marketers is to show more value that will justify the premium paid.

Tata Salt was a pioneer in branding salt. Tata had the backing of a strong brand name. Besides taking advantage of the strong brand equity, Tata Salt was one of the first iodised salt brands and the iodine content proved to be a great value addition. The launch of Tata Salt coincided with the Government of India’s initiative to promote iodised salt. Tata Salt positioned itself on the basis of purity and trust. Another player in the branded salt market Captain Cook tried to add value by promoting its Free Flow feature. The strong promotional campaigns and the very relevant value additions shifted the focus of consumers away from the price.

Differentiation

The most important determinant of a successful commodity branding is the differentiation. The marketer has to establish a very strong meaningful and relevant differentiation to the commodity if he wants to develop a brand in that space. Creating a successful differentiation is not easy in commodity marketing. There is a strong constraint of cost while searching for a meaningful differentiation. The brand will be targeting a price sensitive customer who may not be willing to pay a high price for a differentiated commodity.

Most of the marketers try to use Quality as the key differentiator. Quality is a strong differentiator but the brand has to establish a significant difference between the existing product and the brand to convince the customer about the quality. Parry’s sugar is India’s first branded sugar. The brand is trying to differentiate on the basis of purity and is positioned as a refined pure sugar.

Branding

The brands in the commodity space may have to grab a major share of voice for establishing itself in the category. The brands which have been successful in the commodity space have invested heavily in branding and promotion. Once the brand is established, the promotional spends can be rationalized.

While branding commodities, marketers have to use the various brand elements to the maximum. The colour, brand name, logo, mascots have significant impact on the consumer’s perception about the brand.

Packaging also plays a significant role in successful commodity branding. Brands like Pillsbury, Aashirvaad have caught the consumer’s attention through careful packaging. Parachute which has created a brand in the coconut oil category has put in lot of investment in packaging and brand promotion.

Celebrities also play an important role in building a brand in the commodity space. The use of celebrities creates an immediate impact on the consumers during the initial phase of branding. The disadvantage is that the use of celebrities can push up the cost for the marketers. BPCL used Narain Karthikeyan and MS Dhoni to endorse its Speed range of Premium petrol.

Brands should be innovative while entering the commodity space. Nightingale is a highly successful brand in the highly fragmented Notebook/Diary category.The brand was built on innovation. Nightingale introduced theme based notebooks and Diaries which became an instant hit. Parryware changed the entire sanitary industry with the concept of Glamourooms.

Branding a commodity is not an easy task. Marketers have a better chance of success in this market only if they are able to create a meaningful differentiation for their offerings.

Brand Update : Bajaj XCD RIP ( 2007-2010)

According to Economic Times, Bajaj has stopped the production of XCD 125 and XCD 135. The brand which was touted to give Hero Honda Splendour a run for money has become a part of history. In my analysis of the brand, I had opined about the positioning problem faced by XCD.

I feel that the brand established wrong sets of parity with Pulsar and the total confusion resulting in the focus on the cubic capacity rather than the brand benefits resulted in the death of this brand. Bajaj later diluted the core positioning of the brand by launching a 125 version of Platina which again cannibalized XCD.

The list of failed brands in the Bajaj's portfolio is increasing every year. The ET article also cites the imminent death of Platina in the future.

I cannot understand where Bajaj Auto is running so fast. The company in a race to overtake Hero Honda in volume sales is killing itself. The rapid launch of new products and product failures are going to hurt the company in future. Now will an XCD/Caliber/Wind customer try their hand on any new Bajaj two wheelers ? How will we ever know when company will stop producing that brand.

XCD could have survived if the company gave time for the brand to settle down, rectified its flaws and invested in the brand. Out of the 2 years that the brand had, the investment on the brand may have stopped after one year.

Bajaj is still putting lot of stake in anchoring their products on the CC( Cubic capacity). My personal opinion is that for a customer CC is irrelevant. They will buy good products and not CC. Too much focus on CC has created lot of problems for Bajaj two wheeler brands.

Related Brand
Bajaj XCD

Marketing Strategy : The Logic of Brand Extensions

The Logic of Brand Extensions

Originally Published Here at Adclubbombay.com

Brand extension is a strategy where the company uses an existing brand name to launch products in the existing or new category. This brand extension strategy is often the most used growth strategy for brands by marketers. The popularity of this strategy has given rise to a host of discussion among the academic and professional community about the efficacy of brand extensions.

Why Marketers go after brand extensions?

Exploiting existing brand’s equity

Brand extensions often are perceived to be a less risky strategy for launching new products. The logic behind using the existing brand name for new products is to exploit the brand equity of the existing brand. Recently Sundrop which is a famous sunflower oil brand launched Sundrop Peanut Butter. The use of the prominent brand in the new product is expected to trigger trial usage by the consumers of the parent brand.

Costs of launching brand extensions are low

Compared to launching new brands, brand extensions are perceived to be less costly to launch. The reason is that both the channel members and the consumers are familiar with the brand. Hence the extensions are tapping on the existing awareness of the brand. The marketers can thus use their budget to increase the trial usage rather than spend money on creating brand awareness. In one way using existing brand names helps marketers to skip one step in their brand building process.

Experiment

Brand extensions also prompt marketers to explore new categories for the brand. Since the cost of launching brand extensions are lower compared to a new one motivate the marketers to leverage the existing brand’s equity into new categories.

Expand

Brand extensions also expand the scope of the brand. Ponds, which started off as a cold cream, is now an umbrella brand that endorses a wide range of beauty products. Dettol which is a highly successful antiseptic lotion brand has now a basket of products ranging from soaps to plasters. The brand extensions increase the scope and turnover of the brand and thus give more revenue to the firm.

Brand Extensions have its own set of negatives. Brand extensions are based on some assumptions which if gone wrong can affect the parent brand’s equity.

One assumption in brand extension is that consumers like the brand hence will like all the products endorsed by the brand irrespective of the categories. The second assumption is that the parent brand’s equity can be leveraged across various categories. Hence brand extensions will have similar positive equity as the original brand.

Critics argue that brand extensions will dilute the original brand’s equity. Sometimes there is a proliferation of extensions that dilute the parent brand’s positioning. So when a soap brand extends itself into shampoo, the core identity of the brand as soap is now irrelevant. If not clearly defined, the parent brand may lose its product associations in the consumer’s mind.

Another danger in brand extensions is the positioning confusion. For brands which are extending to related-categories are better off in positioning because the brand can continue with the same positioning when extending to related categories. But when the brand is moving to unrelated categories, the same positioning may not work in the new category. A change in the positioning for brand extensions will have adverse impact on the original brand’s position.

However, brand extension is an invaluable strategic tool for marketers looking for expanding the scope of the brand. Marketers have to get their basics right before embarking on the extension strategy.

To Extend or Not to Extend

This may sound too basic a question but every marketer should ask this question about the brand.

“Whether this brand should be extended in future?”

The future of the brand lies in this question. For a new brand, the decision to extend or not to extend in future will have its implication in the selection of brand name and positioning. A brand name which is highly associated with a product feature or category will have limited scope for future extensions. The positioning strategy will also have to be crafted in a manner which will facilitate future brand extensions. For an existing brand, this question will bring about a need for a change in the current positioning strategy.

Have a Vision

The most important task for a marketer looking for brand extension is to have a vision for the brand. Brand extensions as a short-term marketing strategy will be damaging for the parent brand. The development of a long term vision starts with the critical questions as to whether the brand should be extended or not. Once the marketer has decided on the extension, he has to chart a growth path for the brand. The vision involves deciding whether the parent brand should be used as an umbrella brand or as an endorser. Should the brand be used for unrelated extensions or limited to a category?

The careful planning of the brand’s future will eliminate lot of confusion in terms of positioning, category decisions etc.

Line Logic

Marketers should be clear about the impact of a line or brand extension on the product line of the company. Authors John Quelch and David Kenny in an Harvard Business Review article – Extend Profits Not Product-lines suggest that the company sales officers should take a line logic test where they should be able to explain in one sentence, the strategic role played by each SKU (stock keeping units) in the product line .The consumer should also be able to understand the how these extensions fits his/her needs.

Focus

The biggest threat of brand extension is the possible loss of focus on the parent brand because of extensions. Brand Extensions are opportunities for growth. While extending, marketers should not forget that the extensions are based on the equity of the original brand. Any change in the marketing mix strategy of the extensions will have an effect on the parent brand. This strong relationship between the extensions and parent brand should be taken into consideration during every brand promotions.

Lost Opportunity

Every brand extension is lost opportunity to build a new brand. While extensions take away lot of pressure from the marketers, one should have a clear understanding about the potential loss of an opportunity to build a new brand.

Brand Update : Slice

This season, Slice has come out with another campaign further reinforcing the highly successful positioning of ' Pure Mango Pleasure '. Slice has found a perfect match in the brand ambassador Katrina Kaif and the ad agency has extracted maximum from the celebrity.

Watch the ad here : Slice

I am not a spoil sport but when the celebrity and the brand gel too much the inevitable question arises as to " What Next". When I raised this question in one of the forums, lot of my ex-students asked me this very important question " Why should you ask What Next ?" . If things are working perfectly fine, why be a cynic ? There will be many other celebrities who will be taking place of Katrina . Frankly I did not have answers for that .

When we look at branding as a long term strategy, it is important to look at all brand associations on a long term perspective. Slice had hit upon a terrific idea of " Pure mango pleasure " and Aamsutra concept. The brand also found a perfect match in Katrina Kaif. There is an intense chemistry between the positioning concept and the celebrity now. It reminds me of the Accenture - Tiger Woods relationship.Accenture consciously built that singular pivotal association with Tiger Woods that landed up in trouble. Now Accenture had to break the earlier association built over a number of years and getting some equally good creative campaign for the brand is not going to be easy.

The lesson is that brands must have a plan to take the concept forward independently. I assume that marketers at Pepsi may have thought about it. Marketers should feel jittery when there is too much association with any celebrity for that matter. Be it Akshay Kumar for Thums Up or Katrina for Slice.

For now, Slice is on a roll. Insiders say that the brand has grown more than 300% in Kerala alone in the last quarter.
Great Going

Related Post
Slice

Wipro Smartlite : Savings Account

Brand : Wipro Smartlite

Company : Wipro

Ad Agency : Orchard Advertising

Brand Analysis Count # 448

Wipro Smartlite is an interesting brand. Interesting because of the patience with which the company is nurturing the brand and also for the consistency of positioning which is now a rare feature in the current Indian marketing world.

Wipro Smartlite was launched in 2001 marking the foray of Wipro Lighting division into the CFL market. After 9 years, Smartlite is India's fifth largest CFL brand. The Indian CFL market is estimated to be around Rs 700 crore and is expected to grow fast because of the current trend towards energy efficient products. The lighting market is dominated by the incandescent bulbs which sells around 90-95 crore units every year.

The CFL market was growing slowly because of the significant price differential compared to incandescent bulbs. While the ordinary bulb costs Rs 10-15, CFL used to cost between Rs 110-115. This huge price differential made CFL to be considered as a luxury rather than a value for money product.

The entire CFL market become the center of focus in the last couple of years due to strong campaign from Government and NGOs. Despite the higher cost, CFL is considered to reduce the electricity consumption to a large extent thereby provide continuous savings . Such campaigns increased the awareness of utility of CFL among the general public.

Wipro Smartlite has positioned itself on the savings platform. The brand has adopted the tagline " Savings Account of your house " and uses the benefits like (a) Saves 40% electricity (b) lasts longer (c) better lighting ,to reinforce the positioning . The brand has roped in celebrities like Paresh Rawal and Jayaram in its campaigns.

Watch the campaign here : Wipro Smartlite

The CFL market faces the issue of cheap imports from China. The market is full of cheap low quality China CFLs which are sold at a ridiculously low prices. The margins of these China CFLs are so high that retailers push these products to the consumers.

The next few years will witness a tremendous growth in the CFL market in India. Consumers are becoming more conscious about energy saving products and are convinced about the value proposition of CFL. The high profile promotions of players like Wipro, Philips, CG , Havells etc will further expand the market for CFL.