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MM 6016 Branding and Marketing Communications

INDIVIDUAL MIDTERM EXAM

29111311 Haidir Afesina (FEZI) MBA Executive 46


MASTER OF BUSINESS ADMINISTRATION SCHOOL OF BUSINESS MANAGAMENT INSTITUTE TECHNOLOGY BANDUNG 2013

1. What are your favorite brand characters? Do you think they contribute to brand equity in any way? How? Can you relate their effects to the customer-based brand equity model? Aaker (1994) defined a brand character as a figurative sign whose function is to represent a brand. Mickey Mouse and Walls Paddle Pop`s Lion are my favorite brand characters. Table 1. Brand Characters Character Mickey Mouse Disney Brand Personality Funny, cheerful, smart Paddle Pop`s Lion Walls Adventurer, brave Product Merchandise Movies & Show Ice Cream Paddle Pop Toys The brand characters are definitely contributed to brand equity. It helps to create awareness and association. Accordingly, understanding brand equity is about understanding customer value that provide marketers with a vital bridge from their past to their future (Keller, 2008). Those brand characters above are frequently used to target young consumers, especially children. For cognitive reasons, a brand character is a brand element that is all the stronger when the child is young. The characters have strong familiarity with the brand character, how the character is presented, and the childs knowledge level. Its logo, shape and color are easy to recognize and recall, while its images have a strong and unique association. If customers perceive a brand as having a favorable and strong image, it could positively influence their likelihood of choosing that particular brand rather than competing offerings. Therefore the brand character has huge effects to the customer based brand equity model. Keller (2008) looked at consumer-based brand equity strictly from consumer psychology perspective and defined it as the differential effect that brand knowledge has on consumer response to the marketing of that brand. Children like brand characters because they tell stories through their narrative settings. Consequently, the strategic decision to use a brand character requires the company to invest heavily in advertising in order to build a familiarity

link between the child and the character. In addition, the impact of brand characters on packaging is on childrens purchase requests. When the brand character is presented in a narrative on the packaging, it influence on purchase request increases and create loyalty (relationship) as well in some cases. Thus consumer response to the marketing mix of a brand can be translated at various stages of the purchase decision-making sequence, such as preference, choice intentions and actual choice. Disney has lots of brand characters, but Mickey Mouse is endorsed to be an icon with its smart, funny and cheerful. It has lots of tv series and its famous children playground i.e. Disneyland. Walls created adventure story on its advertisement and movies using its Lion character i.e. The Adventure of Paddle Pop. Its narrative adventure function is also generating emotional experiences into an imaginary world for children. Thus brand equity is more subjective and emotional. It is the intangible assessment of a brand, beyond its objectively perceived value. So it is important for brand managers and market researchers to know how their brand contributes to the overall product experience. Figure 1. Customer Based Brand Equity (CBBE) Pyramid

Table 2. CBBE Model Stage Salience Disney Mickey Mouse High awareness Most commonly recalled Walls Paddle Pop Lion High awareness a Most commonly recalled a pioneer More breadth than depth Modern adventure Unique Fun Innovative taste Community

legendary cartoon in the world. on ice cream character More depth than breadth Imagery Classic heritage

Performance Luxury & premium price Feelings Judgments Resonance Exclusive High quality stories Special connection Merchandise collections

The Mickey Mouse of Disneyland CBBE pyramid is equally strong on the left hand and right hand side. It is also strong from bottom to top, enjoying the highest brand awareness of any cartoon brands. While the Walls Paddle Pop`s Lion CBBE is stronger on the right hand side (imagery and feelings) than the left hand side. However it has the highest brand awareness of any ice cream competitor on its segment. The brand characters are helping to create a customer loyalty and develop the brands development.

2. Pick a category dominated by two main brands. Evaluate the positioning of each brand? Who are the target markets? What are their main points of parity and point of difference? Have they defined their positioning correctly? How might it be improved? Some of two brand-dominated categories include: Ketchup (ABC and Bango)

According to SWA, Ketchup consumption is more than 130 million liters or more than IDR 3 million and consumer is fanatic with the flavor. Categorized as low involvement products, the competition of soy sauce ketchup in Indonesia is highly competitive, especially from the biggest two big brands, ABC from Heinz ABC Indonesia and Bango from Unilever Indonesia. Heinz ABC is the first entry in national market and become a market leader with loyal customers in the category. Bango, on the other hand is the successful new player that boots its sales to date, have a strong customer base able to defeat ABC as top brand in 2011 (figure 2.1). In 2012, both Heinz ABC Indonesia and Unilever Indonesia strengthened their leading positions in sauces, dressings and condiments, with value shares of 22% and 18% respectively (Euromonitor.com). Figure 2.1 Top Brands Index

Source: Frontier Consulting Group

Since acquired by Unilever Indonesia in 2001, Bango is aggressively entering the market by positioned as the real ketchup that provides traditional taste quality. Unilever, pushed the market through distribution and evenly, and pull the market through the promotion both of above the line and below the line. It targeted the real ketchup lovers and households because

most Indonesians still value the tradition of eating at home. It is thought to maintain closeness between family members, while homemade cooking is perceived to be healthier compared to take-away food or dining out. However, the presence of cooking programmed on television, in addition, is sustaining the home cooking tradition. Accordingly, Bango has mission to preserve the culinary in Indonesian heritage through its programmed. Therefore Bango established its brand building and loyalty through the Festival Jajanan Bango, Piknik bersama Bango, social networks, and partnerships with communities to support black soybeans farmers. This aims to build awareness over the long-term, through promoting Bango to participants, street food stall owners and end consumers who visit the event. Heinz ABC Indonesia and Unilever Indonesia are continuing to compete aggressively within the soy based sauces category. After realized it market share has declined for the last three years, Heinz ABC launched the ABC Black Gold product. It is covering all consumer segments and conducting tasting events, as well as cooking competitions. ABC is also created ABC Chef on tour and ABC Academy culinary by partnering with International Chef. ABC would like to position itself as the expert that act as food advisor. Psychological aspect to influence consumer that ABC soy sauce is being used by international chef worldwide. Aside from television advertisements, Heinz ABC regularly conducts cooking demonstration in modern retailers and promotes its products in printed media, digital media and through social networks. A cooking competition held in December 2011, ABC Masakan Andalanku, drew considerable public attention. The market size of ketchup industry is huge. However it is saturated market. Thus every manufacturer is trying to grab each other consumer. Heinz ABC brand is not strong anymore. It can be seen that Heinz followed Bango strategy. Therefore in order to retain its market share, Heinz ABC acquired many of local ketchup in every region who has its own loyal customer. Both of ABC and Bango run successful integrated marketing campaigns, trying to build share primarily in soy-based sauces. Hence, Bango is able to engage emotionally to consumer rather than ABC. According to Nielsen media research in 2009, Heinz ABC spent IDR 22 million for its marketing budget while Unilever spent IDR 23 million for Bango. Bango chose to embrace wholesale-wholesale groceries to distribute. In contrast with ABC strong distribution channel that is more widely distributed in the wholesale food. Similarly, the strategy of Bango in embracing restaurants and street vendors who became one of the

largest markets for this category. SWA (2009) stated that Bango embraces trader or Indonesian food restaurant, while Chinese restaurant is the dominance of ABC. The price of Bango is higher than other competitor as it tries to sell the quality of black soya beans as its differentiator. However, sauces are regarded as basic needs and most Indonesian households in major cities have sweet soy sauce in their kitchen to enrich the flavor of their dishes. So it gives the price sensitivity of consumers. Bango come up with smaller pack sizes, 14ml and 37ml, thus making the product affordable by lower income consumers and those living in rural areas. Answering strong demand, manufacturers compete to provide a broad range of brands with different packaging types and sizes. Plastic bottled soy sauce is commonly available at a lower price compared to glass bottle presentations. In addition ABC has varieties of ketchup product lines, while Bango mainly focused on sweet soy ketchup. Today the increasing of health concerns, especially among higher-income consumers, is set to encourage manufacturers to provide healthier choices. ABC and Bango should be able to more health-positioned ketchup products being made available at a more affordable price, thus it become a competitive advantage. As a market leader, ABC has to maintain its position and do not follow Bango strategy. ABC also has to be able to create its own rules, through its standard quality, distribution channel and customer relationship management. Table 2. The ABC Black Gold vs Bango ABC Owned company PT Heinz ABC Indonesia H.J. Heinz Co Ltd acquired PT ABC Central Food Industry in 1999 Tagline Positioning statement Segmentation Target market Points of parity The Richer Flavor The Real Expertise Mass market Hotel, catering, restaurant The Real Ketchup Together with bango preserve the Indonesian culinary heritage Middle up Households, ketchup lovers Street vendors Soya based ketchup Bango PT Unilever Indonesia Unilever acquired PT Anugerah Setia Lestari in 2001

Fine ingredients Quality of Indonesian taste Pricing Points of difference Strong flavor during cooking Color change to black gold during cooking Average pricing
Sources: www.kecapblackgold.com, www.warisankuliner.com

High quality black soya beans ingredients 100% Indonesian traditional taste Premium price

Figure 2.2 Soy Sauce Shelves at Carrefour

Source: Personal Picture

3. Take a trip to supermarket: Evaluate the in store marketing effort. Which categories or brands seem to be receiving the biggest in store push? What unique in store merchandising efforts do you see? I visited Carrefour Paris Van Java Bandung on Wednesday afternoon and did some observation regarding the in store marketing efforts. The findings are: Space management Market leader product that mostly expensive positioned at the eye level while the cheaper are typically on the bottom shelves. The discount products are at the end of aisle so that customer would notice. Store ambience The shelves designed and decorated with banner, colorful sign for the awareness. Range of product Some brands are dominating the shelves with their range of product put in one area. Stock availability Fully stocked and well arranged. Private label Private label positioned next to the market leader at the same eye level position. In addition, the color of the product is similar. Price tag Mostly the prices are written in odd number i.e. IDR 8900 vs IDR 9000. It definitely plays psychological effects. IDR 8900 still register as in the IDR 8000 range rather than IDR 9000. Shopping cart Carrefour do not provide basket anymore, it fully shopping cart instead. Brochure or catalog The brochures or catalogs are being put next to the shopping carts and at the entrance. The first page will be dominated with the private label promotion.

From my observation, personal care categories are receiving the biggest in store push. There are two brands, which compete on the same section. They are Loreal for Men and Nivea body lotion. The brands are having its special space in the middle of the section. The space or counter is being used as a display of its varieties. Also having sales promotion girl walking around with the products, one for Nivea and two for Loreal. The sales persons are approaching customer who come to the section and offering the products. Inside the store, their shelves are being decorated with small banner. There is no unique store merchandising effort besides a discount for Loreal and deal for Nivea, buy 500 ml body lotion get a 150 ml. Observe the extent of private label brands. In which categories do you think private labels might be successful? Why? Consumer goods segment especially basic groceries needs might be successful for private label in the future: 1. Commoditized such as rice, bakery products, salt, sugar, oil, etc. 2. Fast moving products such as tissue hygiene products (paper towels, kitchen towels, diapers, cotton buds) 3. Frozen food However, the future growth of private label packaged food will largely depend on the ability of both retailers and their contract suppliers to remain at the forefront of innovation to further build up consumer trust, while still keeping prices competitive in order to seize consumer. A rise in a particular brands prices may shift these consumers preference to other brands in order to benefit from a more affordable price. Many low and middle-income consumers became more selective in their shopping, with an increasing preference for more affordable brands, and quality coming second (functional minded). According to Nielsen survey, 43% Indonesians are seeing private label product as alternative and buying especially those perceived as commoditized items (figure 3.1). However, Nielsen

survey also found that the share of private label in Indonesia is still low i.e. 0.7% (figure 3.2). Since 2010, many hypermarket chains have introduced their own private label, such as Super Indo 365, Carrefour Discount, Yogya YOA and Hypermart Value Plus. In 2011, Carrefour was the most prominent private label player in the country, with the widest range of products (www.thejakartapost.com). All of private label products are offered at very affordable prices, instead of just below market prices. In addition, leading retailers regularly advertise their private label packaged food in their respective catalogues and weekly advertisements in newspapers. They also have the power to place them more strategically in terms of shelf location in their outlets, most of the times its placed next to market leader product (figure 3.2). According to SWA, the demand of Carrefour basic groceries needs private label product increased 40% during Idul Fitri 2012. Despite recent advancements, private label packaged food still struggles with a lowquality image, especially in sectors where brands have established reputations. In order to surpass the stigma of being cheap and poor quality imitations of branded items, they should: 1. Innovation National brands are innovation oriented. Thus private label has aggressively take effort to its product development innovation. For instance having organic product that positioned as healthy choice. So that private label not only offers economic value added but also innovative product as its competitive advantage. 2. New segmentation In Indonesia, the raising of middle class segment is promising despite the majority remains in the low-income group. By having private label in different segments, such as middle middle class who is value conscious, or upper middle who is innovation search, private label has its own added market and able to compete with national brands in terms of quality. It will not depend on economic downturn or seasonal effect.

Figure 3.1. Asia Pacific Perception of Private Label

Source: Nielsen Global Private Label Report March 2011

Figure 3.2. Private Label Share in Total Market in Asia

Source: Nielsen Global Private Label Report March 2011

Figure 3.3 Carrefour Private Label Products