Importance Of Brand Leadership For A Fmcg Brand Marketing Essay

Importance Of marque Leadership For A Fmcg flaw Marketing EssayThe important objective of this report is to understand the importance of flabby touch leading for a FMCG instigator. The report develops further by analyzing the previous literature on Branding, Brand leadership, and Brand Loyalty which is implied to a FMCG trademark. Fin altogethery, it underpins the Brand value which en up to(p)s Irn Bru to frame Brand Loyalty.1.2 ObjectivesTo range the Brand Leadership model used by Irn Bru.This is based on Aaker et al. (2000) tick off leadership model an analysis would be carried out in order to comp be the model with Irn Bru operations.To identify consumer motives behind purchasing Irn Bru.By the swear out of a devised survey questionnaire, consumer behaviour toward purchasing of Irn Bru allow be analysedTo go over why truth develop from consumer perspective in FMCG marketplace.Academic literature and dimension of crisscross loyalty testament be used to investiga te this objective. strain group will be brought under practice to indentify these factors.1.3 BackgroundWith an increase in the take of competition, and companies crack more than matchless similar product into the market, it has come necessary to defect the product in order to antitheticaliate it from others. Brands play an important role in modern society, and allow products to be easily place within the market. The invention of seting is used in many aspects of human life i.e. it could be a product, religion, sports, culture etc. As companies argon expanding globally, the concept of branding has been recognised as an utmost important factor. Not only to attract set target markets, but alike to attain brand leadership. The main aspects of branding include shiting a successful brand, differentiating amongst its competitors, and maintaining the brand image in the market. Due to the intensity of the modern market, there has been increase in the outlay on marketing brandin g is a major aspect (Aaker, 1991 Simmons, G. 2007). Generally, a brand is considered as a product, service, a presence or personality which rides on the mind of consumers. Branding, according to De Chernatony McDonald (1992), has been characterized as the process of creating value by offering convincing and constant customer experience, which in turn satisfy their necessitates and wants and hold off them coming back. Organisations build started referring to themselves as a branding organisation once customers affirm realized the value of a brand.With diversity in the market, it has become super important for companies to create and maintain high brand sense and identify how it varies from that of the competition. Internet has proved to be a medium that enables consumers to explore the benefits provided. The increase tote up of internet users indicates that global brands can be viewed, and interacted from a single heading. Also, the increasing number of online purchases hy pothesises the early of brands. Since more than one gild manufactures similar products, the question that arises is which brand is a market leader? Brand leadership has opened a bracing gateway for the brands who seek to be on the top of the market. Brands can be an important asset for the company, and in the coming(pre titular) they will be an increasingly prominent feature of business dealings.AG Barr was founded in 1830 with the foundation of Robert Barrs cork-cutting business in Falkirk. In 1875, his son diversified the company into aerated water production, and in 1887 operations were extended to Glasgow. The Glasgow-based company was re-named AG Barr in 1904. Its core brands included Irn-Bru, Tizer and Orangina, the latter(prenominal) of which is produced under licence from Pernod Ricard. The company also breaks Lipton on behalf of Unilever Bestfoods in impulse and cash and carry outlets. In 2001, the company established an agreement with Pepsi Bottling Group to distribut e Irn-Bru in Russia. The company will continue to focus on its core brands and markets. High brand loyalty for carbonates brand Irn-Bru has seen it maintain sales in a declining market celestial sphere The Companys main strength lies in its Irn-Bru brand, which shows no sign of a sales decline and seems unaffected by the general switch to ingathering/vegetable juice amongst carbonates consumers. To a certain extent it is possible that consumers of Irn-Bru atomic number 18 not much concerned with the health issue whilst, comparing to other change brands. In order to meet the necessarily of their potential consumers, Irn-Bru has launched a low-calorie version for the consumers preferring diet carbonated assimilateing. The main strength of Irn-Bru is the inclination of consumers toward Scotlands other national drink. The slaying of Irn-Bru in Scotland is astonishing, despite the economic d receivefall. The catchy advertisements and the tag line Phenomenal has continuously portra y the tradition and the uniqueness of the Irn-Bru. AG Barr has also pursued a strategy of diversification through acquisition the company bought Strathmore mineral water in 2006 and acquired both the TAUT sports drink range and the exotic juice drinks shaper Group Rubicon in 2008. (GMID, 2009).Rationale for the topicharmonize to Aaker et al. (2000), the emerging paradigm of strategic brand leadership is replacing the classic, tactically oriented brand management system. Leadership has become an important aspect of the brand, as it leads to innovation. A key element of brand leadership is brand vision. The ability to see the future of the company through the customers eyes is important, as it sets into motion a long-term strategy for the brand. It is resilient to discover how consumers perceive the product and what their view points are, as brand value is highly based on it. Measuring loyalty towards a product is equally important as it will enable Irn Bru to reflect on their str ategies.Chapter two-Literature Review2.1 Brand and the conceptsA brand is not a name. A brand is not a spatial relationing statement. It is not a marketing message. It is a promise made by a company to its customers and supported by that company. I may invite intelligent agents that can go out and baste pages of reports on e really camcorder on the market, but I dont have time to read them. Ill buy Sony (Sterne, 1999 cited in Rowley, J. 2004). Due to the different characteristics of product, brand enables to tag one brand from another(prenominal) ( Riezebos, R. 2003). One of the main concerning areas in the field of marketing is branding. As brands have grown beyond the national boundaries, it has become vital to manage and operate them with a strategic view. This will enable companies to focus on the specific brand, rather than company as a brand. As the level of competition has risen, companies tend to focus on their branding strategies. A head derived strategy will lead a br and to attain high awareness and success in the market niche. As defined by Pickton and Broderick (2001), branding is a strategy that helps the company and their products to leverage in to the market and it also build brand value for the owners of the brand and also the consumers. Whereas, Randall G (2000) has a presented a different approach Branding comprises of all innate strategic process deviation within the company it is a part of marketing, but not restricted only to marketing department. Based on the benefits offered by a brand, the consumers form a purchasing decision, and evaluate it depending on their needs and wants. According to Temporal (2001), as the importance of branding is increasing, fast moving consumer goods industry is highly benefited by these strategies. Companies have more than one product in the marketplace, and by viewing the soaring profits in this sector. Companies have tried to differentiate it from their rivals, so that consumers find it blowsy to p urchase. Henceforth, brands provide guarantee package to the consumers in terms of value, quality and reliability. Consumers will generate loyalty toward a brand, if the promised quality, value and reliability are full field. As identified by Murphy (1991), Branding adds value to the overall product, and from consumer perspective it provides a self confidence. However, Rowley (2004) has argued by stating that brands not only consist of value, and it also acts an schooling hub. This enables consumers to eradicate the time spent on searching a specific product offering.2.2 Brand EquityThe goal of the brand leadership paradigm is to create solid brands. Brand virtue is defined as the set of associations and behaviour on the part of a brands customers, channel members and parent corporation that permits the brand to net greater volume or greater margin than it could without the brand (Wood, 2000). Appendix 1 depicts, according to Aaker (1991) major assets of a company can be brought in concert into flipper main types Brand Loyalty, Brand name awareness, Perceived quality, Brand association, and other proprietary brand assets such as copyrights, patents, trademarks. Appendix 2 shows the brand equity chain, where the description provided on the brand leads to the strengthening the brand and this results in creation or building of brand value. Keller (2003 cited in Atilgan et al. 2005) defined Brand equity from a customer based point of view as Customer based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favourable, and unique brand associations in memory. One of the main reasons for a company to brand their product is to attain organisational goals of attracting and creating amongst their consumers by provision of cost expeditious products, as it will aid company to acquire high margin of profit (De Chernatony McDonald, 1998). Strong brands are the core products of the company and i n order to solve a recognition and financial reward, it is important to build a successful brand.Appendix I Aakers theory on Brand EquityAppendix 2 Brand Equity chainSource Wood (2000)2.3 Brand LeadershipLeading brands are perceived to be relevant, unique and compelling. They inspire customer loyalty and enable organizations to charge price premiums. They increase bargaining power with business partners, make it easier to hire and retain talented employees and provide organizations with clear strategic directions and platforms for future growth. Together, these lead to well above average financial performance and a market valuation that far exceeds book value. (Aaker, 2000) Leading brands are organizational assets that moldiness be preserved, enhanced and leveraged for the benefit of their organizations. Aaker Joachimsthaler (2000) developed a Brand Leadership model which will enable companies to build strong brands for the future. It comprises of quaternity challenges which an o rganisation should consider.2.3.1 Organisational contendEvery organisation should structure and process their functions that will lead them to be a strong brand in the market place. A clear organisational hierarchy should be made so that brands are not at the mercy of ad hoc decisions made by those with no long term interest. When a company increases its portfolio, and extends the production line, all(prenominal) manager from a different production line should provide a common set of inputs, outputs and knowledge that will benefit the organisation. The inter-communication will enable the sharing of insight, experience and brand building initiatives. As companies are going international, there lies a trend which companies struggle to confront with, and organisational challenges are raised. With the increasing competition for talent growing amongst business networks, current economic activities rationalise the challenges which are created within the firm. In order to gain competiti ve advantage, change in organisational strategy is important as response to market need is important.2.3.1.2 Brand StrategyStrategies are always used to gain sustainable competitive advantage, which could reflect from any part of the organizations operation. The marketplace is the evaluator of this advantage. Brand strategy is the process whereby the offer is placed to evoke the perception of advantage (Arnold, 1992). Almost all the features of Brand Management are driven by the overall brand strategy otherwise a company might be leading with a entangled perception and image of the brand. Strategy gives focus and direction to brand management and provides the platform that enables brand managers to gain consistency in all their brand cogitate activities (Temporal, 2002). According to Reizebos (2003), a brand strategy is based on two parameters differentiation and added value. Differentiating refers to the practice of trying to establish the difference between a companys own produc t and that of the competitor. This signifies that the intention of the brand strategy has a competitive character. By targeting the differentiation strategy, the firm tends to deliver a brand competitive advantage. The other fundamental trait of a brand strategy is added value, which refers to the fact that a brand has more value for consumers than the bare product. In order to create such an added value, the brand must(prenominal) be meaningful for the consumers (Reizebos, 2003). Appendix 3 shows different branding strategy approaches adapted by brands, and their advantages and disadvantages (Drummond Ensor, 2001).2.3.2 Brand ArchitecturePertomilli et al. (2002) defines brand architecture from a company perspective as a combination of strategies which include managing, organising and operating in to the market with their brands.2.3.2.1 Branding in FMCG sectorBranding plays a world-shattering role in FMCG sector, as there are myriad of products in the market. Due to presence of h igh number of products, it acts a powerful instrument in creation of differentiation and higher store presence. Since the competition is intense in this sector, it is highly important for firms to make their brand identifiable from others. Packaging, graphics and promotional activities such as advertisement is used to attract consumers (Ellwood, 2002). Brands operating in this sector are highly cost efficient and production is carried out in masses. A high capital is required to establish production of FMCG brand, as production cost is high such firms enjoy the benefits of economies of scale. As identified by Moffett et al. (2002), products are not confined within a region or state of matter. With increase in globalisation, brands can be found in any part of the world. Companies need to consider the global implications of marketing and try to gain brand leadership in the marketplace. For the FMCG sector, publicise plays a pivotal role and is the best channel to move on with the t argeted audience. Moreover, with the advancement of internet and information provided on it, consumers tend to opt to review product information online before purchasing it. With high competition and many brands offering same product quality, it is very tight to generate brand loyalty in FMCG sector.2.3.2.3 Benefits of Branding in FMCG sectorA successful brand is one which evokes the consumers by creating and sustaining a strong, positive and lasting pattern. (Fill, 1999). For a FMCG company, it is important to create trust towards its brand in minds of consumers. This trust is being built by providing give way quality and satisfaction. Once the trust is created, it subjects to the top most choice of the consumers mind set and leads to re-purchasing actions. The approval of customers signifies that branding, from consumer perspective, is a method which reduces the time taken for decision-making and related perceived risk of the product. This shows that the brand name provides inf ormation about the quality, price, and attributes of the product without requiring the consumer to undergo the time consuming process (Fill, 1999).2.3.2.4 Branding in the soft drink sectorWith the fierce competition in the soft drink industry, firms are fighting for market share. Companies should reflect upon their branding strategies, as they are of paramount importance. Companies should extend their brands to miscellaneous market niches in order to meet the needs of the consumers. The scope and opportunity in this market is high, as products can be differentiated by infusing different flavours. It would be appropriate to emphasize that the value which the brand adds to the product is intangible, however, its presence is undeniable and with immense significance. Considering the characteristics of soft drinks, branding is an ideal marketing tool which allows companies to position and differentiate between the offered product and its incremental value.International product portfolio analysisThe Boston Consulting Group (BCG) originated an early version of product portfolio analysis. The BCG version classifies a companys products into four categories stars, cash cows, problem children, and dogs. The classification is based on market share and market growth rate. The best product portfolio for one market is different from that of another. harvest-home A, for example, may be a star in country X, and a dog in country Z. Individualizing the use of portfolio techniques for each country will help define different product portfolios for each foreign market. Although portfolio analysis of products for international sale is relatively new, it can assist the company in determining how to divvy up resources among different markets.Positioning a new product/brand depends upon the firms ability to describe product attributes that will generate a flow of benefits to buyers and users. The international seller planner must put these attributes into bundles so that the benefi ts created match the special needs of each targeted market segment or subculture. Product posture then is viewed in a multidimensional space, commonly referred to as theperceptual space or product space (Johanson, 1985). In terms of perceptual space, a particular version of a product is graphically represented as a point specified by its attributes. Competitors (local and international) and other products are similarly located. If points representing other products are close to the point representing the new product, then these are products similar to the new prototype. If the prototype is positioned away from its closest competitors in the world markets and its positioning implies positive features, then it is likely to have a significant competitive advantage. This mapping process is appropriate for each foreign country/market segment contemplated.2.3.3 Brand identity2.3.3.1 Competitive psychoanalysisAccording to Cohen (1988), competitive analysis permits the understanding of di fferential competitive advantage, as well as the comparative advantages in relation to competitors. Intense competition requires operations to be carried out with maximum efficiency. The key to this is large-scale production to reduce the value of fixed costs per bottle. With increasingly sophisticated vehicles and rising investment costs, the optimum economic scale increases (Rees, 1999).Industry Analysis Using Porters Five ForcesAccording to Besanko (2007), in order to devise and execute successful strategies, a firm must understand the nature of the markets in which they operate and compete. In 1980, Micheal Porter developed five forces to analyse the extent of competition. Understanding the nature and strength of each of the five forces within an industry assists managers in developing the competitive strategy of their organization. (Campbell D., 2002, p.134)The Five Competitive Forces for Irn BruA structural analysis of the UK carbonated soft drinks industry examines the tresp ass the various forces have on this industry. Firms operating in the carbonated soft drink market in the UK, face tough competition from the rivals. Every soft drink organization should review its rivals products, analyse any potential new entrants in the market, understand the ingest of substitute products, review the consumption pattern and demand amongst the buyers, and identify appropriate suppliers. Porters five force model is used to analyse the magnitude of competition. The intensity of competition within the industry is quite high, with regular advertising wars taking place on the other hand, sales are increasing and the products are differentiated. There are high barriers to limit entry such as the high capital required for production and distribution, increasingly advanced and specialised technology, lack of access to distribution, and strong consumer loyalty to recognised brands.A final, but very critical, point to bear in mind is that the forces themselves change over t ime. Sometimes in a predictable way, other times not. However, it is usually possible for the firms to have some influence over these changes. If no action is taken to counter the forces, it is extremely likely that the forces will grow stronger over time. Each firm needs to consider the actions that it could take to counter the forces, or position itself in such a way as not to face their full impact. For example, merging with a rival not only eliminates a competitor but also reduces the number of competitors in the market as a whole, something that can benefit all rivals by reducing competitive intensity.Threat of RivalryIn the UKs soft drink industry, Irn Bru faces the greatest competition from its arch rival Coca-Cola and Britvic soft drinks (Appendix, X). Their presence all round the globe shows their potential strength, and demand in the consumer market. As can be seen from the table, Irn Bru has made constant strides in an upward direction by gaining market share.Manufacturer s retail value brand shares in carbonates, 2006-08200620072008 (est.)% changem%m%m%2006-08Coca-Cola GB, of which1,296651,302651,334662.9 Coca-Cola934479424796848+3.6 Fanta127612461156-9.4 Schweppes96510251116+15.6 Dr Pepper613613653+6.6 nance573563603+5.3 Lilt211171151-28.6Britvic Soft Drinks, of which277142801430515+10.1 Pepsi215112241125212+17.2 7-Up241281301+25.0 Tango382281231-39.5AG Barr Irn-Bru824864915+11.0Other965945884-8.3Own-label239122351220010-16.3Total1,9901001,9971002,018100+1.4Source Mintel, 2009Loyalty towards brand names is another factor to measure brands performance. Brand loyalty in the soft drink market is another component which Irn Bru has to deal with from its rivals. Coca Cola and Pepsi are well established brand names all around the globe. Due to high brand awareness and product availability, they attain high market share. The presence of Irn Bru in the international market is very limited. Perhaps, due to its authenticity, it is famous in Scotland, and h as struggled in other international markets (e.g. Russia, South Africa, Australia, America and Canada). The soft drink industry is mature, with nominal current growth and limited ability of firms to increase revenues at the pace they may have become accustomed to in the past. Of course, new markets, such as in Middle East or Southern Asia, may result in major new growth opportunities. The current makeup of the industry line-up leads to higher levels of competition. On one hand, key rivals offer different products, but similar in size, which increases competition. Differences in companies philosophies, cultures, and histories result in varied strengths and litenesses, and lead to different strategies in pursuit of competitive advantage the overall predictability of the industry development decreases and industry volatility increases. Irn Bru has a strong presence in the Scotland, due to the fact that it is the country of origin and a strong culture is associated with it.Threat of n ew entrant entrance to the market, on a large scale, is difficult. The risk of new entrant in the soft drink industry is low. The presence of renowned brands like Coca-Cola and Pepsi, and their strong distribution channels in major grocers, public houses, and fast food outlets get over the industry. Moreover, as the market is saturated, growth tends to be minimised. Such situations prevent new entrants from entering the market, and competing against strong brands. With high fixed cost attached i.e. labour, warehouse, logistics and economies of scale, it is difficult for new entrants to compete with established brands. Market saturation and high fixed costs, the levels of barriers are increased, and henceforth, entering into the UK soft drink market is difficult. Furthermore, because the products are have already acquired the impression of good experience, and reputation matters, very heavy advertising would be a necessity to gain a foothold as a brand producer. Entry as an own labe l producer might be possible, but it would demand a large scale operation to keep costs pot and be as competitive as the existing large own-label producers. Even with the removal of trade barriers and generally greater harmonization within the European Union, major continental firms have appeared to be reluctant to plan a takeover on the UK market. There are at least several strong brands for every consumer segment currently in the carbonated soft drink industry. Consumers do have a choice, and many have developed brand loyalty. It would be difficult for new entrants to sufficiently differentiate their products and to build brand identity and loyalty.Threat of SubstituteThere are number of substitute for carbonated soft drinks e.g. mineral water, fruit juice, energy drinks, tea, coffee etc. Water and sport drinks provide more variety that appeals to the consumers who seek the healthier options. However, carbonated soft drinks have little by little been gaining market share at thei r expense and this trend does not appear set to reverse. In addition, carbonated soft drinks have a particularly strong appeal to the youth market (10-25years), which is where most of the sales can be traced to. Overall, the threat appears relatively weak, especially to the core youth market.Power of suppliersSoft drink industry suppliers do not hold a strong competitive pressure. There are usually several suppliers to choose from for any of the soft drink components therefore, the rivalry between suppliers is high, and companies have many options, including manufacturing components themselves, which some of them still do. Again, relatively weak pressure exists, with the exception of sugar producers and plastic suppliers. The work force is not highly organised, nor is it militant.Power of BuyersThe large numbers of consumers willing to purchase a bottle of carbonated soft drink mean that the actions of a single consumer will not have a notable effect on a companys performance. At th e same time, however, these consumers face low switching costs and have varied degrees of brand loyalty, which requires companies to spend significant resources on capturing and retaining that individual consumer. Over 65% of sales are sold through multiple grocers. The top five marketplace chains account for nearly 70% of all grocery sales and are thus in a strong bargaining position. Some 8% of sales are through fast food restaurants, and 6% sales are through public houses. (Mintel, 2009) The remainder of sales are relatively weak buyers, including off-licences, confectionaries, newsagents and restaurants. Soft drink manufacturing companies distribute the products to these stores so that they can be sold to the consumers. The top grocers buy soft drinks in bulk, as it allows them to purchase goods at a cheaper price.The strongest pressures come from the power of buyers and the fairly intense non-price competition within the industry. Nevertheless, overall the industry seems to be in a fairly healthy position the leading firms are very profitable and industry growth is expected to be steady around 8% over the period 2007-9. Cola, as a product, appears to be reaching maturity, but other segments offer prospects of development and growth. This plays to an advantage in the hand of Irn Bru, as the product offered is completely contrary to the Colas. At the same time, the firms are actively competing on quality and bringing new products to market, as well as being innovative in terms of reducing costs by investing in new technology and machinery, developing new forms of packaging and offering better distribution services. The danger is that the firms may not be able to sustain the route to growth and instead may seek growth through techniques such as undercutting rivals prices in a market share game. In this situation, profits are likely to deteriorate rapidly if destructive head-to-head price competition becomes the main competitive instrument.2.3.3.2 The Brand Positioning ConceptAccording to Kotler (1997), Positioning is the act of designing the companys offering and image so that they occupy a meaningful and distinct competitive position in the target customers minds. The positioning of a brand is not about the quality which products provide, but it is what consumer thinks about the brand. For positioning, it is important how a consumer perceives the product rather than its physical nature. According to King (1991 cited in Fill 1999), advancements in technological fields have allowed products to offer similar functional and physical appearance, where consumers choices and decision will be based on the brand name. Henceforth, positioning origination as a brand will evoke actual and potential customers. According to McCormack (1984, cited in Olsson 2004), positioning is a factor which determines what consumers are actually purchasing while buying any product or service and subsequently communicating related imitations and inspirations to t he buyer. An organization should primarily evaluate and identify where they stand in the market spectrum and then position it accordingly.2.3.3.3 Branding from Consumers PerspectiveA brand provides not only a source of information, but also performs certain other functions which justify its attractiveness and its monetary return, when they are valued by buyers. According to (Kapferer, 2008), there are eight main functions (Appendix 4), Identification and practicality are mechanical and concern the essence of the brand i.e. to function as a rec