Branding in Fmcg

daub strategies in FMCG Chandranshu Charan 09ESHYD011 mark strategies in FMCG Contents 2 Acknowledgement 3 Objective- 5 Methodology .. Structural Analysis of FMCG Industry . 5 Distinguishing features of Indian FMCG Business . 5 1. Design and Manufacturing.. 6 2. Marketing and Distribution. 6 3.Competition . 6 Application of functional knowledge 7 Santoor For a Younger Skin . 7 Taj Mahal Tea.. sane & Lovely Chand ka Tukda 9 Center stupor Hilake Rakh De .. 10 Brand Positioning strategies for competitive reinforcement .. 11 Interim findings and observation of the report .. 2 Brand Equity .. 12 Brand loyalty . 13 Aw argonness of the provoker . 14 Perceived quality .. 4 A mess of associations 14 otherwise proprietary fire pock as tick offs 14 Appraising grease assets .. 14 Ingredients for Strategy 5 Financial .. 15 Innovation from the inside out R&D in the FMCG industriousness .. 15 Hul Strategy 15 audience with an Industry expert 6 Limitation of Branding 17 Reference .. 18 Branding strategies in FMCG 3 Acknowledgement I owe a great many thanks to a great many community who helped and supported me during the writing of this project. I express my deepest thanks to my Guide Dr.G Radha Krishna for guiding and correcting documents of mine with attention and c are. He was always there to show me the right track when I needed his help. With the help of his valu able suggestions, guidance and encouragement, I am able to perform this project work. I would also like to thank my colleagues, who very much helped and gave me support at critical junctures during the making to this project. Branding strategies in FMCG 4 A result is something that is made in a factory a denounce is something that is bought by a customer.A product smoke be copied by a competitor a note is rum. A product can be quickly outdated a productive instigant is clock timeless. Stephen avocation leader WPP Group, London Developing a instigant strategy can be unitary of th e well-nigh difficult steps in the commercialiseing plan process. Its often the element that causes more or less businesses the biggest challenge, but its a vital step in creating the company identity. Companys stag identity will be repeatedly communicated, in multiple ways with frequency and consistency finishedout the life of a business.In Fast Moving Consumer Goods (FMCG), also known as Consumer package Goods (CPG), Consumers in the main put less thought into its purchase than any other products. Here top of mind recall playing a vital g overnment agency while taking purchase decision. Effective mark strategy is indispensable tool in FMCG sector. Though FMCG is the oldest mart place, it has gone through a complete transformation. The FMCG mart be make senses the first indicator of a lifestyle of a society or of a nation. Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG).FMCG products are those that get replace d within a year. Examples of FMCG generally overwhelm a all-inclusive kitchen stove of frequently purchased consumer products such(prenominal)(prenominal) as toiletries, muck, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, case food products, soft drinks, tissue paper, and chocolate bars. The shorter product life cycles and increasingly competitive environment have become a global trend in FMCG sector.On an average, FMCG Company introduces 70 to 80 new-fangled products per year. Profit in FMCG goods generally scales with the number of goods sold rather than the profit made per item. The classification generally includes a wide range of frequently purchased consumer products category including toiletries, soaps, cosmetics, tooth paste, oils, Tea, shaving products, detergents, and other non-durabl es such as glassware, bulbs, batteries, paper products and plastic goods. In order to sustain a fast pace of new product introduction, it is important to have potential new ideas ready for development.Brand loyalty has become irrelevant where many unvarying products are flooded in the food market. Informed customers are making rational purchasing decisions. This makes niche a conditional option for FMCG companies. Moreover all the major players like HLL, P & G, Marico, Colgate-Palmolive and Britannia have tried to make believe a niche market within the mass market to grow profitably. Many FMCG companies time to time formulating merchandise and fooling strategy to gain firebrand equity. An effective Integrated Marketing Communication strategy helps in to achieve the required goal.Creating a squiffy brand identity, leveraging new product categories and growing the customer base are join concerns for consumer product companies. Firms are fronting to maximize profits and mark et share in a highly competitive environment that includes such challenges and risks as demanding customers, integration and global expansion. Branding strategies in FMCG Objective- 5 ? To study branding strategies for consumer goods used by companies to attract consumers. ? To study different arrangement strategies that may influence an individuals Behavior choices. ? To know the limitations of branding. Methodology Literature review. ? Evaluating Branding Strategies and Practices of different product category. ? Interaction with Industry Experts. Structural Analysis of FMCG Industry Typically, a consumer buys FMCG goods at least once a month. The sector covers a wide gamut of products such as detergents, toilet soaps, toothpaste, shampoos, creams, powders, food products, confectioneries, beverages, and cigarettes. Typical characteristics of FMCG products are ? The products often cater to 3 very distinct but usually wanted for aspects necessity, comfort, luxury. They pile up the demands of the entire cross section of population.Price and income elasticity of demand varies across products and consumers. ? Individual items are of small value (small SKUs) although all FMCG products put together news report for a significant part of the consumers budget. ? The consumer spends little time on the purchase decision. He seldom ever looks at the technical specifications. Brand loyalties or recommendations of accredited retailer/ dealer drive purchase decisions. ? Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently, as and when required. Brand switching is often induced by heavy advertisement, recommendation of the retailer or word of mouth. Distinguishing features of Indian FMCG Business FMCG companies sell their products directly to consumers. Major features that distinguish this sector from the others include the following Branding strategies in FMCG 1. Design and Manufacturing 6 1. Lo w Capital Intensity Most product categories in FMCG require relatively minor enthronisation in plan and machinery and other fixed assets. Also, the business has low working capital intensity as bulk of sales from manufacturing take place on a cash basis. . Technology Basic technology for manufacturing is easily available. Also, technology for most products has been fairly stable. Modifications and improvements rarely change the basic process. 3. Third- society Manufacturing Manufacturing of products by third party vendors is quite common. Benefits associated with third party manufacturing include (1) flexibility in production and inventory planning (2) flexibility in controlling labor costs and (3) logistics sometimes its essential to get certain products manufactured near the market. 2. Marketing and DistributionMarketing function is sacrosanct in case of FMCG companies. Major features of the marketing function include the following 1. High Initial Launch Cost New products req uire a large front-ended investment in product development, market research, test marketing and launch. Creating awareness and develop franchise for a new brand requires enormous initial expenditure on launch advertisements, free samples and product promotions. Launch costs are as high as 50-100% of revenue in the first year. For established brands, advertisement expenditure varies from 5 12% depending on the categories. 2.Limited Mass Media Options The challenge associated with the launch and/or brand go oning initiatives is that few no mass media options. TV reaches 67% of urban consumers and 35% of rural consumers. Alternatives like debate paintings, theatres, video vehicles, special packaging and consumer promotions become an expensive but required activity associated with a masteryful FMCG. 3. Huge Distribution Ne twainrk India is home to hexad million retail outlets, including 2 million in 5,160 towns and four million in 627,000 villages. Super markets virtually do non exist in India. This makes logistics specially for new players extremely difficult.It also makes new product launches difficult since retailers are reluctant to allocate resources and time to slow moving products. Critical factors for success are the ability to build, develop, and maintain a robust distribution network. 3. Competition 1. Significant Presence of Unorganized Sector Factors that enable small, unorganized players with local presence to prosper include the following 2. Basic technology for most products is fairly simple and easily available. 3. The small-scale sector in India enjoys exemption/ lower rates of fall upon duty, sales tax etc.This makes them much price competitive vis-a-vis the organized sector. 4. A highly scattered market and poor transport infrastructure limits the ability of MNCs and national players to reach out to remote rural areas and small towns. Branding strategies in FMCG 7 5. Low brand awareness enables local players to market their spurious look-alike brands. 6. Lower overheads due to limited geography, family management, focused product lines and minimal expenditure on marketing. A general assessment of this would lead to the closing curtain that FMCG is not a Structurally Attractive Industry to Enter.Entry barriers are high due the nightmare logistics associated with distributing a FMCG and the limited mass media options available to build a brand. Likewise, the intensity of competition from branded and unbranded goods and the power of retailers make the FMCG a structurally unattractive industry in which to enter and difficult industry in which to remain a competitive player. Application of functional knowledge Soap Category Santoor For a Younger Skin Brand Santoor Company Wipro direction FCB Ulka Santoor is south Indias no1 soap brand.As per sales data it contributed close to Rs 850 crore in 2008-09 to the companys coffers and became the leading brand in South India in its category. The brand which focuses on rur al India has been growing at 29% for the past three years, on a year-onyear basis. The brand was launched in 1985 as an ordinary soap with sandalwood and turmeric as its main ingredients. The brand was initially test marketed in Bangalore and encouraged by the positive response, the brand became national a year after. The brand was positioned as the dishful + skin care at a reasonable price and the brand derived strength from the efficacy of the ingredients.At that time the brands which had sandal as the main ingredient was Moti and Mysore Sandal Soap. The brand derived the do from combining Sandal + Turmeric and it is not from the musical instrument that it got the name Santoor. Although the brand became popular, the company was not fulfil with the results. The customers were not get the ingredient story. The research suggested that customers are not correlating the brand with skin care and beauty. Branding strategies in FMCG 8 Thus started the brainstorming on getting the ? h owler factor to build the brand.The wow factor came in the form of the new positioning ? For Younger Looking Skin. The positioning comes from the consumer insight that ultimately the customers look for a younger skin which is another smart way of defining beauty. The focus on ? Younger Skin also acts as a regnant differentiator because other brands were focusing on beautiful skin or looking beautiful. The next big idea came in the form of communicating the ? Younger Skin? concept using Mistaken Identity? theme (source MG Parameswarans Book). The brand has consistently developed this theme over these two decades of its existence.Santoor is a brand has consistently understood the consumers and was not complacent to change. The brand was the first one to use a Mother and her five year old girlfriend to endorse the brand. Most of the ads showed spinsters in their campaigns while for Santoor, the jockstrap were Mothers. But showing Mother as the protagonist had its share of issues al so. The customers felt that since this brand is meant for adults, it will not be soft on skin. This made the company to change the size texture and the shape of the product. Indian womens mindsets were evolving and demeriting free from the traditional mindset.The Mother-daughter equation and the campaigns set in the supermarkets, wedding and bangle shop did not do well with the achievement oriented customers. That was a message to the marketers that the product communication has to change. The achiever protagonist was introduced in 2004. The campaign showed the mother as a favored fashion designer with the same positioning and theme. The brand also extended itself to a range of beauty products and to talc. Now Santoor have face wash, talc, soap and fairness cream. Year 2006 saw a big change in the marketing strategy for Santoor. They gesture into celebrity endorsement.The campaigns showed Saif Ali Khan (in North) and Madhavan (south) in the TVCs. The TVCs shows these celebrities along with the Mother and child in the theme. Using a celebrity without a change in the overall positioning will have a positive impact to the brand. The use of celebrity will make the ad sticky thus making the campaign more than effective. The brand is facing tough competition from heavy weights and is now seeking support from outside to stay as a leading FMCG brand. Branding strategies in FMCG Tea Category 9 Taj Mahal Tea BrandTaj Mahal Tea Company HLL Taj Mahal tea has changed its Brand Face (brand ambassador).Recent TVCs show Saif Ali Khan endorsing the brand. Taj Mahal has been using the Tabla master copy Ustad Zakir Hussain as its brand ambassador from 1990s. Since Ustad Zakir was endorsing only this brand, the recall was high. Over the period of time, the brand ambassador became synonymous for the brand. Ustad and Taj Mahal were touted as the classic example of a successful celebrity endorsement. The collaboration with the brand and the ambassador went that far that Ustad o nce challenged in a TVC in 2001 that he will stop playing tabla if he come across a better tea. That TVC drawd lot of controversy. The new brand ambassador is Saif.The new face may be an try on to make the brand more contemporary. Ustad and his fans are getting older. Hence there is a chance that the new generation may miss out on the charm of Ustad (generation gap). So the attempt may be to make the brand relevant to the new generation. In theory we site examples where the users of the brand getting older and the brand not able to connect with new generation. HLL does not want this to happen with a power brand like Taj Mahal. Cosmetic Category Fair & Lovely Chand ka Tukda Brand Fair & Lovely Company HLL Agency Lowe Fair & Lovely (FAL) is the brand that revolutionized the Indian Skin care industry.This brand is Worlds first and largest Fairness cream brand with a presence in 40 countries and a value of around Rs. 6 billion. Indian skin care market was dominated by conventional bea uty care products like Bezan, Multani Mitti etc. FAL changed all that. Launched in 1975, FAL is the product born in the Unilever research center. In 1988 the brand went international. FAL commands a market share of over 70% in the Rs 1000 crore fairness market in India. FAL virtually created and owned this category for long. In the fairness market, FAL enjoyed monopoly till Cavin Kare entered this lucrative segment with Fairever.The success of Fairever prompted many players like Godrej to tap the market. Branding strategies in FMCG 10 FAL sustained the pressure from the competitor by careful branding and new product launches. The brand never failed to emulate and learn from the competitor . When Fairever launched the ayurvedic variant, FAL launched a much better variant. Competition is coming from Ozone Ayurvedics with their brand ? No Marks tries to carve a niche. HLL countered with FAL Antimarks and launched a controversial comparative ad that took the steam out of ? No Marks. Whe n Fairever launched the soap, FAL also responded with soap.FAL never allowed the competitors to gain an upper hand in the market which it created. FAL achieved such tremendous success because of careful branding and ad campaigns. Initially HLL do some ugly talking about fairness. Some of the ads were controversial because of gender inequality and stuff like that. It was necessary at that period because the category was new and the brand should first talk about the need to be fairer. Now the brand has laddered up to more aspirational value like Transformation of Women The insight is that the transformation will be more than skin deep.The ads showing a girl achieving the opposition of being a cricket commentator (a male bastion) were very much effective in connecting with the target group. HLL has also extended the brand to more aspirational values by launching Fair& Lovely foundation that works for Women Empowerment achievement and Transformation which are the qualities for which F AL stands for. FAL have also launched a premium hired gun brand Perfect Radiance to tap the premium segment of the market. Fair & Lovely was able to dominate the fairness market because of careful marketing and is a showcase of the marketing genius of HLL. Confectionary CategoryCenter Shock Hilake Rakh De Brand Center Shock Company Perfetti Vanmelle Agency O & M Center Shock is an interesting brands or rather it is a disruptive brand in the sense that the brand just makes all marketing theories look funny. Conventional marketing wisdom says that the product should deliver a promise and satisfy a need. Here is a confectionery brand that tasted sour making itself a market leader in less than 6 months time. Center Shock was launched in 2001 and at that time, the chewing gum market was at cross Branding strategies in FMCG 11 roads. The market lifecycle was at the decline stage.Although the market was worth Rs 300 crore, it was declining at a faster rate at 25-30%. Perfetti then decided to break the category degrowth and make this category more exciting to the customers. This peculiar gum gave a distinct fruit filled acidic taste to the customer which very gave the customer a shock. The brand was an extension of the highly popular Center Fresh known for its Fruit Gel Center. Center Shock came in two flavors Peach and Apple. Center Shock broke into picture through two clutter breaking ads crafted by O. The first ad of the barber created a broad impact in the market.The ads won lot of accolades for O. According to reports, the brand became market leader within no time with a share of over 35% beating Center Fresh from the same company. The first TVC was followed by the second one featuring a dude visiting his girlfriends home to meet the parents. According to brand experts the creative brief for Center Shock was simple -break the clutter and make it funny and distinct and rightfully shocking and the ads just did that. The brand demanded one of the funniest and b est taglines ? Hilake Rakh De? which translates to ? Will shake you UP.The brand was positioned as a fun brand and customers liked the change. The brand had virtually shaken the market. During those days most of the chewing gum brands were sold on sales promotions and seldom marketers invested any thing more on ads. Center Shock brought back the trust on advertising in the category players. To sustain a brand like Center Shock for longer period of time is a difficult proposition. Although this brand had a very short PLC, the brand showed the power of advertising. A good advertising can make people eat a sour dulcorate and be happy about it. Brand Positioning strategies for competitive advantageIn present scenario the consumer mind is cluttered with numerous brand names for dissimilar categories. So companies strategy is to create a perception for their brand in the prospects mind so that it stands apart from competing brands and approximates much more close to what the consumer wa nts. One of the major contributions of positioning theory t marketing strategy is to bring out the concept of ? distance and dissimilarity between brands in the ? perceptual space of the prospect and to uncover the many opportunities for such perceived differentiation based upon the capabilities of the product and its antecedents.These differentiation strategies revolve around different aspects of the brand which can be expressed as four questions- Branding strategies in FMCG 12 1. Who am I? This question deals with the origins of the brand, its parentage. The brand can be position with root to its corporate identity or as an extension of a well established brand. 2. What am I? This question relates to the capabilities of the brand and can be go on broken up (a) Category-Related Positioning (b) Benefit-Related Positioning (c) Positioning by Usage Occasion (d) Price-Quality Positioning 3.For whom am I? This is the strategy of positioning a brand for a carefully chosen target segmen t where it is the best fit and has competitive advantage. Any functionally similar products can be differentiated through positioning by different segments. Such positioning can be by demographic, behavioral, benefit seeking and psychographic segments. 4. Why me? All the above strategies should enable to create a distinct and persuasive perception of a brand. Aggressive marketing companies try to add to their brand a clinching advantage through some unique feature.Positioning by competitor, that is through compassion with the main competitors, is another way to demonstrate a brands superiority and answer the question ? wherefore me? Interim findings and observation of the report One such intangible asset is the equity represented by a brand name. For many businesses the brand name and what it represents is its most important asset-the basis of competitive advantage and of future earnings streams. The first step in identifying the value of brand equity is to understand what it is-w hat really contributes to the value of a brand.Subsequently look at several methods of placing a value upon a brand which will offer up additional insight regarding the brand concept. And finally some issues facing those who create or manage brands will be introduced. Brand Equity It is a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a trusty or to that firm customers. If the brands name or symbol should change, some or all of the assets or liabilities could be affected and lost, although some might be shifted to a new name and symbol.The assets and liabilities on which brand equity is based will differ from context to context. However, they can be usefully grouped into five categories Branding strategies in FMCG 13 Perceived Quality Name Awareness Brand Association Brand Loyalty BRAND EQUITY Name Symbol Other Proprietary Brand Assets Provide value to customer by enhancing custo mers Interpretation/Processing of information Confidence in the purchase decision Use blessedness Provide Value to firm by enhancing Efficiency and effectiveness of marketing programs Brand loyalty Price/margins Brand extensions Trade leverage Competitive advantage Fig-Brand Equity (Source-D.A. Aaker) Brand loyalty-for any business it is expensive to gain new customer and relatively inexpensive to keep existing ones, especially when the existing customers are satisfied with or even like the brand. The loyalty of the customer base reduces the vulnerability to competitive action. Competitors may be discouraged from spending resources to attract satisfied customer. Further higher loyalty means grater trade leverage, since customer expect the brand to be always available. Branding strategies in FMCG 14 Awareness of the brand- people will always buy a familiar brand because they are comfortable with the familiar.A recognized brand will thus often be selected over an unknown brand. The a wareness factor is particularly important in context in which the brand mustiness first enter the consideration set-it must be one of the brands that are evaluated. Perceived quality-it will directly influence purchase decision and brand loyalty, especially when a buyer is not actuate or able to conduct a detailed analysis. It can also support a premium price which in turn can create gross margin that can be reinvested in brand equity. Further perceived quality cab be the basis for a brand extension.If a brand is well-regarded in one context, the assumption will be that it will have high quality in a related context. A set of associations- the underlying value of a brand name often is based upon specific associations linked to it. Association such as Ronald McDonald can create a positive attitude or feeling that can become linked to a brand such as McDonalds. If a brand is well positioned upon a key attribute in the product class competitors will find it hard to attack. Other prop rietary brand assets- brand assets will be most valuable if they inhibit or prevent competitors from eroding a customer base and loyalty.These assets can be several forms. E. g. a trademark will treasure brand equity from competitors who might want to confuse customers by using a similar name, symbol and package. Appraising brand assets Brand loyalty-what are the brand loyalty levels by segment? ar customers satisfied? What do exit interviews suggest? What are customer feedback regarding their problems with buying or using the brand? Awareness- what brand awareness level exists as compared to that of competitors? What could be done to improve brand awareness? Perceived quality- what drives perceived quality? What is important to the customer? What signals quality?Are prices and margins are eroding? Brand associations- what mental image, if any, does the brand stimulate? Is there a slogan or symbol that is a differentiating asset? How are the brand and its competitors positioned? W hat does the brand mean? What are its strongest associations? Other brand assets-is there a patent or trademark that is important? Are there channel relationships that provide barriers to competitors? Branding strategies in FMCG Ingredients for Strategy 15 Creating a strong brand identity, leveraging new product categories and growing the customer base are core concerns for consumer product companies.Firms are looking to maximize profits and market share in a highly competitive environment that includes such challenges and risks as demanding customers, consolidation and global expansion. The components of strategy would be- Financial Adi Godrej, Chairman Godrej Group stated, ? We are aiming to triple our turnover by 2012 by focusing on our fast moving consumer goods (FMCG) business Godrej Consumer Products (GCPL), Godrej Sara Lee and Godrej Hersheys. At present the consumer goods turnover is Rs 2,300 crore and the group aims to reach revenues of Rs 8,000 crore for this business in the next four years.We will also look at inorganic growth as a medium to grow.? In the process, the group would be investing Rs 100 crore per year on brand communications. So for any successful branding strategy Finance played a vital role. The brand salience requires advertisement in different media vehicle. Innovation from the inside out R&D in the FMCG industry R&D plays a key role in helping FMCG manufacturers meet constantly changing consumer needs whilst movement down costs. The Fast Moving Consumer Goods (FMCG) industry is highly competitive and driven by consumer preference.Research and development (R&D) and innovation, therefore, play a key role in helping manufacturers meet constantly changing consumer needs, whilst driving down costs. Hul Strategy We shall now take up one company, HUL (Hindustan Unilever Ltd) formerly HLL and see how the complex proletariat of brand management is actually handled. This company is taken for this article as HUL is considered as one of th e most successful in Brand Management . HLL has a large brand portfolio consisting of nearly 110 bands. In every product line, it has built a number of brands over a period of time.Quite a few brands have come to its fold from the parent company. It has also acquired several ongoing brands from the market. HLL also vigorously pursues brand extension strategy. And concurrently, HLL undertakes line pruning and brand restructuring and consolidation, based on marketing compulsions. HLL is also playing the rejuvenation and relaunch game. With great benefit the corporate-level endeavors at business expansion and diversification are also throwing new challenges on the brand strategy front. HLL lends itself for a proper understanding of the complexity of the brand management task.We shall examine how HLL handles the complex demands in brand management. Such an take off of brands is the outcome of a conscious corporate strategy by HLL. As a corporate, HLL wants to be a leader in every one o f its businesses and the strategy is to fight on the strength of the competitive advantage arising from the possession of strong brands. It is this strategy that is Branding strategies in FMCG 16 getting reflected in the development of a multitude of strong brands. If we take the business of bathing soaps, as an example, HLL has the objective of being a national player (not a niche or a regional marketer) and the leader therein.HLL also wants about 30 per cent of the corporate income to come from this line. So, HLL opted for the strategy of developing quite a few strong brands in this line, and among them they cover different market segments and price points. Dove, Lux, Liril, Rexona, Pears and Lifebuoy are the outcome of such a well planned brand strategy implemented over time. Interview with an Industry expert In order to gain industry insight regarding the FMCG best practices in branding strategy I got an opportunity to have a telephonic interview with Perfetti Van Melle (India) Ltd.Brand manager based in Delhi. (Due to some reason he does want to disclose his name. ) Q. What is your branding Strategy? A. We are currently managing 15 brands and for each brand we adopt differential branding strategy. But everything depends upon the distribution channel. So our strategies always focus to strengthen the distribution network. Q. What strategies you adopt to launch a new communication plan? A. It starts with Idea generation then financial investment. Under financial