commodities & brands

COMMODITIES AND BRANDS

16.12.2011, Bengaluru

Basic Characteristics of a Commodity

A class of offerings which come without qualitative differentiation across a market.

A commodity has full or partial fungibility;

It is no matter who produces it

Price fluctuates on global supply and demand, determined as a function of its market as a whole.

Well-established physical commodities have actively traded spot and derivative markets

They come packaging distinction

There is almost no emotional benefits, apart from cultural meanings some commodities have in some countries. E.g. gold in India

Has no sellers’ equity

Commodities to Brands

Many of the iconic brands in business come from commodities !

Commodities to Brands

BASIC CHARACTERISTIC OF A BRAND

An Idea

Despite all the heavy definitions, a branding can be thought of as an idea, and branding, that rigour to establish that idea.

A Tangible ‘consumable’

Many of the iconic brands in business come from commodities !

The Idea

Advertising

Generic Products and Brands

The Workings of Advertising

Precipitation

Persuasion

Reinforcement

Reminder

Encourages consumers to experiment with a product category

Encourages consumers to choose among alternative "brands”/ intensifies the consumers' desires for a specific brand

Continually directs the consumers' attention to a particular "brand" or product to achieve repeated purchases

Encourages consumers to become repeat purchasers of the product category/ brand

J. N. Sheth, Models of Buyer Behavior: Conceptual, Quantitative, and Empirical, Harper and Row, New York, 1974.

• The precipitation and reminder mechanisms are more likely to increase total product category or industry sales

Generic or commodity

advertising is intended to

precipitate and remind

• While persuasion and reinforcement are usually associated with maintaining or increasing market shares of a specific brand.

Brand advertising is primarily intended to

persuade and reinforce

Generic advertising should expand aggregate sales and be brand neutral.

Commodity Advertising: Theoretical Issues Relating to Generic and Brand Promotions* Ronald W. Ward, Julio Chang, and Stan Thompson

“The brand neutrality [in commodities] may not always hold if the generic message emphasizes

homogeneity within the product group,

while the brand message stresses differences"

Ward and Chang (pp. 91-92).

What Good is a Brand, Anyway?

This question can be answered quite easily with a little bit of data.

A brand can empower!

Price Differentials: Branded Products Versus Store Brands [suburban Philadelphia, Pennsylvania]

Creating a Brand out of a Commodity

Being the first is the most obvious way to get there. But not the only one.

In This Context

Two Views On Advertising

The latter function should enhance

competition and reduce barriers to

entry.

Form of persuasion

• Form of persuasion that creates product differentiation and thus leads to greater market power among those with significant advertising efforts

Information

• Alternatively, advertising is viewed as information that provides an inexpensive means for current and potential buyers to assimilate data about different products

This gain in power is at the expense of

the consumer primarily because of price

increases.




entry.

Form of persuasion


Information




increases.

Therefore, Commodity communication must educate




entry.

Form of persuasion


Information




increases.

And Brand advertising must persuade

Commodity communication must educate


Experience makes a brand

P. Nelson, "Advertising as Information," Journal of Political Economy, 81, 729-745 (1974b).

For infrequent purchases of significant value, consumers look for assurance. This assurance comes from acquiring detailed data about the product. Products are inspected prior to purchase. Detailed information is searched. These products are search goods. Invariably, high-involvement products

For frequent purchases of lower value, consumers look for experience. the consumer may experiment with a number of alternatives then decide on a limited set for continued use Detailed information is searched. quality cannot be completely evaluated without actually consuming it Invariably, low-involvement products These products are experience goods.

Search Goods Experience Goods

Except for very high-priced commodities [Gold, Petroleum], most commodities are low-involvement, high frequency and of low value at each purchase.

Consumers do not search for these goods.

A significant brand can turn commodity into “Experience Products”

Therefore, a brand within commodity space, can be created primarily by delivering emotional/

experiential value Factual content about the product, must justify *act as a “reason to believe”+

the higher order emotional benefit.

Celebrity endorsements of experience goods is an example of stimulating high recall with little factual information.

M. E. Porter, Interbrand Choice, Strategy, and Bilateral Market Power, Harvard University Press, Cambridge, MA, 1976.

The advertising has to create perceived attributes [not necessarily real], To differentiate and

create a brand in the commodity space.

Gains from perceived differences may continue even with repeated purchases if the perceived attributes are difficult to measure.

For example, emphasis on the nutritional value of certain foods may be acceptable

although it is difficult for the consumer to directly validate such claims.

Ultimately, the success of advertising to attain product differentiation Depends on both the

actual product attributes and how easily these attributes can be measured.

For many foods and fibres, the attributes can be judged such as taste, quality, packaging, etc.

Yet, there exists a comparable list of attributes that cannot be judged by the consumer.

One example could be the promotion of a honey brand on its purity/ and its claims of

naturalness

CASES

Lemonade!!!!!!!

Nimbu Paani

Category: Lime juice Lemonade Simply Nimbu pani

Lemonade in Indian style, is simple refreshment, adding natural cooling properties of their ingredients designed to keep your body cool.

Lemon trees are believed to be native to the Indian sub-continent.

Nimbu paani was a kind of summer drink that every Indian household was accustomed to. It is one of the most ancient recipes to beat the scorching heat.

Popularly called as the Nimbu Ka Sharbat in hindi.

How do we describe ‘Nimbu Paani ’

natural

traditional Indian

economical

refreshing

cool

THE COMMODITY WAS BRANDED

The Untapped opportunity in Indian Market!

I want.. umm

Indian summers!

Thirsty Indians travelling on road!

Unsafe tap water?

Or packaged drinking water..but no taste..

Carbonated Colas drinks!…umm

Or a dash of refreshing Vitamin -C

Road Side nimbu Pani.. Cheap.. but hygiene?

Ideally home made…but where?

Restaurant .. Umm expensive, and I ve no time..

To the rescue.. Packaged nimbu paani..

With an eye on summer sales Parle Agro and PepsiCo have

come out with packaged lemonade - LMN and Nimbooz respectively, to provide relief our parched throats……2009

The opportunity

“Nimbu Paani” or lemonade has always been the most commonly consumed cold beverage for Indians, especially during hot summers

It made business sense to launch a non-fizzy drink during summers as it scores above the colas in the health/ hygiene space

The added advantage of it being a very familiar natural refreshing drink which is now being offered in a hygienic and convenient way would make the mothers prefer it over the Colas

The size of the largely unorganized `Nimbu Paani’ market was estimated to be around 1 billion cases, which is double the size of the carbonated soft drink industry in India.

Parle and PepsiCo is vying with each other to tap into this market and with the mercury levels soaring it looks like packaged lemonade is here to stay.

Lime is the second flavour brands are squeezing in fruit drinks. It is a flavour well accepted but most of the consumption is from the unorganised sector.

These brands delivers very strongly on certain expectations. These are:

• Locally Relevant Taste

Packaged lemon juice, under the brand names, Nimbooz, LMN, Minute Maid Nimbu Fresh, are great tasting products.

They have capitalized on the existing familiarity of unpackaged / home-made nimbu pani.

It has remained true to its authentic Indian Identity by using the traditional Matka (Earthen Pot) and Squeezer in the manufacturing process.

• Convenience and Great Value

The products are available in three convenient formats, 350ml PET, 200ml RGB and 200ml Tetra at the remarkable price points of Rs15, Rs 10 and Rs 10 mostly.

• Accessibility

Nationally available packaged Nimbu Pani.

• Hygienic

It is just like home-made nimbu pani. You can enjoy its natural and delicious lemony refreshment anywhere you go.

Nimbooz

Brand insight : Our culture is rich and deep rooted. No matter how much we migrate to a modern lifestyle, it’s only when we enjoy truly familiar & authentic experiences( albeit in a contemporary way) that we can relish being our true selves

Product: Nimbooz by 7UP is an authentic drink that’s made with real lemon juice squeezed from the best of lemons. It has No Fizz & no added Artificial Flavours. It is tasty, 100% hygienic and is available in trendy and convenient packs, so that you can enjoy natural delicious, lemony refreshment anytime, anywhere .

Positioning: Refreshing Nimbu pani with Real lemon Juice

Brand Idea: “Enjoy Being My Asli Self”

Packaging: The product is available in three convenient formats, 350ml PET, 200ml RGB and 200ml Tetra at the remarkable price points of Rs15, Rs 10 and Rs 10 mostly.

Brand Role: "The ASLI Indian Refresher"

Nimbooz creative brief Get busy Indian men and women who have adopted a modern lifestyle but still love their (Indian) tradition to try Nimbooz, the real nimbu paani with real lemon juice By telling them Nimbooz is the cool way to enjoy a traditional favourite.

Source: www.afaqs.com Nimbooz Launch Objective The objective of the film was to communicate the launch of the brand “Nimbooz” with the proposition “Ekdum Asli Indian” (Absolutely Real Indian).

http://www.afaqs.com/

Nimbooz

LMN: The Emergency Lemon Refresher

Product: LMN has a head-start with a good brand name and a cool packaging.

Packaging, Price & Placement:

As for Nimbooz and LMN, both offer 200ml tetra packs for Rs.10.

LMN will gain on its 110ml tetra pack, which Parle Agro intends to sell for Rs.5.

The main competitor was the product at the stalls and the home made nimbu pani.

At stalls, a glass of nimbu pani is sold for Rs.6. LMN made it possible to have packaged and hygienic nimbu pani at Rs.5.

Parle Agro’s LMN has tactically tried to position the drink as a ‘lemon-flavoured’ drink to avoid comparison with homemade ‘nimbo paani’.

Launched in early 2010, Minute Maid Nimbu Fresh came to the market after the launch of Nimbooz and LMN.

Minute Maid Nimbu Fresh…… ...A late entrant; a worthy challenger!

Product: Minute Maid Nimbu Fresh is made from no preservatives and no added colour. It tastes just like homemade 'Nimbu Paani'.

Price: Coca-Cola, the latest to add a dash of lemon to the cola war, is playing the pricing game to catch up with Pepsi’s Nimbooz and Parle’s LMN.

Placement& communication strategy: Bilkul ghar jaisa

The drink is made from lemon juice concentrate and comes with the tagline, 'Bilkul ghar jaisa' (just like home).

Minute Maid

Summary

Most consumers are either used to drinking nimbu paani at home or pick up non-branded products.

Earlier, beverage companies stayed away from the category because they would have no USP.

Though the earlier examples of trying to introduce packaged drinks like tender coconut etc have not succeeded, Pepsi and Parle have already hit the jackpot with Nimbooz and LMN with sales much above their own expectations.

Technology had played a big role to play in this. For example, while nimbu paani made at home doesn’t have much shelf life, Pepsi has used a technology called ‘hot fill’ that increases the shelf life of Nimbooz to as much as four months.

Positions

Pure

Traditional

Fun

Health/ Nutrition

Premium

Nostalgia/ Home

Minute Maid

LMN

Nimbooz

Minute Maid

Minute Maid has based its brand on all the cultural associations and meanings that ‘Nimboo Pani’ carries

It portrays the emotions of the Indian youth, who has grown up on the home-made lemon drink

The value addition has happened in evoking all those images which still appeal to a certain emotional need-state of the TG

DRINKING WATER

Drinking water.. The most basic need to survive.

In the modern context

Water borne diseases,

Increasing water pollution,

Increasing urbanization,

Increasing scarcity of pure and safe water

Need of portable water! But

Packaged drinking water

found its relevance

Packaged, safe, portable, drinking

water!

Opportunity for commodity branding.

Water is the most important necessity for life.

The drinking-water needs for individuals vary depending on the climate and physical activity but for average consumers it is estimated to be about two to four litres per day.

OPPURTUNITY

The growing number of cases of water borne diseases, increasing water pollution, increasing urbanization, increasing scarcity of pure and safe water etc. have made the bottled water business just like other consumer items in the Indian Market..

Scarcity of potable and wholesome water at railway stations, tourists spots, and role of tourism corp. etc. has also added to the growth.

Indians currently spending about $330m a year on bottled water.

The packaged water market constitutes 15 per cent of the overall packaged beverage industry, which has annual sales of at least $2.6bn. ( Business Standard)

Almost all the major international and national brands water bottles are available in Indian market

Before few years bottle water was considered the rich people's choice, but now it is penetrated even in rural areas.

Three key players mainly dominate the Indian Bottled Water Market Parle Bisleri, Coca Cola

India Inc Kinley and Pepsico India Holdings Pvt. Limited.

Water, being the vital element of nature, has largely common connotations in most cultures

natural

Life

Purifier

refreshing

Cleanser Rebirth

With time, the unquestionable properties of water was being corrupted, mainly because of pollution.

This created an opportunity in for brands to the provide seal of assurance to a generic/ natural element like water

What was required was reinforcing the existing and expected qualities of water in a convenient portable product offering

Any brand trying to sell bottled water needed attain relevance by meeting the natural expected qualities of water

In this category, polluted nature of today’s world, created opportunity for brands to enter

Bisleri

Kinley

The market leader is Bisleri International, which boasts a 40 per cent share. It is followed by Coca- Coca’s Kinley (around 25 per cent) and PepsiCo’s Aquafina (around 10 per cent). The top players in bottled water industry in India are the major international giants like Coca cola, Pepsi, Nestle and noticeable presence of national players like Parle Agro,Mount Everest, Manikchand, Kingfisher, Mohan Meakins, SKN Breweries , Indian Railways so on.

Variety of packages

Bottled water is sold in a variety of packages:

pouches and glasses,

330 ml bottles, 500 ml bottles, o

ne- litre bottles and even

20- to 50-litre bulk water packs.

The formal bottled water business in India can be divided broadly into three segments in terms of cost:

premium natural mineral water,

natural mineral water and

packaged drinking water

However, value could still be created

A brand like Himalaya provides access to a unique natural offering i.e. natural mineral water from aquifers

Flavoured mineral water and

Fortified mineral water

Kapferer’s Prism

Mapping Value Addition

Adidas

Picture of Sender

Picture of Receiver

Personality Traditional, conservative,

collective

Physique Sports and fitness

Relationship Quality and heritage

Culture European, Traditional

Internalization

Externalization

Reflection True sportsmanship, A good

team player, Strong work ethic

Self Image Relates more to competing

than to winning

Strategic Brand Management: Jean-Noel Kapferer

Physique according to him is the basis of the brand.

E.G. the physique of Philips is “technology and reliability” while for the brand Tata it is “trust”

Personality is same as Aaker, it answers the question “what happens to this brand when it becomes a person?”

Culture symbolizes the organization, its country-of-origin and the values it stands for.

E.G. traditional brands like balsara, dabur and zandu.

Relationship is the handshake between consumer and the organisation.

E.G. the relationship with “safola” is safety.

Reflection is the consumer’s perception for what the brands stands for.

E.G. coke’s image more attract youth.

Self-image is what the consumer think of himself.

E.G. benz Car owner think that since he has bought the car he is treating himself to one of the best car in the world.

Physical Product features, symbols & attributes

Personality Character & attitude

Relationship Beliefs & association

Culture Set of Values

Reflection Customer’s view of the brand

Self-Image Internal mirror of customer as user of brand

Water

Picture of Sender

Picture of Receiver

Personality Nature, Life giver,

Benevolent

Physique Purity, Life

Relationship Physical Need,

Natural

Culture Physical Need,

Natural

Internalization

Externalization Reflection Self Image

Packaged Water Brands

Picture of Sender

Picture of Receiver

Physique Purity, Life

Internalization

Externalization

Personality Nature, Life giver,

Benevolent

Relationship Physical Need,

Natural

Culture Physical Need,

Natural

Reflection Caring, Natural, Protective

Self Image Health Conscious,

caring,

Comparative Analysis

Commodity

Picture of Sender

Picture of Receiver

Personality religious or cultural, if

any

Physique

Relationship Basic and General

Culture

Internalization

Externalization Reflection Self Image

Brands

Picture of Sender

Picture of Receiver

Physique Value Add

Internalization

Externalization

Personality Value Add

Relationship Value Add

Culture Value Add

Reflection Value Add

Self Image Value Add

Comparative Analysis

Definite Value Add

Scope for Product Innovations

Possible Opportunities fro Differentiated Offer

THANK YOU