Ch- 01 (Competition and Brand)

Excel Books1– 1 Brand Management Text and Cases (Ed-2) Harsh V Verma

Copyright © 2002, Harsh V Verma

Competition and BrandC-1 1

C H A P T E R

1

Competition

and Brand




Cont….

What do Lakmé, Crocin, Goodnight, Hit, Captain Cook, Medicare, Saffola,

Nihar, Milkfood and Dollops have in common? All these are brands which

have been acquired by companies.

Hindustan Lever bought Lakmé for Rs 78 crores. Brooke Bond paid Rs 25

crores and Rs 100 crores respectively for Milkfood and Dollops brands.

Godrej acquired Hit and Goodnight brands of mosquito repellents for a

consideration of Rs 131 crores. Marico acquired Saffola and Parachute

brands for an estimated of Rs 30 crores from Bombay Oil Industries.

Internationally, companies have been paying huge sums to acquire the

brand of their choice.




Cont….

Britain all Sold Out

Many brands originated in Europe. They stood tall and drove material wealth and

esteem. Britain has been home to many iconic brands that enjoyed high recall

and in some case high prestige. But now the reality is quite different. To a

layperson, nothing may have changed…but many of these iconic brands have

changed hands. They are now foreign owned.




The following are the famous British brands that have moved to foreign

hands:

Rolls-Royce - German car and motorcycle manufacturer BMW

Manchester United - owned by US financier Malcolm Glazer

Mini Cooper - German car maker BMW

Kitkat- swiss confectionery company Nestle

Smarties - Swiss Nestlé

Bass Ale - Belgian beer company Interbrew

Ty-Phoo Tea - Indian tea company Tata Tea

The Savoy - Canadian Fairmont hotel chain

The Waldorf - the US hotel chain Hilton Cont….




There has been an outcry over the takeover of Harrods by Egyptian born

Mohammed Al Fayad (whose son Dodi died with Princess Diana in a car

accident), whereas many such sales like that of The Savoy and Claridges did not

even cause a noticeable ripple. The British seem to be unmoved by the fact that

many of their iconic brands have been taken over by foreigners. Does it mean

loss of Nationalism? The most recent name to change hands is famed fish-and-

chips chain Harry Ramsden's.

Adapted from: 'Britain all sold out', The Hindustan Times, April 15, 2006, p. 15.




Cont….

The Economic Ideal Microeconomic theory discusses how different types of market structures

behave differently. A comparison is made between various forms like perfect competition, monopoly and oligopoly.

The welfare economists argue in favour of competition, believing that perfect competition promotes economic efficiency. The equilibrium in perfectly competitive markets is Pareto optimal.

A perfectly competitive market is characterized by;

i. A large number of firms; each firm is small and cannot affect the price of a product by manipulating its output,

ii. The products offered by the firms are identical or homogeneous. The consumers do not exhibit preference for one over the other,

iii. There are no entry or exit barriers. Firms can gain entry or exit from the market at will,

iv. Participants in the market have perfect knowledge and hence cannot be exploited because of ignorance.




Cont….

The Industry Structure – Conduct – Performance Model

Structure

Conduct

Performance

Government intervention “to promote competition”

Structure

Concentration Product Differentiation Entry Barriers

Conduct

Pricing Advertising Product Development

Performance

Efficiency Technical Progress

Promoting Competition




In order to pursue the economic ideal and perpetuate competition, the

Indian counterpart to “governmental interventions” came in the form of the

Monopolies and Restrictive Trade Practices Act of 1969.

The Act was passed with an intent to “ensure that the operation of the

economic system does not result in the concentration of economic power to

the common detriment.

More specifically, the Act was aimed at attaining three objectives:

i. prevention of concentration of economic power to common detriment,

ii. control of monopolies, and

iii. prohibition and control of monopolistic, restrictive and unfair trade practices.




Cont….

Competition Disarms

‘Competition is the economists’ ideal. Its outcomes are socially desirable. It

does everything good for the market—the factors outside the firm’. View this

statement from the marketers’ perspective.

Competition essentially means a fight or a battle. It is a tough condition for

the marketers, because if you are inefficient, the market forces would edge

you out of the marketplace.

Hence, competition means hard work. It is a constant struggle to outperform

the rivals. Competition is customer friendly, but it is not marketer friendly.




Cont….

Product Companies Brands

Cigarette ITC, VST Godfrey Philips, GTC, HM Udyog, International Tobacco North-East Project, Asia Tobacco, Parket Tobacco, Mahaderlal Hariam.

India Kings, Classic, State Express 555, Benson & Hedges, Wills Navy cut, Wills Flake, Gold Flake, Bristol, Capstan, Scissors, Hero. Kingston, Legend, Burton, Charms, King, Gold, Premium, Virginia, Charminar, Gold Filter, Standard, Bat, Passing Show, Rothmans, Jaisalmer, Chesterfields, Marlboro, Four Square, Red & White, Commando, Originals, Cavenders, Chancellor, Harvard, Craven, Dunhill, Cartier, Panama, Baton, Flair, Style.

Players and Brand Proliferation




Cont….

Motorcycle Bajaj Auto, Hero Honda, Royal Enfield Motors, TVS, Suzuki, Escorts Yamaha, LML, Kinetic Engineering.

Eliminator, Caliber, KB 125 RT, Boxer, CBZ, CD100, Passion, Splendor, Glamour, Street, Bullet, Machismo, Thunderbird, Lightning 535, Taurus Diesel. Fiero, Yamaha, Rajdoot, Escort ACC, Adreno FX, Energy FX, Challenger, GF 125, Samurai, Shaolin, Shogun, TVS50XL, Max100, CT 100, Crux, Pleasure, Shine, Karizma, Achiever, Platina, Discover, Avenger, Wind, Apache, Star, Gladiator, Graptor,

Shampoo HLL, P&G, Colgate Palmolive, Laboratories Garnier, Cavin Care, Nyle, Ayur, Chik, Biotique, Lotus, Emami, LG, Amway, etc.

Sunsilk, Organics, Clinic, All Clear, Lux, Pantene, Head & Shoulders, Optima, Halo, Palmolive, Ultra Doux, Nyle, Ayur, Chik, Meera, Biotique. Fructis, Rejoice, Elvive, Emami, LG, Amway, Himalaya.




Cont….

Perfumes HILL, Baccaruse, Archies, Cavin care, Coty originals, Modi Revlon, Oriflame, Henkel, L’Oreal, Avon, Davidoff, Gucci, Nina Ricci, Christian Dior , Jovan.

Ivana, Shie, Calvin Klein, Obsession, Infiniti, Eternity Copper, Boy 3, Gals, Spniz, Exclamation, Jovan Musk, Longing, Masumi, Emeranda, Vanilla fields, Charlie, Fire & Ice, Aspasia, Fa, Lancome, Ralph Lauren, Armani, Women of Earth, Josie, Rare Gold, Faraday, Suny Skies, Cool, Water for Women, Envy, Premier, Joure, Dolce Vita, Prison, Intimate, Hypnotique, Margaretha, Lay, Jaipure, SRK.

Toothpaste HLL, Colgate Palmolive, Glaxo Smithkline, Balsara, Parle, Amway, Geoffrey Manners, Himalaya, Anchor, Ajanta, Dabur.

Closeup, Pepsodent, Aim, Colgate, Colgate Herbal, Colgate Total, Colgate Active Salt, Colgate Fresh Stripes, Cibaca, Meswak, Promise, Babool, Prudent, Glister, Forhans, Smyle, Himalaya, Emofoam, Dabur Lal, Anchor, Ajanta.




Cont….

Television Samsung, Sony, National Panasonic, BPL, Videocon, Onida, LG, Thomson, Philips Akai, Aiwa, Hitachi, Sharp, Toshiba, T-Series, Crown, Oscar, Beltek, Texla, Konka, Haier, Sansui.

Tantus, Plano, Hiltron, Metallica, Trinitron, Wega, Tau, Opera, Sophia, Tango, Giga, Plasma, Matrix, Studio, Prima, Emperor, Neptune, Celestron, Bazooka, Bazaoomba, Unique, Smart, Black, Candy, KY Thunder (These are sub-brands of various companies, Most companies use company brand along with sub-branding).

Chocolate Nestlé, Cadbury, Gujarat Co-operative, Parle, Mars, Hershey, Toblerone.

Kitkat; Classic, Bar One, Munch, Milky Bar, Dairy Milk, Fruit & Nut, Perk, Chocobix, Picnic, Crackle, Temptations, Amul, Badam Bar, Parle Kismibar, Mars, Hershey,

Paints Asian Paints, ICI, Jenson & Nicholson, Goodlass Nerolac, Berger.

Royal, Apcolite, Utsav, Gattu, Tractor, Ace, Apex, Dulux, Duco, 2k, Weathershield, Supercote, Special Effects, Robbialac, Jensolin, Armour Quartz, Umbrella, Special Effects, Pearl, Luster, Nerolac, Excel, Nerotex, Nerocom, Glossolite, Goody, Weathercoat, Walmasta, Durocem, Luxolsilk, Rangoli, Viay 1, Bison, Castle, Butterfly, Woodkeeper, Salvaline, Asphaltene, Happy walls.




Cont….

Watch Titan, HMT, Timex, PA

Time, Casio, Vardone,

SMH, Citizen, Seiko, Rewa,

Maxima, Romanson,

Gucci, Tommy Hilfiger,

Chanel, Rolex, Piaget,

Patelk Philipe, Pierre

Cardin, Fossil, Tag Heur,

Omega.

Classique, Insignia, Psi2000. Fast Track,

Royale, Spectra, Bandan, Dash, Exacta, Raga,

Sonata, Astra, Chanda, Gem, Elegance, Lalit,

Roman, Sangam, Swarna, Tennax, Zap, Aqura,

Basics, Datalink, Lextra, Mariner, Sportz, Vista,

Scuba, Aqua, Gold, G-Brand, Forestor,

Standard, Shein, Edifice, Lap memory, Easy

Ree, Twincept, Databank, Futurist, Cartier,

Alfred Dunhill, Mont Blanc, Datalink, Lextra,

Mariner, Sportz, Vista, Scuba, Aqua, Gold, G-

Brand, Forestor, Standard, Shein, Edifice, Lap

memory, Easy Ree, Twincept, Databank,

Futurist, Cartier, Alfred Dunhill, Mont Blanc,

Piaget, Baume & Mercier, Vacheron Costantin,

Lancel, Tissot, Omega Seamaster, Swatch,

Certina, Mido, Pierre Balmain, Calvin Klein,

Blancpain, Rado.




Cars Maruti, Skoda, Hyundai,

Daewoo, Tata, Ford, HM,

Mercedes, Mahindra &

Mahindra, Honda, Toyota, Fiat,

Mitsubishi.

M800, Zen, Alto, Esteem,

Baleno, Versa, Gypsy, Wagon

R, Swift, Santro, Accent, Getz,

Sonata, Ikon, Corsa, Opel Sail,

Chevrolet Optra, Aveo, Astra,

Ambassador, Octavia, Accord,

Citi, Bolero, Qualis, Scorpio,

Innova, Camry, Corolla, Indica

Xeta, Indigo, Sierra, Sumo,

Uno, Palio, Lancer Cedia.




Product Commonality A study7 by BBDO worldwide discovered that two-third of consumers

surveyed in twenty-eight countries believed that no differences existed in

the quality of brands in different product categories.

Historically, product parity has been a problem of firms engaged in

marketing of FMCG, especially insignificant or low involvement products.

The parity has been a major headache in categories like salt, coffee, tea,

soaps, detergents, toothpastes, house cleaners, pens, etc.

What are the forces behind the emergence of near par products? In

today’s world, technology drives many products and services; very little

commercially available technology provides competitive advantage for long

by itself. Nothing prevents competitors from using the same technology to

match quality and price of the market leader. Point-by-point parity can be

achieved in a very short time.




Differentiation Arms In the traditional economic analysis, price was considered to be the only tool

of competition.

Accordingly, competitive dynamics revolved around the price. The price

theory laid stress on price as the key driver of consumer demand. Efficiency

in price determination and its adjustment was one of the top factors affecting

the competitive position of the firm.

Finally, the importance of marketing variables was not realized. The

behaviour of the firms was confined to price determination and adjustment.

Competition forces the participants to be passive takers of the will of the

marketplace. Firms in a marketplace sell defined products and take the

price.

The business firm has only two basic functions—marketing and innovation.




Cont….

Brand Power Brands are the wealth generators of the twenty-first century. Earlier, firms

were differentiated on the basis of wealth producing assets like factories.

In the new era of a globalized marketplace, brands are key drivers of

economic values of a corporation. When products are not differentiated in

the factories, they are differentiated in consumers’ minds.

Jeans manufactured in factories are just the same, but Levi’s, Wrangler and

Lee are much sought after.

Coffee processed in one factory is indistinguishable from coffee processed

in other factories, yet Nescafé is what people swear by.

Brands are the ultimate differentiators; they drive consumer buying,

revenues and also the value of the business.




Cont….

The World’s most Valuable Brands by Brand Values

Brand$USm

Brand Valueof Parent Company $USm

Market Capitalisation

1. Coca-Cola 83,845 142,164

2. Microsoft 56,654 271,854

3. IBM 43,781 158,384

4. General Electric 33,502 327,996

5. Ford 33,197 57,387

6. Disney 32,275 52,552

7. Intel 30,021 144,060

8. McDonald’s 26,231 40,862

9. AT&T 24,181 102,480

10. Marlboro 21,048 112,437

Interbrand Citibank 1999.




Cont….

Global BRANDS: Ups and Downs

The recent 2001 Interbrand, Citigroup survey of top 100 global brands listed the following as the top brands. No brand can take its position and value as given. Since then, some brands have gained and some have lost their value.

Brand Brand Value2001 ($bn)

Percent changeOver last year

Coca-Cola 68.95 -5

Microsoft 65.07 -7

IBM 52.75 -1

GE 42.40 11

Nokia 35.04 -9

Intel 34.67 -11

Disney 32-59 -3

Ford 36.37 -17

McDonald’s 25.29 -9

AT&T 22.83 -11

Source: Interbrand Citigroup Survey, Business Week, Aug 6, 2001.




Cont….

The World’s 10 Most Valuable Brands

Rank2004

Rank2005

Brand Value Mn ($) 2005 Value Mn. ($) 2004

1 1 Coca-Cola 67.525 76.394

2 2 Microsoft 59.941 61.372

3 3 IBM 53.376 53.791

4 4 GE 46.996 44.111

5 5 Intel 35588 33499

8 6 Nokia 26452 24041

6 7 Disney 26441 27113

7 8 McDonald’s 26014 25001

9 9 Toyota 24837 22673

10 10 Marlboro 21.189 22128

Source: Business Week Interbrand Corp and www.interbrand.com




Cont….

Indian Star Brands

Brand General Consumer Corporate Consumers

Cadbury Coke

Colgate Ariel

Sony Titan

Pepsodent Close Up

Titan 5 Star

Surf Cadbury

Ariel Philips

Lux Surf

Rin Amul

Raymond Colgate

Source: Brand Value, ET – IMRB Survey, ET Supplement (Undated).




Cont….

The top ten brands ruling the roost according to A&M’s surveys are as follows:

1999 1998 1997

Colgate Colgate Vicks

Amul Iodex Colgate

Dettol Ponds Dettol

Britannia Britannia Rin

Lifebuoy Bata Close-up

Ariel Lifebuoy Pond’s

Horlicks HMT Bata

Lux Vicks Iodex

Zee TV Doordarshan Doordarshan

Doordarshan Dettol Lifebuoy

Source: A&M Top Brand’s Surveys.

Top Brands in India




Brand Owners and Product Manufacturers

Brand Brand Owner Product Manufacturer

Palmolive Shave Foam Colgate-Palmolive India Ltd. Accra Pack (I) Pvt Ltd.

Ponds Talc Hindustan Lever Ltd. Clarion Cosmetics Pvt. Ltd.

Lakmé Deep PoreCleansing Milk

Hindustan Lever Ltd. Jas Therapeutics Pvt Ltd.

Parachute JasmineHair Oil

Marico Industries Ltd. Amit Ayurvedic & Cosmetics Products India Ltd.

Denim Talc Indexport Ltd (HLL Subsidiary) Sonia Industries

Rexona Deo Hindustan Lever Ltd. Accra Pack (I) Pvt Ltd

Acquafresh Smithkline Beecham Asia Ltd Geoffrey Manners & Co Ltd

Sunsilk Hindustan Lever Unique Health Care Products

Babool Balsara Home Products Raun Household Care Products

Fa Henkel SPIC VVF Limited




Cont….

Customer Loyalty Quality is a common denominator. It has become less effective in

preventing customer switching. The same is the case with weakening loyalty.

“The ability of the manufacturers to copy one another’s most successful

products, and the brand hopping encouraged by tempting discounts may be

seriously weakening the grip of loyalty in many categories”21.

Erosion of brand loyalty has become one of the serious concerns in the

West.

Six different conditions are essential for brand loyalty. Brand loyalty is the (i)

bias (non random), (ii) behavioural response (i.e., act of purchase), (iii)

expressed over time, (iv) by some decision-making unit, (v) with respect to

one or more alternative brands, and (vi) is a function of psychological

processes (evaluative decision making).




Cont….

India’s Most Global Non-Corporate Brands

Brands are usually thought about in the context of products, services and

corporations. But if the concept of branding was limited to only these

conventional contexts, it would be tantamount to robbing the concept of its

potential. Accordingly, branding is extended beyond its conventional domain to

include politics, people, countries, destinations and non-profit organizations.

Business Today, in a unique endeavour published ‘India’s most global non-

corporate brands’. This survey was commissioned with an objective of finding out

the awareness level and recall of listed non-corporate brands form respondents

across a number of countries. The top non-corporate brands that scored over

others are as follows:




Cont….

Brand Awareness proportion % Primary association

Goa 44 Beaches, tourism, island, hippies, Portuguese

Kerala 26 Tourism, seafood, dosas

Taj Mahal 96 Beautiful place, one of the wonders of the world

A.R Rahman 16 Music

Sachin Tendulkar 14 Cricket

Vishwanathan Anand 9 Chess

Amitabh Bachchan 17 Actor

Bollywood 50 Indian film industry, Hollywood in India

Bangalore 50 IT, Silicon valley

Source: Business Today, August 18, 2002, pp. 84-88.




The essence of brand building is to develop a loyal customer base, i.e., to enjoy

a greater share of spending by heavy customers. In doing so, the brand must

confront the following issues:

Trust

Consistency

Accessibility

Responsiveness

Commitment

Affinity

Social bonds

Psychological bonds

Financial Bonds

Structural Bonds




Cont….

Brand And Trust The markets are in a two-way flux. On the supply side, there has been a

paradigm shift in the way value is defined, created and delivered.

In the context of commercial relationships and meeting consumer needs

and wants, brands hold out a lot of promise. Brands seem to be ideally

placed to fill the void created by depleted trust. Brands in the new, uncertain

environment can be trust marks. Trust brands can help customers cope

effectively with this descending era of uncertainty.

The following three factors suggest the need for trust in people and offer

opportunity for the creation of trust brands:

Time poverty

Knowledge void

Trust gap




Cont….

The Most Trusted Brands 2005 and 2003

Rank 2005 2003

1 Colgate Colgate

2 Lux Dettol

3 Dettol Pond’s

4 Pond’s Lux

5 Tata Salt Pepsodent

6 LIC Tata Salt

7 Vicks Britannia

8 Britannia Rin

9 Rin Surf

10 Bata Close-Up




11 Fair & Lovely Lifebuoy

12 Close-Up Fair & Lovely

13 Lifebuoy Vicks

14 Horlicks Titan

15 Pepsodent Rasna

16 Surf Philips

17 Titan Bata

18 Parle Pepsi

19 Clinic Plus Clinic Plus

20 Moov Horlicks

Source: The Economic Times, Feb 15, 2006 & April 21, 2004.

Ch- 01 (Competition and Brand)

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Transcript of Ch- 01 (Competition and Brand)