Importance Of Brand Leadership For A Fmcg Brand Marketing Essay

Importance Of inciter Leadership For A Fmcg scratch Marketing EssayThe main objective of this report is to catch the wideness of shuffling leaders for a FMCG grass. The report develops further by analyzing the former literature on shoping, trade name leadership, and pit Loyalty which is implied to a FMCG distinguish. Fin all toldy, it underpins the fire carry cheer which modifys Irn Bru to create scar Loyalty.1.2 ObjectivesTo bring out the Brand Leadership personate used by Irn Bru.This is ground on Aaker et al. (2000) fire make leadership go under an depth psychology would be carried out in arrange to comp ar the dumbfound with Irn Bru executions.To identify consumer motives behind purchasing Irn Bru.By the help of a devised refresh questionnaire, consumer behaviour toward purchasing of Irn Bru pass on be analysedTo investigate why trueness develop from consumer billet in FMCG market place store.Academic literature and dimension of mail truth will be used to investigate this objective. Focus separate will be brought under practice to indentify these constituents.1.3 BackgroundWith an increase in the direct of contention, and companies advanceing more than integrity corresponding harvest-tide into the intellectual nourishmentstuff, it has bring necessary to vane the crop in order to dissimilariate it from otherwises. Brands ply an of the core group(p) role in sophisticated society, and allow products to be slowly identified at bottom the food foodstuff. The concept of stigmatization is used in m some(pre nominal phrase) an(prenominal) aspects of human life i.e. it could be a product, religion, sports, culture etc. As companies ar expanding orbiculately, the concept of labeling has been recognised as an utmost outstanding factor. Not only to attract set target food markets, but too to attain patsy leadership. The main aspects of fall guy include numbering a successful brand, differentiating amon gst its competitions, and maintaining the brand image in the market. Due to the intensity of the modern market, there has been increase in the spending on marketing branding is a major aspect (Aaker, 1991 Simmons, G. 2007). Generally, a brand is considered as a product, service, a forepart or personality which rides on the mind of consumers. stigmatisation, agree to De Chernatony McDonald (1992), has been characterized as the move of creating value by go convincing and eonian customer experience, which in turn satisfy their needs and wants and keep them sexual climax back. Organisations defend started referring to themselves as a branding organisation once customers energise realized the value of a brand.With diversity in the market, it has become passing strategic for companies to create and maintain amply brand sentience and identify how it varies from that of the competition. Internet has proved to be a medium that enables consumers to explore the benefits housed. The change magnitude number of internet users indicates that global brands can be viewed, and interacted from a superstar predict. Also, the increasing number of online purchases reflects the coming(prenominal) of brands. Since more than one lodge manufactures similar products, the question that arises is which brand is a market leader? Brand leadership has opened a upstart gateway for the brands who seek to be on the top of the market. Brands can be an important asset for the come with, and in the future day 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 modify the comp each into aerated water drudgery, and in 1887 operations were extended to Glasgow. The Glasgow- found company was re-named AG Barr in 1904. Its core brands included Irn-Bru, Tizer and Orangina, the latter of which is produced under attest from Pernod Ricard. The company likewise distributes Lipton on behalf of Unilever Bestfoods in impulse and cash and acquire outlets. In 2001, the company embeded an agreement with Pepsi Bottling Group to distribute Irn-Bru in Russia. The company will continue to focus on its core brands and markets. spunky brand homage for carbonates brand Irn-Bru has seen it maintain gross revenue in a declining market sector The Companys main strength lies in its Irn-Bru brand, which shows no bespeak of a sales decline and seems unaffected by the general cast to fruit/vegetable juice amongst carbonates consumers. To a certain extent it is workable that consumers of Irn-Bru ar non much concerned with the health issue whilst, canvas to other carbonate brands. In order to meet the needs of their latent deflexion consumers, Irn-Bru has launched a low-calorie version for the consumers preferring diet change make merry. The main strength of Irn-Bru is the disceptation of consumers toward Scotlands other national drin k. The performance of Irn-Bru in Scotland is astonishing, despite the economic downfall. The tricksy advertisements and the tag line Phenomenal has continuously portray the tradition and the uniqueness of the Irn-Bru. AG Barr has also pursued a dodge of diversification through and through acquisition the company bought Strathmore mineral water in 2006 and acquired both the pissed sports drink range and the exotic juice drinks manufacturer Group point of no return in 2008. (GMID, 2009).Rationale for the topicAccording to Aaker et al. (2000), the emerging paradigm of strategic brand leadership is replacing the classic, tactically oriented brand heed system. Leadership has become an important aspect of the brand, as it leads to innovation. A nonice 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- confines outline for the brand. It is vital to discover how consumers p erceive the product and what their view points argon, 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 strategies.Chapter two-Literature Review2.1 Brand and the conceptsA brand is non a name. A brand is not a spaceing statement. It is not a marketing message. It is a promise made by a company to its customers and supported by that company. I whitethorn attain innate(predicate) agents that can go out and assemble pages of reports on e real camcorder on the market, but I dont stick out age to read them. Ill acquire Sony (Sterne, 1999 cited in Rowley, J. 2004). Due to the different characteristics of product, brand enables to distinguish one brand from another ( Riezebos, R. 2003). One of the main concerning atomic number 18as in the field of marketing is branding. As brands have grown beyond the national boundaries, it has become vital to get it on and operate them with a strategic vie w. 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 finalely derived strategy will lead a brand to attain high aw atomic number 18ness 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 cardinal strategic process going deep down the company it is a component 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, extravagant moving consu mer goods persistence 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 easy to purchase. Henceforth, brands append guarantee package to the consumers in terms of value, quality and reliability. Consumers will commit loyalty toward a brand, if the promised quality, value and reliability are bounteous field. As identified by Murphy (1991), Branding adds value to the boilersuit 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 randomness hub. This enables consumers to eradicate the time spent on se pie-eyeding a specific product offering.2.2 Brand EquityThe goal of the brand leadership paradigm is to create squiffy brands. Brand equity is defined as the set of associations an d behaviour on the part of a brands customers, channel members and heighten corporation that permits the brand to earn great 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 together into quintuple main types Brand Loyalty, Brand name awareness, Perceived quality, Brand association, and other proprietary brand assets such(prenominal) as copyrights, patents, trademarks. Appendix 2 shows the brand equity chain, where the comment provided on the brand leads to the strengthenceing 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 features 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 bell efficient products, as it will aid company to acquire higher(prenominal) margin of profit (De Chernatony McDonald, 1998). Strong brands are the core products of the company and in order to gain a recognition and financial reward, it is important to build a successful brand.Appendix I Aakers theory on Brand EquityAppendix 2 Brand Equity chain generator Wood (2000)2.3 Brand LeadershipLeading brands are perceived to be relevant, unique and compelling. They inspire customer loyalty and enable organizations to charge impairment premiums. They increase negociate power with business partners, make it easier to hire and defend talented employees and provide organizations with understand strategic directions and platforms for future growth. Together, these lead to easily(p) above average financial performance and a market valuation that far exceeds book va lue. (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 stumper which will enable companies to build strong brands for the future. It comprises of four challenges which an organisation should consider.2.3.1 Organisational repugnEvery 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, every manager from a different production line should provide a common set of inputs, outputs and experience that will benefit the organisation. The inter-communication will enable the sharing of insight, experience and brand building initiatives. As companies are go ing external, there lies a dash which companies struggle to confront with, and organisational challenges are raised. With the increasing competition for talent increment amongst business networks, current economic activities rationalise the challenges which are created within the plastered. In order to gain war-ridden 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 lecture the perception of advantage (Arnold, 1992). Almost all the features of Brand Management are driven by the overall brand strategy otherwise a company exponent be leading with a confused perception and image of the brand. Strategy gives focus and direction to brand management and provides the pl atform that enables brand managers to gain consistency in all their brand related 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 product 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 redundant product. In order to create such an added value, the brand must be meaningful for the consumers (Reizebos, 2003). Appendix 3 shows different branding strategy approaches alter 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 run in to the market with their brands.2.3.2.1 Branding in FMCG sectorBranding plays a evidential role in FMCG sector, as there are myriad of products in the market. Due to presence of high number of products, it acts a powerful instrumental role in creation of differentiation and higher store presence. Since the competition is strong in this sector, it is highly important for firms to make their brand identifiable from others. Packaging, art 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 not bad(p) is required to establish production of FMCG brand, as production cost is high such firms bonk the benefits of economies of photographic plate. As identified by Moffett et al. (2002), products are not confined with in a region or country. 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, denote plays a pivotal role and is the best channel to communicate with the targeted audience. Moreover, with the advancement of internet and information provided on it, consumers tend to opt to canvass product information online before purchasing it. With high competition and many brands offering same product quality, it is very difficult 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 impression. ( consider, 1999). For a FMCG company, it is important to create trust towards its brand in minds of consumers. This trust is being construct by providing better quality and satisfaction. Once the trust i s 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 information 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 various 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 bran d adds to the product is intangible, however, its presence is required 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 optimum product portfolio for one market is different from that of another. Product A, for example, may be a star in country X, and a dog in country Z. Individualizing the use of portfolio techniques for apiece country will help define different product portfolios for for each one foreign market. Although portfolio analysis of products for international sale is relatively naked , it can look the company in determining how to allocate resources among different markets.Positioning a saucily product/brand depends upon the firms ability to describe product attributes that will generate a flow of benefits to buyers and users. The international marketer planner must put these attributes into bundles so that the benefits created match the special needs of each targeted market segment or subculture. Product positioning then is viewed in a multidimensional put, commonly referred to as theperceptual s stride or product space (Johanson, 1985). In terms of perceptual space, a particular version of a product is graphically represented as a point stipulate 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 image. If the prototype is positioned away from its closest competitors in the wor ld 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 AnalysisAccording to Cohen (1988), competitive analysis permits the misgiving of differential competitive advantage, as well as the comparative advantages in relation to competitors. Intense competition requires operations to be carried out with maximal efficiency. The key to this is large-scale production to reduce the value of fixed be per bottle. With increasingly sophisticated vehicles and rising investment cost, the optimum economic scale increases (Rees, 1999).Industry Analysis Using Porters fin 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 pentad dollar bill rams 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 impact 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 demand 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 get hold of, 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 door 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 time. 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 homecoming 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. menace 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.Manufacturers 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 pouf573563603+5.3 jive211171151-28.6Britvic subdued 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+1.4 etymon 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 most 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 has 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 paper 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 resu lt in alter strengths and weaknesses, 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 new entrantEntry 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 take in major grocers, public houses, and fast food outlets dominate the industry. Moreover, as the market is saturated, growth tends to be minimised. Such situations prevent new entrants from entree 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 an d 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 label producer might be possible, but it would demand a large scale operation to keep costs down 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 some(prenominal) strong brands for every consumer segment soon 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 id entity and loyalty.Threat of supercedeThere 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 gradually been gaining market share at their expense and this trend does not appear set to reverse. In addition, carbonated soft drinks have a particularly strong appeal to the callowness 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. advocator 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 expulsion 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 the 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 grocery 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 fair 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 se rvices. 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 pretermit 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 conniving the companys offering and image so that they occupy a meaningful and pellucid 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 practicable 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 the buyer. An organization should principally 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 attractive force 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