Branding and Its Impact on Commodity Products

CONTENTS
Brand and branding Branding and advertising Brand Equity Positioning Branding of Commodities Advantage Customer Benefits Challenge in Branding Commodities Packaging Case Catch Salt Captain Cook Salt Healthy World Atta Bailley Water Reason for Failure Of Branding Commodities Suggestions Bibliography 1 3 9 10 15 17 18 19 20 22 26 28 37 44 48

-1-

Branding and Its Impact on Commodity Products

BRANDING
BRAND The word Brand owes its origin to the Norwegian word brandr which means to burn. Farmers used to put some identification mark on the body of the livestock to distinguish their possession. Products are what companies make, but customers buy brands. Therefore marketers resorted to branding in order to distinguish their offerings from similar products and services provided by their competitors. Additionally, it carries an inherent assurance to the customers that the quality of a purchase will be similar to earlier purchases of the same brand. A brand is a name, sign, symbol or design or a combination of one seller or a group of sellers and to differentiate them from those of competitors. BRANDING Branding is a process, a tool, a strategy and an orientation. Branding is the process by which a marketer tries to build long term

relationship with the customers by learning their needs and wants so that the offering ( brand ) could satisfy their mutual aspirations. Branding can be viewed as a tool to position a product or a service with a

consistent image of quality and value for money to ensure the development of a recurring preference by the customer. It is common knowledge that the consumers choice is influenced by many surrogates of which the most simple one is a brand name. Although there may be equally satisfying products, the consumer when satisfied with some brand does not want to spend additional effort to evaluate the other alternative choices. Once he or she has liked a particular brand, he or she tends to stay with it, unless there is a steep rise in the price or a discernible better quality product comes to his/her knowledge, which prompts the consumer to switch the brand.

-2-

Branding and Its Impact on Commodity Products Branding can be used as a differentiation strategy when the product cannot

be easily distinguished in terms of tangible features (which invariably happens in case of many CNDs, service and even durables) or in products which are perceived as a commodity (e.g. cement, fertilizers, salt, potato chips etc.). in all such situations marketers use branding as a differentiation strategy and try to develop an intimacy with customer groups. That is, they try to develop and deliver customized products and auxiliary services with tailor-made communications to match with the customers self-image. Such differentiation is an on-going process and the initial and on-going actions are depicted. Brand building is a conscious customer satisfaction orientation process.

The brand owner tries to retain customers to its fold over their competitors by a mix of hardware & software because when a customer feels satisfied he / she develops a kind of loyalty for the same. Therefore, a strong brand, apart from name, symbol or design, ensures quality, stability of assured future market and effective utilization of assets. Further, a strong brand, which a retailer wants to stock because of customer pull also provides the owner of the brand with a platform for the sale of additional products.

-3-

Branding and Its Impact on Commodity Products

BRANDING AND ADVERTISING

A brand is a product that provides functional benefits plus added values that some consumers value enough to buy. Brands do differ from each other but distinctiveness over and beyond this is highly desirable. In brand building, advertising works through the reinforcement hypothesis to build up, for buyers of the brand, a resonance or mutual interaction and reinforcement of behavior and attitudes. Once the brand is off the ground after building its position against other brands, this position is maintained largely by two factors: the brands functional performance in comparison with competitors and the added values (subjective attitudes & values) that have been built in the main by the advertising. Branding and advertising are almost synonymous. There is an unspoken assumption:

PRODUCT + ADVERTISING = BRAND

In other words advertising idea is the brand property. Only advertising reaches a vast number of consumers that too economically. 1.BRAND BUILDING BY TAKING ADVANTAGE OF WORLD FAMOUS EVENTS LIKE WORLD CUP (CRICKET) Surf Excels advertising during the world cup was talked about. The brief was to link Surf Excel with cricket and at the same time bring out the brands functions and benefits like stain removing. The advertising highlighted the core benefit of the brand -- removal of stains, says an HLL spokesperson. That is why the client bought the idea immediately, even though the idea was not typically Lever. This ad. Campaign is an example of how a company can build its brand image by keeping a close watch on events taking place all around the world.

-4-

Branding and Its Impact on Commodity Products

2.BRAND BUILDING THROUGH SHIFT IN AD STRATEGY

Onidas brand image was being threatened by umpteen brands. It wanted an advertising strategy, which could communicate its contemporary, youthful premium brand image with an aim of cheeky arrogance. This arrogance stems from the fact that their TV is the best. This time they changed their familiar and successful devil, as they believed that the core of the brand is more important than symbols like the devil. So the new ad with the airplane. This is case of changing the brand image through advertising.

REINFORCING THE BRAND IMAGE

Kelvinator has reinforced its the coolest one image with a series of ads. For example, in one of its advertisements a man sings attuned but gains appreciation when he feels cold and sings in his shivering voice once the refrigerator is opened. Despite Kelvinators ownership being shifted from Whirlpool to Electrolux, the consumers still associates Kelvinator with the coolest one. The ads were basically meant to bring Kelvinator back to top of mind consciousness. reasoning and the ads are being aired on star sports and Sony. This case endorses the fact that advertising can play a vital role in fixing the brands image in peoples minds. The idea came from rustic

Building brand image keeping the competitors in mind

LG Electronics Fridge Sub branded PN System (preserve nutrition), was positioned as nutrition preserver. The ads said from today, all other refrigerator become history; drawing attention to something that pushed their one benefit further towards the consumer. The advertising aimed at both the head and the heart.

-5-

Branding and Its Impact on Commodity Products CTV It was positioned as the right set for wrinkle free vision, nothing terribly 007-ish in it. The CTVs eye adjusts itself to lighting conditions. This was there in other CTVs also, so LG used preemptive advertising strategy to build its brand image. WASHING MACHINE For this, feature positioning was used. Their washing machine was called the chaos punch +3 and the feature highlighted was that the punch detangles clothes before washing them. A collection of such advertisements on products from the same company are proof that LG is presenting itself as a quality brand which can provide customers with top class products for their home.

ADVERTISING USING A UNIQUE THEME

BPL, as is talked about, is the only brand that has not compromised on quality so far. It has invested a lot of time, money and effort on brand building. The Believe in the best campaign was able to establish BPL as an Indian brand with international quality products. And that is one of the chief reasons why it is still at the top. Its April 99 market share was 19.7% compared to Videocons 13.8% and Onidas 11%. One can use a theme to project its image and it is fairly understood that no one will copy it. It can be used again and again in different contexts but reinforcing the same idea to ingrain the brand in the minds of the consumer.

BRANDING AGAINST COMPETITORS

WHIRLPOOL The company is currently building vehemently on its brand. With ads like Whirlpool Quick Chill and Whirlpool Washing Machine it is placing its durables as the ultimate machine to be had in a household. Attributes like faster ice formation, agitator wash are highlighted specifically in ads placing the brand in a high pedestal and giving it a highly polished image.

-6-

Branding and Its Impact on Commodity Products

BRANDING AN INDUSTRIAL HI-TECH PRODUCT

INTEL (the third line) It is the worlds tenth most valuable brand. It is targeting the main stream market, with a special accent on home pc market, along with office use. Its global advertising sees the blue door opening- the viewer is sucked down a flash whirl, virtual town. The shear technical wizardry of the ad spots gelds the aura of a very high tech product and in this case well becomes the message itself. It also links it to the excitement of surfing the Internet. It has positioned the brand as the Internet dream machine.

EMOTIONS IN BRAND BUILDING

Wheel detergent powder was advertised using the emotion anger. Although it sounds negative, the trick clicked as the angry lady was calmed when she used the detergent which brought award to her husband. A successful campaign fixing the brand as a household middle class product with the customer can identify. MAGGI Maggi tomato ketchup is illustrated as, Sauce ka big boss. The tag line of Tomchi is not too hot, not too sweet, tastes just right. Appears to be direct hit at Maggis its different hot and sweet sauce. The communication is based on positioning of tomchi as a sauce, which has a perfect balance of tomatoes for sweetness and spice of chilies. The Maggi sauce campaign with its famous Ajit jokes-Lily, dont be silly or Boss has gone for a toss, was path breaking. It has made the brand memorable. There is a new ad now, which explains the expansion advertising strategy Maggi is continuously following upon. But whatever be the product, Maggi has remained and will remain etched in the customers mind as a dependable and quality brand.

-7-

Branding and Its Impact on Commodity Products

BUILDING BRAND THROUGH CORPORATE ADVERTISING

ICICI ICICI has been building its identity over the last couple of months and the impact is that now a common man knows what ICICI stands for. In the common parlance it denotes trust and confidence. The new identity has given ICICI extra mileage in everything and the advertisements have built trust in the group name thus helping leverage each product through cross-synergies, seamlessly. This trust has been built at a lower cost. The communication device used is very interesting as it educates the common man about his own money. This is a financial brand in the offing. (Currently their ad. campaign has again undergone a change. Now they are focussing on hassle free banking.) DeBeers The Debeers advertising has rocketed this non-traditional brand from 1995 and its market has grown stupendously by 19.4% in 1997. The ratio advertising to incremental sales was 1.2:100. The Debeers Consolidated Mines manages consumer demand using advertising, publicity and trade. The brand plank was: diamonds are more modern and aspiring as compared to gold. Communications had two options: the woman as a self-purchaser buying with and without her husbands approval or the husband surprising the wife. The second was preferred and thus the product was positioned as a highly emotionally charged surrogate for status. In TV there were two spots Architect and Hotel spot.

-8-

Branding and Its Impact on Commodity Products Print advertising focussed on creating identification with women portrayed and directly compared costs with that of familiar objects. Diamond-testing information below the ad addressed the knowledge issue. These efforts changed the attitudes of viewers against diamonds. In 1997, diamonds were seen as more personal gift. Nevertheless, diamonds had a upper hand on god only in terms of beauty and status. In 1997 only, major change was in media when recall leapt up. The new wedding strategy was used and the new international shadows execution looked stylish and elegant. Infomercials were run which addressed price, confidence and knowledge issues, the channel thus enabled them to get a long, complex message into a medium having greatest reach and impact. No wonder DeBeers is now a name in itself. Ref.: Brand Equity (ET); 10-16 Feb. 1999

ADVERTISING THE HARD WAY

Vicco It took Vicco 27 years to carve out a niche for itself. After five unsuccessful years of trying to sell Vicco Turmeric, it decided to use a fresh strategy. Other than packaging, communication of the brand was an important aspect used. Using the traditional haldi ceremony, it positioned the product in the minds of the Indian women category. The core theme rekindled memories of tradition and happiness but also insisted upon daily application of the cream. It also came up with a vanishing cream formulation and after extensive advertising in over a thousand movie halls and the

-9-

Branding and Its Impact on Commodity Products television, the brand began to gain acceptance. Fair and Lovelys introduction did not dent Viccos sales while Sangeeta Bijlani endorsed the brand. With continuous harping on the natural benefits of turmeric cream, Vicco went ahead unfaltered by fairness creams and came to be known as a nationally recognized turmeric cream.

- 10 -

Branding and Its Impact on Commodity Products

BRAND EQUITY
The equity of a brand is measured by the awareness and image which it evokes.This is a natural measurement, since the brand is the symbol. Brand awareness relates to the number of persons who recognized the brand and who are conscious of the promise which the symbol expresses. The aim of advertising is to reveal the meaning of the brand and to spread it as far and as wide as possible to encourage people to try the product offered. The decision as to which of these different levels of awareness should be pursued depends on the way in which customers are expected to make their choice, and the degree of personal involvement. The Brand Equity has the following elements, 1.Brand Loyalty: It is a measure of attachment that a consumer has to a brand. 2.Brand Awareness: It is the ability of a potential buyer to recognise or recall that a brand is a member of a particular product category. 3.Perceived Quality: It is the customers perception of the overall quality or superiority of a product or service with respect to its intended purpose ,relative to alternatives. 4.Brand Associations: Anything linked in memory to a brand. 5.Other Proprietary Assets: Like Patents,Symbols,Trademarks,etc.

- 11 -

Branding and Its Impact on Commodity Products

POSITIONING
DEFINITION:- Various have given different definition of Positioning. Some are:Beckman, Kurtz, Boonee Product positioning refers to the consumers perception of a products attribute, use, quality & advantages & disadvantages in relation to competing brands. Berkowitz, Kerlin, Rudelius Product positioning refers to the place an offering occupies in the consumers mind on important attributes relative to competitive offerings. Alpert, Lewis & Ronald Gatty The differentiation of brands by studying the ways in which their consumer differ as well as how consumer perceptions of various brands differ is termed product positioning. Crawford, Merle C Once a target market has been selected, the new product marketers must differentiate their item from products already offered to that target group. This differentiating is called positioning the product & is now widespread use. Cundiff, Edward W, Richard R Still, Norman A P Govoni Positioning is significant to consumers in that it provides a basis for comparing alternatives choices in the marketplace. The marketer can guide the consumer by furnishing clues to help position the product in relationship to others Day, George S Product positioning refers to the customers perceptions of the place a product or brand occupies in a given market. Ennis, F Beaven - 12 -

Branding and Its Impact on Commodity Products The theory of positioning is The identification of an exclusive niche in the market or the creation of a unique perception of the product that satisfies an unfulfilled consumer need & that serves to distinguish the product from competing alternatives. Hardy, Kenneth G Positioning is defining the package of benefits relative to competition that will be offered to particular target segments. Hehman, Raymond D Positioning is your product as the consumer thinks of it since the consumer is the ultimate user of the product, the consumerrs perception of your product is what your product really is. Kotler, Philip Market positioning is arranging for a product to occupy a clear, distinctive & desirable place in market & in the minds of target consumers. Mittelstadt, Charles a Positioning refers to how you want your brand thought about in connection with competitors in its product category. Positioning needs to be specific to your brand aimed at a specific target audience. Reibstein, David J Positioning is the activity of trying to get customers to perceive a companys product differently from the way they perceivewhat competitors are offering. The customers viewpoint is the crucial aspect of product positioning .

- 13 -

Branding and Its Impact on Commodity Products

USEFULNESS OF POSITIONING
As competition intensifies & brands proliferate, consumers tend to differentiate between brands in their own way. Positioning is a conscious attempt on the part of the marketer to accentuatethis natural tendency & in the process, impart a distinct identity to his own brand to make it stand out among the competitors. The basis on which this differentiation is achieved reflects consumer preferences or attitudes. The marketer, through his diverse & coordinated actions, tries to influence this process. The concept of positioning is also important in various other aspects of the marketing strategy. Once one is clear about the position one wants, the other marketing decisions like product design, packaging, pricing, method of distribution, etc., become clearer.

- 14 -

Branding and Its Impact on Commodity Products

ELEMENTS OF POSITIONING
Evidence has shown that there are four distinct variables that affect the position of a given product. These are:a) The product itself, b) The company behind it, c) The competition, d) The consumers. 1. The Product :- How important the product is or what meaning it has for the consumer & how he relates to it. The fact that a product involves better ingredients or processes is a matter of indifference unless this knowledge offers distinct advantages to the consumer. There may be little point in lavishing sophisticated technology on certain packaging material if the customer consigns it to the dustbin as soon as he has unwrapped the product. In other words, one needs requires judging the dimensions, which are important to the customer. Conversely, packaging may be used to lend an aura of desirability to a product but its cost must finally be justified by its intensity of meaning to the customer. 2. The Company:- A product comes from a company & every company has its own history. Generally, the stronger the company profile the better the image of its products. For instance, consumers may perceive a better the image of a product if it comes from a reputed house like Tatas. The companys image also matters to the various channels of distribution involving traders & distributors especially retailers. Even where a company like Gujrat Cooperative Milk Marketing Federation Ltd., is overshadowed by its popular brand name Amul, new product launches like Dhara (a non-Amul brand) has been well received by trade channels . Thus, first the companys own image lends weight to the products positioning . secondly, where it does not, as in the case of Dhara, the companys name still plays a vital role in successfully launching the product & eventually creates the product position in the market. 3. The Competition :- Product positioning is invariably done in relation to various competitive offerings. In most cases, the consumers have a tendency to judge a product in - 15 -

Branding and Its Impact on Commodity Products comparision to the dominant brand, e.g., all photocopiers are compared with Modi Xerox, all PCs with HCL, toothpastes with Colgate & so on. Leading brand enjoys some edge over others. It is therefore imperative to assess the various competitors. In other words, selecting a slot distinctly different from the competitors can avoid a direct confrontation with them. While segmentation serves this purpose by dividing the market into smaller groups, positioning goes a step further to establish a distinct niche in consumers mind. 4. The Consumer:- It should be reiterated that positioning is essentially based on consumer perception rather than factual evaluation. Hence, it becomes necessary to examine how the consumer views a product. Here, it becomes necessary to examine how the consumer views a product. Here, the consumers self-perception comes into play along with his cognitive & connotative factors. If he sees himself as modern & progressive, he will expect a more progressive product. If, on the contrary, he sees himself as traditional & possessing a taste for performance, then he is more likely to view changes as new fangled. Thus, it is important to know what kind of person the archetypal consumer is, his lifestyle, & his preferences.

- 16 -

Branding and Its Impact on Commodity Products

BRANDING OF COMMODITIES
In the past in India most commodities were sold in unbranded form. Today we notice the reverse trend. It all started in early Nineties when foodgrains and spices were offered in branded form. Vegetables followed this, salt, sugar etc. Today, more marketers have jumped into the bandwagon. Say, Tata salt has used corporate name, oranges are stamped with the growers level; tea is sold in special pack design or names, common nuts and bolts are packaged in cellophane with the distributors symbol, and automobile components- spark plug, tyres, filters-bear separate brand names from the automakers. This craze for branded commodities is also a result of the changed lifestyle of people, specially working couples who have high disposable incomes and for whom quality and convenience now take priority. Marketers are flocking to the commodity market because of huge size they offer. For instance, the branded rice market is at Rs 1100 crore which constituted just about 10 percent share of rice market. This goes to show the immense opportunity. Generally speaking, marketers have added value to commodities through branding, be it fertilizer, salt, spices, flour, rice or sugar. Hindustan lever has achieved a thundering success when they differentiated its DAP fertilizer under the brand name of paras. Similarly, Brooke Bond has branded frozen vegetables with its green valley brand. DCW Home product had modest success when it first launched Captain Cook salt and followed it up with Captain Cook Atta. Siel is into sugar, NEPC has offerd atta, maida, Sooji and spices.

- 17 -

Branding and Its Impact on Commodity Products

ADVANTAGE
The brand name makes it easier for the marketer to process orders & track down problems associated with the brand. The marketers brand name & trademark provide legal protection (patent or copyrights) of the unique features, which would otherwise be copied by competitors. Branding gives the marketer the opportunity to attract loyal & profitable segment of customers. Loyalty created over time offers the unique advantage of having assured customer base against competition & greater control in their marketing programme. It is wrong to assume that any commodity market is a homogeneous mass. Instead, the task lies in skillfully identifying the different segments & understanding their specific needs. Branding helps marketer to form suitable segmentation of the market. Different brands can be aimed at different segments of customers. In the long run it helps to build a strong association with the consumers as well as the trade. By highlighting the same name, they could project their quality & image of the company. Last, but most important, to derive the first movers advantage & tap the huge market potential.

- 18 -

Branding and Its Impact on Commodity Products

CUSTOMERS BENEFIT
Branding of commodity products not only benefits the organization but it also helps the customer.

1) Quality :- Customer will get the quality product from the wide variety of similar
products. a) The risk of getting adulterated product is minimized. It is certification for quality and homogeneity. For example unbranded masala etc. may be adulterated which not only affects the taste of the food but also affects the health of the person. b) The manufacturing date is printed on the packet of branded commodity which helps him to know how old the product is. For example the local grocery shop can give the old Atta to the customer telling as fresh Atta but for branded customer can read the manufacturing as well as expiry date.

2) Quantity:- In branded commodity products the customer is getting the right

quantity of product. The grocery shop cannot give him less amount.

3) Price:- The price of branded commodity product is fixed so a shopkeeper cannot

change it & customer cannot be cheated. For branded commodity products the shopkeeper has to charge the same price from a child or a adult customer.

4) Value For Money:- The branded commodity products saves time of a customer
because the customer does not have to waste time in removing unwanted material from the commodity products. Customer easily identifies the branded commodity. Customer knows the special attributes or benefits

- 19 -

Branding and Its Impact on Commodity Products

CHALLENGES IN BRANDING COMMODITIES

The commodity market is generally driven by price. Besides, consumers, by and large, show no involvement in selection of a commodity. Under such conditions, to make them insensitive to price itself is very difficult task. And, afterwards to create a preference for a specific option calls for a more sustained efforts on the part of any marketer. Of course, the challenges are slowly taking place in cities and big towns where consumers are able to appreciate the benefits of buying a branded commodity Branding commodity is a marketing exercise at a very fundamental level. Unlike in consumer goods market where the marketer can play around with consumer perception, brand differentiation etc, in a commodity, branding is about going to the basics or exploring at the grass-root level. To quote, David Aaker, it involves overturning the rules of the market, establishing new selling propositions in the market which so far has been driven largely by price. And everything from positioning, pricing, brand value & packaging takes on a new sensitivity. Brand building involves cost, apart from additional cost incurred in packaging, labeling, advertising, legal protection- & a risk that if the brand should prove unsatisfactory to the user, the companys image would suffer & it may even affect market for other products of the company. Thus the challenges involved are formidable. Still any marketer prefers to brand it because of many unique advantages.

- 20 -

Branding and Its Impact on Commodity Products

PACKAGING AS A DIFFERENTIATING STRATEGTY

The package provides the buyers first encounter with the product & is capable of turning him on or off. Many marketers have called packaging a 5th P along with Price, Product, Place & Promotion. Packaging is treated as an element of the product strategy. Well-designed packages can create an image of convenience or quality for the consumer and promotional value for the producer. This could be a useful tool for justifying the premium charged. Inertia Industries Limited (IIL) launched their premium Sand Piper beer in 1993, but the response was less than encouraging as the customer could not associate the ubiquitous brown bottle with a premium beer & hence the price charged struck a discordant note with the customer. In 1994, to rectify the defect, the company went for a relaunch & the packaging was changed to green bottle with a golden champagne foil top. IIL now repositioned Sand Pipers as the champagne of beers. The effect was startling. It sold out 37,000 cases as compared to a mere 3000 cases a year before.

- 21 -

Branding and Its Impact on Commodity Products

IMPORTANCE OF PACKAGING IN COMMODITY PRODUCTS

Packaging plays a very important role in commodity products. For example Uncle Chipps potato chips based on its delivery of freshness, crispness & retention of flavour. This is possible by use of packaging technology wherein the product is packed in air-tight metal foil packets filled with nitrogen atmosphere to prevent air from leaking in & spoiling the product. Moreover, at a time when potato chips were available only in colourless, transparent, their quality plastic packages, Uncle Chipps was the first to use packets made of air impermeable metal foil which was brightly coloured for visual differentiation.

- 22 -

Branding and Its Impact on Commodity Products

CASE: Catch Salt

Catch, as a brand, has already achieved the distinction of having made it to the up market Indian table, which is often the biggest hurdle for most enterprises.

THE HUNCH :- The salt came first. The year: 1987. The Delhi-based Dharam Pal
Satya Pal (DS) group, better known for its Baba, Tulsi and Rajnigandha brands of paan masala (and the recent Pass Pass), launched a subsidiary called Hi Tech Foods Ltd. Satya Pal, the then proprietor of DS group, had this vague hunch that branded free-flowing tablesalt was exactly what many Indian homes wished they had access to, but didnt. The more he thought about it, the better the idea began to crystallize. Getting cooking salt out of a 1kg bag, putting a portion into a shaker and then having it turn soggy in a monsoons was simply too much of an inconvenience. Pepper? It had to be crushed manually (auto-crush shakers were available, but they worked rather poorly). The question was simply one of how cheaply the idea could be launched, and how many people would be willing to pay for it. In hindsight, it looks obvious. To take a product as basic as salt (its the obvious example of a necessity) and deliver it in a more user friendly form. Thats the thing about great ideas. But the point is it was late 1980s, several years into consumer boom, and no one had done it before. The 60-year old DS Group, with a Rs 75-crore turnover, had an enterprising brain in Satya Pal, who went ahead and did it. Today his two sons, Ravinder Kumar, chairman, and Rajiv Kumar, managing director, DS Group, are busy building on success.

Free Flowing Success wasnt a simple matter of executing a terrific idea. It took hard
work, as all business ventures do, and plenty of bold thinking and risk-taking. The idea may have been the result of gut feel, but everything else followed a statistically valid process. Hi tech carried out a random survey of the urban Indian market, and decided to aim Catch at two well-defined segments. One, premium Indian households in SEC A and SEC B cities. And to Hotels and restaurants, which would use the products in large

- 23 -

Branding and Its Impact on Commodity Products volumes. Hi-tech built itself a national distribution network that covered some 1,600 premium outlet would be a decent start. The important gambit, however, was the brands pricing. Catch was launched at a price of Rs 6 for 200-gm pack. For a product that has stirred price passions in past, this was an audacious premium over regular salt. The 1983-launched market leader, Tata iodized salt, was selling at only Re 1 per pack for one whole kg, and local merchant were selling loose salt at less than that. So Rs 6 was quite a price. This was a big risk. A bigger one than the price ratio would suggest at first glance, because low priced salt is seen by most in India as something of a fundamental right, and anything extra, be it taxes, inbuilt costs or margins, risks being viewed by the aam janta as extortion. According to Ashok Aggarwal, vice-president, DS group, We did not have any competitors, as the brand was a high-priced commodity packaged for convenience. And luckily for it, the urbane Indian housewife made a rational choice, and found that free flowing benefit and added convenience value outweighed the price. And the rest of the family was also impressed (a key factor). And so were guests. And, since it was so wellpackaged, it quickly became status symbol. Price analysts would have been shocked. Never before had the Indian market accepted a product at thirty times the per-gram price, for packaging. With in months of launch, it was clear that Catch was on it way into the marketing history books. It wasnt packaging insists the company. The salt used in catch was seawater salt (subsoil water salt is another source). Sourced from the Gujarat coast, DS was getting it processed at its Noida refinery plant, near Delhi, into a pure white crystalline form of sodium-chloride (no magnesium chloride and other hygroscopic salts) that could resist moisture and thus continue to flow freely. This is also the track adopted by Captain Cook salt, which came later (in 1991), and made a free- flowing proposition for 1-kg packs. Now Hindustan levers kissan has entered the salt business, but its harping on iodine and goiter-prevention, a separate benefit altogether.

- 24 -

Branding and Its Impact on Commodity Products Our process says Aggarwal, includes filtering the impurities out; precipitating and crystallizing the salt; then purifying it by removing the water absorbing organic materials to make it free flowing. A high sodium chloride content (99% plus) content differentiates free flowing salt from common salt. Catchs packaging keeps it free-flowing throughout. This is why look-alikes didnt click. DS has invested Rs 50 lakh in it original plant. Another Rs 2 crore was put in subsequently (for state-of-the-art iodization and crystallization machinery). The finished salt crystals coming out of the plant were of various sizes. While the larger crystals went into the consumer pack, the finer leftovers were bought by potato chip manufacturers and used in such brands such as Uncle Chipps, Binnies and PepsiCos Hostess. This made the business more exciting. Britannia started buying fine salt from DS in 1997.

DIVERSIFYING With in four years of Catchs launch, Hi Tech touched Rs 1 crore in

turnover. In 1989, the company thought it was time to broaden the product range under Catch. So it launched ground black pepper in 100-gm packs. It was the obvious move to make. So too, a 100-gm pack for Catch salt. By now, the product had penetrated more than just the surface of Indias uppercrust households, and other products could piggy-ride the brand into the home. That was followed by a host of spices and salt flavours. First, the culture-defying products, than the specific-appeal ones. In 1991, it launched black salt, garlic salt, chat masala and garam masala, in similar packs. The pepper and spices were sourced from Kerela, while the masalas were DSs own recipes. Of course, the culture specific products were not successful as the common use ones, but they did reasonably well in several parts of the country. Here the packaging takes the backseat to the actual product. Cooking masala marketing often takes region wise strategies, which are often not worth it on a base of tiny volumes. Besides, MDH, Everest and others have strong holds in their respective regions. Now, Lever is rumoured to be contemplating foray.

- 25 -

Branding and Its Impact on Commodity Products

PRICES OF BRANDED COMMODITY

100-gm packs Table salt Black pepper Red chilli powder Turmeric powder Ginger powder 1994 5.00 23.50 17.00 12.75 26.00 Catch the trend 1995 1996 5.50 6.00 26.50 29.00 17.00 18.50 12.75 12.75 26.00 28.50 1997 6.00 42.00 21.70 12.75 32.60 1998 7.30 46.50 20.40 14.00 31.90 1999 8.00 58.00 26.00 20.50 30.70

Market retail prices in Indian Rupees Catch salt s contribution to turnover has decreased considerably since its launch in fiscal 1998-99, it was less than 50%, compared to 72% in 1996-97.

In 1998, Catch added Lahori salt, sambhar powder and curry powder to its portfolio. The costlier commodities, such as pepper, garlic salt and chat masala were also put out in 50gm packs. The most recent launch was in 1998, when Catch launched white pepper at Rs 93 per 100 gm pack. Not all the products are still selling. Catch basmati rice, for example, failed in 1989. DS had to retrace its steps. What went wrong? Rice prices kept fluctuating, says Aggarwal. As a brand, one must promise the customer a consistent price. But primary sector products prices are volatile. Its a challenge. Today, Catch salt continues to be the penetration-driver, though observers feel that brand has hit a plateau. The company now has 230 distributors, catering to over 20,000 retail outlets across India. Advertising? Catch ran a campaign a long time back, as Aggarwal recalls. Since then nothing much has happened. However DS continues to advertise its paan masalas.

- 26 -

Branding and Its Impact on Commodity Products

CASE:Captain Cook Salt Product: In May 1991 DCW HPL launched a salt in the name of Captain Cook and
aimed it at top end of the market. The product was put in an elegant package.

Target Market: Market research revealed that salt was of low importance on the
consumers grocery list. Further, it was found that the consumer associated salts purity with whiteness, and Tata Salt was then perceived as best. Captain Cook decided to take a shot at the leader from that position, by calling itself the purest and whitest salt in the market.

Pricing and Distribution The companys biggest gamble was pricing. Captain Cook
salt was priced at Rs 3 for a 1 kg pack, 50% higher than Tata Salt, & thrice the average commodity price. The product expanded its distribution reach gradually to cover outlets in most parts except Kerela & Ares of North-eastern states. However, tackling the trade was not easy. Retailers were reluctant to stock the new brand as they were apprehensive about the price. Even after offering a commission above Tata Salt, the company had to convince them of their service standards replacement of spoiled packs & so on.

Advertising: The Company launched a high decibel ad campaign to arouse consumer

interest in a conceived dull product. The campaign began with teasers warning husbands that their wives were about to fall in love with a mystical man from the high seas. The Holy Hygiene launch commercial showed a ships captain steering his hungry crew to an island where some food was being cooked, & adding salt to the feast before letting his sailors eat. After that, there was a series of fun oriented commercials, each a take-off on popular themes. The company claims that the brand had sales of Rs 3.4 crore at 15,970 tonnes in its very first year. In 1992-93, volumes tripled to 48,410 tonnes valued at Rs 10.3 crore.

- 27 -

Branding and Its Impact on Commodity Products

Competitive reaction & search for new USP. To defend its position, Tata
Chemical launched a campaign highlighting its modern manufacturing process & also made retail commissions at par with Captain Cook. Consequently, Captain Cooks sales began to stagnate & DCW HPL then decided to go in for another round of consumer research in July 1993. The idea was to develop a fresh selling proposition based on what the consumer really desired of high-value salt. According to the study, housewives were looking for a product which would not absorb water, form lumps or stick to her hands. It would mean that she would opt for free-flowing salt.

Repositioning Captain Cook. The product was reformulated with additives to keep
the salt drier. Its new campaign, while sticking to its spirit of fun, highlighted the salts free-flow property. The 60-second film showed a housewife gracefully pouring salt from a Captain Cooks packet into a jar. Alongside is a packet of ordinary salt ( with a pack design gave semblance of Tata Salt) refusing to flow out smoothly. Captain Cook claims to have reached a sales figure of about 90,000 tonnes (valued at Rs 25 crore) in 1994-95, which was 50% more than previous years sales. Since the relaunch the prices have been raised to Rs 5 a kg.( Tata Salt: Rs 4.50 a kg).

- 28 -

Branding and Its Impact on Commodity Products

CASE:Branded Atta
Case: HEALTHY WORLD- The branded atta market is estimated to be Rs 350 crore, or about 3 lakh tonnes per year, with a category advertising spend of about Rs 20-25 crore. There are both national player like Pilsbury, Hindustan Lever Ltd (Annapurna) and many regional players in this market. After Act II, it is act three now. The marketer of sundrop, has launched wheat flour (atta ) under the brand name Healthy World. This is ITC Agro Techs second offering (after Congra hiked its stake), Act II Pop corn being the first. The US-based food products firm, Conagra has just over 51percent stake in the venture. According to Sachid Madan, vice-president, We took an Indian perspective out of the Conagra portfolio, with relevance to the local palate. While Act II was an outcome of our foray into speciality products, Healthy World marks our entry into mass market products, Priced at Rs 18.5 for one kg pack, Healthy World comes in packs ranging from 500gm to 5kg. ITC Agro Tech claims it spent nearly one year on Research & Development before launching Healthy World, benchmarking it against national players in the branded atta category. Players like Pilsbury, Hindustan Lever Ltd (Annapurna). There are several regional brands too. Parameters such as softness, taste, colour & texture preferences are said to have been looked into detail before finalizing the variant. According to Partha Datta, marketing manager, preferences in North & South of India differ distinctly across almost all parameters of atta. While creamish to white colour & finer size is preferred in South, the North consumer is more discerning as far as taste goes. Consumers in the South are more receptive (which is why the product was launched here) to branded atta, but the North leads in consumption, where average monthly household consumption is 27 kg, while it is just 3 kg in the South. Healthy World is currently available in Andhra Pradesh, Karnataka, & Tamil Nadu. Conagra claims to be largest miller in US. ITC Agro took over the atta manufacturing portion of a partner in Chennai to streamline it in line with its parent companys manufacturing process. What will also help ITC Agro is the fact that it has

- 29 -

Branding and Its Impact on Commodity Products established itself as a health conscious manufacture with sundrop. The distribution network is already in place. In fact, the Healthy World too leverage this with the image of boy somersaulting (the Sundrop trademark) with the proclamation From the makers of Sundrop. By December 2001 ITC Agro hopes to take its atta national ,with region- specific blends to appeal to local taste buds. The baseline: More health. More energy. Meanwhile, Healthy World will expand to other products. Green peas, for instance, are being test marketed.

- 30 -

Branding and Its Impact on Commodity Products

CASE:BRANDED WATER
Popularity of Mineral water: History of mineral water The tradition of bottled water and mineral water is not very old. Even in western countries the practice of bottled drinking water started in 1950s. The trend of having mineral water gained grounds in the market. Since ancient time people have used water from mineral springs, especially hot springs, for bathing due to its supposed therapeutic value for rheumatism, arthritis, skin diseases, and various other ailments. Depending on the temperature of the water, the location, the altitude, and the climate at the spring, it can be used to cure different ailments. This started the trend of using mineral water for drinking purpose to exploit the therapeutic value of the water. This trend started gaining momentum in mid 1970s and since then large quantities of bottled water from mineral springs in France and other European countries are exported every year. The concept of bottled has been quite prevalent in western countries due to greater health consciousness and higher awareness about health and hygiene. The international standards regarding bottled water are so stringent that for a particular brand of water to be certified as bottled water it has to get approvals on four levels: federal, state, trade association and individual company levels.

TYPES OF BOTTLED WATER

As per Encyclopedia Britannica, mineral water is defined as water that contains a large quantity of dissolved minerals or gases. The mineral water can be categorized into natural mineral water an artificial mineral water. Natural mineral water is obtained from natural springs and has a high content of calcium carbonate, magnesium sulfate, potassium, and sodium sulfate. It may also contain gases like carbon dioxide or hydrogen sulfide. While

- 31 -

Branding and Its Impact on Commodity Products mineral water produced artificially by adding salts to distilled water or aerating it with carbon dioxide is called artificial mineral water. Mineral water is just one form of aerated water. It is water with high mineral and gas content. Some of the minerals are Epsom salt, lime, magnesia, iron, silica, boron, and fluorine. The most common gasses found in mineral water are carbon dioxide and hydrogen sulfide. It is mostly rainwater that has soaked into the ground and dissolved the mineral matter. While according to American and European Regional Codex Standard, a sample of water is said to be natural mineral water only if: It is obtained directly from natural or drilled sources from underground water - bearing strata. It is collected under conditions, which guarantee the original natural bacteriological purity. It is bottled at the point of emergence of the source with particular hygienic precautions. It is not subjected to any chemical treatment. Besides this, Internationally like for other foods and drugs, FDA (Food and Drugs Authority) of US has set standards for bottled water also. It has categorized bottled or drinking water into 7 different types, namely: Artesian Water / Artesian Well Water: Bottled water from a well that taps a confined aquifer (a water-bearing underground layer of rock or sand) in which the water level stands at some height above the top of the aquifer. Distilled Water: Water that has been turned into steam so its impurities are left behind and the steam is condensed to make pure water. Mineral Water: Bottled water containing not less than 250 parts per million total dissolved solids may be labeled as mineral water. Mineral water is distinguished from other types of bottled water by its constant level and relative proportions of mineral and trace

- 32 -

Branding and Its Impact on Commodity Products elements at the point of emergence from the source. No minerals can be added to this product. Purified water: Water that has been produced by distillation, de-ionization, reverse osmosis or other suitable processes. Sparkling Water: Water that after treatment and possible replacement with carbon dioxide contains the same amount of carbon dioxide that it had at emergence from the source. (PS: soda water, tonic water etc. are not considered bottled waters as they contain sugar & calories and are considered soft drinks.) Spring water: Bottled water derived from an underground formation from which water flows naturally to the surface of the earth. Spring water must be collected only at the spring or through a borehole tapping the underground formation finding the spring. There must be a natural force causing the water to flow to the surface through a natural orifice. Well Water: Bottled water from a hole bored, drilled or otherwise constructed in the ground that taps the water of an aquifer (a water-bearing underground layer of rock or sand).

INTERNATIONAL SCENARIO:
In United States, the bottled water industry is regulated on four levels: federal (by the U.S. Food and Drug Administration as a food product), state, industry association, and individual company. EPA (Environment Protection Agency) regulates public water systems. FDA regulates bottled water that crosses state lines. Overall different players are playing different tunes in order to establish their brands in the market.

INDIAN SCENARIO:
- 33 -

Branding and Its Impact on Commodity Products

In 1967 Bisleri set up a bottling plant for manufacturing and marketing its mineral water but failed. The brand was later sold off to Parle in 1968-69. Mineral water market had its seeding as early as 1968-69 when Parle Group acquired the Bisleri brand from Bisleri of Italy for launching Soda water but later launched bottled water also. The launch at that time was a big flop as concept of buying water that too in bottled form was not accepted by the Indian public. The market remained dormant for quite long (for a period of 20 years or so). The market through out this period was formed only by the premium products that too available through 5-star hotels. In early 1990s with onset of liberalization policy by the Indian government, coming in of cola majors, sell off of local soft drink brands of Campa, Thumps up, Gold Spot etc by Parle to Coke and other factors led Bisleri to test waters again. Bisleri re-launched its bottled water in 1994. By this time with exposure of media and exposure to international life styles, deteriorating levels of potable water, increase in a number of water borne cases, increase in awareness about health and hygiene and other related factors led to acceptability of concept of mineral water. The market has not looked back ever since then and has grown leaps and bounds to such an extent that a number of genuine as well as fly-by -night operators have entered it to milch it. Moreover with this commodity being a human necessity it makes best sense to do business in. As a normal human being requires on an average needs 2-3 litres of water everyday and world population is more than 6bn (growing at 2-3% annually), the business opportunity is humongous and the potential is largely untapped. These facts about water added to 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 quite lucrative. In addition with getting pure drinking water from municipal taps in cities and towns becoming a luxury the scenario has become so lucrative in business sense that the opportunity is being misused by a number of companies especially in our country. These companies are selling plain tap water under the name of mineral water and are be-fooling consumers. The situation has got aggravated by lack of awareness among common people about mineral water and also due to lack of initiatives on part of the government both on count of setting stringent norms as well as on taking action against

- 34 -

Branding and Its Impact on Commodity Products non-compliers. Infact one of the major factor for flourishing of the sector is the public fear that water supplied by civic bodies is impure.

PLAYERS :
PepsiCo: Pepsi has AquaFina brand of mineral water in the market. The company entered into bottled water business in September '99 the company has targeted its product towards youth segment and has so far focuses only on one SKU, that too 750ml. Though the company is present only in selected market as of now, it has plans of increasing share in the market by expanding its SKUs portfolio as well as its distribution reach. Coca-Cola: The company has entered in the business in May'00 through its brand, Kinley. The Kinley brand is already being used for its soda water. The company has tied up with Kothari Beverages, of Yes brand of mineral water, for manufacturing coke's brand at Yes' facilities. Bailley: The brand is a product of Parle Agro, the company of Frooti fame. The company presently is the second largest player in the market with share of 20%. The company has recently extended its Bailley brand name for its soda water. It is also credited with forming a new segment of 330ml SKU in the market. Bisleri: The brand is a product of Parle International and presently is the market leader with more than 45% market share. The company pioneered the concept of bottled water in the Indian market as early as 1967. The company is also credited with SKUs of 500ml, 1.2 lts, 1.5 lts and 2 lts in the Indian market. Other players in the market with strong regional presence are: Brilliant, Yes, Hello, Purette, Fountain, Himalayan, Golden Eagle, Prime, Pure Natural Aqua, Ganga, Florida, Metro etc. Market categorization

- 35 -

Branding and Its Impact on Commodity Products The market initially had only one SKU of 1 litre this was followed a by a number of smaller and bigger SKUs. Based on these SKUs we can divide the entire market into two segments: i) Retail consumption market ii) Household & Institutional consumption market Each of these consumption markets have a number of SKUs under it. Some of the most consumed SKUs in retail market are 500ml, 1 litre, 1.2 litre, 1.5 litres, 2 litres, and 5 litres. Recently Bailley has launched 330ml pack targeted against 330ml pack size of soft drinks especially the aluminum-can drinkers. The institution market is largely constituted by hotel industry, caterers, offices, parties, travel, tourism, hospitals etc. The SKUs that are available in this market are 10 litres and above besides this we have pack size of 250ml plastic cups The market can also be divided on the basis of the price at which this bottled water is available into three categories: i) Super premium mineral water ii) Premium local natural mineral water iii) Popular or plain bottled water Presently, Evian of Danone group; Perrier and San-Pellegrino of Nestle belong to super premium category. Catch, Himalayan, Brilliant etc. belong to premium local natural mineral water category. All other brands like Bisleri, Bailley, Kinley, AquaFina etc. belong to popular or plain bottled water category.

Some of the standards pertaining to labeling of products in the industry are: Label should have consumer brand name Label should have the name of the product category Label should have name and address of the manufacturer

- 36 -

Branding and Its Impact on Commodity Products Label should have net weight or volume Label should have the batch number Label should have the name of source or place of origin of the product Label should have the date of packaging Label should have the date of expiry Label should have direction for storage Label should have treatment for disinfection Label should have the license or certification from the concerned authority

- 37 -

Branding and Its Impact on Commodity Products

CASE STUDY: BAILLEY

In 1993,when Prakash Chauhans Parle Agro entered the mineral water market with its brand, Bailley, market with its brand, Bailley, market analysts thought it fit to keep their fingers crossed about its prospects. For one, the concept of bottled mineral water was not well established, with usage restricted to foreign tourists and jet-setting Indians. On the other, for whatever the market was worth, it was firmly within the strange hold of Bisleri, owned by brother Ramesh Chauhans Parle Exports. In the 3.5 million case market (estimated at Rs 36 crore), Bisleri enjoyed a clear first-mover advantage and was on its way to assume the generic brand status. For Prakash Chauhan, however, the market presented a very clear opportunity. Parle Agro already had two well-entrenched brand in its portfolio, Frooty and Appy, which occupied leadership positions in the tetra packed fruit drinks market with a combined share of over 90 %. That meant that the distribution system was already in place and the new brand of bottled water from the same stable would have a readymade network of outlets throughout the country. Second, with very little investment required in terms of technology or infrastructure, the entry barriers were not very difficult to overcome. However, as a new entrant, Bailleys task was formidable. Through the 1970s and 1980s, the mineral water category was a virtual shell, with only a handful of players catering to the sporadic demands of an equally small audience comprising travelers and a few affluent consumers. According to some estimates, travelers then, accounted for 80 % of sales volume back. Research corroborated the fact that people associated the consumption of mineral water with foreign tourists, who were wary of consuming contaminated water. But for the average traveler, the price tag of Rs 8-9 for a 1 litre bottle appeared unreasonable for a product which could be had for free and for which he had no clear need. Instead, most travelers carried their own water bottles. In any case, even though the concept of filters had made its way into peoples homes, the idea of carrying hygienic drinking water outside of home was accorded very low priority. Instead, travelers were quite content to consume tap water at railway stations or restaurants located near bus stops.

- 38 -

Branding and Its Impact on Commodity Products The biggest barrier was the high recall that Bisleri enjoyed. So much so that

consumers who went to buy mineral water would actually walk up to the retail counter and say Ek Bisleri Dena ( Give me a bottle of Bisleri) . Or even when the consumer ask for a particular mineral water brand, the retailer would fish out which ever brand he had in stock and hand it over to the consumer. In essence, brand awareness was low and, apart from localized competition, the small size of the market did not grant enough space for another national player to join the fray. To thrive in such a scenario, the company had to expand the market. Here, new entrants & relatively smaller players were at a disadvantage because freight costs claimed a large part of the operating expenses. At times, as high as 30-40% of the total cost. Maintaining an efficient delivery system required both high volumes & investment in infrastructure. But ranking in volumes in a category where the scope for brand differentiation was low presented another formidable entry barrier. Despite these barriers, when Parle Agro began exploring the market in detail, it realized that with increasing health consciousness, the market was poised for a take-off. Added to that was the prospect of increasing tourist traffic both domestic & foreign. But the existing capacities were not quite enough to service the steadily increasing demand. Since Parle Exports Bisleri was so strongly identified with the category, Parle Agro took great care to brand its new product carefully. Without being radically different, the company chose a name that was slightly Anglicized ( a la Bailleys Irish cream ) to project a more up market image. The company also figured that consumers took a little more time to articulate the name, which, in turn, made sure that recalling the name would be so much easier. But more than just the brand name, the company realized that to penetrate the market effectively, an efficient distribution system & competitive freight costs were important. Bailley had learnt important lessons from the Bisleri experiment. Parle Exports distribution system started out with its bottling plant in Mumbai. Later, it went ahead &

- 39 -

Branding and Its Impact on Commodity Products added 11 more franchisees, which had their own bottling plants in the metros & a few mini- metros. While this restricted the spread, it also resulted in a lopsided cost structure because the freight & handling costs to service the interior markets sufficiently proved prohibitive. Parle Agro had a very clear gameplan from the beginning. One thing was clear: distribution was the key to success. Mineral water being a logistics business & a voluminous item, transportation was expensive. Therefore, it was essential to locate plants across the country. But that was expensive proposition. Also, differing sales tax, excise & octroi rates across states makes it difficult to have uniform national pricing. A network of franchisees that was the only way things would work. Parle Agro established franchisees near the markets that it intended to attack. This meant that they had to limit their focus to only a few markets initially. But that was fine for the company, as long as the freight cost was kept to barest minimum. This structure also ensured that Bailley had shorter replenishment cycles & lower inventories at the plants. While Bisleri reverted to the same route later, Parle Agro simply doubled the number of franchisees. This allowed Bailley to penetrate the market quickly. All these franchisees were expected to set up PET bottle manufacturing facilities at the bottling plant as well. This was because packaging costs bottle, pilfer-proof cap & so on made up some 40% of the total costs. This also did away with the uncertainty of bottle supply. Parle Agro also decided to differentiate Bailley in terms of bottle design, since there was very little scope of differentiation in the product itself. Mineral water bottles, irrespective of which brand it is, are made through the process of blow moulding. Since the perform supplier of all these bottles was the same, all the mineral water brands available in the market had an identical bottle design. To stand out, Parle Agro decided to standardize the perform & cap designs for Bailley. The company set up a perform plant at Silvassa, which produces these moulds from PET granules which it buys from Reliance. These moulds, which are small test-tube like structures, are then sent to the bottling facilities where they are blown, filled & dispatched.

- 40 -

Branding and Its Impact on Commodity Products

Market Share of Various Brands

Others 22% Bisleri 40%

Bailley 38%

bisleri bailley other

Initially, the company introduced two pack sizes. The 500 ml bottle, priced at Rs 5, was meant to introduce trials; it was also the most convenient size for the individual traveler. The 1-litre Bailley bottle was initially meant to spell safety & security for integrated consumers who were genuinely into health & fitness. Thereafter, it was placed on the prestige platform for the achiever segment- who like to make a fashion statement by drinking mineral water. The prestige aspect was fully exploited by Bailley team hit upon the idea of exploring wedding market. While caterers had reservations about whether the host would pick up the tab for water, Bailley salesmen did a fair amount of direct servicing to set the ball rolling. This has now turned out to be one of the fastest growing segments. Side by side, Parle Agros sales team also established franchisee networks in relatively inaccessible places such as Guwahati, Palghat, Jaipur & Belgauum, which gave the company access to remote markets. Another advantage was that while attacking these markets, the threat of any immediate retaliatory action from Bisleri was minimized. That was mainly because Bisleri

- 41 -

Branding and Its Impact on Commodity Products was quite well established in the metros & such low-volume fringe markets were of very little interests to the company. Moreover, at the time, Parle Exports was determined on paring down its investments on the mineral water brand & was content to let it piggyback on its existing soft drinks networks. After the task of cracking the market open was through, Parle Agro devoted all its energies to exploit the non-traditional routes of increasing distribution width. It tried up with various long distance bus operators who kept stocks of Bailley on board. A small incentive was given to bus operators & conductors to push the brands. The company also sought out restaurants or dhabas on Mumbai-Pune & Nasik-Pune route, which had been neglected by the other players. The company encouraged the stockists to service these outlets- especially restaurants at which buses made their day or nighttime halts. Typically, the interior markets had far more players than could accommodated. To fight the regional players, Parle Agro used a two-pronged approach at the outlet level. It offered better service cycles & better product quality. In some cases the company also resorted to an ingenious retail monitoring system, the Parle Agro Retail Barometer, to identify those outlets where competitive brands were not moving fast, so that the company could seize the opportunity to persuade the retailer to stock Bailley instead & push it. Despite its aggressive stance, the huge Delhi market eluded Bailley for a long time. That was because it faced major problems in getting its franchisee set-up in Delhi right. While bailey was widely available in Jammu & Uttar Pradesh, till December last year Parle agro wasnt able to fix a big enough franchisee, which would be able to service Delhi & adjacent towns. Despite that, till about a year back, Parle Agro was able to command a 20% share nationally (against Bisleris 45%) with its persistent attempts to crack the areas that the leader wouldnt dare.

- 42 -

Branding and Its Impact on Commodity Products The companys aggressive marketing strategy seems to have paid off. For one, its successfully broke the monopoly of Bisleri & is now the leader in number of regions including Maharashtra (especially Mumbai), Gujrat, West Bengal, Karnataka & Goa, & a close second in many others. With a total production capacity of 120 million bottles per year, Parle Agro has mainly targeted towns with populations of more than 1 lakh although Bailley is also available in towns with populations less than 50,000. being in low-margin business, the company hasnt spent any money & effort on mass media advertising but has concentrated on educating consumers on use of pure, hygienic water, through direct mailers & other media. Participation in corporate events also gives it a lot of mileage, and gives it patronized by corporate such as the Taj Group of Hotels & Jet Airways. But the main reason for the Bailleys success has been the strength of its franchisee network. Following the example of the West, the company realized that the best growth strategy is not one that entails extra space, capital investments & added manpower, but franchising. Franchised operations provided it a quick expansion route while keeping costs low & profitability high, & at the same time ensured deeper penetration & easy accessibility. From one Franchisee to start with, Parle Agro now has a network of 18 franchisees. With regular monitoring of its decentralized operations & strict checks on quality, Parle Agro provides the overall expertise, cashing in on the local franchisees understanding of his area. Today, the mineral water market has grown to healthy Rs 500 crore & is growing at a phenomenal rate of more than 50%. Of this, unorganized sector players constitute about 40%. Till 4 years ago, the market had only 2 national players; today, more than 168 are jostling for shelf space. According to industry sources, a new label is launched every 3 months and 1 existing player recedes into oblivion. For all practical purposes, the organized sector today is dominated by Bisleri & Bailley, which, between them, have more than 60% of this market. Bisleri leads the pack with a 40% share, by value. Bailley, a Rs 60-crore brand, has

- 43 -

Branding and Its Impact on Commodity Products a 22 % share & is No 2 player. In percentage terms, the brand is growing faster than the category, claims the company. But the fact remains that, even to this day about 76% of mineral water consumption in the country is by travelers & bottled water really hasnt made inroads into middle-class homes yet. For Bailley too, the biggest segment of consumers is that of travelers, followed by institutions & tourists. According to the company, the mineral water consumer is attracted by the benefits of easy accessibility, purity & hygiene, & only a small segment of consumers have evolved to the level of being loyalists of good brands. The mineral water consumer is typically in the 20-35 year age group & is an educated, evolved person from SEC A & B. the consumption pattern is changing, though. Mineral water is now served on trains, airlines & parties. Besides the standard 1 litre bottle, Parle Agro has introduced bigger pack sizes to cater to a variety of needs. Bailley is available in 1 litre, 1.5 litre & 500 ml bottles, 20 litre jars & 200ml glasses. The 1 litre bottle sells the most. While new players are making a beeline for this industry every day, hygiene continues to be the main plank of most brands. Worldwide, mineral water stands for water fortified with genuine minerals. However, its different in India, since the Bureau of Indian standards hasnt laid down any specifications. So what is predominantly available is purified water. Even techniques such as ozonisation & reverse osmosis are used only by a handful.

- 44 -

Branding and Its Impact on Commodity Products

Reason for failure of Branded Commodity

A number of reasons can be attributed to the success of a brand. However, the same cannot be said for the failure of a brand in the market place. Often, the reason may could be as simple & mundane as i) ii) iii) iv) Unattractive packaging, Improper naming of the brand, Bad product quality, Marketers not being able to understand the core needs of the consumer properly. Still serious lapses, which are attributed for failures, are

i)

Inadequate differentiation or me-too syndrome The most common

reason for failure is that the marketers launch products, which are, simply clones of brands already in the market. These new products failed to stand out in crowd. In fact, often lack of imagination prevents marketers to create a significant difference with the existing options. For example Nirma Bath was launched a few years ago in competition of lifebuoy. The brand was just me-too offering & had nothing new to offer to consumer & attempted to cash in on run-away success of Nirma Washing Powder which had stormed the Indian detergent market.

ii)

Price convenience equation. Many new packaged food products come

into market on convenience platform. That is, the consumer can get rid of some tedious chores simply by paying little more price for the product. The point to calculate here is, just how much will a customer pay for the product. The point to calculate here is, just how much will a customer pay for the convenience. If the convenience-price ratio is not right, the new product has little chance to succeed. All Seasons Foods Package chatni & sambars failed as a result of getting this convenience-price ratio wrong. The basic idea behind the chatni & sambhars was right. All Seasons calculated that housewives would be only too glad to snap up packaged sambars & chatnis if a company with good credentials sold them. - 45 -

Branding and Its Impact on Commodity Products The company bought a state-of-the-art plant from US to produce the proper quality & taste. But the product failed to take off. The reason: the products were prohibitively priced. A chatni bottle half the size of a ketch-up bottle cost twice as much. For most housewives, that did not make any sense. A tomato ketch-up took hours to prepare, & most housewives were only too glad to get it in packaged form. A sambar or chatni required far less effort to cook, & paying a premium for a bottled version was really worth the effort. iii) Positioning. Improper positioning sometimes brings disasters For exmple Milkfood Yogurt Milkfood was a successful icecream in North India. However when the company decided to make this line extension through Milkfood Yogurt, it did not succeed. The problem was that it was never clearly communicated what the yogurt was all about. The advertising projected it as a superior form of curd, but consumers mistook it as a novel form of ice cream. The Milkfood name (associated with icecream) was there on packaging as large as life. The yogurt cost Rs. 5.50 & Rs 6.50 for different variants (against a Vanilla cup of same size which came for Rs 4). The end result was that the consumer refused to pay the premium. Prices were slashed to Rs. 5, but it did not help. iv) Distribution Channel. Another major reason why new products often fail in the market is improper understanding of the distribution channel. A manufacturer often chooses distribution channel which he is familiar with- not one which is suited for the product. For example Ruffles Chips. Pepsis Ruffles chips also failed due to lack of distribution support. Pepsi could not convenience to distributors to carry this product through. While their soft drinks could hold out, their chips got crushed & mangled.

iv) Improper Pricing. Success of a new brand depends to a large extent on initial price setting. The popular saying that one must get value for ones money, - 46 -

Branding and Its Impact on Commodity Products because when the consumer has inclination to buy new offering, there should be a clear benefits.

Some other reasons :1 Lack of Differential Advantage Products fail when customers do not perceive
them as better value than existing options. 2 Too Slow Development. Speed of entry or design of new products is essential in the changing market where technology is readily available.

3 Poor Planning.

Error in judgement about target market/segment, in accurate

positioning often misses the opportunities.

4. Lack of Management Enthusiasm. Management is, at times, complacent &

avoids entry into new area.

5. Lack of Organizations Expertise. Managing new products may call for

expertise, which an organization may sometimes lack.

6. Assigning inadequate resources to market development. Presuming that

the product is so good that it will sell on its own can prove to be wrong as special efforts of market development are required.

7. Lack of Genuine Superiority. If a new product is merely & imitation of existing

product, but claims superiority with which the consumers do not quite agree, the product will fail sooner or later.

- 47 -

Branding and Its Impact on Commodity Products

8. Under Estimating The Competition. Underestimation of competitors

capabilities & possible reactions is at times the cause of product failure. If the product launch is based on a lower cost of production & the assurance of good channel support. It may face its match by competitors.

9. Poor market Research. The wrong reading of consumers mind & arriving at an
optimistic forecast of market demand is sometimes the reason for product failure.

10. Poor timing of Launch. Too early or too late an entry into the market is also a
common cause of failure.

- 48 -

Branding and Its Impact on Commodity Products

SUGGESTIONS
1 Rural market. Knowing the huge size of rural population of India it is natural that the
rural market is attractive to marketers. Company should study purchasing power, life styles , buying habits , optimal usage level. Brooke Bond for instance could capture the crux of the challenge when they started marketing Re 1 tea packets. 2 Understanding role of children . Marketers should study the role of children in buying decision as influencers and decision makers. How ever, the challenge remain how does one communicate with children? Advertising recalls being more in the case of children-one way is clear but with every one trying to apply the same technique, marketers will be gradually disillusioned with the method. Possible ways of circumventing this problem may be to market the product through schools or to use the imitative tendencies of children by influencing their peers. 3 Distribution. Distribution cost are an increasing component of marketing cost marketers will have to find ways through which one can achieve efficient as well as economic distribution. One solution is joint distribution or by adopting direct marketing 4. Packing. With self-shopping gaining grounds and selfspace getting limited, packaging becomes an important factor that marketers have to be concern about. Companies should identify the requirements and pack commodities according to demand. 5 Customer service challenge. In an increasingly competitive market, retention of a customer is possible only through better service. Marketers will require to devote to more efforts to understand the customer view of quality and convenience. Marketers should do regular research to find this fact.

- 49 -

Branding and Its Impact on Commodity Products 6 Adaptation to newer environment. As government withdraw entry barriers and relax restriction on merger or take over many companies should install superior technology and resort to merger acquisition route to make their unit more efficient. 7 Creativity and innovation in overall marketing programmes. Marketers have to develop organizational structure style and functioning, which enable them to act fast and bring in innovations in their marketing programmes

- 50 -

Branding and Its Impact on Commodity Products

BIBLIOGRAPHY
Product Management In India : Ramanuj Majumdar Marketing Management :Philip Kotler Sales & Marketing Management ( Magazine ) A & M (Magazine) Brand Positioning : Subroto Sen Gupta Whats In a Brand : John Philip Jones Building Strong Brands: David A.Aaker

- 51 -