Commodities & brands

COMMODITIES AND BRANDS16.12.2011, Bengaluru

Basic Characteristics of a Commodity A class of offerings which come without qualitative differentiation across a market. A commodity has full or partial fungibility; It is no matter who produces it Price fluctuates on global supply and demand, determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets They come packaging distinction There is almost no emotional benefits, apart from cultural meanings some commodities have in some countries. E.g. gold in India Has no sellers’ equity

Commodities to Brands

Commodities to Brands Many of the iconic brands in business come from commodities !

BASIC CHARACTERISTIC OF A BRAND

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

A Tangible ‘consumable’ The Idea Many of the iconic brands in business come from commodities !

Generic Products and Brands Advertising

The Workings of Advertising Encourages consumers to experiment with a productPrecipitation category Encourages consumers to choose among alternative "brands”/Persuasion intensifies the consumers desires for a specific brandReinforcement Continually directs the consumers attention to a particular "brand" or product to achieve repeated purchasesReminder Encourages consumers to become repeat purchasers of the product category/ brand J. N. Sheth, Models of Buyer Behavior: Conceptual, Quantitative, and Empirical, Harper and Row, New York, 1974.

Generic or • The precipitation and commodity reminder mechanisms are Generic advertising should advertising is more likely to increase expand aggregate sales and intended to total product category or be brand neutral. precipitate and industry sales remind • While persuasion and Brand advertising is reinforcement are usuallyprimarily intended to associated with persuade and maintaining or increasing reinforce market shares of a specific brand. Commodity Advertising: Theoretical Issues Relating to Generic and Brand Promotions* Ronald W. Ward, Julio Chang, and Stan Thompson

“The brand neutrality [in commodities] may not always hold if the generic message emphasizes homogeneity within the product group, while the brand message stresses differences" Ward and Chang (pp. 91-92).

What Good is a Brand, Anyway?This question can be answered quite easily with a little bit of data. A brand can empower!Price Differentials: Branded Products Versus Store Brands [suburban Philadelphia,Pennsylvania]

Creating a Brand out of a Commodity

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

Two Views On Advertising In This Context

• Form of persuasion that creates product This gain in power is at the expense of Form of differentiation and thus leads to greater the consumer primarily because of pricepersuasion market power among those with significant advertising efforts increases. • Alternatively, advertising is viewed as The latter function should enhance information that provides an inexpensive competition and reduce barriers toInformation means for current and potential buyers to assimilate data about different products entry. Commodity Advertising: Theoretical Issues Relating to Generic and Brand Promotions* Ronald W. Ward, Julio Chang, and Stan Thompson

• Form of persuasion that creates product This gain in power is at the expense of Form of differentiation and thus leads to greater the consumer primarily because of pricepersuasion market power among those with significant advertising efforts increases. • Alternatively, advertising is viewed as The latter function should enhance information that provides an inexpensive competition and reduce barriers toInformation means for current and potential buyers to assimilate data about different products entry. Therefore, Commodity communication must educate Commodity Advertising: Theoretical Issues Relating to Generic and Brand Promotions* Ronald W. Ward, Julio Chang, and Stan Thompson

And Brand advertising must persuade • Form of persuasion that creates product This gain in power is at the expense of Form of differentiation and thus leads to greater the consumer primarily because of pricepersuasion market power among those with significant advertising efforts increases. • Alternatively, advertising is viewed as The latter function should enhance information that provides an inexpensive competition and reduce barriers toInformation means for current and potential buyers to assimilate data about different products entry. Commodity communication must educate Commodity Advertising: Theoretical Issues Relating to Generic and Brand Promotions* Ronald W. Ward, Julio Chang, and Stan Thompson

Experience makes a brand

Search Goods Experience GoodsFor infrequent purchases of For frequent purchases of lower value,significant value, consumers look consumers look for experience.for assurance. the consumer may experiment with a numberThis assurance comes from of alternativesacquiring detailed data about theproduct. then decide on a limited set for continued useProducts are inspected prior topurchase. Detailed information is searched.Detailed information is searched. quality cannot be completely evaluated without actually consuming itThese products are search goods. Invariably, low-involvement productsInvariably, high-involvementproducts These products are experience goods. P. Nelson, "Advertising as Information," Journal of Political Economy, 81, 729-745 (1974b).

 Except for very high-priced commodities [Gold, Petroleum], most commodities are low- involvement, high frequency and of low value at each purchase. Consumers do not search for these goods. A significant brand can turn commodity into “Experience Products”

Therefore, a brand within commodity space, can be created primarily by delivering emotional/experiential value Factual content about the product, must justify *act as a “reason to believe”+the higher order emotional benefit. Celebrity endorsements of experience goods is an example of stimulating high recall with little factual information. M. E. Porter, Interbrand Choice, Strategy, and Bilateral Market Power, Harvard University Press, Cambridge, MA, 1976.

 The advertising has to create perceived attributes [not necessarily real], To differentiate and create a brand in the commodity space. Gains from perceived differences may continue even with repeated purchases if the perceived attributes are difficult to measure. For example, emphasis on the nutritional value of certain foods may be acceptable although it is difficult for the consumer to directly validate such claims.

 Ultimately, the success of advertising to attain product differentiation Depends on both theactual product attributes and how easily these attributes can be measured.For many foods and fibres, the attributes can be judged such as taste, quality, packaging, etc. Yet, there exists a comparable list of attributes that cannot be judged by the consumer.One example could be the promotion of a honey brand on its purity/ and its claims ofnaturalness

CASESLemonade!!!!!!!

Nimbu Paani Category: Lime juice Lemonade Simply Nimbu pani Lemonade in Indian style, is simple refreshment, adding natural cooling properties of their ingredients designed to keep your body cool. Lemon trees are believed to be native to the Indian sub-continent. Nimbu paani was a kind of summer drink that every Indian household was accustomed to. It is one of the most ancient recipes to beat the scorching heat. Popularly called as the Nimbu Ka Sharbat in hindi.

How do we describe ‘Nimbu Paani ’ refreshingnatural economical cool traditional Indian

THE COMMODITY WAS BRANDEDThe Untapped opportunity in Indian Market!

Road Side nimbu Pani.. Cheap.. but hygiene? Indian Ideally summers! Unsafe tap Or packaged drinking home water? water..but no taste.. made…but where? Restaurant .. Umm expensive, I want.. and I ve no time.. umm Carbonated Colas drinks!…umm To the rescue.. Packaged nimbu paani.. Or a dash of refreshing Vitamin -CThirsty Indianstravelling on road!

With an eye on summer salesParle Agro and PepsiCo havecome out with packaged lemonade - LMN andNimbooz respectively, to provide relief ourparched throats……2009

The opportunity “Nimbu Paani” or lemonade has always been the most commonly consumed cold beverage for Indians, especially during hot summers It made business sense to launch a non-fizzy drink during summers as it scores above the colas in the health/ hygiene space The added advantage of it being a very familiar natural refreshing drink which is now being offered in a hygienic and convenient way would make the mothers prefer it over the Colas The size of the largely unorganized `Nimbu Paani’ market was estimated to be around 1 billion cases, which is double the size of the carbonated soft drink industry in India. Parle and PepsiCo is vying with each other to tap into this market and with the mercury levels soaring it looks like packaged lemonade is here to stay. Lime is the second flavour brands are squeezing in fruit drinks. It is a flavour well accepted but most of the consumption is from the unorganised sector.

These brands delivers very strongly on certain expectations. These are:• Locally Relevant Taste  Packaged lemon juice, under the brand names, Nimbooz, LMN, Minute Maid Nimbu Fresh, are great tasting products.  They have capitalized on the existing familiarity of unpackaged / home-made nimbu pani.  It has remained true to its authentic Indian Identity by using the traditional Matka (Earthen Pot) and Squeezer in the manufacturing process.• Convenience and Great Value  The products are available in three convenient formats, 350ml PET, 200ml RGB and 200ml Tetra at the remarkable price points of Rs15, Rs 10 and Rs 10 mostly.• Accessibility  Nationally available packaged Nimbu Pani.• Hygienic  It is just like home-made nimbu pani. You can enjoy its natural and delicious lemony refreshment anywhere you go.

NimboozBrand insight : Our culture is rich and deep rooted.No matter how much we migrate to a modern lifestyle, it’s only when we enjoy truly familiar &authentic experiences( albeit in a contemporary way) that we can relish being our true selvesProduct: Nimbooz by 7UP is an authentic drink that’s made with real lemon juice squeezed fromthe best of lemons. It has No Fizz & no added Artificial Flavours.It is tasty, 100% hygienic and is available in trendy and convenient packs, so that you canenjoy natural delicious, lemony refreshment anytime, anywhere .Positioning:Refreshing Nimbu pani with Real lemon JuiceBrand Idea: “Enjoy Being My Asli Self”Packaging: The product is available in three convenient formats, 350ml PET, 200ml RGB and200ml Tetra at the remarkable price points of Rs15, Rs 10 and Rs 10 mostly.

Brand Role: "The ASLI Indian Refresher"Nimbooz creative brief Get busy Indian men and women who have adopted a modern lifestyle but still lovetheir (Indian) tradition to try Nimbooz, the real nimbu paani with real lemon juice By tellingthem Nimbooz is the cool way to enjoy a traditional favourite.Source: www.afaqs.comNimbooz Launch ObjectiveThe objective of the film was to communicate the launch of the brand “Nimbooz” with theproposition “Ekdum Asli Indian” (Absolutely Real Indian).

Nimbooz

LMN: The Emergency Lemon Refresher Product: LMN has a head-start with a good brand name and a cool packaging. Packaging, Price & Placement:  As for Nimbooz and LMN, both offer 200ml tetra packs for Rs.10.  LMN will gain on its 110ml tetra pack, which Parle Agro intends to sell for Rs.5. The main competitor was the product at the stalls and the home made nimbu pani. At stalls, a glass of nimbu pani is sold for Rs.6. LMN made it possible to have packaged and hygienic nimbu pani at Rs.5.

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

Minute Maid Nimbu Fresh…… ...A late entrant; a worthy challenger!Launched in early 2010, Minute Maid Nimbu Fresh came to the market after the launch of Nimbooz and LMN.

 Product: Minute Maid Nimbu Fresh is made from no preservatives and no added colour. It tastes just like homemade Nimbu Paani. Price: Coca-Cola, the latest to add a dash of lemon to the cola war, is playing the pricing game to catch up with Pepsi’s Nimbooz and Parle’s LMN.

Placement& communication strategy: Bilkul ghar jaisa The drink is made from lemon juice concentrate and comes with the tagline, Bilkul ghar jaisa (just like home).

Minute Maid

Summary Most consumers are either used to drinking nimbu paani at home or pick up non-branded products. Earlier, beverage companies stayed away from the category because they would have no USP. Though the earlier examples of trying to introduce packaged drinks like tender coconut etc have not succeeded, Pepsi and Parle have already hit the jackpot with Nimbooz and LMN with sales much above their own expectations. Technology had played a big role to play in this. For example, while nimbu paani made at home doesn’t have much shelf life, Pepsi has used a technology called ‘hot fill’ that increases the shelf life of Nimbooz to as much as four months.

Positions Premium Fun Health/Pure Nutrition Minute Maid LMN Nimbooz Nostalgia/ Home Traditional

Minute Maid Minute Maid has based its brand on all the cultural associations and meanings that ‘Nimboo Pani’ carries It portrays the emotions of the Indian youth, who has grown up on the home-made lemon drink The value addition has happened in evoking all those images which still appeal to a certain emotional need-state of the TG

DRINKING WATER

Packaged drinking water Increasing urbanization, found its relevanceIn the modern context Increasing water pollution, Water borne diseases, Increasing scarcity of pure and safe water But Need of portable water! Packaged, safe, portable, drinkingDrinking water.. The most water!basic need to survive.

Opportunity for commodity branding. Water is the most important necessity for life. The drinking-water needs for individuals vary depending on the climate and physical activity but for average consumers it is estimated to be about two to four litres per day.OPPURTUNITY The growing number of cases of water borne diseases, increasing water pollution, increasing urbanization, increasing scarcity of pure and safe water etc. have made the bottled water business just like other consumer items in the Indian Market.. Scarcity of potable and wholesome water at railway stations, tourists spots, and role of tourism corp. etc. has also added to the growth.

 Indians currently spending about $330m a year on bottled water. The packaged water market constitutes 15 per cent of the overall packaged beverage industry, which has annual sales of at least $2.6bn. ( Business Standard) Almost all the major international and national brands water bottles are available in Indian market Before few years bottle water was considered the rich peoples choice, but now it is penetrated even in rural areas. Three key players mainly dominate the Indian Bottled Water Market Parle Bisleri, Coca Cola India Inc Kinley and Pepsico India Holdings Pvt. Limited.

 Water, being the vital element of nature, has largely common connotations in most cultures refreshing natural Purifier Cleanser Rebirth Life

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

 This created an opportunity in for brands to the provide seal of assurance to a generic/ natural element like water What was required was reinforcing the existing and expected qualities of water in a convenient portable product offering

 Any brand trying to sell bottled water needed attain relevance by meeting the natural expected qualities of water In this category, polluted nature of today’s world, created opportunity for brands to enter

Bisleri

Kinley

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

Variety of packagesBottled water is sold in a variety of packages: pouches and glasses, 330 ml bottles, 500 ml bottles, o ne- litre bottles and even 20- to 50-litre bulk water packs.The formal bottled water business in India can be divided broadly into threesegments in terms of cost: premium natural mineral water, natural mineral water and packaged drinking water

 However, value could still be created  A brand like Himalaya provides access to a unique natural offering i.e. natural mineral water from aquifers  Flavoured mineral water and  Fortified mineral water

Mapping Value AdditionKapferer’s Prism

Adidas Picture of Sender Physique Personality Sports and fitness Traditional, conservative, collectiveE Ix nt te er rn na Relationship Culture al Quality and heritage European, Traditional li iz za at ti io on n Reflection Self Image True sportsmanship, A good Relates more to competing team player, Strong work than to winning ethic Picture of Receiver Strategic Brand Management: Jean-Noel Kapferer

 Physique according to him is the basis of the brand.  E.G. the physique of Philips is “technology and reliability” while for the brand Tata it is “trust” Personality is same as Aaker, it answers the question “what happens to this brand when it becomes a person?” Culture symbolizes the organization, its country-of-origin and the values it stands for.  E.G. traditional brands like balsara, dabur and zandu.

 Relationship is the handshake between consumer and the organisation.  E.G. the relationship with “safola” is safety. Reflection is the consumer’s perception for what the brands stands for.  E.G. coke’s image more attract youth. Self-image is what the consumer think of himself.  E.G. benz Car owner think that since he has bought the car he is treating himself to one of the best car in the world.

 Physical  Product features, symbols & attributes Personality  Character & attitude Relationship  Beliefs & association Culture  Set of Values Reflection  Customer’s view of the brand Self-Image  Internal mirror of customer as user of brand

Packaged Water Water Brands Picture of Sender Picture of Sender Physique Personality Physique PersonalityE Purity, Life Nature, Life giver, I E Purity, Life Nature, Life giver, Benevolent Benevolent Ix n x nt t t te e e er r r rn n n na Relationship a a Relationship Culture Culture al Physical Need, l l Physical Need, Physical Need, Physical Need, li Natural i i Natural Natural Natural iz z z za a a at t t ti i i io o o Reflection Reflection on Self Image n n Self Image Caring, Natural, Protective n Health Conscious, caring, Picture of Receiver Picture of Receiver Comparative Analysis

Commodity Brands Picture of Sender Picture of Sender Physique Personality Physique PersonalityE religious or cultural, if I Value Add Value Add E Ix any n x nt t t te e e er r r rn n n na Relationship a a Relationship Culture Culture al Basic and General l l Value Add Value Add li i i iz z z za a a at t t ti i i io o o Reflection Reflection on Self Image n n Self Image Value Add n Value Add Picture of Receiver Picture of Receiver Definite Value Add Possible Opportunities fro Differentiated Offer Scope for Product Innovations Comparative Analysis

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Commodities & brands

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