Evaluations of the Positioning of the Brand against Nivea - Case Study Example

Brand Management Number Department Introduction The object of discussion belongs to Nivea as a brand. However, the specific product that is being analyzed is Nivea Body Lotion (for dry to very dry skin). Nivea is a global brand which largely deals in skin-and-body-care and is owned by the Germany-based Beiersdorf AG. The history of the company dates back to March 28, 1882 when it was founded by Carl. P. Beiersdorf, a pharmacist. At the turn of the 20th century, the company exchanged hands and got a new owner Oskar Troplowitz who redefined the product by introducing a skin cream which consisted of Eucerit and water-in-oil emulsion. It was for this reason that the company gained the name Nivea proper, as Nivea is a Latin word denoting snow-white. By 1906, Nivea had gone to London. The brand then took on blue packaging from a yellow one in 1925, and thereby giving the company a very unique brand. That Nivea has become a success in the world market is a matter that is underscored by the brand having produced over 25 million Nivea Balls for the global market and thereby claiming its place in the market as a global brand ambassador. Beiersdorf AG is continuing to make profit and grow. In 2013, Beiersdorf AG’s organic sales grew from 6.6 while its nominal sales, by 3.3%. This means that Beiersdorf AG, which Nivea operates under, increased the volume of its sales from 3.062 billion Euros to 3.163 billion Euros (Gwin & Gwin, 2003, p. 30). 2. Identifying the Target Audience and the Target Market for the Branding Program The target audience comprises stakeholders in Beiersdorf AG and its brand, Nivea. These stakeholders consist of the executive decision makers, managers and employees and shareholders. The target market is the Middle East, specifically, the Saudi Arabian market. The Saudi Arabian market has been chosen as the target market since Nivea is interested in introducing its new product, Nivea Sun Care therein, as an artifice to later suffuse the rest of the Middle Eastern region. 3. SWOT Analysis for the Product Chosen There are some factors that are bound to affect Nivea Sun Care’s entrance in Saudi Arabia. Strengths For one, it is important to appreciate Nivea’s innovative streak and culture as a factor that will strengthen its entrance in the Saudi market. Nivea also enjoys strong asset leverage, seeing that in 2013 alone, its volume of sales was 3.163 billion Euros. Nivea has a wide supply chain which is distributed throughout the world. With this supply chain, it will be easy for Nivea to have Nivea Sun Care distributed well in the Saudi market. The crux of the matter herein is that by introducing Nivea Sun Care, Nivea will not be entering the Saudi market for the first time, but will be only introducing a new product into a niche it had already curved for itself (Hüner & Schierning, 2011, pp. 141 – 154). Weaknesses According to Geoffrey and Lubinski (2012, pp. 85-7), Nivea does not enjoy sufficient online presence and this denies the potential and prospective market, the chance to virtually interact with it. Particularly, Otto, Hüner & Österle (2012, p. 397-9) contend that Nivea’s online presence does not factor the reality of online transaction as an important face in business existence and has therefore not made sufficient efforts to have payments and transactions made online. Opportunities According to 2013 estimates, Saudi Arabia’s nominal GDP is 718.472 billion US dollars. This means that the country has strong purchasing power, and this guarantees Nivea, a market for its product, Nivea Sun Care. Again, Saudi Arabia is connected to the virtual world and this means that the Saudi market can be reached with relative ease, virtually and through conventional means (Rusetski, 2012, pp. 359-60). Threats Doing business in Riyadh, Saudi Arabia’s capital city is very competitive and expensive yet Nivea intends to introduce its Nivea Sun Care through Riyadh. The possibility of encountering stiff competition is underscored by the presence of competing firms and brands such as Mukhallat Lotion, Aloe V. Hand and Body Lotion, Rose Lotion, Oud Lotion, Karismal Bianco Body Cream, Karismal Bianco Plus Kit, Batterjee Shampoo and Cosmetics and Amenities, S.T. Dalfour Whitening Cream, Beauty and Personal Care, Ganozhi Soap, DXN Ganozhi Shampoo, Magiclear and Platine de Peau, among a host of others. 4 Critical Analysis of the Various Tools to Be Used To Communicate with the Target Audience Before and in the process of invading the Saudi market, the main medium of communicating with the target audience will be meetings and business reports. The meetings will have to involve all the executive heads of Nivea and Beiersdorf AG informed on the direction the entrance in the market will take. The meetings will take two forms: actual conventional meetings; and web conferencing. Actual conventional meetings will be convened at the onset of the project. This is because the stage facilitates brainstorming as it supports dialogue and requires physical attendance. This physical attendance compels the meetings to be held before the incursion into the Saudi market. Web conferencing will also be useful in facilitating communication between Beiersdorf AG and Nivea headquarters and the team that has been dispatched to invade the Saudi market with Nivea Sun Care. Both physical meetings and web conferencing will help refine and modify strategic plans and solicit a wider array of ideas at no cost. Business or formal reports will also help Beiersdorf AG keep track on the progress that has been being made in Riyadh. This will help convey information on the fiscal and logistical progress that Nivea Sun Care will have made in the Saudi market. Balance sheets and ledger accounts may accompany these formal reports. 5. Identification of the Sources of Brand Equity Just as Liang and Chen (2013, p. 24) observe, Nivea does not just use one form of brand equity. Instead it uses financial sources of brand equity, consumer-based perceptions and brand extensions. Financial sources of brand equity determine a product’s price premium over the rest of its competitors. The world over, clients prefer to buy Nivea items because they are regarded safer and of higher quality. Resultantly and normally, Nivea will not set its prices lower than its competitors to draw large sales volumes. Again, according to Adrian (2011, pp. 270-5) and Sayman, Hoch & Raju (2002, pp. 390-6), Nivea uses brand extension after establishing its financial brand equity source to introduce new products into the market. Nivea deodorants were for instance introduced after Nivea Crème, Nivea Body Care and Nivea hand-and-body lotion had curved a large niche in the market and came at a much more expensive price compared to other deodorants. It is in this manner that Nivea Sun Care is expected to succeed in Riyadh, the rest of Saudi Arabia and the Middle East. Nivea also uses consumer-based perceptions as a source of brand equity. Since Nivea’s brand is largely recognized, Nivea has always used consumer-perceptions to launch itself in the market and set its pricing, independent of competitor’s pricing trend. Nivea Sun Care is expected to have an easy entrance into the Saudi market because it Nivea has a very strong consumer-based perception. Consumers the world over have always tended to buy Nivea products (Rojas-Méndez and Papadopulos, 2013, p. 65). Assessing the Level of Brand Awareness, Strength, Favorability and Uniqueness of Its Associations When assessing the level of brand awareness, Nivea will have to track and measure the extent of customer engagement, client-based impressions and reach. Client-based impressions will help Nivea identify the favorable location for setting up the firm, the market’s social media habits and the market’s preferred search engines. By studying elements of brand recognition, brand-specific web searches and content resonance, Nivea or any other brand will be able to determine how effective its brand awareness campaign program has been. Nivea may also examine reach metrics to determine and inculcate its brand awareness (Ruxandra and Filimon, 2009, p. 1072). While attempting to achieve the above, Nivea can use its three brand awareness tools such as phone calls and conversions driven from websites, questionnaires and klout scores. 6. The Main Competing Brand against Nivea Company Nivea’s main competitors are L’Oreal Paris, Garnier, Yves Rocher and La Roche Posay. However, Nivea Sun Care’s competitors in Saudi Arabia and a smaller part of the Middle East will be Mukhallat Lotion, Aloe V. Hand and Body Lotion, Rose Lotion, Oud Lotion, Karismal Bianco Body Cream, Karismal Bianco Plus Kit, Batterjee Shampoo and Cosmetics and Amenities, S.T. Dalfour Whitening Cream, Beauty and Personal Care, Ganozhi Soap, DXN Ganozhi Shampoo, Magiclear and Platine de Peau. Evaluations of the Positioning of the Brand against Nivea According to Ashok, Călin & Ebi (2011, p. 365), L’Oreal Paris’ positioning can be understood in light of attribute ratings, indifference curve, budget constraints and market awareness. As for attribute ratings, L’Oreal Paris does well since it is always known to have quality cosmetic and beauty products such as make-up, hair care, perfumes, skin care, sun protection and dermatological care. The company is equally advantaged because it has a very weak budget constraint: in 2013 alone, L’Oreal Paris made 2.96 billion Euros. L’Oreal Paris has a total asset amounting to 28.219 billion Euros. L’Oreal Paris has a strong market awareness in the developed world. The Competitor’s Target Market L’Oreal Paris’ target market is mainly situated in the developed world: France where it is based, Europe (especially Western Europe) and the United States, China, India, Japan, Brazil and Southeast Asia, specifically, Indonesia. The Main Points of Parity and Points of Difference L’Oreal Paris’ main point of difference is its close association with celebrity status, while L’Oreal Paris’ point of parity include quality and safety of the product. Nivea is also reputed for quality and safety of its product, as point of parity. Nivea’s point of difference includes the use and presence of Eucerit and water-in-oil emulsion in its product and its snow-white lotion which characterize its face, skin, hand and body lotions (Grant & Kirchmaier, 2009, p. 254). Whether the Competitor Has Defined Its Positioning Correctly L’Oreal Paris has held its positioning correctly. This is underscored by its heavy presence in the places it is widely distributed. 52.7% (7.221) of L’Oreal Paris’ sales are from Western Europe, 27% (3.8 billion Euros) from the United States and 19% (2.699 billion Euros) from the rest of the world. From this, it is possible to see that L’Oreal Paris has positioned itself strategically according to priority (Alden, Batra & Steenkamp, 2003, pp. 45-6). 7. Two Methods for Financial Brand Evaluation The two methods that Nivea is to use for financial brand evaluation are the market approach and the income approach. The market approach will involve comparing the cost of operating in different markets. In this case, Nivea will consider the cost of operating in Riyadh or Mecca or Medina when introducing Nivea Sun Care. As for the income approach, Nivea will consider the financial outcome that will have been accrued from a specific business decision. Different methods such as the income split or the incremental cash flow method may be used for this end. Advantages and Disadvantages of the Methods for Financial Brand Evaluation The advantage that accosts the market approach is that it helps capture the dynamics of market forces (of demand and supply) and this in turn will help Nivea to set in place, effective market strategies. The drawback that comes with this method is that it cannot capture the financial quantification of aspects (such as culture and socio-cultural preferences) that shape demand and supply (Jan-Benedict, 2014, p. 24). The income approach can help Nivea to easily develop market-specific cost-benefit analyses and make important and informed decisions there-from. This method will not only help Nivea identify the most appropriate market to engage, but will also help Nivea make more accurate budgetary allocations. The problem with this strategy is that it neither accurately takes into consideration, the eventualities that may accost a business venture nor can it quantify the same eventualities in financial terms. Recommended Method to Be Adopted When it comes to taking Nivea Sun Care to the Saudi market, so far, the cost analysis method remains the most convincing and useful strategy that can be used to make financial evaluation of the project. This will include: factoring the cost of doing business and living in Saudi Arabia; considering the extra start-up costs; projecting the operational costs into a fiscal year; and making estimates on eventualities that may meet the launching of Nivea Sun Care in the Saudi market. Taking these measures will help seal the pitfalls that characterize the cost analysis method. 8. Branding Strategies to Be Adopted To Promote the Product The most important branding strategy is defining a brand and giving it a unique streak. However, this may not be so applicable to Nivea’s launch of Nivea Sun Care in the Saudi market since Nivea is a well-known brand in the world market. In this case, Nivea may consider building strong and long-term relationships with both potential and prospective customers. This will be important since Nivea will have to announce the entrance of its Nivea Sun Care in the Saudi market. Likewise, Nivea will have to inform Saudis of its continued stay in the market and any positive changes (such as the addition of natural ingredients to Nivea Sun Care) that may have been made pronto or over the time (Jewell and Saenger, 2014, p. 1559). This process may be important in that it demands the brand to exercise caution. For instance, Nivea should take care not to raise false expectations as a way of increasing the volume of sales. On the contrary, Nivea should try to consistently match its brand image with honest branding and its organizational values and statements. Advertisement pieces in electronic and print media may be applicable to this end. Advertising will come in handy also because it has been part of Beiersdorf AG’s culture (Bilgram, Bartl, & Biel, 2011, pp. 34-40 & Laforet, 2011, p. 1830). 9. Assessing the Influence of Packaging on Buying Behavior With time, Beiersdorf AG has come to develop a very sophisticated packaging design for Nivea. Nivea is known for its flip-flop PP closure packages which come in three different sizes. These packages also come in nine different shades of color. The essence of Nivea’s impeccable packaging culture is seen in the manner in which it has endeared clients to Nivea. Specifically, one of the reasons why other Nivea products dominate over other brands in the Saudi market such as Mukhallat Lotion, Aloe V. Hand and Body Lotion and Rose Lotion is packaging. Nivea’s packaging designs have also offered emotional realities and provided clients with clearer product recognition and increased product functionality. As touching product recognition, it is possible for consumers to identify Nivea products just because of Nivea’s unique packaging. Similarly, through packaging, Nivea has been able to enhance product differentiation. Specifically, the color codes and the aesthetic nature of Nivea pack shapes have always helped consumers to identify Nivea products and also glued them to Nivea (Laforet, 2011, p. 18-20). 10. Conclusion From the foregoing, it is clear that launching a product in the market is an undertaking which requires the consideration of strategic and financial factors. Like Nivea, an organization that needs to export its services or products must plan to determine the use of communication and communication mediums and budgeting and the use of finances that are to be expended towards specific micro-projects that make up the entire exportation program. The venture must also factor the socio-cultural environment which encapsulates the market, so as to plan the organizational and task environment accurately and appropriately. With all these factors having been considered, the organization will be able to overcome its weaknesses and threats in the market and to use its opportunities and strengths to its advantage. 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