Brands and Brand Equity - of Nestle - Case Study Example

Customer-Based Brand Equity Model---Nestle Student’s Name: Instructor’s Name: Course: Date: Customer-Based Brand Equity Model---Nestle Introduction Building a strong perceptual position is one way in which Nestle has been operating in the already competitive markets. The image of the company’s brand remains essential and one of the strategies that Nestle has adopted to align its products with current demands in the areas of operations. Just like its competitors, Nestle has been concerned with reaching even further improvements when it comes to service standards so that their operations can consolidate market niche and specific expertise around the products but not the function. Nestle produces its products from seven different factories and its operations are headquartered in Mutiara Damansara. In addition to this point, studies from scholars such as Brady et al. (2008) have noted that the perception of Nestle among people continue to grow. As a matter of fact, it is argued that the Brand remains people’s choice because of the good positioning, To achieve their targets, the company has been managing its brand, putting their focus on logos, packaging, and and intangible tenor of emotions from consumers. Currently, studies have been concerned with different theorists and researches that have been focussing on Brand Equity Models to understand how companies manage their brands. For instance, Kemp et al (2012) has noted that most companies’ business operations are within a competitive marketplace meaning that there is need to evaluate brand management approaches to ascertain how much it can sustain competitive advantage over its rivals. This view has been supported by Customer-Based Brand Equity Model that was proposed by Keller (2012). Based on these arguments, this report provides succinct analysis of brand management for Nestle within the framework of Customer-Based Brand Equity Model as suggested by Keller (2012). Customer-Based Brand Equity and its Application in Nestle Brand Management The best approach in understanding how Nestle approaches management of their brand is relating their brands to Keller’s Brand Equity Model (Keller, 2012). According to the author, Customer-Based Brand Equity (CBBE) is the situation where companies approach brand management in a manner that the brand is positioned to make customers think and feel in a particular way. Proving case study from the Company Nestle has been doing the positioning of their products class towards attracting customers (Edlinger, 2015). Studies such as Wood (2000) have argued that this approach has been informed by Keller’s Brand Equity Model but basically, it follows the trend that has been adopted by its competitors such as Milo that is now becoming the number one drinking for the sport. A case in point that points towards Customer-Based Brand Equity is the Nestle’s introduction of Maggi which has been giving it a very big effect to the brand. Relating Keller’s Brand Equity Model with the approach Nestle has given its products, the company has been engaged in a number of activities that have been aimed at building the right type of experience customers have around their products. In doing this, customers have been having positive feelings, thoughts, opinions, perceptions and beliefs about Nestle. To conceptualise this argument, Suresh Narayanan, the Managing Director of the company argued that the introduction of Maggi as a product of Nestle helped the brand perform well thus increasing the company’s market segment since customers had positive thoughts about the brand (Ponnam and Balaji, 2015). In summary, Nestle application of Customer-Based Brand Equity has followed the structure below: Figure 1: Nestle’s Application of Customer-Based Brand Equity Model in Brand While the figure above resembles what Keller discussed with regard to Brand Equity Model, Nestle operations, particularly since Suresh Narayanan joined the team has led to the introduction of the four elements; Loyalty, Attachment, Community and Engagement to assess how brands such as Greek yogurt brand 'Grekyo' and Maggi perform. In general, while Keller stresses on elements such as brand imagery, brand performance among others (Keller, 2003; Keller, 2016), Nestle has been using Loyalty, Attachment, Community and Engagement to understand two critical metrics in the market; Measurements of brand equity with regard to the nature and scale of their utility that their brands deliver to customers (Gremler and Brown, 1996). Measurement of equity with regard to what Nstle terms as “leaders in nutrition, health and Wellness Company.” With this point, the company engages in brand management aimed at assessing the level at which their customers are prepared to stake their money and loyalties from other brands behind Nestle brands. This metric further assesses the extent to which customers are able to recommend the brand to other customers (Jevons, 2005). One notable weakness in understanding Nestle’s brand equity model is what Keller (2012) terms as ‘Brand Meaning’ (p. 46). That is, Nestle’s approach of introducing variants of Greek yogurt brand 'Grekyo', Maggi noodles and protein growth brand known as 'Pro-Gro' in dairy segment do not ascertain the extent to which the product is meeting specific needs from customers. Keller (2012) outlines that performance should consist of elements such as product reliability, primary features and characteristics, serviceability, durability and efficiency which is not factored in Nestle’s approach to brand management. Report released by Nestle indicates that between 2013 and 2016, its products have recorded between 35 and 55 percent increase in sales (Chen et al., 2016)---a factor the report attributes to efficient approach in brand management. In as much as this is a monolithic brand, there has been instant noodles market in India which reports have indicated to be about Rs 3,000 crore with Nepal based Chaudhary group named Wai Wai as well as Patanjali Noodles being major players (Ferguson et al., 2016; Goedertier et al., 2015; Kim et al., 2014). In line with Keller (2012) outlines, Nestle have also been engaged in heavy but effective promotion approaches. It is worth noting that without effective communication approach, the likely scenario will be that no one will be aware of the products and brands. The company has been engaging in variety of intelligent ideas with regard to advertisement on print media and social media so that it can attract customers. For instance, the company opened a Janji Sihat Contest that suited all customers (Michel and Donthu, 2014). Studies have recognized this approach as one of kind of promotion that the Company has had so as to celebrate good health, nutrition and wellness values. According to Keller (2012), promotions that engage customers as the target marketing niche is essential and effective since it will allow an approach that attract more customers to the brand. Before the inception of Janji Sihat Contest, the Company had organized for Yes No Milo Story Contest that allowed targeted market and customers to create a video regarding their life. According to Keller (2012) and Albert and Lawrence (2001) this approach allows companies to grab customers towards their brand. On the other hand, this approach means positioning brands to compete favourably in the market owing to the fact that Nescafe had previously done their promotions and one of such was the What Are You Going to Do Today Contest (Rose, 2015). The inception of Yes No Milo Story Contest after What Are You Going to Do Today Contest meant that Nestle was making attempts to keep in the customers’ mind regarding the need to start their day with Nestle; it was about ways in which Nestle was catering for customers’ soul and mind. Monolithic brand architecture has been successful with Nestle products as the approach has ensured that products are effectively promoted with a single campaign or advertisement (Velavan et al., 2015). When the company launched its latest model of Janji Sihat Contest, it needed one campaign that factored all its brands including. This approach was also effective with Nestle when they introduced Maggi that replaced the previous tastes. Monolithic branding facilitated the entry of Maggi by leveraging ‘halo effects’ or existing brand equity which when assessed keenly, played the role of promoting new product acceptance in the market. One challenge that researchers have found with Nestle’s approach of monolithic branding is that it has imposed on the brand owners pressure to maintain consistent quality. For instance, if the quality of Maggi fails then such is likely to affect the favorability and acceptance of other products such as Greek yogurt brand 'Grekyo.' One of the main concerns of Customer-Based Brand Equity is brand positioning. From the one hand, it is possible to argue that Nestle has shown commitments towards brand positioning by boosting and sustaining their brand image. As a matter of fact, the Managing Director believes that a good brand positioning may not stand alone without engaging in activities that can be related with the community. On the other hand, brand positioning in the Company has been successful through creation of shared values. The approach the company takes is through sharing the excitement they have with the community. For instance, the decision to position their brand to the community has been done through water, nutrition and rural development. The Managing Director has been terming these approaches as core to the business operations and strategies. A clear case includes the Nestle Paddy Club that has been providing extra financial support to the community and farmers in Kedah. In such situation, Nestle brought together the benefits of water and its reusability (Riezebos et al., 2003). Brands that have acquired the desired brand equity in the marketplace are likely to have potential to leverage its equity through elements such as brand extension, line extension, ingredient brand and brand alliances. This is exactly where Nestle products are headed as they have designed the process of its marketing to an extent that it is succeeding in meeting customers’ functional needs, perceived performance. As a matter of fact, the introduction of Maggi has helped the company to leverage the parent brand associations to new levels of products thus charting a new growth path for different brands Neslte has been offering. This is a careful thought of brand management that generates what Nam et al, (2011) term as Top-of-Mind Awareness (TOMA) (p. 92). Nam et al, (2011) explains TOMA to be a well-executed brand management that makes the brand name the first option to pop into consumer’s mind when prompted to name brands from the product class in question. Nestle Application of Customer-Based Brand Equity in Brand Image Transfer The argument about the application of Nestle Customer-Based Brand Equity in brand is in line with Brand Image Transfer model. In such connectedness, Nestle has been attempting to transfer associations that are considered valuable to their consumers from one of their brands to another. However, the process of transferring associations needs companies to at least have two entities; a source and a target. From the figure below, it is apparent that for Nestle to transfer any of their brands that are competing with Companies such as Nescafe, they will have to have the source conjure up certain associations in their consumers. It has to be noted from the diagram that associations is described using three distinct features as shown in the figure below; the content of Nestle’s brand, positive or negative charge and the level to which the brand is linked to the strength of the brand. With regard to content, most of Nestle brands, especially the Maggi will probably be associated with health and nutrition. Figure 2: The Process of Image Transfer for Nestle’s Maggi Figure 2 abo can further be linked to Keller (2012) understanding of brand image. Brand imaging remains an integral part in brand management and influenced by activities undertaken by companies (Keller, 2012; Riezebos, 2003; Edlinger, 2015). In particular, Keller defines brand image as the perception from consumers regarding the brand, which is reflected in their memories by brand associations. What Keller argues about is that brand management should understand the attributes of brand image as it helps in reducing consumer or client’s perceived risks regarding the brand. Relating these views with Nestle’s approach to brand image, it is essential to decipher information about Nestle’s product risks or how customers perceive Nestle brand to be risky. A report by Edlinger (2015) indicated that Nestle is in a sector where the demand for their products relies on the prevailing economic events and health related challenges people face. This means that they cannot meet specific demands of their brands in some countries. The insinuation of this point is that Nestle should ensure that positive associations are not losing their favorability and strength. Lack of considering health related challenges of their products in the market was a factor that was negatively associated with Nestle as a brand. Currently, Nescafe and other competitors are introducing some changes in the marketing environment therefore addressing the problem of health related complications which in turn, will help alleviate bad association of the brand that damages its favorability and strength. To this regard, improving brand favorability and strength would mean making up brand image. These approaches entail programmes Nestle is directing towards new or existing brand associations. At the moment, Nestle seems to have lost market with regard to products such as Pro-Gro because Competitors products are currently dominating the market in Asia and other parts of Europe. It therefore means that Nestle should refurbish its brand equity (a good way of doing this is to change their support and marketing programs in Asia and leveraging new secondary associations). With deeper conceptualization of Nestle’s desired brand knowledge structures in hand, their brand equity framework will help in providing directions as to how best they can refresh Pro-Gro and Maggi to achieve the associations customers once had with these products. 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Brands and brand equity: definition and management. Management decision, 38(9), 662-669. Read More