The English Multinationals Brand Management - Case Study Example

JCB Brand Management

Introduction

JCB, The English multinational selected for the case study, was founded by Joseph Bamford in 1945 in Uttoxeter, UK. The company currently has its headquarters in Rocester in the UK. The company has grown over the years and transformed from the small factory operating in a makeshift garage in the 1950s to the current multinational with factories in five continents and a market niche in over 150 countries. This paper is a brand analysis of the JCB Company based on the brand management theory and terminology discussed by Keller (2012) and Riezebos (2003).

Justification of the choice of the brand

The firm is a global market leader in the production of heavy machinery including the backhoe loader (its signature product), wheeled loaders, excavators, luggage handlers, forklifts, and tractors.

U.K Market analysis using PRESTCOM

Political

According to Wansink (2003), the political factors that are relevant to the analysis of a brand strength revolve around immigraton, legislation, and government policies. In essence, immigration is a substantial issue in the UK whereby the immigration issue is influenced by both the national policies and the nation’s membership in the EU. For the period of time that UK has been a member of the EU, the country’s industries have been able to attract cheap foreign labour from less developed nations in the EU like Poland. However, in 2016 Brexit referendum, the UK citizens elected to exit the EU thus setting off a chain of occurences that will substatially affect the performance of JCB in the European mrket. Firstly, unlike in the present times when the UK is still an EU member, the country has to renegotiate new tariffs for all exports into the UK including heavy machinery in which JCB belongs. Consequemtly, the company will not find it as easy to sell its products in the European market. Further, the number of migrant workers gaini ng entrance into the country is expected to become lower and hence push the production costs up. Before the Brexit referendum went throeugh, the UK had more 700, 000 registered migrant workers, most of them from Poland, a neighbouring EU member state.

Apart from the UK Brexit, the UK has experience a relatively long period of economic stability hence attracting a large amount of FDI. The company also has several production facilities located in some of the fastest growing regions in the globe whereby it can market its products and services. for instance, india has the largest road metwork in the world. This coupled with the government’s enhanced investment in the road construction sector inidcated that JCB will continue to have an estabished market in the region.

Regulatory

Unlike other players in the health and food sector that are highly regulated, JCB operates in an industry sector that is not that highly regulated hence giving the company ample opportunity to expand its business production without necessarily losing out on its competitiveness. Similarly, the company is expanding its operations in Brazil and China where company operations are not very stringent. Non stringent regulatory measures enable the company to reduce its operational costs thus keeping its operations profitable. In the recent times, many developing nations have dedicated higher proportions of their budgets to infrastructure development and the mechanisation of agriculture. For instance in the millennium development goals, poor nations are encouraged to increase their proportion of budgetary allocation to agriculture and infrastructure to improve food production and ease the cost of doing business. As more governments adopt the international agreements to increase the budgetary allocation to infrastructure and agriculture, FCB will benefit if it can win some of the market and supply the equipment needed to make the mechanisation of the economies successful.

Economic

The UK and the EU have experienced economic growth for the last several decades thus increasing both the demand for the products and services provided by the firm. As the primary market for the goods and services produced by JCB, the UK has consistently been a great source of the company products especially the back hoe loader which is the signature product for the company. Further, the company has production and marketing outlets in other regions of Asia and the Americas that have consistently experienced economic growth. Consequently, the company has not only registered a constant rise in the revenue it earns in its traditional markets, but it has also managed to allocate a section of the earned revenues to marketing activities and therefore attract more sales.

The company, however, faced challenges during the 2010 economic recession whereby it was forced to retrench approximately 2000 staff members. This was mainly because most of its factories are located in Germany, U.K, Australia, India, North America, and China, nations that were at some point affected by the global economic crisis. However, the firm also benefitted from most of the economic stimulus programs adopted by governments to revive the slumping economies. Most of the economic stimulus programs incorporated investments into infrastructure and agricultural production. Further, the company has recently expanded its operations into some countries with some of the strongest or fastest growing economies in the globe; India, China, and Brazil. China’s residential sector has been growing while the worldwide demand for backhoe loaders is increasing due to improved mining industries especially in the developed world.

Social

The social parameters in most of the markets where JCB conducts its core business favour its brand development. In most of the countries in Europe and Asia, JCB brand is famous due to the high quality of its appliances and its adherence to safety standards. However, in the Japanese market, the company faces stiff challenges from the domestic companies owing to the Japanese culture of supporting local industries before consuming foreign goods.

Technological

The world has experienced tremendous technological advancement in the last few decades. Traditionally non industrialised nations in Africa and Asia have increasingly become more technically advanced. Currently, most of the road construction activities that utilise JCB machinery are happening in Asia and Africa. India currently has the fastest growing road network. Further, India is one of the largest markets for JCB machinery in the world. Additionally, technological developments in the African region means that many more processes are becoming mechanised thereby creating a high demand for heavy machinery such as the ones produced by JCB. Essentially, two technical developments have increased the market potential for JCB products. The first is the mechanisation of farming in many nations that priory depended on indigenous small scale agriculture and the second is the expansion of infrastructure projects. Mechanised agriculture in Brazil, India, Venezuela, and some other African states has created a high demand for farm implements and machinery and hence provided a sustainable market for JCB. Further, the world continues to experience the mechanisation of many business operations like cargo handling operations and logistics. The JCB Company is well poised to play a pivotal role in the supply of equipment to facilitate the mechanisation of business operations. For instance, the company’s freeloader has improved the efficiency and safety of

Competitive

JCB is highly competitive in the heavy equipment production industry and prides itself in producing very high quality machinery. The company is currently ranked third in the world and the leading producer of the backhoe loader in the Indian market. Further, the company dominates the Indian construction sector, selling approximately three quarters of all the equipment purchased in the market. The company prides itself of being innovative both in the process improvement and innovative products. For instance, in 1990, JCB began producing the world’s first tractor that featured additional comfort by incorporating a suspension system, an innovation that evaded most tractor processors and traders in the past. Further, the company’s Fastrac tractor is the fastest functional tractor that exists in the current market. Consequently, the company’s innovations in both process improvement and product development improves its competence in the international market. Currently, the company’s main competitors are Caterpillar, Komatsu, and Volvo.

Organisational

The organisational structure of the business favours its global expansion. Firstly, the firm has production facilities spread across the globe that enables it to respond to the demands of a specific market. The company has also established a wide network of dealers who make it easier for its products to reach the market. Finally, the company has established a very robust customer supports system that results in high consumer loyalty and increases its competitiveness in the market.

Market

Finally, the firm produces a wide variety of products for the construction market but also specialises in the backhoe loader which is a product tailor made for the construction and the mining industries. These two industries have been growing at a high rate across the globe. The company, is, therefore assured of a sustainable market for its major products. Additionally, the development of agriculture in South America and Africa creates a market for the firm’s agricultural implements, mining in Africa increases the demand for earthmovers, while the development of warehousing in Asia increases the demand for loaders.

However, the company also markets some of its machines accompanied with extra attachable and detachable appliances that enable an operator to use the machine for other secondary functions. For instance, the lift arm for most of the company’s loaders can be fitted with other peripheral attachments like rock crushers and drills. Although it increases the market for the firm’s detachable appliances, this feature reduces the revenue earned is significantly lower than when whole specialized units are sold for each of the functions. The sale of detachable peripheral appliances constitutes a line extension that significantly threatens the market for the main brand especially considering that these attachments can easily be developed by third party manufacturers in a similar fashion to other fittings like glass panes and tires.

Four Main Building Blocks of Good Brand Positioning:

• The competitive frame of reference

The FCB is in the construction equipment business and prides itself in producing high quality equipment and offering their clients the best service. The company has the highest and best recall rate in the construction equipment industry. Apart from the production of the equipment, the company also competes in the supply chain management for the construction equipment, product innovation, and research and development activities.

• Points of difference

However, unlike other competitors in the construction equipment market, JCB has set itself apart by developing unique products e.g. the fastest tractor in the market and also the first tractor with a fully functional suspension system. The company’s focus on innovativeness is another point of difference. It can be seen in the production of unique products like the firm’s loadall machine for conveyance and the telescopic loadall for warehouse management. Its unique products and innovation has caused its revenue in the Indian market to exceed the $1billion mark making it the dominant construction equipment provider in India . The firm has also targeted non-traditional markets in Asia, South America and Africa thus avoiding competition in some of the traditional markets in Europe and the US.

• Points of parity

There are several comparable competencies between JCB and the competitors. Firstly, the company’s recall rate and customer support services are closely identical to the customer relations management strategies adopted by Caterpillar, the firm’s greatest competitor in revenue sizes. Secondly, JCB targets the same consumers as Caterpillar, both firms producing high quality construction materials. Finally, the company also produces a variety of construction machineries similar to other competing firms and uses a network of external suppliers. Essentially, specialising in the same industry means that there are many competitors for the same market segment thereby limiting the firm’s potential market share. If the brand was to produce products in diverse areas of the economy then it would ultimately increase the potential to dominate a larger market share across various market segments.

• The brand mantra

The firm’s brand mantra, “A Product of Hard Work” reflects both the input and the target functioning of the products marketed by the firm. The firms wants to be recognised through its dedication to hard work that enables it to produce high quality products. Also, the firm’s mantra indicates that all products from the firm can be expected to perform when hard work input is required. Essentially, by using the plural instead of the plural, the firm’s marketing department demonstrates that the products are expected to meet individual needs. Marketing analyst propose that all products and services introduced in the markets should respond to individual needs of the consumer. This creates trust between the marketer and the client and it can increase the likelihood of customer loyalty. The JCB’s brand mantra places the product as a unique brand that recognises that hard work is required in the construction industry. The mantra also acknowledges that the development of quality products requires hard work.

Keller's Four Components of Good Brand Positioning:

According to Keller, building a strong brand requires that the brand manager controls the feelings and perceptions by the consumers. Basically, a brand gains strength when the customers have good experiences, lasting memories, friendly perceptions, beliefs, and good opinion about it. Such customers are not only highly likely to purchase more, but they are also more likely to recommend the brand to their colleagues, relatives, and friends. Additionally, such clients are loyal customers and cannot easily be lost to the business competitors .

• Brand Identity

The JCB prides itself as a world leader in the production, supply, leasing, and maintenance and training operators of construction equipment. Apart from producing a variety of construction equipment, JCB is a world leader in the production and supply of the back how loader, a product of the innovative efforts by the firm to meet the needs of the building industry. As a market leader in the manufacture of heavy equipment, JCB recognises the construction industry innovation needs to improve efficiency and reduce the costs of equipment. In this respect, the firm, through research developed the backhoe loader, a product that combines two construction sector machinery; a backhoe for excavation works, and a loader for conveyance of the excavated earth and debris for removal from the site. The backhoe loader, presently the firm’s bestselling equipment was a market leader in terms of innovation and the reduction of operational costs in the construction industry .

Further, the firm has cut a niche as the supplier of construction equipment in Asia to the extent that some of the conveyance and earthmoving activities are considered synonymous to the firm’s brand. In India, for instance most people refer to earthmoving machinery as JCB even if they belong to competitor firms. Further, the firm’s brand has been used to describe earthworks such as trench clearing whereby people refer to the activity as “to JCB.” The JCB can thus be said to have acquired a brand identity considering that its brand name is synonymous with many equipment and activities in its niche market. The brand identity acts as a marketing approach that encourages potential consumer to purchase JCB products instead of the competitor products. Further, the naming of its popular brands is simple and indicative of the functionality of the product. For instance, the back hoe loader is simply a loader that has a digging hoe arm at the rear. The naming makes it easy for the client to understand both the features and the functionality of the equipment. Another unique product by the firm is the “Fastrac” that is a fast moving tractor as indicated by the two acronyms “fast” and “tractor”. The Fastrac is recognised as the fastest tractor in the globe. The branding indicates both the innovation prowess of the firm and the branding competence of the marketing department.

• Brand Meaning

As a brand, JCB is characterised by high quality products accompanied by equally friendly and supportive customer care service. JCB is a market leader in the production of specialised high quality construction equipment. The firm also invests a lot of resources in research and innovation to ensure that it produces highly functional equipment that can meet several simultaneous client needs in the construction industry. For instance the Fastrac was developed to respond to the customer need for speed and performance in the tractor industry. Another unique product with unique meaning is the telescope loader that was developed to respond to the demand for safe equipment for use in crowded spaces such as warehouses and collapsed buildings. The telescopic loader combines both accuracy, functionality, and safety by ensuring that the operator remains outside the site of operation while improving the operator’s manoeuvrability of the equipment.

• Brand Response

JCB has responded to the construction industry needs by developing high quality implements that have wide applications and improve the safety of operators. The back hoe loader improve applicability and reduce the overall cost that would be incurred in acquiring two separate equipment. The telescopic loader respond to the limited space of operations in a packed warehouse and the need to ensure operator safety. The fastrac responds to tractor operators’ need for comfort, speed, and improved manoeuvrability. The firm also produces superior equipment with the back hoe loader considered as the most versatile construction equipment for general construction needs. However, the brand response can be improved if the firm conducted consistent market research to continually identify the market needs and branded its products to respond to the market needs.

• Brand Resonance

Finally, the firm promotes the brand resonance of its products by carrying out social media campaigns and also manages several online sharing platforms with both the potential and current clients with the aim of maintaining friendly contact with the clients. In meeting the four customer based brand positioning strategies, the firm has ensured that its products are salient, they appeal to the good feelings of the clients, have high performance, and they resonate well with the clients.

Potential for Brand Extension

As an established brand in the production and supply of construction equipment, JCB can improve its brand and business portfolio by extending its services and providing insurance for the equipment it sells or leases to the clients. Research indicates that the main hindrance why clients are reluctant to take up insurance of their construction equipment is that they are unsure if the insurance provider will offer them the appropriate service when the need arises. However, as an equipment manufacturer, JCB is in a competitive position to extend equipment insurance service to its clients. Firstly, the brand extension can succeed because the firm already has a good business rapport with its loyal clients. Secondly, the brand extension would increase the firm’s product portfolio. In terms of Keller’s CBBE approach, the brand identity is justified by the current low supply and high cost of insuring construction equipment. The client segment already exists for the firm since it already sell construction equipment. Secondly, the insurance service would meet the need insurance service among the operators and owners of the construction equipment. One of the challenges that discourages construction companies from leasing equipment is the perceived high cost of maintenance in case of mechanical problems. The product would have good response since the company already conduct maintenance and repair services for its clients. Finally, the company can keep in touch with all its clients as they will be in constant working relationship.

However, such a brand extension could be resisted by the retailers who are already used to getting free customer care service and support but unwilling to access the same service at a premium. Secondly, if the insurance service were to fail, it would negatively influence the market for the primary brand. Finally, the success of the insurance segment can potentially result in reduced sales of the primary brand if most clients pursue compensation for faulty equipment instead of buying new ones.