JUL 17, 2010

Nestle Cerelac Customer-Based Brand Equity Pyramid (CBBE)

CBBE has bottom to top 4-levels as: 

1 – Level: Salience
Salience means awareness. Nestle Cerelac has high brand awarenessamong its customers.
This awareness includes information as it is commonly used for babies as a nutritious food.
It is available in various new tastes and new textures along with a reasonable assortment
(350gm, 175gm and 25gm sachet pack) for the customers’ convenience. 
2 – Level: Performance (Left-hand side) & Imagery (Right-hand side)
As far as performance is concerned Nestle Cerelac is a nutritious product. It contains
Bifidobacterium Lactic which is also present in the breast milk and improves the digestive
immunity of the upset tummies. It is a kind of positive bacteria and it kills the harmful
negative bacteria. Moreover it has 7 minerals and 12 vitamins which are essential for
healthier babies.
Nestle Cerelac has an image that it is a completely balance diet for healthier, active and
energetic babies among its customers. Balance diet means which contains appropriate ratio
of minerals, vitamins, iron and calcium in the food. It makes mothers feel free and relax
about its child diet plan. And that it is a consumer-centric product which focuses on the
consumers’ specific needs.
3 – Level: Judgments (Left-hand side) & Feelings (Right-hand side)
Customers judge Nestle Cerelac on its quality dimension. They see it is a best quality food
available in the market for babies. Second judgment they have that it is an innovative as
well as a reliable product. The name of Nestle brings credibility with Cerelac. They know
that it is a pioneer brand and market leader so they feel the brand superiority in the
market. 
Customers feel that the brand evokes the sense of calmness and peacefulness in them. Also
the usage of brand brings the sense of security and comfort.
4 – Level: Resonance
Resonance means the ultimate social status of the brand and how much loyal customers the
brand has. Nestle Cerelac has 40% loyal customers and repeat purchase is near about 65%.
As it is a quality symbol in society as a result people have affiliation with it. Feel a sense of
community by using Cerelac as society is accepting it. And for making this bond even
stronger company has a “Medical detailing team” for mothers. This team consists of 18,000
doctors belongs to the whole country. At this stage people are in active engagement with
the brand with the team. 

OCT 16, 2010

Brand Value Chain – Nestle Cerelac

‘A structured approach to assessing the sources and outcomes of brand

equity and the manner by which marketing activities create brand value’
The brand value chain consists of four value stages and three multipliers as:
Value Stages: 1.Marketing Program Investment, 2.Customer Mind-set, 3.Market
Performance and 4.Shareholder Value.
Multipliers: 1.Program Quality, 2.Marketplace Condition and 3.Investor Sentiment.Brand-
Oriented Value Chains

Now we will discuss it one-by-one for our selected brand “Nestle Cerelac”.
First Value Stage – Marketing Program Investment:
The brand value creation process begins when the firm invests in a marketing program
targeting its actual and potential consumers. This marketing program can be product
research and development, design, trade or intermediary support, advertising, promotion,
sponsorship, direct or interactive marketing, personal selling, publicity, public relation and
employee training.

Nestle Cerelac major investments on the marketing activities in year 2009 were its TVCs.
First one launched in March for Nestle Cerelac stage 3 – new texture. Second one launched
in September for Nestle Cerelac all stages – Bifidus. Hoardings of Nestle Cerelac Bifidus on
the high exposure places. POS (Point-of-sale) material to support trade partners in better
displaying the product. For employees who have babies, free Nestle Cerelac for 6
months. Making doctors company employees by hiring them for “Medical detailing team” of
Nestle. Providing knowledge to the doctors and mothers through various seminars on the
scientific aspects of the product only.
First Multiplier – Program Quality Multiplier
The ability of the marketing program to affect the customer mind-set will depend on its
quality. It has four major dimensions to judge the quality of a marketing program
as: Clarity, Relevance, Distinctiveness and Consistency.

Nestle Cerelac Analysis for program quality multiplier is as: Clarity; It means how

understandable the marketing program is for the customers? Recent TVC is easily
understandable and for more clarity “Nadia Khan” is explaining the product message for the
customers, Relevance; Do consumers feel that the brand is one they should seriously
consider? How meaningful is the marketing program for the customers. Latest TVC is of
Bifidus Cerelac related with the digestive system functional improvements of babies. Also
delivering the full product related research, development and knowledge to the
customers, Distinctiveness; How unique is the marketing program? How creative or
differentiating is it? TVC of Bifidus Cerelac is really a creative one. It clearly demonstrates
how Bifidus kills the harmful bacteria and generates positive bacteria and also enhances the
immunity of the digestive system to fight with the other diseases and Consistency; How
cohesive and well-integrated is the marketing program? Does it effectively relate with the
past marketing programs and properly balance continuity, change and evolving the brand in
the right direction? Cerelac all previous ads focus on the product features and attributes and
in the recent TVC of “Nadia Khan” this thing also present.Cerelac Banana
Second Value Stage – Customer Mind – set
The customer mind-set includes everything that exists in the minds of the customers with
respect to the brand. It includes thoughts, feelings, experiences, images, perceptions,
beliefs, and attitudes.

Five dimensions to measure the customer mind-set are as: Brand Awareness, Brand

Associations, Brand Attitudes, Brand Attachment and Brand Activity.
Brand Awareness: The extent and ease to which customers recall and recognize the brand
and can identify the product features and attributes with which it is associated. Nestle
Cerelac has high awareness among customers. This awareness mainly is as: It is commonly
used for babies from 6 months to 3 years. Available in different tastes and textures, SKUs
are 350gm, 175gm, and 25gm sachet pack. Brand Associations: The strong, favorable and
unique associations perceived by the customers about the brand. Nestle Cerelac is a
nutritious food and a balance diet which makes babies life healthier. A product that is easy
to digest for babies and taking care of baby’s internal system. 

Cerelac is a reliable and innovative product too. Brand Attitudes: Overall evaluation of the
brand in terms of its quality and the satisfaction it generates. Customers perceived Nestle
Cerelac as a best quality product and a symbol of commitment. It’s a consumer-centric
product that takes care of consumers specific needs. Brand Attachment: The degree of
loyalty the customer feels towards the brand. Customers of Nestle Cerelac feel a sense of
community as they feel socially strong by using it. Brand Activity: The extent to which
customers use the brand, talk about it and seek the product related information. Customers
of Nestle Cerelac are in active engagement with the brand. On web company has an
advisory council for the product with which customers discuss problems and have
appropriate solutions from experts.
Second Multiplier – Marketplace Condition Multiplier
It has three factors as: Competitive Superiority, Channel and other intermediary support
and Customer size and profile.

Competitive Superiority: How effective are the marketing

programs of the competing brands? Nestle has no a tough kind of competition. Market has
very few local cereal manufacturers which are not in a position to do heavy advertisement
as Nestle Cerelac. Channel and other intermediary support: How much brand reinforcement
and selling effort is being put forth by various marketing partners?
Nestle Cerelac used initially “Pull Strategy” by investing on TVC so that customers demand
the product by themselves. And by doing so the trade partners are bound to stock the
product. Nestle Cerelac provide no trade promotions to the intermediary because company
knows that it is the only brand available for babies and that they have high bargaining
power. Also company has the strategy of maximum market coverage to fulfill the
consumer’s demands. Customer size and profile:How many loyal customers the brand has
and what type of customers are attracted to the brand? Are they profitable? Nestle Cerelac
has 40% loyal customers. Health conscious parents are the major customers of the brand.
They are highly profitable as they are not price sensitive but belong to quality conscious.
Third Value Stage – Market Performance
Customer mind-set affects how customers react in the marketplace in six main ways.Nestle
Cerelac, Rice with Milk

Premium Price: Customers of Nestle Cerelac are willing to pay the premium price for quality
products. Price Elasticity:No price elasticity of Nestle Cerelac exists in the market. Market
Share: Nestle Cerelac has 15 % market share, 2 % is in the hands of other local
manufacturers and 3 % belongs to the imported brands. Brand Expansions: Nestle Cerelac
has a successful brand expansion in the form of various new tastes and new textures. Cost
Structure: Nestle has a very effective cost structure as company spend only in the
advertising heavily and not on the trade promotions to maintain the marketing
expenditures. High Stock Value: As Nestle is a multinational so the factors like inflation,
power crises, political issues matters less for it and maintains the high stock value.
Third Multiplier – Investor Sentiment
It has four factors: Market dynamics, Growth potential, Risk profile and Brand contribution.
Market dynamics: What are the dynamics of market as a whole (interest rates, investor
sentiment, and supply of capital)? Suitable for Nestle Cerelac to maintain investor, creditor
and market confidence and to sustain the future development. Board of Directors monitors
the return on capital employed  which the Company defines as operating income divided by
total capital employed. The company paid dividend per share as 25 Rs last year. Growth
potential: What is the growth potential or prospects for the brand in which it operates? Very
high growth for the Nestle Cerelac as 80 % of the market is the opportunity for it. Being a
Multinational company, Nestle has social approval and no legal bonding. These are the
facilitating factors for Cerelec. The inflation rate and power crisis in Pakistan are the
hindering factors for Cerelac brand. Risk profile: What is the risk profile for the brand? Low
for Nestle Cerelac. Nestle Cerelac Apple 400g (England)

Nestle Cerelac is the market leader and there is no competition exists

for it. So that’s why inflation rate or power crisis not much affected the brand’s share.
Customers pay for the quality and nutritious food. Brand contribution: How important is the
brand to the firm’s brand portfolio? Nestle Cerelac stands 4th in the brand portfolio after the
milk and dairy, water and beverages. But overall in the baby food category, Cerelac is the
only brand in the Pakistan that best available in market.
Fourth value stage – Shareholder Value:
Three important indicators for shareholder value are as: Stock price, The P/E ratio
and Market capitalization
Stock price: The current price of the share is called stock price. So the stock price of the
Nestle increasing day by day. Price/Earning ratio: It is the stock price divided by the earning
per share. The current price or value of the share when divided by EPS (Earning per share)
then we get P/E ratio. High the P/E ratio high the investors – investors willing to invest
more. The P/E ratio of Nestle currently, is 17.2 % almost. Its mean investors pay 17 Rs to
earn one rupee. Market Capitalization: Market Capitalization is the total market value of a
company's outstanding shares. Market capitalization is calculated by multiplying the number
of shares outstanding by the market price per share which is the current value of a
company.