Branding a Commodity/

Brand Equity and Decision

Making
 Commodities

• What are commodities?

• A commodity is the generic term for any marketable item
produced to satisfy wants or needs (wiki)
• Is a commodity good or bad?
• For the company?
• For the consumer?

• My view
• Commodities can be seen as an opportunity for the company
• Commodities may not give enough value for consumers
Commodity to Brand

• Why should we brand a commodity?

• Volume and price competition can be avoided
• Differentiate from others
• Enhance value beyond functional features
• Create preferences
• Long term sustainable competitive advantage
 Commodity to Brand

• How can we brand a commodity?

• B-to-B and B-to-C – should we consider them separately?
• Let us start with B-to-B
• Are there segments in this market?
• How do we deliver value through branding?
• What does a brand have to offer?
• Consistency, customization, convenience
• Corporate or family branding, non-product related
associations, leverage BE of other customers.
• What commodities should be branded? Why?
 Commodity to Brand

• B-to-C
• Brand value to consumers in commodities
• Reassurance, value expression, maybe nostalgia
• Difficulty in branding commodities
• Past associations, category promotion
• So, how should we brand?
• Brand depth, joint promotions, spokespersons
• Finding meaningful differences, non-product related associations,
secondary associations
Paracetamol

• Interesting category – mostly OTC

• Crocin used to be a big brand
• Used to market to the doctor who would prescribe
• Dolo 650 has captured a big portion of the brand
• Should Crocin respond? How? Would it work?
 Centuryply

• Are Centuryply’s branding initiatives strategically matched with the

branding practices of the plywood industry?
• Is there harmony between the brand identity created by CPIL and the
existing brand image in the market?
• Are Centuryply’s branding initiatives appropriately integrated with the
company’s other marketing mixes?
• Is this branding model sustainable, considering the financial condition
of the company?
• Should Centuryply focus on the creation of a separate brand identity for
plywood, laminates, and veneers in place of the current corporate
branding strategy? What are the possible ways to do so?
 Branding Milk

• Lactose free milk in different flavors

• Peanut, cotton seed, Soy, Almond
• Milk very important in Indian diet
• So, why lactose free milk?
• 60 to 65 per cent of people in India are lactose intolerant
• Vegan Milk – brands like Sofit, Staeta
• Preservative free vegan choices
• Goodmylk and Sain – cheap alternative, lack of availability
• Different varieties offer different benefits
• Different channel
Impact of Brand Equity on
Decision Making

• Brand equity and Decision making

• How consumers cope
• Stage 1 – screening
• Stage 2 – comparing
• Implications for brand management
• Applied to some common product (we can
do Salt or shoes).
 Consumers Are Overloaded

• Overloaded and under time pressure

• The have a vast array of alternatives
• Each product has many attributes which are
• Difficult to understand (e.g., mineral fortified)
• Sometimes impossible to verify (e.g., low sodium content)
• Or “superior cushioning” or “tortional stability”
The Average Consumer (USA)

• What happens in a grocery store?

• Does very little search: Averages less than 12
seconds per item
• 42% spent 5 seconds or less
• 32% spent between 6 and 15 seconds
• Average number of brands handled: 1.21; 85%
touched only one brand
• What about for shoes? Well, probably some
more time
The Average Consumer (Chennai)

• What happens in the store?

• Time taken to chose
• Salt
• Sugar
• Atta
• Oil
What do they remember?

• Within 30 seconds of picking up the brand, less than

half (47.1%) could give the exact price (55.6% were
within 5%)
• Few could say the size of their savings (<13%), and
most were quite inaccurate.
• Savings misestimated by 47%.
• Estimated price 10% lower than ‘real’ savings.
How Do Consumers Cope?

• What happens during the choice process?

• Choice has two phases
• Screening: Eliminate Alternatives
• Comparison: A small set of alternatives (2-3)
get intense scrutiny
Screening is Important

• What happens during the screening process?

• Elimination occurs because:
• The brand lacks a feature (e.g., not mineral fortified)
• The brand does not meet some cutoff (e.g., Saffola
was priced at Rupees 20/Kg versus 7.50 for Nature
Fresh)
• Once eliminated a brand is not reconsidered.
How Does Brand Equity Effect Screening?

• Awareness: Can I recall this brand?

• Most commonly, a harried or uncertain consumer will
eliminate brands with which they are unaware.

• Infer: What do I know about this brand?

• Consumers will make inferences based on limited
knowledge about the brand
• Image guides inference about the brand
• Inference substitutes for search because:
– Search is expensive
– Available information is irrelevant or tough to understand
What is the role of brand in
marketing salt/shoes?

• To provide assurance on quality to consumers

• Branding can be viewed as valuable for salt/shoes,
since consumers could not understand ingredients,
for example iodine or tortional stability.
• Positioning the product as better than unbranded
choices which contained impurities, and even
appeared dirty or discolored.
How Does Brand Equity Affect
Screening?

• Powerful brands can set the agenda:

• Dictate the attributes used for screening
Examples:
• Annapurna and Purity/Iodine
• Tata Salt and Desh Ka Namak
• Volvo and Safety
• Maruti and large number of service centers
Screening: Summary

• Large product classes are screened.

• Elimination = Death
• Brand Equity influences screening
• Recall for the consideration set
• Inferences about product attributes
• Setting the agenda for screening
Screening Simplifies Choice, But Does not do the
Whole Job

• Even when screening, consumers seem to

examine 2-3 alternatives much more
carefully
• Let us say Tata versus Annapurna versus Shudh
• Process involves intense comparisons on a
small set of attributes.
• How does this comparison process work?
How does this comparison work?

• Consumers compare other brands to one brand

• Often that brand serves as the reference brand
• If Annapurna is the reference brand (Stable Iodine) versus
if Tata is the reference brand (Desh Ka Namak)
• Key theoretical concept:
• Loss aversion…when compared to the reference brand, losses
loom large.
• Example: How would you feel about a foreign brand of salt? A salt
without stable iodine?
Implication

• If you are the reference brand…

• Improvements on price, quality, etc. help
• But decreases hurt more…
• E.g. Loss of stable iodine will hurt more whereas Tata cannot lose
Desh Ka Namak
• If you are not the reference brand…
• You are judged relative to the reference brand
• Any way you differ from the reference brand is your loss
• Losses on an attribute hurt more than the equivalent gain
helps
• Attributes differ in loss aversion
• Some attributes are given more weight than others (category
dependent)
• Loss aversion for quality is greater than loss aversion for price
Implication

• Reference brands have competitive advantages

• Particularly on those features (Iodine versus Desh
Ka Namak?) for which consumers are most loss
averse
Pricing Implication

• Price cuts will effect different brands differently

• High quality brands can easily “steal” market
share from low quality brands by cutting price.
• But lower quality brands will not steal share
from a high quality brands by cutting price
How do you become a Reference Brand?

• ‘Strong’ brands with great awareness (T.O.M.)

• First Mover Advantage
• Brand most recently purchased
• Sampling, particularly for higher quality brands

• Having high brand awareness can make you

the reference brand which can be a significant
advantage.
Key takeaways

• Branding can add value: it can reassure consumers about

“quality” which they could not see for themselves.
• Brand positioning is not a static thing. It has to evolve in
light of competitive conditions.
• Positioning based on “product features” or non-patented
“ingredients” generally do not provide sustainable
differentiation.
• Branding can be via marketing or via product
differentiation.
Loss Aversion

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Salt Brands India
• Annapurna
• Dandi (Kunwar Ajay Industries)
• Shudh (Nirma)
• Captain Cook (DCW Home Foods)
• Aashirwad (ITC)
• Nature Fresh (Cargil)
• Congra
• Surya Salt
• Saboo Salt
• Tota Salt
• Saffola (Marico)
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Crocin Print Ad

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