CH - 01 (Competition and Brand)

C-1 Competition and Brand 1
C H A P T E R
Competition
and Brand
1
Copyright © 2002, Harsh V Verma
1– 1 Brand Management Text and Cases (Ed-2) Harsh V Verma Excel Books
 What do Lakmé, Crocin, Goodnight, Hit, Captain Cook, Medicare, Saffola,
Nihar, Milkfood and Dollops have in common? All these are brands which
have been acquired by companies.
 Hindustan Lever bought Lakmé for Rs 78 crores. Brooke Bond paid Rs 25

crores and Rs 100 crores respectively for Milkfood and Dollops brands.
Godrej acquired Hit and Goodnight brands of mosquito repellents for a
consideration of Rs 131 crores. Marico acquired Saffola and Parachute
brands for an estimated of Rs 30 crores from Bombay Oil Industries.
 Internationally, companies have been paying huge sums to acquire the

brand of their choice.
Cont….
Britain all Sold Out
Many brands originated in Europe. They stood tall and drove material wealth and
esteem. Britain has been home to many iconic brands that enjoyed high recall
and in some case high prestige. But now the reality is quite different. To a
layperson, nothing may have changed…but many of these iconic brands have
changed hands. They are now foreign owned.
Cont….
The following are the famous British brands that have moved to foreign
hands:
 Rolls-Royce - German car and motorcycle manufacturer BMW
 Manchester United - owned by US financier Malcolm Glazer
 Mini Cooper - German car maker BMW
 Kitkat- swiss confectionery company Nestle
 Smarties - Swiss Nestlé
 Bass Ale - Belgian beer company Interbrew
 Ty-Phoo Tea - Indian tea company Tata Tea
 The Savoy - Canadian Fairmont hotel chain

Cont….
 The Waldorf - the US hotel chain Hilton
There has been an outcry over the takeover of Harrods by Egyptian born
Mohammed Al Fayad (whose son Dodi died with Princess Diana in a car
accident), whereas many such sales like that of The Savoy and Claridges did not
even cause a noticeable ripple. The British seem to be unmoved by the fact that
many of their iconic brands have been taken over by foreigners. Does it mean
loss of Nationalism? The most recent name to change hands is famed fish-and-
chips chain Harry Ramsden's.
Adapted from: 'Britain all sold out', The Hindustan Times, April 15, 2006, p. 15.
The Economic Ideal
 Microeconomic theory discusses how different types of market structures
behave differently. A comparison is made between various forms like
perfect competition, monopoly and oligopoly.
 The welfare economists argue in favour of competition, believing that
perfect competition promotes economic efficiency. The equilibrium in
perfectly competitive markets is Pareto optimal.
A perfectly competitive market is characterized by;
i. A large number of firms; each firm is small and cannot affect the price of a
product by manipulating its output,
ii. The products offered by the firms are identical or homogeneous. The
consumers do not exhibit preference for one over the other,
iii. There are no entry or exit barriers. Firms can gain entry or exit from the
market at will,
iv. Participants in the market have perfect knowledge and hence cannot be
exploited because of ignorance. Cont…. Copyright © 2002, Harsh V Verma
The Industry Structure – Conduct – Performance Model
Structure Conduct Performance

Concentration Product Pricing Advertising Efficiency Technical
Differentiation Entry Product Development Progress
Barriers
Promoting Competition
Structure Conduct Performance
Government
intervention
“to promote Cont….
competition”
 In order to pursue the economic ideal and perpetuate competition, the
Indian counterpart to “governmental interventions” came in the form of the
Monopolies and Restrictive Trade Practices Act of 1969.
 The Act was passed with an intent to “ensure that the operation of the
economic system does not result in the concentration of economic power to
the common detriment.
More specifically, the Act was aimed at attaining three objectives:
i. prevention of concentration of economic power to common detriment,
ii. control of monopolies, and
iii. prohibition and control of monopolistic, restrictive and unfair trade practices.
Competition Disarms
 ‘Competition is the economists’ ideal. Its outcomes are socially desirable. It
does everything good for the market—the factors outside the firm’. View this
statement from the marketers’ perspective.
 Competition essentially means a fight or a battle. It is a tough condition for

the marketers, because if you are inefficient, the market forces would edge
you out of the marketplace.
 Hence, competition means hard work. It is a constant struggle to outperform

the rivals. Competition is customer friendly, but it is not marketer friendly.
Cont….
Players and Brand Proliferation
Product Companies Brands

Cigarette ITC, VST Godfrey Philips, GTC, HM India Kings, Classic, State
Udyog, International Tobacco North- Express 555, Benson &
East Project, Asia Tobacco, Parket Hedges, Wills Navy cut, Wills
Tobacco, Mahaderlal Hariam. Flake, Gold Flake, Bristol,
Capstan, Scissors, Hero.
Kingston, Legend, Burton,
Charms, King, Gold, Premium,
Virginia, Charminar, Gold Filter,
Standard, Bat, Passing Show,
Rothmans, Jaisalmer,
Chesterfields, Marlboro, Four
Square, Red & White,
Commando, Originals,
Cavenders, Chancellor,
Harvard, Craven, Dunhill,
Cartier, Panama, Baton, Flair,
Style.
Cont…. Copyright © 2002, Harsh V Verma
Motorcycle Bajaj Auto, Hero Honda, Royal Enfield Eliminator, Caliber, KB 125 RT,
Motors, TVS, Suzuki, Escorts Yamaha, Boxer, CBZ, CD100, Passion,
LML, Kinetic Engineering. Splendor, Glamour, Street,
Bullet, Machismo, Thunderbird,
Lightning 535, Taurus Diesel.
Fiero, Yamaha, Rajdoot,
Escort ACC, Adreno FX,
Energy FX, Challenger, GF
125, Samurai, Shaolin,
Shogun, TVS50XL, Max100,
CT 100, Crux, Pleasure, Shine,
Karizma, Achiever, Platina,
Discover, Avenger, Wind,
Apache, Star, Gladiator,
Graptor,
Shampoo HLL, P&G, Colgate Palmolive, Sunsilk, Organics, Clinic, All
Laboratories Garnier, Cavin Care, Nyle, Clear, Lux, Pantene, Head &
Ayur, Chik, Biotique, Lotus, Emami, LG, Shoulders, Optima, Halo,
Amway, etc. Palmolive, Ultra Doux, Nyle,
Ayur, Chik, Meera, Biotique.
Fructis, Rejoice, Elvive,
Emami, LG, Amway, Himalaya.
Perfumes HILL, Baccaruse, Archies, Cavin Ivana, Shie, Calvin Klein,
care, Coty originals, Modi Revlon, Obsession, Infiniti, Eternity Copper,
Oriflame, Henkel, L’Oreal, Avon, Boy 3, Gals, Spniz, Exclamation,
Davidoff, Gucci, Nina Ricci, Jovan Musk, Longing, Masumi,
Christian Dior , Jovan. Emeranda, Vanilla fields, Charlie,
Fire & Ice, Aspasia, Fa, Lancome,
Ralph Lauren, Armani, Women of
Earth, Josie, Rare Gold, Faraday,
Suny Skies, Cool, Water for
Women, Envy, Premier, Joure,
Dolce Vita, Prison, Intimate,
Hypnotique, Margaretha, Lay,
Jaipure, SRK.
Toothpaste HLL, Colgate Palmolive, Glaxo Closeup, Pepsodent, Aim, Colgate,
Smithkline, Balsara, Parle, Amway, Colgate Herbal, Colgate Total,
Geoffrey Manners, Himalaya, Colgate Active Salt, Colgate Fresh
Anchor, Ajanta, Dabur. Stripes, Cibaca, Meswak, Promise,
Babool, Prudent, Glister, Forhans,
Smyle, Himalaya, Emofoam, Dabur
Lal, Anchor, Ajanta.
Television Samsung, Sony, National Tantus, Plano, Hiltron, Metallica, Trinitron,
Panasonic, BPL, Videocon, Wega, Tau, Opera, Sophia, Tango, Giga,
Onida, LG, Thomson, Plasma, Matrix, Studio, Prima, Emperor,
Philips Akai, Aiwa, Hitachi, Neptune, Celestron, Bazooka, Bazaoomba,
Sharp, Toshiba, T-Series, Unique, Smart, Black, Candy, KY Thunder
Crown, Oscar, Beltek, (These are sub-brands of various companies,
Texla, Konka, Haier, Most companies use company brand along
Sansui. with sub-branding).
Chocolate Nestlé, Cadbury, Gujarat Kitkat; Classic, Bar One, Munch, Milky Bar,
Co-operative, Parle, Mars, Dairy Milk, Fruit & Nut, Perk, Chocobix, Picnic,
Hershey, Toblerone. Crackle, Temptations, Amul, Badam Bar, Parle
Kismibar, Mars, Hershey,
Paints Asian Paints, ICI, Jenson & Royal, Apcolite, Utsav, Gattu, Tractor, Ace,
Nicholson, Goodlass Apex, Dulux, Duco, 2k, Weathershield,
Nerolac, Berger. Supercote, Special Effects, Robbialac,
Jensolin, Armour Quartz, Umbrella, Special
Effects, Pearl, Luster, Nerolac, Excel, Nerotex,
Nerocom, Glossolite, Goody, Weathercoat,
Walmasta, Durocem, Luxolsilk, Rangoli, Viay 1,
Bison, Castle, Butterfly, Woodkeeper,
Salvaline, Asphaltene, Happy walls.
Watch Titan, HMT, Timex, PA Classique, Insignia, Psi2000. Fast Track,
Time, Casio, Vardone, Royale, Spectra, Bandan, Dash, Exacta, Raga,
SMH, Citizen, Seiko, Rewa, Sonata, Astra, Chanda, Gem, Elegance, Lalit,
Maxima, Romanson, Roman, Sangam, Swarna, Tennax, Zap, Aqura,
Gucci, Tommy Hilfiger, Basics, Datalink, Lextra, Mariner, Sportz, Vista,
Chanel, Rolex, Piaget, Scuba, Aqua, Gold, G-Brand, Forestor,
Patelk Philipe, Pierre Standard, Shein, Edifice, Lap memory, Easy
Cardin, Fossil, Tag Heur, Ree, Twincept, Databank, Futurist, Cartier,
Omega. Alfred Dunhill, Mont Blanc, Datalink, Lextra,
Mariner, Sportz, Vista, Scuba, Aqua, Gold, G-
Brand, Forestor, Standard, Shein, Edifice, Lap
memory, Easy Ree, Twincept, Databank,
Futurist, Cartier, Alfred Dunhill, Mont Blanc,
Piaget, Baume & Mercier, Vacheron Costantin,
Lancel, Tissot, Omega Seamaster, Swatch,
Certina, Mido, Pierre Balmain, Calvin Klein,
Blancpain, Rado.
Cars Maruti, Skoda, Hyundai, M800, Zen, Alto, Esteem,
Daewoo, Tata, Ford, HM, Baleno, Versa, Gypsy, Wagon
Mercedes, Mahindra & R, Swift, Santro, Accent, Getz,
Mahindra, Honda, Toyota, Fiat, Sonata, Ikon, Corsa, Opel Sail,
Mitsubishi. Chevrolet Optra, Aveo, Astra,
Ambassador, Octavia, Accord,
Citi, Bolero, Qualis, Scorpio,
Innova, Camry, Corolla, Indica
Xeta, Indigo, Sierra, Sumo,
Uno, Palio, Lancer Cedia.
Product Commonality
 A study7 by BBDO worldwide discovered that two-third of consumers
surveyed in twenty-eight countries believed that no differences existed in
the quality of brands in different product categories.
 Historically, product parity has been a problem of firms engaged in
marketing of FMCG, especially insignificant or low involvement products.
 The parity has been a major headache in categories like salt, coffee, tea,
soaps, detergents, toothpastes, house cleaners, pens, etc.
 What are the forces behind the emergence of near par products? In
today’s world, technology drives many products and services; very little
commercially available technology provides competitive advantage for long
by itself. Nothing prevents competitors from using the same technology to
match quality and price of the market leader. Point-by-point parity can be
achieved in a very short time. Copyright © 2002, Harsh V Verma
Differentiation Arms
 In the traditional economic analysis, price was considered to be the only tool
of competition.
 Accordingly, competitive dynamics revolved around the price. The price
theory laid stress on price as the key driver of consumer demand. Efficiency
in price determination and its adjustment was one of the top factors affecting
the competitive position of the firm.
 Finally, the importance of marketing variables was not realized. The
behaviour of the firms was confined to price determination and adjustment.
 Competition forces the participants to be passive takers of the will of the
marketplace. Firms in a marketplace sell defined products and take the
price.
 The business firm has only two basic functions—marketing and innovation.
Brand Power
 Brands are the wealth generators of the twenty-first century. Earlier, firms
were differentiated on the basis of wealth producing assets like factories.
 In the new era of a globalized marketplace, brands are key drivers of
economic values of a corporation. When products are not differentiated in
the factories, they are differentiated in consumers’ minds.
 Jeans manufactured in factories are just the same, but Levi’s, Wrangler and
Lee are much sought after.
 Coffee processed in one factory is indistinguishable from coffee processed
in other factories, yet Nescafé is what people swear by.
 Brands are the ultimate differentiators; they drive consumer buying,
revenues and also the value of the business. Cont….
The World’s most Valuable Brands by Brand Values
Brand Brand Value Market

$USm of Parent Company $USm Capitalisation
1. Coca-Cola 83,845 142,164
2. Microsoft 56,654 271,854
3. IBM 43,781 158,384
4. General Electric 33,502 327,996
5. Ford 33,197 57,387
6. Disney 32,275 52,552
7. Intel 30,021 144,060
8. McDonald’s 26,231 40,862
9. AT&T 24,181 102,480
10. Marlboro 21,048 112,437
Interbrand Citibank 1999.
Cont….
Global BRANDS: Ups and Downs
The recent 2001 Interbrand, Citigroup survey of top 100 global brands listed the following as the top
brands. No brand can take its position and value as given. Since then, some brands have gained and
some have lost their value.
Brand Brand Value Percent change
2001 ($bn) Over last year
Coca-Cola 68.95 -5
Microsoft 65.07 -7
IBM 52.75 -1
GE 42.40 11
Nokia 35.04 -9
Intel 34.67 -11
Disney 32-59 -3
Ford 36.37 -17
McDonald’s 25.29 -9
AT&T 22.83 -11 Cont….
Source: Interbrand Citigroup Survey, Business Week, Aug 6, 2001.
The World’s 10 Most Valuable Brands
Rank Rank Brand Value Mn ($) 2005 Value Mn. ($) 2004
2004 2005
1 1 Coca-Cola 67.525 76.394
2 2 Microsoft 59.941 61.372
3 3 IBM 53.376 53.791
4 4 GE 46.996 44.111
5 5 Intel 35588 33499
8 6 Nokia 26452 24041
6 7 Disney 26441 27113
7 8 McDonald’s 26014 25001
9 9 Toyota 24837 22673
10 10 Marlboro 21.189 22128
Source: Business Week Interbrand Corp and www.interbrand.com
Cont….
Indian Star Brands
Brand General Consumer Corporate Consumers

Cadbury Coke
Colgate Ariel
Sony Titan
Pepsodent Close Up
Titan 5 Star
Surf Cadbury
Ariel Philips
Lux Surf
Rin Amul
Raymond Colgate
Source: Brand Value, ET – IMRB Survey, ET Supplement (Undated).
Cont….
The top ten brands ruling the roost according to A&M’s surveys are as follows:
Top Brands in India
1999 1998 1997

Colgate Colgate Vicks
Amul Iodex Colgate
Dettol Ponds Dettol
Britannia Britannia Rin
Lifebuoy Bata Close-up
Ariel Lifebuoy Pond’s
Horlicks HMT Bata
Lux Vicks Iodex
Zee TV Doordarshan Doordarshan
Doordarshan Dettol Lifebuoy
Source: A&M Top Brand’s Surveys.
Cont….
Brand Owners and Product Manufacturers
Brand Brand Owner Product Manufacturer

Palmolive Shave Foam Colgate-Palmolive India Ltd. Accra Pack (I) Pvt Ltd.
Ponds Talc Hindustan Lever Ltd. Clarion Cosmetics Pvt. Ltd.
Lakmé Deep Pore Hindustan Lever Ltd. Jas Therapeutics Pvt Ltd.
Cleansing Milk
Parachute Jasmine Marico Industries Ltd. Amit Ayurvedic & Cosmetics
Hair Oil Products India Ltd.
Denim Talc Indexport Ltd (HLL Subsidiary) Sonia Industries
Rexona Deo Hindustan Lever Ltd. Accra Pack (I) Pvt Ltd
Acquafresh Smithkline Beecham Asia Ltd Geoffrey Manners & Co Ltd
Sunsilk Hindustan Lever Unique Health Care Products
Babool Balsara Home Products Raun Household Care Products
Fa Henkel SPIC VVF Limited
Customer Loyalty
 Quality is a common denominator. It has become less effective in
preventing customer switching. The same is the case with weakening loyalty.
 “The ability of the manufacturers to copy one another’s most successful
products, and the brand hopping encouraged by tempting discounts may be
seriously weakening the grip of loyalty in many categories”21.
 Erosion of brand loyalty has become one of the serious concerns in the
West.
 Six different conditions are essential for brand loyalty. Brand loyalty is the (i)
bias (non random), (ii) behavioural response (i.e., act of purchase), (iii)
expressed over time, (iv) by some decision-making unit, (v) with respect to
one or more alternative brands, and (vi) is a function of psychological
processes (evaluative decision making).
India’s Most Global Non-Corporate Brands
Brands are usually thought about in the context of products, services and
corporations. But if the concept of branding was limited to only these
conventional contexts, it would be tantamount to robbing the concept of its
potential. Accordingly, branding is extended beyond its conventional domain to
include politics, people, countries, destinations and non-profit organizations.
Business Today, in a unique endeavour published ‘India’s most global non-
corporate brands’. This survey was commissioned with an objective of finding out
the awareness level and recall of listed non-corporate brands form respondents
across a number of countries. The top non-corporate brands that scored over
others are as follows:
Cont….
Brand Awareness proportion % Primary association
Goa 44 Beaches, tourism, island,
hippies, Portuguese
Kerala 26 Tourism, seafood, dosas
Taj Mahal 96 Beautiful place, one of the
wonders of the world
A.R Rahman 16 Music
Sachin Tendulkar 14 Cricket
Vishwanathan Anand 9 Chess
Amitabh Bachchan 17 Actor
Bollywood 50 Indian film industry, Hollywood in
India
Bangalore 50 IT, Silicon valley
Source: Business Today, August 18, 2002, pp. 84-88.
Cont….
The essence of brand building is to develop a loyal customer base, i.e., to enjoy
a greater share of spending by heavy customers. In doing so, the brand must
confront the following issues:
 Trust
 Consistency
 Accessibility
 Responsiveness
 Commitment
 Affinity
 Social bonds
 Psychological bonds
 Financial Bonds
 Structural Bonds Copyright © 2002, Harsh V Verma
Brand And Trust
 The markets are in a two-way flux. On the supply side, there has been a
paradigm shift in the way value is defined, created and delivered.
 In the context of commercial relationships and meeting consumer needs
and wants, brands hold out a lot of promise. Brands seem to be ideally
placed to fill the void created by depleted trust. Brands in the new, uncertain
environment can be trust marks. Trust brands can help customers cope
effectively with this descending era of uncertainty.
The following three factors suggest the need for trust in people and offer
opportunity for the creation of trust brands:
 Time poverty
 Knowledge void
 Trust gap Cont….
The Most Trusted Brands 2005 and 2003
Rank 2005 2003
1 Colgate Colgate
2 Lux Dettol
3 Dettol Pond’s
4 Pond’s Lux
5 Tata Salt Pepsodent
6 LIC Tata Salt
7 Vicks Britannia
8 Britannia Rin
9 Rin Surf
10 Bata Close-Up Cont….
11 Fair & Lovely Lifebuoy
12 Close-Up Fair & Lovely
13 Lifebuoy Vicks
14 Horlicks Titan
15 Pepsodent Rasna
16 Surf Philips
17 Titan Bata
18 Parle Pepsi
19 Clinic Plus Clinic Plus
20 Moov Horlicks
Source: The Economic Times, Feb 15, 2006 & April 21, 2004.

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C-1 Competition and Brand 1

Copyright © 2002, Harsh V Verma

 Hindustan Lever bought Lakmé for Rs 78 crores. Brooke Bond paid Rs 25

 Internationally, companies have been paying huge sums to acquire the

Copyright © 2002, Harsh V Verma

Copyright © 2002, Harsh V Verma

 Rolls-Royce - German car and motorcycle manufacturer BMW

 Manchester United - owned by US financier Malcolm Glazer

 Mini Cooper - German car maker BMW

 Kitkat- swiss confectionery company Nestle

 Smarties - Swiss Nestlé

 Bass Ale - Belgian beer company Interbrew

 Ty-Phoo Tea - Indian tea company Tata Tea

 The Savoy - Canadian Fairmont hotel chain

Copyright © 2002, Harsh V Verma

Structure Conduct Performance

Structure Conduct Performance

More specifically, the Act was aimed at attaining three objectives:

i. prevention of concentration of economic power to common detriment,

ii. control of monopolies, and

Copyright © 2002, Harsh V Verma

 Competition essentially means a fight or a battle. It is a tough condition for

 Hence, competition means hard work. It is a constant struggle to outperform

Copyright © 2002, Harsh V Verma

Product Companies Brands

Cont…. Copyright © 2002, Harsh V Verma

Cont…. Copyright © 2002, Harsh V Verma

Copyright © 2002, Harsh V Verma

Copyright © 2002, Harsh V Verma

Brand Brand Value Market

Copyright © 2002, Harsh V Verma

Copyright © 2002, Harsh V Verma

Brand General Consumer Corporate Consumers

Copyright © 2002, Harsh V Verma

1999 1998 1997

Copyright © 2002, Harsh V Verma

Brand Brand Owner Product Manufacturer

Copyright © 2002, Harsh V Verma

Copyright © 2002, Harsh V Verma

Copyright © 2002, Harsh V Verma

Copyright © 2002, Harsh V Verma

Rank 2005 2003

5 Tata Salt Pepsodent

6 LIC Tata Salt

10 Bata Close-Up Cont….

Copyright © 2002, Harsh V Verma

12 Close-Up Fair & Lovely

19 Clinic Plus Clinic Plus

Copyright © 2002, Harsh V Verma

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