Monday, 20 February 2012

Thoughts on Branding Strategy


Disclaimer
For the purpose of this discussion and according to the non-disclosure agreement, the real brand name from now on will be substituted with “XBin”.

Branding Strategy
One of the most crucial aspects that we would advice Company X to consider when expanding waste bins operations abroad is branding strategy. So far XBin brand has been a success in Finland. Company X is very well known in Finland, and has successfully been using corporate brand as an endorser when marketing XBins (a good example would be XBin webpage).

For the purpose of global expansion of waste bin operations, we would advice the company management to review basic theories of brand architecture. It is important to note that Company X’s main specialization is offering waste management services. The following brand management theories are reviewed to analyze if the company should implement a new branding strategies that would be specifically tailored for the purpose of globalizing its waste bin operations.

Brand Architecture
According to Aaker & Joachimsthaler (2000) the following four brand structures are to be considered when choosing brand portfolio/ strategy:

1)      House of brands - an independent set of stand-alone brands.
a)      Opportunity to address a new customer segment without impacting the whole portfolio
b)      Clearer positioning, opportunities for active price strategies and/or variable product qualities
c)      Allows for differentiations among competitors
d)     Less risky for the overall company if one brand gains negative image

2)      Branded House – employs a single master brand for all product / service offerings.
a)      Easiness in market communication
b)      More risk in case the brand gains negative associations – will impact all product categories.
c)      Increased opportunities of brand extensions

3)      Endorsed brands – independent brands for every products but endorsed by another brand (usually corporate brand).
a)      Adds credibility
b)      Adds value
c)      Provides associations

4)      Sub-brands- are brands that are connected to the master brand, but add certain different associations (often used to introduce the brand to a new segment).
a)      Sub-brand ads/stretches master with:
i)        Attribute associations
ii)      Application associations
iii)    Brand personality
iv)    New segment targeting
v)      Often used for line extensions

For the case at hand, the first three are to be considered since the forth one is usually used in the later phases of brand expansion.

Figure 2 summarizes the key points above.


Due to the fact that Company X corporate brand is not well known outside the domestic market, especially outside of Europe, following the table above, the answer to most of the questions on the left hand side would be a “no”. Hence, it would benefit the company more having a separate brand for waste bins, which is also the strategy the company has been using so far. Having a brand which is designated to specific segment or is responsible for a unique value proposition would allow for faster geographical expansion.

It is important to differentiate the waste bins business from the core business of the company, which is waste management services, due to the new nature of the products. XBin waste bins are offering the customer not only waste management solution, but also such features as quality and design. Moreover, since the company has already established XBin as a brand, it would eliminate the costly procedures of creating a new brand. Furthermore, we believe that XBin brand is strong enough and is fully competent for foreign markets. However, one aspect that we noticed is that often XBin brand logo is printed in the corporate colors pallete. What we would recommend is really to think XBin brand through and make sure it is representative enough to consumers on its own without any corporate background. All the decisions on the brand, vision, logo, slogan should be made from the foreign consumers point of view.

Corporate branding influence
Corporate message often has an influence on consumers’ product judgment (Duncan and Moriarty 1998, Raju and Dhar 1999, Hatch and Schultz 2001). Corporate message influences customers judgment when it comes to product characteristics (Brown and Dacin, 1997), perceived product values and evaluations (Goldberg and Hartwick, 19990) brand beliefs and attitudes (Sheinin and Biehal 1999), product purchase intentions (Sen and Bhattacharya 2001) and product choices (Creyer and Ross 1996) (from Biehal & Sheinin, 2007).

The question to be asked here is whether Company X would like to entail its corporate associations on its waste bins business. Company X has positive associations in Finland, and is very successful company. However, in most foreign countries it is not as well known and will tell little to the foreign consumer. Introducing XBin as a stand-alone brand will allow to communicate a specific, tailored to the waste bin business message.

Moreover, supporting a separate brand such as XBin will allow to target the customer needs well and create a brand association that will differentiate the product from its competitors. As Nedungadi 2001 concludes in his research, when presented with only memory retrieval, advertisement cues for target brand could lead to recollection of competitors’ brands. The solution to this would be to provide cues which would exclude competitors from consideration set. In this case focusing on Finnish quality and unique design, besides the practical features, can create an own separate association in consumers mind. This can be further achieved by creating advertisement, where XBin would be promoted in specific locations such as airports or stadiums, giving the target clients a mental image and thus a direct association of XBins and the mentioned locations.

Brand Concept Management
Another good strategy to consider before expansion is the brand concept management (BCM) (Park, Jaworski & MacInnis, 1986). Like the authors argue, it is important to work on achieving the desired brand image in consumers head when launching a new product (introducing the product to a new market). The brand concept can be associated in consumers head with functional, symbolic or experimental needs. Waste bins are usually perceived as functional product. However, this may serve as an advantage to work on achieving several concepts together that would be associated with XBin particularly. In this case, it can prove as a competitive advantage to entail not only functional concept but also symbolic in terms of design. Most airports or large office buildings are looking not only for practical solution for waste management, but are also interested in compatibility with the overall interior of the building. Identifying the brand concept would further ease the process of implementing, positioning and controlling the brand image over time.

Even though XBin brand already exists in the Finnish market, in order to expand, especially if we are talking about global expansion, the focus now should shift to building the brand around the global customer. The next question that should come to mind is how to build a strong brand? In the following section, the customer-based brand equity model is introduced in detail since it is one of the main theoretical frameworks for understanding the consumer behavior. This model applied both to consumers and organizations.

Customer-based brand equity.

Introduced by Keller (2008), the Customer-based brand equity (CBBE) pyramid model is one of the best tools to measure, manage and create a strong brand as well as distinguish it from other brands. Every marketer’s dream is to create a brand that successfully establishes a positive (long-term) relationship with its consumers. Thus, understanding the consumer is essential as the power resides in the mind of the consumer (Keller 2008).

The first step of the CBBE pyramid model, salience, is the level of knowledge or insight the customer has of the brand. Consumers need to be able to evaluate the benefit and attributes of the brand to establish the relationship. Based on the brands points of parity and difference the customer will make assumptions on the brands performance and decide whether or not there will be a relationship. A mutual understanding between the partners, will collectively affect, define and redefine the relationships (Hinde 1979). For this experience to be optimal the marketers will have to assure the customer that their choice of brand will benefit them positively.

A positive relationship, resonance, where the consumer identifies the product as a different brand with positive attributes, creates positive customer-based brand equity. If these attributes are negative, the customer will react less favorable to the marketing activities and the brand will end up having negative customer based brand equity (Keller 2008).


Keller 2008 Customer-based brand equity pyramid

In foreign markets, XBin is currently in the salience phase; therefore it is crucial to incorporate the previously mentioned suggestions to create a well defined independent (stand-alone) brand identity and undertake strategic approach to customer targeting. Properly selected brand identity and marketing the brand to the right customer would facilitate brand awareness and recognition among the foreign customers. Achieving brand awareness would in turn trigger certain associations and feelings in consumers mind. The objective is to achieve brand – customer relationship, which is particularly important in B2B marketing, since it facilitates brand loyalty.

The higher the brand is in the CBBE pyramid, the easier it will be to achieve awareness and recognition in new foreign markets. Eventually, it is also possible to benefit from well established brand-customer relation by introducing premium pricing. Hence, again, we would urge Company X to carefully analyze its current branding strategy and to take into account the above mentioned key points. 

(All references can be found in the comment section to this post).

The Key Messages


The new marketing strategy of Company X for the Qatari market has to communicate certain key messages. The nature of these messages is defined by the target audience, which includes companies operating in Qatar that are potential distribution partners, end-customers or both.

What would these potential partners like to hear about the products? The quality, price and differentiation from the competing products should be on the top of the list. Therefore, we would stress the Finnish design of the litterbins that does not compromise the usability and durability of the products. This quality would come with a relatively high price, but it is lower than the price of some other design litterbins from the competing firms. This combination of very high quality with reasonable price in its market segment differentiates the products from their closest competitors.

The second key message to convey is the suitability of Company X as a business partner. B2B-sector is characterised with relationships, both formal and informal, and hence both of the companies including Company X and the potential partner should be willing to sacrifice resources for the establishing and maintain a relationship. Trust can be seen an essential factor in this process. We see that communicating about the past experiences and success of Company X in the Middle East would be an excellent way to build the first perception of trust. Company X has done a very successful project in Dubai, and it has a good relationship with a distributor in United Arab Emirates. Using these references in communication would create an experienced picture of this small company that would be beneficial in attracting new business partners and end customers.

Tuesday, 14 February 2012

The way to work so far


Company X is having strong position and good market share in Finland. They also have several partners (distributors) all around the world. Also in United Arab Emirates (UAE), but as mentioned earlier, not in Qatar. The company X's way to work earlier has been through distributors (partners) who have been found when visiting exhibitions or they have contacted the Company X directly and offered co-operation on their home region. When Company X is thinking of approaching Qatar market, they can compare the good and bad experiences from history and from different markets and entry models.

On domestic market, in Finland, mainly direct sales to end customers are used. In this model, domestic based sales representatives are in place and the manufacturer has own sales force. The company X is well known and the big end customers are better served directly. That is the case in bigger projects, for smaller quantities wholesalers are used also in Finland. They are able to stock bins and different end customers are served fast from their own stocks. In this model, wholesalers are not focusing on contacting end customers and marketing is limited to "special price" campaings. In this wholesaler model bigger projects are not found and developed. Neither important target customers like archtitects are not contacted. The good side is that also smaller end customer with small needs can be served. If the company X wants for example architects to be interviewed, they have to do it by themself.

When taking the co-operation in UAE as an example, the company X has distributor in the area who are working mainly with construction companies. The company X has been successful in many projects in UAE and distributors has managed the local contacts. Goods are sold to the distributor from Finland who has arranged installation and on-the-spot deliveries. Final invoicing and contacting the end customer has been done by distributor. This model can be called coalition with the Company X and the partner Y. The Company X can be called "upstream specialist" and the Partner Y "local downstream specialist". In this model the Company X is responsible of R&D, manufacturing, customer services and sales to Partner Y. Partner Y takes respobsibility of marketing, sales and services locally. They are mainly contacting end decision makers in bigger construction projects in UAE area. Customer relationship can be managed locally which deepends the relationship between the end offerer and the end customer. From Company X's point of view, it does not have enough information of market, about end customers needs and about starting bigger projects. In this model the Company X do not communicate directly for example with architects, who have important role when something new is planned.

Based on out earlier discussion, the company has several options to consider. What should be the final choice of entry model to Qatarian market? What would be the plan to segment customers and how? Is partner needed for that like in UAE? Or should it be done like the company has done on domestic market? How the insight to the need of end customers can be achieved?

Monday, 6 February 2012

This page link (http://www.doingbusiness.org/data/exploreeconomies/qatar/ ) shows summary Doing Business 2012 data for Qatar.
Doing Business 2012 Qatar Rank - 36
This graph shows the overall "Ease of Doing Business" rank (out of 183 economies) and the rankings by each topic. The rest of the tables (in link) summarize the key indicators for each topic and benchmark against regional and high-income economy (OECD) averages.



What kind of relationship Company 'X' want to maintain with their Qatar customers?

The Working Relationship Continuum theory: Company 'X' need to maintain relationship with their target customer Qatar.

What kind of relationship Company 'X' want to maintain with their Qatar customers?

In company 'X' it is important to decide if you want to have a long-term relationship or a short-term relationship with your customers. To do that company 'X' can use the model for working relationship continuum, where the company 'X' decide if they are going to differentiating with transactional (short-term) or collaborative (long-term) customers. Company 'X' is a company that strives to have a long-term relationship with their customers. Company 'X' is following this model really well when they are very thorough when it comes to what the customer need and to make sure that they get the right instruction on how to use the products the right way.

One important thing to remember is that not all the customers wants the same things from a company. The company cannot have the same relationship with every customer, because if the company should have the same relationship with every customer the product the company deliver would not have the same value to each and every one of the customers. Every company would like there product to have a great value to every customer. If the company 'X' can manage to make products that are of great value and fits the customer's needs, they are on a good way of getting a long-term relationship. One way for company 'X' to make sure that the customer are satisfied and ready for a long-term relationship is to create a good relationship strategy. We think it would be a great idea for company 'X' to use the partnering as a focused market strategy for new market Qatar.

The Working Relationship Continuum
Before the managers of a company decide to differentiating transactional and collaborative customers, they have to think strategically about the opportunities they select to serve. After they have done that they should look at the relationship-specific market offerings which they do from delivering the superior value in this kind of offerings. In all working relationships between customer and supplier firms extends beyond the initial order or transaction. This relationship is called: “The working relationship continuum” and it can be shown in a figure. (Anderson et al 2009)




Figure:  The Working Relationship Continuum (Anderson & Narus. 2009 pp 412)

The Pure Transactional relationships – in this part the supplier (Company X) and the customer focus on the exchange of basic products, that it would be repeated over time and for highly competitive prices.

Corrugated box – the corrugated box considers to be a long-term supply contract and just in time inventory program. When it generally represent the extent of potential collaboration.

Fiber Drum – the fiber drum industry focus on helping the customer to modify their systems and procedures, for example lifting and stacking their fiber drums. This in a collaborative relationship.

Programmable Controllers – in the programmable controllers the collaborative relations in an industry can be encompassing, ranging from co-design of manufacturing systems to installation, training and maintenance.

The Pure Collaborative relationships – this is a kind of partnering relationship. This means that the customer firm and the supplier firm have a strong and extensive social, service, technological and economic ties over time. This is to lower the total costs and/or increase the value and thereby be beneficial for both companies.

Company 'X' need to be focus in collaborative exchange when they strives to form a strong relationship with the customer and build trust in the long run. This in return can lower the total cost and/or increase value. If Company 'X' on the other hand should have been in a transactional exchange they should have lower prices for a shorter time period and in that way competed more with the other industries,. They probably would not have the same relationship with the customers either, when the customers in this kind of industry is striving for good relationships and good products.

In the corrugated box we see that Company 'X' is in collaborative exchange when they strives to form a strong relationship with the customer and build trust in the long run. This in return can lower the total cost and/or increase value. If Company 'X' on the other hand should have been in a transactional exchange they should have lower prices for a shorter time period and in that way competed more with the other industries. They probably would not have the same relationship with the customers either, when the customers in this kind of industry is striving for good relationships and good products. Strives to have a good long-term relationship with their customers and that they have long-term contract of the products. But they even can, as we see in the fiber drum, help the customer to modify their designs and bins to get a better working area. Company ‘X’ focus a lot on helping the customers with training the customers so they know how they can improve their working environment. Company ‘X’ even have staff that is stationed out at the customer firms to make sure that they get the right education on how to use the products the right way. This is sort of overlapping in to the programmable controllers when in this area the focus is on co-design of manufacturing systems to installation, training and maintenance.

From the collaborative point of view we can see that Company ‘X’ can fulfil all the parts on have a working relationship continuum. For Qatar, now they can go for fiber drum and after sometimes they can change their relationship with programmable controllers.

Reference
Anderson, J., Narus, J., & Narayandas, D. (2009). Business Market Management (3rd ed.). New Jersey: Pearson Education.

Saturday, 4 February 2012

Going by the book: forming a joint venture


As we have now settled on Qatar as our target country, we will have to choose the most suitable operation mode. The initial mode is our entry mode of operation, which can later be altered as business develops and performance has been evaluated.

The most suitable entry mode for Company X is what Hollensen (2004) calls a strategic alliance, i.e. a non-equity joint venture. This would involve ‘downstream-based collaboration’ in our case. This means Company X cooperates with Partner Y. The parties collaborate on marketing, distribution, sales and/or service. The joint venture is managed through contracts; no separate Joint Venture Z is created (hence non-equity).

Hollensen (2004) divides the joint venture formation into seven major stages. These stages are:
1.     Joint venture objectives
2.     Cost/benefit analysis
3.     Selecting partner(s)
4.     Develop business plan
5.     Negotiation of joint venture agreement
6.     Contract writing
7.     Performance evaluation
Arguably selecting a partner is our biggest challenge. The partner has to have access to the gatekeepers of our potential market, e.g. architects, construction companies operating in Qatar, and the Qatari government. The partner must also have the will to market our products; to convince buyers to choose our litter bins over competitors.

In a past group meeting, we discussed the possibility of a joint venture with, for example, a construction company operating in Qatar. The motivation for this is a mutually beneficial outcome. As Hollensen (2004) describes the choice of partner, “the goal is to develop synergies between the contributions of the partners, resulting in a win-win situation for both.” In our case, we would extend the construction company’s product range with high quality litter bins. The construction company, on the other hand, extends our network further (marketing, distribution). 

This is in line with Prof. Mika Gabrielsson’s guest lecture on Born Globals. He emphasized cooperation with MNCs because it can compensate for the traditional weaknesses of Born Globals. Company X, while perhaps not strictly a Born Global (no consensus on this yet), has many of the weaknesses of a Born Global. Cooperation with a well-known MNC would certainly be beneficial.

Obviously, firms rarely 'go by the book'. For example, a recommendation from an acquaintance can be enough to instantly determine the firm's direction. One bad experience in a country, with one agent, can make management unwilling to go there again.

Friday, 3 February 2012

The competitiveness of Qatar - should I take my business there?


The World Economic Forum’s (WEF) annual publication, the Global Competitiveness Report (GCR), ranks economies’ competitiveness based on 11 categories of indicators, called ‘pillars’. Each pillar, e.g. Higher education and training, Infrastructure or Business sophistication, consists of several indicators. Economies are given a score from 1 to 7. Additionally, economies can be in one of five stages of development. These stages, from least to most developed are: Factor driven, Transitioning from Factor driven, Efficiency driven, Transitioning from Efficiency driven and Innovation driven. The report also presents a list of “The most problematic factors for doing business” for each economy, based on respondents engaged in business in the economies in question.

In the GCR 2011-2012, Qatar is ranked the world’s 14th most competitive economy (rank 17 one year ago, 22 two years ago). For comparison, Finland is ranked 4th and is an Innovation driven economy. However, regardless of Qatar’s high rank and GDP per capita, it is still regarded as being in the second stage of development, transitioning from a Factor driven economy to Efficiency driven. The high overall rank reflects the country’s eagerness to become a hub of business and innovation. Qatar ranks well above other economies in the same stage of development (see figure below), only showing equal results in the pillar for Market size, which is understandable due to its small population and geographical area. Indeed, the measures the Qatari government is taking to boost its competitiveness are ahead of its stage of development. Other economies, who have wanted to rapidly attract businesses and boost national competitiveness in the past, have taken similar measures.


The most problematic factor for doing business in Qatar is ‘Restrictive labor regulations’. Firing employees is considered expensive for the employer, and the ratio of women to men in the labor force is very low. The factor ranked second most problematic is ‘Access to financing’. The third most problematic factor is ‘Inadequately educated workforce’, but this factor is not experienced as problematic by nearly as many respondents as the first two. It would behoove businesses planning to enter Qatar to take these factors into account. No doubt Qatar has to address these issues if they persist.

Overall, based on the WEF GCR 2011-2012, Qatar offers an attractive business environment. 


Source:
World Economic Forum. Global Competitiveness Report 2011-2012. p 302. Qatar Country Profile. Accessed from http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf