Product and Brand Managemet Assignment

Brand Repositioning

Submitted by: Submitted to:

Aziz Ali Afzaly Dr. Harsh Tuli
Retail Management (1st year)
Roll Number: 22048

Date: 26/03/2020
 Brand Repositioning

Meaning:
When a company sees a decrease in sales over time and/or major changes coming down the line, they
know it is time to implement changes within the company. Brand repositioning is when a company
changes a brand's status in the marketplace. This typically includes changes to the marketing mix,
such as product, place, price and promotion. Repositioning is done to keep up with consumer wants
and needs.
Definition:
Repositioning is defined as altering the position of a brand or product in the minds of the customer.
Repositioning refers to the major change in positioning for the brand/product. To successfully reposition
a product, the firm has to change the target market’s understanding of the product. This is sometimes a
challenge, particularly for well-established or strongly branded products.

Strategies
To implement brand repositioning the company must choose a strategy. Each strategy determines
where the main focus of the new campaign will be. The new campaign may focus on the consumer,
other businesses or the general public. Let's review some available strategies.

Consumer engagement: People want to be involved with the brand. They want to feel like they
belong. To make this happen, businesses have to work to customize the products to fit consumer
needs. How can this be done? You have to get creative and figure out what people want. For example,
ZinePak is a company that saw the decrease in music sales and took the opportunity to work with
artists to change the way they communicate with super fans. The company does this through the
creation of physical merchandise to pair with the artists' CDs. The company helps build brands
through engaging consumers. It is a win-win.

Identity: The most important aspect of building a brand is to give the company an identity. The
brand is tied together through the logo, slogan, color scheme, marketing materials, employees, etc.
Everything about the company should tie together and provide a unified identity that the consumer can
understand.

Spirit of giving: The world is starting to expect businesses to be socially responsible and embrace
the spirit of giving. Social responsibility is an organization's obligation to better the welfare of society.
To utilize this strategy, the company can include its partnership with charities in its advertising.

Alternative options available for brand repositioning

Image repositioning: This takes place when both the product and the target market remain
unchanged. The aim is to change the image of the product in its current target market. In the early
1990s Adidas were seen as reliable but dull. The company created an image of ‘street credibility’
in an attempt to reposition the brand to appeal to the consumer in the sports shoe market.

Market repositioning: Here the product remains unchanged but it is repositioned to appeal to a
new market segment. Lucia, a brand of carbonated glucose drink, was originally targeted as a
product for individuals suffering from illness, particularly children. In recent years it has been
repositioned as an isotonic drink aimed at young adults undertaking sporting activities.

Product repositioning: In this situation the product is materially changed but is still aimed to
appeal to the existing target market. In the early 1990s Castle maine XXXX lager was altered,
with its alcohol content being increased from 3.7 per cent to 3.9 per cent for pub sale sand 4 per
cent for cans sold in supermarkets. The packaging was also changed as the size of can was
changed from 440 ml to 500 ml. These changes were instituted to address the changes in
consumer tastes in the product’s target market.

Total repositioning: This option involves both change of target market and accompanying
product modifications. Soda has managed under Volkswagen’s ownership to reposition itself
totally. The product quality and design has changed significantly and the brand now has
credibility with new, more affluent consumers. This has also allowed the brand to expand its
sales outside its Eastern European heartland.

Steps for Repositioning

Positioning is done using the positioning process and a similar process can be used to reposition the
brand in the market. Some steps are as follows:
1. Analyze the current status of the brand
The history of the brand and the how the brand has evolved needs to be analyzed. Now the company
needs to look at the sales, market share, competition, challenges, benefits, customer behavior, industry
performance etc.
2. Consumer perception
A market research should be conducted to get the insights about the loyalty, purchase behaviour and
growth rate of the company. The survey can be conducted through mailers, questionnaires, email or
interviews.
3. Developing the repositioning strategy
The process will develop objectives, brand’s mission, vision and values that it offers to the customers.

What Makes Repositioning Successful?

Once a strategy is chosen, it is time to implement it. The brand repositioning is successful when the
business sees steady or increased customer flow. This means the customer base has accepted the
changes. Below are some factors that could be included to make a strategy successful.

Complete overhaul: To be successful a brand must confirm all the pieces work together. This
includes changes made and any pieces that have remained the same, though there are typically very
few pieces of the brand that remain the same. You are providing customers with a new vision and
taking them along for the ride.

Investment: A company has to be willing to invest in the change. This involves preparation and an
investment in the future of the company. If the planning is not in place, the change will not be
effective.

Marketing changes: In addition to changing the look and feel of the company, you must change the
strategy. The goal is to reconnect the currents audience and/ or reach out to a new audience. Part of the
complete overhaul is to adjust the way you reach to the new audience. For example, you may need to
reposition your marketing strategy from radio and television to social media if you want to reach a
younger generation.

EXAMPLES:

Domino’s Pizza
Domino’s realized that their pizza had a bad reputation from the significant amount of negative feedback
they were getting online and through dismal sales numbers. In order to transform their “garbage pizza”
brand into something more magnificent, they repositioned their brand by changing their recipe and
basing their marketing campaign around the fact that their pizza was now “new and improved.” They
essentially changed their main product, thereby changing the perception that customers had of their
brand and they did so in a charming and pretty honest way–they admitted that their pizza was terrible
and that they had fixed it. A refreshed logo, updates of their delivery locations and website, and a whole
new messaging platform and campaign focus brought Domino’s back from the dead.

Hero & Honda

Soon as Hero & Honda decided to part their ways in 2011, Hero did a vast transformation exercise.
They changed their logo & slogan by giving it an Indian touch. They used red & black colors alongside
sharp designing to convey solidity, energy, passion & confidence. This campaign was backed by the
strong digital spread, which went viral instantaneously. Unlike their earlier positioning where the
national tone was neutral, Hero ensured that they communicate their pride of being the Indian brand is
conveyed to its consumers.

Maggi
This brand has been successful in sending us back to some sweet nostalgic state of mind. The Food
Safety & Standards Authority of India (FSSAI) accused this brand of having the lead & monosodium
glutamate above the permissible limits during 2015. To everyone’s surprise, rapidly this news was
spread in the market like wildfire & Maggi was off the shelves for several months. Despite this massive
set back, they kept the cord live with their consumers. A series of videos with hashtags
WEMISSYOUTOO were launched by the company to remind its consumers of the good time they had
while having their product. Certainly, this campaign was a success & people get its beloved Maggi back
on market racks.

Case study
REDvolution: Repositioning the Nescafé Brand
This case is about the repositioning exercise of the Nestlé’s Nescafé brand which was started in
the year 2014. Sales of Nescafé were declining in the years before 2014 as the demand for instant
coffee had been falling in some of the major coffee drinking countries around the world. Many
young customers who were drinking coffee for the first time in their life perceived instant coffee
to be outdated and instead preferred fresh coffee sold in coffee chains like Starbucks.
The rise in the sales of portable coffee machines, which made it possible to brew fresh coffee
easily, too had impacted the sales of Instant coffee. Smaller instant coffee brands had also started
to eat into the market share of Nescafé. Nescafé was the biggest brand in the stable of Nestlé and
a number of coffee related products were sold under the brand.

Issues
The case is structured to achieve the following teaching objectives:

 Understand the importance of repositioning a brand when its performance is declining

 Explore the strategies that can be followed by companies to reposition their old brands
 Analyze the steps taken by Nestlé to reposition the Nescafé brand to make it appealing for the
younger customers
 Discuss the implications for brands in this new age, which is marked by a proliferation of social
media where consumer reactions can make or mar a brand.
 How brands can impact the performance of a company

Introduction
In June 2014, Nestlé S.A. (Nestlé) launched a new brand repositioning exercise called
‘REDvolution’. The main objective of the campaign was to improve the image of the Nescafé
brand among young customers and consolidate its competitive advantage in the market. The sales
of Nescafé had been declining since the year 2008 in some of the major coffee markets in the world
as the demand for instant coffee had gone down. Many customers perceived instant coffee to be
outdated. Younger customers who were drinking coffee for the first time in their lives preferred
the freshly brewed coffee served by coffee chains like Starbucks.
Another major reason for the decline in demand was the availability of portable coffee making
machines. These machines made it easy to brew fresh coffee in homes and offices. Modern coffee
machines offered more choice to customize coffee than instant coffee brands like Nescafé.
Nestlé’s own range of portable coffee machines competed aggressively with the instant coffee
products sold under the Nescafé brand. Other smaller instant coffee brands were also giving stiff
competition to the Nescafé brand in its key markets around the world.
OUnder the repositioning strategy, the Nescafé brand would have the same characteristics in all
the 180 countries where it was sold. Nestlé introduced one single visual identity, communication,
and digital strategy for all the Nescafé products. The complete repositioning strategy of Nestlé was
centered around three visual markers, viz. the final accent on the logo of Nescafé, a structurally
redesigned red mug, and a block mark called ‘hub’. As part of the campaign, a new slogan called
‘It all starts with a Nescafé’ was also introduced.

Nestle-Background Note
Nestlé S.A. (Nestlé) was formed through the merger of two major food companies in Europe,
Societe Farine Lactee Henri Nestlé and Anglo-Swiss Condensed Milk Company in the year 1905.
Initially, the merged entity was called Nestlé and Anglo-Swiss Condensed Milk Company. The
company specialized in making milk-based baby foods and condensed milk. It was renamed as
Nestlé Alimentana SA when it acquired Fabrique de Produits Maggi SA, which was a major
manufacturer of soup mixes and other related food items.
The company was named as Nestlé S.A. in the year 1977 as part of a major restructuring exercise.
Nestlé expanded into the global markets in the early 1900s and set up factories in markets like the
UK, Germany, Spain, and USA. The huge demand for dairy products during World War I helped
Nestlé double its production. During the 1920s, Nestlé started making chocolates which went on
to become its second biggest business after dairy. The company’s fortunes took a hit during World
War II, leading to a fall in its profits from US$ 20 million in the year 1938 to US$ 6 million in
1939.
The post-World War II period saw the rise of Nestlé as one of the world’s leading multinational
food companies. The company also diversified into other industries like cosmetics and
pharmaceuticals by acquiring stakes in L’Oreal and Alcon Inc. Nestlé took advantage of the falling
trade barriers during the early 1990s and expanded its operations into the developing countries.
For the year 2013, the net profits of Nestlé were Swiss Franc (CHF) 7. 46 billion (Refer to Exhibit-
I for the select financials of Nestlé).

Nescafe -The Origin

The Nescafé brand was born during World War II when Nestlé was struggling with falling
revenues. During the 1930s, Brazil had a lot of surplus coffee as its supply exceeded demand in
the market. Brazil requested Nestlé to help it preserve the coffee so that it did not go waste. One
of the coffee experts of Nestlé, Max Morgenthaler, came up with an idea of making soluble coffee
that would not lose its natural flavor even it was stored. The idea was to create a new way of coffee
making without having to boil the coffee powder in hot water or milk.
After seven years of painstaking development, Max Morgenthaler’s team developed the world’s
first instant coffee, which was branded as Nescafé. The Nescafé brand of soluble coffee could be
preserved for a long time and consumed by just adding some water to it. The brand was initially
released in Switzerland in the year 1938. Despite the initial high expectations of the Nescafé brand,
it took a few years for it to gain popularity in the market due to World War II. Soon, Nestlé started
expanding the brand to other countries like France, USA, and Great Britain.

The Global Coffee Industry

Coffee was one of most widely consumed beverages in the world and the consumption of coffee
was especially high in developed markets like USA, Japan, and major European countries. Coffee
was also the second most traded commodity on the major commodity exchanges in the world after
oil. The total market size of coffee was estimated to be US$ 100 billion per annum in the year
2011. The price of coffee was very volatile and was highly dependent upon the climatic conditions
in major coffee producing countries.

Major Competitors to Nescafe

Maxwell House, one of the oldest and leading coffee brands in the world, was owned by Kraft
Foods. It was established in the year 1892 and continued to be the largest-selling coffee brand in
USA till the late 1980s. The coffee brand had both regular and instant coffee products under its
umbrella. Maxwell had a rich history in making instant coffee. It first started supplying instant
coffee to the American military during the early 1940s. The brand had a strong presence in the
major coffee markets located in USA and Europe. Products sold under the Maxwell House brand
were cheap and affordable even to customers living in the middle-income countries.

Challenges to The Nescafe Brand

The sales of instant coffee began slowing down around the world at the beginning of the twentieth
century due to a change in consumer preferences. Following the trends in the coffee industry, the
sales of Nestlé’s soluble coffee brands too had fallen since the year 2008 (Refer to Exhibit – IV
for the sales of Nestlé’s soluble coffee brands between the years 2008 to 2013). The main reason
for the decline in the demand for instant coffee was the availability of easier ways to brew fresh
coffee. Conventional consumers of instant coffee started using portable coffee machines that made
fresh coffee in minutes.

Repositioning The Nescafe Brand

In order to make the Nescafé brand appealing to younger customers, Nescafé started a
repositioning exercise called ‘REDvolution’ in June 2014. The repositioning exercise was mainly
developed with younger customers in mind. Under the repositioning campaign, all the products
that were sold under the Nescafé brand would share the same visual identity, communication, and
digital strategy. The brand would have the same characteristics in all the 180 countries where it
was sold. The repositioning exercise of Nescafé was based on three visual markers, viz. the final
accent on the logo of Nescafé, a structurally redesigned red mug, and a block mark called ‘hub’ (a
view from the top of the mug) (Refer to Exhibit- VI for the three visual markers of REDvolution).

New Products for Enhanced Image

As part of the repositioning exercise, Nestlé introduced a number of new products under the
Nescafé brand. A milk-rich and chilled coffee product called Shakissmo was launched in seven
European markets in June 2014. Shakissmo was the first ever chilled ice coffee product sold by
Nestlé in the European markets. In order to make the product appealing to younger customers,
Nestlé sold the Shakissmo range of ice coffee products in specially designed plastic cups that
created foam when they were shaken. Shakissmo was targeted at the younger customers who were
drinking coffee for the first time in their lives.

Looking Ahead
Nestlé aimed to implement the repositioning exercise in 90 percent of the countries where it had
operations by the end of 2014 and to reach the rest of the market in the year 2015. Nestlé also
launched customized campaigns based on the REDvolution repositioning exercise in some markets
around the world. In the Middle-Eastern markets, Nestlé launched a new advertising campaign
called ‘My Inspiration’ for its Nescafé My Cup range of instant coffee. The My Inspiration
campaign featured younger customers who were aspiring to grow in their life. The advertising
campaign persuaded the youth to try new things in life and discover the aspects of life that inspired
them.

Exhibit
Exhibit I: Select Financials of Nestlé
Exhibit II: Major Coffee Producing Countries in the World
Exhibit III: Top Five Coffee Consuming Countries in the World for the Year 2013
Exhibit IV: Sales of Nestlé’s Soluble Coffee Brands
Exhibit V: Interbrain’s Ranking of Nescafé Brand
Exhibit VI: Three Visual Markers of REDvolution