Authors: Kris Ayadiani [email protected] se & Timothy Enadeghe [email protected] se Supervisor: Bertil Olsson Examiner: Sabine Gebert Persson Course: Business Administration Credit: 15 ECTS 1 Acknowledgment Writing a thesis project requires inspiration, energy, and assistance from others. We would first of all thank God for giving us the inspiration and energy to write this project and we would also like to say a big thank you to our friends and colleagues who assisted with materials when writing this project.
We would also like to express our profound gratitude to our supervisor, Bertil Olsson for his supervision and guidance throughout the course of writing this project. We are very grateful to him for his help and advice. Our sincere gratitude also goes out to the manager of Willys who created out time from his busy schedule to grant us audience. We also want to express our gratitude to the school librarians who were very helpful in assisting us with materials for this project.
2 SUMMARY This thesis is on Consumers Brand Awareness, a case study of Willys grocery store.
The purpose of this thesis is to investigate the cause of the limited awareness of Garant brand a newly introduced brand of Axfood (the parent company of Willys) sold at Willys shops. This brand seems not to be well known to some customers of Willys and the researchers have deemed it possible to investigate the cause of the limited awareness of this brand and the step Willys is taking to create more awareness for the brand.
This thesis applied theoretical concepts of brand awareness, brand loyalty, perceived quality, consumer decision model, integrated marketing communication (IMC), and strategic planning process.
These theories were applied to examine the various communication tools that can be used to improve the awareness of “Garant brand” among Willys customers. Our analysis was based on the primary and secondary data collected. The primary data was gathered through a questionnaire survey shared among various categories of Willys customers in Falun and Borlange respectively, and the personal interview conducted with Willys manager in Falun. The secondary data collected were from textbooks, academic journals, previous thesis, and websites.
The empirical findings have been presented in details and analyzed with the help of theoretical ideas. The analysis and results obtained from the survey and interview focused on the importance of information, marketing communication tools, brand awareness, brand loyalty, perceived quality and implementation of strategic planning process. The cause of the limited awareness of “Garant brand” has been evaluated and the conclusion and recommendation of this project have been provided in the end.
It contains a short background, problem description, research question, research purpose, limitations, and company’s presentation. 1. 1 BACKGROUND According to Gustafson, and Chabot, (2007, p, 105), the ultimate goal of most businesses is to increase sales and income. Ideally speaking, an organization wants to attract customers to their brand and repeat purchase. Understanding the right audience is an important aspect in a business. The most important aspect for a business success is for an organization to understand that they need a plan with specific motive that would increase awareness of their brand amongst their customers.
Willys as the case study in this thesis, is said to be one of Sweden’s most profitable grocery stores that has a high market share amongst its competitors such as Lidl, Ica, and Coop Konsum, etc. It is of utmost importance to know the effort Willys is putting to increase the awareness of Garant brand during the process of creating brand awareness. It is certain that the more customers are aware of their brand, the more likely they are to buy from them. Brand awareness is very important for differentiating an organization’s brand from other similar brands of other competitors.
This study will be based on four subject areas; consumer decision model, integrated marketing communication, marketing communication tools, and strategic planning process. These four key subject areas will be used to access the different marketing communication strategies that Willys uses, how effective are these strategies in creating brand awareness and what strategic planning process are on-going in creating more awareness for Garant brand amongst its customers. 1. 2 PROBLEM DESCRIPTION
It seems clear that we are currently living in the age of technological advancement where communication networks are so vast in information sharing. But it seems research is somewhat lagging behind this rapid development, and it is somehow difficult to find relevant up to date studies on how communication are to be part of the branding process, how it relate to the strategy that organizations have with the use of communication networks-if they are to be used to strengthen the brand, increase sales, and find new customers.
The question of how organizations create brand equity through brand awareness have also been debated by traditional marketers such as Aaker, who claims that brand awareness is about the strength the brand’s presence has in consumers’ minds (Aaker 1996). 7 The challenges of brand awareness are how to set the direction to introduce the brand and to make concrete steps in lines with the identified vision. In regard to this, the research problem of this study can be formulated as: “How to increase the awareness of Garant brand”.
This thesis is centered on the limited awareness of Garant brand. Garant brand with numerous products is not well known to some of Willys customers. This information of limited awareness of “Garant brand” was gathered from the managers of Willys shops in Falun and in Borlange respectively. For Willys to still maintain its high market share as stated in the introduction, and make “Garant brand and products” well known to all its customers, appropriate measure must be taken to improve the level of awareness of the brand. 1. 3 RESEARCH QUESTION
There is a central question that must be answered in order to determine the reason behind the limited awareness of Garant brand amongst Willys customers. The question is: * What could be responsible for the limited awareness of Garant brand amongst Willys customers? 1. 4 AIM AND OBJECTIVE Aim The aim of this research is to find out the problem that surrounds the limited awareness of Garant brand amongst Willys customers, and the effort Willys is putting to solving this problem in order to create more awareness of the brand so as to strengthen the brand image and develop a competitive advantage over other similar brands.
Objectives The objective of this research is to analyze the results and findings, so that management of Willys can understand which strategy is needed to adopt in order to create more awareness and make the brand stronger and consistent in the minds of the customers when making their buying decisions. The results and findings that would be analyzed will help the organization to implement the necessary strategies that will improve or create more awareness of “Garant brand”, which will thereby enhance sales and increase the profit margins, which is the sole reason for the creation of the brand? 1. 5 COMPANY’S PRESENTATION 1. 5. 1 Willys AB Willys AB is a subsidiary of Axfood Company. Willys been one of the Company’s Group chains, claims to be Sweden’s leading discount chain, with 170 stores, of which 44 are Willys Hemma (A small version of store that Willys sees as the natural choice for cost-conscious customers who want to meet their daily shopping needs close to home). Willys also claims to be the food store for price conscious customers that provide a wide product selection and a rich offering of fresh products.
Willys claims to offer its customers “Sweden’s cheapest bag of groceries and also add value to “Sweden’s cheapest bag of organic groceries” through environmental initiatives and attractively priced range of organic products. It also claims to play an important role as a challenger in the market and tend to set a trend in the discount food retails segment (http://www. axfood. se). According to Axfood, “Garant” the brand under investigation was launched in autumn 2009, and the brand is said to be available in all of the Group’s chains, including Willys, Hemkop and PrisXtra.
The launch of the first products was accompanied by the start of a new website for the brand (www. garantprod. se), which customers can visit to find out more about the products and even provide feedback about them. The vision behind the brand is to be the industry’s most responsive brand-and that the products will give customers more value for their money. (http://www. unitednordic. com/pages/brands_axfood. php) Willys offers other numerous brands aside Garant brand. Amongst these brands are; Felix, Eldorado, Kalodes, Pagen, etc. Garant” the brand under investigation, has varieties of consumer products such as milk, potatoes, kidney beans, cookies, rice, flower, pasta, citron juice, olive oil, canned maize, lasagna, couscous, etc. 1. 5. 2 Willys Collaboration with the Swedish Society for Nature Conservation (SSNC) Axfood (Willys Parent Company) cited that to step up the pace of environmental work, an environmental collaboration was entered into by the company with the Swedish Society for Nature Conservation (SSNC).
Willys as a subsidiary of Axfood, has eco-labeled all of its stores with SSNC’s “Bra Miljoval” (Good Environmental Choice) designation. The “Bra Miljoval” label certifies that stores have ample (enough) access to eco-labeled organic products, and that they have adopted good environmental practices in general, such as through ambitious waste sorting, recycling and energy efficiency programs. http://www. axfood. se. 9 CHAPTER 2 THEORETICAL FRAMEWORK AND LITERATURE REVIEW 2. THEORETICAL FRAMEWORK
Theoretical frame work describes the theories or concepts to be covered or addressed in this research. It combines several theories to obtain useful framework for the research. A good theoretical frame work is to help researcher (s) find out the kind of method to be used in the quest for the research, the kind of data that should be collected, and how the data collected can be related to the research. The aim of this chapter is to establish a theoretical outline in which the literature presented in the chapter deals with research findings on communication; and theories relating to branding, and brand awareness.
All the literature is described and explained in order to build a theoretical background for this study. 2. 1 Definition of Communication Communication is the act of conveying information for the purpose of creating a shared understanding. The word “communication” comes from the Latin “communis,” meaning to share, and includes verbal, non-verbal and electronic means of human interaction. http://www. communicationstudies. com/what-is-communication A new marketing era, long overdue, was heralded in when communication emerged as a real game changer.
Media communication put customer back at the centre of the organization and gave marketer a new set of tools to listen to them and to encourage them to engage with brand. A golden opportunity emerged as organizations realize the possibilities of engaging with customers in a new way so they can become partners driving the business forward. The ladder of engagement makes it easy to nurture customers up to higher levels of involvement. Marketing communications have to be integrated for two reasons. Firstly, un-integrated databases cause many problems and complications, as there is no single picture of the customer.
Secondly, as communications morph into customer experiences, all communication needs to be integrated to deliver a consistent experience (Smith and Zook 2011). 2. 2 Communication and Marketing According to businessdictionary. com, marketing is defined as the management process through which goods and services move from concept to the consumer. It includes the coordination of four elements called the 4 Ps of marketing: 1. Identification, selection and development of a product, 2. Determination of its price, 3. Selection of a distribution channel to reach the customer’s place, 4.
Development and implementation of a promotional strategy. 10 Leventhal, (2005) proposed that an effective marketing effort is based upon information through communication, which can be used in terms of developing sound business strategies, increase your return-on-investment, allow for more successful innovation, lead to better branding effort, increase the effectiveness of your promotional efforts and strengthen your web marketing efforts. It further stated that a market-driven strategy allows a company to truly understand its market and the customers that are the basis for the market.
This effort allows for a more effective integration of all activities that may impact customer value, which in turn affects both return-on-investment and profitability. According to Leventhal, marketing through communication means to adopt a completely new way of communicating with the audience in a digital environment. Leventhal also cited that to further enhance your efforts, being able to develop effective integrated multi-channel marketing strategies allows you reap greater returns as a result of synergistic marketing efforts.
This means that consumers are reached at different ways, and that the most successful marketing communication efforts contained appropriate mix of media for the target audience. 2. 3 Communication and Branding By linking communication and branding, we need to compare the traditional way of looking at brand equity in terms of brand recall-and points to that in the era where various communication networks have become an important media channel. Brand equity should not be measured in terms of brand recall but by dynamic measures such as customer word-of-mouth (Weber 2009).
A strong brand should be based on the dialogue that companies have with their customers and prospects, the stronger the dialogue- the stronger the brand. Communication therefore allows companies to have these kinds of dialogues more efficiently and less expensive than in the past. A summary of some of the theories and concepts that will be used in this research is to create survey questionnaires to know the weak awareness of Garant brand, and as well to carry out investigation on the company to know the kind of communication tools that they have been using, their effectiveness and weaknesses.
These theories will help suggest some communication tools that could be used by Willys to create or improve more awareness of “Garant brand”. 2. 4 LITERATURE REVIEW Before going in details to focus on the different measures to create or maintain awareness of “Garant brand”, we have to look into the much more complicated interaction between creating brand awareness and attracting customers , which can be explained in terms of brand recall, brand equity, how brand equity generates value and brand loyalty.
In addition, we would like to highlight what brand; branding, brand awareness and brand recognition are in reference to this project material. There has been number of definitions from different authors to help us understand issues related to brand. 2. 4. 1 Brand Kotler and Keller (2009 pg274) defines brand as, a combination of name, symbols, signs and services, as a means of identification which makes it different from its competitors.
This implies that brand is a product or service that has differentiated dimensions from other similar products and services of other competitors, which are designed to serve the same satisfactory purpose and need. The American Marketing Association (cited in Kotler & Keller 2006), also defines branding as endowing (large) products and services with the power of a brand. 11 With this definition, one can conclude that brand creates identity and image of a company’s product or services and as well create a difference from other similar provider of these products or services.
Branding is all about creating differences and it involves mental structuring that helps consumers organize their knowledge about products and services in a way that clarifies their decision making, and in the process provides value to the firm. In this case, Willys should see ”Garant brand” as a brand that creates the identity and image of Willys in the mind of its customers and as well create a difference from other similar brands that Willys sell.
Willys could deem it necessary to make “Garant brand” a unique brand that creates a unique image in the minds of its customers. This can be done mainly through effective advertising campaigns with consistent theme. 2. 4. 2 Brand Strategy Brand strategy can be defined as the “Long-term marketing support for a brand, based on the definition of the characteristics of the target consumers. It includes understanding of their preferences, and expectations from the brand” http://www. businessdictionary. com/definition/brand-strategy. tml (Accessed 130410) Kapferer, (2008) identifies brand strategy as the term used for decisions on: the number of brand levels to be implemented; one, two or even three and the role of the corporate in the product value communication; should it be absent, strongly present or hardly present. Kapferer, (2008) also considers the relative weight of these brands, and the graphic arrangement of their coexistence on all the documents, packaging and products but also industrial sites, offices and business cards of sales persons and managers as well as the degree of globalization of the architecture as bearing elements of the branding strategy. 01010000 2. 4. 3 Brand Awareness Brand awareness has often been argued to have important effects on consumer decision making by influencing which brands enters the consideration set and which brands are selected from the consideration set (Macdonald and Sharp, 1996). According to Gustafson and Brian, (2007) brand awareness refers to how aware existing customers and potential customers are of a business and its products. Ultimately, achieving successful brand awareness means that your brand is well known and is easily recognizable.
Gustafson and Brian, (2007) also cited that brand awareness is sometimes seen by business or marketing managers as unimportant and unworthy of monitoring. Enormous pressure exists for organizations and their brand to demonstrate short-term profit results (Aaker, 1991). Hogarth, (1980) and Aaker, (1991) cited that demonstrating the long-term value of brand building is “exceptionally difficult”. For an organization like Willys to establish customer loyalty towards its brand, it could adopt the integrated marketing communication (IMC) system to build a long-term value that would create more awareness for Garant brand.
A study of Hoyer and Brown (1990) carried pioneering research at the individual decision level by examining the effects of brand awareness on consumer choice. It examined brand awareness as a heuristic, as well as exploring its effect on perceived quality. Consumer behavior theory in both marketing and economic literature has tended to see product choice as a highly involving problem-solving process (Foxall, 1992). Hoyer, (1984) stated that, in many purchasing situations, the consumer is a perceive recipient of product information who spends time and effort choosing brands.
In situations involving common repeat products, it may be that consumers choose the brand on the basis of a simple heuristic (e. g. brand awareness, package, and price). 12 There are three possible outcome advertisement display can have on household choice of brand. It can enhance the possibility that the household will switch brand (brand switching), it can make the household to stay with the brand previous purchase (repeat purchasing), or it can have no effect on the choice probabilities.
In an attempt to improve the likelihood of this brand (Garant) success in the market, we assumed the possibility that more awareness will attract customers and increase sales. Keller, (1993) defines brand awareness as the first and prerequisite dimension of the entire brand knowledge system in consumers’ minds, reflecting the ability to identify the brand under different conditions: the likelihood that a brand name will come to mind and the ease with which it does so.
Keller’s definition implies that if consumers have a full mental image of a brand, then the consumers’ would have a full knowledge of the brand existence. There is also a close connection between brand awareness and brand positioning. For a brand to be successful, it is not enough to reach brand recognition. A brand must occupy a noticeable position (top-of-mind or dominant recall) within the target audience consideration set (Elliot and Percy 2007).
A brand must be positioned in its marketing communication in such a way that when the need for a product of such brand occurs, that brand comes to mind. Then the brand must be linked to a benefit that provides a motivating reason to consider it. It is this link between the brand and the benefit that lies at building positive brand attitude, which in turn builds positive brand equity (Elliot and Percy 2007). According to Kotler (2003), positioning is about enabling a brand to occupy a “distinct and valued place” in the mind of the target consumer.
Brand positioning can be thought of as the element that tells the potential customers what the brand is, who it is for, and what it offers (Elliot and Percy 2007, p. 229). Holm (2006), states that integrated marketing communication (IMC) plays an important role in creating brand awareness and positioning the brand in the minds of the consumers. Holm further concluded that it is important to use IMC as a measure to create brand awareness, and that it is crucial to understand the needs of interaction with customers as important as other marketing plans.
Holm’s studies implies that the only way for firms or organizations to interact with their customers and make their brand known to them is through integrated marketing communication. Marketing managers should note that through effective marketing communication, brand awareness can be created or maintained. As earlier proposed by Holm (2006), the integrated marketing communication model could be adopted and used by Willys as a measure in creating more awareness for “Garant brand”. Aaker, (2010, p. 0) states that brand awareness can be measured in different ways which includes: 2. 4. 4 Brand Equity There have been numerous definitions for brand equity in the past. (Kotler and Keller, 2006) defined brand equity as the added value endowed on products and services, which may be reflected in the way consumers think, feel and act with respect to the brand, the price of the brand, its market share, and as well the profitability that the brand commands. Brand equity is an important intangible asset that has psychological and financial value to the firm.
Brand equity is a complicated interaction between creating brand awareness and attracting customers. 13 In marketing it has for a long time been considered that brand add value to a product, but it was not until the large wave of mergers and acquisitions in multinational corporations with large and well-known brands in the 1980’s that this value measured in the asset value of companies. Besides the traditional way of considering asset and net income, also “goodwill” was to be added (Elliot and Percy 2007).
Brand equity can also be defined mainly from two perspectives, either as financial considerations or as consumer perspectives of a brand. For example, “a set of brand assets and liabilities linked to a brand, its name and symbol that add or subtract from the value provided are a product or service to a firm or to firm’s customers’ (Aaker 1991). Aaker’s point in the studies on brand equity is a consumer perspective based on consumer’s memory-based brand associations. The four assets underlying brand equity identified by Aaker are: brand awareness, perceived quality, brand loyalty, and brand association.
Aaker predicts that the firms skillful in operating outside the “traditional” media channels and who can coordinate messages across all medias (Newspapers, TV, flyers, radio, and internet adverts, direct marketing, trade shows) are those that will be the winners in the battle of raising brand awareness (Aaker, 1996). Weber, a social network guru argues against the “traditional way” of looking at brand equity in terms of brand recall, and claims that brand equity is a living thing and should be measured not only in terms of brand recall but dynamic measures such as customer word-of-mouth.
He further stated that instead of creating brand awareness through brand recall, it is about how likely customers are to highly recommend the good or service to others (weber 2009). Considering the importance that brand awareness has to create brand equity, recent studies are questioning the traditional way of looking at brand awareness taking into account how it is affected by communication networks. This is the aspect of branding that this study will focus on, and the approach will be to look at brand awreness in the way that Aaker has done.
Among the 4 assets underlying brand equity, perceived quality is defined by Aaker as a brand association that is elevated to the status of a brand as a brand asset for a number of reasons. Among all brand associations, only perceived quality has be shown to drive financial performance, and perceived quality often drives other aspects of how a brand is perceived (Aaker, 1996). 2. 4. 5 How Brand Equity Generate Value Since brand equity is an interaction between creating brand awareness and attracting customers, we will then describe how it can generates value.
Brand equity is made up of capital and debts that is affiliated with name and symbols which add value to product and services delivered by organization to its potential and prospective customers. According to (Aaker, 2010), “to sustain brand equity, investment is very essential factor in establishing and enhancing assets”. Brand equity management entails all the activities that are carried out to ensure that a strong brand value is created and maintained. Brand equity gives both the customers and organization value for their money.
The creditability and liability of a company is tied to its brand equity. A company is as financially strong as its brand equity while the ruin depends largely on the brand equity. A positive or negative change in brand equity gives similar consequence to the company. Brand equity asset includes; Brand awareness, Brand loyalty, Perceived quality, and Brand association (Aaker, 1992 pp. 27 – 32). For Willys as a company to generate value, it must make sure that “Garant brand” has significant brand equity that can lead consumers to generate a positive association with its products. 4 2. 4. 6 Brand recall A brand recall is when a certain brand comes to consumers’ minds when its product class is mentioned (Aaker, 2010 p. 11). Brand recall can be a deciding factor when getting list of products to shop. Brand recall could be aided or unaided. It is aided when a brand product is remembered and when the actual brand name comes on view. It is unaided when a need comes up and the first choice that comes to a customer’s mind is a particular brand product.
With a unique tagline or logo, “Garant brand” can easily be recalled when its product class is mentioned and when it can satisfy the consumers. This is an interaction between creating brand awareness, and attracting customers. 2. 4. 7 Brand Loyalty Brand loyalty is created by positioning the mind of a consumer of the usefulness and importance of a particular good or service to the point that the consumer does repeated purchases. These repeated purchases can be done by creating brand awareness. Aaker (1996) defines the third dimension of brand equity as brand loyalty.
The importance of including brand loyalty as fundamental asset underlying brand equity according Aaker is that a company’s brand value is largely created by the customer loyalty it commands. He believes that considering loyalty as an asset encourages and justifies loyalty building programs that can help create and enhance brand equity. A highly loyal customer base can generate a predictable sales and steady flow of profit. Aaker (1996) is of the opinion that a brand without a loyal customer base is usually vulnerable or has value only in its potential to create loyal customers.
It is much cheaper to retain customers than to attract new ones because the costs for attracting new customers can be higher than keeping the old ones. Aaker (1996) also cited that the brand loyalty of existing customers also constitute an entry barrier to other competitors because the costs of attracting customers to change loyalties is often high. According to Investopadia, brand loyalty is when consumers becomes committed to a brand and make repeat purchase over time. Investopadia also cited that brand loyalty is as result of consumer behavior that is affected by a person’s preferences.
If Willys customers are fully knowledgeable of the existence of “Garant brand”, and have a Preference towards the brand, then it is obvious that they will be committed to the brand and make repeat purchase of the brand over time. 2. 4. 8 Brand Associations Brand association shows that the brand is supported by associations that build a positive image on consumers’ minds. Brand association is based on brand identity. Building up strong brand with the help of brand associations is important to improve and implement brand identity (Aaker, 2010 p. 25).
Brand associations deals with how brand equity is supported in great part by the associations that consumers make with a brand; it may be product attribute or a particular symbol. Brand associations are driven by the brand identity, and what the organization or company wants the brand stand for in the mind of the customer. This could be seen as a way of helping marketing managers to have proper knowledge on how to improve and implement brand identity to build a positive image of brand on consumers’ minds in order to create value for both customers and organizations. 5 Willys should see “Garant brand” as a brand that can create value not only for the company alone but also for its customers, hence appropriate measure should be taken to make sure all necessary communication tools are used to get the customers identified with the brand in other to create value for both Willys and its customers. Also making customers aware of his or her right towards available brands and products that is being marketed and sold. 2. 5 Consumer Decision Model Consumer decision making comes about as an attempt to solve consumer roblems. Information is a vital part in assisting customers on purchasing decisions. The sources of information that buyers uses for purchasing purposes are Newspapers, flyers, radio, television, internet, and word of mouth. The usefulness and influence of these sources of information will vary by product and by customer. Howard (1989, ps. 29-36) presented consumer decision model in six components which customers have to pass through when making purchase decision. These components are: * Information
Information is the most vital part in assisting the consumers when making a purchasing decision. Television, radio, circulars, handbills, newspapers and spoken words are some of the instruments used by consumers to recognize a particular brand in the market. Thus inspires them to think about purchase. * Brand Recognition Brand recognition cited by (Raymond R et al, in Howard 1989) “comparing dynamic consumer choice recognition”, describes brand recognition as the extent to which consumer perceives the brand imagine in their mind.
There are two factors associated with brand recognition “familiarity and likenes