CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND TO THE STUDY

Brand positioning strategies seeks to create unique identity and position for its products, services and ensures that both product and organization create value beyond that of their competitors (Ind, 2007). Brand positioning strategy can create added value for the corporation and implement its vision and create unique position in the marketplace. Also it can enable the corporation to bring further leverage to its tangible and non-tangible assets. It is a degree of endorsement by the parent brand that has two extremes: First, the uniformity model where both the corporate level and the business units are all positioned and profiled. Second, the variety model where business units are different from the corporate level (Van Riel and Bruggen, 2002). Van Riel and Bruggen (2002), defined the brand positioning strategy as a systematically planned and implemented process of creating and maintaining a favorable reputation. They also said its constituent elements by sending signals to stakeholders used the brand positioning. Some factors impact the crafting strategy of the brand positioning. Corporate strategy, business model, organizational culture, pace of innovation, added-value lever, resources and brand vision are factors that should be taken into account when choosing a branding strategy (Kapferer, 2008). Strategic branding is critical to an organization because it takes into consideration fundamental changes in the environment thus making firms proactive rather than reactive, a consumer should easily identify that for a given need or want this is the brand. So for successful brand positioning, following points are of utmost importance for companies; target consumer, main competitors, point of similarity with competitors and point of difference with competitors. (Bett, 2005). 4 As already mentioned, there are some factors which affect successful brand positioning strategy when the strategists of the organization select brand positioning strategy as a source of competitive advantage for parent and for obtaining the other goals of the organization. Although brand positioning strategy can be beneficial, if it is not managed accurately and thoroughly it can backfire on an organization, consequently, a holistic approach is necessary to appraise the effectiveness of the brand positioning strategy (Kapferer, 2008).

Competitive advantage denotes a firm’s ability to achieve market superiority (Evans and Lindsay, 2011). This concept is the core for strategic management as every organization searches for a vantage point that could deliver competitive edge against the rivals. Porter provided a framework that models an industry as being influenced by five forces, (Porter, 2005). His advice was that the strategic business manager seeking to develop a competitive advantage over rival firms can use this model to better understand the context in which the firm operates. One way of gaining competitive advantage over rivals is achieving a better cost advantage; another way to competitive advantage is product differentiation (Porter, 2005). Product differentiation by itself will be of little value unless the difference so achieved attracts and captures the imagination of customers. The needs and wants of the customer must be entrenched in the business process from customer surveys, to design, to production, to delivery, and use, if the customer is to be truly satisfied (Evans and Lindsay, 2011). Peteraf (2003) defines competitive advantage as sustained above normal returns. Barney (2002) indicates that a firm experiences competitive advantages when its actions in an industry or market create economic value and when few competing firms are engaging in similar actions. Barney goes on to tie competitive advantage to branding, arguing that firms get competitive advantage when it repositions its Branding strategy. Cool (2003) echoed Barney (2002) in arguing that competitive advantage is not obtained from freely tradable assets. From the foregoing discussions from different authors, it is evident that competitive advantage implies a firm having better returns than competing firms or offering a better product and/ or services to the market.

Despite the circumstances, brand extensions are still attractive to companies because they provide a way to take advantage of the parent brand equity. Basically, leveraging a strong parent brand can reduce the risks associated with introducing a brand extension to a new or existent market. One of the major setbacks related to competitive differentiation through brand extensions is that each brand extension promises to be new, bigger, better or simply improved. However, in most cases, competitive differentiation is the result of offering consumers a value that surpasses their expectations (Albert et al. 2008). In the quest for differentiation, most brand extensions become too similar with each other, thus in fact killing competitive differentiation (McGovern&Moon, 2007). Many brands therefore often achieve commoditization by adding new features to their brand extensions. In these circumstances, brand positioning has become the primary focus of competitive differentiation. In order to assure a coherent positioning strategy for brand extensions, brand managers must take some critical strategic decisions with a high impact on both the parent brand and the brand extension. To guide these decisions, we will first describe the steps for developing an effective positioning strategy and the types of brand positioning strategies. We will further provide a careful examination of brand extensions and competitive differentiation related issues. By adapting the brand positioning framework to brand extensions we provide brand managers a detailed guide for identifying and establishing brand positioning bases for brand extensions.

Being confronted with fundamental change in traditional food habits and the turn towards healthier food options, established food brands, such as Kellog’s or McDonald’s, see their market position endangered (Buchter, 2015). Concurrently, the changing demand opens opportunities for innovative food entrepreneurs, who increasingly shape the market. In the American market alone, large food companies are said to have lost $18bn to smaller companies with annual revenues below $5bn between 2011 and 2015 (Daneshkhu & Whipp, 2016). With new niche brands entering the market and retailer’s shelves, the long-standing rule of “bigger is better” is growing irrelevant (Neeley & Potter, 2015, p.4). Established food conglomerates are described as too conservative to launch radically new products and occupy the role of “a market searcher rather than a market developer” in the current market structure (Khan et al, 2013, p.29-30). More often, entrepreneurs are developing truly innovative, science-based food solutions of better nutritional value and less environmental harm (The Economist, 2015). As such, knowledge-based entrepreneurs involved in “the commercial exploitation of science-based knowledge” (Burger-Helmchen, 2008, p.95) are of particular interest in the context of innovative food development. Yet, a new technological innovation does not per se translate into new consumer value and a successful commercial product (Sawhney, Wolcott & Arroniz, 2011). Building a strong brand and a distinct market position is emphasized as a necessity to commercialize a new food innovation (Khan et al, 2013; Mark-Herbert, 2004). Especially in the saturated food sector with typically short 2 product life-cycles (Costa & Jongen, 2006), a weakly branded product without a clear purpose will have difficulties to reach the shelf or quickly disappear soon after. When a brand is built, it needs to find a ‘position’ on the market and within the minds of the targeted consumers. This implies that consumers have to understand for what, for whom and why the brand is relevant, as well as against whom it competes (Kapferer, 2012, p.153). Brand positioning is the process of clarifying these questions (p.153). As Kapferer (2012, p.152) defines “positioning a brand means emphasizing the distinctive characteristics that make it different from its competitors and appealing to the public”. These distinctive characteristics can be built on tangible or intangible product attributes (Keller & Lehmann, 2006). Beyond that, a novel, inside-out perspective on positioning is highlighting the role of the brand’s identity in this context (Kapferer, 2012; Riezebos & van der Grinten, 2012; Urde, Baumgarth & Merrilees, 2011). While “positioning is competition oriented” (p.154), brand identity adds a sustainable source of differentiation in form of the “brand’s uniqueness and value” (Kapferer, 2012, p.149). Recently, Urde and Koch (2014) have contributed to research on brand positioning between the poles of market-orientation and brand-orientation and established five different positioning schools on this continuum. In this context, they highlight that entrepreneurs can capitalize on innovation to position the brand in uncontested market space.

1.2     STATEMENT OF THE PROBLEM

Many of the research studies on brand positioning strategy have not specifically been concerned with the relationship and the interplay of specific factors and their association to competitive advantage success and failure. In order to determine factors to be considered by organizations in their brand positioning strategy, and the factors contributing to competitive advantage additional research is required. Thus, there is a compelling need to establish the brand positioning strategy used by organizations to gain competitive advantage Based on the above information there is need for the investigation of brand positioning strategies and competitive advantage.

1.3     OBJECTIVE OF THE STUDY

The main objective of this study is to find out the influence of branding positioning as a competitive advantage on organizations competition, specifically the study intends to:

1.     Establish the brand positioning strategies adopted by organization

2.     To determine the relationship between brand positioning strategies and competitive advantage achieved by

3.     To identify the role entrepreneurial identity play in brand positioning practice

4.     Find out the effect of branding positioning on the percentage level of organizations output.