University of Wales Institute, Cardiff (UWIC) Master of Business Administration (MBA)

Brand Positioning
Mistake of JayKay Marketing Services (Pvt) Ltd

Prepared By: Mohamed Mohideen Mohamed Rishard UWIC/MBA/MT/12/02 Module Title: Marketing 1 (Individual Report) Module No : MBA 403 Word Count: 2190 (Excluding Cover page, Acknowledgment, Executive Summary, Table of Contents, References & Annexure)

Brand Positioning mistake of KEELLS SUPER

Acknowledgement
Apart from the exertions of me, the achievement of this report depends on the encouragement and guide posts of many others. I take this opportunity to express my appreciation to the people who have been subservient in the productive closing of this report. A special thank belongs to Mr.Charitha Subasinghe, CEO of JK Marketing Services Ltd. The true support that he provided truly assists the progression, and the co-operation is very much indeed apprehended. And also special thanks to Mrs.Shivanthi Rajaratnam, Brand Manager Keells Super, for the guidance and encouragement in giving all the supportive information and suggestions. My warm thanks to Keells Super Outlet Managers at Narahenpita, Mahabage, Marine Drive and Kiribathgoda, who gave the fullest co-operation. Thanks also to Cargills Food city Outlet Managers at Nawala, Wattala, Park Road and Kadawatha. It is a pleasure to thank Mrs.Nilanthi D Silva of Nielsons Research Company for giving us the related research information and documents, in order us to complete the task. Great deals appreciated go to contributions of my Marketing lecturers in ICBT Campus and also I would like to thank the ICBT program staff in helping us complete the program. Last but not least, I would like to thanks all my colleagues in our group Transformers, for the support Contribution and Hard work. The report would be nothing without the enthusiasm from the group members. And it made me to realize the value of working together as a team which was challenging. The program actually brought us together to treasure the true value of friendship and respect of each other.

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Executive Summary
Every company has marketing campaigns to create tremendous new branding initiatives, slogans, and commercials to gain competitive advantage from the modern trade market leaders and captivating the consumers mindset. Sometimes these actions make the brands as successful or mistake and lead to the downfall of entire brand. This report explains the marketing mistakes om Brand Positioning done by Keells Super brand which is administrated and managed under JayKay Marketing Services (Pvt) Ltd. This was established in 1991 as a subsidiary of John Keells Holdings with employees strength of 1800. Currently it has 42 outlets and 6 franchise outlets under the brand Super K, also Keells Super consist of over 12000 SKUs and the newest addition is the brand KEKO for apparel and fashion, also Kells Super brand equity worth Rs. 8 Billion. The vision is to be one of the leading brands in retail in the region. First in the report explanation given on the current retail and modern trade landscape with financial KPIs and market shares of major players in the modern trade market. And apply of Porters five force analysis to the industry. Then comes an audit of marketing function of JMSL and present consumer segment of keells Super .then marketing mistakes been identified along with evolution of the blunder, and to for the justification , a benchmark is done with the market leader along with a consumer perception survey. Then we illustrates the actions taken by JMSL to overcome the mistakes done by Keells Super in different stages and followed by recommendations to re align its growth strategies and generic strategies recover its position in the modern trade market and gain competitive advantage.

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Table of Contents
Acknowledgement .....................................................................................................................2 Executive Summary ...................................................................................................................3 Table of Figures .........................................................................................................................5 1. Introduction............................................................................................................................6 2. Retail Market Landscape of Sri Lanka ..................................................................................7 3. Modern Trade Competitor Analysis ......................................................................................8 3.1. Turnover Vs Outlets comparison in 2010/2011 ..............................................................8 3.2. Modern Trade Market Share ...........................................................................................9 3.3. Porters 5 Force Analysis ................................................................................................9 4. Marketing Audit of JMSL....................................................................................................10 4.1. Strength and Weaknesses ..............................................................................................10 4.2. Present Target Consumer of Keells super .....................................................................11 5. Current Positioning map of Modern Trade in Sri Lanka .....................................................11 6. Marketing Mistake of Keells Super .....................................................................................12 6.1. Evolution of the Blunder ...............................................................................................13 6.2. Benchmarking with the Market Leader.........................................................................13 6.3. Research to Identify Consumer perception ...................................................................15 7. Measures taken by JMSL to defeat the mistake...................................................................16 7.1. Introduction of Elephant House Super Pola..................................................................16 7.2. Lower than Lowest Price Campaign .............................................................................17 7.3 Freshness & Quality Campaign......................................................................................18 8. Conclusion ...........................................................................................................................18 9. Recommendations................................................................................................................19 Bibliography ............................................................................................................................22 Annexure..................................................................................................................................23 1.JMSL Brief........................................................................................................................23 2. Positioning Errors.............................................................................................................23 3.Retai Markt Landscape......................................................................................................23 4. Turnover Vs Outlets comparison in 2010/2011 ...............................................................24 4|Page

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Table of Contents cont..
5. Porters 5 Force Analysis ..................................................................................................25 6. JMSL, Keells Super Audit ...............................................................................................26 7. Expansion of Cargills .......................................................................................................26 8. Consumer Research Information......................................................................................27 9.Elephant House Super Pola ...............................................................................................28 10. Lower than Lowest price campaign ...............................................................................28

Table of Figures
FIGURE 1.MARKET OVERVIEW ....................................................................................... 7 FIGURE 2.MODERN TRADE COMPETITOR ANALYSIS ......................................................... 8 FIGURE 3.MODERN TRADE MARKET SHARE .................................................................... 9 FIGURE 4. JMSL STRENGTH & W EAKNESSES ............................................................... 10 FIGURE 5. CURRENT POSITIONING MAP OF MODERN TRADE IN SL................................... 11 FIGURE 6. MARKET SEGMENT ...................................................................................... 12 FIGURE 7. KEELLS FINANCIAL PERFORMANCE .............................................................. 13 FIGURE 8. CARGILLS FINANCIAL PERFORMANCE ............................................................ 14 FIGURE 9. CONSUMER RESEARCH DATA ...................................................................... 15 FIGURE 10. FIRST EHSP AT W ELLAWATTA ................................................................... 16 FIGURE 11. LOWER THAN LOWEST PRICE CAMPAIGN ..................................................... 17 FIGURE 12. FRESHNESS & QUALITY CAMPAIGN ............................................................. 18

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Brand Positioning mistake of KEELLS SUPER

1. Introduction
This report has been written to illustrate the marketing mistake, which is Brand Positioning done by JayKay Marketing Services (Pvt) Ltd on the their brand KEELLS SUPE for company profile refer Annexure 1. The objective of this report to identify the mistakes faced by Keells Super and also critically evaluates current issues which were lead to the blunder and analysis of market and consumer behaviour, use corrective measures to overcome the current situation and provide recommendations in order to gain competitive advantage over the other super market chains in Sri Lanka .

DeChenatony and McDonald define brand as A successful brand an identifiable product, service, person or place, augmented in such way that the buyer or user perceives relevant, unique added values which match their needs most closely. Furthermore, its success results from being able to sustain those added values in the face of competition. (DeChernatony, 1998) Brand positioning can be distinct as an action of creating a brand to present in such a manner that it occupies a unique place and worth in the consumers mind. There are various positioning errors such as under positioning, over positioning, confused and double positioning. See Annexure 2

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2. Retail Market Landscape of Sri Lanka

MODERNTRADE MARKETGROWTH 34%

Figure 1.Market Overview

Source: (Lanka, 2010/2011) Central Bank Annual report 2010/2011 (Nielsen, 2011) A.C. Nielsen Research Data 2011

For more illustration on the retail market landscape please refer Annexure 3

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3. Modern Trade Competitor Analysis

3.1. Turnover Vs Outlets comparison in 2010/2011

Source: Cargills PLC and JMSL Financial Reports 2010/2011 Turnover in LKR Bn & No.of Outlets Laugfs Sunups Arpico Super Keells Super Cargills Food 0 Turnover Bn Outlets 50 Cargills Food 29 163 100 Keells Super 10.2 42 Outlets 150 200

Arpico Super Laugfs Sunups 10.1 3.1 11 25

Figure 2.Modern Trade Competitor Analysis

As per the above KPIs extracted from the presentation,please refer Annexure 4. for highlights.

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3.2. Modern Trade Market Share The below graph illustrates the market shares of the key super market chains in the country. Being the market leader Cargills have the highest market share 49% and followed by Keells Super with 16% market share. The closest competition for Keells super is Arpico, which is a hyper market.

Modern Trade Market Share

4.7% 14.8%

Source: Cargills PLC and JMSL Financial Reports

Cargills 49% Keells Super Arpico Laugfs Sunups other

15.5%

16%

Figure 3.Modern Trade Market Share

3.3. Porters 5 Force Analysis As we analyse the total industry by using Porters 5 force analysis overall modern trade industry is extremely high, this can be explained as follows (Porter), Annexure 5.

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4. Marketing Audit of JMSL
4.1. Strength and Weaknesses From the Marketing audit we have reviewed the current objectives, strategies and performance of JMSL in order to improve them in future.

Figure 4. JMSL Strength & Weaknesses

As per the situational analysis of JMSL the main strength is that they provide 2 years internship programme to work in Keells Super through NAITA vocational institute and they get paid an allowance, and the second is International consultancy obtained from Tesco and Wal-Mart. The crucial weakness is the high staff turnover, this is due to employees leave the company after obtained the training and to move or head hunted, and this scenario applicable to the industry as well, and the other is the decline of market share , the main reason for this is the growth of Cargills with increasing outlets. for other Strength and weaknesses see the Annexure 6.

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4.2. Present Target Consumer of Keells super Upper Class Earning more than Rs.100K a month. Metropolitan statistical areas Always use a vehicle to do the day to day shopping needs Industrialist, businessman and Top executives. English speaking consumers.

Upper-Middle Class Earning more than Rs.50K a month. Often use a vehicle for shopping Executives and Educated professionals

5. Current Positioning map of Modern Trade in Sri Lanka

H

Value addition & Quality

L
Figure 5. Current Positioning map of modern Trade in SL

Price

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Positioning has been defined as the place a product occupies in a given market, as perceived by the relevant group of customers; that group of customers is known as the target segment of the market (Yoram, 1984) National census department has segmented the modern trade market as follows; Slow Growth 20% of the Population 50% of National Income

Uppe class
Growing Market 60% of the Population 40% of the National Income

Middle Class

Lower Class
Source: National Census Department 2010
Figure 6. Market Segment

To be converted

Value for Money mindset -Earning less Than Rs.50K -Average jobs And education. -Large in Numbers. -More focus on Day to day Needs

6. Marketing Mistake of Keells Super

As per the above ,Keells Super positioned as a high quality, premium super market chain and trying to come close to the low price market segment without changing their position in consumers minds. Because of this Wrong perception Created by confused positioning. On the other hand Cargills enjoy the position as market leader by catering to the rising market segment in terms of Value for money, convenient shopping.

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6.1. Evolution of the Blunder Keells Super and Cargills was started an era where super markets percieved as a place for upper class and luxury shopping. Then Cargills was adopted the market penetration strategy and caputered the growing market with Lowest price campaign (see Annexure 7) and acquisitions of Park & shop chain and Sentra chain, The Arpico and Laugfs entered to the modern trade market providing more competitive environment for Keells Super. Result of this Keells got stuck in the upper market segment , the reason for this was not forecasting the growing market segment, but Cargills used this opportunity and started to capture the market share. 6.2. Benchmarking with the Market Leader Since Cargills is the market leader, and Keells was losing market share , we taken the financial KPIs of each of this super markets to benchmark . As extracted from the presentation the below data illustrates the Keels financial performance. (Reports, 2011)

Source: JMSL Financial Reports

Figure 7. Keells Financial Performance

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However Cargills identified the correct target market and shifted to right market position and became market leader in the modern trade market.

Source: Cargills PLC Annual Report (PLC, 2011)

Figure 8. Cargills Financial Performance

As per the above data figure 7 Keells is struggling to make profits even though the revenue was increasing, this is due to wrong market positioning. In 2008 during the recession period in the country, Keells made 21% revenue increase and growth in profit by penetrating to new markets and lower than lowest price campaign.

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6.3. Research to Identify Consumer perception Because of continues decline in profits and market share Keells Super conducted a survey to analyse the retail market and consumer perception. The consumer research was carried in various Keells Super and Cargills outlets (see Annexure 8) in Colombo and suburbs.

Source: Market Research

Figure 9. Consumer Research Data

The results were Cargills got ratings only for Price aspects where Keells Super rated above than Cargills on qualitative aspects. Also through the research it has been identified that Keells Super current customers are families, who shopping average 8 to 10 times a month is 42%. Out of the balance 58% most of the shopping will be done by males and its been identified as 52%.

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7. Measures taken by JMSL to defeat the mistake
Keells Super tried different strategies to change the position and the perception it had by modern trade consumers. Those are as follows;

7.1. Introduction of Elephant House Super Pola To overcome the blunder, Elephant house super pola was initially introduced in 2003 to attract the lower end and middle class market and also to compete with Cargills. Refer Annexure 9. Apart from the above reasons EHSP to failed due to un trained staff where Super pola staff was outsourced to Abans, where staff was not well trained and another reason is Super pola had only 2800 SKUs where an average super market need to have minimum of 7000 SKUs. Due to all these issues EHSP was withdrawn from the market after 18 months operation.

Figure 10. First EHSP at Wellawatta

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7.2. Lower than Lowest Price Campaign The main objective of this campaign to communicate to the consumers that Keells Super is not an over priced super market but a super market that caters to the common man. Refer Annexure 10.

Figure 11. Lower than Lowest Price Campaign

After the campaign in 2008 the following were the results; Increased the customer base from 87,000 to 181,000 and Revenue increase of 21% and Rs.7 Mn Profits see figure 7.

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7.3 Freshness & Quality Campaign While Keells super was running the lower than lowest price campaign there was a misunderstanding among consumers due to the lowest price introduced and the quality was compramised, because of this Freshness & Quality campaign was introduced. And this was also to safeguard the existing market on the price war of Quality & Value.

Figure 12. Freshness & Quality Campaign

8. Conclusion
As to conclude , Keells Super has taken many actions to overcome the blunder , the price war , increasing competition and losing market share, by introducing EHSP is the first action by JMSL and it was also become a blunder because of not focused on the correct segment, then lower than lowest price campaign was carried out , the results were positive towards Keells super where they actually gained a 100% growth on consumers switching. and the result of this Keells gained profit and revenue increase. But Keells could not keep up the price promise for long-term ,due to this the customer base drop to 50,000 and lost of profits as well see figure 7. Due to this continuous blunder and failure of Keells Super we have made some recommendations to regain its position and also to gain long term competitive advantages in the modern trade market.

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9. Recommendations
The first recommendations proposed based on Ansoff and Perters Generic strategies practice and applications are;

1. Re-Launch Super Pola or introduce a fresh retail brand to carter to the lower end market by.
Re-launch super pola as generic touch targeting the rural, suburban of the country, without making the same error made in 2003 with EHSP. Segment and target market, such as lower end and middle class where they shop their products weekly and value for money mind essential products not the luxury products. Keells should create a warfare with Cargills par with their activities. Communication should be clear to consumers , if not might lead again to failure. also create an atmosphere to feel as local with staff trained to use lame language with consumers and local . Since we recommend opening up at least 100 super pola outlets island wide JMSL need average 20Million per outlet, so JMSL can go in to an IPO to raise the funds. Since the JKH is the logistic partner for Lanka IOC, they can open up super pola on their fuel stations. Currently Lanka IOC have about 150 outlets around the country covering major towns.

2. Penetrate and defend the existing market share by

Keells Super should be further foreground to be the best in retail brand with values and highest quality such as HSBC credit card payments, bakery and pay or buy Union Assurance insurance policies. Increase the shopping varietys of K choice private labels , where currently it has on 87 labels. take measure on acquisition strategies to acquire Laugfs Super and other small super market chains.

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Tune up the online shopping arm which is E-Tailing by fresh home delivery with more geographical coverage, where currently in Colombo only with 1% market share and it can be increased more by widening its delivery coverage and tie up other online shopping site like Kapruka. Also advertise and educate people on online shopping and the benefits for the consumers such as time saving. Offer special discounts according to the consumer buying pattern.

3. Open New super market under the name Keells Extra This will be a new super market for the existing market under with a new brand identity with benchmarking Tesco outlet strategy. Introduce a high end luxurious hyper market specifically cater to upper class segment such as Tesco Extra, with this limited number of outlets with high health conscious organic foods with eco friendly environment, also sell imported global brands to cater to the Expatriates and for the consumers who live in luxury apartments and condominiums in Colombo. Also essentially carry out test marketing prior to launch these one stop shops and super pola.

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4. Become the Cost Leader Increase the direct sourcing both local and imported; such as going to the suppliers directly this would be advantage on provide supplies to super pola and Keells extra. Since the JKH logistics have alliance with North and East , they can get the best sourcing of Vegetables, Rice, Dairy and fresh from these areas by maintain a proper supply chain management. Also strength the supply chain with modern technologies such as low inventories and real-time merchandizing. Through the CSR arm of JKH John Keells Foundation can start sustainability in various parts of the country such as adopting a fishing village or farming. Use existing database of NEXUS loyalty card members to offer tailored promotions and track their consumer buying patterns.

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Bibliography
DeChernatony, L. a. (1998). Creating Powerful Brands (2 ed.). Oxford: Butterworth Heinemann. Lanka, C. B. (2010/2011). Annual Report. Nielsen, A. (2011). Research Data. PLC, C. C. (2011). Annual Report. Colombo: Cargills Ceylon PLC. Porter, M. E. Competitive Strategy. In Techniques for Analyzing Industries and Competitors. Reports, J. F. (2011). Colombo: JayKay Marketing (Pvt) Ltd. Yoram, W. (1984). Going to market:new twists for some old tricks. Wharton Magazine (4).

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Annexure
1.JMSL Brief The company profile of JMSL is a subsidiary of John Keells Holdings established in 1991; main function is administration and management of Keells Super super markets, currently 42 branches and 6 franchised outlets with Super K brand. Current employee force is 1800 and 12000 stock keeping units in outlets. Most recent adaptation of JMSL is to move towards apparel and fashion under the brand KEKO. The brand equity of Keells Super is Rs.8 Billion currently and the Vision is to be one of the leading brands in retail in the region.

2. Positioning Errors
This is where the customer has a blurred and unclear idea of the brand. Under Positioning This occurs when customers cannot readily identify the brand and its features. Where the consumers have too limited awareness of the brand, this happen Over Positioning when organizations try to create idea of the product in the mind than the actual product attributes. Confused Positioning Double Positioning This is where consumers have a confused opinion of the brand. Where in which consumers do not claims of the brand.

3.Retai Markt Landscape Based on the above research information Modern Trade market share is just 16.4% compared to the Traditional trade market share 83.6%. It is a huge opportunity for Keells Super to enter to the untapped markets with different strategies which will be proposed in the recommendations. And also the modern trade market is growing annually with 34% which means more consumers are shopping through supermarkets and new chains are been also introduced ,such as Arpico, Laufs and Sunup. However from the above information we can see there is a huge growth potential for Keells Super in the modern trade market.

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4. Turnover Vs Outlets comparison in 2010/2011

2010/2011 Turnover in LKR Bn & No.of Outlets Laugfs Sunups Arpico Super Keells Super Cargills Food 0 50 100 Keells Super 10.2 42 Outlets 150 200

Cargills Food Turnover Bn 29 Outlets 163

Arpico Super Laugfs Sunups 10.1 3.1 11 25

The fastest growing super market chain is Cargills which has 163 outlets; the second follower is Keells Super with 42 outlets and followed by Arpico super centre and Laugfs. By analysing the above information it is clear that is even though Cargills have a faster growth but their turnover is lower when compared with higher number of outlets it has , on the other hand where keells Super have only have 42 outlets but the turnover is high.

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5. Porters 5 Force Analysis HIGH
Threat of new entrants

HIGH
Bargaining power of suppliers

HIGH

Industry Rivalry

Bargaining power of customers

Industry is Extremely High Competitive

Threat of substitutes

HIGH

Industry Rivalry such as large number of Super markets, Slow market Growth, High Fixed costs, Low levels of product differentiation. Threat of New entrants Economies of scale, less restrictions to open a super market, little brand franchise. Bargaining power of Customers Concentrated, mare choices for consumers. Threat of Substitutes Traditional shops and other mum & pop shops. Bargaining power of suppliers suppliers concentrated, powerful consumers, cost to switch suppliers.

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6. JMSL, Keells Super Audit
STRENGTHS 1. Joh Keells brand strength worth Rs.65 Billion. 2. Extremely motivated and trained staff. 3. Conveniently located to cater the target market. 4. Strong IT backbone with SAP. 5. Extra high quality and hygiene products 6. Consultancy from International experts such as Tesco and Wal-Mart. 7. Trading up consumers by following other players. WEAKNESSES 1. tremendously high rivalry within the industry 2. Very high staff turnover over the Keells Super as well as in the industry, which is 120% per annum. 3. Price has become the main differentiator above all the other attributes. 4. Decrease in market share of keells super from 25% to 17% and rapid growth of Cargills and Arpico.

7. Expansion of Cargills

Source: Cargills PLC Annual Report

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8. Consumer Research Information.

The Consumer research was carried out in following locations and done for 100 consumers KEELLS outlets- Narahenpita, Mahabage, Marrine drive and Kiribathgoda Cargills outlets Nawala, Wattala, Park road and Kadawatha

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9.Elephant House Super Pola To overcome the blunder, Elephant house super pola was initially introduced in 2003 to attract the lower end and middle class market and also to compete with Cargills. Initially it was open on premier locations such as Wellawatta, Union Place, Borella where most of the high class consumers shop, first mistake was choosing the wromg location, this was confused the consumers further, because Elephant House brand had sophisticated image on consumers. So wrong communication was created in the market and consumers , another reason EHSP to fail was the Union issues. Apart from the above reasons EHSP to failed due to un trained staff where Super pola staff was outsourced to Abans, where staff was not well trained and another reason is Super pola had only 2800 SKUs where an average super market need to have minimum of 7000 SKUs. Due to all these issues EHSP was withdrawn from the market after 18 months operation.

10. Lower than Lowest price campaign

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After the Elephant house super pola was withdrawn from the market Keells Super was continuously losing the market share and losing profit, so after 5 years Keells came out with the tactical campaign Lower than Lowest Price in 2008 to attack the Cargills Lowest price campaign.

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