Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Strategic Brand Management and Global Mass Retailer
Elisa Rancati*
The competition between manufacturers and retailers has been focused
on concerns like innovation, new technologies, relationship marketing. In
global markets this competition is based also in own brand policy and
private labels, through those retailers are trying to conquer consumers’
loyalty to the detriment to suppliers. This paper examines how global
mass retail chains attempt to become more than simple retailers, not only
through their own branded products but also through the expansion of
their activity portfolio, by offering to their customers new services and
shopping experiences. Emblematic examples of these competitive
dynamics come from two global mass retailers: Asda and Carrefour.
Keywords: Brand, Global Mass Retailer, Private Equity (JEL Codes: M51TI, M30 and
M31)
1. Introduction
In global markets, mass retailers compete between each other in extensive and dynamic
markets, basing their business on market-space competition and time-based competition.
The current situation of oversupply together with financial and crisis consumption makes
the demand unstable and unpredictable, increasing consumers' disloyalty and products
switching. In order to face this situation, global mass retailers should adopt a marketdriven management and invest in intangible elements.
Moreover global retail chains attempt to become more than simple retailers, not only
through their own branded products but also through the expansion of their activity
portfolio, by offering to their customers new services and shopping experiences.
Retail sector has deeply changed from its birth and today retail place is not only where to
sale goods but it is a place where retailers get in touch with consumers. For these reasons
they are evaluated as critical point of the supply chain and they deserve a deeper
analysis.
2. Literature Review
Strategic brand management has the purpose of creating value for the company by
managing a brand in a proper way. It involves the design and implementation of
marketing actions in order to build, manage and measure brand equity.
Neverthless branding is not only marketing and communication staff's prerogative but it is
influenced by the actions of the other parts of the company, which ensure successful
branding policy and business growth. In fact, the marketing process, which is certainly
indispensable, it's just the last phase of a procedure that involves all company's
resources, which aim is to pursue strategic intent by creating a difference. For these
reasons branding requires corporate long-term participation and high-level skills and
sources.
*Dr. Elisa Rancati, Department of Economics, Management and Statistics Section of Management (ISTEI),
University of Milan-Bicocca, Italy . Email : elisa.rancati@unimib.it
Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
According to Keller, Apéria and Georgson (2011) a strategic brand management process
is lined out by four steps: identifying and establishing brand positioning, which means
understand what would the brand acts for and which position occupies with respect to the
competitors.
The aim of brand positioning is to design the company's offer and its image so that it
occupies a distinct and valued place in the target customer's mind. The main purpose of
strategic brand positioning is to create brand superiority in the mind of customers, in order
to maximize the potential profit of the company, by underlining the points of differences
with the competitors' brand and by alleviating concerns about any possible inconvenience.
The second step is planning and implementing brand campaigns, by choosing brand
elements, which allow the consumer to recognize the product among other brands and
differentiated it from the other ones; by integrating the brand into marketing activities,
which are the first step to build brand equity, in order to create strong, favourable and
unique associations with the brand; by exploiting secondary associations, i.e. brand linked
to sporting or cultural events, to spokespeople, to other brands or to characters. The third
step is measuring and interpreting brand performance, usually by a brand audit, which
analyses the health of the brand, discovers source of equity and suggested ways to exploit
and improve that equity. A useful tool to measure and interpret brand performance is the
brand value chain, which tracks the process of value creation in order to better understand
the financial effect of brand marketing expenditures and investments and to direct
marketing research efforts. The fourth is growing and sustain brand equity. Managing
brand equity means managing brands among other brands, over many categories, over
time and across market segments. Analysing the process presented above makes clear
that brand is a long-term vision, which sometimes could be confused with company's
strategy. But if company's ultimate raison d'être is profits generation and jobs creation, the
brand purpose is a recent concept and could be defined as exerting a powerful and
creative influence on a market. A brand's strength derives from the company's financial
and human capital, but its energy comes from its specific niche, vision and ideals. In fact
what joins the different products of a brand is not a marque or an external sign but the
common vision and ideals embodied in them. The most powerful brands could be
compared to a pyramid, which is characterised by two different processes: the so-called
top-down brand management process and bottom-up brand perception process operated
by the consumers. At the top of the pyramid there is the brand's vision and purpose, which
is followed down by the core brand values, represented by the brand general style of
communication, whose way of being transmits brand's personality and unique character.
The fourth level stays brand's image features, which usually are four or five and come
from the overall impression the consumers have of the brand and materialised in the
products of the brand, in its communication and actions. The last level is the one
concerning products themselves and their positioning in their respective segments. If the
brand management process begins with a vision or an idea, the Brand perception process
starts at the bottom of the pyramid with what is real and tangible. The wider the base is,
the more the consumers will be confused about the brand vision. In fact would be difficult
for the customers to believe that all those products come from the same idea and
purpose. Every brand can choose its own values and positioning but once decided and
advertised, they become a benchmark for consumer satisfaction. This is why a brand can't
change its identity but must preserve it through the time and increase its relevance. A
brand must be loyal to itself, to its mission and to its customers. In fact a brand becomes
trustworthy only through persistence and repetition of its values. The relationship between
a brand and its clients could be considered as a brand contract, which is an economic
Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
contract and not a legal one. This is a difference between brand and other symbol of
quality, like quality seals and certifications. Brands do not legally certify a set of
characteristics in a product but with the frequent use of a product with those features, a
brand gains the same importance as a quality seal or a certification in the mind of
consumers. For these reasons a company should manage its brands carefully, in order to
preserve its credibility in the eyes of consumers, and should also pay attention to the
brand's slogan, which cannot create too many expectations in customer's mind with the
risk of disappoint them. Brand's slogan, in fact, is meant to embody the brand contract and
often good slogans are rejected by the managing directors because they could generate
too much commitment for the company.
3. The Methodology
In order to test our hypothesis, we have analysed in depth two case studies: Asda and
Carrefour. The comparison between these two retailers is not accidental. In fact, as Asda
belongs the American giant Wal-Mart is the first retailer in the World and Carrefour is the
second one in the World and the first one in Europe. These two company pursue the
objective to give to the consumer good quality products at low prices but in two different
ways.
For both the companies the following characteristics are analysed business strategy;
brands and format portfolio.
4. The Findings
Asda is nowadays Britain’s second retailer by market share after Tesco, with a grocery
market share of 16,5% in December 2010. This supermarket chain retails food, clothing,
general commodities, toys, financial services and provides a mobile telephone network:
Asda mobile. As subsidiary of Walmart (since 1999), Asda’s promotions are usually based
on price and convenience. In fact, its slogan is “saving your money every day”. The head
quarter is based at Asda house in Leeds, where Asda Stores Limited was founded in
1949.
According to Vakhariya and Verma (2007), in the long run, ASDA's growth prospect had
been hampered by the policy of 'Everyday low pricing'.
The company affirms that its strategy is based on its mission, purpose and values, which
are essential to guide its actions to make the business better and better. ASDA's strategy
follows four principles: it is based on its customers, its employees, its operating model and
its shareholders. The customer's issue and the 'five pledges' have already been analysed
above but it's important to underline that the main selling point for the company is the
respect for the clients, who feel closer and closer to the store. The main strategy behind
the selling of products in ASDA is "Customer buys benefits not the features". For this
reason, the company allows the customers to return a product within 28 days if they are
not satisfied and takes care of them by putting braille price stickers on products, by
providing scooters to disabled clients and helping them to pack their purchase. About the
operating model, ASDA affirms that its low cost model allows the company to be more
productive and lower prices by some small actions that makes the difference every day.
These small actions listed by the company are for example saving electricity, recycling
whatever is possible to save, repairing damages instantly to avoid safety issues and
Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
employees treating company's money as it is their own money. These are certainly good
practices that allow saving money and reducing costs but the company has been rapped
several times for its inclination to 'cut costs at any cost'. In fact ASDA was accused of
predatory pricing strategy, which wipes out local competition and local jobs, of violating
workers’ rights, of making its suppliers cutting wages and ignoring health and safety
regulations. Doubtless the company uses its bargaining power to set hard conditions for its
supplier, exploits economy of scale and asks to its employees to make efforts in order to
maintain its competitive advantage based on low prices strategy. Cutting costs even in a
situation of growth through core stores, new formats and new channels guarantees higher
profits, which means a richer ROI, in order to satisfy the shareholders.
ASDA's private labels are indeed very strong and popular among consumers. In 2005 the
45% share in grocery was held by its private labels and the 50% share in non-food in
relation to its total store sales. The company has a portfolio of six own brand labels, each
one with its features, peculiarity and positioning. Through these six brands, the company
tries to cover all the segments of its customers, in order to gain loyalty of always more
customers. The private labels are: Asda Smart Price. It counts 580 products of standard,
entry level in each category. The products are both food and general merchandise
essentials, all offered at an unbeatable price but with no compromise on quality.
Strategically this brand position itself against value or economy offers of competitors but
it's consistently comparative the best; Asda Brand. It counts 5,500 products defined as
'Best in market' everyday food and general merchandise items. This brand offers a better
value alternative to the leading brands or the solution where no brand equivalent exists;
Asda Good for You. It counts 110 items. Special line low in fat with salt, sugar and calories
controlled with respect to ordinary Asda Brand. This brands match or better
manufacturers' or competitors' healthy living brands; Asda Organics. It counts 140
products and is composed by organic food and drinks to suit all needs and occasions, and
meets UK Register of Organic Food Standards. The company underlines that its organic
food are affordable, accessible and comes from a trustworthy brand. This private label has
the same or even better quality than manufacturers or competitors' organic brands; Asda
Great Stuff. It counts 100 items, designed to help mothers give their children healthy
meals, drinks and snacks. It matches or betters the manufacturers or competitors kids’
brands; Asda Extra Special. It counts 610 best quality products. It's the company's
premium brand, created to be the same as or better than the manufacturers or
competitors' premium brands. The purpose of this brand is to offer great food that costs
less, in spite of the products are the best food and drink, with top quality ingredients, and
celebrate provenance and originality.
In addition to these private labels, ASDA has developed its own clothing brand: George.
Also for clothes the purpose of the company is providing high quality at accessible price.
ASDA is so sure of the quality of its brand that launched on the market a permanent 100
days quality guarantee on all its clothes and moreover, everything returned to the store is
recycled. George clothing has not only good quality but also style and innovation and the
company has started a project, in partnership with a German government overseas
agency, whose aim is to improve workers skills, pay and factory productivity in
Bangladesh, while decreasing working hours and increasing the quality of clothing.
In recent years ASDA has started to diversify its store formats, in order to be more
competitive with respect to Tesco and Sainsbury's, to solve its problems with planning
regulations for big box stores and to satisfy consumers' new needs for shopping in the city
Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
centres. Nowadays the company has four store formats: Asda Supercentres, Asda
Superstores, Asda supermarkets and Asda Living. Asda supercentres combine the best of
Wal-Mart and the widest range, best value and friendliest service in the business, which
characterise ASDA. It works as a local store but also attracts consumers from outside its
range, thanks to its size (average of 85,000 sq. ft. sales area) and variety (40,000
products).
Asda superstore is the core format of the company and is the format with the large
number of centres. This format offers a wide range of products, both food and general
merchandise (35,000 items), and has an average surface of 46,500 sq. ft.
Asda Supermarkets is the most recent and successful format and it's ideal for the
customers living in smaller cities and suburban areas. This format allows ASDA to bring its
products to towns that had not access to its items, services and low prices. They have a
minor surface, 17,000 sq. ft., and sell 24,000 products. Asda Living is the only one format,
which is not selling food but only clothing and general merchandise products at low prices.
This format has an average area of 28,000 sq. ft. and sells about 23,000 non-food items.
Carrefour S.A. is a French multinational retailer, the largest one in Europe and the second
largest one by revenues in the World, after the American giant Wal-Mart. The company's
head quarter is in Boulogne Billancourt, in Greater Paris, although the first supermarket
was opened in Annecy, Haute-Savoie in 1960. Carrefour in French means "crossroads", in
fact the first supermarket was located near a crossroads. Carrefour's success is due to its
most famous store format: the hypermarket, specialized in selling grocery and retail items,
including hardware, cooking, household items and perishable and non-perishable food
items.
The company is located mostly in Europe but operates also in four out of seven
continents, in fact has been expanding into many new areas during the last years, thanks
to its focus con new and emerging markets.
When Carrefour born, it had immediately a big success because of its innovative retail
format: the Hypermarket, which is a combination of a supermarket and a department
store, all under the same roof. Nowadays a Carrefour Super centre can have an area of
210,000 square meters and sell over 30,000 products. The popularity of this format is due
typically to three factors: products, locations and prices. In fact, hypermarkets or
supercentres usually sell products, branded goods at lower prices and they are located
out-of-town, which makes them more easily accessible for vehicles and allows exploiting
huge areas for parks and for the hypermarket itself. In particular, with reference to lower
prices, Carrefour adopted a price strategy called 'high-low prices' which means that the
price in average are relatively high but when there is a sale promotion the price is
extremely low, in opposition to Wal-Mart/Asda strategy which is 'every day low price'.
In addition to 'high-low prices' and to hypermarkets, the company adopted two more
strategies: diversification of retail formats, in order to satisfy all the customer needs and to
be present in every aspect of consumers' life, and globalisation. Carrefour began to
expand abroad hereafter the planning limitation set by the French government, which
slowed down the company's national expansion and sharpened competition. This strategy
has been successful in the most of cases but sometimes, like for the American or
Japanese market, was a failure.
Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
Nowadays Carrefour's main strategy is investing in store renovation and in prices, in order
to restore its success and profitability and to create the opportunity for a further
development. In particular, profitability should growth by investing in countries where the
company's strategic position is strong, by continuing improving its environmental and
social responsibility and by making efforts to increase sales, through attractive commercial
offers. In addition the company will strengthen its financial structure, by staying disciplined
and reducing its debts, and will ease its operating methods in order to be more effective
and reduce costs.
Carrefour retail format strategy revealed a success, because with its six store formats, the
company is able to reach every segment of consumers, everywhere and in every moment
of the day. In the Carrefour's format portfolio it's possible to find: Hypermarkets. This
format is perfect for major shopping trips, thanks to its wide offer of food and non-food
products and its low prices. Customers can save money with loyalty programmes, sales
campaigns and special offers and enjoy a sales area between 2,400 and 23,000 square
meters. To better satisfy customers’ needs, the company is working for reducing the time
that consumers have to wait at the checkout counters; Supermarkets. This is the format in
which food is predominant, and mixes convenience, high-quality fresh and daily products.
Carrefour guarantees for the quality and the freshness of the food sold and for its
convenience; Convenience stores. This format is particularly appreciated and popular
because combines good location, close to home or on the way back from work, long
opening hours, products that satisfy everyone's needs and a lot of services. In particular it
is possible to distinguish between two types of convenience stores: 'Express' is for daily
purchases while 'City' offers a range of ready-to-eat products; Cash & Carry stores. This
format has been created especially for catering and food business professionals and has
a range of food and non-food items at wholesale prices mixed with services, which support
caterers and professional customers. For example the opening time has been adapted to
the lifestyle of professional of food business; Hypercash stores. In these stores products
are presented in pallets and sold in big quantities at wholesale prices. Both individuals and
professional consumers can purchase in these stores; Multichannel Retail. The progress
in technology allows Carrefour to offer to its customer the possibility of shop in-store or
online and then pick up from a collection point. In order to please its customers, the
company is increasing online shopping options and providing more drives. Moreover, it's
now possible to shop directly from a mobile phone, by using the 'mes courses Carrefour'
application, and collect it at a drive or have the purchases delivered. Even if Carrefour was
one of the first to launch own branded products, it seems that it doesn't pay so much
attention to its private label. Of course the company states that its products are high
quality and cheaper but it doesn't emphasize their contribution to improve stores' offer and
on the contrary affirms that own branded products are used to complete Carrefour's offer
in addition to Major brand products. Even Carrefour's website does not draw enough
attention to them and the distinction between the categories is not completely clear.
However, after a reorganisation of the brand portfolio based on shoppers' expectations
and further researches, it is possible to divide Carrefour's offer into three categories:
Carrefour for everyday. It included more than 8,000 items and is displayed often on eye
level, a key shelf space. Carrefour for everyday has some subcategories like Carrefour
Baby, Carrefour Kids and Carrefour Lite; Carrefour Agir. It is the own brand dedicated to
Organic and Ethical products, whose simple material and form packaging allows
conveying organic contents and ethical concerns, without distracting the consumers;
Carrefour Selection. It's the brand of premium products A mix of classical and unexpected
graphics was used to convey Carrefour Selection’s premium, upscale range. The label
Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
appears sophisticated thanks to the typography choices and the use of color black.
The World Bank (1995) mentioned that a Bangladeshi bank assuming 40 percent of loans
to be non-performing required a spread of 20 percent between lending rates and the
bank’s costs of funds just to break-even.
5. Summary and Conclusions
By way of concluding, Asda's and Carrefour's values are quite similar, in fact both bases
themselves on focusing on customers', paying attention to the community and being
solidarity with it, being respectful of their employees, offering high-quality products at low
prices, certifying their suppliers and being sensitive to environmental and fair trade issues.
All these values bring benefits to the brand and as a consequence to the Retail chain and
company. This demonstrate that the brand issue, brand equity and brand management
included, is one of the most important in global markets and could be the key to regain the
consumers loyalty, which in dynamic are by definition unloyal.
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