3/20/2012
2012
BRAND MANAGEMENT – ASSIGNMENT 3
Aruba Sharif | MBA 2k10 Marketing
Table of Contents
Analyze Olpers with respect to Brand Relationship Typology Forms ........................................................... 3
1
2
Brand Hierarchy .................................................................................................................................... 3
1.1
Corporate Brand ........................................................................................................................... 3
1.2
Range Brand .................................................................................................................................. 3
1.3
Product line Brands ....................................................................................................................... 4
Brand Relationship Typology Forms ..................................................................................................... 4
2.1
Relationships Focused................................................................................................................... 4
2.1.1
Arranged Marriages .............................................................................................................. 4
2.1.2
Casual Friends/buddies ......................................................................................................... 4
2.1.3
Best Friendships .................................................................................................................... 5
2.1.4
Kinships ................................................................................................................................. 5
2.1.5
Committed Partnerships ....................................................................................................... 5
2.1.6
Marriages of Convenience .................................................................................................... 6
2.1.7
Courtships ............................................................................................................................. 6
2.1.8
Dependencies........................................................................................................................ 6
2.2
Relationships not focused ............................................................................................................. 7
2.2.1
Secret Affairs ......................................................................................................................... 7
2.2.2
Flings ..................................................................................................................................... 7
2.2.3
Compartmentalized Friendships ........................................................................................... 7
2.2.4
Enslavements ........................................................................................................................ 8
2.2.5
Childhood Friendships........................................................................................................... 8
2.3
Conclusion ..................................................................................................................................... 8
Evaluate Olpers through Passion Brand Strategy ......................................................................................... 9
1.
2.
Passion Brand Strategy ......................................................................................................................... 9
1.1
Brand Performance ....................................................................................................................... 9
1.2
Brand Perception ........................................................................................................................ 11
1.3
The Brand Inside ......................................................................................................................... 12
1.4
Brand Currency ........................................................................................................................... 14
Conclusion ........................................................................................................................................... 15
Evaluate Olpers viz a viz Engro Foods dairy sector financial ratios by looking at their financial data.
Calculate financial ratios and interpret them. ............................................................................................ 16
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1.
2.
3
Analysis of Profitability Ratios............................................................................................................. 17
1.1
Return on Equity ......................................................................................................................... 17
1.2
Return on Assets ......................................................................................................................... 17
1.3
Return on Capital Employed ....................................................................................................... 18
1.4
Net Profit Margin ........................................................................................................................ 19
1.5
Gross Margin ............................................................................................................................... 19
1.6
Operating Margin ........................................................................................................................ 20
1.7
Conclusion ................................................................................................................................... 21
Liquidity Ratios .................................................................................................................................... 22
2.1
Current Ratio ............................................................................................................................... 22
2.2
Quick Ratio .................................................................................................................................. 22
2.3
Cash Ratio ................................................................................................................................... 23
2.4
Liquidity....................................................................................................................................... 23
Financial Performance ........................................................................................................................ 23
References .................................................................................................................................................. 24
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Analyze Olpers with respect to Brand
Relationship Typology Forms
1 Brand Hierarchy
1.1 Corporate Brand
Engro Corporation/Engro Foods is the corporate brand name under which several range and
product line brands come.
1.2 Range Brand
Olpers is a range brand as it spreads across several product lines like milk, cream, flavored milk
and ice-creams. Hence, it is classified as a range brand.
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1.3 Product line Brands
Product line brands include Olpers Cream, Olpers Owesome (flavored milk), Olpers Lite (low fat
milk) and Olpers Omore (ice-creams). These have sub brands and then branded features under
their categories.
2 Brand Relationship Typology Forms
Fournier developed a typology of different consumer-brand relationship forms. These forms
help us in understanding our consumer’s relationship with our brand and with our competitors.
This provides insight in developing strategies for our brand and establishing strong relationship
with our consumers.
2.1 Relationships Focused
Following are the relationship forms that are valued and strategy is made to further enhance
and strengthen them:
2.1.1
Arranged Marriages
Here, by definition third party has a strong hold in decision making related to use and purchase
of the product. One has a non-voluntary union imposed by the choice of third party. These are
usually long term relations but with very less emotional attachment with the brand.
Olpers has developed this relationship with consumers that are not involved in grocery
purchasing or decisions about kitchen related stuff in Pakistan. These include kids and also
males (sons, husbands, and fathers). These are the consumers who do not consume Olpers by
choice. The consumption is because their mothers or wives have a preference for the brand and
either buy it themselves or ask for this brand if someone else is responsible for grocery
shopping.
2.1.2
Casual Friends/buddies
Casual friends are the ones with which consumers have less intimacy and affection. They do not
expect much reward and includes occasional engagement with the brand.
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Olpers do not focus on this relationship with its consumers. It has an aim of establishing long
term relations and occasional purchases are not much focused. Milk has a specific natural taste
and that brand is bought which suits our palate. Some like Olpers taste and others prefer Nestle
MilkPak. For MilkPak consumers, Olpers is a casual friend in case they do not find their brand in
the market and do not have any choice except buying Olpers. This is a short time relation
usually lasting one time purchase only.
2.1.3
Best Friendships
These are defined as a voluntary union of consumers and brands based on reciprocity principal
which ensures continuous positive rewards.
This relationship also shows one’s self and
partner’s image and a reflection of personal interests. This is an honest and intimate friendship.
Olpers main focus is on strengthening this relationship. From package colors to size to
advertising campaigns, each marketing tool is used to attract consumers and tell them this is
the brand of their choice. Cultural theme in adverts signifies intimacy and reflection of user
imagery. Other rewards of consuming Olpers are the natural taste they guarantee along with
health safety and nourishment.
2.1.4
Kinships
These are non-voluntary but long term unions with lineage ties. These ties are titled as kinships
due to influence of lineage.
Olpers is relatively new brand in the market and does not have kinships established at a higher
level. It has now made a strong position in the market and also focuses on kinship. As it is
precipitating in its target audience, it is increasing kinships with time. Families using Olpers
influence their close relatives’ choice leading to their switching to Olpers.
2.1.5
Committed Partnerships
This relationship is long term, voluntary and has high social support. It consists of trust,
intimacy and love. It has immense level of loyalty and commitment.
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Olpers looks into developing and nourishing such relationships with their consumers. They
provide all the features according to consumers’ tastes and want them to adopt the brand
completely. Their advertising makes it more obvious for consumers to establish ties that remain
strong despite adversities like non-availability in the market. Olpers reminds consumers time
and again of how they value their consumers and would maintain a relation of trust by
providing high quality of product.
2.1.6
Marriages of Convenience
These long termed, highly committed relationships are a result of environmental influence
rather than deliberate choices.
Olpers’ branding strategies do not focus on developing this relationship. Although initially (after
its launch), Olpers had this relationship as it had intensive distribution with comparatively less
price as compared to the competitors. So, the brand was purchased due to its distinctive
presence in the market rather than making a deliberate choice. After that, brand focused on
strengthening this relationship and turning it into loyalty.
2.1.7
Courtships
Courtships are interim relationship leads to committed partnerships.
As they are a leading source to a committed partnership of consumer and the brand so these
are highly priced for Olpers. This is the relation in which loyalty towards the brand is gained. A
problem like dissatisfaction from the quality or taste of the product can lead to a hate
relationship.
2.1.8
Dependencies
This is an obsessive, highly emotional relation where the other is irreplaceable. High tolerance
for not “up to the mark” performance is observed.
Olpers still does not have this relationship where consumers feel fixed with the brand. Olpers
should focus on creating such relations with its consumers and Olpers has started doing that by
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introducing Olpers cream, Olpers Lite, Olpers Omore and Olpers Owesome which covers all
needs of dairy products of their consumers.
2.2 Relationships not focused
Following relationships are either due to non-voluntary union or do not exist currently so
Olpers yet does not focus on them:
2.2.1
Secret Affairs
These relationships are highly emotional and are kept private. It is also considered risky if this
relationship is exposed to others.
Olpers positions itself as a social brand with which people could associate with publically so this
relationship is not a part of Olpers’ brand relationship typology.
2.2.2
Flings
These are short term and time bounded relationships. They do not have commitment and
reciprocity of demands but do give high emotional rewards.
Olpers does not have this consumer brand relationship. They do not focus on making short
term, time bounded relationship with their consumers. They believe in giving value to their
consumers with suitable price and quality. They also ensure convenience in terms of tetra
packaging and more variants in terms of sizes and calories (Olpers Lite) according to consumers’
needs
2.2.3
Compartmentalized Friendships
It is highly specialized but having lower intimacy but higher socio-emotional rewards. It is also
situational confined. People can easily enter and exit this relation.
This relationship is only established when the brand one is using is not available and for the
time being they purchase Olpers instead. Olpers can turn these relations into long term and
high intimacy relationship.
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2.2.4
Enslavements
These are non-voluntary union which is imposed by the brands as they do not have any other
option. This union involves negative feelings and consumers play a subordinate’s role. (Chew,
2002)
Olpers does not make its consumers slaves. It focuses on developing loyal relationship with its
consumers by becoming their first choice and getting a positive mindshare.
2.2.5
Childhood Friendships
These include infrequent engagements which have high affection. It has a relation with one’s
earlier times and yields comfort and security. (Chew, 2002)
Olpers is relatively new brand as compared to its main competitors like Nestle MilkPak and
Haleeb. Childhood friendships will be developed with the Generation Z as it is a brand of their
childhood.
2.3 Conclusion
The above analysis shows that Olpers focuses on developing long term, intimate relationship
with its consumers rather than short lived, non-voluntary relationships.
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Evaluate Olpers through Passion Brand
Strategy
1. Passion Brand Strategy
This strategy consists of four important dimensions and helps an organization to evaluate its
marketing efforts. “What did we hope for?” are the estimated expectations of the brand that
can be calculated through weighted average method too where weights are given according to
industry significance of the measure and ratings are according to the performance of brand
with respect to competitors.
The four dimensions are as follows:
1.1
Brand Performance
These measures help in evaluating brand’s performance in the market place like high frequency
of purchases would indicate repeat purchases from the customer hence leading to more
loyalty. Similarly new customer generation would also contribute to the increment in volume.
Olpers
Brand
Performance
Measures
1
What did we hope
What did we
What will we
for?
get?
change?
Frequency of purchases 12%
10%
distribution
frequency
2
new customer
0.5 million
0.5 million
generation
3
customer churn
negative
-
4
loyalty
40 million
50 million
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5
volume growth
24%
22%
Capacity
Weighted Average Method:
Olpers
Measures
Rating (1-
Weights
Nestle MilkPak
Total
5)
1
Frequency of
Rating (1-
Weights
Total
5)
4
0.25
1
3
0.25
0.75
3
0.2
0.6
2
0.2
0.4
purchases
2
new customer
generation
3
customer churn
3
0.1
0.3
3
0.1
0.3
4
loyalty
4
0.25
1
3
0.25
0.75
5
volume growth
3
0.2
0.6
2
0.2
0.4
1
3.5
2.6
From the above tables, we see that Olpers is performing better as compared to its competitors
in the industry. As quoted by Engro Foods’ Annual Report of 2011, their consumers and volume
has grown more than expected. This shows that customers are getting more and more aware of
the brand, leading to purchases and then loyalty due to provision of quality.
Over a period of 6 years, Engro Foods has launched 11 brands out of which 7 brands are from
the dairy sector. Olpers has expanded its distribution network to 8 regions 310 towns and cities
and internationally to 18 states in USA, 4 provinces in Canada.
Engro Foods Annual Report 2011 states that the dairy sector had a volume growth of 22%
which lead to Profit growth 406%, revenue growth 42.6%, and gross profit 22.2% making Olpers
18th largest tetra pack consuming brand.
All the above facts establish that Olpers has performed well as a brand in the previous years.
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1.2
Brand Perception
Brand perception dimension deals with the images that consumer has due to brand awareness
created by messages sent by the company through advertising predominantly. The measures
are related to spontaneous awareness due to colors, name and packaging of Olpers whereas
prompted awareness is due to advertising and sales promotions. Effective campaigns help in
achieving both.
Olpers
Brand Perception
Measures
What did we hope What
for?
get?
1
prompted awareness
25%
30%
2
spontaneous
40%
40%
did
we What
will
change?
awareness
3
customer satisfaction
30%
35%
4
effective campaigns
45%
55%
Weighted Average Method:
Olpers
Measures
Rating (1- Weights
Nestle MilkPak
Total
5)
1
prompted
Rating (1- Weights
Total
5)
4
0.25
1
3
0.25
0.75
4
0.25
1
3
0.25
0.75
3
0.2
0.6
4
0.2
0.8
4
0.3
1.2
2
0.3
0.6
awareness
2
spontaneous
awareness
3
customer
satisfaction
4
effective
campaigns
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we
1
3.8
2.9
Olpers has a wonderfully attractive campaign that surrounds our culture and links the brand
with the lives of its consumer’s hence increasing awareness and recall of brand associations by
them. Olpers distinctive colors and different packaging helps consumers’ spontaneous
awareness by coming in direct contact with the brand itself.
Also, facts supporting our analysis include stats like 5 million consumers added this year along
with daily 50 million consumers starting their day with Olpers leading to Rs. 30 billion’s
revenue.
Olpers was also given “Best international outdoor campaign Award” at Outdoor Advertising
Convention 2011 which shows that campaigns’ effectiveness is also recognized internationally.
The above to dimensions show Olpers better performance, hence achieving half of the Passion
brand position.
1.3
The Brand Inside
This dimension talks about the internal organizational factors which make the brand stronger.
Employees, suppliers and organization’s environment are the main factors affecting this
dimension.
The
Brand
Inside
Measures
What did we hope What did we What
will
for?
get?
change?
Safety Measures
1
employee attrition rate
13%
15%
2
job satisfaction
40%
60%
3
employee incomings
20%
24%
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we
4
supplier
knowledge 15%
20%
(growth)
Weighted Average Method:
Olpers
Measures
Nestle MilkPak
Rating (1- Weights Total
Rating
5)
(1-5)
Weights
Total
1
employee attrition rate
3
0.15
0.45
3
0.15
0.45
2
job satisfaction
4
0.2
0.8
3
0.2
0.6
3
employee incomings
2
0.1
0.2
2
0.1
0.2
4
supplier
0.25
0.75
3
0.25
0.75
0.3
1.2
4
0.3
1.2
1
3.4
knowledge 3
(growth)
5
employees'
brand 4
knowledge
3.2
The above estimates were taken from Engro Foods Annual Report where it is stated that from
1000 employees in 2010, they now have 1243 employees in 2011. For increasing employee
satisfaction they have invested PKR 1271 million in their salaries and benefits. Supply chain has
also received significant share where it is estimated that it grew by 20%.
Adding to their brand inside, Engro Foods achieved “2010 Employer Choice Award” and “The
Best Place to Work 2010” by Pakistan Society of Human Resource Management and Engage
Human Resource. Employee attrition rate is said to be 15%. For this they have increased
investment in benefits given to employees and improving the environment they work in
specifically the work safety measures.
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1.4
Brand Currency
This dimension relates to the investment done in one’s brand image enhancement through
participating in community activities, corporate social responsibility and increasing brand trust
through them.
Brand
Currency
Measures
What did we hope What did we What
for?
get?
will
we
change?
1
brand trust
40%
42%
2
CSR
7%
5%
3
brand community activities
94 million
95.9 million
Funds Proportion
Weighted Average Method:
Olpers
Measures
Nestle MilkPak
Rating (1- Weights Total
Rating
5)
(1-5)
Weights
Total
1
brand trust
4
0.4
1.6
3
0.4
1.2
2
CSR
4
0.25
1
2
0.25
0.5
3
brand
community 4
0.35
1.4
3
0.35
1.05
1
4
activities
2.75
The above analysis shows that Olpers has actively participated in social welfare activities like
supporting education sector, rural support programs and natural disasters fund raising. Facts
like the following help in substantiating our analysis:

PKR 11 million donations to education, environment, disasters
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
Giving flood affected people PKR 7.5 million and investing PKR 77.4 million in Khushaal
Livestock Project

Collaborating with CARE foundation and helping 800 students to get education
2. Conclusion
The above measures and their analysis shows that by far Olpers is successful in becoming a
Passion Brand for consumers. It has established all the tools that lead to its success in the
market. It needs to continue measuring its performance on all four dimensions for a holistic
picture for their brand.
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Evaluate Olpers viz a viz Engro Foods
dairy sector financial ratios by looking at
their financial data. Calculate financial
ratios and interpret them.
Financial Data
profit
equity
assets
sales
current
assets
cash
short term
debt
2009
-433
3371
9005
14665
2569
2010
176
5124
12460
20945
3738
2011
891
7237
16639
29859
6369
148
1997
180
2522
351
3481
Financial Ratios
2009
2010
2011
(12.84)
3.43
12.31
(4.81)
-7.1
1.41
2.1
5.35
7.9
(2.95)
17.1
6
0.84
21
17
2.98
22.2
16.6
1.30
1.50
1.80
Profitability Ratios
Return on Equity
Return on Assets
Return on capital employed
(ROCE)
Net Profit Margin
Gross Margin
Operating Margin
Liquidity Ratios
Current Ratio
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Quick Ratio
Cash Ratio
0.6
0.5
0.9
0.07
0.07
0.10
1. Analysis of Profitability Ratios
1.1
Return on Equity
A growing trend is seen in ROE which signifies that managers at Olpers are using shareholder
funds effectively as they are turning equity investment into higher profits.
Return on Equity
15.00
10.00
5.00
(5.00)
2009
2010
2011
Return on
Equity
(10.00)
(15.00)
In 2009, the ratio turned out to be negative as the brand was still making its place in the market
hence not earning many profits. Equity was greater as Olpers had investment from
shareholders to strengthen the brand.
1.2
Return on Assets
Similar trend is observed in historic analysis of ROA of the past three years. This ratio shows
that the firm is getting return on its resources.
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Return on Assets
6.00
4.00
2.00
Return on
Assets
(2.00)
2009
2010
2011
(4.00)
(6.00)
Here, assets increased in 2009 due to addition of a plant facility in North (Sahiwal). Due to
increase in assets which were still not functional, lead to a negative ratio.
1.3
Return on Capital Employed
This ratio helps in measuring effective use of non-operating sources of funds by getting
adequate returns on them. This is usually taken as a more reliable and clear ratio than ROA.
Capital employed includes all liabilities and shareholders’ wealth.
Return on capital employed
(ROCE)
10
5
0
2009
2010
2011
Return on
capital
employed
(ROCE)
-5
-10
Again, returns were low as compared to the liabilities as loan was taken to establish state of the
art plant in North which increased the liabilities. Profits were initially low as Olpers was
competing with its rivals and making its position in the industry.
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1.4
Net Profit Margin
This ratio exhibits profits on every Rupee of sales. This reflects an organization’s strategy in the
industry too.
Net Profit Margin
4.00
3.00
2.00
1.00
(1.00)
2009
2010
2011
Net Profit
Margin
(2.00)
(3.00)
(4.00)
Net Profit Margin increases immensely after investment in long term assets is done. Profits
count more and more on every rupee of sales which means that cost of goods sold is being
managed successfully by Olpers hence leading to better profits. It is also efficiently reducing its
operational costs too. Also financing costs are also taken care of.
1.5
Gross Margin
This ratio depicts marginal contribution of every rupee of sales. Gross profit is calculated after
subtracting cost of goods sold from the sales.
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Gross Margin
25
20
15
Gross Margin
10
5
0
2009
2010
2011
This ratio indicates that Olpers has effectively managed cost of goods sold and divided it in
smaller and smaller proportions of sales hence increasing the sales revenue. This shows that
sales revenue has also significantly increased over the years to yield a positive result.
1.6
Operating Margin
This ratio is for operating profit for each rupee of sales. This helps in identifying cost
management of operations like distribution and marketing of the product and its effect on
sales.
Operating Margin
20
15
10
Operating
Margin
5
0
2009
2010
2011
Operating margin initially increased but then a slight decline is seen. This is due to increase in
operating costs as Olpers has increased is supply chain by 20% and also marketing costs. Soon,
positive effects of these investments will increase profits and hence increasing margins.
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1.7
Conclusion
As seen, a trend of upward positive growth has been in the previous years. This shows that
Olpers (dairy segment of Engro Foods) is yielding profits and is a good organization to invest in.
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2. Liquidity Ratios
2.1
Current Ratio
This ratio tells about the safety margin that an organization has to meet short term cash obligations.
Current Ratio
2.00
1.50
1.00
Current Ratio
0.50
2009
2010
2011
More than 1 is considered as a good figure as it tells that the company has more assets to pay
of the liabilities. Olpers (dairy segment of Engro Foods) has maintained a current ratio of more
than 1 from the past 3 years which signifies their management of current assets like cash in
order to pay any requirement in liabilities.
2.2
Quick Ratio
This ratio serves the same purpose but it said to be more conservative than the current ratio.
Quick Ratio
1
0.8
0.6
Quick Ratio
0.4
0.2
0
2009
2010
2011
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A figure slightly less than 1 is preferred. Olpers also performs well on this ratio as seen from the
above graph. Over the years it has relied on its quick assets (that can be readily liquidated) as a
safety net.
2.3
Cash Ratio
This ratio is also a very conservative measure of the above. It includes cash plus short term
liabilities divided by current liabilities.
Cash Ratio
0.12
0.10
0.08
0.06
Cash Ratio
0.04
0.02
2009
2010
2011
This liquidity ratio gives value of cash over liabilities. The above graph signifies that Olpers has a
focus on decreasing the liabilities and increasing constant cash flows into the firm.
2.4
Liquidity
Overall liquidity ratios indicate that the brand performs well in effectively managing its liquid
assets which would help in smooth operations of the firm.
3 Financial Performance
By looking at financial ratios of profitability and liquidity, we see that Olpers is a leader in
profits and is managing its costs and assets efficiently and effectively. Brand management
strategy is right in place and its implementation is improving with time. The brand is profitable
and has gained the position of market leader in UHT milk category.
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References

Chew, J. C. (2002). Understanding Consumer-Service Brand Relationships:. Australasian Marketing
Journal 10 (2).

Engro Foods Annual Report 2011 – Engro Corp’s Website
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