What happens when your brand is face to face with a competitor who is leading the category by a margin? This happened to National Foods, who decided to enter a growing category in Pakistan: mayonnaise. They came up with a product that was superior in quality, defined as product taste, smooth mouthfeel and creaminess. They designed the right communication campaigns and the right Go-to-Market strategies, and then measured the performance on awareness, trial, and market share. While the results obtained have been outstanding, what do they have to do now? (Dr. Aamir Khan, Case Advisor).
Murad could feel the pressure in the room building, there was an impermeable silence. A couple of years ago, he stood before this very audience, in this very room, to pitch an idea. Today he had to prove that implementing that idea was the right call. Murad was the Marketing Manager of the legendary Pakistani brand National Foods.
National Foods is a historic name in Pakistan. It began as a spice company in 1970, with a groundbreaking product that popularized the idea of eating clean, healthy food. National Foods was founded as a private limited company in Pakistan on February 19, 1970, and later became a public limited corporation. With over 250 different items in 12 categories, it is Pakistan's leading multi-category food manufacturer. The company's primary business is the production and distribution of convenience foods. The company was able to register such stellar performance because the company's focus has remained on the demands of its customers through product development in response to shifting market trends.
Murad has been part of the National family for more than five years now. His big idea was to diversify the company’s condiments portfolio. Therefore, he and his team launched the National Food Mayonnaise line in 2017. Why was this considered a ‘Big Idea’? The Mayonnaise Industry was a Monopoly ruled by “Young’s” another famous Pakistani Brand. The category size was PKR 1.1 billion, however, with an annual double-digit category value growth. The strategic barriers to entry were high but through product development and market penetration Murad was positive that it was possible to enter this demand space.
Entering the Mayo Business
When Murad got promoted to the position of Marketing Manager, he had a lot of big ideas and plans. His first innovative decision was to launch a new project. He believed that National had the ability to take on Young’s monopoly in the Mayonnaise Business. The category was dominated for a long time by Young’s, with a value share of 93%. This was a category still in its infancy with penetration of just 26% amongst Urban Households. His interest in entering this category was based on the Pakistani consumer palate evolving rapidly towards a greater acceptance of Western style food trends combined with National’s expertise in similar categories. The growth in demand for the product was undeniable: Some 56% of consumers were now using this condiment in breakfast with bread, while 52% enjoyed it in burgers, 37% chose to have it in sandwiches and with fries whilst there was even an 11% category that relished it with parathas! It was this knowledge that convinced Murad that this was the right project to dive into.
The starting point, as always, was to leverage National Foods’ heritage of providing innovative products that promise a superior brand experience based on solid consumer understanding. This enabled National in the past to offer a superior product at parity pricing combined with strong brand communications and distribution.
It was also the reason Murad was confident that this would work. He knew National Mayo would be able to register superior product quality over Young’s amongst consumers in terms of delivery of key category attributes i.e. overall taste, smooth mouth feels and product creaminess. The packaging he put his effort into was also well received by consumers and rated significantly superior against competition.
Rewinding the Successful launch
“Good afternoon, ladies and gentlemen, glad to be here with all of you again,” Murad began confidently facing the board, the various department heads, and myriad other important people. “What a journey it has been! I’m proud of the work we were able to get done and excited to make it grow even further in the years to come!” Then he went through his presentation showing slide after slide of information of how successful the launch had been.
Murad explained that the underlying reasons for the successful entry in this category had been the “Go-to-Market” strategy. This first required understanding the consumer needs, then developing a superior product in response to those needs, with awareness drives and trial generation through effective and engaging communication combined with excellent in-market execution at the relevant trade universe following subsequently.Murad proudly explained that the trial generation and increasing loyalty had the effect of driving their secondary sales to 40%+ growth. This demand for mayonnaise production at the Karachi Plant (shared between Mayo and Ketchup) was increasing to such an extent that the addition of a second packaging line for Ketchup at the Gujranwala Plant was inevitable. Some key achievements to note were:
- Product Superiority: This lies at the very core of the values of the company and its implicit contract with the consumers. They established through research that the consumer experience desires a product that delivers overall product taste, smooth mouthfeel, and creaminess. In response a product was developed which delivered superiority through research on the key functional attributes versus Young’s perceived attributes.- Awareness: With a superior product developed, the next challenge was to ensure that National let their consumers know about it. To achieve their goals of not just taking the share from Young’s but also pull more consumers into the Mayo category, Murad set their initial Awareness target at 50% of Urban Households. A series of functional communication was developed that communicated the USP of National Mayo in a fun and engaging manner.- Trial: To convince consumers of the superior product delivery, trial and sampling was the key. Hence, a range of sampling, trial and cross-category bundling initiatives were undertaken to establish product credibility on the key attributes. Target trial was set at 25% of the initial awareness numbers (trial to awareness ratio – 50%).- Market Share: The resultant value share target from the above interventions was set at 5% of total mayonnaise category, to be measured through Household Panel.
As he continued his presentation, Murad could feel the positive energy fill the room and he knew he was on the right track. It seemed that he had managed to motivate them.
He had now reached the part about the new marketing campaign they launched in 2018, which led to a significant gain in consumer demand that further resulted in drastic improvement in market share and brand funnel that surpassed the target and internal expectations. The “Mix it, Dip it and Love it!” Campaign was resonating well with the overall market.
The TVC had been launched on various channels and uploaded on the Facebook page. Even though Murad explained that the Marketing Team insisted that they should post more on social media about the product, he also believed the traditional route was better. However, they still posted 5 visuals relevant to the new product and created a cover photo as well. He was confident that this number was enough.
The Resonance Pyramid
Murad felt so strongly for this product that he wanted to leave no stone unturned to show how well it was received. For this reason, he decided to apply the Brand Resonance Model which comes from the Keller’s Brand Equity Model (also known as the Customer-Based Brand Equity Model). What is Brand Resonance? It is a term used to explain how positively clients and customers connect to a specific brand. It is their perception of the values and goals of that brand. It is how brands can build relationships with their target audience. The model he made is below:
The post launch research was conducted in early 2019 (i.e., post marketing campaign). The KPIs and the results of post launch evaluation post marketing IMC campaign are as under: Market Share Value – Pre-Campaign: 4.7%Market Share Value - Target: 7.7%Post Launch Evaluation Result: 12.3% (Increased by 7.6%)
Brand Awareness - Pre-Campaign: 84%Brand Awareness - Target: 88%%Brand Awareness: 90% (Increased by 6%) Brand Trial - Pre-Campaign: 33%Brand Trial - Target: 40%Brand Trial: 48% (Increased by 15%) Brand Used Most Often (BUMO) - Pre-Campaign: 15%BUMO - Target: 18%BUMO: 31% (Increased by 16%)
The numbers were promising and really had an impact on the heads sitting in the meeting. There were expressions of being impressed and lots of nodding. Murad was feeling good; he knew his risk had paid off. Then came the make-or-break question, “How are you going to maintain this?”
The Future of the Product
“Murad, when you launched this project Young’s had a monopoly – today we have Mitchell’s, Hellmann’s, and various other local/international Mayonnaise products. They’ve been springing up – Why do you think these numbers will keep going up?”
Murad smiled; they asked the very question that kept him up at night. What had helped him was constantly worrying about this very question: He now had a well-developed answer based on their strategies and planning.
Murad took a deep breath and began his structured answer “Since entering the Mayo category, National has not only gained significant market share from competition but the additional competitive heat has also led to the category size and penetration increasing. As a result, today National has gained over 20% market share in just under 4 years while also contributing to category size expansion to more than PKR 2 billion.”
He went on explaining the strategies they used based on extensive research to develop a product based on the consumer’s needs. The gap analysis done and the development of how consumers use mayo (graph in annexure) made it evident that the demand for this product was not going to decrease.
To summarize Murad said, “As you can see, we not only planned and strategized but we implemented it keeping the 4P’s in mind – Product, Promotion, Price and Place. Our work has proven to be fruitful - the reviews and sales numbers all support the confidence I have in the future of this product.”
He went back a couple of slides to stop at the stats table again “At this point, National has gained over 20% market share in just under 4 years while also contributing to category size expansion to more than PKR 2 billion! As you can see the forecasted numbers show that we can expect these numbers to get even better,” Murad shared excitedly. The audience seemed convinced. Murad waited a moment for further questions, when none were asked, he said:
“Before we end this presentation and call it a day, we want to take your feedback on three potential ways forward strategies.
Strategy 1: We focus more on Integrated Marketing Communication and assign a larger chunk of our marketing budgets to the Mayonnaise line.
Strategy 2: We re-package – instead of pouches we focus more on customer convenience and switch to squeezable plastic bottles.
Strategy 3: We try the line extension road like Dipitt and focus on creating more condiments e.g., BBQ Sauce, Chipotle sauce etc.”
There were whispers being heard around the room. All three options were viable options but based on the numbers, the competition and National’s current position it was imperative that all aspects be assessed and weighed before deciding. Murad smiled as he looked around at the focused, slightly stressed faces voicing their opinions one after the other – he knew which road felt right to him and he was happy to hear that his thought process was resonating with the majority. He felt confident that this decision, like his previous decisions, would be greatly beneficial for this company.
Questions to stimulate conversation on the case
- In the “Go to Market” strategy mentioned in the case study what do you think is the role of distribution and production quality?
- Applying Porter’s Five Forces model, what do you think were the barriers to entry into the Mayonnaise market for National Foods?
- If you were Marketing Manager instead of Murad what would you have done differently for the launch of National Mayonnaise? What would be your future plan for this line extension?
- Which strategy do you think National Foods should move forward with and why?
Links and media
Website: https://www.nfoods.com/
Chapter 3, in its discussion on strategy, emphasizes the key role of positioning once segmentation and targeting have been done. Fatima Fertlizers, a subsidiary of the Fatima Group, conducted research and agreed on a plan to celebrate Farmers’ Day (Kissan Day) on the 18th of December 2019. It was decided to make the Day the talk of the town, not only amongst farmers but also among the urban and even the national audiences. For this, TVC campaigns and digital platforms were used, and a huge PR effort was carried out. Articles were published in all leading newspapers. The agricultural ministers of all the four provinces made statements. Specialized talk shows were organized. The campaign’s effectiveness was meticulously measured on both the mediating and the outcome variables. The case also discussed the challenges faced after running a successful campaign. (Dr. Aamir Khan, Case Advisor)