Download - Lakspary
MBA Weekday Program ,Semester III – First half (2011/2013)Postgraduate & Mid-career Development Unit
Faculty of Management & FinanceUniversity of Colombo
MBAMK 617 –Advance Brand Management
Pls note that Analysis is done for only academic purpose with the public data
Date :25th Feb 2013
Discussion Thread• Objective• Company Background• Category Overview• Competitor Analysis• Analysis of Lakspray Brand dimensions– Positioning– Brand Value analysis
• Findings • Recommendation
Objective
Analyzing brand value, revenue, profitability and advertising spend of Lakspray from a strategic
brand management perspective
Company Background More than 40years in the market– National Milk Foods (1969)– Lanka milk Foods (1981)– Lanka milk Foods (1983)– Lanka Milk Foods (CWE) (1991)
A local brand Owns the largest packing plant in South East Asia Diversified Product portfolio Strong distribution channel Achieved super brand status
Category Overview
• Potential growth for liquid milk
– Government promoting the local dairy industry
• Disorder in imported milk powder sector due to rise in
prices
– Global price hike
– Import tariffs
– Restraint on the retail price ceiling imposed on milk
– volatility in the exchange rate
• Reduction on advertising & promotional investments
Competitor Analysis
• Anchor is the category leader with more than 50% share, market share indicate above is for tea whitening market
• Ratthi has highest market share, followed by Lakspray• Fonterra has change their brand focus
– When Lakspray & Nespray were active higher weightage on Ratthi– As tea whitening category is not active, increase presence on Anchor
• 70% to 80% sales contribution of Lakspray from corporate sector
50%
30%
20%
RatthiLaksparyOther (Nespray, Maliban etc.)
Brands 2008 2009 2010 2011 2012Anchor 20% 31% 31% 63% 47%Ratthi 50% 23% 49% 34% 41%Lakspray 6% 7% 7% 0% 0%Maliban 7% 6% 9% 3% 9%Nespray 17% 31% 2% 0% 0%Candy 0% 0% 0% 0% 3%Diamond 0% 1% 0% 0% 0%Highland 0% 0% 0% 0% 0%Milgro 0% 2% 2% 0% 0%
Total Rs – (M) 86 474 532 546 820
Market Share for Tea whitening Market Advertising Cost in FCMP
Source: Mediawatch Monitored spend by Nielsen
Imported FCMP price Behavior
Year1 Year2 Year3 Year4 Year50
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Lakspray- price
Transfer price -Anchor & Raththi
Global price
pric
e
CBBE for Lakspray
• Bran salience– Heritage, deeper level of
awareness as FCMP
• Performance– Make the highest number
of tea cup at a low price
• Imagery• Judgments• Feelings
– Attached with homely & affectionate about brand
• Resonance – Value for money, “special
to me” as a rational buyer in a recession
Band Salience- Full Cream Milk Powder (FCMP)
Performance High CreaminessLow price
ImageryHistory & Heritage
FeelingsHomelyNatural
JudgmentsValue for MoneyCredibility
Resonance “Special to me “
PositioningPOD & POP
• Point of difference (POD)– Lakspray” is a heritage household
Sri Lankan brand that enables to prepare a larger number of tea cups at a lower price
• Points of Parity (POP)– Lakspary is a Family Nurturer, tea
whitening FCMP brand
Positioning Map
High Price
Low Price
- tea whitening - Milk Drink
Anchor
Ratthi
Lakspray
Maliban
Nespray Everyday Nespray Enrich
Anchor 1+,2+
Pediapro
Value Addition
Lakspray Performance
2008 2009 2010 2011 2012
Turnover 3161.061 2969.741 3259.46 3190.564 3428.867
Enterprise Value 2302 3285 2288 3741 5885
500 1,500 2,500 3,500 4,500 5,500 6,500
Rs
Year
Sources: Brand Annual by LMD, Lakspray Annual reports,
2008 2009 2010 2011 2012
12%
-6%
10%
-2%
7%
43%
-30%
64% 57%
Turnover Growth Enterprise Value Growth
Value growth
•Enterprise value has increased except 2010- affected melamine issue to the industry
•Sales growth is less compare to enterprise growth
Mn
Lakspray Performance Cont.
2008 2009 2010 2011 2012
Gross Profit 583.53 370.366 547.064 292.266 410.155
Brand Value 408 467 411 559 596
ATL Advertising Cost 4.887 31.956 38.754 NaN NaN
50
150
250
350
450
550
650
Year
Sources: Brand Annual by LMD, Lakspray Annual report, MediaWatch by Neilsen
2008 2009 2010 2011 2012
18%12%
17%9% 12%
17%
8%
37%
1% 2%
14%
-12%
36%
7%
Gross Profit Ratio Net Profit Ratio Brand Value Growth
Rs Mn
Lakspray Performance cont.Growth rates 2008 2009 2010 2011 2012Gross Profit Ratio 18.46% 12.47% 16.78% 9.16% 11.96%Net Profit Ratio 16.93% 7.83% 37.00% 0.50% 1.85%Turnover Growth 12.31% -6.05% 9.75% -2.11% 7.47%Enterprise Value Growth 42.70% -30.35% 63.51% 57.31%Brand Value Growth 14.46% -11.99% 36.01% 6.62%Brand rank 45 42 46 45 49
Brand rating A A+ B
% of brand Value from Enterprise Value 18% 14% 18% 15% 10%
Average share price (Group) 42 52 110 122 91
• Profit ratio has decreased continuously
• Increase brand value at reducing rate, incremental growth has drastically dropped in 2012
• Brand rating has become a average brand (B) in 2012 from strong brand (A+)
• Brand value contribution ratio to enterprise value has reduced from 18% in 2008 to 10% in 2012
Sources: Brand Annual by LMD, Lakspray Annual report, MediaWatch by Neilsen
Brand Value Growth
• History and Heritage - 40 years existence in the market
• Image created through past advertising• Support from BTL activities
– Town storming activities with propaganda– CSR activities targeting national/religion events
• Sales growth due to product attributes - High creaminess
- Quality - Affordable price
• Strong distribution network
Key Concerns on the brand
Being a contrary established brand, Lakspray is highly under leveraged and is not maximizing value to their
owners.• Sustainability of the brand value - Advertising budget on brand communications
- Facing to the competition• Fonterra brands
• Sales contribution ratio– 70% to 80% from corporate– 30% to 20% from household consumers
Recommendations• Due to the low margin, Lakspary can not
compete with consumer market, so continue brand strategy to dominate in corporate sector – Communicate salient benefit (creaminess) – Continue sales promotions on corporate segment
Q & A
Thank you