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