Introduction and thesis
Most companies in the world of capitalism always want more. They want more profit, more shareholder value, and more market share, among others. The realizations of these objectives have been attained through the successful initiation, development and management of brands in most instances. Indeed, the effective development and management of brands has become a major priority for all organizations of all sizes in the different industries and markets. The reasons for this are certainly clear; strong brands are positively correlated with customer loyalty and profits. However, the efficient management of brands can present challenges, especially in the case where managers are unable to accurately evaluate and assess their brands particular strengths and weaknesses objectively. One major limitation that has been presented in both academic and empirical literature is on how to deal with the multifaceted issue of products development and multi-channel branding, especially where there is the need for reliance on professional retail distributors engaged in the sale and distribution of competing products.
The adoption of multi-channel retailing has been advanced as presenting numerous challenges and implications to the marketing context, and thus enlarging the complexity of marketing decisions. A whole cocktail of factors has been presented as forming the basis for the adoption of multi-channel strategies including costs reductions in transactions, reduced growths in demands, competitive strategies and differentiations, changes in customers’ behaviours among others (Lawson, 2003). The questions of how to manage these in an integrated context has however been presented as presenting several challenges. This becomes especially poignant when the said retailers are professionals who are engaged in the sale and distribution of similar and/or competing products. The choices as to whether to rely on such competing distributors (retailers) differentiate the products or focus on products branding is a bottleneck facing majority of companies in the world today. This will essentially call for clear understanding and employment of key concepts and postulates of brand strategies, brand equity, channel strategies and the expected overall performance, in light of product development.
Given the above perspectives, it would be prudent to state here that firms engaged in manufacturing need to bear in mind that channel strategies affect not only internal processes but also external relations as well. This opinion has been supported by several other researchers. “The underlying philosophy is that in order that specific market objectives and envisaged competitiveness in the industry are attained, manufacturing firms need to increasingly adopt multi channel strategies in the selling and distribution of their products or services” (Levy and Weitz, 2001; Lee& Rhee 2007). Essentially, this will translate into increased efficiencies, market development and performance. According to Aaker (1996), “good management of portfolios of brands and markets is initiated where common measures of performance have been delineated”. Researchers have however pointed out that “market shares or sales data may be extremely sensitive to distribution coverage” (Verbeke, Bagozzi & Paul Farris 2006) and that sales maybe dramatically affected when a brand gains or losses a market or expands into a different distribution channel. Indeed, the choices to be made on the decisions on whether to pursue a different distribution channel, or use an existing one, have been presented as multifaceted.
This synopsis analyzes a possible growth scenario for companies, namely market development, through a research study on Ansell Corporation, a global leader in healthcare barrier protection, in order to provide a theoretical and empirical conceptualization of how an organization can ultimately develop its products through effective and informed pursuit of the key constructs of brand equity, brand strategy, channel strategy and market performance as employed in multi-channel branding strategies.
Background
The generic strategies for a brand have been advanced as either focus driven or value driven. The definition of a brand in this subtext will refer to as “an identifiable product, service, person or a place, augmented in such a way that the buyer or user perceives relevant, unique added values that match their needs most closely” (Leslie and Malcom, 2002). The maintenance of sustained value added attributes to be derived from a brand is in essence the key to competitiveness. According to Kapferer (2003), “brands are a direct consequence of the strategy of market segmentation and product differentiation”. This point has been buttressed by Brassington and Pettit (2000) who has pointed out that “branding act as a means of linking items within a product line or emphasising the individuality of product items”. Other definitions have been advanced in literature but the key concurrence has been the emphasis on uniqueness and value provision to the customers in a more efficient manner. This in essence will give rise to competitiveness in the market or industry sector. As Fukuda (2003) has noted, “the key to success lies in finding a competitive advantage that others find hard to copy or imitate”. Indeed, academic and empirical literature is of the opinion that companies that develop brands with a strong customer franchise to be sufficiently insulated from any promotional strategies by the competitors. According to the author, this has been the reason why it makes sense for a supplier to invest heavily in order to create strong or even global recognition and preference for its brand name.
Problem statement
Ansell in an Australian based company with a global presence in Asia, America and Europe. Incorporated in 1920 as Dunlop Rubber Company of Australia, it acquired the name Ansell in 2002 due to restricting and global branding. Gradually this grew to an exclusive dealership for Europe, the rest of Asia and America. Ansell has successfully created an A-brand for its products in these regions called, “AlphaTEC – chemical resistant gloves that bring improved dexterity and comfort to applications that require both chemical barrier protection and robust mechanical performance” (Funding Universe (2007). The demand for safety regulations and the provision of safe and quality protective gear has seen fortunes multiply for Ansell. Ansell has thus created a fist class brand and controlled and monopolized this market segment through strategic branding of its products. By the end of the last century “Ansell’s employee number has surpassed the 10,000 mark and its sales in A$1.29 billion or ($880 million) by the year 2003” (Funding Universe, 2007).
In their quest for growth Ansell decided to look at its options and used the well known Ansoff growth matrix.
In the beginning all effort was focussed on developing the home market (Australia) but soon activities in many different Asia countries such as Singapore, China, Malaysia and Saudi Arabia were initiated. Despite the attractiveness and profitability of these products, it remained a waste to Ansell in that it could only be used by health care professionals within the heath care facilities. Therefore Ansell searched for new products that could be sold to the same retailers, but not for exclusive use by health care professionals. It was to be used as a protective cover across all the industries. Other manufactures also faced the same problem. Ansell could use the same supplier and sell these protective gloves to the same retailers that already sold its products. The product became a success in the test market in Thailand and was gradually introduced into more Asian countries.
Purpose of the study
Ansell needs to come up with a strategy in which it can extend its sales in AlphaTEC chemical resistant gloves to a wider market without major investments in product development and marketing and without cannibalism in the existing retail distribution network. The main question of the research was therefore to decide whether to use the standard P brand AlphaTEC or to use another brand name. Towards this, it was vital to find out how strong the AlphaTEC brand is. An important aspect of this study will be the branding of Ansell’s AlphaTEC chemical resistant gloves in the two different distribution channels. Several options are open and were examined with special attention to the current repositioning process of the main brand AlphaTEC.
This synopsis therefore seeks to address how product development- conceptualized as selling an existing product out of your product portfolio into a new market- can be attained through the mechanisms of a different distribution channel for the product. Specifically, the paper seeks to draw insights into whether product development entails mere offering of a product into a different distribution channel. The synopsis addresses the multifaceted issue of alternatives available in the case where the new distribution channel being sought has always been in competition with the current distribution channel, and therefore wants to, or needs to differentiate itself in the eye of the end consumer. In the contexts of where, in one distribution channel, the end consumer can receive advice about a product, and in the alternative where it is only available for the end user to buy it, the paper seeks to answer the following questions:
- How can suppliers deal with the issues of competition as regards distribution channels, in the case where they are reliant on competing professionals for the same, but, who are engaged in the sale of similar and competing products?
- How prudent would it be to offer exactly the same product to both channels as opposed to differentiation of products, given the circumstances in (1) above?
- Where it has been decided that differentiation presents the best alternative, how should the organization go about differentiating its products? And finally,
- How is branding linked to different distribution channels?
The above questions were answered by employing the Keller’s brand report card in order to measure the strength of Ansell’s P – AlphaTEC chemical resistant gloves.
It was intended that the outcome of this investigation would help inform management on in their decisions on what brand name to use for the new distribution channel for professional installers, based on an insightful analysis and synthesis of all pertinent issues. Where, the research indicated that a new brand name needs to be introduced for the professional installers; suggestions would be fronted, following an assessment of how the new brand name would be coherent and tandem with the existing brand portfolio.
Literature review
The management of brands in the context of increased globalization and changes in customer behaviors are well discussed issues in literature. The major concurrence among researchers is that corporations are facing increasingly difficult tradeoffs between the increased importance of brand coordination activities both within and outside their respective organizations and the pressures to decentralize decision making and eliminate entire layers of management in an attempt to curtail costs. Another major issue that has been seen to act as a major bottleneck has been the issue of cannibalism where there is reliance on retailers that are engaged in the sale and distribution of competing products. The evolution and emerging paradigms of brand management have been well documented in the works of Low and Fullerton (1994) who trace the evolution of brand management from the origins of the first national brands to present status, whereby the important perspectives affecting brand management are well highlighted. According to these authors, brand management proves to be a factor of differing firms and associated adaptabilities in the contexts of both internal and external environments. The authors further advance that the original logic for the brand manager systems in the multi-brand firms rested on the believe that competition internally for resources would improve efforts on behalf of each brand whereas manager for multiple brands in the same brand category often competed as ruthlessly with one another as they did with other brands from competing firms. The difficulties in the management of such brands have been well documented in their works.
Other researchers have added a lot of inputs on how efficient brand management away form the traditional formats should be carried out to facilitate organizational development. For example, Zenor (1994) has pointed out that “a category form of brand management organizations seems inherently justified by an improved ability to coordinate pricing and other marketing efforts for the firm’s different products and brands”. Through the employment of a game theoretic model, Zenor (1994) has estimated the magnitude of profit advantage that firms stands to gain through category management, given varying degrees of cross-brand price elasticity in the markets. The model also helps illustrate how category management can be enhanced where competitors are organized similarly and the associated benefits computations in such occurrences. Other authors have advanced several other postulates Armstrong (2007), Rajasekar, Babu and Nalina (2005) have pointed out that the current management of brands requires the exigencies of the evolving needs of the buyers within a market that is increasingly populated by global competitors and the opening up of territorial markets. In this regard, corporations must deal with the fuzziness of product market boundaries aided by increasing deregulations and competitive initiatives, which is to a large extent focused on the creation of new products or services and the lowering of costs as the principle benefits. Organizations must also deal with the increasing pace of technological improvements and innovations, which has resulted to the increased blurriness in product market boundaries. “This coupled with the growing power and independence of the channels of distribution has affected buyers’ expectations and opportunities and the impacts have been phenomenal for majority of organizations” (Zhang, Farris, Kushwaha, Irvin, Steenburgh and Weitz, 2009).
Research Methodology
The research methodology includes the research philosophy; the research strategy, research methods, population, samples and sampling have been provided. The choice of the methodology approaches that have been selected and followed have been well explained and justified. The purpose of the research was to determine the strength of the Ansell’s AlphaTEC chemical resistant gloves in order to make informed decisions on the choices available to Ansell Corporation as regards its multi-branding initiatives.
Two views about the research process dominate literature, that is, positivism and phenomenology. The positive approach was based on the scientific discoveries made in the 18th and 19th century. Phenomenologists assert that “there is a difference between the subject matter of sociology and natural science” (Zhang, Farris, Kushwaha, Irvin, Steenburgh and Weitz, 2009). In order to analyze the strengths of the AlphaTEC brand in the market, the phenomenology approach will be adopted. This is because the business world is too complex to be theorisized by definite laws.
“Research strategy refers to the general plan on how the research questions that have been set will be answered” (Cooper and Schidler, 2003). In this research paper, descriptive research approach was adopted. The method was tenable as the research focused on the prevailing perceptions of AlphaTEC brand and how it would fare in the market and improve Ansell’s image. Here data was collected first and later the theories developed after data analysis was conducted. The approach owes more to phenomenology as opposed to positivism research philosophy. The research conducted was a clear case of a survey strategy, where a questionnaire was replicated and the items in the questionnaire measured. Since we were aware of what we wanted to investigate but not aware of the answers, descriptive statistics was employed.
“A population will compose of all the individuals, elements, items or objects whose characteristics are being investigated” (Cooper and Schidler, 2003).The population in this case comprised of all the managers at Ansell Corporation. In the selection of samples from the population, the confidence interval approach was adopted. The 95% confidence interval was taken. This means that if 100 samples are selected from the population, at least 95 of them would represent the characteristics of the population” (Cooper and Schidler, 2003).The margin of error describes the precision of your estimates of the population” (Cooper and Schidler, 2003). In this research, the 5% margin of error was applied in order to reduce the sample size. The stratified sampling approach was followed. This ensured that all the important sub populations were selected. Sampling was done in such a way that at least 50% of populations were chosen as sample.
The computation of the minimum sample size was computed using the formulae advanced by Cooper and Schidler (2003) as follows:
- ± 0.05 the desired interval range which the population proportion is expected (A subjective decision)
- Confidence level for estimating the interval within which to expect the population proportion (subjective decision)
- Standard error of the population (0.05/1.96)
pq= measure of sample dispersion (used here as a measure of population dispersion).
the ratio can never exceed 0.25 (if p=0.5, then q=0.5, and the product is 0.25).since we don’t have information regarding the probable value of p, we can assume that p=0.5 and solve for the sample size (Cooper and Schidler, 2003).
n = 43 so with a 95% confidence interval and a 5% margin of error, we need at least 18 persons. According to this minimum sample size, 18 questionnaires were studied as the sample size for this research. (I am not sure of the actual number of questionnaires issued)
Data collection procedures involved the application of questionnaires, standardized tests, observational forms, laboratory notes, and instrument calibration logs are among the devices used to record raw data (Cooper & Schindler, 2003). Survey research design was adopted in the generation of primary data. Surveys are characterized by an organized or methodical set of data that is usually called a collection of variables.
Research results and discussions
The purpose of this study was to analyzes a possible growth scenario for companies, namely market development, through a research study on Ansell Corporation, in order to provide a theoretical and empirical conceptualization of how an organization can ultimately develop its products through effective and informed pursuit of the key constructs of brand equity, brand strategy, channel strategy and market performance as employed in multi-channel branding strategies.
Note: the sample sizes were 15, but the values used have been based on the assessment of several factor components in computation of mean values for individual variables such that the sample size is multiplied by the number of factor responses for each element.
The descriptive statistics for the operational measures for the Zibro brand
The next part of the analysis was focused at analyzing whether the perceived value of the AlphaTEC brand as demonstrated by the descriptive statistics on the latent and manifest variables was statistically strong enough as assessed by the LISREL model (see figure 2). In this regard, the extent to which descriptions of brand strategy and brand equity will affect the channel strategy to be adopted and the expected market performance is proposed was analyzed, wherein the inter-relationships of the four constructs derived, following the advise given by Hu (2006) was carried out. This essentially focused on the “relationship between channel strategy and market performance, relationship between brand equity and channel strategy, the relationship between brand strategy and channel strategy and finally, the relationship between brand equity and brand strategy” (Hu, 2006).
This section will therefore summarize the numerical results obtained from the LISREL analytical tool in the assessment of the AlphaTEC brand strength, following the advice given by Hu (2006).
The assessment of the overall model fit yielded a not significant X2 (p=0.071, greater than the corresponding critical value at the 0.05 significance level), suggesting a statistical consistency between the hypothetical structure for the brand and the data obtained from the Keller’s brand report card, based on the questionnaires responses. The summary of the proposed conceptual structure for the AlphaTEC brand, depicting the interrelationships with the latent variables has been presented in table 5 below. Based on the assessment criteria as proposed by Hu (2006), the estimates for both the GFI (GFI=0.937) as well as AGFI (AGFI=0.892) are greater than the corresponding critical values of 0.91 and 0.83. This would appear to be supported by the observations that RMR (RMR=0.05), SRMR (SRMR=0.04) and RMSEA (RMSEA =0.04) are equal and less than the corresponding critical value 0.05. In this regard, it would be prudent to state that all the assessment measures indicate that the proposed conceptual framework exhibits a very good fit to collected data as advocated for by Lai Hu (2006) (see table 5 below);
Table 5: results of the goodness of fit tests
The influence analyses of the manifest variables were then carried out. This test focused on investigating the capabilities of a specified manifest variable to characterize the corresponding latent variable with the influence index (λ) provided by the LISREL model, following the advise given by several other authors (Armstrong, 2007, Hu, 2006). Based on this analysis, it become apparent that the influence of the manifest variables on the corresponding variables of brand equity, brand strategy and channel strategy for the AlphaTEC brand were quite significant (see table 6 below).
Table 6: Summary of the influence indexes (λ) for influence analysis on the AlphaTEC brand
Based on this assessment, it would be prudent to suggest that the current brand equity may not support the channel strategy being adopted by Ansell Corporation and thus impacts negatively on Ansell’s corporate image.
Conclusion and future research
A lot of corporations in the world today are recognizing that brands play a critical role in enhancing corporate image and as such are mushrooming towards research and investment on product branding. Indeed, the effective development and management of brands has become a major priority for all organizations of all sizes in the different industries and markets. The reasons for this are certainly clear; strong brands are positively correlated with customer loyalty and profits. This research paper has succinctly presented how Ansell Corporation can ultimately develop its products through effective and informed pursuit of the key constructs of brand equity, brand strategy, channel strategy and market performance as employed in multi-channel branding strategies. The role of brands in corporate image is a hot topic and has remained a key focus to marketing managers for decades. This analysis is expected to generate increased interest and research on Brand Introduction ad the Implications for corporate image.
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