MBA Marketing Keels

University of Wales Institute, Cardiff (UWIC)

Master of Business Administration (MBA)

“Brand Positioning”Mistake of

JayKay Marketing Services (Pvt) Ltd

Prepared By:

Mohamed Mohideen Mohamed Rishard

UWIC/MBA/MT/12/02

Module Title: Marketing 1 (Individual Report)

Module No : MBA 403

Word Count: 2190 (Excluding Cover page, Acknowledgment, Executive

Summary, Table of Contents, References & Annexure)

“Brand Positioning” mistake of KEELLS SUPER

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AcknowledgementApart from the exertions of me, the achievement of this report depends on the encouragement

and guide posts of many others. I take this opportunity to express my appreciation to the

people who have been subservient in the productive closing of this report.

A special thank belongs to Mr.Charitha Subasinghe, CEO of JK Marketing Services Ltd. The

true support that he provided truly assists the progression, and the co-operation is very much

indeed apprehended. And also special thanks to Mrs.Shivanthi Rajaratnam, Brand Manager

Keells Super, for the guidance and encouragement in giving all the supportive information

and suggestions.

My warm thanks to Keells Super Outlet Managers at Narahenpita, Mahabage, Marine Drive

and Kiribathgoda, who gave the fullest co-operation. Thanks also to Cargills Food city Outlet

Managers at Nawala, Wattala, Park Road and Kadawatha.

It is a pleasure to thank Mrs.Nilanthi D Silva of Nielsons Research Company for giving us

the related research information and documents, in order us to complete the task.

Great deals appreciated go to contributions of my Marketing lecturers in ICBT Campus and

also I would like to thank the ICBT program staff in helping us complete the program.

Last but not least, I would like to thanks all my colleagues in our group Transformers, for the

support Contribution and Hard work. The report would be nothing without the enthusiasm

from the group members. And it made me to realize the value of working together as a team

which was challenging. The program actually brought us together to treasure the true value of

friendship and respect of each other.


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Executive SummaryEvery company has marketing campaigns to create tremendous new branding initiatives,

slogans, and commercials to gain competitive advantage from the modern trade market

leaders and captivating the consumer’s mindset. Sometimes these actions make the brands as

successful or mistake and lead to the downfall of entire brand.

This report explains the marketing mistakes om “Brand Positioning” done by Keells Super

brand which is administrated and managed under JayKay Marketing Services (Pvt) Ltd. This

was established in 1991 as a subsidiary of John Keells Holdings with employee’s strength of

1800. Currently it has 42 outlets and 6 franchise outlets under the brand “Super K”, also

Keells Super consist of over 12000 SKU’s and the newest addition is the brand “KEKO” for

apparel and fashion, also Kells Super brand equity worth Rs. 8 Billion. The vision is to be

one of the leading brands in retail in the region.

First in the report explanation given on the current retail and modern trade landscape with

financial KPI’s and market shares of major players in the modern trade market. And apply of

Porter’s five force analysis to the industry.

Then comes an audit of marketing function of JMSL and present consumer segment of keells

Super .then marketing mistakes been identified along with evolution of the blunder, and to for

the justification , a benchmark is done with the market leader along with a consumer

perception survey.

Then we illustrates the actions taken by JMSL to overcome the mistakes done by Keells

Super in different stages and followed by recommendations to re align its growth strategies

and generic strategies recover its position in the modern trade market and gain competitive

advantage.


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Table of Contents

Acknowledgement .....................................................................................................................2

Executive Summary...................................................................................................................3

Table of Figures .........................................................................................................................5

1. Introduction............................................................................................................................6

2. Retail Market Landscape of Sri Lanka ..................................................................................7

3. Modern Trade Competitor Analysis ......................................................................................8

3.1. Turnover Vs Outlets comparison in 2010/2011 ..............................................................8

3.2. Modern Trade Market Share ...........................................................................................9

3.3. Porter’s 5 Force Analysis ................................................................................................9

4. Marketing Audit of JMSL....................................................................................................10

4.1. Strength and Weaknesses ..............................................................................................10

4.2. Present Target Consumer of Keells super .....................................................................11

5. Current Positioning map of Modern Trade in Sri Lanka .....................................................11

6. Marketing Mistake of Keells Super .....................................................................................12

6.1. Evolution of the Blunder ...............................................................................................13

6.2. Benchmarking with the Market Leader.........................................................................13

6.3. Research to Identify Consumer perception ...................................................................15

7. Measures taken by JMSL to defeat the mistake...................................................................16

7.1. Introduction of Elephant House Super Pola..................................................................16

7.2. Lower than Lowest Price Campaign .............................................................................17

7.3 Freshness & Quality Campaign......................................................................................18

8. Conclusion ...........................................................................................................................18

9. Recommendations................................................................................................................19

Bibliography ............................................................................................................................22

Annexure..................................................................................................................................23

1.JMSL Brief........................................................................................................................23

2. Positioning Errors.............................................................................................................23

3.Retai Markt Landscape......................................................................................................23

4. Turnover Vs Outlets comparison in 2010/2011 ...............................................................24


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Table of Contents cont..

5. Porters 5 Force Analysis ..................................................................................................25

6. JMSL, Keells Super Audit ...............................................................................................26

7. Expansion of Cargills .......................................................................................................26

8. Consumer Research Information......................................................................................27

9.Elephant House Super Pola ...............................................................................................28

10. Lower than Lowest price campaign ...............................................................................28

Table of FiguresFIGURE 1.MARKET OVERVIEW ....................................................................................... 7

FIGURE 2.MODERN TRADE COMPETITOR ANALYSIS ......................................................... 8

FIGURE 3.MODERN TRADE MARKET SHARE .................................................................... 9

FIGURE 4. JMSL STRENGTH & WEAKNESSES ............................................................... 10

FIGURE 5. CURRENT POSITIONING MAP OF MODERN TRADE IN SL................................... 11

FIGURE 6. MARKET SEGMENT...................................................................................... 12

FIGURE 7. KEELLS FINANCIAL PERFORMANCE .............................................................. 13

FIGURE 8. CARGILLS FINANCIAL PERFORMANCE............................................................ 14

FIGURE 9. CONSUMER RESEARCH DATA ...................................................................... 15

FIGURE 10. FIRST EHSP AT WELLAWATTA ................................................................... 16

FIGURE 11. LOWER THAN LOWEST PRICE CAMPAIGN..................................................... 17

FIGURE 12. FRESHNESS & QUALITY CAMPAIGN............................................................. 18


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1. IntroductionThis report has been written to illustrate the marketing mistake, which is “Brand Positioning”

done by JayKay Marketing Services (Pvt) Ltd on the their brand KEELLS SUPE for

company profile refer Annexure 1. The objective of this report to identify the mistakes faced

by Keells Super and also critically evaluates current issues which were lead to the blunder

and analysis of market and consumer behaviour, use corrective measures to overcome the

current situation and provide recommendations in order to gain competitive advantage over

the other super market chains in Sri Lanka .

DeChenatony and McDonald define brand as “A successful brand an identifiable product,

service, person or place, augmented in such way that the buyer or user perceives relevant,

unique added values which match their needs most closely. Furthermore, its success results

from being able to sustain those added values in the face of competition.” (DeChernatony,

1998)

Brand positioning can be distinct as an action of creating a brand to present in such a manner

that it occupies a unique place and worth in the consumers mind. There are various

positioning errors such as under positioning, over positioning, confused and double

positioning. See Annexure 2


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2. Retail Market Landscape of Sri Lanka

Figure 1.Market Overview

Source: (Lanka, 2010/2011) Central Bank Annual report 2010/2011(Nielsen, 2011) A.C. Nielsen Research Data 2011

For more illustration on the retail market landscape please refer Annexure 3

MODERNTRADE

MARKETGROWTH 34%


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3. Modern Trade Competitor Analysis

3.1. Turnover Vs Outlets comparison in 2010/2011Source: Cargills PLC and JMSL Financial Reports

Figure 2.Modern Trade Competitor Analysis

As per the above KPI’s extracted from the presentation,please refer Annexure 4. for

highlights.

0 50 100 150 200

Cargills Food

Keells Super

Arpico Super

Laugfs Sunups

Outlets

Cargills Food Keells Super Arpico Super Laugfs SunupsTurnover Bn 29 10.2 10.1 3.1Outlets 163 42 11 25

2010/2011 Turnover in LKR Bn & No.of Outlets


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3.2. Modern Trade Market ShareThe below graph illustrates the market shares of the key super market chains in the country.

Being the market leader Cargills have the highest market share 49% and followed by Keells

Super with 16% market share. The closest competition for Keells super is Arpico, which is a

hyper market.

Figure 3.Modern Trade Market Share

3.3. Porter’s 5 Force AnalysisAs we analyse the total industry by using Porters 5 force analysis overall modern trade

industry is extremely high, this can be explained as follows (Porter), Annexure 5.

49%

16%

15.5%

4.7%14.8%

Modern Trade Market Share

Cargills

Keells Super

Arpico

Laugfs Sunups

other

Source: Cargills PLC and JMSLFinancial Reports


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4. Marketing Audit of JMSL

4.1. Strength and WeaknessesFrom the Marketing audit we have reviewed the current objectives, strategies and

performance of JMSL in order to improve them in future.

Figure 4. JMSL Strength & Weaknesses

As per the situational analysis of JMSL the main strength is that they provide 2 years

internship programme to work in Keells Super through NAITA vocational institute and they

get paid an allowance, and the second is International consultancy obtained from Tesco and

Wal-Mart.

The crucial weakness is the high staff turnover, this is due to employees leave the company

after obtained the training and to move or head hunted, and this scenario applicable to the

industry as well, and the other is the decline of market share , the main reason for this is the

growth of Cargills with increasing outlets. for other Strength and weaknesses see the

Annexure 6.


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4.2. Present Target Consumer of Keells superUpper Class

Earning more than Rs.100K a month.

Metropolitan statistical areas

Always use a vehicle to do the day to day shopping needs

Industrialist, businessman and Top executives.

English speaking consumers.

Upper-Middle Class

Earning more than Rs.50K a month.

Often use a vehicle for shopping

Executives and Educated professionals

5. Current Positioning map of Modern Trade in Sri Lanka

Figure 5. Current Positioning map of modern Trade in SL

Value addition &Quality

Price

H

L

HL


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Positioning has been defined as “the place a product occupies in a given market, as perceived

by the relevant group of customers; that group of customers is known as the target segment of

the market” (Yoram, 1984)

National census department has segmented the modern trade market as follows;

Figure 6. Market Segment

6. Marketing Mistake of Keells SuperAs per the above ,Keells Super positioned as a high quality, premium super market chain and

trying to come close to the low price market segment without changing their position in

consumer’s minds. Because of this Wrong perception Created by confused positioning.

On the other hand Cargills enjoy the position as market leader by catering to the rising market

segment in terms of “Value for money, convenient shopping”.

Uppe class

Middle Class

Lower Class

Slow Growth20% of the Population

50% of National IncomeGrowing Market60% of the Population40% of the NationalIncome

To be converted

“Value forMoneymindset”-Earning lessThan Rs.50K

-Average jobsAnd education.

-Large inNumbers.

-More focus onDay to dayNeeds

Source: National CensusDepartment 2010


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6.1. Evolution of the BlunderKeells Super and Cargills was started an era where super markets percieved as a place for

upper class and luxury shopping. Then Cargills was adopted the market penetration strategy

and caputered the growing market with “Lowest price” campaign (see Annexure 7) and

acquisitions of Park & shop chain and Sentra chain,

The Arpico and Laugfs entered to the modern trade market providing more competitive

environment for Keells Super. Result of this Keells got stuck in the upper market segment ,

the reason for this was not forecasting the growing market segment, but Cargills used this

opportunity and started to capture the market share.

6.2. Benchmarking with the Market LeaderSince Cargills is the market leader, and Keells was losing market share , we taken the

financial KPI’s of each of this super markets to benchmark . As extracted from the

presentation the below data illustrates the Keels financial performance. (Reports, 2011)

Figure 7. Keells Financial Performance

Source: JMSL Financial Reports


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However Cargills identified the correct target market and shifted to right market position and

became market leader in the modern trade market.

Figure 8. Cargills Financial Performance

As per the above data figure 7 Keells is struggling to make profits even though the revenue

was increasing, this is due to wrong market positioning. In 2008 during the recession period

in the country, Keells made 21% revenue increase and growth in profit by penetrating to new

markets and “lower than lowest price campaign”.

Source: Cargills PLC Annual Report(PLC, 2011)


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6.3. Research to Identify Consumer perceptionBecause of continues decline in profits and market share Keells Super conducted a survey to

analyse the retail market and consumer perception. The consumer research was carried in

various Keells Super and Cargills outlets (see Annexure 8) in Colombo and suburbs.

Figure 9. Consumer Research Data

The results were Cargills got ratings only for Price aspects where Keells Super rated above

than Cargills on qualitative aspects.

Also through the research it has been identified that Keells Super current customers are

families, who shopping average 8 to 10 times a month is 42%. Out of the balance 58% most

of the shopping will be done by males and it’s been identified as 52%.

Source: Market Research


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7. Measures taken by JMSL to defeat the mistakeKeells Super tried different strategies to change the position and the perception it had bymodern trade consumers. Those are as follows;

7.1. Introduction of Elephant House Super PolaTo overcome the blunder, Elephant house super pola was initially introduced in 2003 to

attract the lower end and middle class market and also to compete with Cargills. Refer

Annexure 9.

Apart from the above reasons EHSP to failed due to un trained staff where Super pola staff

was outsourced to Abans, where staff was not well trained and another reason is Super pola

had only 2800 SKU’s where an average super market need to have minimum of 7000 SKU’s.

Due to all these issues EHSP was withdrawn from the market after 18 months operation.

Figure 10. First EHSP at Wellawatta


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7.2. Lower than Lowest Price CampaignThe main objective of this campaign to communicate to the consumers that Keells Super is

not an “over priced” super market but a super market that caters to the common man. Refer

Annexure 10.

Figure 11. Lower than Lowest Price Campaign

After the campaign in 2008 the following were

the results;

Increased the customer base from 87,000 to

181,000 and Revenue increase of 21% and

Rs.7 Mn Profits see figure 7.


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7.3 Freshness & Quality CampaignWhile Keells super was running the lower than lowest price campaign there was a

misunderstanding among consumers due to the lowest price introduced and the quality was

compramised, because of this “Freshness & Quality” campaign was introduced. And this was

also to safeguard the existing market on the price war of “Quality & Value”.

Figure 12. Freshness & Quality Campaign

8. ConclusionAs to conclude , Keells Super has taken many actions to overcome the blunder , the price

war , increasing competition and losing market share, by introducing EHSP is the first action

by JMSL and it was also become a blunder because of not focused on the correct segment,

then lower than lowest price campaign was carried out , the results were positive towards

Keells super where they actually gained a 100% growth on consumers switching. and the

result of this Keells gained profit and revenue increase. But Keells could not keep up the

price promise for long-term ,due to this the customer base drop to 50,000 and lost of profits

as well see figure 7. Due to this continuous blunder and failure of Keells Super we have made

some recommendations to regain its position and also to gain long term competitive

advantages in the modern trade market.


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9. RecommendationsThe first recommendations proposed based on Ansoff and Perter’s Generic strategies practiceand applications are;

1. Re-Launch “Super Pola” or introduce a fresh retail brand to carter to the

lower end market by.

Re-launch super pola as generic touch targeting the rural, suburban of the

country, without making the same error made in 2003 with EHSP.

Segment and target market, such as lower end and middle class where they

shop their products weekly and value for money mind essential products not

the luxury products.

Keells should create a warfare with Cargills par with their activities.

Communication should be clear to consumers , if not might lead again to

failure. also create an atmosphere to feel as local with staff trained to use lame

language with consumers and local .

Since we recommend opening up at least 100 super pola outlets island wide

JMSL need average 20Million per outlet, so JMSL can go in to an IPO to raise

the funds.

Since the JKH is the logistic partner for Lanka IOC, they can open up super

pola on their fuel stations. Currently Lanka IOC have about 150 outlets around

the country covering major towns.

2. Penetrate and defend the existing market share by

“Keells Super” should be further foreground to be the best in retail brand with

values and highest quality such as HSBC credit card payments, bakery and

pay or buy Union Assurance insurance policies.

Increase the shopping variety’s of “K choice” private labels , where currently

it has on 87 labels.

take measure on acquisition strategies to acquire Laugfs Super and other

small super market chains.


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Tune up the online shopping arm which is E-Tailing by fresh home delivery

with more geographical coverage, where currently in Colombo only with 1%

market share and it can be increased more by widening its delivery coverage

and tie up other online shopping site like “Kapruka”. Also advertise and

educate people on online shopping and the benefits for the consumers such as

time saving.

Offer special discounts according to the consumer buying pattern.

3. Open New super market under the name “Keells Extra”

This will be a new super market for the existing market under with a new

brand identity with benchmarking Tesco outlet strategy.

Introduce a high end luxurious hyper market specifically cater to upper class

segment such as Tesco Extra, with this limited number of outlets with high

health conscious organic foods with eco friendly environment, also sell

imported global brands to cater to the Expatriates and for the consumers who

live in luxury apartments and condominiums in Colombo.

Also essentially carry out test marketing prior to launch these one stop shops

and super pola.


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4. Become the Cost Leader

Increase the direct sourcing both local and imported; such as going to the

suppliers directly this would be advantage on provide supplies to super pola

and Keells extra.

Since the JKH logistics have alliance with North and East , they can get the

best sourcing of Vegetables, Rice, Dairy and fresh from these areas by

maintain a proper supply chain management.

Also strength the supply chain with modern technologies such as low

inventories and real-time merchandizing.

Through the CSR arm of JKH “John Keells Foundation” can start

sustainability in various parts of the country such as adopting a fishing village

or farming.

Use existing database of NEXUS loyalty card members to offer tailored

promotions and track their consumer buying patterns.


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BibliographyDeChernatony, L. a. (1998). Creating Powerful Brands (2 ed.). Oxford: ButterworthHeinemann.

Lanka, C. B. (2010/2011). Annual Report.

Nielsen, A. (2011). Research Data.

PLC, C. C. (2011). Annual Report. Colombo: Cargills Ceylon PLC.

Porter, M. E. Competitive Strategy. In Techniques for Analyzing Industries and Competitors.

Reports, J. F. (2011). Colombo: JayKay Marketing (Pvt) Ltd.

Yoram, W. (1984). Going to market:new twists for some old tricks. Wharton Magazine (4).


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Annexure

1.JMSL BriefThe company profile of JMSL is a subsidiary of John Keells Holdings established in 1991;

main function is administration and management of “Keells Super” super markets, currently

42 branches and 6 franchised outlets with “Super K” brand. Current employee force is 1800

and 12000 stock keeping units in outlets. Most recent adaptation of JMSL is to move towards

apparel and fashion under the brand “KEKO”. The brand equity of Keells Super is Rs.8

Billion currently and the Vision is to be one of the leading brands in retail in the region.

2. Positioning Errors

3.Retai Markt LandscapeBased on the above research information Modern Trade market share is just 16.4% compared

to the Traditional trade market share 83.6%. It is a huge opportunity for Keells Super to enter

to the untapped markets with different strategies which will be proposed in the

recommendations. And also the modern trade market is growing annually with 34% which

means more consumers are shopping through supermarkets and new chains are been also

introduced ,such as Arpico, Laufs and Sunup. However from the above information we can

see there is a huge growth potential for Keells Super in the modern trade market.

Under Positioning

This is where the customer has a blurred and unclear idea of the brand.

This occurs when customers cannot readily identify the brand and its

features.

Over Positioning

Where the consumers have too limited awareness of the brand, this happen

when organizations try to create idea of the product in the mind than the

actual product attributes.

Confused Positioning This is where consumers have a confused opinion of the brand.

Double Positioning Where in which consumers do not claims of the brand.


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4. Turnover Vs Outlets comparison in 2010/2011

The fastest growing super market chain is Cargills which has 163 outlets; the second follower

is Keells Super with 42 outlets and followed by Arpico super centre and Laugfs. By analysing

the above information it is clear that is even though Cargills have a faster growth but their

turnover is lower when compared with higher number of outlets it has , on the other hand

where keells Super have only have 42 outlets but the turnover is high.

0 50 100 150 200

Cargills Food

Keells Super

Arpico Super

Laugfs Sunups

Outlets

Cargills Food Keells Super Arpico Super Laugfs SunupsTurnover Bn 29 10.2 10.1 3.1Outlets 163 42 11 25

2010/2011 Turnover in LKR Bn & No.of Outlets


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5. Porters 5 Force Analysis

Industry Rivalry – such as large number of Super markets, Slow market Growth, High

Fixed costs, Low levels of product differentiation.

Threat of New entrants – Economies of scale, less restrictions to open a super market,

little brand franchise.

Bargaining power of Customers – Concentrated, mare choices for consumers.

Threat of Substitutes – Traditional shops and other mum & pop shops.

Bargaining power of suppliers – suppliers concentrated, powerful consumers, cost to

switch suppliers.

IndustryRivalry

Threat ofnew

entrants

Bargainingpower ofcustomers

Threat ofsubstitutes

Bargainingpower ofsuppliers

Industry isExtremelyHighCompetitive

HIGH

HIGH

HIGH

HIGH


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6. JMSL, Keells Super AuditSTRENGTHS

1. Joh Keells brand strength worth Rs.65

Billion.

2. Extremely motivated and trained staff.

3. Conveniently located to cater the target

market.

4. Strong IT backbone with SAP.

5. Extra high quality and hygiene products

6. Consultancy from International experts such

as Tesco and Wal-Mart.

7. Trading up consumers by following other

players.

WEAKNESSES

1. tremendously high rivalry within the industry

2. Very high staff turnover over the Keells

Super as well as in the industry, which is

120% per annum.

3. Price has become the main differentiator

above all the other attributes.

4. Decrease in market share of keells super from

25% to 17% and rapid growth of Cargills and

Arpico.

7. Expansion of Cargills

Source: Cargills PLC Annual Report


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8. Consumer Research Information.

The Consumer research was carried out in following locations and done for 100 consumers

KEELLS outlets- Narahenpita, Mahabage, Marrine drive and KiribathgodaCargills outlets – Nawala, Wattala, Park road and Kadawatha


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9.Elephant House Super PolaTo overcome the blunder, Elephant house super pola was initially introduced in 2003 to

attract the lower end and middle class market and also to compete with Cargills.

Initially it was open on premier locations such as Wellawatta, Union Place, Borella where

most of the high class consumers shop, first mistake was choosing the wromg location, this

was confused the consumers further, because Elephant House brand had sophisticated image

on consumers. So wrong communication was created in the market and consumers , another

reason EHSP to fail was the Union issues.

Apart from the above reasons EHSP to failed due to un trained staff where Super pola staff

was outsourced to Abans, where staff was not well trained and another reason is Super pola

had only 2800 SKU’s where an average super market need to have minimum of 7000 SKU’s.

Due to all these issues EHSP was withdrawn from the market after 18 months operation.

10. Lower than Lowest price campaign


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After the Elephant house super pola was withdrawn from the market Keells Super was

continuously losing the market share and losing profit, so after 5 years Keells came out with

the tactical campaign “Lower than Lowest Price” in 2008 to attack the Cargills “Lowest

price” campaign.

MBA Marketing Keels

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