Issues and Causes

National Foods now a public company started with a small family business back in 1970. This case primarily is of the Ronaq brand of NFL, which was launched as a flanker brand to target the Karachi market for its spicier taste different than its usual milder taste. Further on, it was launched to capture the market share away from Shan which was a market leader in Karachi for recipe masala.

Shan occupied 70% of the Karachi market whereas National Foods had just 30% of it. Ronaq however, failed to achieve any targets and its market share was just 4% in three years even with one of the most aggressive marketing strategies used for recipe masala in Pakistan.

Cannibalization of own products

Ronaq was introduced into the market to cut down Shan’s share in the recipe masala market in Pakistan. As it entered the market it created confusion in the minds of the customers regarding the National masala. Cannibalization occurred in the internal organization as Ronaq started taking away share of National foods’ original masala. Consumers could not make out the difference between Ronaq and previous National brand and thought of it as just a variant and not a separate brand.

Brand ambassador Shan did not work

Brand ambassador “Shan” could not uplift the image of Ronaq to his loyal followers and this strategy backfired. According to some critics it helped the competitor gain more advantage. It was seen that the more the TV advertisement for Ronaq was run the more people remembered the Shan masala. This increased the sale of Shan masala because people recalled Shan more than Ronaq.

Poor training of Sales force

The sales team also could not convey its “Chatkheela” image to the retailers properly and were not motivated to promote sales as proper training was not provided to them to convey the messages. All they said was “is mein zyada mirchain hain”, which only made sense of a variant and not of a separate brand.

Targeted the wrong market segment

Ronaq targeted the wrong market segment; Shan was strong in parts of Sindh specifically Karachi. Shan held market share of 70% in Karachi. Whereas Ronaq targeted the Punjab where people do not like spicy food, they are fond of milder taste. Ronaq should have targeted the areas where people preferred spicy taste as Shan had done.

Packaging not creating brand identity

Packaging of Ronaq did not create any brand identity

Restaurant jaisa taste, created confusion

The use of “Restaurant Jaisa Taste” line did not motivate consumers to buy the product, instead it served as a barrier to sales and acted as confusion for them as every restaurant is known for its unique tastes and recipes and since all recipes can’t be accommodated into one packet, the purpose was not served.

Shan’s aggressive strategy

Shan, the competitor, came up with their strategy to kill the Ronaq brand right in its early days by an attack through its BTL activities in support with their ATL activities and started targeting the same market of young women and college girls, the housewives of tomorrow.

Alternatives

Discontinue Ronaq

One alternative with the current situation ahead is to discontinue the brand. No more Ronaq, no more confusion. People will start heading back to National Foods’ Original recipe masala and they can concentrate mainly on their primary brand sustaining its market share and develop on it further on. People will not be confused anymore and there will be no more cannibalization. National foods will be able to give full attention to its primary masala’s and gain more profit that way.

Continue Ronaq without National endorsement

The other way round is to remove the National Foods endorsement from Ronaq and re-launch it as a separate brand so that people might not confuse it as a variant of National Foods Recipe Masala, and this way sales can boost up and take away Shan’s share. This way people will see Ronaq as a separate brand.

Continue Ronaq with National endorsement

The other alternative is to continue with what they are doing and put it much more efforts and wait for the consumer to take its stand, it might possibly be a good turnover for Ronaq in the future.

Re-launch as variant of National Spices – the ‘er’ factor

One more alternative is to re-launch variant of national spices but with different variants. For example for any recipe masala give variants such as spicy Biryani masala, spicier Biryani masala and spiciest Biryani masala for any recipe. This would give the people different taste options,

people who want less spicy go for spicy masala and people who wants little more spicy taste go for spiciest taste.

Decision Criteria

Market Share

Ronaq had entered the market as a spicy recipe masala. Its main focus was to cater to the people who like spicy food. There is a market for spicy food in Sindh area specifically Karachi. But Ronaq had positioned itself in the Punjab market where spicy food wasn’t liked much. Therefore Ronaq do not have market for its recipe masala there but if it changes its market positioning to Karachi it might be successful.

Product Cannibalization

National Foods already have a recipe masala with milder taste under the name of National Foods. Then it came up with Ronaq a recipe masala with spicier taste. People started to have confusion about this brand because they thought it is a variant of National Foods previous recipe masala.

Moving towards house of brands

Ronaq had come to the market under the name of National Foods the mother company. National Food has a number of Masala products under its name the original masala’s, the milder taste recipe masala and now Ronaq. National foods have moved towards house of brands by coming up with these products.

Customer confusion

First National Foods had introduced the milder taste recipe masala in the market with the name of National Foods, and then it introduced Ronaq. This caused a confusion in the customers to as which one is the product they should consumer. They focused in the Punjab market where people got confused as to which product was the original one and was Ronaq a variant or a separate product.

Long term sustainable – Strategic Implications

Analysis

Analysis on decision criteria

Alternative I Alternative II Alternative III Alternative IVMarket share There will be no

market shareMarket share will reduce as cannibalization will take place

Market share can increase

Market Share can increase with time

Product Cannibalization

As product will discontinue there will be no cannibalization

There will be cannibalization because people will get confused between different Masalas of National

There will be no cannibalization because Ronaq will be seen as a separate brand

Cannibalization can occur.

House of brands Ronaq will discontinue so it will be not be a part of house of brands

National Foods will become a house of brands if Ronaq stays under its name

Ronaq will be a separate brand not a part of Nationals Foods house of brands

It will be a part of house of brands.

Customer Confusion

There will be no customer confusion

There will be confusion as customers will see Ronaq as a variant

No customer confusion as brand will be separate

There can be customer confusion

Long term Sustainability

No long term sustainability

Low chance of long term sustainability

There will be long term sustainability

Low chance of long term sustainability

This table shows that alternative III meaning it would be best for Ronaq to be separate from National Foods and become an independent brand.

SWOT analysis

Strength

National foods has a strong foothold in the Punjab market

National foods Is a leader in the overall market

National foods brand name is strong and recall value is better than the competitor

Ronaq’s chatkheela taste caters to the Karachi market

Weakness

Sales team’s poor training

Shan as a brand ambassador backfired

Promotional strategy of ronaq did not create awareness of its spicier taste

Promoted in Punjab more than Karachi whereas product was created to capture Shan’s market share which was more in Karachi

Threats