Forum Archive Index - October 2001

[Marilyn Munroe <who.c@res.co.nz>]

The key issue in the Danone takeover offer for Frucor is Frucor's skills
in brand management.

The key trick in  brand management is to have the brand associated in the purchasers mind with qualities that rise above the prosaic attributes of the product.

The best example of this is CocaCola® which on rational analysis is a mixture of water, gas, sweeteners, and flavoring. The commercials on T V which promote this product pay no mind to thirst quenching value of the product but seek to associate its consumption with young hip attractive people having fun doing exciting things. The implied message is that if we to consume the product we too will become young hip attractive people doing exciting things.

Would you choose a product which implied such benefits over rival products? If you did you would be creating brand value.

To succeed in this is not easy. If it was we would find coke type attributes used to plug everything from porridge to cam belts. If however you do succeed you can increase market share or command a price premium over your rivals, resulting in increased profits

Has Frucor succeeded in raising brand value over its products?. I am not sure, I think it may have. Ideally I would have liked more time to judge Frucor's performance. Danone's offer has forced me to make a judgment before I was sure.

My judgment is!     Frucor despite some setbacks is increasing the value of its brands. I expect that as the value of these brands increases the benefits will flow through to the shareholders. I have decided not to sell at the offered price.

Boop-boop-de-do Marilyn

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