Iceland has gone through a series of changes in its brand positioning. A chain that was once seen solely as a retailer of frozen foods also came to be perceived as a retailer of freezers and other appliances. The pivotal point in the supermarket’s positioning seem to have been the stance on genetically modified food and its being the first UK food retailer to have offered a nationwide delivery service. Iceland’s brand identity would have been by now in serious difficulty had it not embraced change and diversification, as it is easier to perceive a chain like Iceland as an unexciting local grocery store which does not offer the scale and range of products that the major supermarkets offer. Expansion of the product line, along with a focus on communication, has helped the supermarket maintain the brand identity of a caring, affordable and a specialist supermarket.
Marketing Communications within the UK
As the co-founder of the supermarket Malcolm Walker (2000) has said, there is no contradiction in being a caring company and benefiting from publicising it. The marketing communication of the company is very much tied to its growth strategy. Iceland would have known that it would be difficult to compete with the scale and pricing of large supermarkets by dint of its being a frozen food specialist only. Hence its forays into the non-genetically (GM) modified food market. The important feature of that strategy was to promote itself by offering the new food range at the same price as genetically modified food. As far back as 2000 the supermarket had signed contracts for sourcing agreements for non-GM food. This was essentially as non-GM food in the UK is primarily imported. The supermarket seemed to be following a carefully crafted integrated marketing communication plan, and targeting budget-aware female shoppers whose concern about GM food and health issues have in recent years been heightened by an arguably scaremongering media.
Iceland has been successful as it has been able to identify what the drivers for its customers are, what is the right pricing model and what needs to be its unique selling point or proposition (USP). While non-GM food at a particular price point is its USP, it has also been able to effectively bring in its core customers. Mothers are the core customers at the supermarket and they have been targeted with campaigns which say that ‘mums love Iceland’. More recently, celebrities of similar age and social class to many Iceland customers (i.e. mums of lower social classes) have been hired to support similar campaigns. Because Iceland does not have a big warehouse approach where the customer needs to drive out to an out-of-town store, it has been successful in luring more mothers to shop with it. The pricing model of Iceland has always traditionally targeted customers who are price conscious. The moment is right for Iceland as people have become more price conscious and budget shopping supermarkets like Iceland, Aldi and others are experiencing a boom period in the recession. Iceland’s recent acquisition of fifty one Woolworth stores is a testament to the success of its pricing model.
Russia is an ideal choice for market expansion as it is still a nascent market in terms of growth of non-genetically modified food. The socialist culture that Russians inherited as a result of the now defunct Soviet Union also in some way makes them price conscious when it comes to shopping for staple food – not to mention the fact that most Russians are financially rather badly off. According to an article on The Washington Post’s online edition, the trend for eating health food is gaining in popularity in Russia, especially amongst the wealthier new rich and middle class. It estimates that around 7 million people eat Non-GM products, out of about 150 million Russians, but a significant number none the less. From a market sizing estimate this seems to be a good market for Iceland to expand into, even though the seven million people only constitute about 5% of the Russian population. Recently the number of people there ready to pay more for healthy food has grown by 20%. This highlights that there exists a Non-GM food market in Russia and it does provide for high growth rates in coming years. Hence, any strategic investment in Russia in this sector could pay great dividends in the future.
Communication Plan for Russia
According to Douglas (2001), brands play a critical role in establishing a firm’s visibility and position in international markets. Iceland should be in a position to leverage its brand equity in this market. Brand equity is often described as the value that a brand name adds to the product. Iceland, through its stance on Non-GM food and active public relations campaigns, has managed to add that value to its product.
Yoo, Donthu and Lee (2000) have said that price and perceived quality are interlinked. Consumers in the UK have arguably benefited from Non-GM food being sold at the same prices as GM food by Iceland. The same benefit when communicated properly will be an attraction for the Russian consumer. Also, as mentioned earlier, there has been a growth in the number of people who are ready to pay more for healthier food in Russia, although it is one of the few countries where life expectancy is actually falling and many Russians do not eat a healthy diet. If Iceland can replicate its promise of Non-GM food at GM food prices then it can look at shifting a lot of competitor customers to its brand.
Iceland’s overall communication strategy should have the objectives of leveraging brand equity with regards to Non-GM food products and highlighting the budget shopping experience. The target audience should be current consumers and people could be potential switchers. What this allows Iceland to do is target potential brand switchers to Iceland and also helps grow the Non-GM food category. Steve and Alexis (2006) have recommended that brands should standardise their communication messages in sync with those existing in the local market, giving customers a familiar point of reference. While Iceland does need to have an international brand view, it should reword its communication and deliver it through mediums that are best suited to the Russian market. Broniarczyk and Joseph (1994) highlight that brand image should be leveraged for any brand extension exercise. While taking a localised approach to communication in Russia, the attempt should still be made to leverage the brand value of Iceland and its achievements in the UK market. These measures will allow Iceland to leverage on its present success when extending its brand into the Russian market.
Walker, Malcolm. 2000. Food Processing, Techpress (FPI) Ltd
Date: 14 June 2000. UK: Iceland supermarket chain buys 40% of world organic vegetable crops.
Available at: just-food.com, http://www.just-food.com/article.aspx?id=88780
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Burt, Steve. Mavrommatis, Alexis. September 2006. The International Review of Retail, Distribution and Consumer Research. Volume 16, Number 4 , pp. 395-413(19)
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Yoo B, Donthu N, Lee S. 2000.An examination of selected marketing mix elements and brand equity. Journal of the Academy of Marketing Science, 28(2): 195-211
Yurov, Alexander. 2006. Hunger for Organic Foods Comes to Russia. Washington