Polishing an image

Zbigniew Bojanowicz, the president of Białobrzegi-based soft drink producer Zbyszko, has great faith in the marketing potential of laughter. So much so that he has put humor at the heart of his company's latest product launch, the second incarnation of the caffeine-free soft drink Polocockta. "Polocockta was the hit of the 1970s and as a drinks producer I wanted to give consumers something very original," Bojanowicz said of the product that was reintroduced to the Polish market last month. "Why Polocockta? I'm a cult guy and this is a cult product - that's why Polocockta. It delivers something original, something Polish and something healthy." Polocockta is a tongue-in-cheek attempt to breathe new life into a brand that enjoyed a brief existence as Poland's answer to the U.S. soft drinks Coca-Cola and Pepsi in the 1970s. But the lighthearted marketing of Polocockta belies the difficulties facing Polish manufacturers in unleashing and nurturing successful brands. While an awareness of the importance of brand names continues to develop, many businesses have failed to build brands capable of inspiring the loyalty of their customers - something crucial to boosting sales. And with many of the country's biggest names under foreign ownership, domestic producers face the prohibitive cost of pushing new contenders through a minefield of brands backed by powerful transnational firms.

Nostalgia trip Rather than deny Polocockta's drab history, Bojanowicz, with the help of Warsaw advertising firm CB4, decided to rescue the unregistered name from obscurity through a mass media campaign that poked fun at inept communist brand propaganda and 1970s kitsch. "People over 30 have negative associations with communism so we had to try and make them laugh," said Marcin Hejduk, the president and owner of CB4, which created Polocockta's launch campaign. "Young people have only ever seen communism through films, so they tend to associate it with comedy." The brand earned a reputation among consumers as a quirk of communist central planning rather than as a quality product and was pushed off the market by Western brands in the 1980s. "It tasted horrible," said Bożena Korulska, a Warsaw resident who remembers the original drink. "The only resemblance to Coca-Cola was the color." With a modified recipe, however, Polocockta's marketers hope the drink now will gain a following among Poles who remember the legendary 1980s cult comedy movie "Kingsajz," in which characters who drank Polocockta were transported to an authoritarian gnome society satirizing Polish communism. "'Kingsajz' was like one big advertisement for Polocockta," Hejduk said.

Brand new identity Using marketing tools to transform a product's image in order to increase its desirability has remained alien to a large number of manufacturers, leaving Poland with only a few strong brands, said Jacek Sadowski, the managing director of Kraków advertising agency Demo. "We have only had a market economy for 12 years, so marketing is a very young discipline," he said. Only 39% of managers and 41% of company owners consider ownership of a branded product to be important, according to a survey conducted by Demo during the first quarter of 2002. These attitudes were reflected in the advertising outlay on Polish brands, which represented just 22.4% of the zł. 6 billion ($1.5 billion) spent on advertising in Poland in 2001. "Those companies that invested in brands at the outset are huge today - I could mention Atlas," Sadowski said, referring to the Łódź-based construction adhesive and insulation producer.

Carrying the market Establishing a strong brand identity was an early priority for Atlas, which needed to stand out from a crowd of products without major technical differences, said Roman Rojek, the company's vice president. Since its launch in 1991, Atlas has distinguished itself by providing free consultancy services, publishing industry news and by forging a Polish identity on a market dominated by German products. "We have focused on everything that is outside the packaging," Rojek said. "We have a cycle of activities to support the brand by providing education for the construction industry. At the beginning of the previous decade we were the first company in the industry to advertise in the electronic media, primarily television." These efforts have paid dividends, creating an awareness of the Atlas brand among 82% of Poles, according to the Warsaw market research firm Pentor Institute.

Waking up Brands were not a serious concern for the majority of companies as Poland began to wake from its communist slumber in the early 1990s - a view that has remained entrenched in many companies, according to Agnieszka Górnicka, the director of the consumer research department at the U.S. market research firm ACNielsen Polska. "After communism, manufacturers preferred to believe that their products were good, and if they are good then they will sell well," Górnicka said. "I don't think that this period is over … There are still companies that think 'We have a great product and consumers must be stupid to buy from our competitors.' " Littered with monopolies, the budding market seldom gave customers a choice of products, thereby allowing businesses to neglect brands, Demo's Sadowski said. "Brands were sidelined, and when problems began they were blamed on salesmen or distribution or the quality of the product," he said. He blamed weak branding for the failure of Bydgoszcz-based Romet, Poland's largest bicycle maker, which collapsed in 1998. Analysts said the continuing lack of enthusiasm for brands, particularly among small- and medium-sized firms, was also caused by economic factors. The cost of establishing a brand on a market with many foreign competitors is a primary concern, said Richard Lucas, chairman of Kraków market research firm Polish Market Media. "The largest economies of scale in consumer goods are in advertising," Lucas said. "It's not worth a small regional brewer spending a lot of money on national advertising because it can't spread its costs of marketing over such a wide volume of sales."

Juicy opportunities "Marketing costs are certainly restrictive," said Julian Pawlak, the chairman of fruit juice manufacturer Tymbark, named after the southern Polish city where it's based. "But we have seen well-known Polish brands with a weak market position … taken over by Western companies that have built a strong brand with one well-conceived advertising campaign and distribution (set-up)." Since the firm was purchased by Wadowice-based consumer goods group Maspex in 1999, Tymbark's logo and packaging have seen two face-lifts aimed at increasing its appeal to younger consumers and shelf visibility. "Innovation is a very important element in our strategy," Pawlak said. "The life cycle of products is very short, particularly in FMCG (fast moving consumer goods). Companies must be able to quickly rejuvenate their brands. Changes to our packaging were intended to allow the product to acquire maturity in line with our consumers, but also to reach younger consumers." The Maspex group's fruit juice brands Tymbark and Kubuś controlled 29.4% of the Polish market in the February-March 2002 period, according to ACNielsen research. The Sopot-based puzzle and game manufacturer Trefl has managed to secure a strong foothold for its brand on the market without a multimillion dollar advertising campaign. The biggest boost to the company's brand has been the publicity generated by the Prokom Trefl basketball team, which was started by Trefl's owner Kazimierz Wierzbicki in 1997 and has been sponsored by business software producer Prokom since 2000. "The basketball side of things is very strong," Wierzbicki said. "In Poland, Trefl is more often associated with basketball than with (puzzles), thanks to the media exposure. The name is very popular, and we are looking for ways to translate this into toy sales." Trefl controls 70% of the puzzle market and 20% of the game market.

On the cheap The price sensitivity of Polish consumers, bolstered by ongoing state-sector downsizing and slowing economic growth, means that Polish companies are cautious about developing brands at the cost of losing their pricing edge, Lucas said. "The idea of a brand is that you may pay for the security of dealing with a company that's prepared to put its resources into promoting its name," Lucas said. "The problem is that there may be someone that sees you as being better but would rather do business with someone cheaper." But Polish consumers who prefer to splurge on branded products have yet to develop a loyalty to their favorite names, casting further doubt on the value of investing in brands, particularly in the FMCG sector, he said. "The FMCG people complain that Polish consumers are loyal to the concept of brands, but not to any particular brand within that concept," Lucas said. "They will insist on buying a branded washing powder, but they don't care whether it comes from Unilever or Procter and Gamble." These factors have attracted domestic businesses to selling their products under a supermarket's own-brand label rather than developing their own brands, a pattern consistent with Western economies, he said. "You cut your marketing costs enormously since you don't need to spend money on adverts or nearly so much on salesmen," Lucas said.

Competitive culture A group of Polish producers of branded goods led by Zbigniew Komorowski, a member of the board of yogurt producer Bakoma and a Peasants Party (PSL) MP, moved to quash the growth of private brands last month. Komorowski claimed in the Sejm that Polish companies, unable to afford to market their brands, were being forced to produce private brands for supermarkets, thus "removing the added value of the brand and forcing many Polish brands to disappear." Komorowski, who wants Polish law to control the number of private brands sold on the market, recently posted amendments to the Unfair Competition Law, which was passed on to the Senate last month. The law, which seeks to prevent large discount retailers from generating more than 20% of their revenue from their own-label products, has met with criticism from analysts, who argue that the amendments will hurt consumers by increasing average supermarket prices and hurting the largely Polish private label producers. The Senate had not voted on the law as the WBJ went to press. "All attempts at manually steering markets are misguided - if they want to promote (brand creation), they should provide training and special credit arrangements," ACNielsen's Górnicka said. "Supermarkets will find lawyers who will get around it. Such laws can always be circumvented." Komorowski was unavailable for comment at press time.

Getting under your skin Analysts see the use of imaginative marketing to create unique product niches as the best strategy for creating and maintaining Polish brands that will withstand pressure from global competitors. "The correct answer in Poland is the same as in Western markets," Lucas said. "You compete by specialization and differentiation … in a particular niche someone can dominate. And if you start going into more detailed niches, you can find examples of the best-of-breed Polish private companies that can compete." Carving out a niche in the cosmetics market to support an established brand has allowed skincare and beauty product firm Laboratorium Kosmetyczne Dr. Irena Eris to maintain market share at a time when competitors are becoming increasingly aware of the value of brands. Established in 1983, Eris branched out by setting up its first skin care clinic in 1996 and establishing a health spa in the southern town of Krynica in 1997. The ventures generate additional revenue and improve the way the brand is perceived, said Cezary Kołodziejczyk, the marketing director of Eris. "We don't do things just for the sake of marketing," he said. "We want women to feel they're getting more than just cosmetics. "This form of activity will determine the way the brand is perceived in the future." The company's share of the skin care market has risen steadily, from 15.74% in 1998 to 16.62% in 2001, according to the market research firm MEMRB International.

Gaining respect The good news for aspiring Polish brands is the domestic consumers' diminishing prejudice against them, Górnicka said. "The Polish market has changed a lot, (and) consumers no longer see foreign goods as being the best by default," she said. The growing acceptance of Polish brands is reflected in a shift in the marketing strategy of Wronki-based household electrical goods manufacturer Amica, first launched as a brand in 1992. "The initial emphasis of our marketing was aimed at convincing consumers that the brand represents the same level of quality as the Western brands to which Polish consumers aspired," said Lidia Holewa, Amica's spokeswoman. "Our current advertising campaign stresses that we are a Polish brand, but one that is respected outside Poland." Amica plans to increase its profit by more than 10% this year, despite the retail slowdown on the Polish market. The firm expects to crank up sales from last year's zł. 856 million ($214 million) to zł. 955 million ($238 million) in 2002 with profit hitting zł. 14.8 million ($3.7 million). Growing loyalty to domestic brands has not escaped the attention of the makers of Polocockta. In giving the beverage a Polish brand identity, the firm said that the thrill of Western brands has faded for Polish consumers. "I think we've had enough of foreign products and enough of the U.S.A." Bojanowicz said. "We are starting to select products in terms of quality, as does the rest of the world."