Rebranding Instead Of Focussing On Market Share Brought Turn Around To A Company
By Nurul Haziqah Abdul Halim
Pix by Shahiddan Saidi
BANGI, 11 March 2014 – A company CEO in a talk to students of the Graduate Business School (GBS) of The National University of Malaysia (UKM) related how changing a strategy from focussing on market share to rebranding, seeking consumer insights while maintaining quality had enabled the company to turn around.
From once where it had to be delisted from the Australian stock exchange after suffering heavy losses, it has within four years been able to turn around and becoming profitable with sales growth of 350% in the period.
Group Managing Director and CEO of Vita Life Sciences, an Australian owned pharmaceutical and healthcare company, Mr Eddie Tie was relating his experiences in turning around the company to what it is today with its products again in demand.
The international brands of Vita Life Sciences are Herbs of Gold and VitaScience in Australia, and VitaHealth, VitaLife and Pharma Direct in Asia. Established since 1947, the company has formulated and sold more than 1,000 products catered to different health and age categories.
Tie was addressing the students in a talk on “Rebuilding Business: Challenging Convention and Changing Mind-sets” at a Sharing Session at GSB here recently.
He spoke of not compromising on pricing strategy when he joined the company in 2005 to help turn around the company which in 2004 was facing a downward spiral of luck and shares.
“Our brand was tarnished, we suffered product recalls, sales suffered, RM130 million loss and we were delisted from the stock-exchange. In 2005 they hired me and now we have opened four subsidiaries, added 320 new staff, 380 new products, 350 percent of sales growth, 30 million in revenue with zero money borrowed from the banks and we were relisted in the stock exchange. That’s the turnaround,” Tie said.
Having previously only focusing on market share, as in paying for product visibility, the company was not bothered by cash flow or stock holdings. It is a common practice for some companies, where they will literally pay pharmacies to keep their products on the shelf where people can see them, even if no one actually buys them.
“They didn’t care. They just simply launch a product and if it didn’t sell they will keep lowering the price and this meant lowering profit margins, which was not good for the company,” Tie said.
He then changed the strategy and instead of focusing on visibility of product he focused on re-branding, consumer insight while maintaining product quality.
Tie stressed the need to never take the consumers for granted. The level of awareness is very high with consumers researching online about the products before buying and they read clinical studies and findings.
“Never underestimate your consumers if they want quality you give them quality and that means that as a company you must be willing to invest for good quality products,” Tie said.
Avoiding the intense competition of vitamin products and common supplement products, Tie steered the company to make changes, create new line of health products, among them focussing on the pre and post cancer medicines.
“Business is like fashion, we need to create a new line every new season. At the time there are a lot of supplements and drugs catering for people who already suffer from cancer no one look at the need of those who are trying to avoid it? Or patients who were out of the danger zone and wish to stay that way? So we focused our efforts there,” Tie said.
Tie said the company never lowers the price of its products even under immense pressure to do so, because it is easier to whether the pricing storm than try to raise it up again later.
Lower prices is not Vita Life’s brand positioning, because it is not sustainable and in the long-run it will damage the company, Tie said.
The talk followed with a question and answer session.