Point of difference (POD) is a term used for an outcome of product differentiation. In business economics, differentiation is seen as an important strategic move for companies to make. Because of an overwhelming variety of products and services on the market, those that stand out in some manner are better noticed by consumers. There are various (positive and negative) ways of being different compared to competitors in the same market. Differentiation is the term given to the positive way in which a company's product differs from its competitors. Points of difference (PODs) describe the individual factors of differentiation.
The key points of difference of a company are synonymous with its unique selling proposition (USP), and are critical in defining its competitive advantage and branding strategy. They must be attributes or benefits that consumers strongly, uniquely, and positively associate with the company's brand; and not with any competing brand. Once points of difference have been clearly communicated to consumers, the company and its brand are set apart from its competitors. Brand loyalty depends upon the ability of the company to establish and maintain clarity of communication with the consumer regarding their brand; and to maintain and expand the points of difference that defines the brand.
Points-of-parity (POP) are driven by the needs of category membership to create category of POPs and the necessity of negating competitors’ Points of Difference (POD) to create competitive POPs. In choosing points-of-difference, two important considerations are that consumers find the POD desirable and that the firm has the capabilities to deliver on the POD.
There are three key consumer desirability criteria for PODs,
1.Relevance:
Target consumers must find the POD personally relevant and important. The Westin Stamford hotel in Singapore advertised that it was the world’s tallest hotel, but a hotel’s height is not important to many tourists.
2.Distinctiveness:
Target consumers must find the POD distinctive and superior. When entering a category where there are established brands, the challenge is to find a viable basis for differentiation. Splenda sugar substitute overtook Equal and Sweet ‘n Low to become the leader in its category in 2003 by differentiating itself on its authenticity as a product derived from sugar, without any of the associated drawbacks.
3.Believability:
Target consumers must find the POD believable and credible. A brand must offer a compelling reason for choosing it over the other options. Mountain Dew may argue that it is more energizing than other soft drinks and support this claim by noting that it has a higher level of caffeine. Chanel No. 5 perfume may claim to be the quintessential elegant French perfume and support this claim by noting the long association between Chanel and haute coutre.
There are three key deliverability criteria.
1.Feasibility:
2.Communicability:
3.Sustainability:
Marketers must decide at which level (s) to anchor the brand’s points–of-differences. At the lowest level are brand attributes, at the next level are the brand’s benefits, and at the top are the brand’s values.
Thus marketers of Dove soap can talk about its attribute of one-quarter cleansing cream; or its benefit of softer skin; or its value, being more attractive. Attributes are typically the least desirable level to position. First, the buyer is more interested in benefits. Second, competitors can easily copy attributes. Third, the current attributes may become less desirable.
Research has shown, however, that brands can sometimes be successfully differentiated on seemingly irrelevant attributes if consumers infer the proper benefit. Procter & Gamble differentiates its Folger’s instant coffee by its “flaked coffee crystals, “created through a “unique patented process. In reality, the shape of the coffee particles is irrelevant because the crystals immediately dissolve in the hot water. Saying that a brand of coffee is “mountain grown is irrelevant because most coffee is mountain grown.
Crtsy - Prahalad Krishnamurthi.
Wednesday, November 24, 2010
Tuesday, November 23, 2010
Household Potential Index (HPI)
Something that is “wanted by many” but “consumed by few” is our definition of Premiumness. Simply put, premuimness is defined as the inverse of penetration. For example, 41 per cent of all homes in India have Television. Only 2 per cent have a flat TV. Hence, homes with a flat TV is considered to be “premium” by HPI measure.
The concept of HPI allocates high scores for less penetrated product categories and services. On the other hand, lower scores to higher penetrated categories or mass consumed categories. Thereby, HPI eliminates judgmental factors and is therefore a more systematic approach, making it applicable across all segments of households, from the “super affluent” to the so-called “desperates”. HPI is a holistic measure of potential, and not just based on few durables.
In order to ensure that a specific ownership of a durable or consumption of a particular category of FMCG or services does not result in very high scores, 50 different measures have been incorporated into the HPI system.
HPI considers a wide spectrum of categories from Durables, FMCGs, Services, which are covered in IRS and scores are assigned in a scientific and automated method to products owned, consumed/ used. In addition to product categories, HPI also takes into account the key differentiating household demographics, such as, Highest Education in the household, Number of working members, education of the housewife, area occupied by the household vis-à-vis the number of people residing etc.
Look at the table-1 below. Going by the definition of SEC, A1 should be the most affluent class. However, it is not the reality. As per HPI, if we look at the top 1 per cent of consuming homes in India, only 39 per cent is from the uppermost SEC A1 and the remaining 61 per cent is from other SECs in Urban and Rural segments.
Conversely speaking, 61 per cent of SEC A1 does not feature in the Top 1 percent of the consuming households.
Crtsy - FMCG blogspot
The concept of HPI allocates high scores for less penetrated product categories and services. On the other hand, lower scores to higher penetrated categories or mass consumed categories. Thereby, HPI eliminates judgmental factors and is therefore a more systematic approach, making it applicable across all segments of households, from the “super affluent” to the so-called “desperates”. HPI is a holistic measure of potential, and not just based on few durables.
In order to ensure that a specific ownership of a durable or consumption of a particular category of FMCG or services does not result in very high scores, 50 different measures have been incorporated into the HPI system.
HPI considers a wide spectrum of categories from Durables, FMCGs, Services, which are covered in IRS and scores are assigned in a scientific and automated method to products owned, consumed/ used. In addition to product categories, HPI also takes into account the key differentiating household demographics, such as, Highest Education in the household, Number of working members, education of the housewife, area occupied by the household vis-à-vis the number of people residing etc.
Look at the table-1 below. Going by the definition of SEC, A1 should be the most affluent class. However, it is not the reality. As per HPI, if we look at the top 1 per cent of consuming homes in India, only 39 per cent is from the uppermost SEC A1 and the remaining 61 per cent is from other SECs in Urban and Rural segments.
Conversely speaking, 61 per cent of SEC A1 does not feature in the Top 1 percent of the consuming households.
Crtsy - FMCG blogspot
Tuesday, October 19, 2010
Brand Update : Peter England is the Beginning of Good Things
In these four years, Peter England has become a Rs 500 crore brand growing more than 30% annually. In the last IPL season, Peter England hit the branding circuit with a bang by sponsoring Chennai Super Kings. The brand also dabbed into suits as well as casual wear in this time. At one point in time, the brand had a campaign featuring Kareeena Kapoor.
2010 is witnessing another beginning for the brand. The brand has roped in the South Indian Actor Siddharth as brand ambassador and is currently running a campaign featuring the celebrity. Along with the brand ambassador, Peter England is also repositioning itself on a new platform. The brand has changed its tagline to " Beginning of Good Things ".
In their press releases, the brand talks about the new positioning. Peter England wants to epitomize confidence that arises out of self belief. The brand wants to remind the users about their inner strength that will arise of self-confidence and Peter England will be the source of that self confidence.
Although the brand's new proposition sounds good and is a sort of laddering up, I surely miss the first campaign of Peter England - The Honest Shirt . That was a campaign that expressed the brand completely. The promise of a Honest Shirt was embraced by consumers because the message was so simple , direct and relevant.
But how ever, the brand got bored with the positioning and moved over to an aspirational " Honestly Impressive " theme. Although the concept was good, it was no where near the original one interms of relevance and simplicity.
To be frank, I did not like the new tagline -Beginning of Good Things ( personal opinion !) . The positioning almost is similar to Cadbury Dairy Milk's Shubh Aarambh theme ( for an auspicious beginning). And theme of self confidence arising out of dress is neither new nor clutter breaking. Its just another campaign and the brand will see its sales going northward because of the smart selection of the celebrity.
Siddharth will make the brand more appealing to youngsters. The flooding of the market by various regional brands/private labels and the trend among youngsters to go for street fashion rather than branded ones is making the lives of brands like Peter England difficult . The popularity of Siddharth among youngsters will bring back lot of them to the brand.
Peter England as a brand will make sense because of the inherent value proposition. As long as the value proposition remains the same, there is no stopping for this brand.
2010 is witnessing another beginning for the brand. The brand has roped in the South Indian Actor Siddharth as brand ambassador and is currently running a campaign featuring the celebrity. Along with the brand ambassador, Peter England is also repositioning itself on a new platform. The brand has changed its tagline to " Beginning of Good Things ".
In their press releases, the brand talks about the new positioning. Peter England wants to epitomize confidence that arises out of self belief. The brand wants to remind the users about their inner strength that will arise of self-confidence and Peter England will be the source of that self confidence.
Although the brand's new proposition sounds good and is a sort of laddering up, I surely miss the first campaign of Peter England - The Honest Shirt . That was a campaign that expressed the brand completely. The promise of a Honest Shirt was embraced by consumers because the message was so simple , direct and relevant.
But how ever, the brand got bored with the positioning and moved over to an aspirational " Honestly Impressive " theme. Although the concept was good, it was no where near the original one interms of relevance and simplicity.
To be frank, I did not like the new tagline -Beginning of Good Things ( personal opinion !) . The positioning almost is similar to Cadbury Dairy Milk's Shubh Aarambh theme ( for an auspicious beginning). And theme of self confidence arising out of dress is neither new nor clutter breaking. Its just another campaign and the brand will see its sales going northward because of the smart selection of the celebrity.
Siddharth will make the brand more appealing to youngsters. The flooding of the market by various regional brands/private labels and the trend among youngsters to go for street fashion rather than branded ones is making the lives of brands like Peter England difficult . The popularity of Siddharth among youngsters will bring back lot of them to the brand.
Peter England as a brand will make sense because of the inherent value proposition. As long as the value proposition remains the same, there is no stopping for this brand.
Thursday, October 7, 2010
Brand Update : Garnier Goes Beyond Shampoos
A lot of activities are happening for Garnier brand in the Indian market. From a brand focused on shampoo, Garnier has moved into personal care category with a range of products from fairness creams to deodorants.
Garnier earlier had moved to a broader personal care market with a wide range of personal care products for women. Later the brand broke into men's personal care with the launch of Garnier men's fairness creams endorsed by Bollywood hunk John Abraham.The brand also launched Garnier range of deodorants endorsed by the same celebrity.
Now,Garnier is all set to cover the entire shampoo market with the launch of Garnier Kids Shampoo in the Indian market. It is interesting to see how this brand is slowly covering the entire Indian personal care market. The brand is adopting a segment by segment targeting strategy. It consolidated its position in shampoo then moved into men's personal care and now into kid's hair care market.
The launch of Garnier Fructis kid's shampoo is expected to revive the kid's personal care category in India. The kid's hair care market is dominated by HUL's Clinic Plus brand and the other players being Parachute Starz. But recently the activities in this category has been minimal.
The entry of Garnier into the kid's segment may have been to catch them young.The new generation kids have a mind of their own and they are brand conscious. So tapping them with a variant makes sense. Moreover mothers feel that young hair /skin needs special care and adults products may be too strong for the kids.
Garnier's brand strategy of slow systematic growth has been reaping rich rewards. The brand has gained consumer acceptance and retail support across various markets in India.The brand is careful in using the same imagery across various categories. The brand uses a mix of foreign and Indian models for its campaigns and is never fixated on depending on a celebrity face to push the product. The brand although started as a shampoo brand has flexibility to move into various categories. The core brand values of " Green " and the tagline " Take Care " can be used across multiple categories without any dilution to the core brand positioning.
Garnier is wise enough to make maximum advantage of those attributes.
Sunday, September 26, 2010
Marketing Strategy : Making Brand Portfolio Decisions
Brand portfolio decisions are strategic in nature. These decisions have very powerful impact on the entire brand architecture and marketing strategy of the firm. According to marketing theory, there are two basic brand portfolio models –House of Brands and Branded House.
Recently Rajiv Bajaj, CEO of Bajaj Auto announced a decision that the company will not be using the corporate brand Bajaj for any of the motorcycles produced by the company. Instead, the bikes will sport individual brand names and Bajaj Auto will be a garage of independent brands like Unilever and P&G. According to newspaper reports, the company will focus on four brands – Pulsar, Boxer, Discover and KTM and will not use the parent brand to endorse these individual brands. Bajaj Auto has made the decision to move from a Branded House portfolio model to House of Brands portfolio model.
House of Brands
House of Brands model refers to a brand portfolio where firms will choose different brand names for various products across categories. These brands will have own identity and personality. Different products in the same category will also have individual brand names. FMCG giants like Hindustan Unilever, P&G l follow the model of House of Brands. For example HUL has soap brands like Lux, Rexona, Hamam, Lifebuoy, Dove etc.
House of Brands portfolio model have many advantages. One of the biggest advantages is the focus that managers can give to individual brands. Since each brand will have separate identity, brand managers can devise focused strategies with regard to segmentation, positioning etc. Individual brands also give tremendous amount of freedom as far as strategies are concerned. Brand managers are not constrained in devising their strategies since the brand is not linked to any other brands in the portfolio.
Since the brands in the portfolio are independent, the failure of any one brand is not going to have an impact on other brands. Controversies affecting one brand will have minimal impact on other brands from the same company and brand managers can distance other brands from the brand which is facing the issue.
House of Brands model also have its fair share of disadvantages. Since the firm intent to have different brand names for various products, the cost of promotion of these multiple brands will be more compared to Branded House model.
In the case of House of Brands, the promotional budget has to be shared which will create internal competition among various brands for a larger share. While internal competition can be beneficial, there is also a chance of internal conflicts within the brand management teams.
Another potential disadvantage is the chances of brand cannibalization within a category. For example soap brands Rexona and Hamam from HUL compete with each other in some southern markets. Thums Up and Coca Cola compete with each other in markets where they co-exist.
If not done carefully, different brands in the portfolio can also create confusion in terms of positioning and segmentation. Overlaps in segments, cannibalization, same positioning, and clutter etc can occur if the firm is not careful about the individual brand strategy. At one point of time HLL (now HUL) found its brand portfolio with too many brands that overlapped with each other. The company had to undertake a brand rationalization exercise which reduced the number of brands from 110 to 30 power brands.
Branded House
Branded House portfolio model is where the firm chooses to have one brand name for all the products that is marketed by the company. Many firms use the corporate brand name for all the products that they sell in the market. Dell is often cited as a classic example of a Branded House.
The biggest advantage of Branded House is the economies of scale in terms of brand promotion activities. Since there is only one brand to promote, the firm can channel the entire resources more effectively.
Another advantage of Branded House is that the promotional cost of introducing new products into the market will be significantly lower compared to House of Brands. Since the new product will carry the common brand name, there is an increased chance of consumer acceptance because of the existing brand equity of the parent brand. The firm is thus spared of the task of building brand awareness from the scratch.
A major disadvantage of Branded House model is the possibility of brand dilution arising out of different products from the same brand. Unless carefully monitored, product proliferation within the brand portfolio can dilute the core positioning of the parent brand. It may not be possible for all products to have the same positioning theme and any deviation from parent brand’s positioning will dilute the core positioning them of the Branded House.
Firms strictly adhering to Branded House portfolio model may have to forego many market opportunities if those categories do not fit into the parent brand’s positioning. For example a Branded House marketing luxury product may have to forego the mass market opportunities because of the positioning constraints. That constraint is not applicable for House of Brands because the positioning of one brand may not affect another.
Another disadvantage of Branded House portfolio is the impact of product failures/controversies on entire portfolio. Since all products carry the same brand name, failure of one product can have a negative impact on the parent brand. Any controversy involving a single product can have devastating influence on the entire product range.
Although theoretically these two portfolio models exist, in practice firms tend to use various elements of both models together while devising their brand portfolio strategy.
(Reference: Tybout, A., & Calkins, T. (2006). Brand Portfolio Strategy. In Kellogg on Branding (pp. 104-129). Wiley India.)
Originally Published here at Adclubbombay.com
Recently Rajiv Bajaj, CEO of Bajaj Auto announced a decision that the company will not be using the corporate brand Bajaj for any of the motorcycles produced by the company. Instead, the bikes will sport individual brand names and Bajaj Auto will be a garage of independent brands like Unilever and P&G. According to newspaper reports, the company will focus on four brands – Pulsar, Boxer, Discover and KTM and will not use the parent brand to endorse these individual brands. Bajaj Auto has made the decision to move from a Branded House portfolio model to House of Brands portfolio model.
House of Brands
House of Brands model refers to a brand portfolio where firms will choose different brand names for various products across categories. These brands will have own identity and personality. Different products in the same category will also have individual brand names. FMCG giants like Hindustan Unilever, P&G l follow the model of House of Brands. For example HUL has soap brands like Lux, Rexona, Hamam, Lifebuoy, Dove etc.
House of Brands portfolio model have many advantages. One of the biggest advantages is the focus that managers can give to individual brands. Since each brand will have separate identity, brand managers can devise focused strategies with regard to segmentation, positioning etc. Individual brands also give tremendous amount of freedom as far as strategies are concerned. Brand managers are not constrained in devising their strategies since the brand is not linked to any other brands in the portfolio.
Since the brands in the portfolio are independent, the failure of any one brand is not going to have an impact on other brands. Controversies affecting one brand will have minimal impact on other brands from the same company and brand managers can distance other brands from the brand which is facing the issue.
House of Brands model also have its fair share of disadvantages. Since the firm intent to have different brand names for various products, the cost of promotion of these multiple brands will be more compared to Branded House model.
In the case of House of Brands, the promotional budget has to be shared which will create internal competition among various brands for a larger share. While internal competition can be beneficial, there is also a chance of internal conflicts within the brand management teams.
Another potential disadvantage is the chances of brand cannibalization within a category. For example soap brands Rexona and Hamam from HUL compete with each other in some southern markets. Thums Up and Coca Cola compete with each other in markets where they co-exist.
If not done carefully, different brands in the portfolio can also create confusion in terms of positioning and segmentation. Overlaps in segments, cannibalization, same positioning, and clutter etc can occur if the firm is not careful about the individual brand strategy. At one point of time HLL (now HUL) found its brand portfolio with too many brands that overlapped with each other. The company had to undertake a brand rationalization exercise which reduced the number of brands from 110 to 30 power brands.
Branded House
Branded House portfolio model is where the firm chooses to have one brand name for all the products that is marketed by the company. Many firms use the corporate brand name for all the products that they sell in the market. Dell is often cited as a classic example of a Branded House.
The biggest advantage of Branded House is the economies of scale in terms of brand promotion activities. Since there is only one brand to promote, the firm can channel the entire resources more effectively.
Another advantage of Branded House is that the promotional cost of introducing new products into the market will be significantly lower compared to House of Brands. Since the new product will carry the common brand name, there is an increased chance of consumer acceptance because of the existing brand equity of the parent brand. The firm is thus spared of the task of building brand awareness from the scratch.
A major disadvantage of Branded House model is the possibility of brand dilution arising out of different products from the same brand. Unless carefully monitored, product proliferation within the brand portfolio can dilute the core positioning of the parent brand. It may not be possible for all products to have the same positioning theme and any deviation from parent brand’s positioning will dilute the core positioning them of the Branded House.
Firms strictly adhering to Branded House portfolio model may have to forego many market opportunities if those categories do not fit into the parent brand’s positioning. For example a Branded House marketing luxury product may have to forego the mass market opportunities because of the positioning constraints. That constraint is not applicable for House of Brands because the positioning of one brand may not affect another.
Another disadvantage of Branded House portfolio is the impact of product failures/controversies on entire portfolio. Since all products carry the same brand name, failure of one product can have a negative impact on the parent brand. Any controversy involving a single product can have devastating influence on the entire product range.
Although theoretically these two portfolio models exist, in practice firms tend to use various elements of both models together while devising their brand portfolio strategy.
(Reference: Tybout, A., & Calkins, T. (2006). Brand Portfolio Strategy. In Kellogg on Branding (pp. 104-129). Wiley India.)
Originally Published here at Adclubbombay.com
Tuesday, September 21, 2010
NEW ALLOUT - "Mosquito to Flies"...!!!
From now on, Allout Frog will not only catch mosquitoes but also catch flies. India's popular liquid mosquito repellent has launched a campaign claiming the additional benefit of repelling flies. This is the first major change in the brand's strategy ever since SC Johnson's took over the brand from Karamchand Appliances.
What I make out of the ad (seen only once) is that the fly repellent property is an additional benefit of the core product - mosquito repellent. The brand expects that consumers will find more value in the product because of the additional benefit provided. Also, the current move can be seen as a larger plan for the brand to become a pest control brand from the current space of mosquito repellent.
The brand website also mirrors such a plan. The tagline of the brand is now " Worry No More " as against the " Macharoan ka Yamraj".
The new campaign follows the core theme of previous ads of Allout - talking about disease spreading pests and how the Allout Frog protects the entire family from those disease spreading pests.
The interesting question is whether launch of the additional attribute of " fly repellent" will add value to Allout brand or will it dilute the core positioning of the brand ?
My perception is that consumers will be delighted to have such an additional benefit with Allout. So far no brand has been able to provide relief from the irritating pest like housefly. So in that sense , Allout will standout ( differentiated) from the rest of the crowd.
Regarding the positioning of Allout, the brand has been careful in continuing with the same theme of ' protection from disease carrying pests ' for the new ad also. I feel that the brand will continue using this theme as its positioning and move away from the " mosquito -Yamraj " theme in future.
courtesy - Marketing Blogspot.
What I make out of the ad (seen only once) is that the fly repellent property is an additional benefit of the core product - mosquito repellent. The brand expects that consumers will find more value in the product because of the additional benefit provided. Also, the current move can be seen as a larger plan for the brand to become a pest control brand from the current space of mosquito repellent.
The brand website also mirrors such a plan. The tagline of the brand is now " Worry No More " as against the " Macharoan ka Yamraj".
The new campaign follows the core theme of previous ads of Allout - talking about disease spreading pests and how the Allout Frog protects the entire family from those disease spreading pests.
The interesting question is whether launch of the additional attribute of " fly repellent" will add value to Allout brand or will it dilute the core positioning of the brand ?
My perception is that consumers will be delighted to have such an additional benefit with Allout. So far no brand has been able to provide relief from the irritating pest like housefly. So in that sense , Allout will standout ( differentiated) from the rest of the crowd.
Regarding the positioning of Allout, the brand has been careful in continuing with the same theme of ' protection from disease carrying pests ' for the new ad also. I feel that the brand will continue using this theme as its positioning and move away from the " mosquito -Yamraj " theme in future.
courtesy - Marketing Blogspot.
Thursday, September 2, 2010
Should Your Marketing Strategy Be Customer Oriented or Competitor Oriented?
Originally published here in Adclubbombay.com
Although many marketing literature propounds the dictum “Customer is the King”, it is seldom practiced in its fullest sense. Marketers would love to put customers at the center of their business strategy but the intense competitive environment forces them to think beyond the customer and move towards the competitors.
There is a dilemma in the marketers mind with the choice of whether the firm’s principal orientation should be towards customer or competitors. Conventional wisdom say that firms should be oriented more towards customers than competitor. Peter Drucker famously said “The purpose of business is to create customers “. When a firm is customer oriented, the entire business is centered on customer needs and satisfaction.
According to academic literature, there are three components of market orientation (1) Customer Orientation (2) Competitor Orientation (3) Inter-functional coordination. Customer Orientation is where the firm spends its resources on gathering information about customer needs and behavior. Competitor orientation is where the firm directs its resources to gathering information about competitor behavior and activities. The firm’s strategies will then be based on the information gathered through any of these orientations. (Source: Narver, John C. and Stanley F. Slater. 1990. "The Effect of a Market Orientation on Business Profitability." Journal of Marketing 54 (October):20-35.)
Customer orientation helps firms with a clear in-depth understanding of consumer which results in a focused marketing effort. Research has confirmed that customer orientation helps firms to increase performance and enhance customer satisfaction.
Too much customer orientation also can be dangerous. There is a chance of marketers becoming blinded by their current focus thus oblivious of the changes brought about by the competitors. There are critics who argue that customers may stifle innovation in companies because customers may not be able to explicitly state their expectations or anticipate future needs. Customers are often resistant to change and this forces the highly customer focused firms to maintain the status quo thus refraining from game changing innovations.
The firms who are skewed towards competitor orientation are blamed for launching me-too products in an effort to fight competition. Too much focus on competitor often forces firms to invest in understanding customers or anticipate their needs better. Too many resources will be spent on competitive activities which may restrict investment on breakthrough innovations. Competitor oriented firms are more open to the changing trend in the market. Since their actions are more directed by the actions of the competitor, there is less chance of lethargy in marketing activities.
Firms must understand that there is a trade-off between these two orientations. Firms will have to lose something if they chose either of the two orientations. The ideal option is to balance both the orientation. It is easy to advocate that firms should have both customer and competitor orientation but with a limited resources in-terms of men and money, firms will find tough to have best of both worlds.
Companies must realize that the choice of customer / competitor orientation is dependent on the environment in which firms operate. There are external and internal factors that will decide the orientation of the company. For example, there are organizations like Zappos.com which is totally customer oriented. The customer orientation run deep within the organization’s DNA and the entire firm is structured around the customer.
Competitor orientation is more preferable in markets which are growing very fast. In fast growing markets, firms should invest in gathering more data about competitors which will enable them to develop innovations at lower costs.
Customer orientation is preferable in more uncertain markets. When the markets are changing very fast, firms can focus on customers which will enable them to change their marketing strategies quickly in accordance with changing customer needs. Also firms that deal with complex markets need to focus on investing in customers rather than competitors.
The choice of customer vs. competitor orientation is ultimately depended on the top management’s world view. The choice is important because there are only limited resources available with the managers to spend on either of these orientations.
Firms can strike a balance between these orientations if they can focus on the following guidelines.
Invest in a robust market intelligence mechanism in the marketing department. The mechanism can be internal or outsourced, but the emphasis will be on information gathering and dissemination. When a mechanism exists, depending on the market environment, organization can decide on the type of information that should be gathered.
Encourage free flow of information within the organization. Market orientation tends to be ineffective if the organization is bureaucratic. Hence firms should ensure that important market information is passed to various levels quickly.
Although many marketing literature propounds the dictum “Customer is the King”, it is seldom practiced in its fullest sense. Marketers would love to put customers at the center of their business strategy but the intense competitive environment forces them to think beyond the customer and move towards the competitors.
There is a dilemma in the marketers mind with the choice of whether the firm’s principal orientation should be towards customer or competitors. Conventional wisdom say that firms should be oriented more towards customers than competitor. Peter Drucker famously said “The purpose of business is to create customers “. When a firm is customer oriented, the entire business is centered on customer needs and satisfaction.
According to academic literature, there are three components of market orientation (1) Customer Orientation (2) Competitor Orientation (3) Inter-functional coordination. Customer Orientation is where the firm spends its resources on gathering information about customer needs and behavior. Competitor orientation is where the firm directs its resources to gathering information about competitor behavior and activities. The firm’s strategies will then be based on the information gathered through any of these orientations. (Source: Narver, John C. and Stanley F. Slater. 1990. "The Effect of a Market Orientation on Business Profitability." Journal of Marketing 54 (October):20-35.)
Customer orientation helps firms with a clear in-depth understanding of consumer which results in a focused marketing effort. Research has confirmed that customer orientation helps firms to increase performance and enhance customer satisfaction.
Too much customer orientation also can be dangerous. There is a chance of marketers becoming blinded by their current focus thus oblivious of the changes brought about by the competitors. There are critics who argue that customers may stifle innovation in companies because customers may not be able to explicitly state their expectations or anticipate future needs. Customers are often resistant to change and this forces the highly customer focused firms to maintain the status quo thus refraining from game changing innovations.
The firms who are skewed towards competitor orientation are blamed for launching me-too products in an effort to fight competition. Too much focus on competitor often forces firms to invest in understanding customers or anticipate their needs better. Too many resources will be spent on competitive activities which may restrict investment on breakthrough innovations. Competitor oriented firms are more open to the changing trend in the market. Since their actions are more directed by the actions of the competitor, there is less chance of lethargy in marketing activities.
Firms must understand that there is a trade-off between these two orientations. Firms will have to lose something if they chose either of the two orientations. The ideal option is to balance both the orientation. It is easy to advocate that firms should have both customer and competitor orientation but with a limited resources in-terms of men and money, firms will find tough to have best of both worlds.
Companies must realize that the choice of customer / competitor orientation is dependent on the environment in which firms operate. There are external and internal factors that will decide the orientation of the company. For example, there are organizations like Zappos.com which is totally customer oriented. The customer orientation run deep within the organization’s DNA and the entire firm is structured around the customer.
Competitor orientation is more preferable in markets which are growing very fast. In fast growing markets, firms should invest in gathering more data about competitors which will enable them to develop innovations at lower costs.
Customer orientation is preferable in more uncertain markets. When the markets are changing very fast, firms can focus on customers which will enable them to change their marketing strategies quickly in accordance with changing customer needs. Also firms that deal with complex markets need to focus on investing in customers rather than competitors.
The choice of customer vs. competitor orientation is ultimately depended on the top management’s world view. The choice is important because there are only limited resources available with the managers to spend on either of these orientations.
Firms can strike a balance between these orientations if they can focus on the following guidelines.
Invest in a robust market intelligence mechanism in the marketing department. The mechanism can be internal or outsourced, but the emphasis will be on information gathering and dissemination. When a mechanism exists, depending on the market environment, organization can decide on the type of information that should be gathered.
Encourage free flow of information within the organization. Market orientation tends to be ineffective if the organization is bureaucratic. Hence firms should ensure that important market information is passed to various levels quickly.
Monday, July 19, 2010
Cadbury - Kuch Aur Meethe Ho Jai....!
Cadbury's Dairy Milk has recently launched a new campaign " Shubh Aarambh" ( meaning Auspicious Beginning ). The campaign is the refined version of the earlier Payday campaign which evoked mixed response from the Ad analysts and consumers.
The Shubh Aarambh campaign reinforces the occasion based positioning of Dairy Milk. The brand has been trying to position itself as a symbol of enjoyment and celebrations. Indians have the tradition of sharing sweets on auspicious occasions and also when one initiates a venture/activity. Whether the activity is small like writing an exam or huge like starting a company, sharing of sweets is an integral part of the event. The belief is that good things happen when one starts a venture on a positive note ( like sharing sweets).
Dairy Milk very cleverly captured this tradition and incorporated into its brand story. The new campaign takes the brand to the center of this tradition linking Dairy Milk to Sweet and Auspicious Beginning.
While the previous PayDay campaign was a narrow interpretation of the occasion based positioning , Shubh Aarambh has given the brand a broad playing ground. In my opinion, the brand has hit upon a really great Big Idea. The concept is very much Indian and offers huge opportunity for creatives to weave great stories for the brand.
What u say guys...??
The concept also gels with the brand's tagline " Kuchch Meetha Ho Jaye ". The launch campaign is targeted at younger generation and hence the brand added a little humor and twist into the campaign.
Shubh Aarambh is a great idea for this great brand. It will be interesting to see how Dairy Milk milks this idea to the fullest.
Soon i will be posting ads which i feel has strike the right chord again. So before you should see the add......Kuch Meetha Ho Jaye....)
The Shubh Aarambh campaign reinforces the occasion based positioning of Dairy Milk. The brand has been trying to position itself as a symbol of enjoyment and celebrations. Indians have the tradition of sharing sweets on auspicious occasions and also when one initiates a venture/activity. Whether the activity is small like writing an exam or huge like starting a company, sharing of sweets is an integral part of the event. The belief is that good things happen when one starts a venture on a positive note ( like sharing sweets).
Dairy Milk very cleverly captured this tradition and incorporated into its brand story. The new campaign takes the brand to the center of this tradition linking Dairy Milk to Sweet and Auspicious Beginning.
While the previous PayDay campaign was a narrow interpretation of the occasion based positioning , Shubh Aarambh has given the brand a broad playing ground. In my opinion, the brand has hit upon a really great Big Idea. The concept is very much Indian and offers huge opportunity for creatives to weave great stories for the brand.
What u say guys...??
The concept also gels with the brand's tagline " Kuchch Meetha Ho Jaye ". The launch campaign is targeted at younger generation and hence the brand added a little humor and twist into the campaign.
Shubh Aarambh is a great idea for this great brand. It will be interesting to see how Dairy Milk milks this idea to the fullest.
Soon i will be posting ads which i feel has strike the right chord again. So before you should see the add......Kuch Meetha Ho Jaye....)
Thursday, July 8, 2010
Umbrella Branding
As with all effective brand strategy, umbrella brands require a single message, an expression of a commonsense benefit grounded in human emotion that opens the way to own the conversation within a business category.
Umbrella brands abound in business; examples include Virgin, Kellogg’s, Sony, and location brands such as Japan, Manitoba, and St. Louis.
With an umbrella brand, the number of interactions the consumer has with the brand increase significantly, thereby reinforcing the brand values, and it helps transfer the goodwill to new products and categories. But the umbrella brand needs to be focused: It must stand for the same values across the category or range of products, and have the same emotional link.
Generally, consumer durables and services brands have used umbrella branding, while FMCGs have not, but even they have resorted to brand extensions rather than new launches.
Independent brands only make sense when the product clearly has a different proposition from the company brand; like Lexus from Toyota and Swatch from Omega.
In the case of Asian Paints, there were so many sub-brands, there was a reduction of media weights for advertising each entity. Then, the company shifted to a brand-centric portfolio, which involved a change of logo, product names, packaging and advertising. But the response from the trade and consumers has been positive, overall brand synergy and shop presence have increased, and the advertising is more effective, he added.
So unless the product is clearly different in the mind of the consumer, umbrella branding is the way to go. NIVEA is a great international example of an Umbrella Brand
ref - http://fmcg-marketing.blogspot.com/2007/11/umbrella-branding.html
As with all effective brand strategy, umbrella brands require a single message, an expression of a commonsense benefit grounded in human emotion that opens the way to own the conversation within a business category.
Umbrella brands abound in business; examples include Virgin, Kellogg’s, Sony, and location brands such as Japan, Manitoba, and St. Louis.
With an umbrella brand, the number of interactions the consumer has with the brand increase significantly, thereby reinforcing the brand values, and it helps transfer the goodwill to new products and categories. But the umbrella brand needs to be focused: It must stand for the same values across the category or range of products, and have the same emotional link.
Generally, consumer durables and services brands have used umbrella branding, while FMCGs have not, but even they have resorted to brand extensions rather than new launches.
Independent brands only make sense when the product clearly has a different proposition from the company brand; like Lexus from Toyota and Swatch from Omega.
In the case of Asian Paints, there were so many sub-brands, there was a reduction of media weights for advertising each entity. Then, the company shifted to a brand-centric portfolio, which involved a change of logo, product names, packaging and advertising. But the response from the trade and consumers has been positive, overall brand synergy and shop presence have increased, and the advertising is more effective, he added.
So unless the product is clearly different in the mind of the consumer, umbrella branding is the way to go. NIVEA is a great international example of an Umbrella Brand
ref - http://fmcg-marketing.blogspot.com/2007/11/umbrella-branding.html
Wednesday, July 7, 2010
PRICING STRATEGY
PRICING STRATEGY
Pricing Strategies
PREMIUM PRICING.
Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.
PENETRATION PRICING.
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom in order to
ECONOMY PRICING.
This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.
PRICE SKIMMING.
Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.
Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.
PSYCHOLOGICAL PRICING.
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar.
PRODUCT LINE PRICING.
Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.
OPTIONAL PRODUCT PRICING.
Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.
CAPTIVE PRODUCT PRICING
Where products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.
PRODUCT BUNDLE PRICING.
Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.
PROMOTIONAL PRICING.
Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).
GEOGRAPHICAL PRICING.
Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price.
VALUE PRICING.
This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.
Predatory pricing
(also known as destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the market, or create a barrier to entry into the market for potential new competitors. If the other firms cannot sustain equal or lower prices without losing money, they go out of business. The predatory pricer then has fewer competitors or even a monopoly, allowing it to raise prices above what the market would otherwise bear.
In many countries, including the United States, predatory pricing is considered anti-competitive and is illegal under antitrust laws. However, it is usually difficult to prove that a drop in prices is due to predatory pricing rather than normal competition, and predatory pricing claims are difficult to prove due to high legal hurdles designed to protect legitimate price competition.
Limit Pricing
A Limit Price is the price set by a monopolist to discourage economic entry into a market, and is illegal in many countries. The limit price is the price that the entrant would face upon entering as long as the incumbent firm did not decrease output. The limit price is often lower than the average cost of production or just low enough to make entering not profitable.
Loss Leader
In marketing, a loss leader (also called a key value item in the United Kingdom) is a type of pricing strategy where an item is sold below cost in an effort to stimulate other, profitable sales. It is a kind of sales promotion.
REFERENCE - http://fmcg-marketing.blogspot.com/2007/11/pricing-strategies.html
Pricing Strategies
PREMIUM PRICING.
Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.
PENETRATION PRICING.
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom in order to
ECONOMY PRICING.
This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.
PRICE SKIMMING.
Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.
Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.
PSYCHOLOGICAL PRICING.
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar.
PRODUCT LINE PRICING.
Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.
OPTIONAL PRODUCT PRICING.
Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.
CAPTIVE PRODUCT PRICING
Where products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.
PRODUCT BUNDLE PRICING.
Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.
PROMOTIONAL PRICING.
Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).
GEOGRAPHICAL PRICING.
Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price.
VALUE PRICING.
This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.
Predatory pricing
(also known as destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the market, or create a barrier to entry into the market for potential new competitors. If the other firms cannot sustain equal or lower prices without losing money, they go out of business. The predatory pricer then has fewer competitors or even a monopoly, allowing it to raise prices above what the market would otherwise bear.
In many countries, including the United States, predatory pricing is considered anti-competitive and is illegal under antitrust laws. However, it is usually difficult to prove that a drop in prices is due to predatory pricing rather than normal competition, and predatory pricing claims are difficult to prove due to high legal hurdles designed to protect legitimate price competition.
Limit Pricing
A Limit Price is the price set by a monopolist to discourage economic entry into a market, and is illegal in many countries. The limit price is the price that the entrant would face upon entering as long as the incumbent firm did not decrease output. The limit price is often lower than the average cost of production or just low enough to make entering not profitable.
Loss Leader
In marketing, a loss leader (also called a key value item in the United Kingdom) is a type of pricing strategy where an item is sold below cost in an effort to stimulate other, profitable sales. It is a kind of sales promotion.
REFERENCE - http://fmcg-marketing.blogspot.com/2007/11/pricing-strategies.html
Wednesday, June 23, 2010
Is HUL Trying To Kill REXONA Now with the launch of SURE?....?
HUL has launched a new brand in the Indian market - Sure . Sure is an antiperspirant brand from Unilever's global product portfolio. The brand is claiming to be the largest selling antiperspirant brand in the world. Sure is sold extensively in UK and Europe.
Sure is an interesting brand for a variety of reasons. The launch of Sure brand marks another era in the deodorant market in India. The deo market is divided into categories like Body Spray, Deo with germ fighting properties and Antiperspirants. The Rs 700 crore Indian deo market is dominated by the body spray categories. The launch of a global brand like Sure is going to develop the antiperspirant market in India.
For the promotion of Sure, HUL has roped in the actress Asin. The brand is currently running the launch campaign across South India featuring the celebrity.
Watch the launch ad here : Sure
Since the antiperspirant category is new to the Indian market, the brand has tried to educate the customer about the product category in the launch phase. The launch ad essentially talks about what the product is and the comparison between ordinary deo spray and antiperspirant.
Another interesting aspect of Sure brand launch is the question mark over the fate of Rexona. The fact is that Sure is Rexona !!!
While Sure is marketed across England and Europe, the same product is marketed as Rexona in other global markets including India. There are rumors that with the launch of Sure in India, HUL may kill Rexona deo brand in near future.
According to newspaper reports , Rexona which created the deo market in India is now a marginal player in the market with hardly 5% share. HUL virtually messed up the Rexona brand (soap) with lot of experiments like migrating to Hamam. Even in the deo category, Rexona was virtually neglected in terms of promotional spend.
Sure is marketed with the same tagline and brand elements as Rexona. Both Rexona and Sure carries the same logo - the Tick mark and the same tagline " It won't Let You Down". Sure is also using the slogan " No Sweat " in the launch campaign to reinforce the product benefit.
It is unlikely event where you see two different brands using the same logo and tagline. It does not make any marketing sense unless there is an underlying thought of migrating one brand to another. It can be assumed that Sure will launch its full range of deos and Rexona will be slowly taken off the shelves.
The deo market is witnessing intense competition these days with n number of launches happening. The trend these days seems that get a good fragrance, outsource production and do high profile marketing.
Even the antiperspirant market has seen new launches with Garnier launching its product in the category recently. By launching Sure , HUL is making sure that it does not leave any part of the category to the competitors.
ref; marketing Practise
Sure is an interesting brand for a variety of reasons. The launch of Sure brand marks another era in the deodorant market in India. The deo market is divided into categories like Body Spray, Deo with germ fighting properties and Antiperspirants. The Rs 700 crore Indian deo market is dominated by the body spray categories. The launch of a global brand like Sure is going to develop the antiperspirant market in India.
For the promotion of Sure, HUL has roped in the actress Asin. The brand is currently running the launch campaign across South India featuring the celebrity.
Watch the launch ad here : Sure
Since the antiperspirant category is new to the Indian market, the brand has tried to educate the customer about the product category in the launch phase. The launch ad essentially talks about what the product is and the comparison between ordinary deo spray and antiperspirant.
Another interesting aspect of Sure brand launch is the question mark over the fate of Rexona. The fact is that Sure is Rexona !!!
While Sure is marketed across England and Europe, the same product is marketed as Rexona in other global markets including India. There are rumors that with the launch of Sure in India, HUL may kill Rexona deo brand in near future.
According to newspaper reports , Rexona which created the deo market in India is now a marginal player in the market with hardly 5% share. HUL virtually messed up the Rexona brand (soap) with lot of experiments like migrating to Hamam. Even in the deo category, Rexona was virtually neglected in terms of promotional spend.
Sure is marketed with the same tagline and brand elements as Rexona. Both Rexona and Sure carries the same logo - the Tick mark and the same tagline " It won't Let You Down". Sure is also using the slogan " No Sweat " in the launch campaign to reinforce the product benefit.
It is unlikely event where you see two different brands using the same logo and tagline. It does not make any marketing sense unless there is an underlying thought of migrating one brand to another. It can be assumed that Sure will launch its full range of deos and Rexona will be slowly taken off the shelves.
The deo market is witnessing intense competition these days with n number of launches happening. The trend these days seems that get a good fragrance, outsource production and do high profile marketing.
Even the antiperspirant market has seen new launches with Garnier launching its product in the category recently. By launching Sure , HUL is making sure that it does not leave any part of the category to the competitors.
ref; marketing Practise
Wednesday, June 9, 2010
PIAGGIO GEARING UP FOR A COMEBACK
Piaggio has announced plans to launch Vespa, its Italian line of scooters in India. The company will be launching the Vespa LX 125 scooter by end of 2012
A plan for production and sale of two-wheelers in India was approved by Roberto Colaninno, Director, Piaggio & C. S.p.A. at the company's board meeting held in Milan recently. The first model to roll out of the factory will be the Vespa LX 125, which has been specially designed for the burgeoning scooter market in India. According to the plan, Piaggio will setup an all-new facility in India for manufacturing two-wheelers and it will be supported by Piaggio's commercial Indian subsidiary and leader in Indian three-wheel light commercial vehicle market - Piaggio Vehicles Private Ltd.
The total investment to setup the new plant is said to be in the region of 30 million euro for the financial years, 2010 and 2011 and the investments will be covered under a Three Year Plan approved by the company's Board of Directors in the meeting. The new plant has a capacity of producing 1, 50,000 units annually and it will be operational by the end of 2012 with the launch of the LX 125. According to the plan, the firm aims to sell 1, 10,000 scooters by 2015.
India has the second-largest two-wheeler market in the world and it grew at an average annual rate of 7% between 2004 and 2009. Last year, over 8.4 million vehicles were sold in the country out of which, scooters accounted for 15% of the total market share. The scooter segment has seen strong growth of more than 13% with scooter sales totaling 1.3 million units in 2009.
POSTED BY - Team ZigWheels 08 Jun 2010
A plan for production and sale of two-wheelers in India was approved by Roberto Colaninno, Director, Piaggio & C. S.p.A. at the company's board meeting held in Milan recently. The first model to roll out of the factory will be the Vespa LX 125, which has been specially designed for the burgeoning scooter market in India. According to the plan, Piaggio will setup an all-new facility in India for manufacturing two-wheelers and it will be supported by Piaggio's commercial Indian subsidiary and leader in Indian three-wheel light commercial vehicle market - Piaggio Vehicles Private Ltd.
The total investment to setup the new plant is said to be in the region of 30 million euro for the financial years, 2010 and 2011 and the investments will be covered under a Three Year Plan approved by the company's Board of Directors in the meeting. The new plant has a capacity of producing 1, 50,000 units annually and it will be operational by the end of 2012 with the launch of the LX 125. According to the plan, the firm aims to sell 1, 10,000 scooters by 2015.
India has the second-largest two-wheeler market in the world and it grew at an average annual rate of 7% between 2004 and 2009. Last year, over 8.4 million vehicles were sold in the country out of which, scooters accounted for 15% of the total market share. The scooter segment has seen strong growth of more than 13% with scooter sales totaling 1.3 million units in 2009.
POSTED BY - Team ZigWheels 08 Jun 2010
Wednesday, May 19, 2010
TATA Indica - Managing Product Life Cycle Effectively
Indica is a brand that is an epitome of persistence. Tata Motors through Indica has demonstrated how to manage product lifecycle effectively. The brand which was launched in 1998 has passed through many hurdles. The brand successfully transcended the initial flaws, bad customer /expert reviews and brickbats to become one of the largest selling cars in the Indian auto industry.
The brand survived and thrived because of the constant focus of Tata Motors to improve the product continuously. More than the product innovation, it was the value proposition that forced customers to choose Indica despite all those nagging troubles. You can see lot of Indica customers cribbing about the bad service and constant trip to the service centers but sticking to the brand because of the value proposition. You cannot get a diesel car with that much space at the price at which Indica is selling ( so far).
Tata Motors has been continuously tweaking the brand over these years sometimes making quantum leap in the quality and refinement of the product. A snapshot of the brand's evolution is given below
1998 - Indica announced
2001 - Indica V2
2004 - Rejuvenated Indica V2
2005- Indica V2 Turbo Diesel
2006- Indica Xeta
2008 - Indica Vista
The brand made a quantum leap in 2008 with the launch of Indica Vista. The entire brand personality changed with the launch of Vista. The product's looks and feel had changed completely and it was a rebirth for Indica.
The changes in the product was not limited to exteriors. Indica began sporting different types of engines from Fiat which gave a new perception of quality to the brand.
At the pricing also, Tata Motors consciously raised the Vista brand to a higher level . The Vista is pricier than the original V2 thus reducing the attractiveness of the brand to the Taxi segment. At a price range of Rs 4 - Rs 5 Lakh, Indica Vista is not a cheap diesel car. It was an upward stretch by the brand.
The Indica brand portfolio consists now of three sub-brands V2, Vista and Xeta.
V2 is the most economical of the lot and is the original Indica. This product is retained because there is still huge demand for V2 at that price point. Within the V2 range, there are three variants which includes the Indicab which is for the Taxi segment. Price of this sub-brand ranges from Rs 3,50,000 - Rs 3,95,000
Next sub-brand is the Vista. Vista is the new generation Indica and Tata Motors would like this brand to take over the leadership position from V2 in future. The brand is targeting the discerning Indian consumer with its value proposition and good looks.Vista has lot of variants satisfying the various needs of the customer. The Indica Vista Aura is the premium range that sports many goodies that premium brands claim like ABS, Airbags etc. Vista also comes in Petrol version sporting the Saphire engine. Prices range from Rs 3,90,000 - Rs 4,90,000 ( apprx). Within the Vista range, customers are given lot of engine option including engines from Fiat.
Xeta is the petrol variant of Indica V2. I am not sure about the future of Xeta since the petrol segment is heavily competitive and compared to Maruti and Hyundai, Indica Xeta's value proposition is not that attractive as the diesel option. Prices range from Rs 2,72,000- Rs 3,00,000).
The positioning across the brand portfolio remains the same. All the brands focus on the value proposition. But these sub- brands sports different taglines
Indica V2- More car per car
Indica Vista- Changes Everything ( Surprise Yourself is the new tagline)
Indica Xeta - Makes much more car sense.
Vista recently relaunched itself with Drivetech 4 technology and is now sporting a new tagline Surprise Yourself .
Indica in a way is an example of good marketing practice. The brand continues to evolve and is a pleasure to watch.
CRTSY - MARKETING PRACTISE
The brand survived and thrived because of the constant focus of Tata Motors to improve the product continuously. More than the product innovation, it was the value proposition that forced customers to choose Indica despite all those nagging troubles. You can see lot of Indica customers cribbing about the bad service and constant trip to the service centers but sticking to the brand because of the value proposition. You cannot get a diesel car with that much space at the price at which Indica is selling ( so far).
Tata Motors has been continuously tweaking the brand over these years sometimes making quantum leap in the quality and refinement of the product. A snapshot of the brand's evolution is given below
1998 - Indica announced
2001 - Indica V2
2004 - Rejuvenated Indica V2
2005- Indica V2 Turbo Diesel
2006- Indica Xeta
2008 - Indica Vista
The brand made a quantum leap in 2008 with the launch of Indica Vista. The entire brand personality changed with the launch of Vista. The product's looks and feel had changed completely and it was a rebirth for Indica.
The changes in the product was not limited to exteriors. Indica began sporting different types of engines from Fiat which gave a new perception of quality to the brand.
At the pricing also, Tata Motors consciously raised the Vista brand to a higher level . The Vista is pricier than the original V2 thus reducing the attractiveness of the brand to the Taxi segment. At a price range of Rs 4 - Rs 5 Lakh, Indica Vista is not a cheap diesel car. It was an upward stretch by the brand.
The Indica brand portfolio consists now of three sub-brands V2, Vista and Xeta.
V2 is the most economical of the lot and is the original Indica. This product is retained because there is still huge demand for V2 at that price point. Within the V2 range, there are three variants which includes the Indicab which is for the Taxi segment. Price of this sub-brand ranges from Rs 3,50,000 - Rs 3,95,000
Next sub-brand is the Vista. Vista is the new generation Indica and Tata Motors would like this brand to take over the leadership position from V2 in future. The brand is targeting the discerning Indian consumer with its value proposition and good looks.Vista has lot of variants satisfying the various needs of the customer. The Indica Vista Aura is the premium range that sports many goodies that premium brands claim like ABS, Airbags etc. Vista also comes in Petrol version sporting the Saphire engine. Prices range from Rs 3,90,000 - Rs 4,90,000 ( apprx). Within the Vista range, customers are given lot of engine option including engines from Fiat.
Xeta is the petrol variant of Indica V2. I am not sure about the future of Xeta since the petrol segment is heavily competitive and compared to Maruti and Hyundai, Indica Xeta's value proposition is not that attractive as the diesel option. Prices range from Rs 2,72,000- Rs 3,00,000).
The positioning across the brand portfolio remains the same. All the brands focus on the value proposition. But these sub- brands sports different taglines
Indica V2- More car per car
Indica Vista- Changes Everything ( Surprise Yourself is the new tagline)
Indica Xeta - Makes much more car sense.
Vista recently relaunched itself with Drivetech 4 technology and is now sporting a new tagline Surprise Yourself .
Indica in a way is an example of good marketing practice. The brand continues to evolve and is a pleasure to watch.
CRTSY - MARKETING PRACTISE
Wednesday, May 12, 2010
iAds New Way of Advertising
Mobile is the undisputed champion of media across the globe with more than 4.1 billion people using mobile phones. That’s about six in 10 people, compared with less than three in 10 who access the internet through a PC. It is easy to understand why advertisers are excited about using mobile as a tool for marketing. The ubiquity of the mobile, combined with the ability to target, track, measure and reach people at key purchase decision points, quickly transforms into advertising nirvana. So why then is mobile advertising only expected to account for a paltry 2% of the digital media market’s spending in 2010 (according to eMarketer)?
Apple CEO Steve Jobs has the answer: “Because most mobile advertising really sucks.” He is right. Screens are small, which leads to disappointing creativity that makes it difficult for an ad to successfully compel a viewer to invest the time away from their current activity to click through. But Apple’s new iAd platform has these possibility to change that, at least for the projected 100 million Apple mobile device users.
It is a relatively small number of the total global mobile population, but as Jobs pointed out in his April presentation it is a very attractive demographic for advertisers. Furthermore, AdMob reported that the iPhone OS accounts for 50% of mobile web traffic and, in places such as Japan, Apple’s iPhone accounts for 72% of the smartphone market, according to Tokyo-based MM Research Institute Ltd.
With iAd, not only has Apple re-thought mobile advertising with the entire iPhone ecosystem in mind, but it has also drawn on its experience as one of the world’s most enjoyed brand advertisers, leading to several features that sets iAd apart. Users will come across iAd within an application. At first, the ad will look similar to the current small banners that are common, but the meat of the ad presents itself after a user initiates interaction.
Paramount to Jobs is that the iAd experience does not take a user away from their current app. Because of the new iPhone OS4 multitasking capabilities, a user can interact with an iAd without closing their current app and go back to where they left off when they are done with the ad. Jobs believes that if people don’t have to “pay the penalty of having to find their way back to their app” it will result in more clicks (or taps) for advertisers. An improved user experience may be just the thing the mobile advertising industry
needs to propel itself further into the plans and budgets of advertisers.
iAd intends to present advertisers a mobile ad platform with more impact, delivering “interactivity and emotion”, as Jobs puts it, by giving creatives a richer canvas to work with, blurring the line between entertainment, information, apps and advertising.
It sounds very promising, but there are questions and challenges.
One unknown is the quality of the metrics and data advertisers will be able to get on iAd campaigns. According to registered developers, there are restrictions on third-party targeting and measurement, which many
advertisers rely on for precise and unbiased information about their digital marketing.
All the data will flow through Apple, presumably on the technology that came with its recent Quattro acquisition.
Targeting will benefit from the detailed understanding Apple has about users from its iTunes and App Store behaviour, however, it is yet to be determined how well this approach will be received by marketers.
The iAd interactive and emotional experience is also not alone in the mobile
advertising market. Companies such as Medialets offer similar units, which also allow for rich and immersive creative.
Furthermore, while the number of Apple apps downloaded far surpasses any others, the Apple App Store isn’t the only game in town. Nokia, BlackBerry and others have moved into the apps distribution business. Then there is the price tag.
The Wall Street Journal recently reported that being part of the iAd launch could cost up to US$10 million, with regular campaign pricing eventually in the US$1 million range. There is no denying that Apple has proven time and time again its expertise at making technology simpler, fun and sexier. Apple has redefined categories so don’t be surprised if mobile advertising is next.
The author is Jason Kuperman, vice president, digital development, Asia Pacific, Omnicom group.
Apple CEO Steve Jobs has the answer: “Because most mobile advertising really sucks.” He is right. Screens are small, which leads to disappointing creativity that makes it difficult for an ad to successfully compel a viewer to invest the time away from their current activity to click through. But Apple’s new iAd platform has these possibility to change that, at least for the projected 100 million Apple mobile device users.
It is a relatively small number of the total global mobile population, but as Jobs pointed out in his April presentation it is a very attractive demographic for advertisers. Furthermore, AdMob reported that the iPhone OS accounts for 50% of mobile web traffic and, in places such as Japan, Apple’s iPhone accounts for 72% of the smartphone market, according to Tokyo-based MM Research Institute Ltd.
With iAd, not only has Apple re-thought mobile advertising with the entire iPhone ecosystem in mind, but it has also drawn on its experience as one of the world’s most enjoyed brand advertisers, leading to several features that sets iAd apart. Users will come across iAd within an application. At first, the ad will look similar to the current small banners that are common, but the meat of the ad presents itself after a user initiates interaction.
Paramount to Jobs is that the iAd experience does not take a user away from their current app. Because of the new iPhone OS4 multitasking capabilities, a user can interact with an iAd without closing their current app and go back to where they left off when they are done with the ad. Jobs believes that if people don’t have to “pay the penalty of having to find their way back to their app” it will result in more clicks (or taps) for advertisers. An improved user experience may be just the thing the mobile advertising industry
needs to propel itself further into the plans and budgets of advertisers.
iAd intends to present advertisers a mobile ad platform with more impact, delivering “interactivity and emotion”, as Jobs puts it, by giving creatives a richer canvas to work with, blurring the line between entertainment, information, apps and advertising.
It sounds very promising, but there are questions and challenges.
One unknown is the quality of the metrics and data advertisers will be able to get on iAd campaigns. According to registered developers, there are restrictions on third-party targeting and measurement, which many
advertisers rely on for precise and unbiased information about their digital marketing.
All the data will flow through Apple, presumably on the technology that came with its recent Quattro acquisition.
Targeting will benefit from the detailed understanding Apple has about users from its iTunes and App Store behaviour, however, it is yet to be determined how well this approach will be received by marketers.
The iAd interactive and emotional experience is also not alone in the mobile
advertising market. Companies such as Medialets offer similar units, which also allow for rich and immersive creative.
Furthermore, while the number of Apple apps downloaded far surpasses any others, the Apple App Store isn’t the only game in town. Nokia, BlackBerry and others have moved into the apps distribution business. Then there is the price tag.
The Wall Street Journal recently reported that being part of the iAd launch could cost up to US$10 million, with regular campaign pricing eventually in the US$1 million range. There is no denying that Apple has proven time and time again its expertise at making technology simpler, fun and sexier. Apple has redefined categories so don’t be surprised if mobile advertising is next.
The author is Jason Kuperman, vice president, digital development, Asia Pacific, Omnicom group.
Wagon R - 'Old Wine In New Bottle'
One of India's best selling car brand got better. Recently Maruti Suzuki launched the new Wagon R in the Indian market. The new spruced up model features the famed K Series engine and with a brand new look.
Wagon R has been a run away success since its launch in 1999. So far the company has sold around 8.8 lakh units of Wagon R (source). Infact Wagon R is the second largest selling car brand from Maruti's product portfolio.
Wagon R operates in the A2 segment of Indian car market which is witnessing most of the competition in recent times. Most of the car majors are viewing this segment seriously and some of the new brand launches like Chevrolet Beat and Ford Figo has been highly welcomed by the consumers.
This intense competition has prompted Maruti to relaunch the upgraded version of Wagon R with a new engine and renewed look. It is interesting to note that Wagon R recently launched a high profile brand campaign featuring the Celebrity Madhavan.
Maruti have aggressively responded to the competition from Chevy and Ford by keeping the price point of the new Wagon R at the range of Rs 3.5 lakh - 3.85 lakh. Maruti has taken the risk of cannibalizing other brands like Estillo and A Star. The rejuvenation is also a part of Maruti to take the brand from the Maturity stage of the lifecycle stage to the growth path.
The new launch is expected to give much needed boost to the brand. Wagon R is still relevant in the Indian market. The users have vouched for the comfort and drive-ability of this car in the urban jungle. The company feels that the brand still have lot of steam left in it.
The company is calling the new Wagon R as the Blue Eyed Boy. The brand has retained Madhavan as the brand ambassador in the new avatar also.
Most of the auto review comparing Wagon R , Figo and Beat has rated the competitors as better than Wagon R. But what will be driving this brand will be the Maruti endorsement . Although Chevy and Ford have established themselves in the Indian market, Maruti still holds tremendous brand equity among Indian consumers. But competitors are not sitting idle. When Chevy launched Spark to take on Alto, it ran a highly successful campaign guaranteeing Zero maintenance cost for three years. That gave lot of boost to the sale of Spark.
Wagon R in a way offers less risk for the discerning Indian consumers compared to the new entrants in terms of cost of maintenance, spares , service etc. That will help Wagon R hold on to its pivot position atleast for now.
CRTSY - MARKETING PRACTICE
Wagon R has been a run away success since its launch in 1999. So far the company has sold around 8.8 lakh units of Wagon R (source). Infact Wagon R is the second largest selling car brand from Maruti's product portfolio.
Wagon R operates in the A2 segment of Indian car market which is witnessing most of the competition in recent times. Most of the car majors are viewing this segment seriously and some of the new brand launches like Chevrolet Beat and Ford Figo has been highly welcomed by the consumers.
This intense competition has prompted Maruti to relaunch the upgraded version of Wagon R with a new engine and renewed look. It is interesting to note that Wagon R recently launched a high profile brand campaign featuring the Celebrity Madhavan.
Maruti have aggressively responded to the competition from Chevy and Ford by keeping the price point of the new Wagon R at the range of Rs 3.5 lakh - 3.85 lakh. Maruti has taken the risk of cannibalizing other brands like Estillo and A Star. The rejuvenation is also a part of Maruti to take the brand from the Maturity stage of the lifecycle stage to the growth path.
The new launch is expected to give much needed boost to the brand. Wagon R is still relevant in the Indian market. The users have vouched for the comfort and drive-ability of this car in the urban jungle. The company feels that the brand still have lot of steam left in it.
The company is calling the new Wagon R as the Blue Eyed Boy. The brand has retained Madhavan as the brand ambassador in the new avatar also.
Most of the auto review comparing Wagon R , Figo and Beat has rated the competitors as better than Wagon R. But what will be driving this brand will be the Maruti endorsement . Although Chevy and Ford have established themselves in the Indian market, Maruti still holds tremendous brand equity among Indian consumers. But competitors are not sitting idle. When Chevy launched Spark to take on Alto, it ran a highly successful campaign guaranteeing Zero maintenance cost for three years. That gave lot of boost to the sale of Spark.
Wagon R in a way offers less risk for the discerning Indian consumers compared to the new entrants in terms of cost of maintenance, spares , service etc. That will help Wagon R hold on to its pivot position atleast for now.
CRTSY - MARKETING PRACTICE
Thursday, April 29, 2010
DelMonte Sauce - TASTE LIKE NEVER BEFORE
Brand : Del Monte
Company : FieldFresh Foods
Agency : Contract Advertising
Del Monte brand is making lot of noise across various channels as well as marketing blogs these days. The brand is in news because of the launch of its range of sauces in the Indian market.
Delmonte sauces launched recently is bought to India by FieldFresh Foods Ltd which is a joint venture between Bharti Group and Philippines based Delmonte Pacific. The JV was formed in 2007 and the Del Monte products were available in select cities. I presume the company has decided to launch the products nationwide in 2010.
Del Monte is a global brand with a rich heritage of over 118 years. The Del Monte brand architecture itself is very confusing with different brand owners/licensees across the globe. The brand Delmonte is originally owned by US based Del Monte Foods and licensed to other firms across the globe. The detailed brand ownership details can be accessed here ( Wiki). FieldFresh Foods have the JV with Del Monte Pacific which has the Del Monte brand license for this part of the world.
FieldFresh Foods has launched a series of food products under the Del Monte brand name. The product range include Packed Fruits, Fruit Drinks, Ketchup and Sauces, Olives, Pasta and corn. I presume this is the first time that Del Monte brand has been promoted heavily in the media.
FieldFresh has launched two sauce brands under the Del Monte brand - Twango and Zingo. Twango is a fruit based sauce and Zingo is the traditional eastern style sauce with garlic, ginger etc. The brand is running the launch campaign for these products across various channels.
The sauce product range has taken the tagline : Taste Like Never Before. The brand has taken the taste as the USP. Delmonte is promising refreshing new tastes for its range of sauces. The launch ad is at best amusing with the brand using hyperbole to drive home the taste USP. The histrionics of the lady in the ad and the theme has nothing new to talk about. I wonder why the brand chose to use one of the most common themes for the first major brand campaign. The Indian Ketchup/Sauce market is worth around Rs 220 crore and is dominated by Maggi.
Another interesting fact is that the company decided to focus on the Umbrella brand Del Monte instead of the sub-brands Twango and Zingo. Most of the viewers may have missed those sub-brands in the ads. It is very difficult of build and sustain individual brands in the foods business. Hence umbrella branding is the only sustainable economical branding solution. The company may use Point of Purchase promotions for pushing the sub-brands.
Although Del Monte has used " Taste Like Never Before" tagline, it may be used only for the sauce product line. As far as the umbrella brand Del Monte is considered, the brand mark resembles a Quality Seal rather than a Logo. Hence Del Monte does not really need a tagline for itself.
Del Monte will be an interesting brand to watch because it has the backing of two big companies - Bharti and Del Monte. It will be tough for these brands to break the stronghold of established brands like Maggi, Heinz ,Kissan etc. Distribution and retailer support hold the key for any such brands in cracking the Indian market. Bharti which has big plans to establish retail chain may be looking for pushing the brands through its own stores in future.
courtsey- ADMAD World.
Company : FieldFresh Foods
Agency : Contract Advertising
Del Monte brand is making lot of noise across various channels as well as marketing blogs these days. The brand is in news because of the launch of its range of sauces in the Indian market.
Delmonte sauces launched recently is bought to India by FieldFresh Foods Ltd which is a joint venture between Bharti Group and Philippines based Delmonte Pacific. The JV was formed in 2007 and the Del Monte products were available in select cities. I presume the company has decided to launch the products nationwide in 2010.
Del Monte is a global brand with a rich heritage of over 118 years. The Del Monte brand architecture itself is very confusing with different brand owners/licensees across the globe. The brand Delmonte is originally owned by US based Del Monte Foods and licensed to other firms across the globe. The detailed brand ownership details can be accessed here ( Wiki). FieldFresh Foods have the JV with Del Monte Pacific which has the Del Monte brand license for this part of the world.
FieldFresh Foods has launched a series of food products under the Del Monte brand name. The product range include Packed Fruits, Fruit Drinks, Ketchup and Sauces, Olives, Pasta and corn. I presume this is the first time that Del Monte brand has been promoted heavily in the media.
FieldFresh has launched two sauce brands under the Del Monte brand - Twango and Zingo. Twango is a fruit based sauce and Zingo is the traditional eastern style sauce with garlic, ginger etc. The brand is running the launch campaign for these products across various channels.
The sauce product range has taken the tagline : Taste Like Never Before. The brand has taken the taste as the USP. Delmonte is promising refreshing new tastes for its range of sauces. The launch ad is at best amusing with the brand using hyperbole to drive home the taste USP. The histrionics of the lady in the ad and the theme has nothing new to talk about. I wonder why the brand chose to use one of the most common themes for the first major brand campaign. The Indian Ketchup/Sauce market is worth around Rs 220 crore and is dominated by Maggi.
Another interesting fact is that the company decided to focus on the Umbrella brand Del Monte instead of the sub-brands Twango and Zingo. Most of the viewers may have missed those sub-brands in the ads. It is very difficult of build and sustain individual brands in the foods business. Hence umbrella branding is the only sustainable economical branding solution. The company may use Point of Purchase promotions for pushing the sub-brands.
Although Del Monte has used " Taste Like Never Before" tagline, it may be used only for the sauce product line. As far as the umbrella brand Del Monte is considered, the brand mark resembles a Quality Seal rather than a Logo. Hence Del Monte does not really need a tagline for itself.
Del Monte will be an interesting brand to watch because it has the backing of two big companies - Bharti and Del Monte. It will be tough for these brands to break the stronghold of established brands like Maggi, Heinz ,Kissan etc. Distribution and retailer support hold the key for any such brands in cracking the Indian market. Bharti which has big plans to establish retail chain may be looking for pushing the brands through its own stores in future.
courtsey- ADMAD World.
Wednesday, April 14, 2010
FMCG N INDIA BAZAAR
The Indian FMCG sector is the fourth largest sector in the
economy with a total market size in excess of $13.1 billion.
It has a strong MNC presence and is characterised
by a well established distribution network, intense competition
between the organised and unorganised segments and low
operational cost. Availability of key raw materials, cheaper labour
costs and presence across the entire value chain gives India a competitive
advantage. The FMCG market is set to treble from $11.6
billion in 2003 to $33.4 billion in 2015. Penetration level as well
as per capita consumption in most product categories like jams,
toothpaste, skin care, hair wash etc in India is low indicating the
untapped market potential. Burgeoning Indian population, particularly
the middle class and the rural segments, presents an opportunity
to makers of branded products to convert consumers to branded
products. Growth is also likely to come from consumer 'upgrading'
in the matured product categories. With 200 million people
expected to shift to processed and packaged food by 2010, India
needs around $28 billion of investment in the food-processing
industry.
POLICY
India has enacted policies aimed at attaining international competitiveness
through lifting of the quantitative restrictions, reduced
excise duties, automatic foreign investment and food laws resulting
in an environment that fosters growth. Cent per cent export
oriented units can be set up by government approval and use of
foreign brand names is now freely permitted.
CENTRAL AND STATE INITIATIVES
Various states governments like Himachal Pradesh, Uttaranchal
and Jammu & Kashmir have encouraged companies to set up manufacturing
facilities in their regions through a package of fiscal
incentives. Jammu and Kashmir offers incentives such as allotment
of land at concessional rates, 100 per cent subsidy on project
reports and 30 per cent capital investment subsidy on fixed
capital investment upto $63,000. The Himachal Pradesh government
offers sales tax and power concessions, capital subsidies and
other incentives for setting up a plant in its tax free zone.
TRENDS
Demand for FMCG products is set to boom by almost 60 per
cent by 2007 and more than 100 per cent by 2015. This will be
driven by the rise in share of middle class from 67 per cent in
2003 to 88 per cent in 2015.
The boom in various consumer categories, further, indicates a
latent demand for various product segments. For example, the
upper end of very rich and a part of the consuming class indicate
a small but rapidly growing segment for branded products.
The middle segment, on the other hand, indicates a large market
for the mass end products.The BRICs report indicates that
India's per capita disposable income, currently at $556 per annum,
will rise to $1150 by 2015 - another FMCG demand driver. Spurt
in the industrial and services sector growth is also likely to boost
the urban consumption demand.
HOUSEHOLD CARE
The size of the fabric wash market is estimated to be $1 billion,
household cleaners to be $239 million and the production of synthetic
detergents at 2.6 million tonnes. The demand for detergents
has been growing at an annual growth rate of 10 to 11 per cent during the past five years. The urban market prefers washing powder
and detergents to bars. The regional and small un-organised
players account for a major share of the total volume of the detergent
market.
PERSONAL CARE
The size of the personal wash products is estimated at $989
million; hair care products at $831 million and oral care products
at $537 million. While the overall personal wash market is growing
at one per cent, the premium and middle-end soaps are growing
at 10 per cent. The leading players in this market are HLL,
Nirma, Godrej Soaps and Reckitt & Colman. The oral care market,
especially toothpastes, remains under penetrated in India (with
penetration level below 45 per cent). The industry is very competitive
both for organised and smaller regional players.
The Indian skin care and cosmetics market is valued at $274 million and dominated by HLL, Colgate Palmolive, Gillette India and
Godrej Soaps. The coconut oil market accounts for 72 per cent
share in the hair oil market. In the branded coconut hair oil market,
Marico (with Parachute) and Dabur are the leading players. The
market for branded coconut oil is valued at approximately $174
million.
FOOD AND BEVERAGES
The size of the Indian food processing industry is around
$ 65.6 billion, including $20.6 billion of value added products. Of
this, the health beverage industry is valued at $230 million; bread
and biscuits at $1.7 billion; chocolates at $73 million and ice
creams at $188 million.
The size of the semi-processed/ready-to-eat food segment is
over $1.1 billion. Large biscuits & confectionery units, soya processing
units and starch/glucose/sorbitol producing units have also
come up, catering to domestic and international markets.
The three largest consumed categories of packaged foods are
packed tea, biscuits and soft drinks.
The Indian beverage industry faces over supply in segments like
coffee and tea. However, more than half of this is available in
unpacked or loose form. Indian hot beverage market is a tea dominant
market. Consumers in different parts of the country have heterogeneous
tastes. Dust tea is popular in southern India, while
loose tea in preferred in western India. The urban-rural split of the
tea market was 51:49 in 2000. Coffee is consumed largely in the
southern states. The size of the total packaged coffee market is
19,600 tonnes or $87 million. The total soft drink (carbonated
beverages and juices) market is estimated at 284 million crates a
year or $1 billion. The market is highly seasonal in nature with consumption
varying from 25 million crates per month during peak
season to 15 million during offseason. The market is predominantly
urban with 25 per cent contribution from rural areas. Coca cola
and Pepsi dominate the Indian soft drinks market.
Mineral water market in India is a 65 million crates ($50 million)
industry. On an average, the monthly consumption is estimated at
4.9 million crates, which increases to 5.2 million during peak
season.
economy with a total market size in excess of $13.1 billion.
It has a strong MNC presence and is characterised
by a well established distribution network, intense competition
between the organised and unorganised segments and low
operational cost. Availability of key raw materials, cheaper labour
costs and presence across the entire value chain gives India a competitive
advantage. The FMCG market is set to treble from $11.6
billion in 2003 to $33.4 billion in 2015. Penetration level as well
as per capita consumption in most product categories like jams,
toothpaste, skin care, hair wash etc in India is low indicating the
untapped market potential. Burgeoning Indian population, particularly
the middle class and the rural segments, presents an opportunity
to makers of branded products to convert consumers to branded
products. Growth is also likely to come from consumer 'upgrading'
in the matured product categories. With 200 million people
expected to shift to processed and packaged food by 2010, India
needs around $28 billion of investment in the food-processing
industry.
POLICY
India has enacted policies aimed at attaining international competitiveness
through lifting of the quantitative restrictions, reduced
excise duties, automatic foreign investment and food laws resulting
in an environment that fosters growth. Cent per cent export
oriented units can be set up by government approval and use of
foreign brand names is now freely permitted.
CENTRAL AND STATE INITIATIVES
Various states governments like Himachal Pradesh, Uttaranchal
and Jammu & Kashmir have encouraged companies to set up manufacturing
facilities in their regions through a package of fiscal
incentives. Jammu and Kashmir offers incentives such as allotment
of land at concessional rates, 100 per cent subsidy on project
reports and 30 per cent capital investment subsidy on fixed
capital investment upto $63,000. The Himachal Pradesh government
offers sales tax and power concessions, capital subsidies and
other incentives for setting up a plant in its tax free zone.
TRENDS
Demand for FMCG products is set to boom by almost 60 per
cent by 2007 and more than 100 per cent by 2015. This will be
driven by the rise in share of middle class from 67 per cent in
2003 to 88 per cent in 2015.
The boom in various consumer categories, further, indicates a
latent demand for various product segments. For example, the
upper end of very rich and a part of the consuming class indicate
a small but rapidly growing segment for branded products.
The middle segment, on the other hand, indicates a large market
for the mass end products.The BRICs report indicates that
India's per capita disposable income, currently at $556 per annum,
will rise to $1150 by 2015 - another FMCG demand driver. Spurt
in the industrial and services sector growth is also likely to boost
the urban consumption demand.
HOUSEHOLD CARE
The size of the fabric wash market is estimated to be $1 billion,
household cleaners to be $239 million and the production of synthetic
detergents at 2.6 million tonnes. The demand for detergents
has been growing at an annual growth rate of 10 to 11 per cent during the past five years. The urban market prefers washing powder
and detergents to bars. The regional and small un-organised
players account for a major share of the total volume of the detergent
market.
PERSONAL CARE
The size of the personal wash products is estimated at $989
million; hair care products at $831 million and oral care products
at $537 million. While the overall personal wash market is growing
at one per cent, the premium and middle-end soaps are growing
at 10 per cent. The leading players in this market are HLL,
Nirma, Godrej Soaps and Reckitt & Colman. The oral care market,
especially toothpastes, remains under penetrated in India (with
penetration level below 45 per cent). The industry is very competitive
both for organised and smaller regional players.
The Indian skin care and cosmetics market is valued at $274 million and dominated by HLL, Colgate Palmolive, Gillette India and
Godrej Soaps. The coconut oil market accounts for 72 per cent
share in the hair oil market. In the branded coconut hair oil market,
Marico (with Parachute) and Dabur are the leading players. The
market for branded coconut oil is valued at approximately $174
million.
FOOD AND BEVERAGES
The size of the Indian food processing industry is around
$ 65.6 billion, including $20.6 billion of value added products. Of
this, the health beverage industry is valued at $230 million; bread
and biscuits at $1.7 billion; chocolates at $73 million and ice
creams at $188 million.
The size of the semi-processed/ready-to-eat food segment is
over $1.1 billion. Large biscuits & confectionery units, soya processing
units and starch/glucose/sorbitol producing units have also
come up, catering to domestic and international markets.
The three largest consumed categories of packaged foods are
packed tea, biscuits and soft drinks.
The Indian beverage industry faces over supply in segments like
coffee and tea. However, more than half of this is available in
unpacked or loose form. Indian hot beverage market is a tea dominant
market. Consumers in different parts of the country have heterogeneous
tastes. Dust tea is popular in southern India, while
loose tea in preferred in western India. The urban-rural split of the
tea market was 51:49 in 2000. Coffee is consumed largely in the
southern states. The size of the total packaged coffee market is
19,600 tonnes or $87 million. The total soft drink (carbonated
beverages and juices) market is estimated at 284 million crates a
year or $1 billion. The market is highly seasonal in nature with consumption
varying from 25 million crates per month during peak
season to 15 million during offseason. The market is predominantly
urban with 25 per cent contribution from rural areas. Coca cola
and Pepsi dominate the Indian soft drinks market.
Mineral water market in India is a 65 million crates ($50 million)
industry. On an average, the monthly consumption is estimated at
4.9 million crates, which increases to 5.2 million during peak
season.
Monday, April 12, 2010
TATA- PEPSI JV to grab Health Drink Market
Now TATA AND PEPSI has entered into a join venture for creating a new entity for non carbonated drinks. The new company will be exclusive for the Indian market, said Sanjeev Chadha, chairman of cola and snacks foods multinational PepsiCo.
now the question is Pepsi has already a JV with HUL for marketing, selling and distributing Lipton ice tea. and TATA TEA and HUL are in stiff competition to grab that market. HUL competes with the Tata Group firm in the packaged tea market.now it would be interesting to see what HUL has to say about this. Though both TATA TEA and PEPSI has said it wont affect any existing deals and would be taken as a step forward fro another healthy competition.
Under the new entity both the companies are trying to bring their non carbonated based products under the new entity.PEPSI has products like Nimbooz, Aquafina and tropicana juices as their non carbonated drinks in their portfolio. While TATA include Tata Tea’s ‘good for you’ liquid beverages such as Himalayan packaged water and T!ON — a fruit juice and tea-based beverage.
TATA which has been trying to reposition itself as branded beverage company, this JV would be crucial. India’s health and wellness food sector, estimated at Rs 5,050 crore, is growing at 24% a year, a report by Tata Strategic Management Group said last week.This JV is definitely going to redefine the particular market segment and would add fuel to already going war between HUL, NESTLE, P&G, Coca Cola and others.
now the question is Pepsi has already a JV with HUL for marketing, selling and distributing Lipton ice tea. and TATA TEA and HUL are in stiff competition to grab that market. HUL competes with the Tata Group firm in the packaged tea market.now it would be interesting to see what HUL has to say about this. Though both TATA TEA and PEPSI has said it wont affect any existing deals and would be taken as a step forward fro another healthy competition.
Under the new entity both the companies are trying to bring their non carbonated based products under the new entity.PEPSI has products like Nimbooz, Aquafina and tropicana juices as their non carbonated drinks in their portfolio. While TATA include Tata Tea’s ‘good for you’ liquid beverages such as Himalayan packaged water and T!ON — a fruit juice and tea-based beverage.
TATA which has been trying to reposition itself as branded beverage company, this JV would be crucial. India’s health and wellness food sector, estimated at Rs 5,050 crore, is growing at 24% a year, a report by Tata Strategic Management Group said last week.This JV is definitely going to redefine the particular market segment and would add fuel to already going war between HUL, NESTLE, P&G, Coca Cola and others.
Impact of Slowdown and Inflation and Changing Strategies in FMCG Sector
Impact of Slowdown and Inflation and Changing Strategies in FMCG Sector
The recent financial crisis has impacted several industries across the globe. In this article I will be addressing the impact on FMCG sector in India and the changing strategies which are being considered to counter the meltdown.
Impact on FMCG Sector
Post liberalization, because of the entry of a number of MNCs in India, the FMCG sales went up. But soon between 2000 and 2004, FMCG sector got hit, attributed to agricultural crisis and industrial slowdown. The crisis of declining FMCG markets was also driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Indian population was all set to experience the new basket of products, but with cut-down on FMCG products. This lead to low share of FMCG spends in the consumer’s wallet.
But every year the disposable income was increasing, from $424 in 2002 to $599 in 2007. There was an inflection in 2005, when they could spend on value added/ premium products along with the new basket of products. This was the boom stage; all categories were growing at healthy double digit rates.
As the share of FMCG spend has come down over the last few years, high inflation will not have a major impact on the consumer. The incremental expenditure will not pinch. In the current slowdown and high inflation, my hypothesis is that the consumers may not reduce the expenditure on FMCG products; rather they may cut down expenditure on expensive restaurants. People may prefer local cinema halls or in-house entertainment (Movies on Demand), than multiplexes. Consumers may prefer a local transport than Taxis. They may hold their decision of buying a new car for sometime.
Having said that let me discuss what possible impact can be there on FMCG sector.
1. Marginal Slowdown in products with low perceived value
Can you think of consumers stop consuming Atta in North and Rice in South in the current scenario? Will consumers stop bathing and washing their clothes? The answer is No!! The simple reason being it’s a necessity. Now the next question is whether consumer will buy expensive/ premium detergents or the basic ones. I think that if the perceived value from the offer is high, consumers will not downtrade to cheaper brands. This means that “Value for Money” products will not be impacted. Here “Value for Money” is independent of the price. There may be products that are inexpensive, but may offer less value to the consumers. Those will get impacted.
Therefore, large mass FMCG segment, which deliver value, may be insulated from the vagaries of the financial market; the under-penetrated premium-end category could face the heat.
From 2005, we have seen willingness in consumers to move to evolved products/ brands, because of changing lifestyles, rising disposable income etc. This was the key reason for FMCG companies like HUL, P&G, Marico focusing lot on value-added products and premium-end products to drive their growths. We all have seen big launches of two premium Anti-Ageing brands, namely Olay and Pond's Age Miracle.
In the current scenario, there may be some hit to the premium FMCG brands, because of mainly two reasons:
1. Products which are not differentiated and have low perceived value will be impacted. Consumer may reconsider buying expensive skin care products, high-end food items.
2. Some consumers who were ready to upgrade from popular to premium brands may hold, as they may find more value in popular brands
In a nutshell, consumer will look for value and not the MRP.
2. Rural FMCG Sales: The growth engine
In last few months we have several FMCG categories like shampoos, toothpaste, hair oils etc growing faster in rural than urban markets. This is attributed to higher prices of farm produce, farm loan waiver and rising rural income. These consumers are not impacted with the global slowdown. The rural consumers are upgrading to higher end products, which is driving the volume sales of FMCG companies.
Now to understand the impact on FMCG sales, let us see the split. Rural, semi-urban and urban contributed 57%, 21% and 22% respectively in 2007-08. Rural with the highest base is growing the fastest. So even if there is marginal drop in premium and value-added products (as mentioned in the previous point), the overall sales would not be impacted much. Therefore, FICCI’s prediction of growth of FMCG sector by 16% may marginally come down, because of less than expected growth rates in the premium segments.
Changing Strategies in FMCG Sector
As mentioned in the first half of my article, the overall impact on the FMCG sales will be marginal. Heavy dependence on the agri-sector and FMCG not being very capital-intensive are among the factors that have insulated the sector from the downturn. But rising input prices, inflation and increased commoditization of products are forcing FMCG companies to adopt new strategies, to have a viable business proposition. Let me enlist few of the strategies which companies have adopted and the outcome of the same.
1. Increase in price: Due to increase in raw material prices, many companies were forced to increase their prices and pass on the cost to the consumers.
a) HUL: Hiked the price of its detergent bar Surf Excel (120 g) earlier known as Rin Supreme from Rs 13 to 15. They have also increased some of their toilet soap brands
b) Tea Companies: Tata Tea and Duncans Tea have also hiked prices for select brands in their stables. Even regional players like Royal Girnar and Soceity Tea have increased prices of their brands to compete with national players
c) Britannia: Hiked the price of its popular brand ‘Britannia NutriChoice Digestive’ from Rs 14 to 15.
Some companies have been able to maintain the prices. Parle Agro has not changed the price of Frooti in spite of upward pressure on prices.
It may be easy to increase the prices of premium products but in case of popular products, the preferred choice is between reducing grammage and maintaining the same price points or introducing another price point to suit consumer pockets.
2. Introduction of lower SKUs: To prevent down trading, the companies have introduced packs with lower SKUs so that per unit purchase does not pinch the consumer’s wallet. With that companies are sharpening their focus on the existing smaller packs and increase their availability.
a) Henkel: Introduced a new 400 gm pack of Henko washing powder at Rs 40 and withdrawn the 500 gm pack that used to sell for Rs 46. As quoted by Henkel, “A family of four requires only 400-425 gm of washing powder in a month. We withdrew the 500 gm packs as they were making consumers spend more and consume more”. They have reintroduced Pril liquid for Rs 50 (425 gm bottle), down from Rs 55 (500 gm). They recently brought out its popular Fa deodorant in 75 ml and Margo soap in 40 grams.
b) Procter & Gamble: P&G has reduced the pack size of its flagship detergent brand ‘Tide’ from 1 kilo to 850 gm while maintaining the price point at Rs 62. They have also also reduced the size of its 500 gm to 480 gm at the same price.
c) Gujarat Cooperative Milk Marketing Federation: Amul introduced 25 gm packs of butter few months back, which is now registering higher sales than the traditional 100 gm and 500 gm packs. Same has happened to their milk powder. They used to sell more of traditional packs of 200 gm, 500 gm and 1 kg, with the 500 gm packs selling the most. In the recent scenario, 25 gm and 50 gm packs are selling in higher numbers.
As an outcome, companies are registering faster offtake in the mid-sized packs.
3. Cost Cutting Strategies: While companies resorted to price hike, many companies are exploring ways to cut down cost.
a) Companies are busy in strengthening their distribution and logistics, by bringing in more efficiency and innovation in the supply chain. Companies are closely monitoring their stock levels and loading patterns
b) Soap companies have shifted to cheaper options of raw materials to source their products at a competitive price.
c) Some companies have cut down their spends on advertisement
4) Mergers and Acquisitions: The turmoil in global markets seems to have a favorable impact on Indian FMCG majors’ acquisition. While many big FMCG companies find this situation an ideal opportunity to go for acquisitions, there are others who are cautious to invest in M&A. CK Ranganathan, chairman & managing director, CavinKare Pvt Ltd said that the global melt down will have a favorable impact for Indian companies’ acquisition plans. According to him, it’s an opportunity for them to acquire companies as they get good value for money. The current financial crisis may offer more opportunities because of better valuation.
5) Restructuring to leverage synergies: With the ‘power of one’ strategy, PepsiCo is aligning its beverages and snacks businesses under a common leadership. This will help them to maximize synergies of the two businesses across key functions such as procurement, agriculture and production, which will lead to production efficiencies. This will help them to minimize the price hike.
Outcome: FMCG sales & profit unaffected despite mayhem
In the June quarter, FMCG companies saw an impressive topline growth. However, rising input prices and inflation impacted their profitability. To counter the decreasing profitability, as mentioned above, companies adopted multiple strategies.
As an outcome, if we look at September quarter results, it clearly shows that the FMCG sector is not impacted, despite rise in raw material cost; credit crisis and the global meltdown. The combined net profit of 12 Bombay Stock Exchange (BSE) FMCG index companies has increased by 14% as compared to the same quarter last year. In fact, net profit of 350 BSE-500 companies increased 7% in the July-September 2008 quarter, as compared to the same period last year.
The robust net profit was boosted by a 21% increase in net sales of these 12 companies, despite the fact that raw material cost increased by 29% as compared to the same period last year. This clearly indicates that companies were able to offset the input cost hike by passing it on to the consumers as retail prices of goods in this segment increased on an average by 10-20% in the last few months. The sector is showing strong volume growth across product categories.
Vote
Has the recent increase in prices of FMCG products impacted your FMCG buying behavior?
a) Downgraded from Expensive Brands to Cheaper Ones
b) Stuck to your old brand; but moved to cheaper SKUs
c) No change in buying behavior
References
Top-end FMCG products may witness slowdown (Times of India)
FMCG cos remain unaffected despite turbulence (Financial Express)
PepsiCo to go ahead with India plans (Economic Times)
Slowdown in India won't impact growth, says Nestle (Business Standard)
FMCG: Strong volumes, margin pressure (Equitymaster)
Despite slowdown, FMCG cos put M&As on fast lane (Financial Express)
Inflation blues: FMCG prices set to rise (Financial Express)
FMCG companies push product launches despite inflation (Financial Express)
Inflation heat has not dampened FMCG offtake (Hindu Business Line)
Companies bet big on small packs to beat inflation heat (Economic Times)
Inflation: FMCG majors on a reinventing spree (Economic Times)
FMCG cos buck downtrend, may grow 17 pc (Ibef)
FMCG firms in a fix over pricing strategy (Business Standard)
FY10 should be good for FMCG: Godrej (Utvi)
POSTED BY NITIN KOCHHAR
The recent financial crisis has impacted several industries across the globe. In this article I will be addressing the impact on FMCG sector in India and the changing strategies which are being considered to counter the meltdown.
Impact on FMCG Sector
Post liberalization, because of the entry of a number of MNCs in India, the FMCG sales went up. But soon between 2000 and 2004, FMCG sector got hit, attributed to agricultural crisis and industrial slowdown. The crisis of declining FMCG markets was also driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Indian population was all set to experience the new basket of products, but with cut-down on FMCG products. This lead to low share of FMCG spends in the consumer’s wallet.
But every year the disposable income was increasing, from $424 in 2002 to $599 in 2007. There was an inflection in 2005, when they could spend on value added/ premium products along with the new basket of products. This was the boom stage; all categories were growing at healthy double digit rates.
As the share of FMCG spend has come down over the last few years, high inflation will not have a major impact on the consumer. The incremental expenditure will not pinch. In the current slowdown and high inflation, my hypothesis is that the consumers may not reduce the expenditure on FMCG products; rather they may cut down expenditure on expensive restaurants. People may prefer local cinema halls or in-house entertainment (Movies on Demand), than multiplexes. Consumers may prefer a local transport than Taxis. They may hold their decision of buying a new car for sometime.
Having said that let me discuss what possible impact can be there on FMCG sector.
1. Marginal Slowdown in products with low perceived value
Can you think of consumers stop consuming Atta in North and Rice in South in the current scenario? Will consumers stop bathing and washing their clothes? The answer is No!! The simple reason being it’s a necessity. Now the next question is whether consumer will buy expensive/ premium detergents or the basic ones. I think that if the perceived value from the offer is high, consumers will not downtrade to cheaper brands. This means that “Value for Money” products will not be impacted. Here “Value for Money” is independent of the price. There may be products that are inexpensive, but may offer less value to the consumers. Those will get impacted.
Therefore, large mass FMCG segment, which deliver value, may be insulated from the vagaries of the financial market; the under-penetrated premium-end category could face the heat.
From 2005, we have seen willingness in consumers to move to evolved products/ brands, because of changing lifestyles, rising disposable income etc. This was the key reason for FMCG companies like HUL, P&G, Marico focusing lot on value-added products and premium-end products to drive their growths. We all have seen big launches of two premium Anti-Ageing brands, namely Olay and Pond's Age Miracle.
In the current scenario, there may be some hit to the premium FMCG brands, because of mainly two reasons:
1. Products which are not differentiated and have low perceived value will be impacted. Consumer may reconsider buying expensive skin care products, high-end food items.
2. Some consumers who were ready to upgrade from popular to premium brands may hold, as they may find more value in popular brands
In a nutshell, consumer will look for value and not the MRP.
2. Rural FMCG Sales: The growth engine
In last few months we have several FMCG categories like shampoos, toothpaste, hair oils etc growing faster in rural than urban markets. This is attributed to higher prices of farm produce, farm loan waiver and rising rural income. These consumers are not impacted with the global slowdown. The rural consumers are upgrading to higher end products, which is driving the volume sales of FMCG companies.
Now to understand the impact on FMCG sales, let us see the split. Rural, semi-urban and urban contributed 57%, 21% and 22% respectively in 2007-08. Rural with the highest base is growing the fastest. So even if there is marginal drop in premium and value-added products (as mentioned in the previous point), the overall sales would not be impacted much. Therefore, FICCI’s prediction of growth of FMCG sector by 16% may marginally come down, because of less than expected growth rates in the premium segments.
Changing Strategies in FMCG Sector
As mentioned in the first half of my article, the overall impact on the FMCG sales will be marginal. Heavy dependence on the agri-sector and FMCG not being very capital-intensive are among the factors that have insulated the sector from the downturn. But rising input prices, inflation and increased commoditization of products are forcing FMCG companies to adopt new strategies, to have a viable business proposition. Let me enlist few of the strategies which companies have adopted and the outcome of the same.
1. Increase in price: Due to increase in raw material prices, many companies were forced to increase their prices and pass on the cost to the consumers.
a) HUL: Hiked the price of its detergent bar Surf Excel (120 g) earlier known as Rin Supreme from Rs 13 to 15. They have also increased some of their toilet soap brands
b) Tea Companies: Tata Tea and Duncans Tea have also hiked prices for select brands in their stables. Even regional players like Royal Girnar and Soceity Tea have increased prices of their brands to compete with national players
c) Britannia: Hiked the price of its popular brand ‘Britannia NutriChoice Digestive’ from Rs 14 to 15.
Some companies have been able to maintain the prices. Parle Agro has not changed the price of Frooti in spite of upward pressure on prices.
It may be easy to increase the prices of premium products but in case of popular products, the preferred choice is between reducing grammage and maintaining the same price points or introducing another price point to suit consumer pockets.
2. Introduction of lower SKUs: To prevent down trading, the companies have introduced packs with lower SKUs so that per unit purchase does not pinch the consumer’s wallet. With that companies are sharpening their focus on the existing smaller packs and increase their availability.
a) Henkel: Introduced a new 400 gm pack of Henko washing powder at Rs 40 and withdrawn the 500 gm pack that used to sell for Rs 46. As quoted by Henkel, “A family of four requires only 400-425 gm of washing powder in a month. We withdrew the 500 gm packs as they were making consumers spend more and consume more”. They have reintroduced Pril liquid for Rs 50 (425 gm bottle), down from Rs 55 (500 gm). They recently brought out its popular Fa deodorant in 75 ml and Margo soap in 40 grams.
b) Procter & Gamble: P&G has reduced the pack size of its flagship detergent brand ‘Tide’ from 1 kilo to 850 gm while maintaining the price point at Rs 62. They have also also reduced the size of its 500 gm to 480 gm at the same price.
c) Gujarat Cooperative Milk Marketing Federation: Amul introduced 25 gm packs of butter few months back, which is now registering higher sales than the traditional 100 gm and 500 gm packs. Same has happened to their milk powder. They used to sell more of traditional packs of 200 gm, 500 gm and 1 kg, with the 500 gm packs selling the most. In the recent scenario, 25 gm and 50 gm packs are selling in higher numbers.
As an outcome, companies are registering faster offtake in the mid-sized packs.
3. Cost Cutting Strategies: While companies resorted to price hike, many companies are exploring ways to cut down cost.
a) Companies are busy in strengthening their distribution and logistics, by bringing in more efficiency and innovation in the supply chain. Companies are closely monitoring their stock levels and loading patterns
b) Soap companies have shifted to cheaper options of raw materials to source their products at a competitive price.
c) Some companies have cut down their spends on advertisement
4) Mergers and Acquisitions: The turmoil in global markets seems to have a favorable impact on Indian FMCG majors’ acquisition. While many big FMCG companies find this situation an ideal opportunity to go for acquisitions, there are others who are cautious to invest in M&A. CK Ranganathan, chairman & managing director, CavinKare Pvt Ltd said that the global melt down will have a favorable impact for Indian companies’ acquisition plans. According to him, it’s an opportunity for them to acquire companies as they get good value for money. The current financial crisis may offer more opportunities because of better valuation.
5) Restructuring to leverage synergies: With the ‘power of one’ strategy, PepsiCo is aligning its beverages and snacks businesses under a common leadership. This will help them to maximize synergies of the two businesses across key functions such as procurement, agriculture and production, which will lead to production efficiencies. This will help them to minimize the price hike.
Outcome: FMCG sales & profit unaffected despite mayhem
In the June quarter, FMCG companies saw an impressive topline growth. However, rising input prices and inflation impacted their profitability. To counter the decreasing profitability, as mentioned above, companies adopted multiple strategies.
As an outcome, if we look at September quarter results, it clearly shows that the FMCG sector is not impacted, despite rise in raw material cost; credit crisis and the global meltdown. The combined net profit of 12 Bombay Stock Exchange (BSE) FMCG index companies has increased by 14% as compared to the same quarter last year. In fact, net profit of 350 BSE-500 companies increased 7% in the July-September 2008 quarter, as compared to the same period last year.
The robust net profit was boosted by a 21% increase in net sales of these 12 companies, despite the fact that raw material cost increased by 29% as compared to the same period last year. This clearly indicates that companies were able to offset the input cost hike by passing it on to the consumers as retail prices of goods in this segment increased on an average by 10-20% in the last few months. The sector is showing strong volume growth across product categories.
Vote
Has the recent increase in prices of FMCG products impacted your FMCG buying behavior?
a) Downgraded from Expensive Brands to Cheaper Ones
b) Stuck to your old brand; but moved to cheaper SKUs
c) No change in buying behavior
References
Top-end FMCG products may witness slowdown (Times of India)
FMCG cos remain unaffected despite turbulence (Financial Express)
PepsiCo to go ahead with India plans (Economic Times)
Slowdown in India won't impact growth, says Nestle (Business Standard)
FMCG: Strong volumes, margin pressure (Equitymaster)
Despite slowdown, FMCG cos put M&As on fast lane (Financial Express)
Inflation blues: FMCG prices set to rise (Financial Express)
FMCG companies push product launches despite inflation (Financial Express)
Inflation heat has not dampened FMCG offtake (Hindu Business Line)
Companies bet big on small packs to beat inflation heat (Economic Times)
Inflation: FMCG majors on a reinventing spree (Economic Times)
FMCG cos buck downtrend, may grow 17 pc (Ibef)
FMCG firms in a fix over pricing strategy (Business Standard)
FY10 should be good for FMCG: Godrej (Utvi)
POSTED BY NITIN KOCHHAR
Sunday, April 11, 2010
Celebrity Endorsements
Betting Big on Celebrity Endorsements
Why do Marketers go for Celebrity endorsements? The reasons could be many; the highest recall among consumers, immediate positive impact on sales, new brand launches and re-introductions etc.
As a few experts put it, the reason could also be one of pure pressure from the top management to deliver on the brand and see immediate results. The pressure is definitely not unreasonable, as in today’s competitive scenario, the number of touch points that a consumer is exposed to, is showing a manifold increase. Hence, after years of meticulous R&D on a particular product, there is a rush on the Marketing side of the new brand.
The valid question that needs to be raised is the rationale or science behind each celebrity endorsement, from the marketer’s angle. From the celebrity’s angle, the rationale is purely one of personal choice or value of contract.
Breaking the clutter within multiple touch points, warrants the Marketer to come up with innovative attributes that will latch onto the consumer’s mind. Unfortunately, this is definitely not possible each and every time, with multiple people handling multiple brands in an organization. FMCG biggies in India have all implemented excellent clutter-breaking media from time to time. But everyone’s had their share of naïve moments.
The prospect of bringing some sense of sanity and consistency into marketing leads to celebrity endorsements. Statistics on the latest survey show that only around 30% of the consumers would consider the purchase of a brand based on a popular face. A higher percentage would associate themselves to a brand, if the celebrity is actually linked to the brand message in some way or the other.
Many pundits are now arguing about the ‘Tiger Woods’ phenomenon, ‘putting all your eggs in one basket’. Whether the associated brands have been affected or not, is debatable. Only Gatorade, would have suffered an immediate impact, due the withdrawal of an entire range of ‘Tiger’ branded drinks.
In India too, many brands solely run on the back of successful celebrities, the flip side would be a ‘Tiger’, but the positives weigh much more than the intangible probability of the brand getting hammered. Especially in light of Brand Managers changing almost every 2 years.
The only simple mantra, can be to stick to one’s ‘Brand message’ atleast for established brands, irrespective of the celebrity or non-celebrity route, Airtel is a good case in point. For new brands like Max, Karbon & MicroMax (IPL), ‘celebrity’ power could be the only way forward in a highly competitive category like Mobiles.
Pepsi now in biscuit market
ya thats true. now the beverage giant Pepsi is eying to grab the share in lucrative biscuit market which is worth of 6000 crore plus. Pepsi entry into this segment would surely pose threat to already established players like Britannia, Parle and now ITC.
now it would be really interesting to watch out what marketing strategy Pepsi is going to follow. Biscuit market in India which is a commodity market, has always been very much price sensitive. Even a rupee increase in price could change the market game. So pepsi has to be very careful in terms of pricing.
ITC could be a classic example. the late entrant in this segment follow 'Single Brand Strategy'. ITC launched saveral sub brands under its umbrella brand 'Sunfeast' as this strategy is useful in easy consumer recall. Making Shahrukh Khan as its brand ambassador for sunfeast also helped the company in getting connect with urban as well as rural market .
Britannia/Parle with its lead in the market has been successful in establishing several popular brands like GoodDay, Tiger, Milk bikis, Monaco, 50-50, Krackjack, Hide&Seek etc. According to the reports in Financial Chronicle , Pepsi would mostly enter into salted biscuit sub category.There are already strong household brands like krackjack, 50-50, monaco etc in this sub-category with competition from ITC also , this will surely add fuel to the margin market.
Pepsi is already having fight with ITC (kurkure vs Bingo) and others in the snacks market. Pepsi can bank on its highly developed distribution channel to leverage its new brand with others though now with the new avataar of Pepsi as biscuit manufacturer could force the existing players to change their strategy.
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