Private Labels in India

If one walks into any of the newly sprung retail chains we can see various products which are being sold under their own name or a name owned by the retailer himself. In Big Bazaar one can see various ready to eat snacks under the brand name 'Tasty Treat" , salt and other commodities being packed under the Big Bazaar name itself, and then if you were to go into their consumer durables section you can see "Koryo"range of AC and other appliances.

This phenomenon of retailers using their own brands are more prominent today in the garment retail chains. In westside you would find them selling most of the brands which are owned by westside.

Though in terms of its share of market it is minuscule, but in the coming days going by the trend in other countries private labels, are going to become a force to reckon with. Infact Nirmalya Kumar of LBS, an authority on this area predicts that in the next twenty years private labels would easily account for over 50 percent of retail sales in the country....

The retailer has many advantages from the use of private labels , he would most of the times make more profits by selling private labels than the brands of organized players, and also use it to reduce the bargaining power of the suppliers. In the long run he can actually use the private labels to attract customers to his outlet.....

The consumer also gains as he gets products which are as good as the manufactured ones albeit at a lower cost, only party worried with this development would be the manufacturers ...

Inflation, Recession and the return of sachets.........

A few days back I had written on how consumers tend to down-trade when they feel the pinch of economic slow-down. The situation wherein a consumer shifts from a premium and more recognized brands to cheaper brands or private labels.


In the last few months in Indian retail the focus is supposedly back on smaller pack sizes on the back of rising inflation and fears of a slow down. The expectation is that consumers than buying the bigger packs would shift to smaller packs of their favorite brands. This actually seems to make sense in the Indian context as the availability of private brands is very low, so the options for down trading for a consumer is also limited..

Like as with the case of Henkel which has just introduced a new 400 gm pack of Henko washing powder at Rs 40 and withdrawn the 500 gm pack that used to sell for Rs 46. It has re-introduced Pril liquid for Rs 50 (425 gm bottle), down from Rs 55 (500 gm). For more on this , link

This is sharp contrast a few months back when many had started predicting the dead of small packs with the organized retail focusing more on the bigger packs..............

Market Update 03.07.08

Trying to link up the various news items on marketing issues in India across various newspapers in the last few weeks

Recession and Inflation are hogging the news headlines through out, even brand equity's cover story is on how bad is the impact and the question of will the ad spend go down in the coming days, with tell tale signs of empty hoardings across the streets the prognosis is not good, the coming festive season would provide the litmus test on the consumer sentiment, Link

A small item on how bubble gum is struggling to keep up with changing times, consumer habits , link and the write-up on how far should marketers go to promote their brands, or are willing to move above the clutter in the market, link

And the most obvious coverage has been on the record haul of 23 Lions in Cannes 2008 . The Best ever performance with 23 awards, including one Grand Prix, one Integrated Lion and four gold Lions, catapulting Indian advertising onto the world stage. Link

Strategist, in it's campaign logic section dissects the new Aamir Khan Samsung mobile ad, link.
The link for the ad on youtube for some one who might not have seen the ad, Link

Changes at Spencer's Retail, Link

Slightly older news, but talks about the changing focus of the Indian FMCG major , Dabur, Link

Catalyst has a very interesting story on the growth of breakfast cereals, with the category almost doubling in size from 2003-07, to 250 crores, the reasons is increasing health consciousness and awareness, but even at the current market size it is a very very very small part of the overall market. Link

The Cannes Story is also covered here, link
Last edition was full of Cannes, Link

Inflation and Consumer Buying Habits

A few weeks back I was reading a very interesting book on consumer buying behavior Treasure Hunt By Michael Silverstein. In the book the author has brought out many examples and explanations on how middle-class consumers around the world are reshaping the consumer-goods market by trading down to low-price products and services , trading up to premium ones, and avoiding the boredom and low value that increasingly characterizes the middle.

Now in the Sunday ET,there was a very interesting new item on how the sales at the value retailer have been going up in the last few months. The tittle of the article itself is 'While retailers feel the inflation heat, value stores make merry'. The article writes about the strategy adopted by Big Bazaar to attract more customers by Wednesday Bazaar concept — hafte ka sabse sasta din has been a hit among consumers. And the every day low pricing strategy adopted by Subhishka. Link to the article.

It basically goes on to show how the Indian consumer is trading down in a inflation hit market....Though the actual success of these value stores would be when these retailers are able to bring in very good quality private labels against the established brands, but that will take time, till then the consumer has to be satisfied with the discounts that they are able to get...

Brand ranking in India

Worldwide we have many ranking mechanism for brand, the more popularly accepted ones include

Interbrand Best Global Brands Survey , which would include a detailed report on how the ranking is done,

BrandZ Ranking 2008, is also a good resource

But in India we still don't have a well accepted raking which we can follow, only one which has been doing this on a regular basis is the Brand Equity Most Trusted Brand Ranking , link

and this survey has a fair bit of industry acceptance too.....

Electric Cars and alternate fuel....

For some who has been in Bangalore would be familiar with Reva, the small electric car which has been running in the city for quite long now. Infact the same could be said about people staying in London, because they are probably the two cities where one can see this car in higher numbers. Now with the crude expected to touch $200 per barrel, the government has taken certain proactive steps in promoting electric cars. Link and which would mean that we would be seeing the car in many other cities across the country.

And with this Reva is also planning to ramp up its capacity by 5 times, it should become a viable alternative for commuters.

And many small car manufactures are coming up with a gas version, one of the first one was Wagon-R , now maruti 800, even Santro is expected...

But then maybe for years we have been sitting on this issue of developing alternate fuel cars and not done much about it. There is one version which says that its is the major auto manufactures who have been blocking the development of alternate fuel vehicles, but then I think as individuals tell we are pushed to a corner with very high fuel cost (as was commented on my earlier post on fuel price hike) we will still prefer to use the petrol based cars....

A Marketer's Ability to See the Future

As the caption says one needs the ability to see and believe in the future, that is an ability which a marketer needs. In the book 'Made in Japan' it says Akio Morita declined to sell unbranded electronic goods to a major US retailer, and said he would sell it only with the name Sony on it , and these were the initial start-up days when no one even knew about Sony.

I was reminded of this need to be able to see the future when I see the Volvo Buses plying in Bangalore. When the Volvo started its operations in India in early 2000 I was one of those skeptics who never believed that it had a market in India, at best maybe a niche market, but today they are the most sought after services in the state and private transport. A detailed article in Business World gives the current status and demand for the bus, link.

We tend to underestimate how consumers tend to assess value, and how much they are willing to pay for the value that an air-conditioned, reliable and comfortable bus service.... Many years back when Reynolds first came in with its pens in India, n the late 80s or early 90's, most of the pens which were available in the market were priced 1/4th of Reynolds, but once the consumer used a Reynolds he would come back and buy only that .....

But the point which I want to make is how would Volvo know that its buses would be well accepted 8-10 years down the line, one needs to be able to have a faith in its products and understand the market and stick to ones plans (though a fair bit of research is an essential part of backing up certain decisions ), and ample risk appetite..

PS: I find the bus service between the new airport in Bangalore and the city is picking up , when the airport was opened in May end the buses were plying empty now they are quite full...food for thought you provide good reliable services to people, they are willing to try it ....

Petroleum Price Hike and Marketing.....

A few weeks back I was talking to one of my close relatives who had stayed in UAE for a long time, he said the people there were comfortable with the concept of car pooling. He said many a times 5 people would form a car pool and that would reduce both the fuel expenditure and the amount of driving one has to do... he was lamenting the lack of car pooling in India... ( UAE is oil rich and we are oil poor!!!!!)

And similarly one can observe the reluctance that people have towards using Mass transport systems to go to their offices , agreed that the facilities in mass transport are not up to the mark, but how many of us are willing to try them , personally when I had to travel to the new airport in Bangalore I used the special air conditioned buses of BMTC to reach the airport and found the service and comfort to be much higher than taking a taxi ...

This resistance among people to go in for car-pooling is a mind-set issue among us Indians, as most of associated cars with prestige rather than a means of transport and same is true to certain extent with use of Mass transport system (though this might change with improvement of the services) where most people would find it below their dignity to travel on a bus to their office...

But what role does marketing have to play in this scenario? We have concepts like Demarketing which can be applied in the current context, which basically looks at how one can reduce or limit the demand for consumption of a specific product or a service on a permanent or a temporary basis.

And with the increased awareness in environmental issues and the hike in petroleum prices it might be the right time to come up with a hard hitting campaign to promote the use of car pools and reduce the consumption of fossil fuels....

Infact one of the reasons why opted for using the mass transport (BMTC Buses) to reach the new airport in Bangalore was driven by the numerous 3/4 page ads by BMTC announcing the services, with routes timings and also a brief note on the environmental benefits of the service , giving emission or other equivalents of using the bus vs a taxi....

Dreams.............

This post of mine is not in the lines of my usual ones , where i would talk about marketing. This is more general in nature, but linked to what we want to achieve in our lives...As the heading says it is about following the dreams that one has in his or her life.

I found two videos on the net which incidentally talk about the same issue, the first one the 'last lecture' by Randy Pausch , which must have been seen by many of you... is a more moving one



The second video is one by Tom Peters on Mathew Kelly's book The Dream Manager,


Tom Peters on The Dream Manager from Tom Peters on Vimeo.

After watching the two videos one is forced to think or remember about his or her own dreams, which in many cases would have been forgotten in the rush of day-to-day life ............

Hopefully these videos would inspire us to follow our dreams and provide us with clarity and focus to pursue them and continue dreaming...

Market Update 03.06.08

Trying to compile what has come in the print media on various issues linked to marketing in India

Starting with articles in Brand equity

We have always been told about the stories of Harley Davidson, the great iconic brand that it is, In India perhaps the Royal Enfield Bullet might be the closest comparison possible. The write-up in Brand Equity provides us with insights on how the brand is being currently managed. Link

An article from brand republic reproduced in BE on the advantages of Marketing to the whole family, Link

A small write-up in ET on the changes in the story line for Amul hoarding over the years, Link


A few interesting stories in the Strategist over the last couple of weeks

Latest issue talks about how McDonald's India in a departure from its past is offering home delivery in India. Localizing of strategy !!!! Link

The last issue had an interesting article on how MUL was slowly moving out of the utilitarian cars which it had been producing for long , and swift marking that shift, link

How the retailer strategies vary across the various retailer in the country, Link

Catalyst

With the hype around the organized retail and the impact that they would have on the mom-n-pop stores , one can read the three part series on the impact of supermarket retail based on research by Kirana First
Part 1
Part 2
Part3

Harish Bijoors Q&A, Link