Indian Market Update 30.12.07

The weekend edition of ET had a few invitation articles and predictions made for the new year

Kishore Biyani's article on retailing No one can Stop an Idea

Arun Maira's predictions for the new year link

Hector Ruiz, Chairman and CEO AMD Inc, on Indian Market and Innovation

Other Usual Updates

Predictions on the Gadget boom coming in 2008 link

Harish Bijoor Catalyst reviews the year 2007 from a marketer's perspective link

The Strategist had an article on selling luxury homes.

Radio ad makers and the use of golden days to connect link

Suzuki - 'from denial to price reduction' reaction to Tata 1 Lakh car

Tata's seem to be the flavor of the month in terms of the media coverage and news. This is media attention is only going to increase in the coming days with the Jan 2008 launch of its 1- lakh car at the Auto Expo in Delhi. As it had happened with Indica, competitors and other auto manufactures were in a state of denial that an Indian company could come up with a world class car, now the same is happening with the 1 Lakh car, Suzuki initially denied that it was possible to manufacture a car at $2500, and then a few weeks back questioned the ability of Tata's to produce a car at the price with adequate safety and emission norms. Now the news is that Suzuki is planning to slash the prices of its iconic 800, some are even saying that it might try and match the prices . To quote the managing director Shinzo Nakanishi "We will have to do at least that,”.

From the consumers point of view it is a new year gift from Suzuki and Tata Motors, and the reinforcement of the belief that competition is good for consumers. With the coming of the world's cheapest car the dynamics of the auto industry might change forever. But then what would happen to consumers who have brought Maruti 800 for so many years, will they not feel cheated? Would it lead to a similar reaction as happened with iphone? Maybe one of first reactions would be that consumers would postpone their purchase decision till dust settles down in the low priced car wars............

Bottom of the Pyramid a Mirage?

Debates and arguments are beneficial , many a times the process brings out dimensions which have not been thought-off by the parties involved. Infact it is when some one questions you that you are able to articulate your thoughts better than when your idea is accepted passively by peers and others.

The debate between Prof C K Prahalad and Prof Aneel Karnani on the viability of the concept of Bottom of the pyramid marketing is one such debate. C K Prahalad is the one who propounded the theory that the Bottom of the pyramid consumers with incomes less than $2 per day can be a viable and a profitable segment to market and he places the onus of these activities on MNCs who have ignored this market till now. He says serving the bottom of the pyramid can become a win-win situation for both the consumers as well as the companies and also serve as a source of innovation. In his book 'Fortune at the Bottom of the Pyramid' he has written many cases on how the concept has been applied in many emerging economies. The book was published in 2004, but in the preface of the book CKP admits the fact that he has been working on the issue for many years and the struggle he had to go through before the idea was accepted. And as of today one finds that the idea has been taken forward by many companies and there are joint initiatives in terms of BOP labs being set-up in many developing countries.

Prof Aneel Karnani in his article Mirage at the bottom of the pyramid argues that the BOP argument is riddled with fallacies. According to him the BOP approach looks at the low income consumers as alternate markets and with the current low levels of income this seems to be a difficult proposition to accept. He goes on to look at each of the cases which have been given in the book and identifies the problems, including the estimated market size and number of BOP consumers. He emphasizes towards the end of the article that rather than looking at BOP consumers are buyers of products produced by multinationals they should been seen as producer . This is the only way in which the real income of these consumers would increase and real poverty alleviation would happen. CKP has responded to the article , link.

Indian Market Update - 22.12.07

Thought should start providing links in major news paper articles, which had marketing news so that one would be able to access it at one point. Staring from this week would try to post this info every Saturday.

Brand Equity had the main story on Marketers who dominate the market, a good read which provides us insights into how some companies are able to dominate their markets. Examples of J&J, Nestle, Eureak Forbes....

Strategist reproduced an article on Companies approach to innovation, which had some time back come in the McKinsey Quarterly and the other story was on how three comics are trying to redefine the markets.

Catalyst describes the challenge that Raymonds is facing trying to manage both park Avenue and Raymonds Brand.


More News links

This article is about the importance of Bollywood in Indian market place and the fact that it is the driving force behind internet portals , gaming devices and mobile phones

The story of how regional brands are cashing in on the modern trade.

SRK and the nokia ad.

Reliance eying the acquisitions route for making its presence felt in the Indian branded apparel sector.

Opinion of Shombit Sengupta on "Is Brand India tag a liability for Luxury goods?" and Arvind singal in his regular column adds his insights on Brand India.

Trends

Net Access through Cellphones is 14 Times more than Broadband.

10 Technology trends that defined 2007.

'Munnabhai' makes Mahatma netizens' top search.

SRK and New Nokia Ads

Celebrity endorsements as a means of promoting a brand has often been misused in the country with celebrities like Amitabh Bachan and cricketers endorsing scores of brands each, from petrol, Banks to chocolates.

But the new ads of Nokia featuring Shahrukh Khan (who is into as many if not more endorsements as Amitabh Bachan) has been generating a lot of media attention even before it's release. The coverage on Hindustan Times talks about the ads connecting the use of Nokia phones with the generic category of telephony itself. With Nokia having close to 70 percent market share in the handset market it does make sense. Overall though nokia has been a little late in jumping on to the band-wagon of using celebrities with the rivals Motorola having used Abhisek Bachan and Sony Ericsson Hrithik Roshan.

If one were to look at the earlier communication strategy used by Nokia through it's N Series ads and now the use of SRK, the question is Nokia taking the easy way-out of coming up with original ads, because the earlier ads of N-series were very well received and with the use of celebrity maybe the originality of Nokia ads might be lost as it would be one more Brand being promoted by SRK . Though in the short run it might have an influence with the recent hits like "Om Shanti Om". And as the Business Standard article asks, how will this help the market leader???

If one were to fall back on some theory , it says that for a celebrity endorsement to work it should have expertise, trustworthiness and likeability. Maybe SRK would do well in the last parameter and to certain extent in the Trustworthiness also , but then may one should wait till the ads are released...

Will update the ad in the blog when it is released......

Update 1 : SRKs comments on Celebrity Endorsements, link
Update 2 : More on Celebrity Management, link

Rise of India....

Here I have written many times on the potential that India holds ,

but one always feels good if some one outside also acknowledges the same and thus thought this video* should find a place in this blog....



* saw it on varun's page so due acknowledgment to him...

Tata's Small Car as a Taxi

I read this news item in the economic times Tata's small car may become taxi operators' choice and then there was a question raised in one of the discussions* which promoted me to raise this issue .The article says that many of the Taxi Operators across the country are postponing their plans to buy Indica and other small cars and are waiting for the Auto Expo in Jan when the Tata's would unveil the new car. The fact that the other products in the Tata Motors stable, Sumo and Indica have both the reputation of being cheap to run and affordable to own, the taxi operators expect the same from the new offering.

But as a marketer would it be a good idea if your car sells as a Taxi? World wide car manufactures have resisted being seen as a Taxi reasons being the impact on the Brand image and also because in the developed markets the Taxi business is very well organized with big players who have a lot of bargaining power and thus are able to get the best price possible. Though in the Indian market the Taxi operators are small and mostly unorganized market, but the first factor of the impact of the brand image is a factor which needs to be taken care of . Would a first time buyer (the expected target customer) be really keen on buying a car which is is running around the town as a Taxi? Or maybe it might not be as much as a criteria as we are talking about an entry car. In Srilanka I had read that Baja Autoriksha's are being used as a family transport vehicle........................

* By Vinayak during the Indica presentation.

Triumph of Brand Tata or Brand India

Most of us have been keenly following Tata's bid to acquire the two Ford Brands Land Rover and Jaguar. With the Indian media reporting that Ford has named Tata as the preffered bidder it seems that Tata would eventually buy the two brands. This is not something new for the group which has been on the acquisition spree for sometime now, its 11.3 billion deal acquiring Corous is being listed among the world's ten best deals of 2007 by Time.

And even in overall M&A scene we have seen many Indian groups acquiring many companies in 2007, and the Chinese companies have been on it much longer than the Indian companies, the Lenovo's acquisition of IBM's PC division being one which is more recent in the consumer's memory.

But the coming to what i have put in the title of the post on how the Triumph of brand Tata is more or less the recognition of Brand India. Tata is one of the oldest and well recognized brands in the country and in the pre-lib days through their diversifications were there in most of the sectors in the economy and as their website puts it name "TATA is synonymous with India's industrialization". As one foreign visitor has observed in the pre-lib days most of things in India were manufactured by the Tata's , how the hotel he stayed belonged to Tatas (Taj), even the the soap he used in the hotel belonged to the Tatas (Tomco), salt, steel, buses, and so on......

The willingness on the part of Ford to sell its brands to the group shows that they recognize it as a company which has the competence and standing in the automobile market to be able to handle the two brands.....

Update: Brand Tata is Hinged to Brand India

" We are like that only"

Book written by Rama Bijapurkar on understanding consumer India. With foreword written by C K Prahalad and afterword by Naryana Murthy, the book raises a lot of expectation of the reader. The book promises to help the reader understand the billion plus market, and also clear many myths about it. A good read but the authors ideas have been published in various newspaper articles and business publications. A die-hard believer in the future growth and potential of the Indian market.

Link to the author's website Link

Aminabad Market Vs Sahara Ganj....

This post is triggered by a comment made by my friend on our recent visit to Aminbad Market, he wondered "Can Big Bazaar replace this market ever?". Now for the benefit of people who are not from Lucknow , Aminbad market is that typical market which is present in most of the small and bigger cities in the country(though size might vary), whether it is the Shivaji Nagar Market in Bangalore, or the market surrounding the Kalupur market in Ahmedabad. These are the typical markets which are full of vendors who are there to sell anything from a comb to watches to crockery......

And these vendors are mostly the small vendors on the roadside, with all the material which they sell on the a rented gadi or thela and some make use of a small loudspeaker to attract customers. And these markets have a reputation to be the one where you could get the best price if one knew how to bargain.

My friend made the comment a couple of days back , and we just casually discussed it, but then when i again went back to the market i decided to take some time off and spent a couple of hours in the market pondering over the question. Though I am firmly in the favor of the entry of organized retail in the country, the first thought which came to me was the one which has many people worried (though i doubt the genuineness of most of them) was the employment such markets are able to generate. Second thought was what it would mean culturally to loose out such a vibrant and lively market with a life less organized retail store which in a way is unique and ingrained in the way we are and we shop....

But at the end of two hours followed by a visit to few of the organized retailers in the city I was convinced that it would be very difficult if not impossible for organized retail to dislodge the unorganized small retailer from the retail scene in the country , because more than the issues of economies of scale and efficiency, for us bazaar buying is a part of our culture and though we might like to go to the shopping malls once in a while we would continue to patronize markets like Aminabad for a long time to come, and by "we" I mean the majority of Indians...

Marketing Trends and Predictions for 2008??

2007 is nearing an end, so i thought we could make some predictions on marketing trends for 2008 and also list out things which we as marketers would look forward to ....

can start with some and other can contribute and we could compile it at the year end and post it....

Market Trends

1. Indian Retail would continue to grow, but with them becoming more sensitive to the political and social issues

2. Indian Telecom would grow at the same pace or even higher.....

3.

Things to look forward to

1. New Car launches by Maruti, hyundai and others would make the activity in the Indian automobile market even more interesting to watch and comment..

Expect more additions .....

Product Launches Accompanied by Websites

The recent launch of new products have been accompanied by the launch of a companion website (generally gaming and entertainment).

ITCs Bingo's website is a gaming page which includes games woven around the flavors which the company is promoting in its chips. The theme is that of a college campus.

I think one of the reasons why marketers are going for the launch of companion website is that the cost involved in setting up a new website is very low and for such a low cost it is not a major decision , whatever traffic you are able to generate would be a plus and if it really picks up you can capitalize on it later.

And the second and more important reason could be the changing media habits of the younger consumers, the ITC Bingo site is focused on informing consumers about the various flavors it has to consumers who might not be spending that kind of time on TV or even when they would be watching TV they might switch channels during the ad time and with the growing interest in gaming in the country it is bound to attract the attention of the right consumer .....

Some more examples include, ITC Sunfeast , Colgate Max Fresh , in which the site includes games, jokes, e-cards and free sample options. The game is again revolves around the brand proposition of the use of crystals.....

Another new launch accompanied by a website is Taj Mahal Dessert Tea. Here the site seems to have been put to a different use, There are no games, the site seems to be more of trying to educate consumers on the possible uses of the Dessert Tea which for most of the consumers would be new...

Corporate sites which have additional websites attached

Coke has Myenjoyzone.com
Pepsi has Pepsizone.com

Importance of Category in Branding

If one is launching a new brands then perhaps one of the early decisions one has to make is the choice of the product category in which it would enter. The product category helps one identify the competition and the possible positioning option one can choose. This point has been highlighted by Al Ries in one his earlier Ries reports

Brand building - Dove Way

Traditionally one would find that ads of a soap would emphasize on making the user beautiful either directly or indirectly through the use of celebrity endorsements . But the series of ads used by dove is very different in the sense that the ads challenge the concept of beauty as has been traditionally seen. The Dove Evolution Ad has won two Grand Prix Advertising awards recently. On the web page it says "In a world of hype and stereotypes, Dove provides a refreshingly real alternative for women who recognize that beauty comes in all shapes and sizes".

The Dove Evolution Ad



They have recently launched the Dove "Onslaught" Ad



The details about the brand, its standing in the US market as per their website

• the world's number 1 cleansing brand
• sales of over € 2.5 billion a year in over 80 countries
• outsells all other skin care bars combined in the US
• over 1 billion showers taken with Dove products in the US each year
  

All these campaigns are part of the "Campaign for Real Beauty", which has a website of its own with a host of activities linked to the brand....

So the question is what is dove up to ?
It has managed to create enough buzz in the market place with its campaigns which have been recognized by both the industry and consumers as being some thing different.....

This ad has been discussed by many bloggers, link

Packaging as a source of innovation 2

Earlier we had seen how quantity in packaging, specifically lower-quantity has lead to increased usage and penetration in categories like shampoo, oils.... now we will try and see the other benefits one can derive from effective packaging, apart from the basic functions like protection, making them easy to identify, and enhance their presence at the POS.

Packaging can be used as a way to assure the consumer about the product's quality, when one uses a see-through packing. The see-through packaging induces customers to try the product, and in cases where the nature of the product is such that physically experience is requires then the see-through packing helps provide a substitute . It also helps in those categories where the willingness of consumers to try out new brands might be low. This is being done by most of packaged foods being market.

Effective packaging can help enhance the basic functioning of the product. I have know many of my friends who would switch brands when they see a more convenient packaging with a competing brand. When a shampoo manufacturer comes up with a new bottle which can be kept inverted so that every time you don't have to struggle trying to force the shampoo down the bottle it will attract customers. The packaging used by Parachute Coconut oil increases the convenience for its customers. It has the option of a wide necked bottle from which consumers can remove the oil in winter when the oil would freeze and smaller trial packs.

In the Indian context one also finds that companies try to use packaging as a means of protecting their products from counterfeiters. The special crimp packing used in the case of Bisleri is to assure customers that the bottle has not been tampered with. And, even the fact that we as Indians like to find use of old products and if the packging helps us in that we would be more happy dealing with that company. This can be seen by how we reuse used containers of paints and oil as substitutes for buckets and PET bottle of coke and Pepsi finding it's way to the fridges of most homes...

The scope of packaging in enhancing the products visibility and eventually sales of the product is unlimited and thus I feel it needs to be given its due importance in the marketing mix...............

Microwave Oven gaining acceptance among Indian Households

In new product development one finds very few totally new-to-the-world products, most of the products we see as new products in the market place are the new improved versions of the older products. Microwave oven is one those few products which would fall under the classification of new-to-the-world products. The discovery of the product itself was more out by accident than by design. According to wikipedia " Cooking food with microwaves was discovered by Percy Spencer while building magnetos for radar sets, he was working on an active radar set when he noticed that a peanut chocolate he was carrying in his pocket started to melt".

Microwave as a product has become a high growth segment in Indian market only recently, initial launches very not very successful, but with the changing lifestyles and family structure the product is finding more and more acceptance among Indians. Another reasons given is the fact that microwave cooking is not suited to Indian way of cooking , and with the changes made by manufactures to incorporate additional features to accommodate our cooking styles has also lead to its increased acceptance. The projected production of microwave oven sin the country is set to touch 1 million next year.

Packaging as a source of innovation - 1

Though packaging is at times considered as the 5Th P of marketing mix it has not received the attention it ideally should have. According to Harish Bijoor ( Marketing Consultant) "Packaging is an integral part of the brand mix and this is the day of attractive shapes and vibrant colors. Therefore, the brand manager has to consider a host of things such as shape, design, color, mnemonics and graphics, in order to make his brand more visible"

Packaging innovations can be seen from two varying perspectives, one wherein in adds to the basic functionality of the product through providing additional benefit to the consumers and second would be when it enables trials and increased usage by virtue of pack size (small). We have many examples of both the cases in Indian market, though the small pack as a source of innovation has received more attention than the other.

Small pack sizes have enabled marketers to reach consumer groups who were earlier not considered to be their target customers. The sucess of small shampoo sachets in rural markets have become marketing folklore which every student of marketing is told.The basic logic behind the small pack introduction is the understanding that the consumer though might not be able to afford to buy the full bottle of shampoo but wanted to use shampoo. And the fact that he would be able to afford buying it in smaller quantities, moving from cost of a monthy hair cleaing to cost per use to the consumer.

Though it is being said that the sachets would die a slow death with the emergence of organized retail , as in the organized retail context sachets become easy target for pilferage and they are not very keen on promoting small packs and would rather want the consumer to buy bigger packs. But in the market you would still find many companies continuing to come up with more and more small packs, like the recent amul mini butter packs, and parachutes small packs, and with the mom-and-pop stores dominating the retail landscape of India for a long time to come these introduction would only add to their turnovers ...

Second aspect of how packaging adds to increase the functionality of the product would be the subject of the next post....

Islamic car - Segmentation Strategy?

Malaysian automaker Proton along with Iran and Turkey are planning to build an Islamic car. The additional features are supposed to be a compass to find the direction of Mecca and a compartment to keep the Koran in. The realization that as a marketer one needs to be able to address the cultural differences among consumer while designing products and communications has always been acknowledged and we even have a separate sub-discipline called multi-cultural marketing which specifically addresses these issues. The question this proposed new product introduction raises is "Is a need for a specific product like this in the first place or is that the case of a marketer trying to exploit the religious sentiments of a specific set of consumers?" There have been many critical comments on the idea already, saying that it is cynical marketing.

The idea that one should target specific needs of customers within larger markets through segmentation is a well accepted marketing strategy which has lead to many successes. But from what is available in the media the only additional features it boasts of is the compass and compartments for Koran and the Scarf. The company has also made claims that it has identified a huge gap in the market. Lets us suppose for a minute that there is indeed a need for such additional features in a car how long will it the competition to add a few compartments and compass to their exiting models and bring out their own versions of the Islamic Car?

Internet and the Net Generation

The influence of IT especially internet on marketing has been of much interest to marketers. Its influence on consumer buying behavior can be seen from varying perspectives , one would be how it influences the current population interms of how they are using the net for information search and purchases , another much more interesting way is to try and understand how these emerging technologies are influencing the younger generation , a generation Don Tapscott calls the Net Generation in his 1997 book Growing up Digital .The author claims that because of their access to the digital media these young people learn, work, think, shop and create differently than their parents. A generation bigger than the baby boomers itself and one which would dominate the twenty-first century through its sheer demographic muscle.

The size of this net generation is estimated to be close to two billion internationally, and inspite of the low penetration levels of PC in the country (3%), we also we have our 'net generation' which is influencing marketing. A recent study done by Walt Disney company and GroupM shows that children in the age group of 8 to 14 years function as consultants to their parents when it comes to buying mobile phones, computers and television sets. They help out parents’ particularity for comparison of one product to another. The findings point to two things one is how the decision-making is changing with the Indian society moving on from joint family system to nuclear families, and the implications for marketing communicators on whom they should target in their communication plans....

Though the basic contention that Don Tapscott had was that as this generation grows up they would influence the way they shop, access information and receive media, but what we see here is the influence that they are having currently owing to their familiarity with technology .....

update 1 : found a good post of something related to the younger generation and how can one target them on Sandeep Krishnamurthy's blog http://marketingcollege.blogspot.com, the post if an interview with David Morrison founder of TwentySomething.com

update 2: Found a good related blog written on one of my favorite blogs wikinomics.com on the net generation link.

Segmentation and the Concept of Gravity of Decision Spectrum

This is in continuation with earlier posts on segmentation, though a little theoretical may be more examples can be brought out through comments and discussion..

Segmentation is the first critical step in the marketing process once a need has been identified. The process of segmentation, targeting and positioning provides the bases on which one decides the 4 Ps of marketing mix, product, price place and promotion.

In segmentation we divide a market into distinct groups which have distinct needs, characteristics or behavior, so that the company can focus its resources on satisfying the customers in this distinct segment rather than spreading itself thin trying to serve the whole market.

A 2006 HBR article, Rediscovering Market Segmentation provides us with the latest on the concept. They propose a 'gravity decision spectrum' to avoid the error marketers commit by applying segmentation designed to shed light on one kind of issue to some other purpose for which they are not designed. They suggest that one should begin with the expectation consumers bring to a particular kind of transaction.

The authors have divided the gravity of decision making into three, first is shallow, which involve the decisions which are simple and inconsequential like trying out a new brand of toilet paper and at the deepest end are decisions which have very high significance like buying a house and others which fall in middle.

An example of the shallow end was the case where in a manufacturer of men’s shaving products wanted to introduce disposable razors but feared that it might cannibalize the sale of its reusable razors. Segmentation exercise carried out classified consumer into those who use either disposable or reusable and those who switch. The company found that the switchers formed a very small segment and introduced the disposable razors.

In the middle end of the spectrum the article gives the example of the segmentation exercise carried out by Toyota prior to the launch of its Hybrid Prius in the US market. The consumers wanted car with greater power and faster acceleration than what was being offered by Prius. But through segmentation they discovered a small segment of consumers who were environmentally conscious and wanted to project that image and were also happy with the design and performance of the car and thus it was launched to this small segment through a focused media campaign.

At the deep end is an example of the people opting for Retirement community centers at a very high cost. The segmentation exercise revealed an orientation towards changing family values driving the purchase of these expensive retirement options. The two key values characterizing this segment were identified as the desire for autonomy and willingness to embrace.

Thus we can see that in each of these three cases the bases for segmentation differed and they brought out insights which helps marketers improve their decision-making.

Previous post on the issue

Segmentation and Demographics

Paras Pharma Succeeding through Segmentation

Rule of Three in India

Marketing Guru Jagdish Seth has been promoting his theory rule of three and has a book on the topic named The Rule of Three. The basic proposition put forward by him and his co-author Rajendra Sisodia is that in just three major players emerge in all markets. Which essentially means that in any product category only three players would survive and all other players in the given industry will have to limit themselves to being niche players in the market.

Ex- US food restaurants McDonald's, Burger King and Wendy's, Automobile market in the US. The book was written in 2002 and in one of his visits to India the author was asked if the rule of three would apply to Indian markets, to which he had said it would be applicable here and perhaps in response his new book on Rule of three in India is also coming.

Infact is one were to observe the Consumer Durables market the phenomenon can be seen to be working already. Coming back to Fridge purchase again, our visits to many shops across the city found only two brands being promoted LG and Samsung. When we asked for other brands either the variety was not there or the salesman didn't show any interest in promoting them. Other than the fact they are not Indian companies a consumer doesn't have much to complain agianst the two companies , they provide good quality products at reasonable prices and have built their brands based on that ..........

Books on Business History

1. McDonalds Behind the Arches by John F Love
2. Google Story by David Vise and Mark Malseed
3. Nuts ( The South West Story)by Freiberg and Freiberg
4. iCon Steve Jobs by Jeffrey S. Young and William L. Simon
5. The Disney Way by Bill Capodagli and Lynn Jackson
6. The Rising Tide ( History of P & G) by Dyer, Dalzell and olegario
7. Sam Walton Made in America ( Wal-Mart Story) by Sam Walton
8. Iacocca An Autobiography by Lee Iacocca
9. Made in Japan (Sony) BY Akio Morita
10. Who Says Elepehants Cannot Dance ( IBM Turnaround Story) by Louis V. Gesrstner Jr.
11. Direct From Dell by Michael Dell
12. Only the Paranoid Will Survive (Intel) Andy Grove.
13. Richard Branson the Autobiography
14. Pour Your Heart into It: How Starbucks Build a Company One Cup at a Time (The Starbuks Story) by Howard Schultz
15. It Happened in India ( Pantaloon Story) by Kishore Biyani
16. Jack Straight from the Gut, (GE) by Jack Welch
17. POP : Truth and the Power at the Coca-Cola Company, by Constance L Hays.
18. Shift Inside Nissan's Historic Revival, by Carlos Ghosn and Philippe Ries
19. iWoz, (Apple), Steve Wozniak
20. The HP Way, David Packard

Price Point Strategy

In this post I would like to highlight the strategy adopted by Maruti Udyog Limited (MUL) to dominate the market. It follows a price-point-strategy where in they have products available in almost all possible price points. If one were to study the number of variants and products available

1. Maruti800 from 198460 to 222272 (4 variants, including the metallic & non-metallic)
2. Alto from 239029 to 294175 (6 variants, including the metallic & non-metallic).
3. Zen Estilo from 325626 to 383162 (6 variants, including the metallic & non-metallic).
4. WagonR from 332982 to 456815 (14 variants, including the metallic & non-metallic).
5. Versa from 368162 to 479419 (3 variants)
6. Esteem from 451374 to 516 (3 variants)*
7. SX4 from 625000 to 731000 (3 Variants)
8. Swift from 405763 to 531458 (7 Variants)
9. Grand Vitara from 1393805 to 1493085 (2 Variants)

* Withdrawn

A total of 46 variants covering the price range from sub 2 Lakh to 7310000, and two variants in the 14-15 lakh bracket....

And further the news paper reports on the future plans of the company says that it has plans to introduce Swift Sedan shortly , which will be priced lower than SX4, It also plans to launch a big car in the range of 10-12 lakhs which seems to be an apparent whole in the price range offered by the company.

The logic provided by the company is that this strategy enables them to ward-off competition, retain customers in their fold when they want to upgrade and to give a feeling to the customers that MUL can provide them with variants at all price points.

The question which comes to my mind is this based on understanding the needs of the customers of a strategy driven by competition and market forces.....??

Segmentation and Demographics

If one were to actually try and understand the progression of the various bases on which segmentation is done, it initially started with use of basic demographic variables like age, income, education levels to segment the market. And moved on to non-demographic traits like values, tastes and preferences with the hope that these variables would have more influence on consumer purchases than their demographic traits.

The recent article in Harvard Business Review "Rediscovering Market Segmentation" has criticized that segmentation has become more of psychographic profiling diverting it from the original and true purpose of discovering customers whose behavior can be changed or whose needs are not being met. And the purpose of segmentation has become narrowly focused on the needs of advertising, which it serves mainly by populating commercials with characters that viewers can identify with.

But coming to the Indian context one can see many successful applications of the most elementary of segmentation variables that is sex or gender to design and market products which have been very successful in catering to a new segment of the markets which had not been tapped by the industry. The example of this trend is the case of the introduction of Emami Fair and Handsome, a fairness cream targeted at men. This was based on the findings that men were using fairness cream meant for women and there was a need to introduce a new fairness cream for men. And companies like Madura Garments which introduced the Allen Solly Women's Wear based on their finding that women buyers were behind the rapid sales of sizes 26 and 28 in its men's trousers.

Though one might want to keep moving to more and more complicated bases on which to segment the market but going back to basics in terms of understanding differences in consumer needs might not be a bad idea..............

Window Shopping for a Fridge and a Water Purifier

We are in the middle of the peak festival season and everyone is in a festive mood, and most of the companies have come out with schemes to capitalize on this festive spending mood. Yesterday I decided to do a market visit to check-out the festival offerings, driven by a friend who wanted to purchase a fridge.

We went to the nearest consumer durables shop and were caught by the Philips water purifier guy wanting to sell purifiers. A need which had been there but had not seriously considered buying it due to various reasons. Found the guy at the small promotional counter quite well informed, but couldn’t take a decision as we wanted to compare the offer with the market leader Eureka Forbes….

Inside the shop we were shown many models of Samsung and told about the local scheme which was running and how last week itself nine of his customers had won Mobile phones. We couldn’t compare Samsung with LG and went to check that out in another shop nearby. The response from the shop sales person was not good, so we decided that Samsung was better.

On the way back we saw another promotional stall put up by Eureka Forbes, found the price to be similar to what was being offered by Philips, but it has the hassles of the getting an annual service contract and the salesman couldn’t provide us with the brochures and product information, maybe the fact that they have the water purifier market for themselves for a long time has made them complacent, again we decided that Philips was a better deal…

As a marketer when I was reflecting back on our experience I could clearly see that as consumers we didn’t see much difference between the fridge brands or the water purifier brands, and what made us decide in favor of one brand over the other was the experience we were getting at the POS while interacting with the sales people, and these sales people will not be directly appointed by the companies themselves they would be more of dealer appointed sales persons, though the company would give them special incentives to push their brands..

But at the end though we did so much of information collection we didn’t make the final purchase, we had taken a decision on the brands but the final purchase is still pending and who knows what might change…

Update : My conviction that a good sales person at the POS can lead to more brand switching compared to the effort one has to put to create the same kind of difference through mass media is getting reinforced. In one of our recent trips to the market we were looking for a room heater and had only two brands in our mind, USHA or Bajaj, but the owner at one the older shops in the city convinced us to buy an unknown brands of the room heater , the name which i have forgotten and all my efforts to remember it and it put a link here should be an adequate proof on the ability of the POS sales person to make the consumers switch brands....

Motorola Mobile India and US Market

A brand becoming the number two brand from No 5 with market share going up from 2.6 to 15% in a year in a market as highly competitive as the Mobile handsets market is a story which catches attention, which is what it did when I read it in the Business Standard-Strategist today. The company we are talking about is Motorola. The success in the market was attributed to the fact that could move people away from the feature driven compare-and-buy approach to making people buy the product for style and design making it a cool brand to buy. The article also says that it helped that Motorola’s sub-brands have catchy names like Razr, Pebl and Flip which helped it differentiate from competition. A combination of good promotions involving a celebrity's also helped the cause.

But in the youtube I found Al Ries the Marketing Guru criticizing Motorola for its branding strategy,It provided me with a contrast on the situation, which forced me to think are the fundamentals in marketing in these two countries so different??



At the end of the article in Strategist on the sucess of Motorola in India is given the fact that Motorola never had phones in the below 5000/- range and the launch of MotoFlip W220, which was priced under 4000/- only in August 2006. The launch was backed up with a good ad. It makes me wounder if consumers were just waiting for a sub 4000/- handset to be launched or was a mix of things ............

More on the Small Format Debate

In one of my recent posts I had written about how the small format is being favored by most retailers in the country adding more insights into the issue is an article, “Big Impact in a Small Format” article forwarded by one of my friends and also available at Strategy and Business. The article comes out with the major reasons why after years of the hype about “big box retailing” small format retailing is making a comeback in Europe and Latin America. The first reason is that the customer experience that one gets in a massive retail establishment is becoming increasingly unattractive. Second is that with the improvement in technology and economics, enable the small stores to procure at almost the same price and quality that the big box retailers are able to do because of their economies of scale. And the last reason given is the intimate relationship which the small retailers are able to provide to their customers. The article also provides more support on why the big retailer would not wipe out the small mom-n-pop stores in the country.

Previous Post on the Issue

Paras Pharma Succeeding Through Segmentation

According to the Chairman and MD of the company Mr Girish N Patel “Most of the products of Paras have in fact been formulated based on the perceived needs and requirements of the common man.” This identification of consumer needs and satisfying them with new products has enabled the company to create many categories.

As a conscious strategy the company has stayed away from the ethical pharma segment and instead decided to focus its energies on the OTC segment. Stopache was the one of the initial successful products that the company launched in the late 1960's, but the company waited for many years before its next flurry of product launches came.

It started with the launch of Krack cream in 1993. The company found that the market was served by petroleum jelly and there was a need for a product specifically targeted at cracked feet, and thus Krack was launched backed by a well designed communication campaign to convince consumers that its use in the initial stages would reduce damage. Krack registered an sale of 3.8 million tubes in the first year which shot upto 8 miilion by 1996 and now the brand is pegged at around 32 crores.

Second brand which did well in the a competitive market was Moov, it differentiated itself against Iodex as colorless ointment in a tube and attacked Iodex with its positioning as a "stain-free" option. From that it has moved on to “Ek minute MOOV ki malish” proposition for its consumers. Moov single offer to the consumer of "pain relief" versus the multiple benefits being offered by other competing creams in the marketplace has also helped it become a market leader.

The experince from launching two products which exploited the basics of marketing of good segmentation, targeting and and positioning helped it do well in other products which it launched later on, like Dermi cool with a crystal clear positioning: immediate cooling sensation. The cooling sensation came from the mentholated formulation. Other sucesful brands in the posrtfoplio include Itch guard and Rung guard.............

Road-side eateries in the shadow of the Mc Donalds and Pizaa Huts

I was observing the presence of the small road-side eateries near a posh mall in Lucknow. The mall is one the older ones in the city and has many eating joints including McDonald s and Pizza Hut, and a few of the traditional eateries. In the by lane just besides the Mall there are series of road side eateries which do good business. The main customers for these road side eateries include the staff of the various retail outlets within the Mall and many visitors to the mall who would like to visit the mall but find the food stuff available inside too costly. You can find quite a few of the them having their tea and snacks in these eateries before or after their visit. As a marketer in spite of the hype which is created on the emergence of the mall culture in the country the question which comes to my mind is what percentage of the population are they catering to? and when would we able to have avenues to cater to the majority of the population of the country.

More on the Two Wheeler Market

The issue of the downturn in the two-wheeler market, whether it is temporary and reasons for that have been debated out by three experts in the economic times today, the link is provided below,
Two-wheeler Industry: Facing a Crisis?

Link to the previous post on the issue and comments..

Changing Marketplace - Two-wheelers

Indian Retail and the Issue of Size

Back to the Indian Retail Scenario, one aspect in which our organized retail differs from those in the advanced economies is the physical size of their set-ups. The Malls in UK and US are much larger in size and the area that they end up covering is many times more than the average mall in the country. One of the major constraints that we have is the availability of space in urban centers and if we were to locate the malls at some distance from the main heart land of the city we would find it difficult for consumers to come because of the lack of personal transport.


The other trend one can observe in the market place is the slow shift from the commitment to large formats to much smaller formats. Initially most of the players were bullish of the larger hyper mart formats but now most of them have started talking about operating much smaller formats. Though reliance with the opening of reliancemart a 1,65,000 sq ft hyper mart in Ahmedabad is bullish and plans to open over 30 such marts by the year and expand it to 500 by 2010 across the country. But with its retail plan coming unstuck in many states it is to be seen if it would be able to stick to it's expansion plans.

The largest player in the organized retail Pantaloon Retail is also planning to come-up with 1500 200sq ft no-frills KB fair Price shops in the next two years across the country.They propose to provide branded products at 10% less than the mrp and 20% off on the local brands, which is similar to what has been Subhiskha's proposition for a long time. Subhishaka the predominaltly south based chain has always followed the low-frills small shop size format. Spencer's Retail has it Spencer's daily which is small format and the bigger Spencer's hyper mart.

My feeling is that as with most new initiatives be it retail or telecom, we cannot copy what had worked in other countries and try to plant it in into India, we have go through the tough trial-and-error process to understand what would work for India and suitably adapt and change. And whoever is able to master the art sooner would lead ............


There is a good article written by Sunil Jain in Business standard on the 'Big Retail's Blunders'

Update on the Tata 1 Lakh Car........

The much awaited 1 lakh car of Tata's would soon be launched and this is generating a lot of buzz in the media . The company has managed to keep the details of the project under wraps and the Chairman Ratan Tata himself is supposed to be personally looking into the project. This sort of hype and buzz creation helps in a new product launch. The latest information which is supposed to have leaked is that the car would have a rear engine and also sport the world’s first 800 cc, turbo-charged, CRDi diesel engine. The company is working on two engine options for the Rs 1-lakh car. The petrol version with a 600 cc engine will debut first in 2008. The diesel version will follow later, probably in 2009.

As we get nearer to the launch we will keep getting more information and details about the car. It is not only people like me and you , but automobile manufacturers across the world are keenly watching..................

Previous Post on the 1 Lakh Car

Marketing Durbales in Rural Areas...........

Despite all the potential that rural areas hold , marketing in rural areas is challenging. Among various things the nature of product to be marketed in terms of its weight and cost has an over whelming influence on strategy adopted. The nature of distribution would be different for FMCG versus durables. In the case of distribution of durables, one can afford to restrict the reach to towns with population between 99999- 20000 population, which would be around 1900 of them. Through then you can service your rural consumers, because certain studies have show that close to 90 percent of the durable purchase by villagers happens in these 1900 towns.

Suppose your task is to promote a certain brand of cement in the rural markets of Bihar and UP. You have certain details about how the villagers purchases and who all influences him, the mason in the village, other villagers and the dealer. You also know that the cement usage is tied-up with the agricultural cycle and the quantities purchased by the farmer is small and more frequent compared with the purchases of a urban consumer. The problems with low literacy levels and low brand awareness are also there. But you also know that what works well in the rural areas is the word-of-mouth, and once a brand is accepted as a good one your competitors would find it difficult to dislodge it , and you would enjoy the first mover's advantage. But then how would you go about promoting the product??

My opinion would be to target the Masons in the village by organizing meets in the nearby small town through the local dealers. In the meets the Masons could be provided with some training on new techniques in usage of cement and then some information on the company and its cement could be shared. Certain incentives and schemes could also be provided to promote the company's cement. The local Haats and Melas could be used to demonstrate the product and highlight the qualities and promote the brand name. Consumer schemes could be run to designed to increase the off take of the farmers and promote brand awareness and recall. All communication , whether it is the brand name written on the wall paintings or the dealer shops should be in the local language and so must be the infomercials which can be used to promote the brand in the villages. These combined with demostartion could help generate good word-of-mouth for the company.

With regard to distribution one could also think of accessing the informal channel of distribution of fertilizers and seeds which exist within bigger villages. In these villages the Village Mukhia or the bigger farmer would sell fertilizer's and seeds to other villagers during the agricultural season. These sales would happen from the house of the villager itself and usually no formal shop is set-up for that and the activity would stop after the end of the season. If one were to have access to this channel, then maybe the villagers could be supplied right up to the village directly.

Suggestions on how to develop a rural marketing plan for this cement company.....

Changing Marketplace - Two-wheelers

The dynamics of the Indian automobile market is changing, especially the two wheeler market. In the pre-liberalization era the market was dominantly a scooter market with the market share of scooter touching 70-80 percent of the two-wheeler sales . That changed with liberalization and the ratio changed and it was the motorcycles within the category whose sales dominated the product category. The company which rode the changed preference of the consumers towards motorcycles was Hero Honda, with their best selling Splendor and CD 100 they were able to witness unprecedented growth in both their top as well as bottom line. The change in consumer preferences were driven by both the fact that motorcycles were more fuel efficient and also were technologically superior. The introduction of Honda Activa did revive the scooter segment, but it could never reach it is previous levels. As of 2005-06 data the motorcycle sales are 85% of the total combined scooter and motorcyle sales, which is reverse of what was there 15 years back.

The latest sales figures for September show that there is a fall in the sales of two-wheelers as whole. Though the market leader Hero Honda has shown a small growth but they are cannot be compared with the phenomenal growth that they have had in the last few years and at the other end TVS motor company has shown a substantial drop of 29.04 percent in the overall two-wheeler sales and in motorcycles the drop is to the tune of 49.53 percent. The economy as a whole is doing very well, if one were to look at the sales of consumer durables and also the sales of cars (Though in cars there is a expectation that may be there would be a decline in the near future), so why is this decline in the sales of two-wheelers?

One of the reasons when one reads the newspapers is the rising interest rates and the tightening of finance from company's end for the 100 cc segment. But the market has also witnessed a shift in consumer preference from 100cc to the larger 125/150cc, as can be seen by the success that products like Pulsar, Discover have had in the market place. Companies are claiming that their new launches in the next few months would shore up the sales, but then one wonders if the lowered interest in the segment is due to poor marketing effort by the major players, in terms of new launches, campaigns ................... Hopefully the companies will pull up their socks and ensure a better performance in the upcoming festive season

Is the Honeymoon period in Indian Retail over????

Till now we have been only reading about the positive and good side of the Indian retail revolution, but now on we can slowly see the problems and issues being faced by the retail industry, and if one were to list a few of the not so positive the news items on the retail scenario in the country,


Reliance Retail sacks 400 employees in West Bengal
Reliance Retail to shelve UP, Orissa Plans
RIL wobbles in UP
Metro Faces Protests in Bangalore
Pantaloon retail expansion slows down due to high rentals

Though the first few case of problems which RIL is facing in UP might seem to be a isolated case with a single company and the second one relating to with only one aspect of the retail industry, but in my opinion these are just indicators of the problems which the retailers would face in the near future and would impede the speed with which the expansion would take place. The worrying factor is the implicit support of various state governments to the protests aimed at the organized retail, with their eyes on the forthcoming elections...

Second issue is the issues related to high rentals which are being charged by the Mall developers and the problems it is causing for retail chains which are expanding. Though there has been talks about developing a revenue sharing model, but it still in the development stage and more work needs to be done on that .

It is very important that these issues be sorted out in the next few months and the right signal sent to investors and companies anxious to make and entry into retailing. Outcome of these issues and the reluctance of the central government to move on the opening up of FDI in retail is that it is making India a less attractive destination for world-wide players and they would be more reluctant to enter the country...........

It seems we are on our way to move out of the initial honeymoon period and now need to get down to deal with the harder issues .....

UPDATE: `Quit Retail` movement gains mass base, rally on Oct 10

Is Customer the king in India,Yet?

This is a question which I have raised in this blog quite a few times and whenever I have written about my experiences or rather bad experiences as a customer i have had quite a few people commenting on it.Which essentially reinforces the fact that most of as consumers have faced similar situations and thus are able to relate to it. Any of us who has stayed for a reasonably long time in US has more discomfort with the way we are treated here. Our experiences in banks, both nationalized as well as private is equally bad though one would expect the experiences in the private banks to be better. Dealing with service-guarantee on products is still a painful process, and so is dealing with salespeople in various shops . The list seems to be endless...............

Maybe one can console himself by saying that things would change and we are wrong in comparing ourself with economies which have been customer-oriented for a much longer time than what we have been, one could say that we have become consumer-oriented since the liberalization of the our economy in the 1990's, so as such we are a very young customer-focused country. This is an important point because putting the customer first and making him the king or queen will not happen automatically , once you put it in the mission statement of the company. Because this care and focus on the needs of the consumers would come only through the behavior and attitude of not just the marketing department and but also the other departments which have an active interface with the consumer. The term used for this effort is "Internal Marketing", which essentially means you need to start the marketing process within the company starting from the Marketing Department itself and then covering other departments. How many times have we interacted with either the lady at the reception of a company or a sales person in a multi-brand outlet and carried a bad impression about the company itself?????

Internal Marketing would require companies to hire right kind of people and train them well enough, and ensure that you communicate your philosophy through the company right from the top management to the distributor sales person.

Things would start to change when the employees of a company get treated well when they themselves go out as customers ... and start to accept the fact that they have to treat customers well, and this is a long term process and hopefully we are moving towards it......

More TV Channels more choice more confusion...

We are witnessing a world of which is getting increasingly fragmented. We have moved from an era of mass marketing where Henry Ford could sell as many black Model Ts as he wanted, to an era where mass customization and micro-segmentation where every marketer wants to be able to address needs of individual customers. Though not many have been able to reach the magic formula of being able to serve the individual customer profitably. If we were to look at one area where there has been a tremendous fragmentation, it is the traditional mass media, specially TV channels. Close to a decade back we just had one channel Doordarshan, and as a marketer if you wanted to reach the consumers across the country and you had put your ad in Chitrahaar then your job is done, you would have reached your target customers and media planning was a very nice and an easy job.

But today...........to quote from a recent news item "An astounding 200 channels have hit the air since 2000, taking the total number to 326. (There were only six in 1991, when the satellite TV had entered India’s orbit, and 48 till 1996.)" This proliferation of channels has added an estimated 48,000 minutes of new advertising time every day converting this into 10-second spots, that’s 288,000 new spots a day. Now lets imagine the life of a media planner in this situation, with each of these channels attracting a smaller and smaller group of consumers, making reaching them more complex and costly. Though if one were able to get the exact data on the viewer ship maybe we could manage to reach them more effectively. Some time back I had read that Google wanted to integrate its google maps, Wi-fi and ads. It wanted to target individual consumers who were browsing the net in a given area, to be targeted with specific ads for that locality and link it to their search. For example if one were browsing the internet sitting in a CCD in MG Road in Bangalore then through google would be able to target ads of the nearest shopping mall or announce the special price menu in a nearby restaurant or announce the happy hours of the nearest pub....

The Impact of the world cup win...........

I am one of those who has stopped watching cricket especially after the performance of the team in the last world cup. But i made an expectation yesterday and went on to watch the last half of the match, and was pleasantly rewarded by the rare Indian victory. It was not only me who was benefited yesterday , the sponsors of the Reliance Communications, Nokia, Pepsi and the sports broadcaster ESPN-Star Sport had a windfall gain . In the 50-over version of the game when the Indian team exited in the first round many of the advertisers and sponsors wanted to renegotiate the ad-rates. There was a lot of debate of the merits of having a more flexible arrangement depending on the performance of the team. But with yesterday's win in the twenty20 World Cup tournament the Indian team and players are back in the reckoning, in the next few weeks we will find new brand endorsement deals being struck. But the bottom line is that for marketers who want to bet on cricket to make their brands a success in the market place it will remain a gamble, unless the team starts to perform more consistently.

But just to give an idea of the gains that ESPN Star Sports made in the Twenty20 tournament, an estimated Rs 200 crore, out of which 110-115 crore came from ad sales alone. The ad spots for the final was sold for an all time high of Rs 7.5-10 Lakhs per ten seconds, and the TRPs are expected to be in the range of 15-20. Some food for thought indeed..........