Marketing Funda : Line Filling

Marketing Practice Reader Balaji asks a very pertinent question about the series of brand launches by Maruti Suzuki in the hatchback segment. He asks :

"

I want to know about New product development in automobile industry especially in Maruti.They are launching different small cars.Is it really makes a profit for them.Can you give the explantion with example.Introducing new car in the small car segment(Maruti) makes confusion among the customers that which car to buy /which is best?.Is really they are benefiting or just in order to compete with other company they are introducing the new product ? "

Maruti Suzuki is following the product line strategy of Line Filling. Line Filling is a strategy where the company introduces new products within the same( existing) price range.

Maruti Suzuki recently launched a series of brands in the hatchback segment. A look at the price ranges of hatchback brands of Maruti will give you a clear picture of Line Filling.

Maruti 800 - Rs 2,00,000 - Rs 2,12000

Maruti Alto - Rs 2,22,000 - Rs 2,70,000

Maruti Estilo - Rs 3,17,000 - Rs 3,98,000

Maruti Wagon R - Rs 3,18,000 - Rs 4,32,000

Maruti A Star - Rs 3,40,000 - Rs 4,12,000

Maruti Ritz - Rs 3,89,000 - Rs 5,10,000

Maruti Swift - Rs 4,06,000 - Rs 5,20,000

( All prices are Ex-Showroom Cochin)

Source : Marutisuzuki.com)

The overlap is diagrammatically represented below.

From the price ranges, it is evident that there is a significant overlap among various brands.The question is why Maruti chose to bring out products with similar price ranges. Another question is whether this overlap will create cannibalization among these brands.

There are several reasons for such a line filling strategy. According to Prof. Philip Kotler, firms adopt this strategy for

a. Incremental Profits

b.Satisfy Dealers who complain about lost sales because of missing items in the line

c.Utilize existing capacity

d.Try to become a full-line company

e.Try to plug holes to keep the competitors away. ( Source Marketing Management ,11 edition)

In the case of Maruti, more than one reasons prompt it to fill the line. Maruti Suzuki has tremendous brand equity in the Indian market. Hence having a full line catering to all segments of consumers offers tremendous advantage to the company.

There are customers (like me) who would like to buy a car from Maruti. Having various offerings at various price points keeps that customers happy and make them stick to the company. If I want to upgrade to a bigger car, I have a choice or a A star or a Wagon R or a Ritz or a Swift. In such a scenario, I may not go in to a competitor's product.

Another reason for Maruti's line filling is to keep out the competitors. The company is facing lot of competition in the hatchback segment. At the lower end Nano may give Alto and 800 a run for its money. Santro, i10 and Spark is giving tough competition for mid-range hatchbacks and products like Fabia, Palio,Punto,i20 are giving competition at the higher segment of the hatchback market. Hence to keep the market share intact , Maruti is keeping a full line of brands covering various price points.

When there are brands which has similar price points, it is natural that some sort of cannibalization will happen. When Ritz was launched, it definitely took away some customers of Swift. But Maruti can be happy that the customer has bought its product rather than that of its competitor.

Regarding the profits, Maruti is one of the lowest cost producer in the automobile industry. This low cost base enable the firm to make a profit irrespective of cannibalization.

One of the critical factor that a firm should consider while line filling is the Differentiation. There has to be a just-noticable difference between the offerings other wise consumers will get confused . In the case of Maruti brands, there is a clear differentiation either interms of design or performance between these brands.

Line Filling is the strategy adopted by Maruti Suzuki to retain its grip in the Indian market. But in the Indian Automobile industry , may be only Maruti can do it.

Brand Update : Onida

According to a report in Economic Times, Onida has decided to send its iconic mascot- The Devil to Hell. According to the report, the brand feels that Devil is no longer attractive to the consumers and hence the decision to remove it. The report further says that the brand is working on a new mascot.

The report gave me a sense of Deja_vu. This is not the first time that Mirc Electronics ( brand owners) has scrapped the Devil.

In1998, Onida withdrew the mascot citing the same reasons that they have given now. The explanation given in 1998 was that Indian consumers no longer find Devil, who symbolizes Envy, relevant. So they scrapped the famous tagline " Neighbour's Envy, Owner's Pride " together with the Devil. But ever since it changed the tagline and mascot, Onida never found a powerful positioning .

After six years of drifting around, Onida brought back the Devil with much fanfare in 2004. Media and brand enthusiasts welcomed the move and eagerly awaited the Devil in a changed modern avataar. But the comeback was damp squib. The brand suffered heavily due to ownership issues within the company. There was no brand promotion or new product launches worth talking about since 2004. If at all there were launches, promotions were not sufficient enough.

Now in 2009, Onida is redoing its old strategy.

Onida is facing a marketing problem and not a branding problem. Everything is fine with the brand. People recognize the brand, love its mascot. The issue is on a larger perspective. It needs to concentrate on its entire marketing mix not just the brand elements. Changing the devil and bringing in a new mascot is not going to do any good to Onida.

The Economic Times report suggest that Onida is changing its brand elements because of competition from Korean brands like LG and Samsung. These Korean majors has built its position in Indian market riding on Product strategy rather than on heavy duty brand promotions. Their products were good, reasonably priced and well promoted. In the case of LG and Samsung, nobody really cares about the tagline. For them , the product speaks for itself.

Onida failed because its products failed. I was a die hard Onida fan . I loved my Onida KY Thunder Television. But after that there was nothing remarkable about Onida. No high technology products came from this brand.Onida became successful because the Devil was backed by products that really created envy in others. Now there is nothing to envy about Onida. Last year, I bought an Onida DVD player which boasts about playing scratched DVDs but the product failed miserably.

Now in the consumer durable space, brands are coming out with new advanced products on a monthly basis. Technology keeps changing and most brands are moving with break-neck speed to catch up with consumer expectations. In the case of Television, flat is now old and brands are talking about plasma, LCD etc. What is Onida doing in this space ?

Onida is now in one of the most difficult times. The brand needs to come out with a product that will change the game. Changing the mascot is secondary at this point of time.

Related Post

Onida Brand Update

Onida

Gatsby : Inspired by a Movie

Brand : Gatsby

Company : Mandom Corporation ( Japan)

Brand Analysis Count : 416

I used to notice Gatsby brand of hair gels in beauty salons.I have seldom seen any advertisements of Gatsby but the popularity of this brand among salons often surprised me. This has prompted this small post about this shy brand.

I was really surprised to know that Gatsby is an international brand with its origin in Japan. The brand is owned by Mandom Corporation. Gatsby is a leading men's beauty care brand in Japan.

Gatsby brand was born in July 1978. The most interesting fact about this brand is about the brand name.The brand name was inspired by the movie " The Great Gatsby " starring Robert Redford. ( Read the History here). I think Gatsby is one of the rare brands which derived its brand name from a movie.From a hair gel brand, Gatsby then morphed into a complete beauty care brand for men with wide range of products in Japan.

No information is available about when Gatsby was first launched in India. How ever, the brand have significant popularity among hair stylists . It has to be noted that Gatsby also has a strong retail presence also.Recently Gatsby launched its range of deos in the Indian market.

What is puzzling is the lack of any sort of brand promotion for Gatsby. Internationally this brand is famous for its hair care products. The brand's latest launch of " Moving Rubber " Series of hair gel was a hit across various markets. But this brand has so far being very silent in the Indian market. The competing Indian brands like Brylcream and Parachute After Shower are very aggressive interms of share of voice.

The recent launch of deo range is an indication that Gatsby is getting interested in the Indian market. The men's grooming market in India is witnessing lot of action and the pie is getting larger. We may see some action from this brand also in future.

Brand Update : Kelvinator

Marketing Practice reader Ms Simran asks an interesting question about Kelvinator. She wanted to know about the prospects of rejuvenation of Kelvinator brand.

In my earlier post on Kelvinator, I had predicted (assumed) that the brand will be killed after being acquired by Electrolux. To a certain exte

nt, it was true also because Kelvinator was sidelined for Electrolux brand. There was no brand promotion and the product was also not visible in stores.

Electrolux too had difficulty in surviving the highly competitive Indian consumer durable market. In 2005-06, Electrolux Kelvinator Ltd was acquired by the Videocon group ( source). The acquisition gave Videocon , the rights to use Electrolux brand for five years and Kelvinator brand for unlimited period. ( Source).

My prediction of Kelvinator's death was proved wrong. Videocon had other plans for this brand. The brand was rejuvenated in 2008-2009. Recently I saw the commercial of Kelvinator in one of the local Kerala channel. ( Watch the TVC here : Kelvinator)

The brand retains the famous classic positioning of " The Coolest One".

I think that Videocon is using Kelvinator as a flanker brand . Kelvinator will be the price warrior for the Videocon. Even after all these years, Kelvinator still have lot of brand recall. Vidoecon will just have to create some noise in the media to rejuvenate the brand . I am sure Kelvinator still have lot of potential to succeed in the Indian market.

It is good to see the good old Kelvinator back into the branding world. It is also wonderful to see the brand owners retaining the famous positioning and tagline which made Kelvinator famous.

Related Brand

Kelvinator

Aliva : Thodi Sharafat, Thodi Shararat

Brand : Aliva

Company : Frito- Lay ( Pepsico Group)

Agency : JWT

Brand Analysis Count : 415

There is a new kid in the block in the Rs 10,000 crore snack food industry. Aliva is the latest launch from Pepsico in the intensely competitive Snack Food Industry. Every one in the branding world is excited about this launch since it is the major(food) brand launch from Pepsico since Kurkure.

Aliva comes in the category of Crackers. Cracker is a new category in the Indian market. The product is a combination of biscuit and Namkeen. Aliva ,if successful, will create a subsegment in the 1500 M ton Indian biscuit industry. According to news reports, the brand is trying to create a new category for itself just like what Kurkure did.Aliva comes in four flavors and is priced at Rs 12 for 60 gms ( introductory offer).

Since Aliva is trying to create a new category, it does not face any immediate brand competition . It faces competition from other categories of snacks . Aliva faces competition from the non-glucose biscuit brands like Britannia 50-50 and Parle Monaco and Sunfeast Snacky. ( read report here). Lays and Bingo also gives this brand a competition since all these brands are in the snack food business.

Aliva has roped in the actress Chitrangda Singh as the brand ambassador . Aliva is currently running its launch TVC across various channels

Watch the TVC here : Aliva

Just like Lays and Bingo, Aliva targets predominately youth and adults . The brand is being positioned as a healthy snack. The brand has adopted the tagline " Thodi Sharafat, Thodi Shararat " roughly translated to " Little Nice, Little Naughty ".

There has been various reactions to the launch ad. Read Afaqs review here and a view of ad man here

Frankly speaking, I think that the launch ad is nothing great to talk about. The theme is not new and there is no big idea. Britannia Bourbon is currently running a campaign similar to Aliva.

The brand could have come out with some clutter breaking stuff but chose to go for a lousy also-ran commercial.The tagline is also nothing to talk about compared to Lay's earlier campaign " No one can eat just one " or Bingo 's " No confusion, Great Combination". The launch ad also does not highlight the core positioning of a healthy snack. There was too much focus on the plot rather than the brand.

Having said that, the high profile media blitz will generate lot of trials.My 5 year old daughter has already demanded one. If the product delivers, then Aliva will just have to ride the wave. Lays became such a blockbuster product because the product delivered.

Aliva is a launch from a very powerful marketer . Hence the brand has a huge support base . It will be interesting to see how Aliva will make a space for itself.

Related Brand
Lays
Bingo

Neutrogena : Dermatologist Approved

Brand : Neutrogena
Company : Johnson & Johnson
Agency : White Canvas

Brand Analysis Count : 414

The 2000 crore Indian skincare market now has a new member. The leading international skin care brand Neutrogena was relaunched in the Indian market recently. Neutrogena is one of the leading premium skincare brand with its origin in USA. The brand is owned by Johnson & Johnson.

Neutrogena was born in 1930 founded by Emanual Stolaroff .Emanual started a small cosmetic company called Natone. On a trip to Europe in 1954, Stolaroff heard about a soap developed by a Belgium scientist Dr Edmont Fromont. Emanual bought the right to market the soap in United States . The soap was Neutrogena soap. The soap became so popular that the company name was changed to Neutrogena Corporation. In 1994, Neutrogena Corporation was acquired by J&J. (Read the story here)

Neutrogena was first launched in India in 2005 ( source).But the brand was never heavily promoted by the company. 2009 is witnessing a rejuvenation and relaunch by the company. It seems that J&J is going all out to corner a share in the Indian skin care market. It recently launched another brand Clean & Care in India.

Frankly speaking , I never knew that Neutrogena was such a famous International brand until I searched for it for the purpose of this post. I was also surprised to find that Neutrogena belonged to Johnson & Johnson.

Neutrogena has a strong brand equity across various global markets. It is also promoted heavily by the company . The brand relies on a host of celebrity actors and models like Diane Lane,Jennifer Garner and Vanessa Hudgers , Natasha Mcelhone to build its popularity. Although celebrities create an aura of premiumness for the brand, the real driver for the brand's acceptance is the quality and efficacy of the products.

In India too, the brand has taken the celebrity route to create an impression.It has roped in bollywood actresses like Manisha Lamba and Prachi Desai to endorse the product range. The brand is currently running a television campaign featuring Prachi Desai .

Watch the tvc here : Neutrogena

Although the brand has started off with Indian celebrities, in future the brand may bring in its campaigns featuring its international brand ambassadors.

Neutrogena is positioned as a premium skincare brand which is approved and recommended by Dermatologists. The brand is following its global positioning here also. The rational positioning is supported by the dose of high profile celebrity endorsements.
It will be interesting to see how Neutrogena will fight for its space in the highly competitive Indian skincare market.