Marketing Strategy : Going Back to Basics

Going Back to Basics

Originally Published here in Adclubbombay.com

In the 1973 classic text, “Management: Tasks, Responsibilities & Practices”, Peter Drucker asks firms to answer five very pertinent questions.

What is our business?

Who is our customer?

What is of value to the customer?

What will our business be?

What should our business be?

Even after 36 years, these simple questions are of profound importance to marketers who are facing one of the toughest times since Great Depression. These questions are more relevant today than ever before. During the period of exuberance, firms tend to forget to answer these key questions and land up in a trouble of their own making. Firms forget value, customers and commonsense when faced with unprecedented growth. This over confidence resulted in inflated prices, aggressive expansions and unrelated diversifications. It is time for marketers to revisit these basics and set their focus on consumer.

Defining the business

One of the fundamental questions that marketers should ask themselves is to clearly define the business. While defining the business, one has to be careful about setting the scope of the business. Too narrow a scope can severely limit the growth of the business. Too broad a definition can cause confusion.

If a marketer narrowly limits the definition of his business by focusing on the product, he will find himself in a state of marketing myopia – a term popularised by Harvard Professor Theodore Levitt. A myopic organization defines its business narrowly which blurs the organizations ability to spot competition from other categories. Further, myopia limits the marketer’s ability to change itself according to changing consumer preferences.

When a marketer becomes too focused on his product, he fails to understand the competition from different types of products satisfying the same consumer need. Although this may sound very simple and obvious, many large organizations and brands have suffered out of this myopia. For example, Scooters which once ruled the Indian market suffered near –death stage due to competition from a different product category of motorcycles. IPod has now occupied the position once owned by Walkman. Ujala redefined the cloth whitener category with a different product form.

The key to a proper business definition is to take the focus away from product and focus on consumer. Marketers must define the business around the customer. The focus should be on the customer rather than the product. Once the organisation redefines itself making the customer as its centre, a world of opportunities will be thrown open.

Too broad a definition blurs the focus of the firm. It is where the firm must be able to understand the consumer it serves. Apple Computers were able to leap forward with its products like Iphone and IPod because it understood the consumers and never restricted itself to be a computer manufacturer.

Understanding the Consumer.

In the highly insightful book “ What the customer wants you to know “ Dr Ramcharan states an important rule – “ The more you know about your customer, the better you and your company will be at identifying and devising products and services that will help address them “

Marketers should be able to collect all the information about the consumers and their buying behaviours. One of the key strength of Hindustan Unilever Ltd is their enormous knowledge about the Indian consumer psyche. This has enabled them to create new products and new business models which are very much in line with consumer’s needs and wants.

Who buys the product and why he buys the product are the two important questions that a marketer should be able to answer.

Consumers buy solutions and not products. Value has been the keyword for success in Indian market. Products that do not have an intrinsic value will not survive in the market. The crisis that most firms now face is a result of the failure of firms to keep their products with in the value expectation of the consumer. When the consumer confidence dips, he turns to those products that offer value. Even in times of recession, consumer needs are not exhausted. He just postpones the decision to indulge till the confidence is back.

The future of business

Predicting the future of business is often the most difficult tasks for a marketer. And marketers have to make decisions regarding the future course of actions.

To predict and determine the future of a business should be based on the firm understanding of the consumer. According to Peter Drucker, this task of making judgements about future should start with a demographic analysis. Demographic analysis is the study of the population and the trends.

Indian market is also witnessing a demographic shift with the younger consumers now becoming the major consuming segment. Those brands which foresee such a demographic shift would be ready with new products and strategies targeting the young consumers.

This calls for massive investment in developing knowledge about customers and their behaviour. Many Indian advertising agencies have realised this need and created specialized departments and Chief Knowledge Officers who are in charge of creation and dissemination of knowledge.

The market environment is in a state of constant changes. Take the case of media. Five years back, very few predicted the explosion of social media in India. Blogging was unheard and Orkut and Facebook was not in vogue, no one was Twittering. Even now Indian marketers are clueless on how to understand the social media and take advantage of the popularity of orkut and facebook.

This is the right time to go back to basics, redefine the business and make the entire business operations centred on the consumer. There will be pain in the process but it will be worth the effort.

Micromax : Nothing Like Anything

Corporate Brand : Micromax

Ad Agency : Lowe Lintas

Brand Analysis Count #447

Micromax is a challenger brand in the highly competitive mobile handset market. This Indian firm is shaking up the market dominated by MNCs. Micromax was founded in 1991 by Rajesh Agarwal . Micromax in its original avatar was a distributor of computer hardwares. In 1998, three more people Sumit Arora, Rahul Sharma and Vikas Jain joined Micromax as co-founders.The company branched out from a mere distributor to a marketer of telecommunication equipments.

It was in 2008 that Micromax ventured into the mobile handset market. The brand wanted to create a base before taking on the large players . Hence as a go-to- market strategy, Micromax concentrated on the rural market first. It was a different move altogether since most of the marketers tend to concentrate on the urban markets then move to the rural markets.

Micromax launched its first phone in the rural market with a very unique USP- 30 days battery standby time. The brand was launched from a consumer insight that most of the rural households do not get enough electricity to recharge phones on a daily basis . Hence a phone with a 30 day battery standby would be a worthwhile differentiation. The first product was a big success. The first product Micromax X1i priced at Rs 2150 was lapped up by rural market.

The success of X1i enthused the company to go aggressively into the market. But tapping the rural market is not an easy task. There is severe logistics pressure in servicing these markets. One of the first things that Micromax did was to establish the distribution network . According to a report in Forbes India ( March 5,2010), Micromax created a distribution network comprising of 34 super distributors, 450 distributors and around 55,000 retailers. The brand could also take advantage of the inroads made by other brands into advantage.

One of the highlight of their distribution strategy was that Micromax managed to make these dealers pay in advance by offering them more margins. Marketers will vouch that the most difficult part in managing distribution is the payment collection part. According to the news report, Micromax managed this hurdle through this strategy of more margins for advance payment. It is not a new strategy to offer such kind of discounts for advance payments (cash discounts), but to make a retailer accept such an offer is indeed a remarkable feat (if the Forbes report is true).

Unlike many challenger brands, Micromax was careful in its product strategy. Although all Micromax products were towards the lower end of the pricing spectrum, the brand was focusing on adding more features at a reasonable price . The focus was more on value than price. What I have noticed while going through their product range was that there was some USP in their products which offered more value. I think , that value orientation with a clear differentiation was a significant factor that aided the significant growth of this brand in Indian market.

The company in their website claims to have invested heavily in the product development. The brand boast of launching many firsts in the market like

30 day battery life

Affordable QWERTY phones

Affordable Double Sim etc

Besides the focus on product development, Micromax has invested heavily in brand building. The brand is one of the big spenders in the current IPL. Micromax has centered much of its brand building exercise around cricket. It was one of the principal sponsors of the South Africa VS India ODI series in 2010.

Most of the brand promotion for Macromax is centered around products. I havn't seen a corporate brand building campaign from Micromax. The ads are for individual products highlighting the product features and USPs.

Micromax has the tagline " Nothing Like Anything " which initially appeared confusing to me. Perhaps the brand wants to convey that every product from Micromax has something unique. It is not just like any other product.( I need to have more clarification on this regard).

The brand's promotions , although heavy, is a big let down. Some of the campaigns are good but most are below par. For example , the Micromax Facebook ad was outright disgusting. Most of the campaigns like Gravity, MTV , EEZPad was very ordinary basic ads. There was no brand building theme behind those ads. They talked about the product and that is it. I feel a visible lack of creativity behind those ads.

In a big marketing move, Micromax roped in the Bollywood Action hero Akshay Kumar as the brand ambassador. This move is going to boost the brand recall of Micromax to new heights. Akshay Kumar has strong equity both in urban and rural markets. The association with such a big star will also have a positive impact on the image of Micromax. The brand can now overcome the perception of a low price product.

But the first campaign featuring Akshay Kumar was nothing but pure noise. I couldn't believe that Lowe Lintas could come out with such a pathetic ad. Watch it here.

The new Gamolution handset was supposed to be a game changer for Micromax. But the campaign was a big let down. With a star like Akshay, the brand could have done much much more rather than some funny noises and acrobatics. I think the agency was stuck in a stereotype as to how to use Akshay Kumar.

The new game handset uses the motion- sensor technology with bluetooth ( as I understand). So one can play games using the computer and handset. I don't think that the ads were in anyway doing justice to the brand's intention. Motion Sensor games are not new to the Indian markets but playing games on a PC using mobile is something new. I am not sure whether the ad essentially communicated the innovation.

A very poorly made ad like this will do more harm to the image of Micromax. The brand may get lot of eyeballs due to the ' noise ' and celebrity power, but a low quality ad will reflect in the image perception of Micromax. A lot of my students said to me " Have you seen that Akshay ad, its crap !!" . Micromax has lot of powerful positives that many consumers doesn't know. I came to know more about this brand only after I digged for information to write this post.

There is a risk of the brand perceived not as an aspirational brand but a ordinary price warrior if it does not focus on the quality of the communication.

Micromax now have a wonderful chance of moving up the ladder. With a good product range, reasonable pricing base and a high profile celebrity, the brand could have positioned itself as an aspirational brand. Instead of also ran ads that lack any brand vision, Micromax would do well if it could bring in some class in their campaigns.

The brand should also move from a product oriented ad campaign to a brand building mode. Micromax as a brand should be developed focusing on the core brand values like innovation and value orientation. When the product range widens, it may not be practical to sustain individual campaigns. So it is time for Micromax to position the Family Brand and develop a brand identity.

Brand Update : Lux

Lux has a new endorser. True to the brand's heritage of being endorsed by the reigning queens of Bollywood, the brand has roped in Katrina Kaif as the new Lux girl.

The brand is currently running the campaign featuring Katrina across the channels for its new Purple Lotus cream variant.

Watch the ad here : Katrina Lux ad.

What is interesting is the change in the tagline of the Lux brand over the last few campaigns. Ever since the brand discarded its classic tagline of " Filmi Sitaroan ka saundarya sabun" , Lux has not been able to find a fitting tagline. The brand later adopted the taglines " Celebrating Beauty " and then later to " Why worry about beauty " . The last campaign had the simple voice over like " Lux with Beauty Oils ". The brand this time has further reinforced the USP of the brand as " Soap with cream and beauty oils".

This time Lux has used a new positioning " kaliyon se Thwecha ke liye" translated to " Skin as soft as budding/blossoming flowers ". While Lux with beauty oils is a more rational feature oriented pitching, the brand is also talking about the brand promise of a " Softer looking Skin". It is good the see Lux settling with its USP and positioning.

But the gain of Lux has resulted in a loss for another brand Dyna. Dyna which is the soap brand from Anchor Group was banking on Katrina Kaif for building the brand. The entire Dyna brand was heavily depended on Katrina rather than its positioning or differentiation. With Katrina ending the association with Dyna, it will be interesting to see the future of Dyna brand.

Related Brand

Lux

Marketing Strategy : How to Create Consumer Centric Innovations

How to Create Consumer Centric Innovations

Originally Published here at Adclubbombay.com

What can you do with a boring product like a dishwash bar? Can you bring excitement into it? Is it possible to make innovations to a product like dishwash bar? A look at Vim, the market leader in the dishwash bar category, will give valuable insights on making innovations which are meaningful for a consumer. Vim have a plastic coating which prevents the bar from getting soggy because of its constant contact with water. This simple coating gives the product long life and thus adding more value to the product.

Innovation is considered to be a key factor that will ensure the future of a company. Companies like Gillette (now a part of P&G), 3 M, Google, and Apple have their entire organization focused on innovation. Successful firms have developed a culture of innovation which becomes the part of the DNA of the entire organisation.

In future, India is believed to have potential to lead the world in product innovations. The fact that many global IT firms have their product development centres in India is a proof of the growing stature of India as a global innovation hub.

Indian marketers are also not far behind. Indian companies have been able to provide breakthrough marketing practices that acts as a model for emulation for their western counterparts. Notable in these innovations are the e-chaupal (ITC) and Project Shakthi (HUL), GCMMF etc.

Although we have seen a significant rise of product innovations in India, we are yet to create an innovation culture in Organizations. The level of investment in research and development in Indian companies are yet to reach global standards. The fact that we don’t have an Indian equivalent of a 3M or a Google is a reminder of the enormous task before us.

In this era of global competition, marketers cannot afford to be complacent. This is a market where categories are becoming irrelevant. Mobile phones are competing with cameras and computers. Two wheelers are competing with cars and airplanes competing with railways. Marketers cannot afford to be myopic to competition. Now firms have to run faster in order to survive.

When markets become too fluid, organizations should be investing in creating products for the future. Organizations need to understand the changing consumer mindset and also the changes that are happening across various markets.

There are three approaches to innovation. One approach is to strive for a pure innovation which results in an entirely new product. The second approach is to innovate incrementally and continuously. The third approach is to innovate on building efficiency in operations. What HUL did for VIM was an innovation which was an incremental innovation. The company created a new method of tapping rural market through Project Shakthi which was a process innovation.

Innovation doesn’t always means that the company should come out with an entirely new feature or a product. Innovation also can be in the form of imitation. Professor Theodore Levitt calls it Innovative Imitation. Innovative imitation is where the firm tries to bring in innovations that are happening in other industries to their field. Vim recently relaunched itself with anti-bacterial property which was an innovative imitation of its nearest competitor.

Continuous and constant innovation strategy is going to be the key for organisational success in future. But in order to succeed, these innovations should be customer centric.

Innovations should be visible and should be authentic for a consumer. The period where a marketer can get away with “New and Improved “label is over. The challenge for the marketer is to make the process of improving their offerings continuously.

The best way for getting new ideas is from the consumer. A consumer may not be able to give a list of new product ideas. But by observing his life, the marketer can get lot of ideas for improving the product and also new products.

Have a plan for innovation

The first step in creating an innovative culture is to have a plan for innovation. Large or small, firms need to have a plan of innovation. There has to be people who should be responsible for innovation and most importantly there has to be a budget for innovations.

Celebrate Failures

While Google, 3M and Apple are celebrated for their innovations, the long lists of the failures encountered by these companies are often forgotten. Not every new product ideas are well received by consumers. When encountered by failures, firms must not penalise the innovator but should be doing a thorough analysis of reasons for failure.

Make the customer the centre of innovation process

In the highly insightful book “The Game Changer”, the authors Ram Charan and A.G.Lafley describes how P&G made their innovations customer- centric. In the book, the authors narrates an example where the product development team for a new heart-burn medicine created a life sized cardboard cut-out of a consumer which they named Joanne. They put this cut-out in a chair in their conference room. In all the meetings discussing the new product’s launch, there will be the presence of this hypothetical customer. The team used this hypothetical customer to focus their discussions on those ideas that will have a meaningful impact on the consumer.

By looking at how a customer uses the products and how the product impacts his life gives valuable inputs for future innovations.

Brands can innovate in product form by launching the product in new shapes and sizes. The shampoo category witnessed explosive growth after the product being introduced in sachets. The simple innovation in packaging made the product category affordable to millions of Indian consumers.

Products also innovates itself by making it easier for consumers to use the product. For example TVS recently provided balancing side-tyres to its Scooty which enables the users (Girls) to learn to ride scooter on their own.

Brands can innovate by making it easier for consumers to store the product .Bru recently added a flavour lock ( plastic clip) which kept the coffee powder fresh and eliminated the need to transfer it to a container.

Products also can innovate by satisfying problems faced by consumers. Asian paints launched samplers which helped the consumer to test the colours before purchasing it. Nightingale popularised un-dated diaries which gave this product an unlimited shelf-life.

Whether big or small, innovations will be successful only if it made some impact on consumer’s life. The most important decision that a marketer should do is to make customer the centre of his innovation strategy.

Hippo : Fights Hunger

Brand : Hippo

Company : Parle Agro

Ad Agency : Creativeland Asia

Brand Analysis Count # 446

Another brand has entered into the highly competitive snack- food market. The brand Hippo was nationally launched recently by Parle Agro. The Indian branded snack-food market is worth Rs 6500 crore has now become a battle ground of titans.

Indian snack-food market growing at 25% p.a is witnessing marketing fight worth watching. The players are trying every tricks of the trade. This intense marketing competition has expanded the market and also created new segments. One such new segment is the healthy snack segment.

Marketers were aware of the gradual trend among consumers towards healthy foods. Although this trend is limited to certain sections of society, marketers are calculating that healthy snack-foods will become a mainstay category in the snack-food market. Infact Ms Indra Nooyi of Pepsico had openly stated her vision of Pepsico leading the healthy food movement.

The healthy snack segment in the Indian Snack market has got a big boost in recent times with the launch of Aliva brand by Pepsico and Monaco Smart Chips by Parle. Earlier, Lays tried its hand by launching a low-calorie version to counter Bingo's claim of 'baked not fried 'proposition. The high profile campaign of Monaco Smart Chips featuring Aamir Khan put the spotlight on the healthy angle of snacks.

Hippo calls itself " Delicious Baked Munchies ". This baked wheat based munchy is neither a potato chips nor a biscuit, but something in between ( source Business India). The munchies are available in Pizza flavor,Chinese Manchurian, Hot N Sweet, Thai Chilly , Yoghurt Mint Chutney and Indian Chatpatta. The brand is priced at Rs 10 per pack.

Hippo is currently running its launch campaign across channels.

Watch the ad here : Hippo

Hippo has tried to position itself differently from the rest of the brands. While the other snack brands have positioned itself on product properties, Hippo brand tried to take the generic need platform.

For example :
Lays is positioned as a convenient snack,

Bingo on the different tastes,

Aliva also on health + taste

Monaco Smart Chips on health ( baked ).

Hippo is being positioned as a hunger- killer. The brand wants to be a guilt-free snack for hunger moments. The brand is banking on two properties - made from wheat and free of MSG & GMO to prove its healthy snack claim.

The brand also chose a different way to communicating its positioning to the consumer . The brand is trying to tell a story. The story is based on the premise that ' Hunger is the root cause of all evil. So the brand motto is ' fight hunger, fight evil'. The brand has adopted the mascot Hippo who is in the forefront of eliminating hunger and thus eliminating evil. Hippo has the tagline " Hippo Fights Hunger ".

Although the brand has tried to tell a story and successfully created an initial hype, I have serious reservations about the differentiation of the brand. The brand has taken the " Hunger" platform, but how is it different from other snack-foods that offer same qualities ? How is Hippo different from a Bingo or Monaco Smart Chips ? .

I feel a lack of uniqueness in the brand. The problem of lack of differentiation will come into forefront when the initial consumer interest dies down. Without a clear USP, the brand needs to constantly stay on top of the Share of Noise to drive the sales. If you observe the campaigns of Parle Agro brands, the company adopts a " On/Off " kind of advertising strategy. Sometimes there are lot of ads, and sometimes, there is no sign of any brand communication. In a category like Snacks such intermittent burst of ads may not work. One needs to have a steady continuous stream of campaigns ( ATL and BTL) to drive the sales.

From the first campaign, I don't see any attempt from the brand to create a differentiation. What the brand had tried to do was to establish brand familiarity which it had done successfully. But the brand needs to find a meaningful differentiation if it wants to survive for the long term. The brand can develop its positioning further using its core brand promise of " Guilt-free snack for hunger moments ".

One of the most striking aspect about this brand is the packaging. The company has put in lot of work behind making the packaging stand out in stores. Since the purchase of snacks are highly spontaneous, the packaging offers immense strategic importance. Hippo has really differentiated itself from the rest of the crowd in the packaging front.

Another aspect of the brand is its emphasis on ' After-Marketing". After- Marketing is what the brand does after it has sold itself to the consumer. Like Appy Fizz, Hippo has cleverly used the packaging to engage the consumers after the purchase. The pack contains interesting information and one-liners which takes the brand-consumer conversations beyond advertising .

As a new product launch, Hippo has done all the right marketing moves. The brand has a catchy name , good product qualities, excellent packaging, nice pricing, distribution reach etc. It has also created right kind of noise in the media during the launch. The real test is after the initial euphoria. The brand is fighting players with deep pockets. It will be interesting to watch how Hippo takes on the giants.

Related Brands
Lays
Aliva
Bingo
Appyfizz

Brand Update : Rin Vs Tide , The Strategy

According to latest news report, the Calcutta High Court has restrained HUL from airing the controversial campaign against Tide. HUL has been given 72 hours to comply with the order ( Source)

The high decibel comparative ad of Rin generated huge buzz in the market. The direct comparative campaign evoked mixed reaction across the media. That single controversial ad generated crores worth of buzz about the brands in question.

The current high profile aggressive stand of Rin has a background story. There was a proxy war going on between Rin and Tide since December 2009. During December, P&G launched the low priced variant of Tide branded Tide Naturals. Tide Naturals was priced significantly lower to the Rin. Tide Naturals was launched at Rs 50 per Kg , Rs 10 for 200 gms and Rs 20 for400 gms. Rin was priced at Rs 70 per Kg at that time.

The reduced price of the Tide variant was an immediate threat to Rin. Since Tide already has an established brand equity, Rin was bound to face the heat. Although HUL had another low priced brand Wheel priced at Rs 32/Kg, Tide was not in the same category of Wheel.

Rin had to cut the price to resist the market share erosion. As discussed elsewhere in the blog, HUL was facing a steady erosion in the market share in most of the categories. In the detergent category itself, the brand faced a market share fall of 2.5% in December 2009. With P&G starting a price war, HUL had to react and it did by cutting the price of Rin by 30% to Rs 50 per Kg. ( Source ) .

HUL also reacted to the Tide Natural's price war in a ' Guerrilla Marketing ' way. It took P&G to the court regarding the Tide Natural's advertisement. The contention was that Tide Naturals was giving the impression to the consumers that it contained natural ingredients like Sandal. The court ordered P&G to modify the campaign and P&G had to admit that Tide Naturals did not contain any Natural ingredients. ( another example of a brand swaying over to unethical marketing practices).

While P&G opened a war in the price front, HUL retaliated by opening two war fronts. One was the direct comparative ad and other through the court order asking P&G to modify Tide Naturals Ad and to admit that Tide Naturals is not ' Natural'.

I think that it was Rin which won the Round 1 of this war. It generated enough Buzz about the brand with all the media talking about the campaign. Rin was also able to neutralize the aggression of P&G to certain extent.

Tide chose not to respond because further fuel to the fight can highlight the fact that Tide Naturals does not contain any 'Natural Ingredients " which may negatively affect the brand's standing in the consumer's mind. So it is better to play the role of a " poor" victim at this point of time.

P&G can celebrate because of the free advertisement it got for Tide Naturals because of the comparative ad of Rin.

It is interesting to see the academic angle of this concept called Comparative advertising. From my little digging of information, it was evident that the academic research is also clueless about the effectiveness of comparative advertising. There are enough evidence to prove that comparative ads work better than non-comparative ads and vice versa. So academicians are as clueless as the practitioners in this regard.

According to academic literature, Comparative ads are those ads which involves directly or indirectly naming competitors in an ad and comparing one or more attributes in an advertising medium ( Alan T. Shao, Yeqing Bao, and Elizabeth Gray,Comparative Advertising Effectiveness:A Cross-Cultural Study Journal of Current Issues and Research in Advertising, Fall 2004)

There are two broad types of comparative ads. One is the Direct comparative ads which compares the competitor in more than one attribute. The second type is the Indirect comparative ad which projects the brand as the Leading Brand rather than comparing on certain attributes.

In the marketing world ( globally) comparative ads are commonly used across categories. Some of the relevant observations regarding comparative ads are given below.

• Comparative ads are perceived to be beneficial to the consumers since more information is provided to him by the competitors. Comparative ads are encouraged in certain markets like USA by the regulators because it increases transparency and provides more information to consumers.

• The comparative ads generally result in counter arguments which often creates such a noise that it discounts the original argument/information. Consumers tend to discount the claims by both the competing brand because of the arguments.

• Comparative advertising strategy is more effective for smaller brands rather than established large brands. By challenging a larger brand through comparative ad , the small brands tend to derive more acceptance and awareness than the larger brand.

• Comparative ads are found to be more effective for categories where consumers tend to use their analytical mind. Comparative ads tend to fail where consumers use imagery while evaluating the brands. For example, products like automobiles use comparative ads extensively and with effectiveness.
• There are also studies which shows that male consumers are more attracted towards comparative ads compared to female consumers.

Although Indian marketing world have seen lot of comparative ads, the current Rin Vs Tide is a rare case of direct comparative ad where the brand has taken the competitor brand's name and challenging it head on. That is the main reason behind the media noise about the campaign.

P&G India always was a laid back competitor in the FMCG market . Despite having the product portfolio and market strength , it never realized its potential. The company was happy with their minuscule market share in the various categories in the FMCG business . I am not sure whether P&G will react aggressively to the current HUL onslaught and if at all they did ,will it sustain the fight for long.

Related Post

Rin Vs Tide Round 1