Marketing Funda : Marketing and Osborne Effect

Osborne effect is a phenomenon where the sales of an existing product gets affected because of the announcement of future products. Osborne Effect's story goes like this :- During 1980s, Osborne computer corporation was a highly successful computer manufacturing firm which marketed the personal computer named Osborne 1. The chairman of the corporation Mr. Adam Osborne during 1983 announced several future models promising consumers highly efficient and fast machines. When he made the announcements, none of these machines were in the pipeline.

The announcement prompted a heavy cancellation of orders of Osborne 1 because consumers and trade expected the arrival of advanced machines. This event have virtually driven the company to bankruptcy ( although many other reasons also contributed to it ). Source : Wiki , Report

The same effect is now played out in the case of Nokia- a brand which is struggling at the onset of competition from Apple and affordable Chinese brands. Nokia in 2011 announced with much fanfare, its tie-up with Microsoft for the mobile O/S. Nokia announced the shift in the OS from Symbian to Windows much before the actual shift. The first shock for existing Symbian users who began to ditch the existing Symbian models in favor of other platforms like Android. 

Then came the much touted Nokia Lumia with the hyped Windows Mango ( 7.5). The well designed Lumia range was expected to lift the fortunes of Nokia in the smartphone category. The company also launched an affordable version of Lumia in the Indian market thus effectively covering various price-points. 

Then came the announcement of Microsoft about the Windows 8 and the shock that the existing Lumia phones will not be upgradable to the new much talked about Windows 8 platform. No wonder, many of the prospective Lumia buyers will be postponing their purchase.

The trouble is not with Nokia alone. Even Android based mobiles also are facing the issue of frequent upgrades and the existing phones not being able to be upgraded to the new platforms. Google has rapidly introduced upgrades from Froyo to Gingerbread to Icecream Sandwich within a short span of time much to the confusion of  consumers and marketers.

One needs to learn from Apple on how to handle this rapid changes in the technology and specifications. Apple has an advantage since it is tightly controlling the eco-system. It makes the entire upgradation process highly secretive and this prevents any shocks on the existing inventory and product line. 

Android based phone marketers have a huge issue since the platform upgrades are beyond their control. So how can a marketer prevent Osborne effect when they do not have control over the platform changes.? The million dollar question is whether the consumer buy a Ginger Bread Android Phone even after the launch of Icecream Sandwich ? 

The only way is to build a powerful brand having value more than the platform. So till now, the Android makers were riding the equity of Google and Android ingredient brand. But to insulate the after-effects of platform changes, one needs to build their own brand showing more value so that consumers doesn't ditch the brand because of future version announcements. 

Another method is to customize the product so that consumers are lured by the customization rather than the platform itself . Amazon has tried to do that in the Kindle Fire where  the version is customized and hence the user experience is owned by Amazon rather than Android.

Brands can also insulate itself by building a comprehensive package of features and attributes rather than just depending on one single platform.

In the new fight over the platforms, the key to success is the user experience. Firms are now forgetting this and running after platforms. Although platforms are important, it will be the unique user experience that will be luring your customers to your product

ONN Inners : Keep It On

Brand : ONN
Company : Lux Hosiery

Brand Analysis Count : #514

ONN is the new brand of premium innerwears from the house of Lux Hosiery. The brand is targeting its share in the high growth premium men's innerwear segment. Indian innerwear market is worth around Rs 13000-14000 crores. The market is equally split among organized and unorganized players. The men's inner-wear segment is worth around Rs 5800 crore. According to reports, the premium segment in this market is growing at a scorching pace of around 40%.

It is in this context that the launch of ONN gains significance. Lux Hosiery has been a dominant player in the innerwear market with its Lux brand of inners. Lux gained prominence in the affordable segment with its celebrity endorsements and the famous slogan " Ye ander ki baat hain ". Lux had the brands Lux Cozi and GenX with endorsers like Sunny Deol and Neil Nithin Mukesh.

ONN has gained lot of eyeballs by roping in Shahrukh Khan as its brand ambassador. The brand is running its campaigns across the media

Watch the TVC : ONN with Shahrukh

Just like most of the innerwear brands except Jockey, ONN also is following the celebrity centered brand building route. The saddest part is that there is nothing more to the branding strategy other than the celebrity. 

Here also there is Shahrukh Khan and the brand ONN. The brand owners failed to convey any meaningful message for this brand. For a low priced inner-wear brand, creating brand awareness is the key to success. But for a premium brand, it needs to justify the premium and a mere celebrity endorsement may not work. The task becomes more important when there are international brands like Jockey upping its noise and most of the readymade brands like Vanheusen , Louis Philleppe etc have their own innerwears. 

The quality of the TVC is  much below standards interms of theme and execution.The ad doesn't suit the premium segment but will be ideal for a low priced segment. By choosing a hyperbole around the movie Don and with a stereotyped characters has virtually downgraded the positioning to a lower level brand. The brand's site says that ONN wants to fight Jockey but with this kind of creatives, the dream will be a distant one.

ONN needs to focus more on creating a credible differentiator or atleast position itself on the basis of some important attributes like Fit, Design, Range, Comfort etc. Just having an expensive brand ambassador will not work well in the segment it is in.

Brand Update : Scooty wants to Shake EM Up with Scootygiri

In its new campaign for Scooty Pep+ , the brand features the new celebrity ambassador Ms Anushka Sharma. The campaign titled Scootygiri projects the Scooty user as a young confident girl willing to question the status quo. The theme of empowered confident girl has been the major positioning platform on which Scooty has built itself to the current position. 

Watch the campaigns here : Scootygiri Romeo

                                           Scootygiri Dress code  

The brand now has the slogan " Shake Them Up with Scootygiri" exhorting girls to standup confidently and face issues head on.

The brand should be commented on being consistent in its message over these years.

An analysis of the brand's portfolio gives certain interesting facts. There are  three sub-brands under Scooty - Scooty Streak, Scooty Pep+ and Scooty Teenz.

Scooty Teenz is a sub 60cc scooter aimed at the first-time user of the product category. Scooty Streak and Scooty Pep+ are almost similar products interms of technical specifications. The difference is in the styling and promotion.Scooty now can be considered as a primary brand with sub-brands - Teenz ,Streak and Pep+.

Although Scooty has been performing quite well in the category , there is a gradual shift in the category moving in the direction of powerful scooters. This shift is now boosted by Hero Honda Pleasure and also gender-neutral new scooters like Access 125, TVS Wego Vespa etc. 

Scooty seems to be contented with the current technical specifications but it should not be blind to the fact that increasingly the ladies' scooter market is moving towards powerful scooters. TVS has a product Wego which is in the segment of powerful scooters . My contention is that Scooty should be modifying its product offering to reflect this shift. It cannot let Hero Honda Pleasure take up leadership position in this emerging  category. 

Scooty needs a presence in the higher engine capacity scooters to counter Pleasure . It cannot use Wego to counter Pleasure since Wego is a unisex scooter. Pleasure has been very aggressive in its promotions and will be creating a big chunk in the Scooty's existing customer base. The issue is much deeper that cannot be handled with high decibel ads or celebrity endorsements. Scooty has to see whether the entire category of ladies' scooter is shifting towards higher engine capacity ones. Ofcourse there will be a market for less powered scooters but that will be much smaller and unprofitable in future.

Related Brand

Scooty

Brand Update : Lux Extends to Deo

Lux, India's most famous personal care brand has extended itself to deo. The campaigns are on air featuring the extensions. The deo market in India is witnessing huge amount of brand activity with new brands being launched almost every month. According to Economic Times, the deo market is estimated to be around Rs 1300 crore and growing at 40%. 

The question as always is what can be logic behind HUL extending its iconic brand to deo. It is not that Lux is not extended before. The brand has soaps, shampoos, bodywash in the product-line. Globally this is the first time that the brand is extending to deodorants. 

HUL has been a pioneer in creating the deo category in India. The company holds its leadership position in the market with its iconic brand Axe. HUL also has its anti perspiration deo Sure and also Dove. So rather than investing on these brands why would HUL try to extend Lux into this category ? 

One of the reason can be to pre-empt competition by flooding the market with its own brands. Lux has a huge equity which will translate to trials and incremental sales. Further, the company is also wary about the launch of competing brands like Santoor, Nivea etc into this category. 

However, HUL is taking the risk of spreading the budgets too far on these extensions. After Axe, the company was not able to come out with another blockbuster deo brand. It pulled out Rexona and Sure was not able to replicate the success of Rexona ( during the initial years). Dove is also another brand which is extended to almost all imaginable personal care categories.

Lux as a brand will get more diluted  if HUL tries to milk its equity too much. None of its earlier extensions could replicate the success of the core brand. Rather than diluting, HUL could have launched new focused deo brands.

Mahindra Stallio : RIP (2010-2011)

Brand : Stallio
Company : Mahindra 2 wheelers

Brand Analysis Count :  #513

Question : What else do you want for a  perfect product launch when there is a reputed Corporate Brand, Aamir Khan and a decent campaign ?

 Ans : A good product !

Mahindra Stallio is a sad story of a perfect plan foiled by a poorly built product. Mahindra Group was very vocal in its plan to enter into the Indian two wheeler market. It surprised the industry by acquiring the ailing Kinetic Motors' two wheeler division. The company  followed it up with the successful launch of automatic scooters Duro and Rodeo. Then came the much anticipated entry into the bike segment.

Rather than launching a macho, performance bike to impress the technological prowess of the company, Mahindra chose to enter the much crowded and highly competitive commuter bike segment. The first product in the bike segment was the 106 cc Mahindra Stallio. 

Stallio had a dream launch. The PR team of the company had built in enough suspense in the market. The entire automotive industry was looking for something similar to a Scorpio that will shake up the established brands like Splendor and Pulsar. Then Stallio happened. The brand instantly gained eyeballs through the endorsement of Aamir Khan. Aamir Khan's endorsement was a master marketing move. The actor had huge equity in the market and his endorsement of a two wheeler was something no one anticipated.

Stallio put on an aggressive face in the market with a cheeky campaign pitting against all those macho bike brands which advertised with more hyperbole than a Bollywood movie.
Watch the launch campaign : Mahindra Stallio1 
                                            Mahindra Stallio 2
Stallio was positioned as a commuter bike that combined style and performance. At a price around Rs 45000, the brand promised enough features and quality and was aiming to compete with the segment leader Hero Honda Spendour.

The brand sold more than 5000 units in two months time, then the problem started. The brand had serious issues in the clutch and gear box. Noticing this issue, the company stopped producing the product and the brand was withdrawn from the market. For a marketer, it is a nightmare come true. The issue was not a product recall but a complete withdrawal from the market. 

It has been more than 8 months since the product withdrawal and the company is still not able to relaunch the brand in the market. It is highly intriguing of the fact that a company like Mahindra would land in a product quality issue of this scale. 

As of now, Stallio is almost dead and it will be difficult for the company to revive the brand since it failed at the launch itself. Renewing the brand and regaining the lost trust will be Herculean task. Aamir Khan also lost his bike endorsing credibility and if he comes again to endorse Stallio, I wonder how the consumers will react. If Mahindra relaunches Stallio, it will be easy for the competitors to kill the brand by refreshing the past failure memories. How ever, Mahindra did  a good job in swiftly taking the brand out of the market thereby limiting the PR damage. Also the media has been benevolent about the failure with limited coverage on the debacle.

Vespa : Fashion Unchanged

Brand : Vespa
Company : Piaggio

Brand Analysis Count : # 512

Vespa is back in a new avatar or rather in its Original avatar. The brand which died in 2006 is being resurrected by its original owners is set to change the way Indian consumers think about scooters. Vespa initially came to India in 1960 with partner Bajaj  and later through LML. The brand had a tough ride in the Indian market with some few successes like LML Vespa Select. But the brand failed to bring in volumes which eventually led the demise of this stylish brand.

Although Vespa had a different image compared to its rival Bajaj, the brand was never considered to be lifestyle oriented. Consumers considered it as a stylish scooter and the image ended with that.

This 2012, Vespa has come back to Indian market with its original persona of an Italian Scooter. The launch is significant because of the iconic status that Vespa enjoys elsewhere in the world. It is also interesting to see how Indian consumer will welcome the second homecoming of the brand.

The main reason behind the relaunch of Vespa is the increasing interest shown by consumers towards the scooter segment. According to Economic Times, Indian scooter market is around 2.5 million units growing at CAGR of 20%. Lot of new launches are happening in this market and consumers seems to prefer the utility of this product.

What is interesting in Vespa is the brand's positioning as a fashion statement. For the first time in this segment, a brand is exploring the possibility of creating a new market - lifestyle scooter. The target segment is youth who wants to be different, make a style statement. Essentially a psychographic segmentation. The brand is now focusing on print campaigns which makes sense .

The brand has the tagline " Fashion Unchanged" and is drawing power from its legacy dating back to 1945. The brand uses funky colors and evokes as sense of youthfulness that fits a fashion brand.

The brand has done it right in terms of the product design. The scooters looks cute and stylish and the advertisements looks chic. Although the product reviews are average, Vespa is expecting to sell for its looks and more importantly its brand image. The brand owners are repeatedly telling that Vespa is not for power-hungry as an excuse for the poor engine specifications. But hope they don't forget that consumers should get a decent deal when the brands commands a premium. Poor specs cannot be masked through colorful advertisements and lifestyle positioning.

The challenge for the brand is to show value. The brand is expensive and the specifications is nothing special so getting Indian youth to open up their wallet for the sake of looking fashionable seems to be a tough task.

The silver lining is that this is the era of design and experience. Lot depends on the brand's ability to convey fashion statement through the product. 

The steep price will force customers to compare value with the workhorses like Activa, although Activa is not a style statement. There is a chance that the brand will remain aspirational restricted to a few. The brand could have done wonders if it was priced at an affordable range and get more on the road - some thing like an affordable fashion statement. But Italian arrogance is visible in the pricing. The brand with the styling and premiumness can make Indian consumers drool or will they ?

Related brand

LML Vespa