Marketing Funda : Limited Edition

Marketing Funda #4: Limited Edition

The post is inspired by one of my students Mr.Prateesh who raised this intriguing question: Why do companies come out with Limited Edition products?
Obviously this question can be seen in the light of high promotion advertisements of Marketing giants like Pepsi launching Pepsi Gold and Mirinda Limited Edition.
According to Wikipedia, the term "Special Edition" when used in Marketing, is intended to give the product something new and previously unseen in the regular edition.Limited Edition carries a sense of urgency and the products will be released for a shorter time or in limited numbers.
Limited Edition term is derived from publishing industry where limited number of editions can be printed with top quality impressions. But later this term was taken and used across industries.

Although Limited Editions are sold at a premium, there are many FMCG companies take up this concept minus the premium factor.The industry that has used this concept widely is the automotive sector . In India too there were lot of products that come with Limited Editions. The recent one is the Pepsi World cup Gold. Pepsi has earlier came out with Pepsi Blue in the last world cup.

The reason for launching a Limited Editions can be many :
1. Induce brand rejuvenation
2.Consumer Connect
3.Celebrate an event
4.On occasions/Festivals
5.Sales Promotion
6.Test Marketing
7.Creating a Hype in the market
8.Celebrity Endorsement
9.Encourage multiple purchases.
10. Create Brand Associations
11. Enhance Share of Mind

According to MG Parameswaran of Ullka, marketers use Limited Editions to increase consumer connect, to excite the market or for celebrations ( source:Financial Express). For example Lux came out with two limited edition flavor Chocolate Seduction to celebrate its 75 th anniversary.Pepsi Blue is to celebrate World Cup. Amara Raja Batteries had a Limited Edition to celebrate Narain Karthikeyan's entry into F1.

Sometimes Brands come out with Limited Editions to Excite the market. If the brand sales is plateauing, Limited Editions can bring back excitement into the product.The incremental improvements may encourage many new consumers into the product thus rejuvenating the brand.
Limited Editions also help to encourage customers to make multiple purchases as a Collectors item. Sometimes marketers use these Editions as a test marketing of a feature of attribute. For example Wagon R used a series of Limited Editions to test market some of the features which later became the part of the standard equipment.
Limited Editions are also used by marketers to boost the Share of Mind i.e to ensure Top of Mind Recall. Brands like Pepsi which has limited scope of differentiation in terms of product attributes uses Limited Edition like Pepsi Aha, Caffe Chino to boost the image and also the high profile promotion ensure top of mind recall.

Limited Editions are used for special seasons and occasions. Many marketers launch event/theme based variants of their products that runs for a short period but with a view to enhance the brand image.Some times Limited Editions are used to create a hype in the market.

Another advantage marketers see in Limited Editions are to use it to maximize the use of a celebrity.Palio effectively used Sachin and Special edition cars to boost the image of the brand.Limited Editions also help the brand to create positive brand associations. Coke used limited edition Rang De Basanti bottles to create positive association of truth and optimism.

All though there are many advantages to using Limited Editions as a strategic marketing tool, often these editions are expensive.Most often the return from these limited ranges cannot be measured. Sometimes the Limited Editions become failures which in turn affect the brand equity of the parent brand. Now a days marketers use Limited Editions as a tactical weapon ( sales promotion ) rather than a strategic tool.

Source: Financial Express

Marketing Funda : Marlboro Friday

On November 12 , 2008 , Honda Motors India shocked the Indian autoworld by offering the biggest discount of 40% for its hybrid Civic. The country's first hybrid car Honda Civic was introduced in the Indian market this June. The launch price of Civic Hybrid was Rs 21.5 Lakh. Now the car is sold at Rs 13.5 Lakh.

Naturally the news was the talk of the town. For two reasons, first was the quantum of discount.It was the largest discount seen in that sector and second was that no body expected a price cut from a car maker like Honda.

Now the reason for the price cut has been officially out . The price cut was to clear the inventory . Honda had expected that the customers will buy the new generation Civic Hybrid for the prohibitive cost of Rs 21.5 Lakh. How ever Indian consumers gave this product a miss.

The huge price did not justify the value offered by the car. For one reason, Indians do not care too much for the eco-friendly proposition. We like eco-friendly cars but not at the cost of Rs 21 lakhs. Infact the hybrid feature was not motivating enough to justify the price. The dampener was the 105% import duty which forced Honda to sell the brand at such a high price.

The Civic Hybrid was imported as a completely built unit . The first shipment of 25o cars reached India this June. So far Honda was able to sell only 30 cars.

For high technology products and also products with " limited edition/Special edition" tags have only limited shelf life. When time passes, their value also erodes. Hence Honda had to sell off the inventory. To add to this problem, another shipment of 250 hybrids were on the way.

Honda maintains that the current discount is applicable for 190 cars only. That means the next lot of hybrids will be costing more.

All these events remind me of the famous Marlboro Friday.

On April 2 1993, Philip Morris which is a global cigarette major cut the price of its flagship brand Marlboro by 20 % in the US market. This sent shocking wave across the consumer market in USA. The stock market reacted violently and Philip Morris stock went down by 23 %. The entire consumer goods stocks fell drastically on that day. The market felt that consumer companies have buckled under the pressure of low-price competitors.

Philip Morris at that time was reeling under the pressure from discount brands . The low priced Cigarette brands was eating away the market share of Marlboro which was the market leader.

The branded cigarette business at that time also faced serious issues like
a. Demarketing by government
b.Restrictions on advertising and promotions.
c.Threat of law suits.
d. Price competition from discount players.

Philip Morris justified the price by saying that the price cut is a part of the major shift in the business strategy for long term growth. Many analysts blasted the company and predicted that the iconic brand status of Marlboro will bite the dust.
Philip Morris argued that it will not be able to withstand if it does not react to the price competition.

The Marlboro price cut was followed by a price restructuring exercise by the company across the product line. While the price of premium brands were reduced, it increased the price of its own low priced brands. The aim was to reduce the gap between the premium brands and the low priced brands.

The price cut was executed initially through sales promotions like coupons and offers like one + one free. Later the discount were made permanent .

The brand felt that once the price differential between premium and low priced brands are reduced, customers will choose the branded ones.

Although for the short -term, Philip Morris suffered revenue loss and share price beating, the strategy proved to be correct. After a year, the price competitors suffered and customers began to buy the brand. Marlboro regained its lost market share and share price of Philip Morris went back to sunny times.
The whole event is now known in the marketing world as Marlboro Friday.


I think that the price cut of Honda in India should be called as by Hybrid Wednesday.

Unlike the Marlboro price cut, Honda Civic price cut is not strategic but tactical. But the price cut throws some relevant marketing questions .

The most important question is about the brand equity. Many think that such a drastic price cut will hamper the brand equity of Honda. Since the price cut is for a specific variant, I don't think that Honda as a brand will suffer. Remember that Honda brand is build on attributes like quality, technology ,innovation etc which are still very relevant .

Another question that arises is the fate of those customers who had bought the car for Rs 21 lakh. Obviously when there is such a drastic price- cut, the existing customers are obviously going to be pissed off. According to reports, Honda is planning to compensate the existing customers although its not legally binding. Since there are only 30 customers who suffered because of price-cut, it makes marketing sense to compensate them because these customers are ' innovators ' who have lot of ' value ' among the target audience.

Although Honda claims that price cut is for 190 cars only , I have serious doubt whether they will be able to sell the next lot of hybrid cars for anything more than 15 lakhs. In a way the brand has fallen into a price range by its own making. It will also be a price benchmark for all those car marketers who have plans to launch their own hybrid cars.

What is interesting is that although Honda has misjudged the pricing during the launch, it had corrected the mismatch swiftly. It takes lot of guts for marketers to admit that they had made a mistake.
Honda quickly acted on the inventory problem and rightly identified the new price. According to reports, with in a day of announcing the price cut, Honda was able to sell a whopping 98 cars. So in a way the entire event help discover the price for such an innovative technology based product.