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Marketing and Branding: The Indian Scenario

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Why Concepts are Important in the Indian Context?

CONTENTS
PREFACE
ACKNOWLEDGEMENTS
INTRODUCTION WHY CONCEPTS ARE IMPORTANT IN THE
INDIAN CONTEXT?
Importance of Cultural Dimensions
Importance of Timing
CHAPTER 1 APPLICATION OF PRODUCT AND BRAND RELATED
STRATEGIES
Product
Product Levels as the Product Concept
Brand
Unique Selling Proposition
Product Management
Product Concept
Concept Testing
Market Testing
Product and STP
Reverse Engineering
Quality Function Deployment
Product-Line
Brand Associations
Brand Extension
Brand Loyalty
Brand Positioning
Brand Repositioning
Managing Brand Power Over Time
Brand Life Cycle
Brand Feelings
Brand Resonance
Brand Experience
Brand Aesthetics
Brand Awareness and Brands
Brand Elements
Brand PositioningThe Pitfalls
CHAPTER 2 DIMENSIONS OF DISTRIBUTION AND RETAILING
Distribution and Retailing
Importance of Value Chain
Supply Chain and Strategies
Factors to be Considered Before Selecting Distribution Channels
Distribution Conflict
Retailing StrategiesTypes of Stores
Category Management
Retail Planning
Retail Display/Signages
Retailer as a Brand
Store Brands
Direct Marketing
Retailing and Point of Purchase
Retail Equity
Retail Loyalty
Retail Service
Retail Service and Speciality Products
Retail Service and Durable Product Categories
The Credibility Factor
Retailing and Consumer Behaviour
Retail Outlet Selection and Brand Selection
Consumer Decision-Making and Retailing
Retail ImageBasics
Dimensions of Retail Image
Developing Store BrandsAdditional Points
Advertising and Retail Outlets
Retail OutletsLocation and Size Consideration
Perceived Risks and Retail Outlet Choice
Consumer Shopping Types
Retail Outlets and In-Store Purchases
Retail Outlet Strategy Formulation
Importance of Avoiding Stock-Outs
The Death SpiralAn Important Aspect of Managing Merchandise
Internet ShoppingIndian Context
Internet Shopping and Consumers
Prerequisites for E-Tailing
Online RetailingSegments to Customization
Online Marketing and Customizing Services
Online Marketing and Product Customization
Online Shopping and Product Categories
Online Shopping and Price Sensitivity
Online Shopping and Building Consumer Loyalty
Online Marketing and Concept of Customer Relationship Management
Online Marketing and Five-Dimensional Branding
Off-line Brand Equity to Online Brand Equity
Synergising Online and Off-Line Strategies
A Framework for Synergising Online and Off-Line Strategies
Virtual Supermarkets
CHAPTER 3 DIMENSIONS OF PRICING
Pricing and Value
Marketing Orientation and Pricing
Quality-Price Association
Pricing in a Changing Environment
Pricing and Marketing Mix Elements
Skimming as a Pricing Strategy
Applying Penetration Pricing and Perceived Value Pricing in a Specific
Context
Target Costing
Price Bundling
Customer's Perception of Value
The Concept of Value Subtraction
Price Sensitivity
Cost to Serve Consumers
Pricing of Services
Analysing Services
Costs of Customization
Brand Equity and Pricing Decisions
Mass Market Pricing Strategies
Customer Relationships and Pricing Challenges
CHAPTER 4 PSYCHOLOGICAL DIMENSIONS IN MARKETING
AND IMPLICATIONS FOR MARKETING STRATEGIES
Behavioural Dimensions of Marketing
The Concept of Perception
Branding CommoditiesA Behavioural Approach
Consumer Decision-Making Process and Marketing Strategies
Reference Group and Their Implications
Brands and Online Positioning
CHAPTER 5 ROLE OF PROMOTION, MARKETING
COMMUNICATION AND MARKETING MIX ELEMENTS IN BRAND
BUILDING
Understanding Marketing Communication and Promotion
Psyche of Consumers
The Psychological and Sociological InterfaceThe Four Forces
Changing Environment and BrandsImplications for Communication and
Promotional Strategies
Synergizing Marketing Communication
Concept Selling and Marketing Communication
Creating Differentiation and Marketing Communication
Symbolic Branding
Directness and Subtlety in Advertising Appeals
Subtleties and Celebrities
Embedding Subtleties in the Cultural Context
Urban Time Poverty and Marketing Communication
Media Planning Strategies
Managing the Promotional Process (The Basics)
Symbolic Promotional Plans
Direct Marketing
The Challenges
The Power of Brand Imagery
Critical Aspects of Brand Repositioning
Branding Strategies in a Changing Marketing EnvironmentThe Indian
Context
Mass Markets and Brand BuildingExamples
Power of Contrast in the Marketing
Discernment of Contrasts by Consumers
Capturing Consumers' Emotional Contrasts
Communicating Contrasts through Experiential Aspects
Brand LoyaltyMyth or Reality
Brand Perception and Brand Strategies
REFERENCES
INDEX
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1: Application Of Product and Brand Related Strategies

Why Concepts are Important in the Indian Context?
The Indian context offers unique challenges to marketers. Cultural and
economic diversity, a blend of western lifestyles and strong cultural anchoring,
and the rural/urban divide with islands of prosperity in rural areas are some of
the critical factors that need a specific-context treatment in terms of formulation
of marketing strategies. The affluent niche markets are as important as the
bottom of the pyramidlower end markets. The unorganized markets also
pose a challenge to the branding of products and services. The following data
indicate the unique nature of the Indian context.
According to the Sample National Survey Organization, there are 58.5 million
urban households and 148.1 million rural households. The penetration levels of
various product categories in the urban households are:
o Cars 4.4%
o TV 66% (41% with cable connection)
o Refrigerators 28%
o Air coolers 15%
o Personal computers 3.1% (with and without Internet connection)
o Fixed line telephones 24%
o Mobile phone 3.3%
In the case of rural households, the following are the penetration levels of
various product categories:
o Cars 0.6%
o TV 28% (10% with cable connection)
o Personal computers 0.6%
o Fixed telephone lines 5.3%
o Mobile phones 0.9%
A conceptual approach should be adapted to find solutions to challenges posed
by the Indian context. Some of them are:
o What does value mean in any given category?
o Can there be a successful business model built-up to cater to the mass
markets?
o How should various pricing strategies be adapted to the Indian context?
o What aspects of the marketing mix elements play an important role in
brand building?
o How should marketers approach premium brands/markets?
o What kind of product-based strategies are required to succeed in the
Indian context?
This book does not attempt to provide the solution for such questions; it merely
attempts to emphasize the need for a conceptual orientation when strategies are
formulated in a specific marketing context.
TOUCH OF REALITY
This touch of reality provides a snapshot of the Indian marketing scenario with
an indication of the challenges and complexities involved, which is likely to
motivate any one passionate in marketing to learn further on applying marketing
concepts to the enigmatic Indian context.
India offers unique challenges to marketers. Upwardly, mobile software
technologists with designer lifestyle form a niche market; there are millions in
the mass market who depend on non-branded offerings and there is a huge
middle class which may be buying national brands with reference to fast-
moving consumer goods categories and aspiring to own several durable
categories. In a country of about 1 billion people, just about a million of
computers and a million of cars are being sold in a year. In India, there are about
6,25,000 villages (or hamlets) and about 80 per cent of them have a population
of less than 5000. Around 75 per cent of the country's population live in villages
and the population of India is spread out in 25 States with diverse customs,
cultures and languages. The per capita income of the country hovers around
US$ 540. There are Invisible children in the countrya Unicef report mentions
that only 30 per cent of the childbirths are registered in India. A number of
children are employed as domestic help and child labour is a rampant problem
in the country.
The multinational brands in a number of categories, especially those with
lifestyle orientation, are predominantly consumed in urban markets while these
brands continue to inspire consumers in the hinterland of the country.
Compounding the complexity is the fact that both the urban and rural areas have
almost equal number of households which have one or more durable categories
such as refrigerator, music system, television and personal computer (major
durable other than a car). This introductory note has a focus on the importance
of two aspects that are vital to the Indian contextcultural dimensions and
timing of products. The context presents challenges that are sometimes
addressed by traditional concepts in marketing, with several challenges, which
need to be addressed by context-based marketing so that the outcome benefits
both the corporate establishments and the society at large. Marketing in this
complex scenario with diverse consumer segments requires a complete
understanding of the intricacies of the context and the several dimensions of
consumer behaviour. Multinational corporations have joined the competitive
clutter already existing in the torm of local brands. Whether it is mass markets
or niche one understanding the diversity of the Indian market is a prerequisite
for marketers; the marketing mix they formulate need to reflect these intricacies
of the Indian market. According to Goldman Sacs (2003). BRIC (Brazil, Russia,
India and China) promise a tremendous growth in economy and would be global
leaders in a few decades. But GDP may not be an indicator of global power.
According to Arvind Virmani [who worked out Virmani Index of Power (VIP)],
who had analysed several aspects of the economy of USA. income per head,
strategic military and technological leadership are important to ensure that a
country becomes a global leader. India, according to the index developed by
him. scores just 8.5 per cent benchmarked against a 100 per cent rated US. A
global power requires a country to score above 20 per cent, and US, Japan and
China are the countries which are in the global power league. Widespread
poverty, niche class of elitist consumers, fast track middle class population who
have enhanced their lifestyle in the recent times, government policies
concerning trade, developments in the international marketing scenario and the
oddities that may be barriers to marketing, make marketing a unique and
challenging task for marketers in the Indian context.
Importance of Cultural Dimensions
India as a market has a unique culture, and the marketing mix elements should
take into consideration the cultural dimensions that have profound implications
on the psyche of consumers. The importance of culture can be illustrated by few
examples. Multinational brands have been marketing shampoo brands for the
past several decades, but almost an unknown brand (at the time of its launch)
called Velvette introduced shampoo in a sachet two decades back. About 70 to
80 per cent of the shampoo category sold in the country are consumed through
sachets and most multinational brands have shampoo offerings in sachets. High
degree of price sensitivity is a strongcultural trait in the Indian mass market. In
the same category, a brand, Chik, a non-multinational brand was the first to use
a floral fragrance. Floral fragrance and flowers is a part of the culture, especially
in southern markets of the country and women use flowers as a cosmetic tool to
wear on their hair and also to decorate deities. They also use flowers for festive
and auspicious occasions. Food is a category, which has a strong cultural
orientation with regard to the cultural aspects of eating. Bread as a category has
been present in the country for almost a century, but its penetration level is low.
Sub-cultural aspects in a specific region dictate food preferences, and there is a
significant variation on food habits and tastes across the country. A brand called
Maggi (noodles) from Nestle is probably one of the few brands to have
registered some degree of sustained receptivity among Indian consumers during
the 1980s, though noodles are not of Indian origin. But Maggi was positioned as
a brand of snack for children which could be conveniently cooked in 2 min. The
brand appealed to urban consumers where employed couples are common and
the proposition of convenience appealed to these couples who found the brand
to be a useful snack both in terms of taste and convenience. Kellogg's initially
positioned itself as a nutritive breakfast for children, and its initial advertising
campaigns attacked traditional oil-soaked delicacies on the health platform.
Later, the brand stopped attacking the traditional delicacies perhaps finding that
it was attacking a strongly held belief about traditional food. Kellogg's has made
little headway in terms of substituting traditional breakfast in Indian households
because of both the cultural habits and the steep prices (as compared to the
traditional food made at home). General foods has its Pilsbury wheat flour
which is packaged and advertised, but only about 8 per cent of the wheat flour
sold is from the branded category. Consumers continue to procure wheat flour
from their neighbourhood retail outlets or take wheat to grinding stalls close-by
to get them ground. Consumers have a strong belief that freshly ground flour is
tasty and fresh apart from price associated with branded offerings in the
category). Coffee is a drink confined to the southern markets and despite the
category being present in the market for several decades, India remains a tea-
drinking nation (though in recent times higher prices of coffee has added to the
practice). Nestle and Cadbury, probably for the first time in India, have
introduced a liquid form of chocolate priced at less than 5 per cent of a US$.
Liquid chocolates at this price has the advantage of bringing chocolates within
the affordable range of masses and the consumer base gets extended. Coke and
Pepsi also have low-priced, 200-ml glass bottles that are recycled by retailers as
consumers are not allowed to carry or destroy them. Films, music and cricket
are a part of the Indian culture in a number of markets (there are specific
markets where soccer is popular too) and the present trend among markets to
use celebrity endorsement is not surprising. Some of the categories for which
film/cricket celebrities are used for endorsing brands are of soaps, milk additive
drinks, cars, apparel, television and household appliances, soft drinks, regional
foods, chocolates, watches, paints, shaving creams, biscuits, washing machines
and two wheelers. Santro, the brand of car from Hyundai, has made rapid strides
in the respective passenger car segment using a combination of rational and
celebrity appeals in its advertisements. Initially, the brand being new to the
Indian market used a reigning celebrity to get the attention, then used rational
appeals to get into the consideration set of consumers and brought back the
celebrity to position itself as a lifestyle brand after achieving success based on
its functional appeal. An interesting point is that a few celebrities find
acceptance with consumers in all socioeconomic classes and get used to diverse
product categories. Celebrity usage across product categories is quite common
in the Indian context and the intensity of such usage is on the uptrend. In-film
advertising (product placement) has been attempted by a few brands. Fanta, the
orange drink (from Coke), and its competitive brand Miranda (from Pepsi) use
regional celebrities in respective markets to advertise the brands. Fairness
creams are a significant category in the personal care segment. The fairness of
the skin as an indicator of beauty is another cultural belief which is being used
by marketers. Fair & Lovely is a popular brand of fairness cream, which
advertises regularly and its recent commercial has a theme, using cricket as a
backdrop. It shows a girl aspiring to be a cricket commentator (a male-
dominated field) and she is able to achieve her ambition by using the brand that
is able to contribute to her ambition by bolstering her confidence. Biscuits, not
only as a snack, but also as a kind of food is a cultural habit. Tiger, a brand of
biscuit from Britannia company focused on the health aspect for its brand
proposition and used a well-known cricket celebrity to target the lower end of
the biscuit category (mass market). The brand has a sizable chunk of the lower
end of the category, which was earlier dominated by the unorganized sector (an
unorganized sector has a number of offerings catering to a small local market
usually in the range of 30-40 kilometers or less and apart from the fact that these
offerings are not branded and manufactured by small-scale units in small
volumes).
Importance of Timing
Launch timing of product category is a critical factor in Indian markets.
Consumers would have to be culturally and inspirationally ready to be receptive
to new categories. For example, even in the most ultramodern neighbourhoods
of the country, it may be difficult to find accomplished and liberated women
smoking cigarettes. A minor segment may be smoking in clubs/pubs, and
paradoxically, there is a small segment of women in the lower section of the
society, normally workers who smoke a different version of tobacco called
bidis. But this segment too is very small and is present in only certain regions of
the country. Therefore, there has been only one brand called MS, which
launched its cigarettes to professional women almost a decade back and it was
withdrawn from the market within a short period of time. These are product
categories, which could be termed as neo mindsetproducts, which have close
linkages with cultural values. Marketing managers would have to time these
product categories taking into consideration the changes in the environment.
Condoms have been in the country for almost four decades, but it is only in the
past decade a few brands have been able to use media campaigns highlighting
the features and benefits. KS, a brand in the category was the earliest of the
brands to run a permissive campaign during 1990s in the urban markets. This
would not have been possible a few decades back, given the cultural inhibition,
which was associated with the category. Timing the launch of a product also
involves considering the product usage and habits of consumers. When Procter
& Gamble introduced its compact high-end detergent brand Ariel during the late
1980s, it advertised that a bar version is not required to clean fabrics. Majority
of Indian households use detergent bars to rub and clean clothes and there is still
a widely held belief that rubbing clothes is required to effectively clean the
fabrics. Going against this belief, without knowing if the timing is right (timing
in this context refers to evolution of consumers with regard to beliefs about a
category or its usage), can be counterproductive to brands. Ariel, later
introduced its version of bars for the lower end. Another brand of the company,
Tide, also started off with detergent powders, has now introduced a bar version
of the brand. Frozen vegetables that were marketed by Hindustan Lever in the
1960s failed and even today the market for the category is limited to a few
markets and the mass market has not reached a state when it could be receptive
to the categoryaffordability and taste beliefs may together contribute to the
present state of the category. Mouthwash brands have been in the context for a
long time, but have a low penetration level. Category growth too is associated
with the timing of brands and product categories. Analysis shows that creating
the right timing in a changing environment has to be initiated by, probably, the
pioneering brand, and there are categories that have not grown, despite the
environmental changes being conducive to the growth of these categories. There
has been tremendous awareness about personal grooming in recent years, and
despite these changes, the hair cream market has not grown over several
decades, though the brand Brylcream has been in the context for several years.
When the category growth does not happen slowly over a period of time, short-
term communication or repositioning strategies may not produce much mileage
for the brand initiating such strategies. Brylcream had tried out repositioning the
brand. Liquid detergents is another category, which perhaps belongs to the same
category of examples. Though a few brands have been in the context for a long
time, the category growth has not occurred.
The Indian context is a unique one, which requires marketers to adopt
specialized marketing strategies to be adapted to the complex environment.
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2: Dimensions of Distribution and Retailing

1
Application of Product and Brand Related
Strategies
The Product Theme
The product and brand related theme deals with four major issues that matter to
marketing practice from the viewpoint of product/brand-based strategies. The
first one is about the concept of the product or service. A marketer has to be
clear on systematically addressing various aspects of a product in a changing
context. A product not only includes the core offerings but also deals with
differential aspects of the brand, after-sales service and several other aspects.
The second issue deals with the differentiation associated with the offering that
enters the consumer mindscape as a brand, and this aspect elaborates on
positioning strategies in an emerging market like India. The importance of
marketing mix elements with regard to brand differentiation is also highlighted.
The third issue discusses how brand associations are to be nurtured in the
consumers mind. This deals with the way several aspects, including emotional
ones, can be used to create and sustain brand associations. A company, after
entering into a category, would like to develop a number of offerings in that
category, and use different techniques to differentiate its offerings in that
category. The fourth issue deals with the basics of product-line management,
and how a brand should develop offerings to cater to several segments in order
to maintain an edge over its competitors. These issues are addressed with sub-
headings, which have been sequenced in an appropriate manner. Since,
fundamentally and conceptually, branding is associated with product concept,
some aspects of branding have also been covered as a separate theme in this
book.
Product
A fundamental question which needs to be addressed by marketers today is what
defines a product. While there may be a number of concepts associated with the
term product, a product is a promise made by a marketer to consumers in
exchange for the money spent by consumers. This promise is a combination of
benefits, associations, attributes and services, emotional overtones and status
appeals. A cosmetic product like a fairness cream could promise beauty, and
also confidence to face the competitive world. The concept of fairness is a
prerequisite (as perceived by consumers) for both personal and professional
success. A brand like Surf offers both the benefit of clean, stain-free clothes and
laundry services which are oriented towards fabric care. A brand like Onida
promises not only good entertainment but also the status of owning a state-of-
the-art electronic durable. Mercedes is recognized the world over for its superior
engineering excellence, as well as for its status appeal which is associated with a
personality statement of the owner of the car. A hotel could offer several
benefits like quick check-in/check-out, fast room service, business service
and/or be artistic and stylish in infrastructurewith fashionable bars, lobbies
and restaurants, which define a lifestyle associated with status. In business-to-
business marketing, a product could be a consumable, like a cleansing solution,
or could be a complex project associated with distribution control systems,
which integrates several hardware and software contributions. As the
competitive environment changes with advancements in technology, there is a
need for marketers to present a better product with enhanced benefits to
consumers. A pen, for instance, could have a better design and could offer the
benefit of smoother writing (Reynolds). Computers could provide better benefits
at rapidly reduced prices within a short time (Intel), and a cosmetic or a watch
brand could use the latest technology to enhance brand benefits (Pond's/Timex).
A hotel, like The Marriott, may offer online-booking facility with several
customer queries answered.
Product Levels as the Product Concept
Product levels deal with several layers of the product, and brand is one of the
vital aspects of product levels. A product level has the following implications
for a marketer.
(i) It identifies the level at which competitive offerings are present in a
competitive scenario.
(ii) It helps a marketer to identify the scope for differentiation.
(iii) It helps marketers to understand the trends in a specific product category.
(iv) It helps a marketer to know the importance of concept selling.
(v) It helps a marketer to find out gaps in product development, and formulate
changes in the product.
Product level is a strong foundation concept which could be referred to as a
classic concept, given the fact that it was pioneered decades ago by Theodre
Levitta classic framework which would be useful to organizations. The
concept would enable the organizations to formulate branding strategies with
layers of benefits to suit different segments of consumers.
A product or service forms the core aspect of a marketer's offering; and hence,
marketers have to take vital care to ensure that the benefits are communicated
and delivered in such a way that consumers can feel the need and experience the
benefits. From using a pen or tasting a chocolate to using a latest computer like
Palm Pilot is an experience for the consumer. Product usage experience is vital
in terms of brand loyalty and good word of mouth (WOM) communication.
Hence, an organization has to concentrate on providing a product that
consumers would value and recommend to others. Lasting brands have created
excellent products and won a strong loyal base of consumers, both in India and
in several developed markets. On the one hand, there is great importance
attached to successful products, but on the other hand, marketing history
abounds in product failures. This probably highlights the need for good product
benefits through branding, to combat competition even in the digital economy.
The distinguishing feature of the product level concept is that it can be applied
to any product categoryfrom commodities to complex products and services,
and in both off-line and online marketing.
The product level concept categorizes the product into five stages. At the basic
stage is the core level that deals with the product category. At the next stage is
the generic level that deals with the sub-categories associated with the main
product category. At the third stage is the expected level that deals with what
consumers would normally expect from the product. At the fourth stage, is the
augmented level that deals with how a brand could differentiate itself from other
competing offerings in the market. At the last stage is the futuristic level that
deals with the trends taking place in the category. The product level concept
could be well illustrated by the following example. Transport is the core need
(core level) served by all two-wheelers. The generic category consists of sub-
categories like scooters, motorcycles, scooterettes and mopeds. The expected
level deals with what consumers expect from a sub-category in terms of riding
comfort, features of the two-wheeler and fuel economy (to name a few). The
augmented level deals with how brands differentiate themselves with respect to
functional and emotional benefits. TVS Victor could offer several benefits like
economy, riding comfort and aesthetics. Bajaj's Caliber could offer an
emotional benefit and Honda Activa may differentiate itself with several new
to the market benefits. Warranty, packaging and after-sales service belong to
the augmented level associated with the product concept. A brand may have to
do research, if consumers want to pay for additional benefits at the augmented
level, because any augmentation would result in additional costs to the
organization. For example, a brand of tea may want to add vitamins to create a
sub-brand, and it may be worthwhile to find out whether consumers are
prepared to pay for the augmentation. The futuristic level of the product gives
an idea about the trends which are taking place in the market in a specific
product category. In the two-wheeler category, there may be some ongoing
research related to solar-powered two-wheelers. New concept products require
marketers to be cautious. There is a need to create awareness of the concept
rather than just of the brand when new concept products are introduced. The
introduction of washing machine in India is a good example. Videocon created
awareness of the concept of washing machines during the earlier phase of
introduction of washing machines.
Product concept (two-wheelers)

The author's interpretation of product concept is derived from the concept
proposed by Theodre Levitt.
Brand
A brand is defined in several ways in the marketing literature. According to
Shunu Sen, it is a unique offering to which functional and emotional
associations get attached. A brand is a product that adds other dimensions, and
differentiates it in some way from other products designed to satisfy the same
need. Regardless of the context, a brand has to be unique and has to provide
differentiation at any given point in time in a competitive context. The time
aspect has to be vital to ensure that the brand is always on top of consumer's
mind. The rime orientation also emphasizes the need for brands to update their
offerings. Ambassador, Fiat, Binny, Yezdi, Liberty and Amrutanjan are some of
the brands which lost their pioneering market dominance in a changing
marketing environment. A brand should functionally and emotionally reassure
consumers on what it stands forfor example, L&T housing brand may
reassure about the quality of housing, as well as provide them with emotional
security of trust. A brand could stand for fashion and status (Omega or Rolex).
A brand could also stand for personal grooming style which reinforces the look
of an executive (Park Avenue); a brand could also be associated with fun,
adventure, freedom and a feeling of community belongingness (Harley
Davidson).
Brand equity, in simple terms, is the value a brand adds to a product category. In
today's context, a brand's value can be converted into monetary value and hence
a brand is an asset to the company. There are techniques and methodologies to
evaluate the value of a brand. According to Businessweek and Interbrand, the
following is the value of some of the top brands in the world (these brands have
occupied the top 10 slots for successive years):
Coca-ColaUS $69.6 billion
MicrosoftUS $64.1 billion
IBMUS $51.2 billion
GEUS $41.3 billion
IntelUS $30.9 billion
The figures give an idea about the concept of a brand being a tangible asset to
the respective company.
Building a brand is not confined to merely advertising or creating visibility, it is
about offering the right marketing mix elementsproduct attributes, pricing,
distribution (place) and promotion. Brand building is not just naming a brand; it
is about creating value with regard to the offering of the organization. Branding
is the external indicator that enables a consumer to recognize the value
associated with it. Branding associations enable a consumer to develop brand
preferences based on his/her experiences with the respective brand offering.
Creating and nurturing a brand involves (a) creation of value as perceived by
consumers, (b) creation of brand associations to reflect the value created, (c)
adapting the value to a changing environment influenced by competition, and
(d) adapting the brand associations to the changing environment in a
contemporary and consistent manner. Branding is a dynamic process, involving
several elements of the marketing mix at a given point in time. Titan has used a
number of marketing mix elements to build itself. Variety, shopping experience
at the retail outlets, strong associations through promotion and creation of
different price points have together contributed to brand building.
Unique Selling Proposition
Unique selling proposition (USP) was first pioneered by Reevos several decades
ago, and though there is a growing opinion that USP is outdated, it would be
difficult to discuss any brand without considering the concept of USPperhaps
the scope of USP has changed in terms of its application to the changing
environment. A brand's differentiation with regard to its competitive offerings
revolves around USP. During the early years of professional marketing, USP
was associated with the functional benefit of a brandthe extent to which an
offering differentiated itself from other offerings on functional benefits. While
Colgate prevented bad breath, Forhans strengthened the gums. Bajaj offered
good mileage and durability in the scooters category as its differentiation. Over
a period of time, when offerings had to compete on undifferentiated benefits (as
several brands offered the same benefits in a given category), the USP shifted
to symbolic benefits. This was also because of the changes in the lifestyle of
consumers who were exposed to western lifestyles and media. They started
reflecting that good lifestyle is also associated with ownership of brands that
make a lifestyle statement. This shift had very important implications for
marketers. They had to also take into consideration the emotional needs of the
consumers besides the functional benefits. These emotional benefits would have
to be communicated to consumers through marketing communication that
would appeal to them. A brand's personality could be built through satisfying
such emotional needs. Owner's pride, neighbour's envy was the message from
Onida during 1980sprobably the first brand to make use of the status appeal
in the TV category. This was a category which, at that point in time, was full of
brand proposition statements associated with features and product benefits.
Symbolic appeals (symbolizing status or emotions) can be found in several
product categories in today's context. Louis Philippe in ready-made shirts,
Scorpio [from Mahindra & Mahindra (M&M)] in passenger cars, Caliber in
motorcycles, and Fair & Lovely in fairness creams (confidence as the
brand's proposition) are some examples. Godrej's Storewel positioned itself as
the gift for the bride and used the emotions associated with Indian culture in
its positioning. Services can also be used as a USP by a brand, to gain advantage
over other brands trying to catch up with one another in terms of benefits.
Lakme's beauty salon offers service as a solution (and hence, a USP) in the
category of beauty care. A detergent like Surf could offer laundry fabric care as
the ultimate proposition. Service and ambience are the USPs of Cafe Coffee
Day or Barista (and not just the quality of menu served). An experience as a
USP is the assumption on which experiential marketing is based. Coke in some
markets, advertises as The sparkle on your tongue capturing an experience
associated with the brand. A service brand like Apollo (hospitals) or Heritage
Inn (hotels) could create an experience, which could be the proposition of the
brand. Virgin Airlines, a brand known for innovation in the airline industry, has
designer cabins in its airline (for a specific class of consumers) to create an
experience. A unique selling proposition has to be handled with care because it
triggers associations about a brand; and there is also a need to make these
associations contemporary when the marketing environment changes over a
period of time. The brand's meaning should not create confusion among the
consumers when such associations are managed and hence, managing the
brand's USP is one of the vital functions of a brand manager.
TOUCH OF REALITY
Should a USP signify functional attributes/benefits or symbolic meanings?
Research published in the Journal of Consumer Marketing by researchers has
shown that functional and symbolic associations of a brand are not two ends of a
continuum. It is possible for consumers to view a brand with both these kinds of
associations. Nike is associated with sports celebrities as well as wearing
comfort. Mercedes is sold both on reliability and performance, and on status
appeal. Rolex is known for its quality and social associations of prestige.
Consumers may buy Louis Philippe both for its symbolic image and quality.
The problem with brands in both kinds of associations is that they may confuse
the consumer in the present-day context, which is a cluttered one, with
advertisements creating the clutter. It may be noted that the brands mentioned in
this context earlier are the ones which have grown with time. Their functional
utility and symbolic image have created an impression among generations of
consumers over a period of years. Marketing research into the offerings in the
category, and the target segment is a logical solution to find the right positioning
stance for a brand; once a positioning is successful, complementary associations
can be added to the brand, if required through a sub-brand or a new brand.
Importance of unique selling proposition
The USP of a brand continues to be critical even in this era of digital marketing.
Trout, one of the proponents of the positioning concept, is of the opinion that
any advertising for a brand should sell with a USP rather than provide
entertainment for the viewers. USP positions a brand strongly in the mind of the
consumer and also develops a strong differentiator which creates a partition
for the brand among competing brands in the respective category. Fevistick
(adhesive in the form of a stick) had convenience as its USP (though several
times expensive than the regular gum). Reynolds provided durability and free-
flow competing against offerings from the unorganized sector, and Maruti (the
initial no-frill version) changed the perception of Indians on passenger cars.
While a USP in today's context can be a benefit from an attribute of the brand
(BPL Studioline's 1,000 W for the intended target segment), there can be other
ways in which a USP could be formulated, taking into consideration the various
research inputs from the appropriate target audience. Sidney Levy's models on
these qualitative aspects could be applied to the present day clutter of
communication to ensure that the message is conveyed to the intended target
segment. This could be very valuable to a company interacting with an
advertising agency to ensure that creativity is meaningful and practical.
Sidney Levy, a well-known researcher in the area of qualitative marketing,
suggests what is known as the Thematic Universe that would enable brands to
differentiate themselves from competitive offerings. An understanding of this
framework would ensure that a brand is able to effectively counter the
commoditization of brands in several product categories. The framework
contributes to the formulation of images linked to specific brands and can be
effectively used with positioning maps.
TOUCH OF REALITY
A product offering may also be associated with hedonic consumption, which is
associated with sensory, fantasy-oriented and emotional states of mind, during
the consumption of the product. For example, Coke's thanda (chilled drink
association) and Cadbury's sweetness campaign are examples of how mundane
products get associated with hedonic consumption. Besides the traditional
products, performing arts (like dance and art), plastic arts (like photography and
crafts) and culture-based arts (like movies and rock/carnatic music) are also
associated with hedonic consumption. An interesting aspect of hedonic
consumption is that the consumer may be interested in availing an offering,
despite the foreknowledge that consumption may involve negative emotions.
For example, the biography of Anne Frank, a popular wartime real story,
involves suffering, pain and misery; but the book, Anne Frank's diary is
popular in several countries. Consumers may also differ in the manner in which
they expand mental activity with regard to hedonic consumption. A consumer
may enjoy the hilarious film Roman Holiday (involving several humorous
sequences where a princess attempts to break off the shackles of regal life to see
the real world and meets a news reporter). Another consumer may find strong
hedonic consumption in a film like Born Free, which is full of compassion, fun
and sadness of parting in an unusual real life man-animal relationship. Even in
common place products like shampoo, hedonic consumption can produce
symbolic meanings, which give rise to self-generated imaginative reality. A
consumer using a shampoo which features a celebrity can get into a fantasy
associated with the celebrity. When a consumer has multi-sensory experiences
during the consumption of a product, he/she may also generate multi-sensory
images within himself/herself.
The manufacturing proposition
This proposition could be useful for a niche brand to compete in a category, and
when several brands have already pre-empted the usual USPs. Soap is a
category belonging to this situation. While the basic price at the preliminary
level defines the segment, brands would need to have a differentiator within a
given segment. The point of differentiation should be relevant and memorable.
This is useful to a niche brand, because consumers may be less price sensitive
and more inclined towards learning about intrinsic product benefits, especially if
they are explained from the viewpoint of how the brand is manufactured. This
would also make the consumers psychologically more comfortable with the
premium charged by the niche brand. A good example is the brand Pears (the
glycerine soap). The company makes the soap only in India and exports it to
other markets. The method of preparation is unique and the soap carries with it
the associated benefits. Chemicals, used in shampoo brands (e.g. Clinic), may
also be useful when the brand's USP is new, but the appeal may wear off after
competitors follow suit. Secondly, highlighting natural ingredients in the
manufacturing process is likely to have a better impact on the target market
(sandalwood and shikakai in soaps, clove in toothpastes and natural juice in soft
drinks are examples). Besides, especially in cosmetics and foods, there may be a
strong perception that any synthetic additive would be detrimental to
skin/health. In durables too, the proposition can be associated with the relevant
benefits. The manufacturing proposition could be extremely useful for the food
category. When Pizza Hut and other brands were pre-empting a number of
propositions, Papa John (also a brand of pizza) highlighted the use of superior
ingredients. Samsung has introduced a washing machine specially catering to
Indianssarees could be washed without getting entangled. LG advertises
about a system of nutrition preservation in a country, which is still not used to
food being stored for days together in a refrigerator (as in the West).
Feature-based proposition
The thin line of difference between the manufacturing proposition and feature-
based proposition is that the feature and manufacturing details like made purely
from natural ingredients or handcrafted are highlighted. Features normally get
associated with specific benefits. Brand features take shape when focused on
benefits, especially in categories with which consumers may not be very
familiar (or in the case of durables). Natural in foods means healthy, but
golden eye in a brand of TV requires explanation for a prospective buyer.
There are two ways of positioning featureseither just highlight the feature or
link it up with the relevant benefits. Traditional marketing wisdom has always
emphasized the need to link benefits with features. However, in a changing
environment when consumers may not get too involved in processing
information from elaborate advertisements, just a mention of the feature could
get the consumer involved and he/she could get more details at the point of
purchase (retail outlet). This is likely to work in the case of durables, when the
consumer is actually able to realize the tangible benefit at the retail outlet based
on the feature highlighted. Advanced fuel injection systems advertised for a few
brands of automobiles, agitator action in washing machines, extra-space
viewing in televisions (Samsung), and usage of special fabric in ready-mades
(Van Heusen) are some examples of feature-based positioning for which the
benefits could be explained better at retail outlets. The feature-based
positioning could also trigger the WOM. Consumers may consult personal
sources for information and the sheer process of involvement creates awareness
about the benefits offered by features advertised by the brand.
Benefit-based proposition
Fast moving consumer goods (FMCG) categories are usually low involvement
ones, and consumers also try various brands (they may still be loyal to a brand
in terms of purchase frequency). Features like added moisturizer or the
presence of a special ingredient may not convey the benefit, and besides
consumers may reflect a lower level of involvement, as compared to durables, in
processing information related to FMCG advertisements. Hence, it may be
worthwhile to position FMCG products on benefits, as this would straightaway
carry the brand into the consideration set of consumers. Colgate Total was
initially launched as a toothpaste that prevents several problems associated with
teeth. The brand did not take off and was re-launched as a toothpaste which
offers a 12-hour protection (though the initial USP is still printed on the
package). The brand has made significant progress after the re-launch. Even in
the case of shampoos, a brand would do well to point out the benefits and, if
appropriate, link it up with specific features on the packaging. Sometimes,
features could carry a perception which may adversely affect benefits and, in
such cases, an appropriate benefit proposition would have to be selected. For
example, a brand of juice concentrate may have a particular ingredient for
adding vitamin C (health benefit is implied), but it would have to highlight
taste as the benefit proposition to ensure that consumers do not develop a
medicinal perception.
Organization-based proposition
A brand differentiator could also be developed using an association of an
organization. A good example would be Wipro's applying thought. As a
company which is into diverse kinds of businesses like computers, finance,
soaps, edible oil and medical electronics, the firm may like to convey one
association which may be common to all categories in general. Body Shop, the
global green cosmetic company, draws its association from the environment-
friendly philosophy of the organization. McDonald's association is drawn from
its traditional value-for-money, convenience and hygiene. Incidentally, the top
ten brands frequently selected by Businessweek happen to be the ones which
have company names (like GE, Microsoft, Intel, Ford and Disney); and hence
an organization-based proposition may be useful to develop associations.
Pepsodent introduced a variant in the form of germ indicator. The consumers
were given two indicators through which they could check plaque levels over a
period of time (before and after using the brand). In a situation like this, it
would be better to advertise the benefit (the benefit of plaque reduction) rather
than mention about the ingredients which convey the benefit. In contrast, for a
durable like air conditioner, mentioning the attribute of the brand might trigger
information search about the brand. Voltas introduced air conditioners with
intelligent features concerned with cooling effects. In consumables (FMCG),
attribute branding could be usedgerm indicator, in the example discussed, and
Power Tip bristles of Oral B toothbrushes are examples. A well-known brand
name introducing such attribute branding could be very effective, especially
because the current base of loyal consumers may have another variant to
choose.
Overall differentiation
This develops the No. 1 association with regard to the brand and can probably
be useful after a brand has been successful in a market for a given length of
time. It is important to note that the brand has got to have a significant share of
the market to use this differentiator and ensure credibility of the claim made.
Tylenol in the US used this, advertising itself as the largest selling analgesic in
the hospital segment. Bring home the leader from Videocon and the ultimate
in luxury from Esteem are examples in the Indian context. Another point is that
a brand using this proposition would have to continuously launch variants and
ensure that it does not get outpaced by competition. A brand using this
proposition should certainly be in the consideration set of consumers who are
contemplating the purchase of the product.
The different kinds of propositions are suggestive and a brand needs to
undertake extensive research associated with the appropriate target segment
before selecting a differentiator. These propositions could be used in several
waysa brand like Raymond's started with a benefit association and has
strongly consolidated its association with an emotional proposition. Building a
brand differentiator, and sustaining it is a major marketing challenge in today's
context.
Choosing between brand attributes and brand benefits
An attribute of a product or a brand is the characteristic of it. A toothpaste brand
could have cavity control as an attribute. In this case, this proposition is both an
attribute and a customer benefit. An attribute could be a characteristic which
could be associated with a benefit or it could be a tangible functional benefit.
Ease of handling of a brand like BMW is an attribute and the ultimate driving
machine associated with the brand is the benefit. Germ killing action of
Lifebuoy is an attribute and hygiene is the ultimate customer benefit. Extra
space viewing of a model of Samsung brand of TV is an attribute and enlarged
clear TV viewing is the ultimate benefit to the consumer.
An important implication of attribute is the attribute competition that could
evolve in a category. Fuel economy, comfort, good braking system and safety
are some of the product attributes that have evolved over time in the automobile
category. Self-starters (ease of starting) is an attribute which consumers started
associating with scooters only after Kinetic Honda introduced the attribute.
Cavity prevention, strengthening of the gums, white teeth and a combination of
benefits (Colgate Total) are attributes that have evolved in the toothpaste
market. The herbal attribute is becoming a preferred one in several categories
like soaps, toothpastes and shampoos. Brands should find out the type of
attributes that are needed by consumers. While some authors point out that
attributes can also be social and emotional propositions, it may be better (for the
purpose of conceptual clarity applied to practice) to hold that attributes are more
associated with functional benefits. Such a treatment would indicate how a
brand should update its offerings to deliver benefits to consumers. For example,
Velvette was the first brand of shampoo to be introduced in sachets and other
brands followed this attribute (convenience and low-cost unit pack).
Psychological factors are too subjective to be brought within the purview of
tangible attributes and they are more associated with qualitative creativity.
Tracking attributes of competitive offerings is a prerequisite in today's context.
The strategy of marketing communication has to make a fundamental decision
on whether a product attribute, or benefit is to be used. The traditional thought is
to use a benefit to highlight an offering. But there are several examples in the
Indian context that have used attributes and made a significant impact on
consumers through marketing communication. Clinic shampoo used ZPTO
chemical (attribute) to highlight the cleaning action of the offering. Godrej, in a
durable category like refrigerator, used Puf (attribute) to achieve results in a
significant manner. Golden eye (attribute) from LG TV brand is another
example. There is a need to research consumers at any given point in time to
take such decisions. Magic eye was a proposition used by a brand of detergent
and 3D was a proposition used by a brand of TV during the 1980s. If a brand
decides to use an attribute, it may be worthwhile to also emphasize the benefit
associated with the attribute. For example, a brand of toothpaste highlighting
usage of bubbles as an attribute may baffle consumers if they do not understand
how the attribute is linked to benefits that they look for in the category.
TOUCH OF REALITY
A cola brand is different from a mobile. While the difference is obvious, the
approach of marketers with regard to these two categories would highlight the
important aspects of a good marketing strategy. Cola products (brands) have
developed what could be a virtual quality which has very little to do with the
product-based attribute/centric approach. Fun, enjoyment and social gatherings
form the core of the virtual quality associated with these products. Over a
period of time, these virtual qualities develop into a brand personality. For
instance, the macho image associated with Thums Up is very much a virtual
quality of the brand. Within the acceptable limits of consumers perception (as
long as a cola is not colourless), the brand could be driven by its virtual
quality. If mobile phones are considered, is this the virtual quality which
drives the brand? Airtel's association may appeal to a cross-section of MTV
viewers (the brand has a collaboration with MTV for its promotion), but most of
this segment would also want to understand the offering of the brand services,
scheme on charges and hence the overall value. Most segments would want to
know (most segments because there may be a cross-section which is only driven
by the virtual quality of the brand in case a brand attempts this) permutations
and combinations of the offering in very clear terms. This does not seem to be
happening in the category and any brand that pioneers the approach would have
a reasonable lead over its competitors. Most cellular operators, for example,
carry advertising copies which prominently mention a low fee, but small letters
appearing at the bottom of the advertisement have statements which convey
very little differentiation across brands. If a brand mentions a low rental, it has
to be charged with a fee on the 10th/3Oth day without which the mobile would
not work. It is difficult to find a brand today that has segmented the market
clearly on a product-centric platform. Students, housewives, executives and
non-executives are some of the segments and all of them have varying needs.
There are specific value-based packages to each of these segments. Most of
them use similar packages (in terms of features/fee), and the whole service
seems to be driven more by the Virtual quality of the handset (brands offer
several features which most may not require). A good combination of need-
based fee and virtual quality (to segments which may require it) would result
in a win-win situation for both the consumers and the brands. A good example
of such a combination is the case of the brand Vodofone (has several million
consumers in about forty countries) that featured David Beckham in developed
markets where brands are under pressure because of both competition as well as
discerning consumer segments. The example is from the marketing
mix/consumer behaviour view point rather than from a business model view
point. Certain durable categories require to be experienced before the consumer
is convinced about the features of a brand. In developed markets. Whirlpool has
retail outlets where consumers can see the action of machines which they are
considering to buy. Advertising, which creates awareness among consumers
should be completed by exposing consumers to the experience associated with
the brand. A product-centric approach does not just showcase the features of a
brand; it also demonstrates how such features are useful to the consumer
segment which is interested in the brand. Even in a fast moving consumer
product, there seems to be good scope for product-based strategies to work.
Gokul is a well-known sandal talcum powder in the southern markets. The
packaging is still the conventional container; the brand neither advertises like a
typical multinational company (MNC) brand, nor frequently runs sales
promotional campaigns which are common in the FMCG categories. The brand
has a strong following in the market because consumers like the product
(perhaps not the urban consumer; but given the choices for the urban consumer,
the semiurban/rural markets are critical for this category). In the past, Cinthol
developed its brand image based on deodorant qualities. MTR is attempting to
create a market for its ready-to-eat items based on taste, freshness and
hygiene. Lifebuoy and Dettol are well-known brands and have built up their
equity, because of the attributes they have been able to offer and sustain. Much
before large companies entered the market, the regional brands in the herbal
soap category used product attributes to carve a niche for themselves. It may be
worthwhile to recall the gum protection proposition of Forhans, one of the
well-known brands of toothpaste during the 1960s. A brand would have to
sustain and adapt itself to the changing environment after it has successfully
created a product-centric proposition.
Product Management
Product Management has been instrumental in the success of several brands in
the FMCG sector. Traditionally, sales was associated with the organization's
attempts to sell brands through intermediaries. Many reasons triggered the need
for a structured product management in an organization which wanted to be
oriented towards the consumer in a rapidly changing marketing context. Some
of the reasons are as follows.
(i) Pressure on an organization to manage several product categories. A
company like Hindustan Lever is into several categories like soaps, tea,
shampoos, hair oil, foods and beverages. Unless there is a strong focus on a
specific category, specialized strategies will not emerge. There is always a need
for such strategies in any category to create and sustain a competitive edge over
rival brands. Each category has its own trends and intricate aspects.
(ii) Proliferation of brands within a category. There are a number of offerings
from a company to address several segments and hence each brand has to be
monitored carefully Hindustan Lever has Red Roses, A-l, Taaza, Red Label and
Taj Mahal (brands of tea) and each of these brands has its own competitive
offerings.
(iii) Need to develop the market. Product management is required to develop the
market, to identify new consumers for existing offerings and to bring out new
offerings for existing and new consumers.
The role of product management is vital in making the organization customer-
centric. Product management provides the interface between marketing and
other functional areas of management. Product development inputs required for
developing/modifying products are given to production/quality control units
based on the information provided by product management. Product
management involves monitoring competition and interacting with advertising
agencies. Examining the cost structure of a product by interacting with the
finance department is another activity undertaken by product management.
Product management adapts to the changing requirements of an organization as
demanded by competition in a specific category. If the need is to prevent the
turnover of marketing personnel, product management may have to study the
appropriate policies of competitive organizations, interact with the human
resources team and recommend a compensation package that will lower the
turnover rate. A more recent function closely associated with product
management is brand management. The brand management process is
concerned with creating and nurturing several dimensions associated with
brands. Broadly, the brand management serves four important functions.
(i) It identifies core brand values which are the attributes and benefits that
characterize the brand.
(ii) It chooses the elements of a brand, namely the brand name, logo, symbol,
packaging and slogan, taking into consideration insights from the target
segment.
(iii) It is responsible for the brand equity measurement system that has a set of
research procedures.
(iv) The brand management system has to also grow and sustain the brand
equity, which involves management of brand extensions and brand portfolio.
TOUCH OF REALITY
On the one hand, the domain of marketing is offering cutting-edge knowledge
with advanced concepts but, on the other hand, there is a situation in which the
basics of marketing are not adhered to by marketers across a number of
product/service categories. While the concept of USP is very much relevant to
the marketing context, there is a need in several product categories to analyze
whether it is required at all! The concept of category benefits requires that
brands satisfy the basics, which are expected in a category before they embark
on brand differentiation with different kinds of USP. If the category of cellular
phones is considered, consumers require trouble-free service at value-based
rates, transparent billing and easy recourse to a process which would deal with
their complaints. How many brands offer category basics? If the newly opened
express service photo stores (Kodak and Konica are examples) are considered,
the minimum package offered to consumers wanting a set of passport photos is
beyond the requirements of an average consumer. For instance, if a consumer
requires two copies, he/she is burdened with a price which is much beyond the
price for two copies. The brands with their service orientation fail to recognize
the category benefits. The price-sensitive mass segment is forced to look for
alternatives in traditional studios which will give them a package very close to
their requirements. The differentiation brought forth by quick development of
films and ambience will attract only a cross-section of consumers. There seems
to be a great opportunity in the mass market for such a service only if category
benefits are given importance. Credit card service is another category in which
the consumer requires some amount of customization on card limits and other
aspects of usage. Credit card companies seem to be marketing a standard offer
to several segments of middle/upper middle class consumers with several kinds
of differentiation. Would category benefits not enhance the satisfaction levels of
such consumers with an effective system to redress the grievances of
consumers? There are several durable categories, which require an effective
after-sales service system and this is a category benefit which consumers expect.
There is even scope to differentiate after-sales service depending on the
urgency/situational aspects associated with the target segment.
Product Concept
A product concept is an elaborate version of a product idea. A product idea can
be considered in terms of several concepts from the viewpoint of consumers. A
soft drink brand can consider a number of concepts. Who would be the
consumer for this productchildren, youth or adults? What will be the product
benefittaste, thirst quenching ability or refreshment? What will be the
occasion associated with this drink? The product concept can be considered in
several combinations and it enables marketers to explore various alternatives of
developing the product. The soft drink can be a tasty one positioned for the
children. It can be a drink to be taken by youth while socializing or it could be a
drink for the adults when they relax after a day's work. One of the important
aspects of developing a product concept is to visualize a situation that will offer
a competitive edge in a specific context. Each alternative is a category concept
that will highlight the competitive offerings when the respective alternative is
chosen. For example, if the drink is one that is positioned towards youth who
are socializing, it will compete with several other soft drinks which are already
positioned on similar lines. The alternative chosen should be such that there is
an inherent advantage. A soft drink brand which provides energy to teenagers
after school may be a good product concept. Teenagers in an urban context have
a hot beverage in the morning, and some may also have this in the afternoon. A
number of these teenagers may also have a soft drink during the day; and the
energy proposition not only puts forth a worthwhile and a different perspective,
but also ensures that it generates few alternatives. These alternatives can be
compared with the help of a product map on specific dimensions. For example,
the energy drink will be compared on the cost and energy propositions perhaps
with a brand of chocolate. Glucose powder is not a direct competitive offering
because of its association with athletes or sick persons. Dimensions of fun and
energy can also be chosen. This may even narrow the gap in the market with
regard to such offerings. While the product map considers several product
categories that are in competition with the offering in terms of how one
competes with the other, the brand positioning map considers only the brands
that directly compete with the offering.
TOUCH OF REALITY
Marketers should be sensitive to changes in the environmentboth with regard
to consumers and the ones concerned with competition. This approach should be
followed even when a brand is doing well. For example. Robin Blue used to be
a household name, but the brand introduced the liquid variant only after Ujala
introduced its offering. Colgate introduced its herbal variant long after herbal
awareness on consumer products demanded it. Brands like Bru, Nestle and
Coke are expanding their vending machine operations so that the product in its
ready-to-consume form would be available to more consumers, who may be
on the move more frequently than they were a few years back. The product-
centric approach also calls for the right kind of innovation which is timely and
adds value to consumers. Television companies promote several kinds of
features and innovative aspects as a result of technology, but the need of the
hour, to gain a competitive advantage, might be to view how value-addition
could be brought around (with innovative features of the TV) that will enhance
value to specific segments. Could there be brands which work with cable
operators to customize programmes for specific segments? For example,
programmes intended for the youth are very different from those required for
the housewives; and even this mix for each segment would differ from one
geographical area to another depending on the lifestyle differences. Besides
brand building, advertising revenue is also likely to build up as the focus on the
segment would lead to better advertising effectiveness from the viewpoint of the
advertisers. There is a need to adopt caution when a company is addressing
itself to changes in the environment. The passenger car industry has opened up
several avenues for the car manufacturers. During the mid-1980s, Maruti 800
(the no-frill model) was introduced and it created a great degree of
discontinuity in the market, completely out-shadowing Ambassador and Fiat,
the brands which ruled the Indian market, for decades. Currently there are
various segmentsthe small car segment with Indica and Santro, the midsize
segment with Indigo and Ikon and multi-utility vehicles like Sumo and Scorpio,
and the sub-premium segment like Honda City. A company has to decide
carefully its own competence in terms of addressing changes in the
environment. For example, Maruti with its head start in the no-frill segment
may have a competitive advantage in this segment over its rivals besides having
a huge potential to upgrade about forty million two-wheeler riders (which is also
an aspiration-based environmental changeaspiration among consumers to
have a better lifestyle).
Concept Testing
Concept testing follows concept development, and it involves getting the
reaction of consumers of the prospective target segment to the product concept.
Consumers respond to a number of dimensions that will enable a marketer to get
useful insights. Concept testing can be very useful with regard to new-concept
products. For example, the usefulness of such a concept could be illustrated by
the following example. A vacuumizer is a vacuum-filled pump with containers
that can be used to preserve food. It prevents the food from becoming odorous
and rancid. Being a new concept, consumers may have problems in visualizing
the product and its benefits. They have to get an impression (even if the
prototype of the product is shown to them) that the product is an enhancement
of normal storage containers. They may not believe that the containers offer
such benefits. There is a need to find out how such benefits will be
communicated to consumers. Marketers will have to know whether it serves a
problem or matches a need felt necessary by consumers. The involvement of
consumers will be greater and need-based.
Scorpio, the vehicle launched by M&M, is a very good example of how concept
development was achieved. In the Indian passenger car industry, there are a
number of segments starting from the no-frill Maruti to premium cars like
Mercedes. On the one hand, there are cars in segment C (beyond models like
Zen, Indica and similar cars) that offered a lifestyle statement. On the other
hand, there was a sports utility vehicle (SUV) segment which is also positioned
on lifestyle. These cars are more expensive than segment C cars. Scorpio with
its basic models priced at Rs 6 lakhs, targeted consumers from both the regular
car (segment C) and the SUV segment with its sophisticated and urban appeal.
The positioning statement of the brandother cars will suffer from low self
esteemalso reinforced the lifestyle appeal. Scorpio was like an SUV with the
comfort of a car, and within a short period of time started selling significant
numbers, A cross-functional team of 19 groups worked on the project, which
was supposed to be several times more cost effective than a similar project by
any other international car manufacturer.
Even in categories with which consumers are familiar, concept testing could be
useful. Tata Motors experienced a decline in the pick-up truck market between
1998 and 2002. When the company conducted a research study, it realized about
the need gap in the market. Consumers wanted a vehicle, which looked like a
car but performed like a truck. Research also showed that the truck was used for
a variety of purposesto carry durables or pipes or gas cylinders. The company
had to make a number of changes in the design of the truck (redesigning the
wheel arch to accommodate durables, and strengthening load sheets to carry
cylinders are a few of them). It also used the 407 LCV engine which had proved
to be effective in the market (in the past) and the redesigned vehicle was
launched as 207DI, and the company found that the product was received well
by customers. Even in the case of commonplace FMCG products, a brand may
find it worthwhile to use some of the dimensions of concept testing, like the
intention to buy or the value perceived by consumers with regard to the offering.
There are several research techniques that can be used with this concept.
Market Testing
A new offering or a product has to be tested in a specific market that reflects the
intended target segment for the product, and market testing is a process for
accomplishing this task. The degree of market testing will depend on the
investment cost and the risk associated with the product, and also the costs
involved with regard to market testing. There are several methods associated
with market testing. Simulated test marketing is a method which involves
identifying 30 to 40 shoppers (belonging to the intended target segment) and
questioning them about brand preferences.
Santoor, the herbal soap from Wipro, re-launched the offering in 1989 and it
was considering changes in several elements of its marketing mix strategy
including advertising. Market testing can be used to get the reaction of
consumers about the marketing strategy associated with the brand or it can also
be used with a focus on a specific element of the marketing mix. Santoor's
advertising strategy was focused on positioning the brand as the soap for the
modern woman. Two alternative appeals were considered for this positioning
strategyone had the romance appeal and the other had the young skin
appeal. A celebrity was used for the romance appeal and the young skin
appeal showed the mother of a young girl being mistaken for a college student.
Market testing was done in two cities and respondents numbering five hundred
were chosen (these were similar to target segment definition). Respondents were
shown the advertisements, which were being tested along with other
advertisements in a clutter of commercials after a TV programme. Certain
operational procedures (like grouping the respondents) were followed among
the respondents with regard to their exposure to the advertisements. A coupon
worth Rs 12 was given as a gift and respondents were led to the stall that
stocked Santoor with other brands. They were free to buy any brand or not buy
anything. Those who did not buy Santoor were given the brand as a gift. After a
lapse of time, the respondents were interviewed at their homes about their
preferences between various brands and Santoor was also included in the
interview. It was seen that the young skin commercial was used for a long
time, indicating the success of the commercial based on the growth of the brand
in the southern markets.
Test marketing is another method for market testing an offering. In this method,
the company chooses a specific representative market and markets the offering
backed up by an actual advertising campaign (similar to the one it would use
when the offering is launched in several markets). The reaction of consumers to
several elements of the marketing mix elements is observed, and the strategy is
fine-tuned before being used for a major launch. There are several decisions to
be taken with regard to test marketingcompetition in one specific category,
the budget available for test marketing and the regional differences, which
matter in a country like India. Sandalwood soaps are strongly entrenched in the
southern markets. Brands like Horlicks and Hamam have a regional skew.
These decisions involve the type and number of cities to be selected, and
duration of test marketing. Test marketing involves collection of information
from consumers associated with sale at retail outlets, repeat buying
pattern associated with the brand and competitive brands (during the period of
test marketing) and consumer attitudes and satisfaction. Ariel detergent brand
used this method when it introduced the detergent brand in India.
Product and STP
It is important for marketers to realize that the product' offering they
manufacture, and the branding they undertake largely depend on the target
segment. The concept of segmenting, targeting and positioning (STP) lays the
foundation for several aspects of marketing. It is important to undertake
research on several aspects of STP. Segmentation is a process by which a group
of consumers with similar needs are targeted by the marketer. There are two
major bases which are used together for segmentation. One is the demographic
base and the other is the psychographic base. Demographic base is concerned
with the age, income, education and professional status of consumers. Even at a
very broad level, one can observe that the products required by the elderly, for
example, are very different from those required by the younger population. The
market for products for the elderly has not been explored much. In Japan, there
is a niche market (small and profitable one, with special needs), for products
that cater to people above 90 years of age. Though the major thrust of marketing
in the Indian market is associated with the youth segment, there is a significant
market for products which can be positioned for elderly people. Food products
with different combinations of ingredients (different from the usual
combination), footwear and apparel are some of the categories which offer
scope for marketers. Psychographics, is associated with the lifestyle of
consumersin simple terms, it is the manner in which consumers spend their
money and time. For example, a highly paid corporate executive has a lifestyle
which is different from the consumer who is in the lower end of the economic
strata. Wearing designer apparel, status-oriented brand of watch, using state-of-
the-art electronic products and gadgets, having a foreign holiday and spending
the weekend in resorts and pubs are perhaps some of the typical lifestyle
associations of the upwardly mobile executive. Marketers will have to gather
information on the lifestyle of consumer segments they are interested in through
marketing research, concerning the activities, interests and opinions (AIO) of
the respective target segment. The information arising out of AIO research can
be used to position the brand and also to formulate the marketing mix elements
for the respective target segment. For instance, if it is known that a segment of
consumers for a brand of apparel are frequent fliers of a brand of airline, the
information can be used for promotional purposes linking the brand of airline
and the apparel. The joint promotion can involve a contest, a special offer
exclusively for these consumers or even an advertising plan to expose the
consumers, through in-flight magazines. It should be noted that lifestyle analysis
is equally applicable to even the lower end of consumers in any category.
Positioning strategies with behavioural aspects
While the psychological aspects of marketing are covered in a different section,
it is necessary to know how the behavioural aspects are used in brand
positioning strategies. Needs, motivation and personality are related concepts,
and it would be appropriate to consider them together in a practical context.
Need is a state of deprivation. Motivation is the drive which impels a person
towards achieving his goals and personality is a set of inner characteristics
which enable a person to decide how he or she should respond to the
environment. Motivation and personality could be linkeda person with a high
degree of confidence may be assertive. There are a number of theories on
personality Freudian theory assumes that the behaviour of individuals would be
based on unconscious needs and drives. According to this theory, the human
personality consists of three partsidentity, ego and super ego. The id is the
component which consists of impulses and primitive instincts which urge the
individual to move towards immediate gratification. A number of product
categories which may not have well-defined functional attributes and which are
oriented towards sensual pleasure formulate communication, may appeal to the
id part of the personality. Perfumes, cigarettes and liquor are some categories
which make use of the approach. Black Knight and Bacardi brands are examples
which have adopted this route to communication, when advertising of the
category was allowed.
There are two kinds of needsprimary and secondary. Primary needs are
associated with physiological needs like thirst, hunger and sex. Secondary needs
are acquired needs like sense of belongingness, status orientation and self-
esteem. Consumers may not consciously know their secondary needs and it is in
this situation that the symbolism associated with brands could appeal to
consumers. Louis Philippe, Park Avenue in apparel, Mercedes in automobiles
and Fastrack in watches are some examples which reflect the symbolism
involved in brands. By associating themselves with these symbolic brands,
consumers are able to gratify their psychological needs. Further research into
such needs of consumers is warranted. Liril soap was launched in the 1970s
after a research agency found that housewives had a distinctive need for
fantasizing and this was captured in the advertisement for Lirilwaterfall,
freshness (denoted by green) and the indulgence of the model in the
advertisement. This communication is still being used (with variations brought
in) even after more than two decades.
Multiplicity of needs
Normally, consumers have more than one need and analysing the multiplicity of
needs (with their importance) could provide insights for marketers. A buyer of
the no-frill Maruti may be interested in the brand because of its low price, fuel
economy and adequate comfort, but low price could be the prepotent need
which could take the brand into the consideration set of consumers.
Types of goals/needs which can be used in positioning
Goals can be positive or negative. A positive goal is one towards which
behaviour is directed and a negative goal is one from which behaviour is
directed away. This concept is useful when USP is researched. For example,
would consumers want white teeth or would like to prevent decay in the
category of toothpastes could be a decision which needs to be taken by the
marketer and the concept of goals are likely to be useful in this situation. Needs
from the viewpoint of application to a practical context could be classified as
extrinsic and intrinsic. Extrinsic needs are those which motivate an individual to
achieve an end result. Buying a status symbol (designer watches or furniture) to
impress others could be associated with extrinsic needs. If an individual buys a
car for his own comfort and enjoyment, it gets associated with intrinsic needs. It
may be worthwhile to find out the link between intrinsic and extrinsic needs
before a communication package is formulated for a brand. The following
example will explain this concept of examining the link between intrinsic and
extrinsic needs.
Intrinsic and extrinsic needs for a brand of television

The list of needs provided in the TV example are suggestive ones which
illustrate the concept. In-depth research is required to find out the degree and
importance of these needs. This would also be useful to select the imagery,
which needs to be associated with the chosen USP. For example, Cielo carried
an imagery in which the proud owner of the brand reflected his happiness at
procuring the brand after he had achieved success. This typically involves both
intrinsic and extrinsic motives.
Self-concepts and their implications on positioning
In almost any category in the realm of consumer products, symbolism makes
use of self-concept. Self-concept is the image an individual holds about
himself/herself. There are a variety of self-concepts which could be useful to
marketing communication. They are as follows.
(i) Actual self-concepthow the individual perceives himself/herself. A group
of consumers may perceive themselves as rebellious, non-conformists who seek
individuality and freedom in their lifestyles. Charms brand of cigarettes, during
the early 1980s, was perhaps one of the early brands in the Indian context to
create a brand personality using the power of self-concept. The spirit of
freedomCharms is the way you are were some of the copy statements in the
advertisement of the brand, which featured young models. To add to the
claims about freedom they had packaged the brand in a pack which carried a
denim type of visual design. This was the time when denim (jean), which has its
origin in the US, was getting accepted in the Indian context for its functional
and symbolic appeal (normally associated in the west with casualness and
freedom) and made the brand an inherent part of the youth culture during its
time. The brand had used either actual self-concept or others actual self-concept
(how an individual would like others to perceive him/her).
(ii) Ideal self-conceptthis is concerned with how an individual would like to
ideally perceive himself/herself. There is a thin line of difference in that the
ideal self-concept has an overtone of futuristic aspiration in it (more deeper than
an active self-image)the individual perceives the ideal image of
himself/herself based on his/her aspirational needs, and this would depend on
the individual's statusfinancial and educational, childhood upbringing,
environmental exposure and personality traits. An upcoming businessman who
is driven by aspirations may buy the Lacoste brand of apparel which is
associated with the profile of a globe trotter, club membership, some kind of
exclusivity and perhaps, certain upmarket sports. There could also be a variant
of this kind of self-concept in the form of others ideal self-concept (how others
should ideally perceive the individual). The individual may use status symbols
to impress others (others ideal self-concept), but may resist from using them
whenever there is a situation where the individual feels others do not matter
(personal discretionary time/leisure etc., vis--vis professional work). Marketers
could use such psychographic information with timestyles (how individuals
spend their time) to come out with appropriate appeals for products and services
(vacation and weekend cars are examples of categories where these kinds of
orientation are likely to be useful).
(iii) Expected self-imagethis kind of image is between actual and ideal self-
images. It is likely to be useful to marketers because changing the self image
radically towards the ideal image would be difficult, and the expected self-
image is one which consumers could identify with. A typical example is the
advertisements of computer educational institutions which attempt to draw
prospective candidates for their courses, generally ranging from a few weeks to
two years. Though there is an element of aspiration, prospective candidates feel
it leads to a situation which is a stepping stone (completion of the course to get
a job) rather than the realization of their dreams (the ultimate ideal self-image).
For a given target segment, the short-term aspirations may reflect actual self-
concepts and the long-term ones the ideal self-concepts.
Individual differences, as reflected through self-perception, sensitivity to others
perception and rational and irrational needs, form the basis on which brands
carry their psychological warfare in the minds of consumers.
Segmentation and positioning aspects in evolving markets
Evolving markets like India face marketing challenges that are quite different
from the ones which developed markets have, in terms of managing brand
association, pricing and enhanced levels of consumers aspirations. For instance,
the price war initiated by well-known brands in the detergent category has
literally eliminated the premium segment in terms of price (though there seems
to be some low-profile activity from LG with a premium priced brand). There
are too many price points and stock keeping units (SKUs) across brands in the
soap and confectionery categories. Even in the case of durables category, the
introduction of product-line variants, in general, is much more than what it was
in the past. There are several aspects which need to be examined in this context.
First, the consumer aspires to upgrade (whether this is happening and how this
should ideally happen are connected issues). Lifebuoy's repositioning with
upgraded variants is an interesting example. Second, an average consumer has
become sensitive to value offered by brandseither in terms of price or in
terms of the intrinsic benefit offered at a higher price point. The emergence of
several discount brands and higher priced improved offerings in the soap and
biscuit categories are examples. Godrej's No. 1 is an example of how the brand
initiated the strategy of offering several variants (like sandal) to the lower
segment when such variants have been associated with higher segments in the
category. Third, apart from expecting value, the consumer is also caught in
generic competition, which may force him/her to downgrade in a few categories
while attempting his other categories. For instance, the consumer, in order to
balance his/her household budgets may alternate between a good brand of tea
and loose tea and/or a low-priced detergent bar/a low-priced detergent
powder/medium-priced detergent powder. The behaviour adds a complex twist
to the context, which makes strategies very unpredictable and calls for a
dynamic approach (which may also be affected by competitors moves). The
situation especially is complex when too many price points are involved within
a narrow price band, offering a vast choice to the consumer (edible oil to colour
television sets). An additional factor which is associated with the black box of
the consumer is the symbolic orientation which also caters to the psyche of the
consumer, apart from the functional attributes which may be an important
criteria for brand patronage. This is reflected in mundane products having a
strong symbolic orientation; and such kinds of communication are on the
increase in recent times. Nestle's Sunrise, Bru or Nestle's Select in the coffee
category, Chakra Gold in tea (See Plate 2), the warmth behind gifting of Titan,
the relationship proposition of Raymond's are examples of such communication.
Specifically, three aspects seem to be important in addressing the emerging
markets through strategies, which require dynamic changesmarketing
communication, product-line management and changing aspirations of
consumers.
Diversity of segments/appeals/contexts in an emerging market
The following examples and observations provide important inputs to reflect the
state of communication in the Indian marketing context.
Cadbury's Dairy Milk advertisments showed adults in touch with the child
within them, thus justifying chocolate consumption as enjoying the taste of life.
The second round of advertisments for the brand showed people giving different
excuses for eating the chocolate. It also emphasized on certain usage situations
to eat chocolates. This is probably a good example of how markets could be
expanded in an emerging market when the lifestyle orientation based on
westernization is gaining groundadults eating chocolates is a western cultural
habit.
Tata Salt touched on patriotism in its advertisments, with the words desh ka
namak. Even in this day and age of mercenary materialism and unmitigated
cynicism, these simple words had an earthy appeal that went straight to the
heart, For cached in this phrase lay all those old-world sentiments of honesty,
integrity and loyaltynot to mention patriotismthat stirred the soul. Tata is a
brand which has grown with the passage of time, and patriotism could probably
have an impact, as it stands in contrast to the image of westernization which is
diffusing at a fast pace in several product categories.
In an emerging market like India, there is a need for marketers to take into
consideration, the rural-urban similarities as well as the rural-urban divide.
The similarity relates to consumer perception concerned with certain specific
categories like soft drinks, apparel, shampoos and chocolates. A high degree of
aspiration-based or fun-oriented appeals could be used for both the markets
(perhaps, regional language variations will call for a variation depending on the
region; Coke and Fanta are examples in which regional celebrities are used
besides regional language execution). Aspiration could be lifestyle-based or
functionality-based. Lifebuoy's family health repositioning based on hygiene is
another example of how marketing communication should take into account
changing consumer aspirations. The brand also has different variants and SKUs.
In certain other categories like detergent bars or floorcleaning solutions, there
may have to be more of application/awareness appeals. A brand may, for
example, explain how the detergent bar is best suited to the type of water in a
specific region or create awareness about using a powerful floor-cleaning
solution. The type of market is what ultimately matters. Even in the lifestyle-
based category like soft drink, a niche drink has got to have a different
treatment. For example, Red Bull, a fast-growing energy-oriented soft drink,
uses extreme sports associations, and this is in tune with the changing
aspirations of the youth. Given the niche orientation of the drink, the same
strategy could work well for the brand in the Indian context too.
For a brand like Lux that was in the maturity stage, HLL used an innovative
technology to involve the customer in its print advertisements. They used
ultraviolet (UV) ray-sensitive printing inks in a picture of a woman, which
darkened when exposed to sunlight. Even an established brand like Lux needs to
cut through the clutter to grab attention, even before perception takes place in
the mind of the consumer (comprehension of the brand with its updated
benefits). In an environment where the consumer was being bombarded with
various exchange offers, LG differentiated its products on the basis of
technology, the advertising of which appealed to the emotion of the Indian
consumer, rationally. This helped LG build a strong bond with its customers.
The emotion was appropriately backed up by new to the Indian market
features.
Soap market in India
Bath and shower products also have the highest penetration and awareness
levels in both urban and rural markets in India. The regional markets for bar
soap and talcum powder products are saturated, with a plethora of brands, and
products vying for the consumer's disposable income. Bath and shower products
remained the largest category within the Indian cosmetics and toiletries market
in 2003, and accounted for 39 per cent of the total market sales in terms of
value. Urban penetration is almost completely saturated, while rural pockets
continue to shoulder the weight of national progress. With demand rising for
other consumer non-durables, regional consumers are downgrading to cheaper
bar soaps, or bar soaps which come with freebies, discounted prices or
promotional offers, as they are then good value for money. The industry in India
classifies the various price segments of bar soap products as tabled below.
Segment Price(Rs/75 g)
Carbolic 5.00
Segment Price(Rs/75 g)
Discount 7.00
Popular 11.00
Premium 17.00
Super premium 35.00
With the premium end shrinking, most companies are finding consolation
within the popular segment. One of the reasons for the decline in the value size
of the market was improvement in quality With technological advancements,
the TFM (total fatty matter) content improved, so that consumers had to use less
soap to clean better. Dove, Dettol and Mysore Sandal Gold are positioned as
super premium brands, while Nirma, Cinthol and Lux belong to the popular
category. Lifebuoy and Godrej's No. 1 are in the discount category/higher end
of the discount category, while the carbolic category almost ceased to exist with
the repositioning of Lifebuoy in 2002. Bar soap products with added-value skin
care benefits are fast gaining in popularity. Most price bands have several price
points/variants aimed at either upgrading the consumer temporarily or
permanently. A consumer can, once in a while (depending on the pressure on
his generic expenses across categories), try out a higher priced variant of a
brand or a higher priced brand from the same company or get upgraded (as a
part of the regular purchase cycle) to a higher priced offering because of his/her
enhanced affordability at that point in time. There is a lot of advertising activity
in the soap category. Certain brands extol functional benefits like smell,
reducing body odour, freshness, recommended by doctors, etc. Certain other
brands highlight their symbolic benefits like making one feel like a star,
increasing one's popularity, a caring mother's choice, etc. A situational context
is also built into the advertising of soaps that promise fairness, protection from
UV rays, etc. The presence of functional and symbolic benefits in
advertisements and the situational parameter make the soaps category a fit case
to explore the effect of expansion advertising as a precursor to brand loyalty.
Balancing functional benefits, symbolic appeals and timing the right
combination of good functional attributes and symbolic brand orientation
(which can go beyond advertising, like an event associated with beauty care/hair
care) within a price band is likely to be a conceptual approach to get over the
complexities of the FMCG markets. Price band focus explores the possibility of
consumer upgradation. Evolving markets and their diversities demand much
more than just creative advertising: either for new or for established brands.
Brand positioning and ethnic culture
While there may be a number of positioning strategies in the urban context,
which reflect the growing influence of westernization, there have been a number
of communication campaigns that have been conveying the desired impact with
an ethnic touch. There are a number of advantages of using the ethnic route
(subject to the appropriate selection of target segments). Ethnic appeals
normally are drawn from the culture of the specific market, which reflects the
practices, rituals, taboos and behavioural orientation on values that have been
passed on from one generation to another. These may also be useful to enable
consumers to connect with situations with which they are familiar. While
dramatization of westernized situations could be effective through aspirational
fantasy, specific situations drawn from the consumers cultural settings will be
useful because of a higher degree of identification through belongingness
experienced by the consumer when he/she emotionally connects with the
situation. This could be best illustrated by comparison between Titan's
advertisement and Godrej's Storewel advertisements. The former has an element
of dramatization woven around the warmth expressed by the gift-giving
behaviour. The aspirational fantasy element of gift-giving brought the brand
into the consideration set of consumers who shopped for gifts (not just watches).
Watch as a gift and the picturization of the TV spots clearly reflect a western
orientation. The changing lifestyles, especially in urban markets, were
conducive to such a positioning strategy. In the case of Godrej's Storewel
(storage cupboard), the emotional connect (though portrayed as a gift) is
achieved against the backdrop of marriage context in which the bride receives
the brand as a gift. This campaign was launched after consumers were quite
familiar with the brand, and the emotional appeal enhanced the brand's equity.
There are many different ways in which a brand could be positioned using the
ethnic approach. This can be done by:
(i) Identifying specific behaviour(s) / practices which would be connected with
the brand/product category.
(ii) Identifying specific values in a cultural context which would be inputs to
marketing communication.
(iii) Identifying certain beliefs which need to be taken into consideration before
an advertising campaign is formulated.
(iv) Combining elements of a specific culture with changing cultural trends
(westernization).
(v) Capturing a sense of nostalgia associated with a specific culture;
(vi) Using stereotypes which have been connected with a specific culture, and
(vii) Identifying specific cultural traits which could be used for product
categories/brands.
A combination of several kinds of cultural dimensions makes it worthwhile for
marketers to consider positioning strategies oriented towards culture.
Cultural behaviour as a positioning underpinning
There are a number of behaviours which could be associated with a specific
culture. Some of these behaviours may have their origin in certain kinds of
beliefs. These could be associated with product categories; for example, bindi
worn by women in most parts of India. It is essential that a brand name selected
for such a product category should have an ethnic sounding name. A western
name is likely to be counterproductive. Tang, the orange juice, was initially
introduced as a breakfast juice in a country where, even in the upper strata of the
society, such practices may be unusual. An interesting example which
effectively makes use of cultural behaviour is the Pepsodent commercial.
Consuming snacks on the way to school (and back) is a cultural habit passed
on from one generationto another over the last several decades. It is typically a
behaviour which could be associated with the masses. The commercial for the
toothpaste captures the behaviour (and the traditional behaviour of the mother
scolding the child). This gets the attention of viewers before the brand benefit of
protection is conveyed effectively. Kellogg positioned itself as a breakfast
cereal in a country where food preferences are very regional in nature. Food is a
strong cultural dimension and any brand in the category would do well to take
into consideration the cultural dimensions associated with food. Bread has been
in the market for several years, but it is still not a part of the staple food. It may
be recalled that even a Chinese food like noodles (Maggi brand) was positioned
as a 2-minute convenience-based snack food for children, making use of the
cultural practice of providing home-made snack food for children, which is
prevalent across the different layers of social strata. Nature-based ingredients
have been used for ages for skin care in India. Nihar, Medimix and Vrinda in
soaps, and Meera in the shampoos category are examples of brands which have
had an effect on such practices. The focus on whiteness in clothes led to the
creation of the whitener category for clothesinitially Robin Blue and then
Ujala during the 1990s. The practice of applying soaps for washing clothes is so
strong that a brand like Ariel which pioneered the category of compact
detergents at the higher end had to introduce a soap for the lower end of the
market. It is further interesting to note that the brand had initially advertised that
soap is not required if the compact detergent is used for washing clothes. A
major market with lots of potential in the Indian context is the toy market.
LeoMattel, Fisher and Funskool are western brands. While there are a number
of offerings in the unorganized sector, a brand could be built up around toys
against the backdrop of India's rich and ethnic cultural heritage (mythologies
and stories drawn from Indian culture).
Importance of cultural values for brand positioning
Cultural values matter to a number of product categories and positioning
strategies. Charms, the cigarette for the youth launched in the 1980s, became the
rage among young smokers because the positioning was in consonance with the
changing valuesthe spirit of freedomCharms is the way you are
symbolizing adventure, independence and a non-conformist attitude. The jean-
like packaging added to this appeal. However, cultural values have not changed
enough for marketers to launch a cigarette for women (Ms was the brand
launched during the 1980s). Values are importantbecause they reflect culturally
acceptable behaviour. Valentine's Day cards may have been almost a taboo
before a decade, but atleast in urban markets they have caught on. Bacardi, the
brand of liquor, which positioned itself on the spirit of enjoyment (during the
days of liquor advertising) and its success among the intended target audience,
also reflect the changing values. The launch of Close-Up brand of toothpaste
during the 1980s was perhaps ahead of the values which prevailed during those
times. The Close-Up smile was advertised through cinema halls and was
positioned towards teenagers. Later on, the permissiveness was diluted with the
group that was brought into Close-Up commercials.
There may also be certain beliefs which could have an impact on marketing
communication. The cultural belief that fairness is beautiful has made Fair &
Lovely a strong brand. The recent commercial (TV spot) of the brand is based
on the cultural belief about the superiority of the boy child over the girl child.
The girl child proves that she could be as successful as a boy to the joy of her
parents (thanks to Fair & Lovely). Vicco turmeric cream positioned itself as a
cream which would be useful for the would-be bride to enhance her
complexion, and applying turmeric for skin care is a part of the Indian tradition
in parts of the country. Vicks Vaporub captured the emotional bond between the
mother and son to convey the brand's benefit. Clinic Special also captures the
traditional care a mother showers on the daughter. The family togetherness is a
cultural aspect which could be used by marketers. Protex and All Care were
soaps positioned as family soap in the past. Lifebuoy has relaunched itself as
New Lifebuoy towards the family. The togetherness platform for the 107-year-
old Lifebuoy may be very appropriate, given the rural presence of the brand.
Caring for the family is another appeal woven around the present-day
housewife's role. Trupti atta used this concept and currently, Bharat Gas is using
it as croking food and serving love.
While Pond's was almost a household name till the 1980s in the category of
talcum powder, a significant cross-section of talcum powder users may have
switched over to creams/lotions because of the belief that self-enhancing
powers are better with substitute products. A brand, which has been accepted
by the masses on a cultural belief, should launch several variants/better
alternatives of the product to the same segment, to ensure that the segment stays
with the brand. The cultural belief about beauty care would differ from one
region to another and marketers in this product category have to be sensitive to
the region-specific tastes of the people. Even in the contexts of rural markets,
consumers in the states of Tamil Nadu, Bihar and Orissa exhibit different tastes
and preferences, more because of their differing cultural interpretation of beauty
care and the beliefs and taboos associated with how a consumer should resort to
beauty care.
Asian Paints presents a good example of a company's attempts to associate its
brands with several festivities around the country. For example, several
households especially in the semi-urban and rural areas of Tamil Nadu, may
believe in repainting the house during Pongal festival to symbolically mark the
beginning of a new year. Asian Paints created specific brands which were
associated with such festivities.
Mixing culture with changing trends for brand positioning
A type of effective cultural appeal consists of mixing certain cultural beliefs
with trendy products or advertising. Promise, toothpaste which had a successful
run, highlighted the efficacy of clove oil used by people traditionally to control
tooth pain. Cadbury's recent television campaign (for moulded type of
chocolate) shows people of various age groups (traditional ones included)
enjoying the chocolate. Traditionally, chocolate snacking was associated more
with children in the Indian context; 5 Star positioned itself towards teenagers;
and in the past few years, Cadbury's moulded chocolate has been targeted
towards adults belonging to various facets of life. Snacking is a part of the
culture (children and adults) and positioning a chocolate for adults involves a
mix of the tradition and overtones of westernization, where chocolate is a
favourite snack for adults as well. Cricket has been a part of the culture in most
parts of India and Pepsi made it contemporary, with its for the younger
generation proposition reflecting fun and frolic and a strong association with
cricket. Raaga collection from Titan is yet another example of contemporary
positioning with ethnic overtones.
Cultural traits and their importance
Indianness is a trait which a few brands have used to make an impact on the
target segment. Believe in the best highlighting the superiority of Indian-made
BPL products featuring Amitabh Bachchan is an example of a specific cultural
trait being used to strengthen the brand which had already built up an image
over the years. The Hamara Bajaj campaign (the original and the new one) has
a blend of modern lifestyle and ethnic beliefs, and reflects the positioning that,
at the outset, western-oriented youngsters are still Indians at heart. Ruf and
Tuf created an excellent commercial in which a modern youth reflects the
cultural trait of respect for elders through We know English. We also know
how to respect elders, bringing in an appropriate theme to reflect the cultural
value.
Other kind of appeals from culture
A sense of nostalgia concerning a specific culture could be a good approach to
make the appeal, especially for a brand which has been in the market for a
number of years. Margo soap adopted this approach showing a young woman
being nostalgic about her experiences during her childhood days, and there was
a strong cultural flavour to the nostalgia experienced. A cultural stereotype is
the measuring of a picture which is related to a specific culture. Grandmothers
are associated with traditional medicine and remedies. Ayurvedic Concepts
(now Himalaya brand) used such stereotype to promote its offerings made from
traditional ayurvedic preparations. Such stereotypes offer credibility to the
brand. Bru also initially used a cultural stereotype of associating itself with the
taste of filter coffee, which is a part of the South Indian culture.
Cultural dimensions could matter to a range of products and such inputs could
be valuable to marketersfor both Indian and MNC brands.
Issues that matter to marketing mix elements, in an evolving
market
While there are a number of strategies and laws for marketing success, there
seems to be a need to explore the way in which marketers could add value to the
company during days of recession. Past history with regard to marketing actions
only seems to complicate matterswhile a stream of research suggests that
constant advertising even during bad times improves the sale of the brand,
there is another research which makes out that almost 70 per cent of the
advertising expenditure under competitive conditions does not contribute much
to the brand. The only observable strategy in recent times is the spate of freebies
offered to the consumer in both FMCG and durable categories. Delight seems to
be the in thing to get the brands off the shelves of the retailer. The following
are certain considerations which may enable marketers to conceptually reason
out strategies when they operate against the odds (these aspects are more of a
spring board kind than being laws or rules during times of recession).
Are all consumers, price sensitive?
While by and large, consumers seem to be down-trading (moving from their
regular brands to those which may cost less), it might be wrong to assume that
all consumers are price sensitive in a desperate consumer set like the Indian
market. Brands like Colgate Total and Himalaya are those which are not
targeted towards the masses. These brands have provided value at higher price
points and have identified a base of consumers who have found value in these
brands. Colgate Total was repositioned as a toothpaste which offers a 12-hour
protection (after having failed with a skimming pricing during the 1980s) and
Himalaya has been delivering value through the traditional herbal route in both
cosmetics category and over-the-counter pharmaceutical category. The value in
this case is also associated with a higher price point. While the value of a brand
is important at all times, the success of some brands in both the FMCG and the
durables categories emphasizes the fact that good value (in comparison with
competitive offerings) could deliver results at a higher price point even against
odds. This is because, a niche segment is prepared to (and can afford to) pay a
premium if there are brands which satisfy the fastidious needs of the segment.
LG is another brand which has registered success in recent times with its
feature-benefit combination that has been unique to the brand. The brand
certainly cannot be associated with freebies;. LG positioned itself on health-
related benefits (by making use of technology)preservation of nutrition with
regard to refrigerators, healthy air with regard to air conditioners and easy
viewing with regard to televisions. Santro is another brand which has met with
success inspite of the deviation in design within the category of automobiles
('tall boy'). The success is based on a good product and excellent service. All the
three brands are relatively new to the Indian market. There is a cross-section of
consumers who are prepared to pay more for a better product and service.
Service (after sales) has been a dismal feature in the Indian context for the last
several decades, though there have been a number of reputed brands. Any brand
which is able to provide even an incremental value addition in service during
times of recession will be perceived better by the niche consumers.
Differentiation at the lower end of the market
One of the distinguishing features of the Indian marketing scenario is the
presence of an unorganized sector in a host of product categoriesmoulded
luggage, edible oil, tea, biscuits, watches, kidswear, ethnic dresses for women,
pens, sewing machines, footwear, furniture, toys, cookware, fans, baby foods,
jewellery and cassettes. If marketers could provide value preferably at a lower
price point in these markets (better alternatives to the present substitutes at the
same price or a lower price), consumers are likely to upgrade to these products.
This needs to be done with a qualifierbrands which are introduced at low-
price points should be profitable when the entire product-line of the company is
taken into consideration. Hindustan Lever came out with brands like Tiger (a
combination of tea and tapioca) to upgrade consumers from the loose
(unorganized) tea market; and Aim was a toothpaste introduced by the company
to bring in consumers from the toothpowder segment. Sustaining these brands in
a profitable manner is a challenge for the company, especially when it is making
a number of offerings in the category across different price points (and more so
when some of these price points may be close to one another). VIP came out
with Alfa initially to move the consumers from the unorganized to the branded
market (with a superior product). Videocon's low-priced semi-automatic
washing machine targeted towards the rural areas and the lower end audio
products from BPL are examples from the durables category in which value was
provided to the lower end offerings. There seems to be a vast potential in a
number of categories where value could be provided to the masses at the lower
end of the pyramid. A lower end offering has to be a no-frill offering whose
quality performance would be perceived better than the existing substitutes.
Tiger brand from Britannia is an excellent example of a value-based offering in
a market structure which was full of substandard offerings by the unorganized
sector. Vendee edible oil (good quality edible oil distributed in loose quantities
through vending machines) followed a unique concept which may have
appealed to the masses. Some companies are attempting to tap the unorganized
markets through low-priced brand variants. Cadbury's in chocolates, Close-Up
in toothpastes and Haldirams in snacks are some examples of this approach.
While the penetration of the brand may increase because of this approach, the
repeat purchase would be sustained only if the frequency of such purchases
increases; and these companies would do well to come out with low-priced
variants (new offerings and not just low-priced packs) to sustain brand loyalty.
Importance of category management in an evolving market
While the concept of category management is explained under a different
section, managing a category of related products from the viewpoint of
consumer needs is highlighted in this section, as it has a marked significance on
the overall marketing mix strategy. For example, a brand advertising its fairness
cream or its fairness soap in a specific geographical region in a country like
India, benefits from the insights provided by category management. Category
management has significant implications for marketing strategies formulated
during recession. Almost all FMCG brands offer a number of variants in their
product-line to appeal to several segments. During days of profitability, the
impact of variants that are not doing well may not be much on the product-line
profitability. There is a need to ensure that only those variants which are
profitable are maintained in the product-line. A company in the business of hair
care may be marketing hair oils, creams and shampoos. There may be several
variants like those by hair-type or variants like anti-dandruff, herbal, protein-
based or the ones which are oriented towards cosmetic benefits. A category
consists of a set of brands from the same segment, which are related (in terms of
consumer usage) or substitutes to one another. There is a need for a database
consisting of consumption/demand patterns, movement of SKUs, how
consumers substitute products in terms of usage, interchangeability and
frequency and profitability from various items and product-lines in the category
(for example, creams, hair oils or shampoos in the hair care category). Category
management has implications on the marketing mix elements (including the
shelf-space display) associated with all brands in the category. When a company
introduces a hair oil with vitalizer, how many consumers using the brand's
shampoo with vitalizer will also switch to the hair oil? How many of them will
get to substitute the shampoo with hair oils? How many would enter the brand
user-ship domain (new users of the brand)? How many consumers using a
competitor brand's shampoo would switch-over to the cream of the brand? Such
questions provide very useful insights into consumer response to the category
and these insights would be useful in fine-tuning the supply chain associated
with the category, and hence there is a possibility of optimizing the costs
involved (procurement of new material, inventory levels, etc.). Surf Excel
Power was introduced and priced between Surf and Surf Excel in the product-
line of detergents, a few years back. In a situation like this, a number of
category-based insights would be very valuable to the company.
Impact of freebies in an evolving market
jams, toothpastes, soaps, TVs, washing machines, refrigerators and ready-made
wear are just some of the product categories in which freebies are given to
consumers simply to make them buy the brand. This raises a number of
questions regarding the impact of the freebies on the equity of the brand as well
as the objective of such sales promotions.
(i) How do consumers react to such sales promotions?
(ii) Would these strategies be able to retain the consumer after he/she tries the
brand (in FMCG products), or can these kinds of sale promotions lead to
relationship building in the case of durables?
(iii) How would these sales promotion be effective to ensure that competitive
brands/companies with deeper pockets do not react to such sale promotions?
(iv) Pushing the brand during difficult times is one aspect and measuring the
profitability of such an approach is another. If these sale promotions are just an
investment, how would these brands recover the investment over a period of
time? Are these back-up strategies devised to ensure the development of
customer relationships?
The answers for these conceptual dimensions would ensure that the brand is
following the marketing orientation and not just a sales orientation; besides,
planning the sales promotion with these dimensions would also reflect the
marketing acumen within the company. The dimensions are realistic enough for
practising managers to explore and analyse, without which the sales mindset
replaces the broader marketing mindset.
A brand of soap has a sales promotion, whereby a consumer buying three pieces
of the brand would get a fourth one free. A competing brand introduces a
variant of the promotion. Another brand introduces a bonanza prize, which may
be equal to thousands of rupees. There is a need for any brand to create once in
a while excitement, but brands seem to be getting more and more into the
vicious cycle of freebies. Is there any approach a soap brand follows, to identify
and reward loyal users of the soap in this clutter of freebies and point of
purchase material at the retail outlets? In today's context, loyalty may be not just
to one brand (especially in the soaps category); a consumer may be loyal to
more than one brand. At a minimum level, there needs to be a segmented
approach towardsidentifying loyal buyers and non-loyal buyers before
formulating sales promotion strategies. The benefits of the sales promotion
should help differentiate the two segments. This could be worked out through
appropriate marketing research techniques.
In durables, the situation is not very different. Each brand seems to outperform
the other on freebies, with the retailer adding his bit (certain large-scale retailers
known as category killers may plan such strategies because they are able to
effectively negotiate prices with manufacturers due to the volumes they sell).
Akai's initial sales promotion was a phenomenal success because it was able to
capitalize on a need unfulfilled by any other brandexchange scheme with a
reasonable price for the TV set being used, regardless of the brand. It was not
freebies which were offered just for the sake of it. Is there any brand of durable
which conveys a special benefit to the user of the brand when the user is in the
replacement phase? This benefit should be better than that given to the non-user
of the brand. BPL, Videocon and Philips are brands which are likely to have a
large number of consumers who have bought the respective brand as their first
buy; and brands need to research and formulate strategies on retaining these
consumers when they enter the replacement market. Such strategies will also be
useful to brands present in multiple categories.
Reverse Engineering
An important concept associated with product development is the concept of
reverse engineering. It involves completely analysing competitive offerings. The
Japanese call it tenji kai. When Toyota launched its Lexus LS 400, it was
supposed to have bought four Mercedes cars for performing the analysis by
disassembling them. Apart from teams in the organization, suppliers were also
encouraged to take part in the reverse engineering exercise to find out several
alternative ways to cut costs or add value. In 1994, Toyota dissected Chrysler
Neon and it invited 240 suppliers. The following questions were answered by
the personnel of the company and the suppliers who took part in the reverse
engineering exercise.
o What are the ways to reduce manufacturing costs while developing the
new product?
o Will it be possible to have a marginal improvement in a profit accruing
business?
o What will be the optimal cost to introduce a desired set of features?
o What are the ways in which a competitive offering can be bench-marked?
It is to be noted that reducing costs does not mean sacrificing customer
satisfaction. A lower quality raw material used in a consumer product may save
costs, yet may also spread wrong information about the product. Benchmarking
approach in reverse engineering can sometimes take time, but the Japanese have
a number of successful products following this approach. These Japanese
products have sometimes even threatened well-established foreign brands. Like
the Lexus example, there are also examples from other categories. P&G's
Pampers (diapers) was the pioneering brand in Japan, and Moony brand from
Uni-charm introduced later, achieved significant consumer response. Initially,
the Japanese lacked the technology (associated with the absorption quality of
paper fibres), but were later able to develop it. One of the advantages of reverse
engineering is that the entire exercise, if carried out in planned stages, will result
in value being incorporated into the product; and the consumer being likely to
perceive the associated Value.
The reverse engineering process also speeds up the product development time.
This increases the pressure on competition, as also the speed with which
products diffuse in the market when a number of offerings in the market come
out with improved features frequently. Reverse engineering also contributes to
value with regard to components. A combination of reverse engineering, cross-
functional teams and the competitive pressure associated with the market
produces a situation that is called churning. This involves quick and improved
imitation of products which are introduced in a product category. A
leader/pioneer introduces a brand with certain features; it is followed by
competitors with better features and the pioneer responds with offerings that
have better value. Toyota's Corona was modelled on VW Beetle and Datsun's
200 5X was modelled on Corona. Toyota's Canary was modelled on Honda
Accord and so were Nissan's Stanza and Mazda's 626 competing with similar
product offerings. There is also the Walkman's example that was copied by
several Japanese manufacturers after Sony introduced it.
Churning has interesting lessons for a market like India. Refrigerators and TVs
are categories in which a brand's features create an impact on the psyche of
consumers. There have also been comparative advertisements in the
automobiles category. There have been several introductions in the motorcycles
category within a short span of time and the focus has been on features.
TOUCH OF REALITY
Haier, the Chinese brand which has created a reputation for itself in a highly
competitive US market, operates in 160 countries, has 13 manufacturing plants
outside China, and manufactures about 80 products. In 2002, its worldwide sales
was US$ 8.5 billion. Haier has a strategy different from several other Chinese
manufacturers. It has opted to compete in premium markets to establish its
brand rather than making products for other world-class brands (like several
other Chinese competitors), or competing in low-end markets which are price
sensitive. Haier uses speed and differentiation as the basic strategy to provide
several unique features to consumers. It has about 50 per cent of the market
share in compact-sized refrigerators in the US. Most of these are owned by
college students who live in small apartments where space is a constraint. The
Haier refrigerator has two foldable flaps on top, which double-up as personal
computer tables (which the user need not buy separately); and the flaps can be
folded back whenever the personal computer is not used. It developed a wine
storage cabinet in 5 months when compared with the 18 months' time required
for an established brand. Priority on consumer needs, internal coordination and
a strong focus on being meaningfully different in its offerings are the factors
which have catapulted Haier to big success. The brand has also entered the
Indian markets recently.
Quality Function Deployment
Quality function deployment (QFD) is a school of thought that combines new
product development with customer research. The QFD technique, which
evolved in the Japanese automobile industry, quickly spread to other product
categories. QFD is a process where engineering influences marketing practices.
This method, also known as house of quality, has four aspectsrankings of
features or benefits based on customer's perception of what is important,
ranking of competitive offerings by customers, description of competing
products, and correlation between product features and customer ratings. The
objective of such an exercise is to obtain a combination of features that will be
offered by a new product in comparison to the existing offerings. Reverse
engineering, judgement of experts, design changes and engineering feasibility in
terms of costs and features, all contribute to QFD, The procedure finds a forced
fit between the engineering skills in the company and the benefits defined by
consumers. It also forces an organization to find alternative ways of developing
a product with the sort of desired features that will be better than the
competitive offerings at any given point in time. Lexus, which was
benchmarked against Mercedes, had noise levels that were lower than that in
any of the Toyota cars. Lexus' engineering team avoided using a thicker gauge
steel for the chassis and used its skill in manufacturing precision parts to
increase the fit between body parts to further reduce noise levels, while keeping
weight and fuel consumption at desired levels. One more interesting aspect of
QFD is the investigation of links between the various features/benefits. Usage of
heavier steel is linked to noise levels, weight and fuel consumption in cars.
Reducing the noise levels with its implications on related links is the focus of
QFD in this example.
In order to illustrate the usefulness of QFD, the design of a commonplace
product like pencil could be considered. The features/benefits that can be
expected from this product areeasy to hold, should not smear, should not roll
and the lead point should be durable. There are a number of other factors that
affect the benefitslike the length of the pencil, time between sharpening and
lead dust. Customers ratings can be obtained on the benefits in terms of
importance on the existing brands of pencils, before a new brand of pencil is
designed to offer value to consumers.
Quality function development is a competitive tool that not only accomplishes
the function discussed, but also has several other organizational implications. In
the Indian context, a number of companies have started taking an integrated
view of the internal organization to achieve a competitive edge. There is not
only a need to create a competitive edge; but also a need to sustain them. The
internal working of the company decides the marketing edge which a product or
brand could have in a category. If the category of detergent soaps is considered,
it is a huge market because the lower end of the detergent market uses detergent
soaps for hand-washing clothes. There are national brands and several regional
brands which have achieved significant success in regional markets in the
South. A closer observation will reveal that the success of a brand in this
category depends greatly on several factors ranging from consumer usage to the
type of clothes and the type of water that differs from one region to another. A
concept like QFD holds tremendous potential in a country like India where
several brands across categories depend more on advertising clutter than on
tangible benefits that the consumers could appreciate.
Product-Line
A product-line is a string of offerings associated with the product designed to
satisfy similar needs of different segments. Tea is a category and if Hindustan
Lever is considered, the company has a string of offerings associated with this
category in the form of brands like A-l, Red Label, Taaza, Taj and Yellow
Label, which serve the similar needs of consumers drinking tea with different
brands targeted towards different groups of consumers. Each of these brands is
bought by consumers with different demographic and psychographic
backgrounds. Each of these consumer groups even with their similarity of needs
has a different preference for the offerings in terms of taste, packaging and
pricing. The generic need for tea is the same, but the needs concerning the
marketing mix elements of these groups of consumers are different. In a
competitive context, a company cannot have just one offering. It has got to have
several variants (variants in detergents, biscuits, soaps and chocolates can be
observed in the market place) and several brandsHindustan Lever has
Sunsilk, Clinic and Lux shampoo brands. There are a number of decisions to be
taken with regard to a product-line of any company. The following aspects
indicate the different types of decisions associated with product-line.
o How many variants of a brand should be offered to consumers? (Rasna
has a number of variants).
o Should all of them have the same brand or should they be branded
differently? (Santro and Sonata are from the same company).
o Should sub-brands be used? (Junior Horlicks, Maruti Zen and Videocon
Bazooka are examples).
o How should the product-line offerings be priced? (In the example
category discussed earlier, the brands are priced over a range of price
points).
o How should a brand be developed over a period of time? (Lifebuoy and
Liril have been in the market for a long time).
o What will happen if price points are too close in the product-line? Will
consumers perceive a differentiation across brands?
Product-line decisions play an important role in maintaining market share,
launching new brands and, in general, are associated with the profitability of the
product-line. While too many brands may create confusion among the
consumers, few brands may not result in optimizing the potential for a given
product/brand. Product-line management has become a challenge for several
companies in terms of sustaining the brand in a profitable manner. A delicate
balance of several factors will be required to ensure that a company is profitable
over a period of time. In the watch market in India, the unorganized sector is
larger than the organized sector (unorganized sector refers to assembled brands
sold in several markets). A national brand like Titan has to be careful about
planning several aspects of the marketing mix elements with regard to each
brand in its product-line. One complex factor that needs to be addressed is the
positive and negative aspects of brand association. Titan, the brand that created
marketing history in terms of brand development in the category, had to be
dropped when the company introduced Sonataa brand for the lower end of the
market. This brand contributes significantly to the company and today has a
broad price range. Titan was perhaps dissociated from Sonata because of its
elitist association, and the lower end consumers needed to have a brand from the
company which did not carry such associations. Tanishqa brand introduced as
a jewellery watch was later assigned exclusively to jewellery, probably because
Titan, which is also into jewellery, wanted to ensure that consumers are not
confused.
Various product-line strategies
Given the importance of product-line management, there are a number of
strategies that can be applied in a practical context. Product-line pricing is an
interesting as well as a vital strategy, as companies are expected to manage a
number of offerings to ensure that they are in a number of segments as also to
ensure that there is product-line profitability. Coke and Pepsi have expanded the
Indian soft drink market with their 200 ml offerings. While during the initial
stages, this specific offering may not have been probably profitable, the
companies were able to expand the market. It is also possible that a number of
consumers who had tried the offering may have upgraded to larger packs.
Almost 50 per cent of the chocolate market has its contribution in terms of value
from offerings that are below Rs 5 and hence national brands have introduced
offerings at this price point (Perk, Kit kat and Munch). Introducing variants also
requires a focused approach. Tuning is also important while a firm introduces
variants. Fair & Lovely introduced its herbal variant after Fairevera
herbal fairness cream that started getting significant attention among consumers.
Introducing too many variants/offerings/brands, especially when a number of
competitive offerings emerge in the marketplace, can have major cost
implications in terms of investment, brand building and creating infrastructure.
The company may have to focus strongly on profitability. Maruti has a number
of brands like Maruti, Zen, Esteem, Wagon R, Baleno and Versa, and in each of
these brands there are several variants. A balance of factors associated with
competition, consumer preferences, profitability and long-term market potential
will be required to build a strong product-line.
Upward stretch is a strategy adopted by a company when it decides to move the
brand (or extend the brand) from lower end markets to higher end markets. The
major problem associated with this kind of strategy is the perception of
consumers on the brand with regard to quality and image associations. Such a
situation is not very frequent as firms have different brands for different
segments. A strongly entrenched brand in a specific category can follow this
strategy with precautionary measures. Pond'salmost a household name in the
category of talcum powderintroduced a number of higher end products under
the same brand name. It communicated this upward stretch with a powerful
Pond's Institution advertising campaign that emphasized on researched efforts
on which such offerings are based. Timex, the well-known global brand in
watches, has adopted this approach in India with several high-tech oriented
offerings backed up by high visibility advertising campaigns. Videocon, the
well-known brand in the TV category originally associated with middle
market segments introduced offerings for the higher segments using sub-
brands. Madura Coats has Peter England at the lower end, Allen Solly for
corporate casuals, Louis Philippe and Van Heusen for corporate formals. Allen
Solly has also launched women's shirts.
Line-featuring is another strategy of a brand which showcases (with high
visibility advertising) a specific higher-end offering in order to convey to
consumers about its product competence skills. Normally, profit may not even
be a motive for introducing such offerings. The company expects to gain a
favourable consumer perception, which is likely to build the brand with regard
to the other offerings as the product-line of the company. BPL advertised its
large capacity refrigerator when it entered the category, and Samsung advertised
its World Series TV when it entered the Indian markets.
Brand Associations
Brand associations play a major role in nurturing the proposition/emotional
association among consumers. Benefits or attributes could be used to nurture
brand association. For example, a brand of toothpaste can highlight white teeth
(benefit) or get its ingredients (attributes) endorsed with a doctor in its
advertisement. Brand associations are extremely important as they define what
a brand stands for over a period of rime. Nike's association with the Just do it
attitude has given the brand a legendary association. In recent times, marketers
have attempted to provide a personality to brands and have found that this
provides an effective emotional association with the respective consumers.
Brand personality involves associating a brand with human associations (can be
gender or trait associations). Another advantage of developing a brand
personality is that when brands compete on an even plane with regard to
functional attributes or benefits, personality can provide a very powerful
emotional differentiator. Liril, the soap brand (introduced by Hindustan Lever),
was one of the earliest brands to attempt a brand personality. Liril came out with
the refreshing waterfall campaign associating the brand with, fresh, energetic
and fun-loving traits. Charms, the brand of cigarette, appealed to youth with its
young, rebellious and non-conformist attitude, reinforced by the brand's
packaging which had a denim-like design. Titan's gift-giving warmth, Park
Avenue's corporate role type of personality symbolizing smart and full of
aspiration characteristics and Raymond's complete man which has a focus on
relationships are examples of brand personality orientation.
A topical issue on the subject is the extent to which celebrity association can
add to personality orientation. This will depend on the product category, target
segment and the celebrity used. For example, a brand like Parker pen used
Amitabh, to add grace and sophistication attributes to its existing
premiumness. It should be noted that there needs to be a connection between the
perception of consumers, the brand and the celebrity used. Pataudi's touch to
Grasim is another example that was on similar lines. Sometimes, a brand can
choose a celebrity not associated with a commonplace sport (like cricket or
football) just to convey the message of exclusiveness, which is important to
premium brands. Fastrack from Titan used this approach by choosing a celebrity
from car racing.
Brand associations have long-term implications for a brand. The top brands of
the world have reflected consistent meaning (in terms of what they stand for),
and it is an established practice to nurture a strong brand once associations are
developed. Lifebuoy's germ-killing action, Dettol's anti-germ proposition and
Johnson & Johnson's association with children are examples. However, there
may be situations when the brand attempts to reposition itself after having a
post-launch failure. Brand association can also convey perceived value and
quality. For example, Rolex or Omega has been associated with class, quality
and elegance for a long time. This is also one of the reasons why a brand
associated with premiumness has to be careful if it wants to extend the brand to
the lower end of the market. In 2003, Titan came out with a campaign in an
attempt to create a world-class association with the brand, given its export
markets in Europe and the Middle East. In a highly competitive context,
managing brand associations become very complex, because there is a need not
only to preserve and nurture the associations created; but also to differentiate the
brand from competitive offerings. Pepsi has been projecting irreverence and
hence always goes for stars like Sharukh Khan who are closely associated with
that kind of personality. This helps the target audienceyouthto identify
themselves with the brand. Coke, a more classic brand personality, uses Aamir
Khan. Hyundai Cars successfully used the personality of young, not so staid,
in with times, innovative, which was to create a fresh set of associations
among consumers who were used to the associations of Maruti. In order to
appeal to these set of customers, they used Sharukh quite successfully.
Provogue is a classic example of fashion conscious, trendy, different
personality association. Hindustan Lever has built a personality around Fair &
Lovelyactivist and catalyst for women's success.
Brand Extension
An interesting aspect of studying a brand is the area of brand extension.
Traditionally, it was thought that a brand with a strong equity can be extended
to other categories. Several decades ago, Ries and Trout, the advocates of brand
positioning had highlighted the dangers of extending a brand to other categories.
David Aaker proposed the introduction of sub-brands (within the category) to
signal new offerings in the product-line of the company. Xerox, which made an
attempt to enter the field of computers, was not successful. Today, it is almost
an accepted fact that a brand which extends itself indiscriminately is likely to
lose its focus as well as get its associations diluted in the psyche of consumers.
There are several aspects of considering brand extensions. One is product-line
extension without a sub-brand (Rasna has several variants). The second
approach is extending the brand with sub-brands (Junior Horlicks). The third
approach is extending the brand to related categories (Liril to Liril Talcum
Powder) and yet another approach is to extend the brand to more related
categories (Wipro in computers, finance, edible oil, medical equipments, soaps
and baby powder).
Each approach has its own merits and limitations and will have to be researched
well before a final decision is taken. Glaxo, which is almost synonymous with
baby milk powder, found that consumers perhaps did not accept its baby talcum
powder when it extended its brand name into the category. Pond's, a major
brand in the talcum powder category, also saw that its brand extension into the
baby powder category did not last long. In fact, Pond's also launched a
toothpaste under its brand. T-Series, which became associated with economy
and value in audio cassettes (pre-recorded), did not seem to meet with success in
detergents. Nirma, which was successful in detergents, has had success in soaps
too, but perhaps the major contributing factor can be its strategic vertical
integration thrust because of which cost advantages are possible. Cadbury's
biscuit launch did not seem to take off despite the brand being associated with
snacking. The freshness of Liril did not seem to appeal to consumers when it
launched its cologne variant (probably because the brand was associated with
spontaneous and natural freshness; waterfall freshness was the original and
nurtured proposition/association of the brand). Virgin, a global brand known for
its innovative and rebellious spirits, has extended itself into several businesses,
which include cola, entertainment, banking and airline. It seems to be having
problems in optimizing its profitability with diverse businesses under its fold.
Hitachi, Toshiba, and Sony are also brands which are into many kinds of
businesses, and the profitability of these firms do not reflect a very stable
picture
1
. Wipro is probably the only company in India which has made a
planned and concerted effort to convey a consistent perception to consumers. Its
applying thought advertising campaign emphasizes the care which the
company takes in applying thought to whatever it does regardless of the diverse
product categories under the brand. The advertisements underscored the
applying thought message with visuals of each of the categories carried in
separate advertisements. Brand extensions can be useful if a company has a
balanced approach based on in-depth consumer research. Anchor toothpaste is a
recent successful example of brand extension. Its 100% vegetarian proposition
along with the association of the brand's trust has been instrumental in its
success (Anchor electrical switches have been in the market for several decades
and have a reputation for trust).
Sub-brands
With the proliferation of brands in several categories in the Indian context, it
may be worthwhile to discuss the middle of the approach on branding
(between selecting a new brand and extending several variants under the mother
brand). Sub-brands carry the strength of the mother brand and also enable a
company to bring in differentiation by indicating a new offering. In some cases,
it helps a brand to move to higher segments as mentioned earlier. A sub-brand
can be used with the endorsement of the mother brand, reassuring the consumer
about the equity of the brand. This is very useful to reduce the perceived risk
associated with a category. For example, Horlicks introduced Junior Horlicks to
reassure the consumer through various associations of Horlicksnamely health,
nutrition and years of experience in the category of milk additives. When a
company has a number of offerings in the product-line, it has to build an
identity for each offering (Sunsilk, Lux, Clinic Plus, Ayush in the shampoos
category offered by Hindustan Lever). Sub-brands enable a company to reach
out to a different group within the same psychographic segment. For example,
Perk and 5 Star are both positioned towards similar psychographic segments
from Cadbury's, and sub-brands help to reach out to the groups. Sub-brands are
useful when a brand introduces an offering in a related but new segment. For
example, Johnson & Johnson's introduction of baby soaps is an example. The
brand is associated with baby personal care products, but moving over to
children's segment (higher age segment) required a new sub-brand. Though the
strategy may not always succeed, one conceptual direction associated with sub-
branding is to upgrade consumers from their current offering to a new offering.
Sub-brands create a perception that the new offering (at a different price point)
is likely to be better than the existing offering. Hindustan Lever's introduction of
Surf Excel Power to upgrade consumers from Surf is an example. The idea is
not to convey that any such strategy (in any product-line) would succeed; this
kind of sub-branding would have to be considered with several branding options
(existing and potential) associated with the category.
An other important aspect is that using a sub-brand to introduce an offering
minimizes the damage which may be done to the other mother brand in terms of
brand equity. Titan may have several sub-brands targeted at several segments.
The failure of one offering, for example, may not have a negative impact on the
mother brand, compared with a situation when there are no sub-brands at all.
But too many sub-brands may create confusion in the minds of consumers.
Sunsilk had a number of sub-brands (in the shampoos category) at one point in
time and later, the brand changed over to variants (rather than using sub-brands)
associated with the type of hair. There are categories like television which have
a tradition of using alpha-numeric characters to differentiate the offerings of the
company. BPL perhaps was the first company in the televisions category to use
sub-brand BPLThe Emperor. After a gap of many years, the company (as
well as several other brands in the category) has started using sub-brands
(Videocon's Freedom, Challenger and KY Series from Onida). Sub-brands are
also useful to indicate the physical differentiation of the offerings (apart from
the functional features and benefits). Maruti's Zen, Alto and Wagon R are
examples. While sub-brands offer certain advantages to marketers, they need to
be supported and sustained, and this will involve large resources. This is one of
the reasons why companies may be interested in consolidating their brand
portfolio with a few sub-brands after attempting many such brands over a period
of time.
Brand Loyalty
In todays scenario, brand loyalty is an area which is not only topical but also
confusing to marketers, given the complexities of the marketing environment
both in Western markets and in the Indian context. On the one hand, traditional
literature advocates that loyal consumers are cost effective to retain vis--vis the
cost of acquiring new consumers. On the other, present-day literature suggests
that more than loyalty management, customer migration management would be
effective in terms of analysing the degree of loyalty. Another vital direction of
loyalty trends is that satisfaction may not lead to brand loyalty (because of a
variety of reasons). In FMCG categories, with the proliferation of product
variants and brand launches, brand switching may be an inherent behaviour of
most consumers. There may also be a pattern of brand switchinga consumer
may buy a brand three times consecutively, try out a few other brands and
then return to his original brand (perhaps in a category like soaps). Consumers
may also reflect occasion-based brand buying. For example, in the category of
detergents, a consumer may use a low-end detergent brand for ordinary clothes
and a high-end brand for his special clothes worn on specific occasions.
Brand loyalty has to be differentiated from repeat buying. While brand loyalty
may lead to repeat buying, there is a difference between the two when they are
considered in terms of behaviour. Repeat buying without commitment to the
brand may happen when a consumer buys a brand either because there is no
alternative or because he/she feels that it is not worthwhile to search for and
compare several brands. While the scenario may be changing now, several
commodities like sugar, rice and atta were associated with inertia buying a few
years back because of lack of alternatives or even good branded offerings.
Loyalty happens when the consumer is committed to a brand. A smoker of a
specific brand would try in several retail outlets for his favourite brand when
this brand is not freely available in the market. In durables, a consumer
upgrades to a better offering from the same company from which he/she had
bought his/her earlier brand because of the trust and commitment associated
with the brand/company. Toyota's Lexus has a loyalty percentage higher than
the average loyalty in the automobiles sector in several markets around the
world. Current literature on research indicates that marketers could be more
certain about the brand loyalty of consumers if two dimensions are strongly
indicated, namely, behavioural and attitudinal loyalty. Behavioural loyalty
consists of aspects like intention to buy, consumers spending a major share of
their requirement on the specific brand, willing to give information to the
company when required and routine re-ordering. Attitudinal loyalty includes
advocating the brand to others, top-of-mind awareness, trust, psychological trust
and propensity to pay a premium. An investigation into these two dimensions
would provide several insights to marketers for planning loyalty programmes,
taking into consideration competitive offerings.
Brand Positioning
Brand positioning is probably the most important fundamental concept in a
brand's strategy In simple terms, it is finding a niche in the minds of the target
segment consumer in such a way that (i) the offering is perceived with a
differentiation and/or (ii) takes into consideration the innate needs of the
consumers whenever required. The USP and the brand meaning are strongly
associated with the brand positioning. Brand positioning is also linked with
managing a brand's meaning. Cadbury is a brand strongly associated with
warmth, belongingness and enjoyment (mould version). Cadbury's Gold was a
variant introduced by the company with a permissive positioning and it may
have been difficult for the consumers to identify this variant with the mother
brand's association. Onida, which positioned itself on prestige and status symbol
two decades back, is attempting to hold on to the same emotional connect with
its campaign of may cause envy positioning. The following are the basic steps
involved in a positioning exercise, with inputs from marketing research:
(i) Identifying various brands in a product category.
(ii) Identifying various propositions associated with various brands.
(iii) Researching the consumers on specific dimensions which are important to
them in the respective product category.
(iv) Identifying a gap with regard to a proposition which would be of
relevance to the target segment, and
(v) Developing brand associations based on the propositions identified.
Positioning exercise is carried out with the help of a positioning map (see
below). For example, if two dimensions like price (with the continuum from
economy to premium range) and style (with the continuum from formal to
informal) are considered for the ready-made shirt category, brands in the
category could be positioned on different slots in the map.

Allen Solly positioned itself as a semi-formal premium brand with its Friday
dressing positioning. Vicco toothpaste is priced as a premium herbal brand and
there is no other brand which is close to Vicco if a positioning map is drawn
with type of toothpaste (herbal/synthetic) and price dimensions. Several brands
of cars are positioning themselves on the features-price or features-comfort
dimensions in the automobiles market.
Positioning strategies should be carefully considered and consumers in a target
segment should be in a position to identify themselves with the type of
positioning brand attempts. Pond's toothpaste's positioning (brand was
introduced in the 1980s) was even spreading action. At one point in time,
Ariel's variant was positioned as the detergent with magic eyes. These kinds of
positioning strategies do not seem to have made much impact on consumers,
going by the fact that either the product is withdrawn or the positioning had
been changed (there may have been other factors involved in such decisions, but
the point is that positioning strategy has to be developed with a long-term
orientation). Positioning also helps the company to clearly differentiate each of
its offerings. Titan's Nebula is a jewellery watch; Fastrack is for the fashionable
and trendy youth; and Dash is the watch for children. In recent times, there has
been a new type of approach, which could be termed as functionality-based
symbolism. LG air conditioner, which has its proposition around cool and pure
air (unlike the traditional pure air positioning) showed a woman in the family,
in the visual, emphasizing that if the air was pure enough for the baby the lady
was carrying (on family way), it should be good enough in terms of purity for
anyone using the air conditioner. Define, differentiate and defend reflects the
essence of any brand positioning strategy.
TOUCH OF REALITY
Titan's Sonata, which by volume accounts for about 60 per cent of the watches
sold in the organized watch market in India, is positioned towards the masses.
Fastrack (See Plate 3), the brand for the up-market youth segment from Titan,
has been repositioned with a broader price range starting from Rs 500. Research
has shown that the age group of buyers from 11 to 42 years account for 42 per
cent of the watches bought in India. The youth and fun association of Fastrack,
is reinforced by co-branding Fastrack with MTV (MTV has a strong modern
youth association). Fastrack has also extended itself to goggles for the youth.
Fastrack, initially an up-market brand, has been stretched downwards in the
product-line too, with its youth appeal being the common symbolic factor.
Brand Repositioning
In the past, repositioning was viewed as changing the perception associated with
a brand either because the brand's meaning had to be made relevant to the
changing environment or because consumers who were using the brand were
leaving its fold. With several hundreds of new offerings failing in the
marketplace every year, there is a distinctive need to treat brand repositioning as
a tool not only for old brands, but also for new brands. However, this exercise
could be complex for new brands, as changing brand associations may be
involved and axiomatically a brand has to nurture the associations it had already
created. Repositioning is possible in two ways.
(i) Repositioning a brand by strengthening the associations that were originally
associated with the brand (this is appropriate to established brands).
(ii) Changing the associations for a new brand that has failed in the marketplace
or the one which has not been doing well on introduction.
Since the second option is a complex process, this section deals with the first
optionfor brands which are already established in the market and where the
associations are to be strengthened. The new associations, used in this context,
would have to complement the existing associations. Some of the examples
discussed may not exist in the market today, but they offer valuable insights into
how brand repositioning could be accomplished. Lifebuoy is known for its
germ-killing action. While the brand launched two other sub-brands, Lifebuoy
Gold and Lifebuoy Double Action (these brands have been repositioned as
international), Lifebuoy itself has undergone a repositioning on the health
platform (the original Lifebuoy was a carbolic soap which was perceived to be
different from the regular cosmetic soaps). Lifebuoy re-launched itself on the
health proposition as a family soap with a change in the product composition
(with more of cosmetic fragrance) and a different packaging with the visual of a
family. It could be noted that the germ-killing action association has been
strengthened by the health proposition for this brand, which is one of the
largest selling brands by volume, perhaps in the Asian markets. Fair & Lovely
fairness cream repositioned itself in an innovative manner (this repositioning did
not however continue, probably because of several decisions associated with the
brand strategy)it came out with a campaign to attract married women. Maruti
repositioned its Maruti 800 (no-frill economy car) as the dream car for
middle-class consumers who were wanting to upgrade from a two-wheeler.
Red Label, an established brand of tea repositioned itself on product attributes,
adding vitamins. 5 Star, which initially had an emotional positioning during the
1970s, repositioned itself on energy later and, in recent times, it has
repositioned itself on softness. Marketers would do well to consider the past
associations of a brand before adding associations during the repositioning
phase.
Managing Brand Power Over Time
The power of a brand has several dimensions associated with it. On the one
hand, consumer's perception of the brand is critical and on the other hand, the
power of a brand depends on the manner in which it is managed over a period of
time in terms of its association, imagery, variants, brand personality, value and
other brands of the company in a given category.
Value in simple terms is the pricebenefit equation. The category of aerated
soft drinks is a good example in which consumers experience the product/brand
for reasons other than a strong functional or economic benefit. Pepsi and Coke
are associated with fun and lifestyle, Sprite is associated with individualism, and
Thums Up is linked with macho appeal. In a number of other categories,
functional benefits appeal to consumers. Edible oil, detergents, shampoos,
biscuits, apparel and hair oil are categories in which functional benefits are
emphasized by brands. However, a number of brands in these categories also
add a layer of social or psychological benefits. Sundrop edible oil (warmth and
love), Surf Excel, Wheel (family bonding), Clinic Plus (mother's care reflected
in the relationship with daughter) and Tiger (a sense of belongingness through
sports association) are a few brands which are oriented towards social and
psychological benefits. In the ready-made apparel category, Louis Philippe, Van
Heusen (See Plate 4) and Park Avenue are examples of self-concept strategies
used in creating brand associations. In fact, a premium brand in any category
has the prerequisite to extend itself beyond economic benefits.
Brand associations have a power impact on the psyche of consumers. Managing
brand associations is one of the vital challenges of brand/product management.
Marketing literature suggests that indiscriminate use of brands to launch
variants (or even related product categories) may be counterproductive. A few
years ago, Sunsilk introduced several variants with sub-brands. Currently, these
sub-brands have been withdrawn. Horlicks, which had a strong nutritive
association with the mother-child imagery, has repositioned itself as a kind of
fun drink for children and the packaging has been made trendy. Sustaining a
power association built over time is a powerful branding tool, especially when
consumers have developed a goodwill towards the equity of a brand. Volvo, the
worldover, stands for safety and Mercedes for classy prestige. Even durable
marketers (in the categories of cars and home appliances) would have to make
an effort to nurture a successful association over a period of time. Associations,
which are complementary to the basic association, can be added over time to
ensure that consumers develop an emotional bonding with the brand. Strategic
brand management deals with such strategies. For instance, a brand like Santro,
which has been successful in India, could develop associations linked to culture
of the brand (warm and friendly) and hospitality (good service) apart from
attributes of performance and design. Cadbury's 5 Star, which for several
decades built up its youth and energy associations, has launched a campaign,
which has a focus on the functional aspects of the brandsoft and tastythat
could be enjoyed by even elderly consumers. While a brand can focus on
attributes in a changing environment, it may be worthwhile to take precautions
on the imagery portrayed to consumers, especially if the brand has built up a
certain kind of imagery and user association over a period of time. This is
because consumers are likely to associate the brand with imagery owing to
lifestyle pressures and also due to the communication clutter to which they are
exposed. A premium brand may have to even forego certain segments to ensure
that the premium association does not get diluted. Tag Heur and Rolex
(watches) and BMW (cars) are examples. If the brand extends itself, there will
have to be a clear functional benefit to ensure that the offering does not get
diluted and consumers perceive the differentiation. Besides, premium brands
will also have to ensure that the exclusivity of the symbolic appeal is not diluted
by the launch of several offerings. Colgate Total stands out in terms of its
product attributes from other variants of the brand. Another alternative to
sustain and nurture the association of a brand, which is attacked by competitors,
is to create premiumness with functional attributes and ensure that the brand is
perceived in a different mental partition. Liril is under attack from several
brands in the same price range or from brands which are similar but priced
lower. The brand could have probably established itself as a premium brand
with several functional attributes ahead of its followers over a period of time.
Such a strategy would have to be timed well and formulated based on primary
research, because the strategy banks on the strong positive associations created
by the brand over a period of time, but addresses a different segment (after
becoming a premium offering). The timing should also be such that there is
minimum competition in the premium range planned for the brand (though
some from the original target segment may also upgrade).
Brand Life Cycle
The concept of brand life cycle has immense potentialities in terms of exploring
brand associations. A brand could have a functional, symbolic or sensory
proposition depending on the category of the product and the competitive
proposition of several brands competing with it. In subsequent stages after the
brand gets entrenched in the psyche of the consumer, it introduces variants or
gets into related diversification based on the success of association on which the
brand has been built over a period of time.
For several decades, Lifebuoy has been associated with germ-killing and was
initially positioned as a macho soap. The germ-killing proposition was extended
to a variant double action, which targeted urban youth and later, another
variant gold was launched with young college girls as the target segment. In
recent times, the brand has been repositioned as a family soap on the health
platform and has also extended itself into the talcum powder category. The
objective is to probably appeal to the consumers in the semi-urban and rural
areas where the equity of the brand is strong and backed up by the fact that the
habit of using talcum powder is stronger in these markets. Fair & Lovely, the
fairness cream which holds a dominant position in the category, has introduced
a herbal variant and the brand has also extended itself into other cosmetic
offerings associated with beautyanti-marks cream. Pond's, which was almost
a household name decades ago (with its dream flower talc), has probably been a
late entrant in terms of positioning a brand directly against Fair & Lovely. Its
Fair & Young targets married women. Cadbury chocolates extended itself to
adults with a significant degree of success. Listerine (in US markets) has
branched off into toothpaste based on the strength of its associations. Fastrack,
watch brand from Titan, probably could be developed adequately to enter
several fashion categories if strong associations of the brand are nurtured.
There are different and distinctive stages in the brand life cycle and brands will
have to plan accordingly. The essence of the brand life cycle concept is that
brand associations and its extensions are managed in such a manner that they
have a synergy with the functional/symbolic/sensory needs of consumers.
Brand Feelings
Brand feelings are consumers' emotional responses and reactions with respect to
the brand. These feelings could be mild or intense and can be positive or
negative. There is a specific kind of advertising called transformational
advertising that attempts to change consumers perceptions of the actual usage
experience with the product. Palmolive's aroma therapy products are advertised
with the message conveying how a consumer feels about using the brand. A
firm depending on the kind of associations it would like its brand to have can
choose any of the following brand feelings.
Warmth. This appeal makes the consumers feel calm and peaceful, reflecting
warmth, sentiments and affection. Raymond's relationship campaign is a good
example of this element used in advertising. The brand portrays the user of the
brand as a caring, warm and affectionate member of the family. One of the
successful campaigns of the past which forcefully used this feeling was
Complan, which showed a small boy gaining strength to the extent of even
carrying his mother on his bicycle. The care and warmth of the mother, together
with the pride of the boy was well captured by the visual on television. The
warmth was associated with the effectiveness of the brand in providing relief to
children (and to mothers who are worried about them). Johnson & Johnson's
baby products are well-known for their warmth association reflecting mother's
care of children in their advertisements. ICICI's Hum hai na is another
example in this category of feelings.
Fun. Happy days are here again was the copy line of Thums Up, the popular
soft drink, several decades ago when Coke was banned by the government of
India. This ensures that the consumer becomes light-hearted, joyous, cheerful
and amused. This feeling could be found in several FMCG categories like soft
drinks, chocolates and biscuits. Cadbury's just like that (for its moulded
version), Pepsi commercials with celebrities and Fanta and Mirinda's campaigns
with lemon are good examples of this feeling being used in advertising.
Excitement. This feeling is used to describe the mood of consumers when they
are experiencing something special. The campaign of Bajaj for its wind bike,
which has a focus on the special experience associated with the bike's
performance, is an example of this feeling being used by a brand.
Security. This feeling gives rise to reassurance and safety from the viewpoint of
consumers. Hence, this is useful in overcoming the perceived risk associated
with the product or service. In fact, a brand could even charge a premium for
this aspect. L&T in real estate is associated with security in a category, which
gives rise to perceived risk. Samsung, when it entered the Indian market,
launched an advertising campaign projecting the brand as the state-of-the-art
offering to reduce the perceived risk, which may get spontaneously associated
with an unknown brand (especially in a category full of established brands).
Social approval. This deals with the self-concept dimension of consumers.
Consumers are conscious of what others feel about them (there are also several
other aspects of self-concept) and are concerned about using a particular brand
to get social approval. As discussed earlier, the symbolic appeal associated with
a brand gets entrenched in the mind of the consumers. Anti-wrinkle creams, TV
brands (like Onida), two-wheelers and cars are some of the categories which
make good use of this appeal.
Self-respect. A feeling of pride, accomplishment and fulfilment are associated
with this appeal, which also addresses one more aspect of self-respect. A
combination of feelings may also be necessary in a given situation to ensure that
consumers identify with the brand. For example, accomplishment and
fulfillment are generally combined together to create the advertising appeal. A
status appeal is associated with both social approval feeling, and self-respect.
TOUCH OF REALITY
Brand personality is the association of human characteristics with brands. The
basic assumption of the brand personality concept is that consumers will choose
brands which are in tune with their own self-concept. Lux is likely to have a
glamorous and handsome personality. Thums Up, a macho personality and
Fastrack perhaps an urban, youthful, vibrant and playful personality. Liril was
perhaps the first soap brand in the country during the 1970s to convey its brand
personality strongly by making use of powerful advertisements where a girl
being shown in the waterfall signifies the freshness of lime (Liril had a lime
fragrance when launched). Fresh, indulgent, cool and fantasy-oriented was
perceived as the personality of the soap brand. Research has shown that
products and product variants and not just brands have personality; and
consumers prefer those which are in tune with their personality traits. For
instance, coffee makers were identified with the traits of introversion and
outspokenness. A variant of the coffee maker was associated with the traits
sociable, kind and warm. A product variant is a unit which is distinguishable by
its size, price or appearance with regard to a product-line or a brand. Soap
dispensers were associated with the traitsarrogant, masculine and to the
point'. A variant of the soap dispenser was identified with the traitsfunny,
childish and two-faced. A screwdriver was identified with the traitscold,
straightforward and reliable. It is interesting to note that these products and
product variantscoffee maker, soap dispenser and screwdriverare
personally utilized categories as against cars, ready-made apparel and watches,
which are products that are conspicuous to other consumers (utilized in public).
Research has important implications for marketers who need to think about even
product design with regard to various categories of products, beyond the
traditional aspects of brand personality.
Brand Resonance
A number of factors associated with consumer behaviour are covered under
brand resonancethe relationship and identification consumers have with a
brand. It is the depth of psychological bonding a consumer has with the brand.
Brand resonance therefore is important for marketers to enable them to develop
a long-term relationship with consumers through their brands. Behavioural
loyalty, attitudinal attachment, sense of community and active engagement are
the four factors which strongly build brand resonance. Harley-Davidson, the
well-known brand of motorcycle, scores on all these factors (it has about five
lakh members and 1200 chapters as a brand community called Harley Owners
Group).
Brand resonance has important implications for marketers in India. A
community association, in which users of a brand form a community,
establishes emotional links and a sense of belonging with other consumers in the
group. As the group grows, there is a possibility of intense brand loyalty, as
consumers attempt to identify themselves with the group and brand usage is the
bridge which links consumers. Active engagement of consumers happen when
they spend time, money and effort in the purchase and consumption of the
brand. The four factors do not operate sequentially; they provide a synergy,
which creates brand resonance. For example, if for a brand of chocolate like 5
Star or Perk, the company is interested in getting insights into brand resonance,
several dimensions of the four basic factors are to be captured, before the
marketing mix elements are used to enhance brand resonance. (It should be
noted here that brand resonance is an aspect of brand building.) These
dimensions could include questions like whether the brand is the friend of the
consumer, whether the consumer buys the brand regularly, whether the
consumer buys just this brand in the category (these are loyalty aspects),
whether the consumer would miss the brand if it is not available, whether the
brand is special to the consumer (attachment factors), whether the consumer
identifies with people utilizing the brand, whether the consumer feels that the
brand is being used by people similar to him/her (community factors), whether
the consumer advocates the brand to others and if he/she would like to visit a
website of the brand (engagement factors). Depending on the response of
consumers, a brand could build marketing mix elements which would
strengthen the brand resonance. For example, depending on the response (if
favourable to such a strategy), the brand can organize a web-based sales
promotion, could incorporate a celebrity with whom the target segment can
identify and have a sense of community feeling. There may be a number of
steps to be initiated over a period of time. It should be noted that a brand builds
up brand resonance over time, and that this cannot be built overnight.
Brand Experience
Brand experience expresses a brand in terms of how consumers perceive it
through their sensory receptors. The sensory receptors are in the form of
hearing, visual indicators, kinesthetic aspects (feeling), olfactory aspects (smell)
and tactile aspects (sense of touch). Brand experience is based on experiential
marketing, which recognizes the fact that any thought process is driven by
neurological processes, uses a language for expression and has a pattern. This
could be applied to consumer behaviour and branding through sensory
receptors. The concept is very useful in recreating the experience an individual
may have had with regard to the brand. As humans, consumers have the ability
to play back the experience they have had and this is the mechanism used in
brand fingerprinting. For example, the following situation can be visualized: a
beach full of youthful people, a beat song, a cool breeze and, in general, an
ambience of celebration and enjoyment. This experience could be recreated by
anyone at a later point in time by remembering/recollecting it. Bacardi brand of
liquor, for example, attempts to create an impression on the minds of consumers
through its experience associated with the scenario described earlier. Bacardi's
brand experience could be codified as follows: visual, fun-loving youth on a
beach setting, kinestheticfeeling of joy, belongingness and refreshed spirits,
auditorythe West Indian jingle and tactilefresh sea breeze. Thus, the
offering gets associated with the associations linked to sensory receptors. The
vital aspect of creating a brand experience is that it recreates a sensory note
(when the consumer recalls it), and any such sensory recall by itself is a
motivation for the individual (consumer) to return to the experience. In this era
of experiential marketing, brand experience could be important, given the lack
of differentiation on functional attributes. Imagery and brand personality too
may not provide the differentiation which may sustain a brand. Brand
experience is based on customer experience and would have a lasting impact on
consumers. Another interesting aspect is the combination of sensory receptors a
target segment of consumers may select, with regard to a brand. For example,
consumers may select a refreshing feeling (kinesthetic) as a priority for a soft
drink and perhaps a tactile sensation (feel) for a deodorant. These aspects could
be strong inputs for positioning and advertising a brand. Brand experience could
also enable marketers to plan out a marketing strategy based on the pattern of
fingerprinting. For example, for a bike like Bajaj Wind or for a razor like
Gillette's Mach 3, different kinds of promotional elements may be required. A
motorcycle has to reinforce the experience of riding it and a razor has to capture
the tactile experience of usage aspects. How well each brand is experienced is
captured in the communication of the brand and how these experiences are
triggered at the point of purchase (retail outlet) using appropriate visuals is an
application of the concept. Creating and triggering the experience is the purpose
for which an experience around a brand is created. Bacardi's television
commercial, with its visuals and music, is a good example of creating the
experience associated with the brand. Such an approach is very useful in
categories like soft drinks and liquor, as it will be very difficult to focus on any
benefit of the brand other than the sensual experience. Brand experience deals
more with the sensory aspects of experiencing the brand and brand feelings deal
with the overall psychological feelings a consumer may have about a specific
brand.
Brand Aesthetics
Aesthetics has a number of important implications for branding. This could be
referred to as the marketing of sensory experiences, other than what has already
been mentioned, which contributes to the brand's identity. It has a focus on the
aesthetic gratification of consumers. There is also a possibility that consumers
associate positive aspects of aesthetics with the organization marketing the
brand. For example, Kodak came out with the disposable Fun Saver camera.
This may enable consumers to not only appreciate the innovativeness of the
product, but also perceive the organization's efforts in contributing to the
aesthetics of the brand. Santro's tall boy car in the Indian context may also be
perceived on similar lines. Aesthetics not only enhances visual appeal, but could
also create a sensory experience. The design of a toothbrush, for example, could
enhance the experience of the user. An innovatively designed perfume container
could enhance the sensory experience when the splash is appropriately
channelized through the container. There are two aspects of aesthetics. One is
style and the other is theme. Style refers to quality, form, colour, shape, pattern,
taste, smell and touch (texture and material). A marketer should know (in a
given product category) how the style elements could be combined and when to
adopt a particular style (timing). For example, Onida's KY System highlights
the sound (audio) aspects of the brand, which is considered as important by
consumers in India. Tea combinations of brands vary across the nation as tastes
differ in different regions. Kinetic Honda, which entered the Indian markets in
the scooters category during the 1980s with a different design, initially faced
perception problems among consumers who doubted its utility and effectiveness
on Indian roads. Hero Honda's Street, a premium two-wheeler built for city
rides, resembled the Bajaj M-80 step-through vehicle, which was priced at the
lower end, and this may have created similar perception problems for the brand.
For a long time, detergents were associated with blue colour in India. It may be
more than a coincidence that Anchor toothpaste brand, which captured a
significant market share within a short period of its launch, has a packaging that
incorporates graphics very similar to that of Colgate which has been associated
with the consumer psyche for several decades. Despite the aesthetics provided
for four-stroke scooters, in the form of a different design, they have not taken
off in the Indian context (Legend, Spectra) in a big way. There may be
categories in which consumers do not ascribe primary importance to physical
design and looks of brands (this would also depend on the target segment).
Rimless glasses have become the fashion in urban cities. In the two-wheeler
category, style-plus features approach may be working (Hero Activa). The
second aspect of aesthetics, namely theme, refers to brand names, symbols,
slogans and jingles used in advertisements. For example, should a brand like
Titan use the same jingle (the popular Mozart piece) or different jingles could
constitute a crucial decision, which affects the image of the brand and the
company. Bring home the leader was the slogan used by Videocon in its
advertisements (along with the lion which is normally perceived to be a leader
in the jungle). Recently, the lion visual is found in the advertisements reflecting
the brand's changes in its theme.
Brand Awareness and Brands
In a highly competitive environment, choosing brand names could be important
from the viewpoint of brand recall and enhancement of brand awareness. Short
and simple names are easier to recall as consumers can store them well in their
memory (Kodak, IBM, Titan and Maruti are examples). Pronunciation is
another important aspect which is associated with brand recall. Tata Kapi is a
brand name introduced in the category of coffee and it is in consonance with the
pronunciation of coffee as Kapi, among South Indian consumers who form a
major chunk of the coffee-drinking population. Fiat is certainly more easier to
pronounce than Hyundai and perhaps for this reason, the company has brands
which could be pronounced easilylike Santro or Sonata. Honda selected the
name Accura for its premium offering as it connotes precision in several
languages. Familiar and meaningful names also enhance recall. Vendee was a
brand name of a loosely sold edible oil through vending machines. Park Avenue
was the brand name selected by Raymond for its ready-to-wear apparel as it had
American associations (the company had launched the brand Legwear earlier).
At times, a well-known brand name could become a generic name which gets
associated with the product category itself (like Dalda, Aspro and Xerox). This
may be disadvantageous to the brand as consumers associate the category with
the brand. The brand loses its identity and hence its recall. There is another
situation when a brand pioneers a particular subcategory (in a specific category)
but does not brand the sub-category appropriately. This happens when a brand
has a dominant market share and has a pioneering lead in the market. Britannia
made an entry in Nice, Marie and Bourbon type of biscuits and for a long time
there were no brands in these sub-categories (for decades). But today, there are
several brands which have these offerings. Parle created a very strong
association with glucose biscuits taking advantage of its early entry. Its
association with the sub-category is so strong that even Britannia had to use a
sub-brand Tiger to get into the lower end of the market dominated by glucose
biscuits. The competing brands also have an impact on how consumers
remember and recall brands. The television category includes simple names like
Videocon, Onida and BPL. LG and Akai are recent brands which have made
significant progress. It is interesting to note that brands like Onida and Akai are
not exactly ethnic sounding, but being short brand names they are easily
remembered and recalled. Titan is well recalled in a category which was
dominated by HMT for a long time. A good example of a short and meaningful
brand name is the computer manufacturer's brand Power book. The company
wanted to brand a new offering of a portable PC and it came with Power book,
which combined two common names rarely used together and it reflected the
compactness of the product design (being compact), which offered power.
There could be several brand names generated out of morphemes (a morpheme
is the smallest linguistic unit having meaning). There are about 6000 such
morphemes in the English language. Videocon is perhaps a combination of the
words video and consumer!
Brand Elements
Brand elements (also referred to as brand identities) consist of brand names,
logos, symbols, characters, celebrities, jingles, packages and signages associated
with the brand. Brand elements are important in building brand equity, brand
associations and brand recall. The basic question which brand elements address
is How would the consumer think or feel about the offering if they only knew
its brand name or logo? For example, Head & Shoulders may evoke images
which are different from the ones which the consumer can think of when he/she
hears Chic, though both of them belong to the same shampoos category.
Horlicks has been attempting to revamp its brand elements in recent times.
Under such a situation, it may be worthwhile to research into what consumers
think when they hear the brand name Horlicks. Convalescence, children,
energy, nutrients or mother's warmth or a combination of these aspects?
Complan, which also competes in the same category of milk additives, could
trigger the following imagesgrowth, warmth, caring mother, family, etc. In
choosing brand elements, the following aspects need to be considered
memorability, meaningfulness, likeability, transferability, adaptability and
protectability. Memorability means that the elements should easily be
recognized and recalled. Meaningfulness is associated with how persuasive the
message should be and how it has to take into consideration the product
category information. For example, a string of celebrities (including Sachin
Tendulkar) were used by Nesfit, the brand of glucose from Nestle, almost a
decade back. The packaging had a white background as against the green
packaging (even offerings from unorganized sectors follow this packaging)
normally associated with glucose. There are chances that consumers may
perceive a lack of connection between the brand and the category if a brand
deviates from elements, which consumers associate with. A brand of edible oil
used a negative appeal in its advertisements (on how heart problems could be
associated with the usage of the wrong edible oil) when most brands were
highlighting taste, warmth and health. This may lead the consumer to conclude
that the brand is most suitable for patients recovering from heart problems.
Persuasive aspects of meaningfulness is associated with highlighting specific
benefits or attributes of the brand. Puf was the attribute highlighted by Godrej
refrigerators and it appealed to consumers. Herbal variants were introduced by
Hamam in tune with the back to nature attitude of consumers. Body Shop, the
brand of cosmetics from the UK, not only emphasizes the herbal nature of its
offerings; it also underscores the fact that its products are not tested on animals
(an emotional benefit). Likeability examines the degree to which consumers
visually and verbally like the brand elements. Associations are strongly
influenced by likeability and they contribute to brand equity if it is positive.
Several consumers may be buying several brands of FMCG across categories
based on likeability (besides the benefits being offered by these brands). Pepsi is
a good example of likeability that was created using cheeky and humorous
themes in advertisements featuring popular cricketers. Transferability refers to
the extent to which the brand elements would have a favourable influence in
case the brand is extended to a category within or outside its present product
class. For example, the germ-killing action proposition of Dettol, supported by
several brand elements over the years, may have made it possible for the brand
to extend itself to soaps, shaving gel and floor-cleaning solutions. Adaptability
deals with how brand elements could be adapted to changing times, with regard
to competition and consumer preferences. Onida and Fair & Lovely serve as
good examples of how they have adopted the brand elements over a period of
time. Onida has retained its devil logo, but has made it more friendly. Fair &
Lovely, which started with fairness message as a benefit, has extended its
appeal to confidence through fairness, with appropriate jingles. Protectability
refers to how brand elements could be protected legally and in a competitive
sense. Dettol had to provide an explanation for its claim that its soap provides
antiseptic protection.
Brand PositioningThe Pitfalls
Is the brand differentiation clear?
In a competitive context, consumers will include a brand in their consideration
set only if they clearly perceive a difference in the brand. Creating brand
awareness alone may not help the brand to be considered by consumers. While
Anchor toothpaste resembles Colgate in packaging, the vegetarian proposition,
a deep-rooted value proposition in the minds of the consumers, in states such as
Gujarat, reflects a clear differentiation. Total toothpaste from Colgate was
launched in the mid-1980s with several benefits as a proposition. But, the 12-
hour proposition with a celebrity, provided clarity to the differentiation when
the brand was re-launched. Himalaya brand provides a clear differentiation by
associating itself with the traditional ways of healthcare. In certain categories
such as soft drinks, the differentiation depends on the development of brand
personality rather than on the tangible benefits. Adequate care should be taken
to ensure that it results in a benefit (functional or psychological) to the
consumer. A soap being advertised as a transparent one is not a brand
differentiation; the same offering being associated with blemishless skin
provides a differentiation. A pain balm which is non-sticky in nature offers a
differentiation which is functional. In addition to serving the core need, this
proposition also serves the convenience aspect.
Is the positioning a timely one?
Fill it, shut it, forget it from Hero Honda, reflecting its mileage, and the all-
round benefits of TVS Victor bike are examples of positioning aspects, which
are timelythey seem to provide those benefits which customers expect in a
market full of several offerings. The low cost, no frill positioning of Maruti in
the 1980s was also an example which could be classified under this category.
The brand which develops a timely offering should be the first to project the
timely positioning. Titan was not the first brand to go digital. There were a
few brands which had the timely offering in the market. The computer giant
Dell has carved a niche for itself worldwide with its customized value
positioning orientated towards its online ordering system. While Oxemberg, a
brand of ready-mades, provided a value proposition, much before Peter
England, it was the latter which went national to further the value proposition
('honest shirt'). This was at a time when ready-made shirts were gaining
acceptance among consumers. When consumers were showing a strong
preference towards herbal cosmetics, it was Fairever which launched the herbal
fairness cream ahead of the leader Fair & Lovely. It may be worthwhile to track
the changing expectations of consumers to obtain insights into how a new brand
could be positioned. Extreme caution is to be taken in that there may be several
kinds of expectations concerning an offering/brand. Marketers should be able to
decide the effective positioning that will appeal to consumers at a given point in
time. During 1970s, herbal shampoo might have been perceived as offerings of
home-made ones. In the present-day context, it might attract adequate attention
if packaged and positioned appropriately. Hindustan Lever, which has been
marketing shampoo offerings for several decades, launched the herbal brand
Ayush in tune with changing expectations. The other aspect of having several
expectations from an offering refers to the importance placed on several benefits
associated with it. This could also change with time as the category evolves. A
shampoo brand could position itself on active ingredients, silkiness of the hair,
glamour, and the strength the shampoo would impart to the hair. It is important
to track the perception of consumers on the importance given to each of these
factors.
Is the brand over-positioned?
Over-positioning occurs when consumers are unable to associate the positioning
with any benefit. A brand of detergent positioning itself as an offering with
smart eyes is likely to perhaps make the consumers think hard about the
benefit and positioning. The brand may be effective in terms of functional
performance, but the proposition is such an uncommon one that may not be
simple to comprehend. A brand of toothpaste in the 1980s had the proposition
that it would spread in the mouth. Consumers may not associate the spreading
action of the toothpaste with benefits expected from a brand in the category.
Is the brand under-positioned?
Consumers may not realize that the brand has several beneficial aspects. For
example, one aspect could be the price range associated with the brand. Foreign
brands entering India are likely to be associated with a higher range of prices
though they may have offerings/variants in the lower range (relatively). This has
happened in categories such as jeans and sunglasses.
Doubtful positioning?
Consumers start suspecting the credibility of the brand if there are doubts about
its claims. A brand of cream positioned simultaneously as antiseptic lotion,
shaving cream, cleansing cream and facial cream may find it difficult to convey
this positioning, because each of the categories associated with the offering has
evolved with specialized offerings.
Brands and mass markets
Businessweek's frequently listed top brands for the past many years are Coke or
Coca-Cola, Microsoft and IBM (the value of these brands range from about $69
billion to $50 billion). While branding strategies offer several advantages to the
marketer, one fundamental question which should be addressed by marketers is
whether there is really a need to spend on brands if they target the lower end of
the market (bottom of the pyramid).
The following aspects would interest mass market companies or companies
(perhaps even regional brands or local offerings) which may be interested in
developing offerings for the lower end of the market.
o Is the product category familiar to consumers?
o Are the lower end price points explored by existing offerings?
o What is the level of substitutability of a given product category?
o Would consumers be interested in upgraded offerings or would they use
the upgraded offering sporadically?
Product category familiarity
While attempting to upgrade consumers at the lower end of the market, there is
a need for marketers to know whether consumers are familiar with the product
category. When a large multinational brand of baby food entered a developing
market, it found that consumers were not familiar with the category, resulting in
wrong usage of the product. One aspect is the usage, and another aspect
associated with familiarity is the appreciation of value. Unless consumers are
familiar with the concept of washing machines, they may not be able to
appreciate the value-based semiautomatic machine from a brand like Videocon.
Consumers are familiar with quartz watches and they are able to perceive value
in the new brand Maxima, which has a number of watch models targeted at the
lower end of the market. Shakti Bhog is a brand of atta in the northern markets
of India and it is perceived as a value brand. The same familiarity may not be
applicable to categories like mouthwash or perhaps fabric softeners. If the
familiarity is low, an offering has to not only sell the concept to the target
segment, but also design the offering in such a way that consumers would be in
a position to try out the product in terms of affordability. Rexona's deodorant
launch in low-priced variants is a very interesting example of this approach.
Shampoo as a category, which has at present reached very high levels of
familiarity, owes its success to sachets sold at very low price points. The
category of shampoo, traditionally, was more associated with luxury rather than
with necessity.
Another important concept related to the familiarity aspect is the importance
given to a product category (product ladder) among the various segments at the
lower end of the market. Mixers (used for processing food) have caught on
among the middle class, because it can benefit the consumer hard pressed for
time in an urban environment. Mopeds as a category is very popular in some
semi-urban and rural parts of the country, because it is a priority for the small
trader to carry the merchandise and it also makes him mobile without being
dependent on the infrequent (relatively) public transport. The importance given
to a category is critical because of the generic competition, where a number of
products compete for the purchasing power of the price-sensitive consumer
(who has limited amount of purchasing power, in fits and starts). A typical
average consumer at the lower end of the market may not regularly buy branded
detergents, shampoos, toothpastes and soaps. He/she may alternate between
branded offerings across categories, and an offering perceived to be low
on price and adequate on functional features would have a greater degree of
being chosen more frequently.
Are lower end price points explored by current offerings?
In a number of categories, the lower end price points may not be explored by
marketers, though some national brands have attempted this often and they have
been successful during certain times. A brand built on a low price, no-frill
offering could use it as an extension to explore related product-line items. Tiger
from Britannia provides a good example of using this approach. After having
achieved success at the lower end of the market, competing largely in the
unorganized sector, the brand has launched cream variants at (relatively) low
price points. Household appliances, fans, plastic products for households, fast
foods, snacks and ice creams are areas, in which low price points could be
further explored to offer the right product for the target segment. In the area of
fast foods and snacks, some brands have been launched in recent times, but the
price points (for a given quantity or volume) are too high to touch the mass
markets and they are targeted more to the higher end consumer who prefers
convenience, taste and hygiene and is prepared to pay a price for it.
Substitutability
Mass-market consumers are more likely to down-trade (switch to lower priced
offerings) than consumers at the higher end of the market. Any offering should
decide on value after taking into account the substitutability associated with
the offering. In recent times, there has been a marked down-trading in several
FMCG categories. Would a consumer buy an offering (which is based on value)
more number of times if he/she perceives value taking into consideration the
substitutes which may be used currently? In certain cases, there may even be
branded substitutes which need to be taken into consideration (toothpastes and
tooth-powder are examples). Shampoos and certain herbal soaps, which are used
for hair care, could be another example of substitutability. Facial creams and
soaps, which contain fairness ingredients, can be one more situation where
consumers may substitute offerings. One strategy of marketers would be to
encourage consumers to increase the frequency of usage of the branded offering
though in general, consumers may down-trade to balance their monthly flow of
income, especially during times of recession. A consumer who down-trades
from a detergent like Wheel to a cheaper bar soap could be still motivated to use
the lower end brand of detergent for specific and selective occasions. Home
made versus branded readily available fast foods could be an option for the
consumer in entry level marketswhen he/she desires convenience and speed,
there could be the branded offering for which a slight premium is charged and
the consumer over a period of time increases the frequency of the branded
offering provided value is perceived. The only precaution required in this case is
that the price as perceived by the consumer should be within the plausible
rangethe consumer should not think that there is a heavy premium. Meera,
the brand of packaged herbal powder in some of the southern markets is a good
example. Consumers use either this herbal powder which is home made or
unorganized offerings for hair. Meera is priced moderately higher than
competing offerings, and offers value in this mass-market category.
Mass markets offer a huge potential to marketers who could develop appropriate
offerings. The best advantage they would have is the positive WOM if the
offering is accepted by consumers.
Product-centric marketing strategies
With the proliferation of advertisements across categories (both products and
services), there may be a need to go back to the fundamental question of why
consumers buy most product/service categories. It may be appropriate to state
that the product-centric approach is not opposite to the one which may use
brand personality/emotional aspects. The objective of this section is to highlight
the importance of managing a product-line, taking into consideration the
motivation of consumers in buying products and services. There are two basic
aspects which need to be considered in an approach which considers the
product/service-centric approach: the nature of the product category and the
changing aspects concerned with a category.
Marketers should know how to respond to these aspects, taking into
consideration a variety of factors ranging from product development to timing
of a new introduction.
1
Al Ries and Laura Ries Origin of Brands, Harper-Collins, 2005.
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Marketing and Branding: The Indian Scenario

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1: Application Of Product and Brand Related Strategies

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3: Dimensions of Pricing

2
Dimensions of Distribution and Retailing
The Distribution and Retailing Theme
One of the major aspects of marketing which has undergone a radical change in
a short time in the Indian context is in the domain of distribution and retailing.
This is important especially in the Indian context, because in emerging markets
like India, the retail density (the number of retail outlets for a given number of
consumers) is rising against the trend in developed western markets, where there
is no such fragmentation of retailing. The challenges posed to Indian marketers
are unique, as they have to compete between the traditional neighbourhood
outlets, as well as with the likes of big business such as Shoppers' Stop or Big
Bazaar. The distribution and retailing theme covers three major issues. The first
issue includes basic factors that are involved in distribution/retailing decisions.
The second issue deals with various aspects linked to retailing, such as planning
the retail outlets, positioning outlets, retail equity, point of purchase, retail
loyalty, category management and issues related to managing the merchandise.
The third aspect relates to the futuristic aspects of retailingelectronic retailing.
Pertaining to the three major issues dealt within this part, the relevance of
retailing and distribution strategies to the Indian context is highlighted.
Distribution and Retailing
Marketing channels are interdependent organizations, which make the product
or service available for consumer consumption. India might go through a
revolution in the days to come, but it would take a few more years before the
country has a chain similar to Wal-Mart in the US (which registered a turnover
of about US$ 285 billion as annual sales during 2004-2005). Retailing is
associated with selling the product or service to consumers for personal (non-
business) use and could be considered as the final phase of the channel process,
before the products are utilized by consumers. India's unique distribution
structure poses numerous challenges for any large multinational company
(MNC) entering the country. India's retail density (number of outlets/500
consumers) has been steadily increasing in the last four decades when compared
to the decreasing retail density in developed countries. This is because of the
high degree of fragmentation of retail outlets. About 98 per cent of the retail
sale occurs in small shops (kirana stores) and India has about 12 million
traditional outlets throughout its length and breadth. Sixty-five per cent of these
outlets (most of them being kirana/neighbourhood or pop and mom stores) deal
with fast-moving consumer goods (FMCG) and the retail industry is worth
about Rs 900 crore. Departmental outlets such as Food World (which are of
recent origin) contribute about 2 to 3 per cent to the total retail sale across
categories and also cater more to the urban population. These stores cater to
the urban upper middle class, probably the consuming Indian middle class
segment which earns Rs 45,000 to Rs 2.15 lakhs/annum. They bargain with
manufacturers on large volumes and attempt to create value in their offerings by
pricing them lower or by offering sales promotion packages. At the other end of
the spectrum, Hindustan Lever covers rural markets through several thousands
of self-help groups (SHG) in rural areas. These groups comprise entrepreneurs
funded by banks/co-operatives in a limited way and they carry limited stocks of
the company and turn them around by reaching the consumers in villages. There
have also been low-price margin-free shops, which have come up in several
urban regions. Metro, the German retail network, made a controversial entry
into India by offering several brands at prices much below the maximum retail
price (MRP). Though the retail network was permitted to be a wholesaler (not
selling in retail to end consumers), competitors have raised a furore about its
trade practices (19 October 2003, The Indian Express). The need to sell
commonplace FMCG at rock bottom prices seems to be the cutting edge of
retail competition. Distribution and retailing strategies vary across product
categories. In services, hospitals are beginning to form franchising arrangement.
A franchisee is a retailer who would use a well-known brand, and manufacture
products or services, according to the specifications provided by the
manufacturer or the owner of the brand. Though franchising is new to the
hospital sector, it has been common in consumer goods such as soft drinks and
ice creams for last several decades. Apparel brands such as Arrow, Park Avenue
and Van Heusen have developed exclusive outlets as they contribute to their
premium image. While all these outlets may not register high profits, they are
expected to provide the shopping ambience which goes with such premium
labels. Cost considerations make an impact on distribution decisions, as huge
investments are involved and these decisions are generally irreversible.
Footwear is a category in which there are not many brands with a strong
national retail network. Bata's strong network is because of its historical
presence. The unorganized sector represents about 75 to 80 per cent of the total
market, and changing styles and preferences also make it complex to build up a
huge network of distribution for FMCG product categories.
TOUCH OF REALITY
Indian retailing has tremendous opportunities at the higher end of the retail
market, which is associated with lifestyle products. In today's context, the
symbolic value of products and brands matter to the consumera feature that
can be used by retailers who would like to deal with a variety of
products. Product complementarity is a concept which groups together different
categories of products based on their symbolic meaning to consumers. For
example, an upwardly mobile executive in a metro may be using formal branded
apparel such as Louis Philippe, an upper-end Titan watch and perhaps Ray Ban
sunglasses. The examples are just illustrative, but the spirit of the concept is to
arrive at a constellation of products that will appeal to a target segment based on
the lifestyle kind of segmentation. The categories could also be high-value
durables, which have a social signalling value. It is interesting to note that such
theme-based symbolic stores are yet to catch up in the Indian context.
Importance of Value Chain
In today's context, distribution and retailing has to be viewed as a chain of
activities. Large companies and large retailers (like Shoppers' Stop) use
software packages to manage the value chain. As the complexity of distribution
increases with several product categories, customer segments and different
packages/styles/variants, the costs also increase and the concept of value chain
becomes important. Supply chain management (SCM) is an important and
central part of managing the value chain. Value chain is a series of design,
business activities that are performed to produce, market, deliver and service a
product for consumers. Product development, order fulfilment, quality control,
cost management, information systems, procurement of raw materials and
managing customer returns (involving faulty products) are the various activities
in the value chain. Value delivery chain involves several groups of people who
carry out value chain activities. For example, for a commodity like Annapurna
atta, the value chain involves growing and harvesting wheat, selecting the best
grains, storing them, processing them in a factory, preserving or storing the atta,
managing the logistics or sending it to several parts of the country through
depots, wholesalers and retailers before it reaches the consumers. Quality
control and preservation of the product, sourcing the right wheat, vendor
management, logistics management and matching the retail supply with
procurement after understanding the demand for the brand at several markets in
the country and optimizing the costs of these activities are all a part of SCM.
Hindustan Lever Limited has about a hundred manufacturing bases in the
country; it is into several product categories, which include tea, soaps,
toothpastes, food, shampoo and beverages. It caters to about 1 million outlets
through a system of distribution and each of the brands may have several
variants. It is in this context that the concept ofstock keeping units
(SKUs) becomes important. An SKU is a unit of a product; it could be 50, 100
or 250 g of tea or 1/2 or 1 kg of detergent like Surf Excel. Each unit (packaging)
is an SKU. The company has to manage about 1000 SKUs. The complex
problem is that each region in the country would have specific preferences for
specific SKUs. SKUs will also have to consider the shelf-display place.
Information technology employed by companies such as Hindustan Lever helps
the company to match the demand and supply considerations with optimal costs
of logistics and value chain activities. Planning is a continuous process, taking
into consideration the preferences of the consumers, profitability of the firm and
the servicing levels required by retailers. Information technology is also equally
useful in the apparel category where fashion changes require careful handling of
demand preferences and SKUs. For example, a company dealing with apparel
for men and women will consist of shirts, trousers, ties, evening wear and suits;
and each of these may have several designs, sizes and colours. On an average,
an apparel store in India loses one in every three customers because of non-
availability of the desired offering (KSA's annual consumer behaviourstudy
Consumer Outlook published by one of the ET Knowledge Series
publication
1
): a typical fashion store may have about 65,000 SKUs. These
explain the complexity of operations associated with managing the supply
chain. Besides, there is also the monitoring on various vendors and changing
them if required. Distribution could involve both exclusive outlets and multi-
brand outlets (MBO). For example, Arvind's, Arrow, Lee and Wrangler are sold
through 130 exclusive outlets and 400 MBO.
TOUCH OF REALITY
The rural market in India is geographically spread out and has about 6,27,000
villages where 70 per cent of the population of the country lives. One of the
major challenges which marketers has to face is to establish a distribution model
that will help them to penetrate into villages and 90 per cent of the Indian
villages have a population of less than 2000. Given these facts, any company
which launches a major plan to capture these markets cannot expect to break
even within a very short time. ITC launched the e-choupal initiative in 2000. It
has about 5300 e-choupals covering about 33,000 villages. An e-choupal is an
internet-based initiative in which a local citizen belonging to the respective
village (either a postman or a farmer with whom the local people could relate to
on a daily basis) operates the computer. The venture is targeted towards farmers
and any farmer in the vicinity can obtain the prices of different commodities in
various markets, get advice on fertilizer and agricultural methods and can also
know the weather forecast. These aspects are likely to improve his agricultural
productivity and most e-choupals are within 3 km reach of farmers. E-Sagar
(located within 25 km travelling distance from a group of villages) is a variant
of the venture where farmers can transact business. Over a period of time, ITC
plans to set up supermarkets linked to the venture so that the farmer could also
complete his purchases with the money he earns from his transactions. Project
Shakti from Hindustan Lever Limited is another venture designed to penetrate
into the villages. The method involves selling a basket of the company's
products to a woman entrepreneur (who is normally from an SHG, given a small
funding from a bank/co-operative) who in turn sells the brands to consumers in
the village. From the company's viewpoint, it need not have a local distributor
(the products are delivered to the entrepreneurs through carrying and forwarding
agents), and from the social viewpoint, this method provides a livelihood to
rural women who will be able to supplement the household income. Currently,
5-6 per cent of the company's sale is obtained from Project Shakti and about
15,000 entrepreneurs cover about 60,000 villages.
Supply Chain and Strategies
Any large company or distributor would have to invest in an SCM software.
Metro, the German retail brand, entered India with an investment of about Rs
176 crore for its 6500 sq.ft. showroom that caters only to corporates and
retailers (21 October 2003, Times of India). Given the low-priced strategies,
there would have to be a systematic and planned SCM process, which would
involve information technology. It may be worthwhile to discuss what the major
implications of using SCM on the distribution/retailing strategies are. In an era
of globalization, supply chain strategies become critical to the success of
brands. Carrefour is an international retailer with presence in 33 countries. It
demanded from a fast-moving consumer good (FMCG) company that the lowest
price in any country be the global price for any SKU (any item of a brand). The
company estimated that if Carrefour's demand is granted for every unit of a
brand produced by the company, the company will lower its revenues from the
retailer by 7 million Euro on a turnover of 100 million Euro. The following are
the advantages of using an SCM.
(i) The company will be able to link the demand at the consumers end (in
several markets) and adjust its inventory of products and SKUs.
(ii) Vendor management gets streamlined as suppliers could be approached with
appropriate specification.
(iii) The positive aspects of inventory also benefit logistics, which depend on
the volume and mix of merchandise. Cost savings are possible because of the
optimization of costs and logistics.
(iv) Choosing the right manufacturing location depending on the demand for a
mix of products in a given market also contributes to inventory, product range
planning and logistics.
(v) Integration of the company with the information of the vendors is another
advantage, which could result in a quick response to changing market needs.
(vi) On an average, only about 54 per cent of the fashion and lifestyle retailers
receive their stock on time and SCM can enhance such delivery aspects.
Shoppers Stop has an SCM system, which enhances its strategies in a number
of ways. The chain has nine stores across India and each one has an area of
about 25,000 to 45,000 sq.ft. There are 300 suppliers. The chain has Enterprise
Resource Planning system that takes care of merchandising and vendor
management. Variety, colour and size of the offering are important to customers
as the company is in the lifestyle/apparel business. There is an auto
replenishment system (ARS) that links the distribution centre and the outlets of
the chain. This system updates the inventory with specification on size, quantity
and colour as the merchandise is sold out at the outletsthe warehouse
management system (WMS) serves the objective to optimize the warehouse
space. The ARS and WMS work in synchronization with each other and ensure
that availability of the required stock is maintained at the outlets preventing
stock-outs at the retail point. There is also a continuous inventory system that
receives inputs on different types of offerings (there are 52 merchandise
departments which operate on the classification of merchandise). As a result of
SCM management, the cost of logistics has decreased. The company evaluates
its distribution efficiency based on the time taken for the products from vendor
to centre and from centre to store. The company has three distributive centres in
three cities and these centres operate round the clock to ensure supply to the
stores. As a result of SCM, the stock-turn (the number of times a stock is turned
overhigher the better) is 5.5 times retail chain of stores. In a highly volatile
category like apparel in which trends and fashion changes are frequent, the high
stock turnover offers a distinctive advantage in terms of cost savings on
inventory. This is to be compared with several brands, which go on a sales
promotion simply to get rid of colours and designs which have not sold because
they are not in the topical fashion bracket. About 65 suppliers are directly
connected to a Web-enabled procurement system and the company is able to
share the data on inventory with them in a gap of 24 hours. The company is also
working on an automatic ordering system which could be used for merchandise
which is not affected by trends in fashion.
Factors to be Considered Before Selecting Distribution
Channels
As distribution channel decisions involve a long-term commitment of
infrastructure with huge investments, the following factors are to be considered
by a firm before making a decision on distribution: (1) type of target segment,
(2) the company's existing infrastructure, (3) the type of product, (4)
competition in the specific category and (5) alternatives available to the
company for distribution. The type of target segment is important because it is
not only the reach which matters, but the symbolic aspects associated with the
brand as well. Even in a commonplace category like soaps, Dove is not
available in all outlets, which sell soaps because of its exclusive and premium
features. Given the upmarket target segment and the premiumness associated
with the brand, it is selectively distributed in large outlets or departmental stores
like Food World. BPL, Carrier Aircon and Raymond have exclusive showrooms
to showcase their range of products. With smaller SKUs becoming popular in
categories such as biscuits and chocolates, companies are identifying distinctive
channel arrangements, which would focus on specific segments. Cadbury has a
distinctive channel arrangement for offerings below Rs 5 (this price point
accounts for about 50 per cent of the chocolate market by value). Even in the
category of watches, Titan had to have a distinctive set of distribution for its
Sonata range. LG at one point in time displayed its products in gymnasiums in
specific cities to attract the attention of the target segment. Bru and Taj Mahal
brands are increasing the use of vending machine to reach out to consumers in
an attempt to increase the out-of-home consumption. Mont Blanc, the global
premium brand well known for hand-crafted pens, has a limited number of
exclusive outlets the world over and this reinforces its symbolic appeal. Food
World, with its chain of stores, provides an assortment of commodities
(including store brands), other FMCG categories and vegetables to attract the
upper middle class. Cadbury has also introduced a technology, which would
enable the consumer to order from a vending machine through his/her mobile.
This was tried in a few outlets with the objective of increasing the consumption
of the brand. The company's existing infrastructure is also an important factor
for channel decisions. BPL deals with Televisions (TVs), CD players,
microwave-ovens, refrigerators and music systems and can use its network for
the different categories. ITC, with lakhs of outlets selling its cigarette brands,
has launched biscuits and snacks and a number of these existing outlets would
now also carry its new categories. Hindustan Lever is another company which
has leveraged its channels for carrying a number of its product categories. The
type of product may also demand a specific channel arrangement. Ice cream, for
example, demands a huge investment in the cold chain; and for a national brand
like Kwality Walls, this would involve a major commitment. The investments
are so large that profitability aspects would have to be given a serious
consideration especially when the unorganized and regional brands (Arun, Joy,
etc.) offer an established range with lesser overheads. Washing powders used
for utensil cleaning (scouring powder) is one more category where it would be
difficult to have a national network given the low price of the product and cost
of logistics. Hence, Vim is probably the national brand which makes use of the
distribution synergy (it is from Hindustan Lever). Mineral water is another
category in which the plant location plays an important role in the logistics
concerning distribution. It may be noted that Aqua Fina, Kinley, Bisleri and
Bailey are the national brands with manufacturing plants across the country.
Baskin-Robins, the premium brand of ice cream catering to the upper end of the
market, has limited operations confined to a few localities in urban markets.
Competition too has an influence on channel decisions. Titan, for example,
categorized a few MBO as Timezone providing a few services to these retail
outlets. This is because of the large number of offerings in the category from the
unorganized sector. Various alternatives that are available also matter to a
company. Vendee, a brand of edible oil, chose vending machines to deliver
good quality edible oil in the unorganized sector over others who sold loose oil
to consumers at the lower end of the market.
TOUCH OF REALITY
Organized retailing is just about 2 per cent of the entire retail industry in the
country. But, malls and supermarkets are one of the major trends in retailing in
urban markets, Pyramyd started its supermarket in mall Crossroads in Mumbai.
While there is a sizeable population that will get attracted to malls in a
metropolis, footfall (the number of people visiting the place) alone will do little
for the revenue of a mall or any other large format retailing. About 1.5 lakh
people visit Crossroads during weekends, but Pyramyd is unable to focus on
conversion (the number of people who actually make a purchase on visiting the
retail outlet), because most of the visitors are not serious shoppers. Besides, the
location of a mall in a prime area in the city requires a critical mass in terms of
purchases made by consumers. Large format outlets either will have to depend
on low-priced, high-volume merchandise or deal with premium products/brands
which will give them margins. The neighbourhood or the kirana type of shops,
focus on low-priced products, and hence the latter option of dealing with
premium products is an attractive one for malls/supermarkets subject to the
availability of the appropriate target segment. Large format outlets have to also
plan for optimum security with few entry points to avoid pilferage and also
ensure that display of merchandise is well within the visual range of consumers.
Building relationship with consumers is one more vital strategy for large format
outlets. Pyramyd has a loyalty programme for consumers buying between Rs
5000 to Rs 50,000 on a single day. During the first year of operation, the outlet
had 20,000 members in the loyalty programme accounting for 35 per cent of
business of the outlet.
Distribution Conflict
The proliferation of retail outlets and the need for brands to drive exclusive
retail outlets to enhance their image, and the importance of reaching out to
consumers have added a new dimension to the complexity of distribution
managing distribution conflicts which could be extremely devastating for a
manufacturer. In FMCG product categories, there is pressure for the
manufacturer to enhance the margin. At the same time, any large manufacturer
would have to also deal with outlets such as the Food World chain because of
the volumes involved. A few years back, MNCs had to deal with problems
posed by retailers in Kerala and margin was the main issue. Kerala contributes
significantly to the turnover of a large FMCG company. In the apparel market,
two brands face the problem of balancing the different pressures of retailing
with regard to distribution conflict. Peter England has exclusive showrooms and
the brand is also retailed in about 2000 outlets. Planet M is an upmarket retail
chain from Madura Coats, which deals with Van Heusen, Allen Solly and Louis
Philippe. Even the premium brands may not have reached a situation where they
could completely avoid MBOs and these two strategies may create a distribution
conflict. A number of Planet M stores may be located in shopping areas where
good MBOs may also be located, and these may also be retailing other premium
brands. They may also have a well-entrenched customer base. Durable brands
such as Videocon and BPL would also have to tackle such problems when
exclusive outlets are planned. There are a number of specific areas in which
distribution conflict could occur, Pricing at the retail outlet combined with retail
format (type of retail outlet) is one aspect. For example, a number of apparel
brands are opening factory outlets which dispense off slightly outdated designs.
For a common consumer in the target segment, these may be attractive as they
are discounted. There may be retail outlets selling the same brand not far away
from factory outlets. Location of such outlets away from the city (as in
developed markets) may be an option, but given the fact that only a small
percentage of consumers would have either the transport or the motivation to
drive to the outskirts of a city, such options are not viable unless created on a
large scale similar to Big Bazaar (Bangalore). Product return is a sensitive area
of conflict in which regional brands may score over large national brands. Tea,
biscuits and cosmetics are categories where regional brands have more
flexibility to take the inventory back. With their growth and profit margin of
these regional brands, retailers could get into a conflict with larger companies.
Service levels also could cause conflict. The typical retailer dealswith several
brands across categories and they are a mix of slow and fast moving
merchandise. The levels of service could vary between one brand and another
(sometimes it could be seasonal) and this is vital for the retailer as he depends
on the inventory turnover. Manufacturers could vary their service levels (supply
of merchandise) in accordance with the intensity of demand in various places in
a given market. The demand for sandal wood talcum powder may be heavy in
several towns in the south and moderate in a few other towns. A manufacturer
who operates under constraints of logistic costs may not be able to ideally serve
both kinds of towns. Allocation of merchandise during a specific season may
also give rise to conflicts. During Diwali season, there may be a large outlet like
Vivek & Co. demanding the shipment of large number of durable products
TV, refrigerators etc., and there may also be normal outlets, which experience a
spurt in demand.
Retailing StrategiesTypes of Stores
One of the basic strategies in retailing either for a retailer or for a chain of stores
is to decide on the type of store. A retail store strategy should take into
consideration a combination of factors such as location, timing of the store,
assortment of products, service levels, advertising, prices and the type of
ambience. The ambience especially plays an important role depending on the
type of target segment as well as the type of products sold. Food World's
ambience is different from that of the book outlet Landmark or Shoppers' Stop.
A convenience store is one which stores groceries, beverages and some personal
care products. Most small retail outlets (neighbourhood stores) belong to this
category. The Indian population depends predominantly on this type of outlet.
Most of these retailers, especially in urban markets, provide excellent delivery
service generally at all times during the day in their neighbourhoods. This kind
of service is something even large departmental stores may not be able to match
especially for the middle class consumers of the country. While large stores may
have variety and sales promotion, these small retail outlets provide services
regardless of the bill per occasion for the neighbourhood consumers wherever
they are located. An additional element associated with these kinds of kirana
stores is the credit given to consumers who may buy in small volumes. It may
be extremely difficult to wean away consumers from these type of stores though
no margin type of departmental stores have come up in certain urban pockets.
A supermarket in the Indian context is very close to Food World type of stores.
A few decades back, supermarkets In India were associated with elite
consumers. But chain stores, for example Food World and Subiksha, have
largely altered this perception in recent times in cities. Supermarkets and
departmental stores, by the western definition, have different retail formats, with
departmental stores more associated with fashion wear and apparel displays. A
supermarket like Food World attempts to provide merchandise concerned with
FMCG and commodities, which are used on a daily basis. The strategy has a
mix of variety in terms of brands and SKUs, sales promotion which bundles
products/brands and discount offers on specific brands at any given point of
time. One recent aspect that could be noticed in these types of stores is the
presence of private labels in tea, food items and ready-to-eat snacks. These retail
chains have tremendous bargaining power with manufacturers of branded
FMCG and some of these FMCG companies have dedicated marketing
professionals to deal with these chains. With the development of private labels,
the bargaining power of these chains is bound to increase over a period of time.
At the same time, most FMCG companies would also find it impossible to
ignore these chains as they are becoming popular with consumers, owing to
their acceptable quality and low prices on branded products. A speciality store
concentrates on one product-line. Toys, apparel, furniture, electronic products
and books are some of the categories, which could be related to this type of
retail format. Fountainhead in Bangalore and Landmark in Chennai are
examples. They generally attract consumers who are involved in a category or
consumers who would like to compare prices and brands (Lifestyle in the
apparel category). These stores carry variety which other retail formats do not
carry, and may also provide a service which is highly specialized (a consumer
wanting a rare book or a CD which could be procured by the retail outlet and
this type of consumer may establish a relationship with the outlet over a period
of time). Category killer is a type of large speciality store and generally the
outlet offers a large selection of brands at relatively low prices and consumers
may be drawn from long distances surrounding the outlet. Vivek & Co. in
electronics and appliances is an interesting example of such an outlet (at
Chennai and Bangalore), which announces a number of sales promotion
programmes during the festive season and also draws a number of consumers
who would like to compare brands/prices. Such outlets are coming up in urban
areas and they are generally in the area of entertainment electronics. Virgin, the
globally well-known brand which has diversified into several kinds of
businesses, has opened a category killer for cars and offers about 25 brands on
low prices. An additional feature of this outlet by Virgin, is the grouping of cars
into themes such as Adventure, Thrillers and Crowd Pleasers bringing in a
lifestyle touch to the outlet.
TOUCH OF REALITY
In Rs 4000 crores organized biscuit market, Parle with 42 per cent and Britannia
with 32 per cent market shares (value share) are the leading brands. ITC has
also entered the category with its vast distribution network. Priya Gold has a
share of 8 per cent of the market and has a strong distribution network in the
northern zone. The brand is attempting to set up a strong network in the
southern markets, a market where consumers are more brand loyal and it
accounts for 28 per cent of the biscuit market in value terms. It has about 70
distributors in the southern market and plans to add more. The company is also
known for its sales promotion for retailers with prizes including Mercedes Benz,
Alto cars and Compaq computers. Though Parle and Britannia are strong brands
in southern markets, Priya Gold hopes to capture this market by its product
offerings, which number about 25. A competitive product variety in a category
such as biscuits, backed by a strong distribution network, seems to be an
appropriate strategy even when formidable brands are well entrenched in the
psyche of consumers.
Category Management
An emerging strategy in retailing is the concept of category management. P&G
was one of the earliest companies to introduce the concept. Given the diverse
consumer preferences, a range of product-lines, information technology, new
product introductions and the need to optimize inventory costs, category
management is a very effective strategy for a large company dealing with
several product-lines, SKUs and related products. Category management is an
effective retailing of substitutable products taking into consideration the
response of the consumers with regard to these products. If Hair Care could be
considered as a category, it would have hair oil, shampoo, hair cream, hair
tonics, conditioners and anti-dandruff offerings. There may be several variants
(in terms of types) and SKUs associated with each of the categories. Category
management will analyse the consumer response to the category as a whole and
regulate the retailing of these products/SKUs/brands in such a way that it would
offer optimal profits for the company at any given point in time. Category
management has to have a number of prerequisites, as it is a highly coordinated
function, which requires both internal coordination within the company, as well
as coordination with retail outlets and monitoring of consumer preferences,
There is also a need to analyse the extent to which consumers may respond to
offerings, which are substitutable especially if they are in the same price range.
A shampoo brand has a number of variants and a consumer may upgrade or
downgrade to a variant depending on the offerings, as well as on how the
competition responds. A consumer could respond to a new launch of hair
shampoo with conditioner and may downgrade to a competitive hair-oil brand,
which is priced less than the brand offered by the company. Competition also
makes category management complex. There are not only new offerings at close
price points; there are also frequent sales promotions in the FMCG categories,
which adds another dimension to category management. Category management
also helps a company with regard to the assessment on the shelf space required
at retail outlets. With a number of regional brands having a significant share of
the market in a number of categories, shelf space is becoming an important
factor at the retail outlets. Analysing the trends and preferences would provide
an idea about the shelf space that the company may require at the retail outlets
for its various offerings. Category management is also helpful to turnaround the
stock from the retailers viewpoint, and hence this contributes to the profitability
of the retailers. There are two sides in category managementthe supply side
from the company and the demand side from the consumers end across the
product offerings in the category. Category management also helps the company
to come to terms with the diverse demand patterns across regions in a country.
Some of the variants of a toothpaste brand may witness an increase in sales in a
region. Some of the SKUs may move faster than other sizes in a region.
Category management helps to recognize these variations with a view to
optimizing logistic costs. An information technology system, which provides
point of sale information, is a major requirement for the effective utilization of
category management. This strategy can also provide information to the brand
manager about critical issues such as withdrawal of a variant/SKU or even a
brand. For example, Rexona, Lux, Ayush and Hamam are four brands from
Hindustan Lever in the soap category. Category management, taking into
account several aspects of the soap category (including the demand for brands
offered by the company in the category), would provide important information
on the brand (if the company should lower or increase the supply, if other
variants are required, and if there is a change of strategy required on other
variants as a result of this introduction).
TOUCH OF REALITY
While fragmented retailing (most sales happening in pop and mom stores and
small outlets throughout the country) dominates the Indian scenario, there is
tremendous potential for private labels as shown even in developed countries.
This is because even consumers are price sensitive and given the large
affordability limits of masses, Indians are likely to be more receptive to private
labels, if they can prove their worth. Private label offerings need to be built by
retailers with a specific focus. They need to develop entrepreneurs to offer
value, which are comparable with the ones offered by national or multinational
brands. Brands spend a large amount of money on advertising and research and
development. In Germany, Aldi is a retail network which gets 90 per cent of its
sales from private labels. Wal-Mart has 70,000 SKUs as against 700 of Aldi.
Aldi also has 1000 stores in the US. With global supply chains opening up,
entrepreneurs have the access to markets like China where most of the
multinational brands get their offerings outsourced. Once consumers find value
in private label offerings, they will not need the kind of variety which is being
offered by brands. Eighty per cent of consumers in the US visit Wal-Mart, 80
per cent of consumers in UK visit Tesco and 80 per cent of consumers in
Germany visit Aldi. These are retail brand names very much trusted by
consumers. It may not be long before such hard discounters (retail outlets,
which get a majority of their revenues from private labels) become a reality, in
the Indian context. In Japan, Y100 (Shop100) stores, which offer fruits,
vegetables and other consumables to housewives, singles and the elderly, who
are interested in shopping daily (besides getting small savings on convenience
goods), are becoming popular in cities.
Retail Planning
While there are a number of factors associated with retail planning, there are
two aspects which are important basic considerationslocation of the store and
the store atmosphere. Store location takes into consideration the target segment
and the type of products or services, as stated earlier, and
thetimestyles associated with the target segments. Timestyle, in simple terms, is
the manner in which consumers spend their time. It could be associated with
their obligatory time or with their discretionary time. A good example in recent
times is the location of Cafe Coffee Day and Barista outlets. In order to attract
the urban youth who would like to have a social experience at the outlets (and
the ones who are not price sensitive), these outlets are located at places which
have a very high traffic of the target segment. Besides, the atmosphere (known
as atmospherics, which is the overall physical attributes of the retailer), it is
probably the motivation to socialize and the menu served in these outlets that
draws the crowd. Thousands of consumers visit these premium outlets in a year
not just because of the product, but because of the atmospherics associated with
them. Apparel shopping has also undergone a change. Allen Solly studios in
prime locations were exclusive outlets of the brand, which created a new way of
retailing the productthey were displayed in such a manner that consumers
could touch and feel the pre-washed fabric. Store atmospherics are becoming
important in retailing and atmospherics motivate the consumer to stay longer in
the store and probably spend more. In the Indian context, in which the concept
of shopping mall is not very common (except in a few cities and a few
locations), retailing in certain product categories is confined to specific
geographical areas in the city, and retail strategies should take this into account
during the planning process. For instance, Commercial Street in Bangalore may
not be the right place for a small retailer dealing in consumer electronics
(perhaps, a very large retailer may attract attention, but the retail estate
availability and cost may inhibit such a retailer). Discount stores (large format
retail outlets) may perhaps be located on the outskirts of the city if serviced by
public transport, and if the format is large enough to draw consumer segments
which would provide volumes. There may be emerging categories for which
store locations may be important. PC for households is a category which may
offer a lot of potential in the near-future, and there could be two types of
locations which may be preferred by the retailera location where the target
segment women and children frequent, and another location, probably a
business area where executives work. One enables the retailer to create
awareness and interest in those who may be probable users of PCs; and the other
helps the retailer to initiate the process with the key influence in the family
(executives who could visit the retailer for a discussion after their office hours,
without commuting much). Location of a retail outlet should also take into
consideration the after-sales service required in a specific product category. For
example, in categories such as moulded luggage, cameras or even household
appliances (small ones such as geysers and toasters), it is very common in the
Indian context for consumers to travel a long distance just to carry the product,
which requires service. There is a need for retailers in durable categories to
establish service outlets around the city to enable consumers to appreciate good
service experience. Even in other large durable categories, there is usually a 24-
hour margin for the service personnel to visit the consumers' homes. This is too
large an interval, given the time pressures and the quality of time associated
with consumers in large cities. For example, a few hours of a popular sport
missed by a consumer may reflect badly on the retailer or the service franchisee
associated with the brand owned by the consumer. Having more service outlets
to enhance the experience of consumers should be viewed by marketers as a
long-term goodwill investment, rather than a short-term investment, which is
likely to produce immediate profitability. Companies could probably rethink
their overall marketing strategies and allocate a portion of their advertising
budgets to these aspects of retailing. Proximity to home, discount offered, credit
offered, and home delivery are some of the reasons related to retail buying
among consumers.
TOUCH OF REALITY
On the one hand, there are multiple channels emerging to serve consumers; and
on the other hand, the cost of serving consumers is rising. For example, in retail
banking, a bank may find that it may be cheaper to serve consumers with the
online channel. But consumers will keep checking their balance more frequently
when compared with the traditional banking system and hence the volume of
transactions rises, resulting in higher costs of serving consumers. In the travel
industry, dis-intermediation is becoming popular with travel agencies saving on
transaction costs, if they occur through the Web. But, given the impact of Web-
based search, research shows that the average ticket cost has gone down by
about US$ 50 to 100. Companies should therefore decide at what stage of the
sales process they should use a specific channel, after taking into consideration
consumers preferences and costs of serving consumers. For example, in the
airline industry. Delta Airlines introduced its self check-in services and obtained
a lot of media buzz (coverage), in 2003. they saved millions of dollars, with
consumers making use of the facility. The cost of serving consumers, also
requires a fairly good estimation of the profitability of consumers. For example,
cell phone companies can work out cost per gross add (CPGA), which is the
expense involved in acquiring an additional consumer. It is evident that CPGA
cannot be the same for all types of segments of consumers and managing the
channels is one of the ways.
Positioning a retail outlet
Retail associations, a type of target segment which visit a retail outlet, and the
word of mouth (WOM) about the retail outlet are built up through the
positioning of the outlet. Retail outlets (most of them) position themselves based
on the merchandise and services they offer, and the type of consumers visiting
the outlet. For example, the expectations associated with Food World are
different from those of smaller supermarket. As a basic strategy, retail outlets
should position themselves by planning various aspects associated with it. The
following diagram illustrates positioning of retail outlets.

Functional merchandise and low service (1)
This type of outlet could be a no frill outlet with essential commodities which
consumers can buy. While there may not be wide variety, consumers could have
most of their daily needs met through this type of outlet. A retailer in this
category should offer limited SKUs, identify specific categories (to ensure less
of inventory costs), should be careful not to employ many sales persons, and
should not spend much on atmospherics. Another strategy of this kind of outlet
is the timing which needs to be followed. As it is more of a functional outlet, it
would be worthwhile to keep the outlet open early in the mornings and late
during the evenings. Customers should be encouraged to self-select timings and
the outlet should be designed accordingly (layout and display). For example, a
consumer who searches for food items should also find supplementary food
items close by. Another facility required is the check-out during peak hours. As
convenience is the benefit, long queues should be avoided by incorporating
appropriate provisions. The retail outlet should ensure that its prices are
relatively lower than other retail outlets, which offer enhanced services. Over a
period of time, such retail outlets should be able to survive by sheer volumes. A
number of kirana neighbourhood shops in the Indian context adopt this strategy.
TOUCH OF REALITY
Spencer's, a brand which is 150 years old in the Indian context, is in the process
of repositioning its retail outlets by launching tour retail formats (Tesco, the
world renowned retail chain also follows a similar strategy in the UK). A
multiple format strategy is helpful to stay in terms with the diversity of
consumer needs with regard to retailing; for example, the millions of kirana
stores that deal with convenience and shopping goods, besides the supermarket
formats which have emerged in recent times. Spencer's has decided to have
Spencer's Fresh dealing with vegetables, fruits and eggs with a floor space of
about 2000 sq.ft, Spencer's Daily (4000-7000 sq.ft.) will deal with frozen foods
and bakery products. Spencer's Super format will deal with garments and daily
range of products, while Spencer's Hyper will be a hypermarket with a floor
space if about 25,000 sq.ft. dealing with liquor, gift items, music, and fruits and
vegetables. The Hyper format will have a pricing with the purchase more and
pay less strategy.
Symbolic merchandise and low service (2)
Normally, symbolism is associated with premiumness and status appeals. In this
context, symbolic merchandise means those categories which consumers use to
reflect symbolism.
Symbolic merchandise and high service (3)
Symbolism involves exclusivity and the service offered with such merchandise
needs to have very high standards in terms of the sales and attention being given
to consumers. Exclusivity, in this retail context, also includes attention given to
the customer, which could be customized as per the requirements of the
customer. A symbolic product such as furniture, which is premium priced, may
trigger various kinds of status-oriented questions from a consumer who would
have to pay for a lifestyle statement which is the product itself. Service
provided with symbolic merchandise has to create an experience for the
consumer.
Functional merchandise and high service (4)
These types of outlets should concentrate on having more personnel, more
variety and better atmospherics (than the earlier type). These outlets also
concentrate on functional merchandise, but service to consumers may be
associated even with delivery of merchandise. There is also a need to develop a
database of consumers by attending to their special needs (e.g., consumers
wanting an SKU or even a brand which is normally not stocked). It should be
noted that margins of such stores should be considerably higher than that of the
earlier type; and hence one of the ways of achieving this is to have less of sales
promotion. This does not mean that the outlet should never sell anything at a
lower price. Care should be taken to ensure that consumers perceive the outlet's
value in several kinds of services and not in price all the time. In fact, this type
of outlet caters to a different kind of convenience and hence could probably
charge for home delivery of merchandise, perhaps particularly during early
mornings and late evenings. In urban markets in which consumers are hard-
pressed for time, this positioning could be effective and the objective of this
type of outlet should be to discourage consumers who shop only on the price
criteria.
TOUCH OF REALITY
Onida, BPL, Carrier Aircorn, Titan, Sony and Godrej & Boyce are some of the
well-known brands who have a network of exclusive retail outlets at various
points in several markets. Such showrooms have several objectives besides
making profits. Godrej & Boyce are able to display a vast array of its products
that include locks, furniture, washing machines and refrigerators. Exclusive
showrooms provide a shopping experience for consumers. In developed
markets, some brands have showrooms that encourage consumers to use the
products and convince themselves if various features of the brand. Competent
pre-purchase interface with prospective consumers is effective in linking the
claims of the brand with the consumers first-hand experience even before they
purchase the brand. Consumers are also convinced about the commitment of the
brand when they see the infrastructure created at such outlets. Such display of
all models within a category and different categories of the brand also offer
scope for cross-selling (consumers who have bought the brand in one product
category may buy another product from the same brand) and up-selling (when
consumers replace their product with a better upgraded product from the same
brand). Exclusive showrooms should be a part of the retail strategy of a brand,
especially if the brand is present In more than one category and where the same
consumer segment is targeted by the brand for most of its products.
Retail Display/Signages
Retail display has become so important in the Indian context that several major
brands such as Coke, Pepsi, Cadbury and Wills sponsor the display (signage) of
several small retail outlets across the country. There are several hundred brands
in FMCG categories and the major brands carry advertising blitzkrieg almost
throughout the year on several TV channels. Consumers are exposed to so many
advertisements that they may be confused and unable to correlate the benefits
with a brand. The recall established at the point of purchase (POP; retail outlet)
may enable a brand to stay on top of the mind of the consumer concerned with
a specific category. Even if the consumer is not completely brand loyal to a
specific brand, there is a possibility that the visibility created stays in the
consideration set of the consumer when he would like to make a purchase
decision at a later point in time. Moreover, there is a cumulative impact of such
signages and it may be difficult to quantify the impact of such an effect, which
happens over a period of time. Pepsi and Coke, throughout the world, have such
signages and it is a widely known fact that most consumers recognize these
brands from their graphics. Signages add a synergistic effect to the overall
visibility created by a brand and this is extremely important in categories where
the consumer has a wide choice and buys the category frequently. Coke has an
electronic signage in a high-traffic location in London, which is attracting
attention due to its innovative ways of responding to changes in the physical
environment. The graphics of the brand appear to sway when there is a strong
wind. One more aspect of signages is the sign used inside the retail outlet. There
is strong research evidence to show that using the sign Sale or having an
indication of the pricing as ending with 9 increases the sale under certain
circumstances (for further reference, refer to Mind your Pricing Cues, Bric
Anderson and Ducan Simester, Harvard Business Review, September 2003).
Display of products and brands also has to take the consumer psyche into
consideration. In a large supermarket, when consumers come inside the shop,
they may take time to adjust to the lighting and atmospherics of the outlet and
hence may not be able to notice the products/brands kept near the entrance. Care
should be taken to ensure that the display should attract the involuntary attention
of consumers. Themed display is a type of display in which a range of goods or
brands under promotion are placed together. It may also be a good idea to
suggest that the promotion is for a limited number of days and to reassure
consumers that the merchandise quality is not defective. These steps would
ensure that consumers do not form a negative image about the outlet because of
promotional deals. Product category focus with regard to display will ensure
that consumers do not miss out on any brand being offered by the retailer. Care
should be taken not to brand the display in a generic manner like cosmetics
(without earmarking a specific location for each of the categories that may be
stocked under this heading). Space management (obtained through marketing
research on how consumers shop in retail outlets), which is context based (in a
specific location for a defined target segment), will enable retailers to stock their
merchandise in a profitable manner. Stock turnover is vital for a retailer,
especially for perishable goods. Sales per square foot is the typical measure for
a supermarket or for any display area.
TOUCH OF REALITY
A good retail network has to be backed up by appropriate advertising. The pull
factor of appropriate advertising/marketing communication is a prerequisite for
several consumer product categories. This is even more important for
commodity type of products which are being branded by well-known
companies. Common salt used in households is a commodity. Tata and
Annapurna (having a share of 42 per cent and 27 per cent of the organized
market, respectively) are well-known brands. Organized market for
such commodity itself is insignificant, with most homes using loose or
unbranded salt. Tata came out with a campaign which linked itself with trust
and national pride to connect with the mass market. While the campaign did not
connect with consumers at an individual level, Tata came out with a
commercial, which showed a family in a small town preparing pizza after
reading out the recipe, but standing by Tata salt for the right amount of usage.
The objective of this commercial was to emphasize the functional attribute of
quality and consistency of tasteeven when a new recipe is being tried out, the
brand could be trusted. Tata had chosen a rural-like small town setting to ensure
a rural thrust for the brand, and pizza was chosen to suggest the changing
lifestyle even in a small town, serving to emphasize the functional aspects of the
brand. Tata's approach fits in with a variant of the involvement model.
Normally, for any low involvement, commodity type of product, cognitive
aspects get the consumer involved (advertisement campaigns giving information
about the brand serve the purpose). The consumer tries out the brand and forms
an attitude towards the brandwith a feeling of like or dislike for it. But, Tata
had created a feeling with its campaign on an emotional connect to reflect the
brand as a national pride which can be trusted. This was followed up with a
campaign mentioning the functional appeal of the brand. The route followed is
attitude (which has a feeling aspect) by consumers and reinforcing this with
cognition (conveying information on functional aspects). While commodity
branding has been explained with an examplethe point to be noted is the
presence of a conceptual approach towards the pull factorconcerned with
consumers being pulled towards the retail outlet.

Retailer as a Brand
A retailer should develop the outlet as a brand and achieve differentiation
among other retail outlets in the category. This has to be done in a consistent
manner over a period of time. From the consumers' viewpoint, the choice of
retail outlet is influenced by four aspectsevaluative criteria, perceived
characteristics of stores, comparison process, and acceptable and unacceptable
stores. A retail brand has to develop itself as a brand based on evaluative
criteria, as consumers will make a judgement on the brand based on the last
three criteria. Several factors affect the evaluative criteria applied by consumers.
As stated earlier, this criteria would depend on the specific target segment of
consumers and hence at the outset the retailer should be clear about the type of
target segment.
Location (distance) is a major factor. Farther the distance, more should be the
motivational factors associated with the merchandise for consumers to perceive
value in the efforts invested in travel and time. Assortment of product categories
and variety is another factor which may be associated with the retail brand.
Several consumers may be less inclined to enter into a retail outlet which does
not have the variants or the SKUs which would be of interest to the target
segment. Product return (warranty) is a major factor which is associated with
the retail outlet when consumers exchange views on retail outlets. Defective
products or products which do not have the right quality should be replaced to
ensure customer satisfaction. This may happen in a large supermarket, which
deals with several categories and stocks them over time. There may be specific
products (e.g., perishables or commodities) on which consumers judge the retail
outlet during their initial shopping trips to the supermarket/retail outlet. These
traffic triggers should be identified and the retail outlet should ensure
complete satisfaction for the shoppers on these items. Large retail outlets could
run magazines/newsletters, which deal with several aspects concerning the
product categories. For instance, vegetables and fruits may be traffic triggers,
and a magazine of a supermarket could deal with the importance of these items
and discuss the efforts on the part of the retail outlet to procure the best of these
items. Such a strategy strengthens the beliefs of the consumer towards the retail
outlet. There could be sales promotion announcement well in advance so that
consumers are able to plan for their purchases. Consumer research could be
applied to several dimensions of retailing. After defining the target segment, the
retail outlet has to make an assessment of the various categories that they may
shop at any given point in time. These categories could be both high and low
involvement products. A typical FMCG store/supermarket will be interested in
knowing what specific brands the target segment would be interested in, and if
the target segment would be price sensitive. The level of service (both in-store
and delivery) will have to be assessed before the retail outlet is staffed.
Consumption pattern of the target segment with regard to volumes associated
with the product categories needs to be assessed. A comparison of several retail
outlets in the geographical area will have to be made by a retailer before the
retail outlet's strategies are finalized. Wal-Mart, which has a number of stores in
the US, is a good example of how a branded retail outlet can build up a
reputation among intense competition. Wal-Mart, which has an annual turnover
of about US$ 285 billion initially, identified specific neighbourhoods where
there would be scope for retailing. It coversseveral categories and most of its
merchandise cost less (all round the year) as compared to competitive offerings.
Variety, location-based advantage and value have made Wal-Mart one of the top
brands in the US. The chain's bargaining power with manufacturers, given its
volumes and its IT-based inventory control, has enhanced the value of its
offerings.
TOUCH OF REALITY
Changing lifestyles have led to the emergence of new retailing formats in the
food and beverage sector. Cafe Coffee Day and Barista are coffee outlets built
on the lines of Starbuck Coffee outlets in the US, where coffee is just a part of
the consumer's experience. The ambience provided at these outlets ensures that
consumers meet at these outlets as much for socializing as for sipping a variety
of coffee. The relaxed atmosphere could be the right place either for chilling
out or for a minor official or semi-official discussion over a cup of coffee. With
prices well above the affordability limits of masses, these outlets are a niche
market. Mocha is another such retail outlet with a difference. Instead of
Americanizing the outlet, it has positioned itself as a Turkish Coffee House
serving wine and food besides coffee. Mocha has nine outlets as against Cafe
Coffee Day's about 225 outlets, or Barista's about 100 outlets. Mocha seems to
be working towards making the retail brand, a cult brand. Its customers spend
more at the outlets and the chain is making efforts to create a bonding among its
customers. It has a film club: it has an arrangement with Virgin music and the
book shop Bookworms for cross-promotion, and has a Backpackers Club where
the members could exchange notes on travelling. Such efforts are likely to get
like-minded consumers togethera prerequisite for cult branding.
Store Brands
Store brands (also called as private labels) are offerings marketed by retailers.
Traditionally, retailers have been marketing branded products from large
companies, especially in the FMCG categories. Store brands are not just generic
offerings which are packaged in blank packages without much information.
These store brands have the name of the store itself as their brand name. Private
labels/store brands offer more margins to the retailer than the national brands.
Food World has a number of offerings in categories such as tea, commodities
such as sugar, rice and floor-cleaning liquids. Because of their low prices, store
labels are generally associated with consumers who are at the lower rung of the
market. The Indian context offers a lot of potential for store brands to improve
their quality and compete with national brands and also provide enhanced value
to consumers. In the US markets, store labels account for about 20 per cent of
units sold in grocery stores. As with any national brand, deciding on the value of
the offering and the price (value pricing) is a prerequisite for any private label.
Brands which are regional in nature (some of them may also be getting
national), such as Anchor, Ghari and Priya Gold (in their respective categories),
have demonstrated how value pricing could be successfully adopted, and store
brands should draw cues from the success of these brands. They should start
with how the functional value of the offering in a product category could be
improved. Pricing is likely to be lower than national brands as store brands have
relatively lesser overhead costs and advertising expenditure. This would not be
very difficult in the Indian context, given the share of unorganized market in
several categories including biscuits, detergents, cassettes, moulded luggage,
footwear, watches, jams and tea, and the offerings in the unorganized sector are
generally perceived as inferior by consumers. There is a fragmentation of
markets and the unorganized sector largely caters to the local consumers in any
market. For example, some consumers in an urban market may find that well-
known brands of tea are expensive but not very satisfactory in terms of taste.
The unorganized sector is even worse with product offerings being diluted with
several add-ons. The consumers hence desire a good offering but may not be
in a position to procure fresh tea with good properties, which could be available
in a distant market (more of a generic offering). The opportunity for a store
brand is to analyse the needs with regard to taste, quality and variety, which
would draw consumers to it. Proper vendor development and monitoring the
merchandise is required on the part of the store brand. A store brand should also
initiate trials among consumers. Indiscriminate sales promotion may be
perceived by consumers as an attempt to get rid of stocks or as offering a sub-
standard product. Trials, through sales promotion, should be generalized in such
a way that the focus on the offering is not lost. Given the penetration of a toilet
cleaner in urban markets (12%; Economic Times, 28 October 2003), there is
tremendous potential for store brands in this category, owing to the fact that
there are a few national brands and the unorganized sector does seem to be
having high-quality offerings. Food World is attempting this strategy in the
category with its own brand. It is important for store brands to cultivate trust
among consumers and any complaint with regard to the product should be
addressed in an appropriate manner (not only from the consumer's point of
view, but also from the quality point of view). In an environment in which large
brands are facing several complex problems, the time seems to be right for store
brands to make a mark among consumers.
TOUCH OF REALITY
Raymond's, the premium brand in men's fabrics, with its premium brands in
ready-made wear (Park Avenue, Parx, Manzoni and Color Plus) has 303 outlets
throughout the country and these outlets are exclusive outlets other than its
MBOs. These outlets have been under pressure from shopping malls, though the
brand has increased its market share in ready-made wear in recent times. Given
the situation that ready-made brands are 60 per cent more profitable than
fabrics, there is a need to ensure that consumer traffic at the retail outlets keep
increasing with time, but due to the changing dimensions of consumer
behaviour, the footfall (the number of consumers visiting the outlet in a given
period of time) has actually gone down. Consumers like to compare brands
before buying (many brands could be compared in a shopping mall), and
another aspect which these outlets face is that the average age of the buyer
visiting these outlets is 30 plus and the age group 25 to 35 years (in the target
segment of the brand) is likely to spend more frequently on apparels. This is one
of the reasons for the chain of these outlets to upgrade their layout and
ambience. The objective is to attract more of the younger consumers. Selective
outlets have a shop in shop for the Manzoni brand which retails between Rs
3500 and Rs 24,000. With the proliferation of several ready-made brands and
with most of these premium brands having their exclusive retail outlets to create
the right experience, any such brand has to adapt to the changing environment to
sustain its success through state-of-the-art retailing strategies.
Direct Marketing
Direct marketing (DM) is a process by which consumers are exposed to a
product or service by a non-personal medium (direct mail, TV, radio, magazine
or internet) and then order through a mail/phone/internet. More than half of the
US households use DM every year, and globally US, Europe and Japan account
for about 90 per cent of the DM business. Permission marketing and one-to-one
marketing are variants of DM. Permission marketing has the assumption that
consumers should be interested in an offering before DM techniques could be
used to market the product. This also subscribes to the approach that DM
methods should not be used to intrude into the privacy of consumers.
Permission marketing ultimately aims at delivering a meaningful and
customized offering to the consumer who anticipates a response from the
company because of his/her interest in the offering. DM is extremely useful for
a firm which has a good database of consumers with their demographics,
psychographics and consumption patterns. DM needs to have a sound database
to succeed. ICICI used DM in an innovative manner. It conducted a painting
context for children of consumers (prospective) who would be interested in one
of the offerings of ICICI. The company used this drawing drawn by the
respective child and enclosed it with the brochure of the offering to the parent
and this enabled the company to get leads on consumers who were interested in
the offering. A company like BPL, which has millions of consumers with one or
more products of BPL (which has a range of product categories), could use a
database of consumers to advocate cross-selling and upselling. Cross-selling
involves selling a new product category to an existing customer. A consumer
who owns a BPL colour TV may be a prospective consumer for a BPL
refrigerator. Upselling involves upgrading an existing consumer by selling a
product offering which is superior to the one currently being used by the
consumer. Given the situation in the replacement market of colour TVs, there is
scope for an existing brand to upgrade a consumer in the replacement market to
a better offering with more features. A company could also use the database to
remind a consumer at the appropriate time to replace the product category.
These techniques would be useful only if the consumer is satisfied with the
existing brand he/she is using at a point in time. DM could also be made use of
in sales promotion strategies. Shoppers' Stop may have several consumers who
are loyal to the store and contribute to it by repeat purchases. Knowing details
about these consumers would enable the outlet to formulate sales promotion to a
specific segment and use DM to boost the sales promotion. For instance, several
consumers in a segment may be buying a brand of ready-made wear, and a
discount only for such loyal consumers on the specific brand is likely to appeal
to them. Elderly consumers may have teenage children and a sales promotion on
a popular jean brand may be effective. BMW uses the internet to create
visibility about some of its offerings in the automobile market. Direct mail is not
to be confused with a systematic and structured DM approach. Data mining is a
technique which would be useful for DM ventures. The basic approach of data
mining is to analyse and explore the consumption pattern of consumers with a
view to analysing customer relationship possibilities. For example, even in the
Indian context, there are millions of consumers who use credit cards. A
supermarket capturing the details of credit card data can use data mining
techniques to know the trends in consumption of brands across categories. As
credit cards diffuse into the market, point of sale data become easier to obtain
and marketers may use more of data mining and DM techniques. There may
also be a situation where different messages may have to be delivered to
different segments, and regular advertising may be expensive and also create
confusion in the minds of consumers. For example, a food supplement product
such as spirulina may appeal to younger segments in urban markets and elderly
consumers for different perceived benefits. Younger segments may prefer it for
its health and fitness properties and elderly consumers may prefer it to
supplement their diet. DM is likely to be useful to reach out to such niche
markets.
Retailing and Point of Purchase
Retailing is all about point of purchase (POP) and it should be noted that this
point is only the final point where the sale takes place. POP strategies would
have to be planned as a part of the overall strategy of the brand/retail store. In
the present-day context of multi-promotional plans, POP process has to be
integrated into the entire promotional plan in a meaningful manner. This process
could be termed as Integrated POP Plan. Apart from the conventional POP
such as posters and brochures, a POP plan today also considers factors such as
layout of the store, signages, parking place, atmospherics (includes mood-
enhancing elements such as music, decor and temperature systems), and systems
which could enable consumers to transact business with ease and comfort.
Though a customized strategy for each brand/retail store cannot be arrived at
without specific situation-based inputs, certain broad guidelines could be
considered to come to terms with regard to promoting brands in a retail store.
o The identification of the target segment helps in selection of
brands/product categories. Hence the store need not carry brands or
variants that may not move fast. This radically cuts down the POP efforts,
that may not be meaningful. For example, Connexions is a retail store
which carries books, CDs, gifts and toys, taking into account the needs of
consumers in a specific locality.
o The store could identify fast moving brands and pre-plan promotional
activities at the POP. This would ensure that an optimal promotional plan
is worked out and brands which are promoted get significant visibility
without clashing head-on (to the extent possible).
o Brands from different categories which are on sale could be placed in a
specific location within the store. This helps the consumer to plan his/her
purchase on sale brands and it also helps the consumer to compare and
contrast with variants that are not on sale. A consumer, while going
through the store, may find a brand of squash on sale and a brand of tea
on sale at different locations. If a number of brands are on sale (from
many categories), the consumer may miss out on certain brands or may
not have the money to spend on brands he/she comes across at a later
stage in the layout of the store. Comparison of variants (in terms of sizes)
is also likely to take place in a systematic manner if the variants that are
on sale are separated out from the other. As there is a clutter of variants
normally found in FMCG, keeping all variants together may miss the
attention of consumers.
o The POP posters will have to be separated based on whether the brand is
on sale or not. Categorizing sale brands also helps the retailer to spread
the POP material within the layout of the store. This helps in gaining
better attention from the customer, as it breaks the adaptation process by
which consumers get used to the plethora of POP material in the store and
may not concentrate on any specific POP poster.
o POP brochures are best placed in the vicinity of the respective product
category. Placing the brochures at the entrance of the store (or distributing
them) fails to identify specific consumers who may be interested in the
product category. If just awareness is to be created on a new
category/brand, it will have to be done in synchronization with media
planning.
o When a brand offers a sale in a specific city, it may be worthwhile to
advertise the sale in media vehicles/niche channels popular in the area
where the store is located. This generates awareness and the POP material
selectively used within the store can serve as recall stimuli.
TOUCH OF REALITY
There are a number of factors which go into the success of a store, some of them
being drawn from the realities of changing environment and lifestyle of
consumers. Paco Underhill, the well-known consultant in the area of retailing,
opines that store design though important, cannot create a successful store by
itself. In the west, the fastest growing retailers are anti-design in terms of their
approach. A retail store will have to fit into the lifestyle of consumers. Urban
consumers may be involved in multitasking activities. For example, an urban,
youth segment perhaps may like to combine shopping for gifts/lifestyle
products, entertainment/eating/drinking and shopping for their study-oriented
schedules. The thrust in such a case will not be just designit will be the right
merchandise along with design. Deep discounting is also becoming a
prerequisite for consumers visiting retail outlets. About 10 per cent of the
consumers walk away from large stores without buying anything. Two-thirds of
retailing expenditure in the world is spent by middle class consumers on
unplanned purchases. The signages, and in-store communication also, play an
important role in sustaining the consumers' interest. The effectiveness of the
signages, in terms of its size depends on the height at which it is kept. Indian
retailers must be innovative with their format and not look for the ones that have
succeeded in the west.
Retail Equity
Brand equity is the value a brand adds to a product. Retail equity is the value a
retail outlet is able to add to the brands or products sold by it. POP happens at
the retail outlet and hence the equity added at this point enhances the image of
the outlet. In fact, in some of the product categories like jewellery, it is the retail
equity which draws consumer traffic (though in recent times, brands such as
Carbon and Tanishq are attempting to build brands in this category). BPL,
Titan, Carrier Aircon, CEAT and MRF are some of the brands which have
exclusive showrooms, and primarily this kind of exclusiveness helps the brand
to build up its equity. Titan is a brand which literally shifted the shopping
experience associated with buying of watches from the regular bazaar shops to a
retail world of comfort and ambience. This is not to infer that MBOs are not
required; this example reflects the importance of retail equity in building brands.
While the actual process of developing a retail equity differs across product
categories, there are a few conceptual aspects which are likely to be useful to
any outlet concerned with retailing and POP. The type of target segment which
is being considered by the specific retail outlet defines the expectations, to
which the outlet will have to measure up in terms of service, availability,
product assortment and layout. The typical buyer of a Titan brand of watch is
unlikely to be a consumer who would want a watch in the range of Rs 150 to Rs
250. There is a huge unorganized market operating in the watch category (which
is between 50% and 60% of the total market) and a high percentage of watches
(about 50% to 60%) are sold below the range of Rs 500. The consumer at the
lower end of the market may in fact feel uncomfortable in the atmospherics of
an outlet selling high-end watches. A neighbourhood grocer will only display
the products and brands which would be of interest to the consumers
frequenting him in his vicinity. This is the reason why these outlets select
product categories and brands with great care. For example, the brand of pickle
Mother's Recipe may not be available at most retail outlets (small shops
included), which sell pickles. Priya brand is more likely to be available at most
outlets. Awareness of brands and expectations from retail outlets by the target
segment are important criteria for developing the retail image. The concept
could be extended to any product categoryBaskin-Robin ice-cream outlets
and Tanishq's outlets are examples which would substantiate the point.
The next aspect is to consider the various dimensions which may be of interest
to the specific consumer segment. There is an interesting aspect which is worth
mentioning when target segment expectations are discussed. There may be few
situations where the retail outlet may cater to a broad segment (a typical
example could be McDonald's outlet all over the world). Such a situation is
possible when a brand with a specific expectation appeals to a large segment.
For example, McDonald's is known worldwide for its value, cleanliness,
consistency of taste and convenience. These expectations have been built up
over a period of time and hence it draws consumers from all income, age and
lifestyle groups. Even a brand like McDonald's today offers a variety which
could appeal to distinctive segments. An outlet should research the target
segment and identify specific dimensions which could be developed to attract
consumers. Convenience for a fast food outlet, fast checkout during peak hours
for a departmental store and variety for a music store are some dimensions
which could be important. In a context where the lifestyle is fast paced and
complex with several kinds of pressures, an emerging dimension is the need to
enjoy the atmospherics and shop at leisure. Shoppers' Stop has positioned itself
on this dimension. It highlighted the total enjoyable shopping experience in its
visuals and this was backed up by an ambience covering a large space (apart
from product variety and attention to consumers). The expectations of shopping
experience were conveyed powerfully by advertisements which were executed
in black and white (unlike the visual colour ones). There were also
advertisements in which customers talked of their experience. After having
created an association with enjoyable shopping experience (to be the first in the
retail ladder on this aspect), the outlet also takes care to ensure that this
association/image does not get diluted. For instance, when a sale is planned, it is
conducted through an event and not labelled as a sale. Elaborate Fountain Head,
the Chennai-based book store, has also positioned itself on a leisurely shopping
experiencea differentiator among several other book stores. Expectations
grow and differ with changes in the environment. The concept of Outlet Malls
(normally situated at the outskirts of the city) is another POP retailing option,
which is becoming popular in western markets. These malls have outlets
managed by manufacturers, which offer good shopping experience apart from
offering merchandise at a discounted price. Apart from lower prices, large
layouts, open spaces and comfortable car parks attract a specific segment to
these outlets.
TOUCH OF REALITY
The footwear category in India is fragmented with 85 per cent of the market
being in the unorganized sector; and India is the second largest footwear
producer in the world next to China. Liberty is a 50-year-old brand, which is
currently attempting to give an impetus to its image, and a retailing strategy is
the core aspect of its image make over strategy. The company, which produces
6 million pairs of shoes, operates through 300 exclusive franchisee showrooms
and 80 distributors to reach out to 4000 outlets. The brand has launched Liberty
Retail Revolution Ltd. (LRRL) showrooms, which will supplement its existing
retail strategy (currently, there are 14 shop-in-shop outlets and six showrooms).
LRRL is located in malls like InOrbit and Crossroads in Mumbai, and the idea
of such a showroom is to offer a unique experience to the fashion-conscious
consumer segment, through its unique ambience and display. Another important
differentiation with regard to these showrooms Is the type of SKUsthese
showrooms will carry about 70 per cent of fashion line which are replaced every
6 months (as against a franchisee showroom, which has just about 10 to 20 per
cent of such SKUs). The company will also expand its franchisee outlets, which
are not located at places that involve high real estate rates like in the case of
LRRL, Besides making Liberty a brand relevant for the trendy youth, LRRL
will also help the company to expand the market for its new offerings. The
company produces about 1500 new offerings in a year, and franchisee
showrooms are not in a position to showcase all the designs.
Retail Loyalty
Loyalty being one of the topical strategies of marketers, it would be worthwhile
to analyse how retailers will be able to retain consumers and make them come
back after establishing retail equity. With fragmented patterns of retail locations
and a high degree of area-wise concentration in urban cities, sustaining loyal
consumers is a major challenge for retailers. Research into the Indian and
western context across categories has shown that loyal consumers enhance
profitability to a significant extent. Loyalty for a retail outlet is the preference
exhibited by a consumer out of commitment. This aspect highlights the fact that
the consumer, due to some reason, selects a store for repeat buying out of the
several alternatives available to him. In products such as soaps, toothpastes,
blades, talcum powders, shampoos and other packaged goods (FMCG), there is
a high degree of branding coming into the picture. It is not uncommon, at least
in the urban markets (even in the rural markets, brands like A-l, Lifebuoy and
Pond's are strong), to find the consumer asking for a specific brand. The critical
aspect to be noted at the POP (even in a supermarket, like Nilgiris or Food
World, which is visited by middle class consumers), is the maintenance of the
typical SKU with regard to each product category and also with regard to the
brand. There has to be an analysis (based on the past data on the purchases of
consumers) on what these SKUs are. An SKU is just a unit of the brand. For
example, there are sachets, 500 g and 1 kg packages of Surf Excel and each is
an SKU. The normal POP strategies which may often be associated with loyalty
are service and price. SKUs may play an important role in the formation of a
specific perception in the mind of consumers with regard to a store. A consumer
unable to get an SKU of his/her choice at a store (when he/she frequents the
store a few times for a variety of products) may never feel like trying the
respective store again. Availability of appropriate SKUs (as appropriate to the
location, product category or brand) is an important aspect in gaining store
traffica prerequisite for store loyalty. Does the same size of Ariel or Close-Up
or Red Label sell uniformly in all areas of the city? How many times a retailer
has run out of stock with regard to a specific SKU? This incidentally also helps
a retailer to manage his/her inventory more profitably. Price is one of the several
other factors which may build up repeat package. Any shopper in a city would
be aware of a couple of retailers in his/her neighbourhood who may be able to
offer packaged goods at a price less than the MRP to several regular consumers.
This is one of the reasons why consumers still stick to their neighbourhood
shops in spite of the emergence of supermarkets in the vicinity. Such retailers
bank heavily on the volume of business. The basic point to be noted is that this
kind of price loyalty may be a short-term strategy. This is not to imply that
discount sale or a reduced price should never be adhered to by retailers. This
only means that there may have to be other kinds of strategies to back up the
price-based strategy. Even for a small grocery retailer who follows a low-price
strategy, the emergence of a large retailer (may not be a supermarket) who is
able to offer better prices (because of his volume deals with large
manufacturers) is a definite threat. This is the reason why some kirana stores
offer home delivery during working hours even for a minor buy.
TOUCH OF REALITY
Why do consumers shop?, has raised a number of interesting questions among
researchers. Some of the insights obtained will also be useful to marketers in the
developing markets like India, where consumers are experiencing changed
lifestyles in recent times. Hedonic shopping or shopping for pleasure is one of
the strong motives among consumers to shop. Retailing and entertainment have
opened up interesting options for consumers who indulge in hedonic shopping
behaviour. Bangalore and a few other cities have shopping complexes,
restaurants and cinema complexes which cater to shoppers. Consumers can
indulge in hedonic shopping for several reasons. It can be an occasion for social
interpersonal interaction (places where consumers/teenagers hang out).
Consumers with similar interests may shop to interact with one another
(premium apparel/sports goods outlets). Consumers may shop to get an aura of
importance, when sales personnel shower attention on them. Consumers may
also shop just for the thrill of it, whether it be for bargain hunting or for buying
rare items or for keeping up with the trends with regard to a specific category of
product. Hedonic shopping may have different motives based on the product
category and the nature of the target segment of shoppers.
Retail Service
Service at the POP has been often written about and discussed in great detail. A
contemporary dimension associated with retail service is the nature of the
service, which is expected by consumers in a specific retail setting and product
category. Service in a retail context is the overall attention given to the
consumers (according to his/her expectation), which would enhance the retail
experience. This retail experience could also extend to certain services beyond
the POP in the case of durables. A retailer (whether small or large, dealing with
consumables or durables) is concerned with the store image, and service is a
vital aspect which could affect the image of the retailer. The direct result of
service provided at the retail outlet could be observed in the WOM, which
consumers carry among their friends/peer groups. A positive WOM is the best
advocate for the store, while a negative WOM will spell disaster for the store.
The importance of WOM is reflected in the fact that large brands in developed
markets conduct research studies to quantify the impact of WOM in terms of
sale gained or lost! Service also helps the store to become known for a specific
proposition. This is important as it functions as a differentiatorone could
appreciate a service that ensures faster billing, with distinctive counters for less
than five items bought in a large store. Service varies with the type of product
and also the type of retail outlet. The basic aspect of providing service is
concerned with the identification of consumers who need service after entering
a large retail outlet. Sales personnel should be trained to provide appropriate and
not unwanted service. Service, unfortunately, is mixed up with over-enthusiasm,
which is reflected in artificial hospitality at the retail outlet, which certain
consumers may not like. The attention given to a consumer should always be
perceived as warm, spontaneous and appropriate. It should never be associated
with unnecessary intrusion of privacy.
FMCG products, commodities and groceries are categories which require little
on store service. Normally, consumers are discerning enough to sift through
the information on brands, prices and sale offers (if this kind of basic
information is made available). The off-store service becomes important.
Apart from free home delivery (on certain norms) offered by supermarkets, the
reassurance provided on the quality of products (especially with regard to
groceries and commodities and vegetables which may not be branded) is
extremely important. Consumers visit these large retailers in the hope of finding
value on such products (a combination of price and quality). Dissatisfaction on
these products could force the consumers to get back to their neighbourhood
shops (smaller ones with which they have been transacting) or may force them
to look for other options. In the Indian context, the success of supermarkets
(success from the viewpoint of creating the habit among consumers to enter
supermarkets) was felt after the entry of Food World. The perception that
supermarkets are shopping places for the middle class is of a recent origin and
this was based on the variety and quality associated with the assortment of
goods which are of interest to the middle class. Consumers should never be let
down on the proposition. Complaints about the lack of quality (freshness as
well), improper packaging and underweight should be immediately attended to,
and the consumer should never get a feeling that the store is doing them a
favour by replacing the product. If required, the procurement process or the
supply chain changes may have to be made by the store before it loses its
reputation on its core promise. It may be even overemphasized that unbranded
products are (relatively) more important from the viewpoint of the store, as
consumers perceive the importance of the store through the quality of such
products (against their perception of branded FMCG which are selected by them
more because of the pull effect created by manufacturers).
Retail Service and Speciality Products
High-end products (e.g., expensive jewellery, furniture or even designer wear)
are those which draw consumers because of their lifestyle and symbolic appeals.
While brands may also play a role in attracting consumers, the POP demands a
service which is very different from other products. Allen Solly's exclusive
showroom is a good example, which reflects the kind of service that may be
expected at such stores. The consumer goes through an experiential service,
especially if the product is of personal significance. The product display of
Allen Solly at the exclusive shop was such that the consumer would be able to
go around and feel the fabric before trying it on. Digital kiosks can also be made
use of to give an idea about how well the product would match the consumer in
the appropriate categories. The kiosks enable the consumer to try out different
designs/variations of the brand, enabling him/her to decide on the one which is
most suitable.
In the case of ready-made wear, the usual aspect found wanting is the fit with
which the consumer is concerned even after selecting the design.
The retail store personnel could probably help out the consumer in an
unobtrusive manner. Of note here is that this aspect of service is also associated
with the availability of SKUs and inventory management, which is to take into
consideration the needs of consumers. Structured in-store and off-store
service could enhance the credibility at the POP.
Experiential service which consumers experience at the POP could also be
extended to categories like perfumes and cosmetics. Lakme introduced a plan at
the POP for its orchids range of cosmetics in which a consumer could try the
product before deciding on the purchase. Of note is, that in such product
categories trying the product could be introduced only with regard to the
premium price range. Experiential service can also be extremely effective if
applied to products like audio and video durables. BPL maintains an exclusive
gallery displaying all its products in some cities. Carrier Aircon and Onida are
the other brands which maintain such exclusive showrooms displaying a range
of products/variants. How would it feel to experience an audio system
(appropriate wattage) in a house-like structure? This experience is likely
similar to the home situation where the consumer uses the product. Similarly,
experiencing the coolness of air conditioning in a room similar to the room
(typical household room size could be used with a few types of dimensions,
though the exact dimensions cannot be had) where the consumer may use the
product is likely to have a better impact on the psyche of consumers when they
visit the POP. A trend of this nature may have a significant impact in detailing
the benefits of a brand. A part of the promotional budget could be allocated for
such POP experience.
Retail Service and Durable Product Categories
A leading brand like Videocon, BPL, LG or Samsung deals with a number of
product categories (audio, TV, refrigerator, microwave-ovens, etc.), and WOM
(discussed earlier) has an even greater impact with regard to durables. A
consumer of a black-and-white TV may be a prospective consumer of a
refrigerator or an audio system and so on. Thousands of households may use
atleast one product of a brand like BPL or Videocon (both companies have a
number of product categories), and service at the retail outlet could be a potent
tool for creating a base of loyal customers. While pointing out to service with
regard to these durables, there are two aspects to be consideredservice
provided by multibrand outlets which may be small or large (like Vivek & Co.)
and the service provided by the exclusive outlet. This approach is important, as
a leading brand is likely to be present in about 3000 to 4000 outlets in the
country and all of them cannot be exclusive outlets. Such a differentiation
would also help the brand improve its infrastructure and location-based
considerations apart from enhancing customer satisfaction.
The Credibility Factor
Multibrand outlet is one where the consumer could make a comparison of
features/prices and also get a feedback from the store personnel on specific
brands. A retail store of this nature should be very careful in dealing with the
consumer when he/she asks for information on specific brands. It is not
uncommon to find sales personnel in the store attempting to promote a specific
brand or brands and discouraging the consumer pertaining to certain other
brands. This traditional approach of pushing certain brands may no longer
work in an environment where the consumer is getting discerning as a result of
exposure to information other than that given by the sales personnel in the store.
For instance, when the consumer receives a negative feedback from the sales
person at the retail outlet about a brand of washing machine, which has a
positive WOM among his/her friends, he/she begins to suspect the credibility of
the store and the personnel involved. While the retailer's influence on the
purchase decisions of the consumer is by and large quite high in the Indian
context (though the trend is on the decline in metros), the opportunity provided
by the situation should be used to build in credibility in the transaction.
Analysing the need of the consumer is the fundamental manner to building up
the credibility of the store. With so much of clutter with regard to features and
benefits of various brands, the consumer (in most cases) is confused. An added
complexity is the comparison advertisement (comparative advertising which
compares brands on features, quality, prices, etc.), which mentions several
aspects that the consumer may not be able to understand. A consumer
attempting to upgrade to a colour TV is very different from the one who is
entering the store to replace a colour TV. Pressurizing and selling a feature-
ridden colour TV to a consumer who just wants a no-frill TV could create
dissonance after the purchase is over. The consumer is likely to feel cheated
about being sold a TV which he/she never wanted and the one in which he/she
may not make use of several features. Even in the case of cars like the S series
from Mercedes, there may be several controls. But this consumer is very
different from the consumer who looks for an entry model. While in categories
like cars where price points are significantly apart, in the case of TVs (barring
certain models such as Plasma types and a few high-end models), price points
are very clustered; and there may be a tendency on the part of the sales
personnel to force a higher price point than what the consumer had intended to
buy The need-offer match which takes place at the initial phase of customer-
POP interaction is vital, especially for lower and middle range (price range)
products which are highly competitive. This is because the major chunk of the
market is present in these ranges and the existence of most of the retail stores
depends on these markets. The state of the service, which could be provided by
a large exclusive outlet, has been indicated earlier in the article (focus on
experiential service'). Product-service interface at the POP enhances the
relationship between retailers and consumers.
Retailing and Consumer Behaviour
Decision-making on retailing is similar to consumer decision-making (CDM) on
brands where the consumer goes through the process from needs to post-
purchase decision-making. There are a few interesting as well as important
dimensions associated with consumer behaviour and retail outlet selection.
o Does the retail outlet have psychological implications on the target
segment? Titan and Timex watches are retailed through exclusive shops;
and consumers wanting lower-end watches probably felt that the typical
Titan showroom had too much of elitist orientation and this could have
had a negative impact on consumers.
o Does selection of outlets vary in accordance with types of product
categories? While buying a TV or washing machine, would consumers
visit an exclusive showroom of BPL/Onida/Sony or would they visit an
MBO. Would there be differences in the psychographic (and
demographic) profile of consumers in terms of choosing outlets? What is
the sequence in which consumers are likely to go about their decisions
would they select the brand or the category first before choosing the
outlet?
o What is the impact of the image developed by a retail outlet? Is Food
World, for example, different from the neighbourhood grocery shop in the
perception of consumers? What kind of perception consumers are likely
to carry with regard to shopping from an online outlet like Fabmart vis--
vis a brick and mortar outlet/supermarket.
o Would consumers be interested in store or retail brands? Traditionally,
retailers have been carrying manufacturers brands. In recent times (at least
to a significant extent in the food category), supermarkets like Food
World have started carrying retail or store brands. Nilgiris is another
example in South India which carries its own brands of chocolates,
biscuits and other commodities.
o What contributes to retail equity (the value a retail outlet holds to a brand)
or retail image or retail loyalty?
o How are perceived risks handled by retail outlets?
Marketers need to have an in-depth knowledge about the various dimensions
which link retailing and consumer behaviour. There is research required to
handle retail decisions in a competitive context. McDonald's found that a major
chunk of its consumers decide to eat a few minutes before they make the
purchase decisions, and hence it is building small outlets in large supermarkets
like Wal-Marts and Home Depots (apart from petrol bunks). It is providing play
areas to ensure that a number of families visit its outlets with children. A few
companies also operate through kiosks in airports, malls and high-traffic areas.
A brand in an appropriate category and target segment can operate through
kiosks at various places, enabling consumer interaction with the kiosks.
Consumers could place the order through the kiosks and the product is home
delivered. In the Indian context, such a target segment of consumers will form
only a small niche.
Retail Outlet Selection and Brand Selection
There are three fundamental patterns which a consumer can follow and they
could be: (1) retail outlet first, brand second; (2) brand first, retail outlet second
and (3) both brand and retail outlet, simultaneously. A consumer wanting to buy
a car (typically, information search on brands is followed by retail outlet
selection in durables) may collect information on brands and purchase it from a
retail outlet based on his/her perception of price offered, and /or after-sales
service provided by the outlet. In certain product categories, especially in
categories where category killers exist (large retail outlets which deal with
several brands and variants), consumers may think of the retail outlet initially
andmen the brands (TV, refrigerator and audio products retailed through outlets
like Vivek & Co. could be such a situation). One more dimension may be to
compare the brands in the evoked set at the retail outlets, which are also there in
the evoked set. This is very much possible, especially in the Indian context, in
which dealers develop a social relationship with consumers, especially in the
semi-urban and rural areas. Primary research could be used to find out the
specific sequence involved in a situation of this kind. A brand-first dimension
may need advertising with a focus on features and a retail outlet-first dimension
may require a set of POP material and special training to sales personnel at the
retail outlet to recognize the needs of consumers. Further, if it is known that a
number of consumers may be oriented to visit their favourite retailer (before
obtaining information on brands) in a geographical area, there would have to be
more emphasis on regional/local advertising which highlights the retail shop
rather than the regular brand-based national advertising.
Consumer Decision-Making and Retailing
(i) Retail outlet first and brand second. When a number of consumers follow
this sequence of decision-making, displaying POP material and building up the
image of the outlet becomes important. The manufacturer of the brand may have
to ensure that the brand (and the variants demanded) will be available at the key
outlets in a locality. Point-of-purchase materials which are to be used at the
retail outlet may require primary researchto decide on various aspects like
whether visuals are to be used or whether product features are to be used and if
the POP material should be in the regional language. There may also be a need
to monitor the competition from other retail outlets, to ensure that consumers
are kept satisfied in terms of service, price, promotional deals or ambience. This
is especially applicable to durable retailing in India (in cities). Retailers attempt
to increase consumer traffic by providing a number of add-ons.
(ii) Brand first and outlet second. The brand was probably thought of by the
consumers because: (1) the consumers may not have developed a relationship
with any retailer, which is strong enough to get into the evoked retail set or (2)
the brand has got into the evoked set because of either advertising or positive
WOM. Local advertising (regional advertising or advertising in the
shopping guide which appears every week in the local newspapers) with the
mention of brand names which have already got into the evoked set of
consumers would enable consumers to be pulled to the outlet. Primary
research may be required to find out the brands in the evoked set. This feedback
may have to be provided by the manufacturers of a brand (especially if it is a
brand with a major chunk of the market and one that is nationally advertised) to
the retailers in various geographical areas. Even multibrand outlets could make
use of this approach and mention the brands in the evoked set (in a given
geographical area). This is likely to increase the traffic to the outlet. Besides, the
evoked set could also change from time to time depending on the strategies of
brands. About two decades ago, brands like Solidaire, Dyanora and Crown may
have been on top of the mind recall of consumers (in a specific geographical
area), and they may have slowly given way to other brands and these changes
should be captured (how often this happens, why this happens and the
differences over geographical regions) to be used in formulating retail
strategies. The local advertising (to increase the traffic at specific retail outlets
within a area) should be different from the national advertising for the brand. A
brand may be advertised on features (which could have a competitive USP)
nationally, but the retail outlet in a geographical area may prefer to highlight the
effective after-sales service associated with the brand as this may be prioritized
by consumers in that area (after having been convinced about the benefits). The
interest generated on the brand would have to be backed up by good pre-sale
services at the outlet.
(iii) Brand and retail outlet, simultaneously. When consumers think of the brand
and retail outlet simultaneously, it means that they have a certain preference for
the outlet and would hence like to check the evoked set of brands in the retail
outlet. The marketer would have to carry out primary research to find out
specific markets (geographical areas) where consumers have a very positive
relationship with retailers. This is important because of the influence of retailers
over the purchase behaviour of consumers in the Indian context. It may also be
worthwhile to check, if the evoked set among the target segments (the evoked
brands) are carried by the retailers who have a positive relationship among the
target segment. This is to ensure that the retailers who have a favourable
perception among the target segment carry those brands which may be of
interest to that segment. If there is disappointment to the consumers on the non-
availability of brands in the evoked set, the consumers may turn towards a
different retailer, and this would be to the disadvantage of a retailer who has
already won the confidence of consumers. Retail sales personnel also become
important in this situation. The prospective consumers are carried over to the
purchase stage by the store personnel and hence there should be incentive
programmes for the store personnel. If a company like BPL or Videocon is
dealing with a number of brands/sub-brands, it has to ensure the availability of
specific brands which may be of interest to the consumers. If the retail outlet is
one, which is large and deals with a number of brands (like Vasanth & Co. in
South India), a shop-in-shop arrangement may be preferable. A shop-in-shop
creates a focus on the brand and reinforces the positive association a consumer
may have had about the brand (in this context). A considerable amount of pre-
sale service would have to back up the shop-in-shop concept. The shop-in-shop
concept creates an aura of exclusivity inside the retail outlet and consumers tend
to have higher expectations about the pre-sale service and the attention given to
them. A large store is also likely to stock several brands, and hence all brands in
the evoked set would have to compete with each other to the process of moving
from the evoked set to choice set in the mind of the consumer. Large outlets
may also have a built-in provision for a lower price (because of volumes), and
hence may be in a better position to clinch the deal from consumers who may
simultaneously consider both the brand and the retail outlet.
Retail Image;Basics
As in the case of brands, retail outlets also carry images in the perception of
consumers. Primary research could point out the perception of consumers on
various aspects/dimensions associated with a retail outlet. Such an approach can
also be tried out by a smaller retail outlet. Any retailer in a given area can
develop a perceptual map consisting of relevant dimensions, and the competing
retailers, to get an idea about how consumers perceive a set of competing
retailers. One more aspect associated with retail outlets is that consumers tend to
use the retail outlet's image as an indicator of quality in the absence of brand
cues. For example, if a packaged unbranded commodity is marketed through
Food World or any other well-known departmental store, the perception on the
unbranded offering would be influenced by the image of the retail outlet
carrying the offering. Factors such as service counters, the way the queue is
managed, billing is done, merchandise display and the variety of product
categories carried by the retail outlet (apart from SKUs) influence the image of
the retail outlet. Retail image is also important in internet marketing (online
retailers). FabMart, a Bangalore-based online retailer, has moved beyond music
and books in establishing its presence as an online retailer. It is into groceries,
jewellery and gifts, and enjoys a considerable degree of repeat purchase from its
loyal customers. It has good backend arrangements and offers customers pay
on delivery options for groceries, bringing in the touch-feel-pay which
customers have been used to in their traditional purchasing behaviour. An online
retailer has to have an image of convenience, trust and quality associated with
a brand name to ensure that loyal customers transact more business with the
retailer over a period of time. Besides, as consumers' trust increases over a
period of time, the online retailer could get into more product categories, which
may be bought more frequently by consumers. FabMall, for example, has
moved from music and books to groceries, a category where frequency of
purchase and interaction are likely to be more. There have been a few research
studies which have focused on the store personality. These studies have
explored various dimensions associated with pleasant, unpleasant, active or
sleepy kinds of images.
Dimensions of Retail Image
In a competitive era of retailing, it would be difficult for retailers to have a
lasting impression on consumers if they attempt at targeting all kinds of
consumers. There is a need to target specific kinds of consumers and develop
associations which may be relevant to the target segment chosen. For example,
Shoppers' Stop may have associations of a pleasant shopping experience (which
is leisurely and enjoyable) and a satisfied loyal customer who is able to benefit
from the deals offered to encourage loyalty. Food World may have an
association of value with regard to FMCG (products and groceries). Landmark
may have an association of variety offered with regard to books. Marketers can
control the kind of associations which need to be developed to provide the
required differentiation. There may be a store which sells well-known brands at
a lower price and which does not offer much in-store help, and a network of
such stores could develop an image of convenience and value (by planning the
locations in neighbourhoods, where this kind of convenience is preferred) rather
than a number of other dimensions associated with the store image. Another
aspect of store image is the shopping area which is associated with the store
image. Different shopping locations in a city have different kinds of images
among consumers. In Bangalore, for example, Commercial Street is known
more for textiles than consumer durables, and an up-market consumer durable
located in the area would find it difficult to attract customer traffic (unless it is
planned on a large scale in terms of merchandise and visibility). Similarly, an
up-market textile store in a predominantly discount-oriented shopping area may
not attract the attention of the intended target segment, which may also have a
symbolic need with regard to the shopping area consumers visit, for shopping
the required product category.
There may be several dimensions associated with retail image, and primary
research has to be extensively done to ensure that a retail store selects the
appropriate dimensions (without selecting too many dimensions which may
dilute a focused store positioning strategy) for developing the store image.
Product associations could stand for quality, variety, style or price. Services
could develop its associations with sales personnel, pre-sale or after-sale
service, easy return of faulty goods, shopping ease or delivery. Consumer
imagery could be developed by association of a specific type of consumer with
the retail outlet. Ambience could be associated with decor, lighting, moving
space, layout cleanliness and comfort. Convenience could be associated with
locations and parking. Value could be associated with lower prices (when
compared with prices offered by competing retailers), bundling of products at a
lower price or delivery, or a number of these dimensions put together. Choosing
and nurturing the right image is a prerequisite for the long-term profitability of
any retail outlet.
Developing Store BrandsAdditional Points
Store brands, as discussed earlier, are those which are carried in the name of the
store. As competition intensifies in any category, retailers are likely to develop
brands in the name of the store, which would be carried in their retail outlets.
National brands (well-known brands of manufacturers) are likely to have a stiff
competition from store brands, especially in retail outlets which have a high
base of loyal consumers. Loyal consumers are very likely to try out store brands
as their level of confidence in the store's brand name is likely to be high. Hence,
store brands should necessarily offer high quality, and perhaps due to their
lower overheads can position themselves on value (higher quality as compared
to regular brands, but at a lower price). Food World and Nilgiris are examples
from South India. These retail outlets have developed store brands in traditional
snacks, bread, biscuits, tea, floor-washing products and even shampoos. There is
a need to avoid the traditional approach of store brandsproviding acceptable
quality at lower prices. This is essential because a number of national brands
have started following this approach in numerous category of soaps, shampoos,
biscuits, commodities, toothpastes and beverages. A retail outlet may research
the pattern of off-take with regard to store brands it carries across categories. If
the store has a chain of stores, it may be worthwhile to observe the impact of
store brands in different geographical areas.
A retail outlet has to consider the following aspects before launching store
brands.
o Analysis of product categoriesIf there are several national brands in a
category of offerings at close price points, a store brand may find it
difficult to enter the category.
o Distribution of national brandsIf well-known brands are widely
available at different price points, a store brand may find it difficult to
have a presence in the market in the Indian context.
o Specialized offeringsThere may be specific markets/niches which may
not be served by national brands, and store brands could make use of
them. Herbal soaps (though there are some variants of national brands) is
one example and supermarket chains carry brands such as Medimix,
Vrinda and Krishna Tulasi as store brands (some of these brands may not
be as freely available as national brands in grocery stores). Special Assam
tea made by independent brands are carried in Food World outlets. There
could also be upmarket niches like home-made chocolates and snacks
which could be marketed as store brands.
o Are there enough brands to develop the marketThere may be categories
like floor-cleaning and dish-washing powders/liquids which are largely
confined to the unorganized sector and these categories may offer scope
for the creation of store brands. For example, in the category of floor
cleaning, there are only a few national brands and there is a huge market
to be developed as the penetration level of the category is lowstore
brands have the opportunity of capturing a considerable amount of the
neighbourhood markets if value is provided.
o Can demand be metA store brand has to be prepared to meet the
demand for it if consumers show a marked preference for the brand. This
is important because once a consumer finds that the supply of the store
brand is not consistent (though of good quality), he/she may go back to
one of the national brands which may be available without problems.
Advertising and Retail Outlets
An outlet may deal with several product categories and there may be a need to
advertise on two aspects.
(i) A continuous form of advertising (taking into accent the reach, cost aspects
and the choices available for media selection) which would ensure the
positioning of the retail outlet on the dimensions to stand for (or the type of
associations on which it would like to be perceived by the target segment).
(ii) Specific advertisements on product categories and promotional prices
(including sales promotional offers), whenever it is required. For example,
festive occasion is one which may require certain types of advertising that
would pull consumers to the retail outlet (especially for durable products). A
retail outlet marketing fast foods and soft drinks may like to target children
during their summer holidays. There may also be specific offers targeting
housewives.
The following aspects require careful consideration, while a policy on retail
advertising is formulated (a planned process helps a retail outlet to convey a
coherent and focused perception on the image of the store).
(i) Selection of positioning dimensions is important and there should be no
advertising that dimensions the planned positioning dimensions. An up-market
store dealing with apparel can certainly run sales promotional campaigns. It has
to ensure that the up-market associations are continuously built up over a period
of time. It has to also ensure that frequent sales promotions do not dilute the
credibility associated with the up-market associations. The firm could probably
decide to offer a sales promotiononce or twice in a year (during Deepavali,
Christmas or any other festive occasion depending on its target segment) and
emphasize the association with such sales promotion by using phrases like
Now only or Once in a year or Special sale. It may also be a good idea for
this kind of retail outlet not to deal with Seconds (even if prices are reduced).
When an up-market store announces a sales promotion, its objective should be
to enlarge its consumer base by offering a trail valueoffering good quality
products at prices which are slightly lower than the usual year-round prices so
that a base of consumers is added during the sales promotion period. They
should become frequent customers to the retail outlet after being convinced
about the merchandise of the up-market store. Apart from creating a loyal base
of consumers (a new set), the promotional offer would also benefit the existing
base of loyal consumers. An up-market store should ensure (apart from layout
and ambience) that customers appreciate value at a higher price point.
(ii) Advertising for one product category (with or without an offer) should result
in spillover sales. This means customers entering the store for a particular
item/category should also be motivated to buy some more items (either related
or unrelated) apart from their planned purchase. This could be done by having:
o an attractive POP material for other categories (other than the one
advertised);
o a good layout which would attract attention on related products from the
viewpoint of either perception or consumption situation. For example, an
offer for soft drinks should ensure that the brand on offer is stocked near
snacks. If a lifestyle kind of outlet is advertising for apparel, it has to
ensure that shoe brands (which also have a lifestyle appeal) are stocked
near the brand of apparel which is advertised.
(iii) When a store advertises on just price (discount type of stores), it has to
ensure that consumers compare the advertised prices either with their internal
reference price (price range which is normally considered by consumers for the
product category), which could be obtained through research, or external
reference price (which is the price of the advertised brand in other outlets).
A synergy-based approach taking together the image of the store, POP, planned
offers and advertising could result in creating a power impact on the target
segment.
Retail OutletsLocation and Size Consideration
Consumers' perception is shaped by an outlet's location and size. Location has to
take into account the target segment and the merchandise being marketed.
Grocery stores should be located in residential neighbourhoods, but if a large
store (like Food World or Nilgiris) deals with several categories (and SKUs) of
products, it could locate itself in a prime shopping location in the city as
consumers would be interested in combining their purchases when they visit the
location. Larger outlets may be preferred by consumers when they are not
particular about fast service or convenience. The following aspects could be
considered by a retail outlet store during the process of planning its size.
(i) The size and the retail traffic of competing retail outlets in a given
geographical area.
(ii) Travel time involved for the target segment.
(iii) The importance placed on fast service and travel time by the target segment.
(iv) The kind of product categories to be marketed by the outlet (even
willingness to travel to an outlet would depend on the product category, and for
high-involvement categories, consumers may be willing to travel a distance if
they are assured of value).
(v) Area of shopping (lifestyle brands like Tanishq, Rolex or Reebok may
attract better retail traffic if their exclusive outlets are located in a shopping area
which is full of such lifestyle outlets).
(vi) When large retail outlets (category killers) in categories of high
involvement are planned, parking space should be considered, and hence they
need not necessarily be located at prime shopping locations (like lifestyle
outlets), because consumers will be willing to travel to buy the value offered by
such outlets. A shopper who is interested in buying a colour TV for Rs 15,000
to Rs 20,000 is not likely to be reluctant to travel a few kilometres if he
perceives value in an outlet.
(vii) If high-involvement categories are marketed by outlets which are slightly
beyond the prime shopping area, the outlet must ensure that the service provided
for installation and delivery is a part of the package. Charging extra for such
services is likely to dilute the value perception among consumers. Location
and size consideration not only have an impact on consumers; it could also save
overheads for the outlet.
Perceived Risks and Retail Outlet Choice
There could be two kinds of risks when consumers buy different categories of
products. One is the social risk (acceptance of fashion apparel, for example) and
the other is the economic risk like repairs, performance, the effort involved in
terms of cost and even the physical risk involved and the cost of such physical
risks (side effects of using a hair dye). The following framework provides a
fundamental approach towards identifying different kinds of risks involved and
kinds of categories which may be affected by the risk.
Of note is that different sets of consumers perceive the risks differently across
product categories; and certain amount of primary research is required to
identify the appropriate risks associated with the target segment and product
categories. Perceived risk is both consumer and product characteristic.
Retail outlets also carry a risk perception. New kinds of retail formats like
interactive home shopping (through the internet) and DM may be associated
with a higher degree of perceived risk. The following aspects revolve around
perceived risks and specific retail outlet strategies.
o New kinds of retail outlets (marketing through the internet) should lower
the risk by reassuring customers on the security arrangements made for
purchase (especially if credit cards are used), making arrangements for
returning the products which are faulty. There may be products which
involve considerable amount of social risk and some outlets offer the
choice of returning the product if the consumer feels so after having a
look at it. When a consumer buys a designer wear or jewellery, through
the internet, he/she may not like the design (in spite of seeing it on the
computer screen), and the option of returning the product encourages
consumers to shop in non-traditional outlets. This would also spread the
good WOM about the outlet.
o Discount outlets (specializing in discount offers) should ensure that well-
known brands are available to reduce the perceived risk associated with
the purchase.
o Traditional outlets with a reputation have a clear advantage with high-risk
items (may not be so much in durables), and hence they are in a position
to develop store brands in a few categories associated with high economic
risks (food categories, kitchen appliances). Store brands (apart from being
promoted through POP material) also have the advantage of being
associated with the credibility of the store image.
o If a retail store dealing with durables provides efficient after-sales service
while dealing with well-known brands (especially in an environment
where brands score low on after-sales service), it would be able to lower
the perceived risk to a significant extent.
Consumer Shopping Types
A retail outlet has to design itself taking into consideration different types of
shoppers and the manner in which they shop. A retail outlet could select specific
segments and decide on its target segments. Shopping is viewed as an activity
which goes beyond purchasing productsit involves social interaction, learning
about new products and trends and sensory stimulation. A shopping type or
orientation refers to specific emphasis on certain characteristics of the shopper.
Lifestyles of shoppers to a great degree determine the type of shopping they
pursue. Inactive shoppers do not get involved in shopping to a significant extent
and they do not have a strong interest in shopping. Active shoppers are those
who enjoy shopping activity and price may be a major criterion in their search.
They are serious about shopping, which reflects their lifestyle and hence they
may consider quality,fashion and symbolic aspects of a brand along with the
price factor. Service shoppers are those who demand and have a need for in-
store service when shopping. An outlet catering to these types of shoppers
should have friendly and helpful employees. There may be a need to explain a
number of aspects associated with brand comparison. Dedicated fringe shoppers
are those who rely on heavy catalogue shopping. They have a compulsion for
being different and they may not be interested in socializing to a great extent
and may reflect limited store and brand loyalty. Price shoppers are highly price
sensitive and they may be willing to extend their search efforts to identify
products/services, which are offered at low prices. There are several
implications of the shopping orientation/styles to retailing strategies. Inactive
shoppers may be more oriented towards purchasing online and may prefer home
delivery. Active shoppers may enjoy the buying experience at retail outlets
and may be oriented towards experiential shopping. For example, a retail
outlet (like supermarket) may have a food court to provide the experience of
socializing if its target segment consists of active shoppers. A discount outlet
stocked with leading brands may attract the attention of price shoppers in an
appropriate residential area. An outlet would do well to analyse the
demographic and psychographic profile of consumers in a specific area and
draw inferences about the shopping orientation of consumers in that area. For
example, there may be more than two types of orientation present in a specific
area, and this may call for distinctively different strategies. There may even be a
need to use different store brands for different segments. Apart from in-store
decor and layout, the type of merchandise, SKUs and the service provided
would also vary depending on the shopping orientation involved. A planned
approach also enables the outlet to take decisions on the viability of the outlet
itself. Price-sensitive consumers, for example, may expect a high level of in-
store service. In this situation, unless the outlet is assured of a huge volume
(made possible by stocking a range of items and brands), it may not be feasible
for the outlet to go ahead with the decision to have the outlet in that
geographical area.
Retail Outlets and In-Store Purchases
A consumer may visit a retail outlet with an intention of buying a brand or a
product and may buy additional products while he/she is in the store. Normally,
impulse purchase is referred to as the lack of rationality in the buying decision.
While this may be true in a number of buying situations (in-store), there may be
exceptions to this criterion. A decision to buy Bournvita instead of Complan (as
planned earlier) after entering the store because the brand is on sale, is not an
illogical one (though a certain degree of impulse is involved). An unplanned
decision could take advantage of the availability of a sales promotion (and this
could happen after the consumer enters the retail outlet). There may be several
kinds of store decisions. The following are some of them.
o Specifically planned. A product or brand may be decided upon for
purchase even before the consumer visits an outlet.
o Generally planned. Consumers may decide to buy a product category
such as cosmetics before entering an outlet.
o Substitute. A consumer after entering an outlet may buy a substitute
itemcould buy a brand of fresh juice instead of an aerated soft drink
after being exposed to promotional material within the store.
o Unplanned. A consumer may buy an item after entering the store (which
he/she did not have in mind before entering the store). There is research to
show that in a number of categories, consumers make item or brand
decisions after entering an outlet. Hence in-store marketing strategies
are important for retail outlets. This may especially be applicable to
product categories, which are not purchased frequently (like mouthwashes
or antiseptic lotions). Researching the buying decisions of regular
customers would enable a retail outlet to plan an appropriate in-store
marketing strategy.
Store atmosphere which is concerned with layout, lighting, presentation of
products, floors, colours, sound, smell and behaviour of sales personnel may
have an impact on in-store purchases. Atmospherics is concerned with the
physical retail environment, which could have an impact on the moods of
shoppers.
Retail Outlet Strategy Formulation
In South India, a chain like Food World is present in a number of
locations/cities. This may have changed the expectations of consumers with
regard to several aspects of retailing like value, service, returning a faulty
product, etc. Smaller outlets competing with large outlets (at least in specific
product categories) would have to introduce specific strategies to ensure that
present customers continue to be loyal. The following diagram emphasizes
certain important dimensions of retail outlet strategies. The diagram shows that
the process is a continuous one. There is a need to monitor the expectations of
the target segment over a period of time.

Importance of Avoiding Stock-Outs
Retailers may be facing a problem in the present-day competitive context
there is a need to ensure sufficient stock of several SKUs and there is also a
need to ensure profitability by turning around the stock. Hindustan Lever, across
its product categories, may be having about 1000 SKUs. A retail outlet today
has to necessarily keep a track of the purchasing pattern not only with regard to
brands and product categories; it has to also keep track of SKUs in terms of
consumer preferences. There may be three aspects of consumer behaviour
associated with a stock-out situation.
Purchase behaviour may involve buying a substitute brand or item in the same
store; the purchase may be delayed until the preferred brand is available in the
same store; the consumer may decide to forego the purchase at least in the short
term; the brand may be bought by the consumer in a second store. The
consumer may also decide to buy all the items he/she had planned to buy in the
second store because of the non-availability of the favourite brand in the first
(original store). Generally, in FMCG categories, the customer either buys a
substitute brand in the same store or buys the preferred brand in the second
store.
The impact of a stock-out situation could be also reflected with regard to the
verbal behaviour of consumers. There may be negative WOM about the store
which did not have the brand/product enquired. This may in turn lead to positive
WOM on competing stores. There may also be positive comments about
substitute brands.
Attitude development may also figure in a stock-out situation. The consumer
may develop a negative attitude towards the original store and may develop a
more favourable attitude towards substitute brands and competing stores.
A retail outlet should constantly monitor the preferences of the target segment
with regard to merchandise available and make changes in the merchandise
traded. This approach should also be extended to brands and SKUs/variants. In
fact, in popular product categories, a large outlet like Food World should offer
SKUs/variants which are not available in a majority of neighbourhood grocery
stores. This provides a strong motivation for consumers to shop at larger outlets.
There should also be exclusive packaged deals (FMCG products), which could
be made available at large outlets by a special arrangement with the
manufacturers of well-known brands. Special services could be introduced to
tackle stock-out situations. This may involve special arrangements made for
regular consumers (could be identified with a set of shopping criteria) of the
outlet to receive those products, which were not in stock at their doorstep when
they reach their homes after shopping. This would strengthen the service
orientation of the outlet apart from providing a way to deal with stock-out
situations. Stock-out situations would result in serious problems if such stock-
outs are a part of the outlet's strategy to eliminate certain products because they
are not demanded by most consumers. The outlet should research not just the
off-take of such items; it should also research the products that are bought, with
those items it may decide to eliminate. This is dealt with later in this chapter.
The Death SpiralAn Important Aspect of Managing
Merchandise
Retail outlets could get into what is known as the death spiral. This involves a
vicious cycle in which the retail outlet keeps eliminating non-profitable
items/products and this in turn reduces the demand for certain items/products
bought with such eliminated items/products. The outlet tends to repeat its
elimination round with the new set of items, and over a period of time, the
outlet traffic is seriously affected. This may even go to such an extent that the
profitability of the outlet may be threatened. The following example would
illustrate the importance of the concept.
Shoppers in an outlet may buy bread regularly along with other items. Those
who buy bread may be regular shoppers, but may form only about 15 per cent of
the total number of shoppers. The outlet may find that cheese and butter are not
profitable items and may eliminate them from the merchandise traded, without
realizing that the 15 per cent of shoppers who buy bread regularly also buy
butter and jam (though overall, these may be unprofitable items). By eliminating
these items, the store may be reducing the consumer traffic to the outlet. These
15 per cent of shoppers may gradually go to other stores and hence, not only the
traffic comes down but also the profits from these shoppers who may also buy
other products from the outlet. The outlet could get into this vicious cycle and
end up losing its consumers and hence the profits.
The death spiral could be illustrated with the following diagram:

Internet ShoppingIndian Context
E-commerce, internet shopping and Cybermalls are some of the topical
strategies, which have appealed to academicians and practitioners of marketing
in recent times. The following observation reminds the US that e-commerce is
in fact a reality and not a myth.
o Amazon.com, the pioneering internet store dealing with books/music
software, is accessible to consumers around the world. Closer home, there
is FabMall and Rediff on similar lines.
o Certain categories like music and books lend themselves more amenable
(relatively) to e-marketing, as the consumer can sift through information
online and the traditional touch-feel-buy purchasing route is not
required for these categories.
o Business-to-business marketing is already experiencing the impact of the
internet.
o Electrolux has introduced a Web-based washing machine (abroad).
E-commerce is certain to change the way consumers, manufacturers,
intermediaries and suppliers communicate with each other. But, with all these
developments, marketers have to consider a few fundamental questions before
they build brands on the Net or woo customers through the Net. A recent
publication from NCAER provides useful information on the penetration levels
of different products (penetration per 1000 households). Colour TV is at 79,
BWTV is at 240 and refrigerators is at 86. The penetration of these durables
gives US an idea about the readiness of the market to accept internet shopping.
While the penetration of telephones is just touching double digits, the
penetration of PCs is still in single digit. Marketers who are into Web-based
TVs may have to wait a little longer so that they would be assured of better
returns with the enhanced penetration of cable TV which is required for the
Web-based TV.
Another aspect, which is important is the demographic fact that the consuming
class (which buys branded products across categories) in the income range of Rs
45,000 to Rs 2.15 lakhs per annum (household income), comprises about 87
million households. The number of households above this is a small niche,
which is about 1.2 million households. Internet marketers will have to, at a
fundamental level, consider the demographics and penetration levels of
prerequisite durables to calculate the critical mass required for launching an
internet infrastructure and promotional strategies, The world's largest internet
store, Amazon.com, has probably broken even after a number of years of
operation. The belief is that it takes sometime for these technologies to gain
ground. Marketers in the Indian context may have to do a lot of homework if
they make such assumptions.
Internet Shopping and Consumers
Internet shopping behaviour could be captured meaningfully at the point of sale
(retail outlets). But, this pre-supposes (i) state-of-the-art tracking methods and
(ii) credit card transactions. It is common knowledge that the credit card culture
is yet to fully develop in the Indian context, though the market has been active
with several brands in the last decade. The one-to-one marketing and loyalty
programmes using the internet will blossom only if patterns of purchase are
monitored cost effectively in different markets. Besides, the major chunk of
retailing in the Indian context is from the street grocery shops (kirana type of
stores) and not from departmental chains as in developed countries.
Certain product categories like books and music are readily amenable to internet
shopping when compared with other products. Even FMCG products may be
amenable to internet shopping, but again, critical mass is vital as the e-tailer
has to develop an effective supply chain system and also has to stock a wide
spectrum of products (both in terms of variants and variety) and this translates
into an investment-intensive infrastructure. The e-tailer has to also workout and
formulate feasible delivery systems and ensure that consumers are profitable.
Tesco, the UK-based retailing mart, which has reported profits, serves and
manages consumers in an effective manner. Thus e-tailer will have to plan an
enhanced high-tech infrastructure to accommodate more internet shoppers
simultaneously with increased buying volume. This makes the proposition
immensely investment and technology oriented. Tesco has a chain of off-line
stores that has an infrastructural synergy with its online operations and the store
also has a vast base of loyal customers. Apart from other important issues,
consumer behaviour in the Indian context is a vital factor, which should be
considered by any marketer who would like to consider dis-intermediation
through internet. The Indian consumer follows the Hear-Think/Feel or
Feel/Think-Do approach while buying durables and internet shopping may not
be appropriate for durables with the inherent perceived risks and high unit cost
considerations. TV marketers, a few years back, offered consumers Book Now:
Delivery after a time period discount offers and one has not come across these
offers in recent times. An average consumer who buys an audio system/TV/PC
would like to shop around, compare brands, feel them, bargain the prices and be
convinced about the value, before eventually buying a brand. The tangible and
physical experience involved in the shopping of durables offers an experiential
mind state which cannot be substituted by internet shopping in spite of the
plethora of information it is capable of offering. Even in the category of ready-
made wear, research in the Indian context has shown that consumers like to
shop in multibrand outlets. The shopping experience provided by Titan reflects
the power of retailing with regard to durables. The dealer also has a strong
WOM impact on consumers in most markets (urban ones may be exempted
from this aspect). The durable marketer also has to market the offerings
to different segments through a complete product-linewashing machines
could start from no-frill semi-automatics to fuzzy logic ones. Even if internet
shopping is introduced, only a small niche may be interested and may also have
access to internet. The majority of sale, for instance, in the category of washing
machines, is in the semi-automatic sub-category; in refrigerators, the majority is
still in the 165 litres sub-category (though higher-end models are also
experiencing growth). Hence the major share of sale in such categories will be
limited to a specific product variant. Most shoppers of durables are non-internet
shoppers.
Going by demographics, it is very likely that the major chunk of prospective
customers (first-time buyers as well as replacement buyers) may prefer the
conventional retailing route to buy durables. There may be a small niche,
probably a multiple ownership niche (in fashion categories like watches),
which may be interested in transacting through the cyber-mall (one more layer
of symbolic appeal!).
In a market like in the US, about 95 per cent of internet users have bought at
least once using the online strategy, but this percentage may be much lower if
high-value durables are considered. Autotel, a dealer of second-hand cars, puts
up the prices of different brands on the Net so that consumers could compare
prices.
One area in which internet may have a rapid and direct impact is online trading
of shares and securities. Share brokers may have to offer portfolio management
packages to suit different segments of consumers; not just be a part of trading.
Vanguard, an online firm headquartered in a developed country in this field, has
adopted a number of innovative measures for succees.
Prerequisites for E-Tailing
A niche market may be preset in several categories and marketers interested in
targeting internet shoppers should research the market to identify the niche. A
bank may find that a specific service like a payment transaction over the internet
may be more economical, than the teller service or telephone or mail. The bank,
in this case, has to identify customers who may be interested in the internet
option.
At a basic level, the motivational pattern of prospective internet shoppers will
have to be analysed. There are five basic types of convenience which may be
perceived by internet shoppers.
(i) Reduction in the time spent on shopping. Nuclear families in urban cities
with both spouses having a busy schedule may want a reduction in the time with
regard to mundane shopping.
(ii) Flexibility in the time for shopping. Apart from the segment mentioned in
the earlier point, senior level corporate executives may be interested in this type
of convenience.
(iii) Scaring the physical effort of visiting stores. This aspect has to be analysed
with great care, as even a cross-section of the upper economic strata (does not
include the earlier segments which have been stated) like housewives may
perceive shopping as a recreational activity. The physical effort of visiting
stores has to be viewed with regard to the product categories, which are shopped
by consumers. The effort may not be worth it for FMCG or commodity
products, but consumers may perceive that it is useful for speciality products
like ready-made wear or furniture.
(iv) Search effort. Research indicates that internet shoppers are likely to be less
price or brand conscious, as they are exposed to a lot of information on the
internet. The deal prone consumers may look for value than just the price
factor. Mahindra & Mahindra launched Qudro vehicle, which can be ordered
over the internet. Consumers could have a customized product with accessories
and attachments. The mid-segment passenger car market in which the model
was positioned has a number of models from several manufacturers. It will be
interesting to know if such a model can work even in a niche market in the
Indian context. A significant portion of the consumers in this segment are
upgraders who are in the process of upgrading from their present model. These
consumers would look for specific features and price dimension across brands.
Quality of information on internet is likely to be useful for this type of segment,
which is also likely to be in the appropriate demographic segment that may have
access to internet.
(v) Impulsive buying behaviour. This may be of interest to marketers of CDs
and books. Consumers may indulge in impulsive buying in response to
advertisements, and this niche could order products through internet. A database
of these consumers would help the marketer to develop a relationship with the
consumer by monitoring the preferences and the variety sought by consumers.
Categories like confectionery, chocolates and fashion apparel may also qualify
for impulsive buying over internet.The marketer should keep the excitement
alive by introducing a number of variants in these categories (some of them
could be exclusive to the internet).
Another area of research which is being attempted by marketers in developed
countries (and the one which could be useful in the Indian context) is to study
whether there is any difference between the profile of internet shoppers and
internet users. The profile could provide information on psychographics, like
attitude towards buying products on the internet, risk taking and lifestyle
orientation. Internet marketers have to plan for complaint redressing and
product recall arrangements in case of complaints.
One of the objectives of using internet is to develop consumer loyalty (not just
towards brands, but towards the e-tailer) and this involves planning for customer
satisfaction. In order to create a habit of internet shopping among consumers,
marketers may have to offer customers trial period offers at least during the
initial developmental phase of internet marketing.
Operational arrangements (apart from costs involved) will have to be made by
e-tailers, and this may require a great deal of planning in the absence of regular
retailers. There may be a need to network with different kinds of manufacturers.
Marketers may also be required to work out reward schemes, bringing together
different products or brands. There has to be several variants of the schemes to
keep the excitement going on internet shopping.
Marketers may have to depend on multiple channels of distribution until
consumers are able to gear up to experience the benefits of internet shopping.
TOUCH OF REALITY
According to a market research organization, AC Neilsen, there are about 627
million online shoppers in the world. About 135 million of them have made
airline reservation, and an equal number have purchased DVDs or videogames
online. About 128 million of them have purchased shoes or clothes and about
110 million consumers have purchased CDs or music downloads. Indian online
shopping market is estimated to be about Rs 1180 crore and 24 per cent of this
market is consumed by online rail reservation. Online air reservation is also a
popular category of service among Indian online shoppers, with about 35 per
cent of them buying it online. No other category even contributes to Indian
online shopping in terms of shopping value (though 35 per cent of online Indian
buyers buy books online).
Online RetailingSegments to Customization
Traditionally, market segments were created by marketers to divide consumers
into meaningful and similar groups to enable the formulation of strategies. With
the power of internet, the preferences of discerning consumers and their ability
to monitor and track information on prices and brands, and the focus of
consumers on time and convenience, there is a need for marketers to use data
mining techniques to ideally target individual consumers. This may appear a bit
far-fetched in the Indian context, but a pioneering brand, which is able to
effectively achieve this strategy (among a niche of consumers), is certain to reap
the benefits. The objective of marketers should not be just to maximize the
market share; it should be to maximize the lifetime value of each individual
consumer. This requires building interpersonal relation with the consumer by
establishing an ongoing dialogue with him/her and customizing the offering to
the needs of the consumer. There is an interesting implication of this
customization strategy. While services (like travel, financial, hotel and hospital)
offer a wide scope for customization, product-related customization would be
limited. Decades ago, Theodre Levitt published a simple but profound article
(profound even in the digital economy), which views even products as Services,
essentially because they result in end benefits, in the area of services,
customization should take into consideration the fact that tangibles (like the
brand and infrastructure) are likely to have a phenomenal impact on decision-
making aspects of the consumer. A brand of private hospital would have to
create credibility and trust to reassure consumers that customization would be
an effective option. The trust and credibility associated with the off-line
experience (more in the case of such services) could affect the online demand
for the service. Customization in healthcare sector would require a high degree
of data about the consumer and customization has to be triggered by the
marketer, as the consumer may or may not be aware of the needs (problems
related to health in the healthcare industry) and hence, customization can only
follow after awareness is created. For example, a national brand in the
healthcare industry could develop a niche segment for which a customized
strategy could be formulated. As a basic step, the brand would have to choose
from its database probable consumers who may be interested in having
customized services in health care. The initial strategy of the brand should be to
have a communication programme (online), which would trigger the interest
levels of probable consumers. Though the ultimate benefit to the consumers
would be customized, the initial start-up communication should preferably not
be a customized one. The involvement levels of consumers would vary even
among the niche and eventually, the brand may be left with only a micro-niche
of consumers who may be interested in customized services. The brand should
ensure (taking into consideration its own infrastructure and capabilities) that the
service provided measures up to excellent levels for the chosen micro-niche.
The process of customization for such a service is given below.

Online Marketing and Customizing Services
In a service like healthcare, building tangibles, as mentioned earlier, provide the
basis for the evaluation of search qualities by the consumer (those
factors/qualities which could be evaluated by the consumer before he/she buys
the service). The experience qualities (which could be provided by the
customized services) are qualities which could be evaluated after the consumer
goes through the service. For example, the customized services (healthcare) for
a family could include a range of services from skin care to advanced treatment
for heart care. This could involve both online and off-line experiences.
Besides, if the family is the consumer unit, there would be more than one
family member and the range of services would include a broad spectrum of
services which could be required by the family. Taking good care of search
and experience qualities could, to a great extent, prepare the brand to face the
uncertainty involved in credence qualities in servicesthose which cannot be
evaluated by the consumer even after he has experienced the service. For
example, counselling may be one of the services included in the basket of
services mentioned in the example and the impact of such services cannot be
fully assessed by the consumer. Hence, a brand which is in the area of
customizing its services in the digital economy would have to face both online
and off-line experiences involving a variety of service qualities. The brand
should ensure that the overall delivery of services results in a positive WOM.

Online Marketing and Product Customization
While product customization is also a distinctive possibility with the state-of-
the-art technology (National Panasonic produced a bicycle which could be
produced in many customized versions depending on the individual preferences
of consumers), not all companies would have thetechnological/financial
capability to produce a break-through of this kind. Product customization
(apart from variants) could be effectively done in the pre-purchase stage with
the interactivity aspect offered by online search process. This could be
applied across categorieshigh-end TVs, pharmaceuticals, books and
passenger cars to name a few. For example, the niche of consumers interested
in a high-end TV may be interested in a variety of parameters and the
importance given to each of them may vary. Plasma TV (Samsung, Philips) may
trigger interest in the type of technology used, the value offered, the viewing
experiences, perceived risk towards the price/technology, after-sales service
queries to name a few. The interactive and anytime nature of internet makes it
the best possible medium (with the standardization of answers, unlike a retail
outlet where personnel may differ in their knowledge or perform differently at
varied levels of enthusiasm) to get the consumer involved by generating interest
levels which may not be possible through other media.

Pre-Search customization for products
Internet could be extremely useful to draw the consumer to the retail outlets,
especially when premium products are involved. In fact, pre-search
customization could be a dominant purchase decision factor. Online marketing
also opens up the exciting option of customerization, which could be useful in a
few product categories. For example, an architect/real estate firm could provide
an infinite number of options on housing designsrooms, attachments,
dimensions, prices, landscapes, etc., and consumers could choose from these
options. Customerization offers more options than customization; and another
important difference is that the marketer need not define the specific needs of
the consumer (the consumer chooses from the large range of offerings built
around the core product and that could get fine-tuned). The real estate company
could have a supply chain comprising of architects, contractors, suppliers and
component manufacturers to ensure that the chosen preference is met according
to specifications (the firm accepts the needs of the consumer from the chosen
offering rather than defining the needs through interaction).
Online Shopping and Product Categories
Books, publishing (where online images could be marketed), music, travel and
airline are categories which lend themselves amenable to online marketing.
Reviews about books (in the respective category of interest to the consumer)
and a review about a CD/cassette launched (could also be sampled on internet)
are adequate to create interest among the target segment. Additionally, if there is
a brand surrounding the offering (like Polygram or BMG) in cassettes, there is
also reassurance provided to consumers about the quality of the offering (apart
from the intrinsic nature of the offering). If a soft-drink brand or an apparel
brand is to use internet, there are two ways in which interest could be created
by providing category-related information or by providing some kind of
entertainment, which would appeal to consumers. A brand of ready-made shirts
could have a Website for detailing how fabrics are used and how quality is
adhered to and the benefits of different kinds of raw material combinations.
Care should be taken to ensure that the information emphasizes the core
strengths of the brand (functional attributes) in a subtle mariner and how these
benefit consumers, specifically the target segment of the brand. It could
highlight, for example, the anti-wrinkle range it has introduced and how the
offering prevents wrinkling of the apparel. The limitation of this approach is
that only a small fraction of consumers may reflect category involvement
interest in the category of textiles in this case. However, the brand may gain
certain positive aspects of WOM. If a brand consistently gets associated with
product category and also informs the consumers of how it is constantly
updating its offerings (there may not be a better way to convey it other than
through internet as only involved consumers are likely to get exposed to the
information), the brand may be perceived to be an expert in the category in spite
of the lack of explicit advertising (if the brand caters to a segment which can be
reached without the traditional media). The option of creating excitement
around the brand with an exclusive launch on internet is not discussed in detail,
because the approach may be applicable only if the brand is built up over time.
An unknown brand having an exclusive launch on internet may fail to attract
attention unless the offering is novel (or a free offer of some kind!).
The second option of providing entertainment on the Web has the limitation of
competing with a number of other sites. But, the approach can work to
strengthen the equity of a brand, which is already established in the mindset of
consumers. Coke, for example, has a Website where consumers are taken to
places which are fun and refreshing (the core values of the brand), and visitors
could also coin jingles. Certain categories like soft drinks, confectionery and
other kinds of impulsive items may have to find innovative ways of entertaining
Web visitors to ensure that they keep coming back to the site and also hope that
the online approach provides a rub-off on the equity of the brand.
Services like banking and travel could provide certain services which may be of
interest to the target segment. Citibank, recently made available the income tax
forms on internet so that visitors could download them. American Express
offers suggestions on investment options after interacting with the consumer.
Some research is required on how many consumers (target segment) would be
interested in information, entertainment or supplementary services, which may
not be a prerequisite for product/service usage. Travel, airline and banking
services involve a high level of interaction, and internet gets integrated into the
core service itself.
Online Shopping and Price Sensitivity
In this marketing era of value orientation, a marketer has to consider the value
offered and not just the price which is associated with the brand. But, with the
onset of internet-oriented retailing, it looks as if price could emerge as the
dominant factor, which may drive consumers towards internet (price in this
context is used after assuming that a brand offers value). World over, it looks as
if retailing of consumer products is driven by price. The retail chains abroad
(such as K-Mart, Wall-Mart, etc.) and the entry of several organized retail firms
in India proves this point. Nirma and Lifebuoy may be value brands, but the
consumer may look for reduced prices (not as a part of sales promotion) on
these brands when he visits a retail outlet; especially the consumer who is from
the middle class (this aspect is also reflected in the Buy and Save grocery
stores which have mushroomed in cities). The basic assumption in this context
is that this approach does not include premium niche markets like jewellery or
artefacts. It may be mentioned that Amazon.com has prices which are
considerably lower than what the consumer may find in retail outlets. In the case
of durables like a special edition of Volvo car on internet, which may
command a premium; and in this case, the niche is a premium one. Any
company which attempts to create a large base of online shoppers by offering a
range of products will have to understand that price will be a strong motivating
factor for consumers to continue to be online shoppers. Hence, a back-up
infrastructure of vendor management and logistic systems will have to be
created to ensure that the marketer has a long-term and sustainable advantage.
The price will also have to take into consideration the delivery costs. Dell
computers is an example of how an infrastructure has been created to make
online shopping a win-win situation both for the consumers and for the
company. In durables, which are feature oriented, consumers are not likely to be
price sensitive. Internet will be useful in reaching these kinds of consumers who
will be able to appreciate information orientation through it.
Online Shopping and Building Consumer Loyalty
Once a company has a base of online shoppers who visit the site to purchase
products, there may be a need to probe into the switching behaviour of
consumers. This would be useful to devise loyalty programmes. While most
consumers may switch because of prices, there may be a cross-section which
may be interested in additional services as discussed earlier in this chapter.
Consumers spend money on different kinds of categories and there may be a
need to introduce a loyalty programme which may be beyond the products
offered by the online store. Psychographics of a section of consumers may
reveal that they are ardent followers of movies and theatrical plays and hence a
club membership which would make these members eligible for certain
privileges in their areas of interest could be formulated. There are research
studies which indicate that a huge number of surfers visit specific sites because
of WOM. It may be worthwhile for an online store to have a mechanism by
which the impact of WOM (on the sale or on the traffic through the Net) could
be analysed. Apart from specific promotional programmes to encourage
consumers to spread the good WOM, the company could also get an idea on the
profile of consumers who spread the WOM either on the online store or on the
brands, which they had bought through the store. When internet is evolving as a
medium, marketers could use it as a medium for the conventional advertising
pull. Though advertising on internet is getting cluttered and there is uncertainty
regarding the effectiveness of advertising on the Web, it could be used to pull
the consumer to the retail outlets once the interest in the brand is created. A
brand like LG which has taken the innovation route to enter India across durable
categories (TV, refrigerator and microwave-ovens) could use the graphics to
demonstrate the features and their benefits to convey value proposition at a
higher price point. There may be a need to use the traditional media to generate
awareness on specific features of products and then involve prospective
consumers through the Web. This approach may enhance the traffic at retail
outlets and result in purchases. What is unique about advertising on the Web is
that it is interactive unlike the traditional media. Messages and information
could be customized to segments and even individuals, and this aspect could be
used to explain a specific feature and its benefits to an individual consumer. For
instance, a consumer may like to know how the multi-wave concept in an LG
microwave-oven may be useful to his specific cooking needs. The Web could
overcome the service limitations at retail outlets, especially for durables. The
service in this context refers to the pre-sale information, which a consumer
expects at retail outlets before he/she buys the durable. This service is at a low
level in most outlets (including large outlets which deal with a number of
categories and brands, and which also offer products at a lower price) and
internet could be used to overcome these limitations.
Online Marketing and Concept of Customer Relationship
Management
The Web may be highly suited for customer relationship management (CRM)
when the marketer deals with the consumer directly (could be in consumer or
business to business marketing). CRM is as old as the concept of marketing
itself, as all efforts of a company to satisfy the consumer could be brought
within the focus of CRM. CRM helps the company to interact better with the
consumerbefore, during and after the sale is over. A semiconductor company
has a plethora of design information on its Website and this attracts thousands
of design engineers to the site regardless of which company they work for.
These design engineers are influencers of the buying decisions and hence they
are like floating customers for the semi-conductor company. Building a
relationship with these engineers would amount to developing a relationship
with all the companies they may work for in future. Online ordering, checking
out the delivery schedule, comparison of prices, and communicating changes in
specification are some of the vital areas where the speed and connectivity of
internet could help a marketer to enhance CRM.
CRM could also be useful in consumer products where the company could
connect with a customer base using the Web. In fact, several aspects of
marketing research could be attempted online. A firm like Whirlpool or
Samsung could get an idea about the expectations of a replacement buyer
through the Web. It is assumed that currently most PC owners would be owning
durables and some of them may be interested in replacing some of their
durables. A buyer in the replacement market may look for the same kind of
offering (for example, a no-frill 165L fridge) at a lower price or may like to
upgrade to a frost-free model at the lowest available product. Another buyer
may require to know about the after-sales service, especially if he/she has had a
bad experience with his current brand. When a consumer wants to go in for the
replacement of a durable, there may also be a useful information which could be
gathered on the Web. The concept of Call Centre could also be implemented
by using the Web. This maybe useful after the sale is over when the consumer
may have queries about usage or complaints. The user manual could be
augmented with powerful graphics on the Web to educate the consumer about
specific situations which may require a specialized use of the product (washing
machines). Marketers may have to plan, nurture and monitor online shopping
behaviour of consumers as it evolves.
Online Marketing and Five-Dimensional Branding
Martin Lindstorm suggests five-dimensional branding as very effective to build
a brand. The five-dimensional branding offers the consumer a multi-sensory
experience, which involves audio and visual stimulation, a sense of feel, smell
and taste (as appropriate to the product). Kellogg in its research (in countries
abroad) also found that a mixture of multi-sensory experiences influence brand
choice and recognition. Online retailers (music, books and services may be
exceptions) should attempt to create such experiences apart from developing
trust in relationship and providing value to consumers. Indiatimes was in the
news about the volume of consumers shopping online. Consumers may have
been reassured by being accredited through an internationally known internet
security brand with regard to payment transaction. It deals with a number of
brands. An online outlet like Indiatimes could have an arrangement (at least in
urban markets) by which the consumer can order the brand and take delivery of
it at a retail outlet close to his/her residence. Operational arrangements would
have to be worked out. This arrangement has two advantagesdurable products
could be included as the consumer could get a feel of it at the retail outlet and
secondly, the consumer can order and take delivery after paying cash on
delivery. This may be similar to retail purchase, but in a situation where an
online consumer orders about ten products and is particular to have the feel
factor for only one or two products, the online outlet certainly provides a value.
The consumer, for example, may even order online a walkman and has the
advantage of getting clarifications from the sales personnel at the retail outlet
from where he/she is taking delivery of the product. Depending on the product
category the concept of multi-sensory branding should be used by online outlets.
Apparel is another category where this kind of branding may be useful. Sony
has the try off-line, buy online concept in some of its stores abroad. There are
stores which offer all products of the brand ranging from Web TV, digital
recorders to walk-man. They can be tested and felt when consumers visit the
store but can be ordered only online. The idea of off-line product display is to
engage the consumer in the multi-sensory experience. While the traditional
retail outlets reassure the consumer of after-sales service as a post-purchase
activity, e-tailers have to reassure consumers about after-sales service wherever
it is applicable. It may be about returning a malfunctioning new cassette; or it
may be servicing the electric toaster bought online. Research has clearly shown
that the satisfaction levels associated with the first time purchase is a
prerequisite for repeat purchases. FabMart offers the option of returning the
jewellery bought online if it is not to the liking of the consumer (though this is
not strictly an after-sales service). Reassurance about service could come in the
form of exclusive off-line outlets to service the customers of an online retail
outlet. This would be an investment, especially when the base of consumers for
an online outlet is growing into a huge one. The service equity built up by the
online retail outlet builds up a relationship with consumers through trust.
Charles Schwab is a financial services company, which started off as an off-line
company. In 1995, it started an online version without closing down its off-line
branches. Online investors apart from availing the online benefits, which could
be associated with financial services, also benefited from the off-line stores. The
company realized that the human interface at its off-line branches played an
important role in both pre- and after-sales services. While the
website Schwab.com gets about 76 million hits per day on an average, 80 per
cent of the transaction get completed online. But 70 per cent of the new business
comes from the off-line branches. The company held about 10,000 seminars in
2000 to market its Website to consumers while reassuring of their best services
through off-line branches. It has about 350 branch offices. The service equity of
the firm is built both through online and off-line stores. Service associations
(and deeds) play an important role in the branding of online storesservice
through both technology and human interface. 7-Elevan (a retail network abroad
which is open for 24 hours a day, 7 days a week) is planning a novel service in
Thailand. This e-service consists of putting up computer kiosks in their stores
with a list of items the store does not carry. Consumers would browse through
the kiosks, order and leave to collect the products ordered a few days later. This
pre-sale service apart from providing this service to loyal customers would also
appeal to consumers who have no credit card or computersan ideal concept
for the Indian context as well.
Intangible services added with the core service would be the order of the day in
online branding in a digitalized
environment. Mapquest.com and Mapsoners.com are websites which are
associated with maps. Unlike a traditional map, which is concerned with
location of places, the sites offer information on need-based drive destinations
like the shortest route or the most scenic route, details regarding destination, and
information from a business directory. In the category of automobiles. General
Motor's Onstar system links automobiles with service centres, which provide
roadside service assistance. The spate of services also has implications on the
pricing of brands operating online. An online services company may give the
PC free if the consumer is able to take up a long-term service contract for
internet access. The brand in this situation takes into consideration the product
usage cycle of the consumer. Services also enable brands to provide a wholistic
experience to consumers. An online investment brand like E*Trade offers
information on investment, speed of trade execution investment research and
customer support. This kind of investment experience is possible because of
the brand's partnership deals with several vendors. Partnership is an important
aspect of e-brands.
The core offering of the brand is to be backed by an experience and this would
be possible only through partnerships. Other websites which offer such
experiences (through partnerships) are Travelocity, Yahoo, Geocities
and Quicken.com. Xerox offers a service print-on-demand solution for book
publishers called Book on Time. Publishers can use this service to print out
single copies of digitally stored books when an order is received online from a
retailer location. Customers could choose the paper type, building style and
fonts for their book. The publishers benefit not just bycustomizing the book
according to the specifications of consumers; they also save on inventory costs
and unsold books. Besides, the book never goes out of print. While the initial
investment for the customer (publisher) is likely to be high, the impact of such
benefits in the long term could make it worthwhile for the publisher to invest in
such technology.
Off-Line Brand Equity to Online Brand Equity
Brands, which have already established themselves, have an excellent
possibility of transferring their equity to online. If such brands could provide the
extra dimensions critical to internet marketing, as stated earlier in the article,
they would be very successful online brands. Tesco is one of the largest retail
chains in the UK with about 600 stores and 60,000 product-lines and it is known
for value for money. Its store brand accounts for 40 per cent of the total sale in
the UK. This reflects the commitment of the brand towards its consumers
while a number of chains market well-known FMCG brands at a lower price,
Tesco strives hard to build its own value-based brands in a number of
categories. It is currently present in Central Europe, Ireland and Thailand, and
builds relationships with local vendors. Tesco's online outlet does not have an
exclusive infrastructure. The back-office aspects like billing, picking, packaging
and sorting and delivery make use of the existing infrastructure of the company.
A significant portion of the online shoppers also shop off-line at its stores.
Making use of its equity it has a Club card loyalty programme by which the
consumer can earn points for every pound spent, save it for weekly redemption
at the store or use it to get discount on categories ranging from petrol to travel
services. There are 10 million consumers who are a part of the programme and
this also includes online shoppers. A brand which has a good deal of equity
could encash the equity online with appropriate strategies.
Disney is another brand which has built up a successful online brand
(Disney.com). The trust built up by the brand has been instrumental in several
online consumers visiting the site. The more they visit the site, the more would
be the possibility of the good WOM and this successful online/offline
consumer reaction enhances the equity of the brand.
Toys R Us is a well-known chain in the US which was started in 1948. It has
an equity, which has triggered positive associations on trust, variety quality,
service and value. In an effort to become an online outlet, the company
attempted several partnership deals but did not meet with success. In 2000, Toys
R signed a 10-year partnership deal with Amazon, com. Amazon.com, also
known for trust and dependability, would bring its online synergies and market
Toys R Us in a co-branding effort. A well-known off-line brand could join a
reputed online brand to create a trusted co-branding partnership.
Synergising Online and Off-Line Strategies
Business to consumer marketing is a growing area of interest in internet
marketing. While books and music have been strongly associated with Net
shopping, there is a need to establish a framework which could optimize online
and off-line marketing strategies. Such a framework would be useful to
marketers if they could use it for both FMCG and durable products.
There is growing concern the world over among marketers about the feasibility
of business to consumer marketing on the internet. Amazon.com, one of the
frequently quoted brands in internet marketing, has attempted a number of
innovative strategies on the Net but has not been able to put up a significant
financial performance. Apart from books and music categories, service is
another area which is amenable to internet marketing, given the intangibility and
complexity of a number of services. The chapter attempts to formulate a
practice-oriented model which could enable marketers to synergise off-line and
online strategies. There is a need to consider some of the important dimensions
of online marketing. According to Ries, online marketing is most suitable when
the offering is a service, when customers place a heavy emphasis on pricing,
when the offering is a non-fashion product (as fit and comfort become important
for products like apparel and shoes) and when the costs of delivering the
product (groceries) are not significant. Internet being a highly interactive
medium is very suitable for customized services like travel and financial
services given the queries they are likely to generate from consumers. Vanguard
Group, the fastest growing mutual funds company in the past decade, has spent
about $100 million on the development of its website. Online marketing could
build up a strong base of loyal consumers who could also bring more consumers
through referrals. EBay is one such company which has been benefited by
WOM. EBay has also found that referred consumers tend to use the people who
referred them for advice and guidance ratherthan calling the company's support
staff. These factors point out that the value of loyalty could be much greater in
online marketing than in physical off-line marketing. Amazon.com has created
adequate trust and credibility among consumers and most of them provide the
company with adequate information about themselves in such a way that they
could conduct their repeat purchases with significant ease. FabMart, an Indian
online marketing company which started with books and music categories, has
moved into an innovative servicesupplying groceries to parents of non-
resident Indians (NRIs) who live abroad. Given the high purchasing power of
these young NRI professionals, the company was sensitive to the feeling of
warmth and care these professionals reflected towards their parents. The
company started a service by which the NRI consumers could use the online
accessibility to give a list of groceries that could be supplied to their parents in
India after being procured from local stores. Though the service involves
tangible products, it could enhance the database of the company's consumers
and add a positive WOM rub-off on the brand.
On the flip side, online marketers marketing mundane FMCG may have to
concentrate on building the brand personality of brands rather than attempting to
provide value on the offering as this may not always be possible because of
frequent off-line sales promotions and bargain deals. Marketers marketing
durable products like cars, refrigerators and TV sets need to know that apart
from providing in-depth information on features and benefits and comparison
across brands, there is also the need to use online marketing tools to draw
consumers to the retail outlet, especially because the feel aspects are still
important in most durable product categories. The feel-think-buy model is the
one consumers have been used to for several years with regard to durables.
Changing this behaviour radically with online strategies like huge price
discounts or providing freebies for Net shopping could trigger dissonance
among consumers of high-involvement purchases (products which have
significance to buyers due to their functional or symbolic/status appeals). There
is a strong need to use online and off-line strategies for durables to ensure
appropriate brand building.
A Framework for Synergising Online and Off-Line Strategies
A framework is proposed taking into consideration both FMCG products and
durable products. The framework also delves on the various stages of decision-
making, which are relevant to the combination of off-line and online strategies.
The framework presented in the following figure consists of four quadrants
based on two parameterstype of product and type of consumers buying the
product.

In the figure Brand Tasters are either new to FMCG categories or they are
consumers who are new to the brand and they are trying out the brand for the
first time. In the Indian context new to the category, consumers are those who
graduate from a non-branded product to the branded offering (detergents,
toothpastes, shampoo are categories where entry-level brands may be
required). Cibaca in toothpastes. Wheel in detergents and Clinic Plus in the
shampoo category are examples. Brand building is attempted through entry-
level (penetration pricing) pricing along with high-visibility campaigns in mass
media (as the offerings target mass markets). The upgrading type of
consumers, are in the purchase stage of the decision-making process (need,
information search, evaluation of alternatives, purchase and post-purchase
stages are the various stages in CDM). They are familiar with the product
category, and hence the pricing and promotional strategies could propel these
consumers to try the brand. Free sampling could also be attempted by marketers
to enhance trials. A high degree of sales promotion (freebies) is likely to dilute
the image of the brand.
In the case of online marketing to such consumers, the marketer should focus on
premium brands (as consumers owning computers are not likely to be entry-
level consumers in the categories cited). The focus should be on building and
reinforcing the brand personality. For example, for a brand like Close-Up
toothpaste, a website reinforcing the personality of the brand (young,
extroverted, outdoor-oriented and modern) is likely to appeal to the new
consumers who are attempting to switch over to the brand in the product
category. There should also be constant attempt by the marketer to introduce
brands, which would offer significant perceived differentiation to these new
consumers. Dove moisturizer bar (soap) is an example. A website can elaborate
on the benefits offered by the state-of-the-art ingredients used by such brands
(whether it is soaps, detergents or shampoos). The website should encourage
consumers to reflect their queries about the new offerings. Besides, it would be
a good idea to provide information on types of problems associated with the
product category. Stain removal for a detergent company like P&G or problems
related to baby foods/baby health for a company like Nestle are specific areas,
which could provide in-depth information to a new consumer who is in the
evaluation of alternatives stage in the decision-making process. These
consumers will buy the premium brand (unlike the entry-level consumers) if
they are convinced about the credibility of the brand. Online marketing could
build up brand credibility by providing insights into the problems associated
with a category and offering solutions to these problems through the brand.
Brand ID in the figure represents a set of loyal consumers who identify
themselves with the brand. Though these consumers could be categorized as
loyal, the loyalty could be partly dividedsome consumers for instance may
be trying out different brands of soaps but may buy a specific brand with greater
frequency. Off-line strategies would include segmenting these loyal consumers
through retail outlets (by appropriate methods of monitoring their purchases)
and offering them points, which they could redeem for a company's products
depending on the frequency of brand purchase. The new offering launch with
the associated online information to create awareness on various aspects
suggested for the earlier category of Brand Tasters is also applicable in this
context because these consumers may become new consumers of a
competitive brand if such strategies are not formulated. Event marketing among
the target segment could also sustain interest and excitement around the brand.
The event organized has to be in tune with the personality of the brand. For
example, Coke could organize a game/contest which would be perceived as fun
and refreshing by the target segment. A brand of fast food could organize a
contest on innovative recipes to reinforce its perception as a brand with good
taste and amenable to a variety of recipes. Children could also be a part of the
contest to emphasize the warmth and family feeling.
Hopefuls in the figure represents a set of consumers who are trying out a new
brand of a durable product (could be TV, refrigerator or a washing machine).
This segment can also consist of a set of consumers who are entering the
product category for the first time and hence may choose a brand or (model)
which has a entry-level price. WOM (or buzz) could be a very effective online
strategy if a brand could build off-line credibility. Off-line credibility involves
offering a good value in the product itself (being a high-involvement product),
good service after the sales is over and a good rapport being built by the retailer.
Of note is that a satisfied customer of a brand (post-purchase stage of the
decision-making process) may like to buy other products of the company
probably from the same retailer from where he/she had bought the brand
initially Once a brand is able to build up credibility, it could use its equity in
online marketing. This could be done by offering a chat among the satisfied
users of the brand by projecting the good track record of the company with
regard to service and by encouraging the consumer to take a look at the brand at
the nearest retail outset. Depending on the demand in a specific geographical
area, small incentives may also be provided to the consumer. This is an attempt
to push the brand into the choice set of the consumer who may be evaluating a
set of brands before buying a durable product involving a substantial price. The
online strategies should be simultaneously pursued with off-line strategies, like
advertising in the appropriate media and demonstration at specific outlets. It is
important to ensure the Hopefuls that they have made the right choice of the
brand after they have bought the brand. This could be done with follow-up visits
for a specific length of time. This eliminates dissonance in the mind of the
consumer who has chosen the brand.
Life consumers in the figure indicate those consumers who are likely to repeat
buy the brand in the respective category and also buy other products of the
brand. The repeat purchase may also involve buying an updated version of the
offering (with more features/benefits). Online strategies include developing a
database of consumers (with demographics and psychographics which give
information of the lifestyle of these consumers), identifying specific segments
which reflect a readiness to repeat buy or readiness to buy another durable
product (a consumer who has bought an Electrolux refrigerator may like to buy
a washing machine at a later point of time and the onus is on Electrolux to
market its brand of washing-machine to this consumer) and offer a specific
value deal to the consumer. This value deal could be in terms of price, after-
sales service contract or even certain privileges across product/service
categories depending on the lifestyle of a specific segment of consumers. For
example, if there is a segment which travels by air frequently, the brand could
have a tie-up with an airline and offer privileges on air-travel to this segment.
Ready-made wear, hotels and theme parks are other categories which could get
associated with the value deal. The Internet helps the brand to constantly stay
in touch with consumers (who have bought the brand) and elicit information at
various stages involved in the relationship. Online newsletters, product updates,
timely offers based on readiness and online community building are some of the
approaches that can be used to build relationships with consumers. Users of the
brand could form a club as in the case of Harley-Davidson motorcycles. This
brings in an emotional feeling towards the brand, could help the brand to forge a
relationship with consumers. Referrals could be an outcome of such strong
relationships. The framework provides a set of suggestive strategies (not
exhaustive) and marketers could draw up a combination of strategies by
applying the framework along with marketing mix elements.
TOUCH OF REALITY
There could be three kinds of retail store consumers. Loyal consumers are those
who are loyal to the store. Switching consumers are those who shop in multiple
stores and cherry pickers are those who shop in several stores to get the best
bargain. The difference between switchers and cherry pickers is that switchers
shop in multiple shops whereas cherry pickers shop in at least two shops in a
single day at least once In a month. In an environment full of sales promotion
and price-oriented deals, cherry pickers may be of interest to marketers in the
Indian context, given the situation that a major part of the mass market (across
product categories) is price sensitive. Cherry pickers could also be observed in
both FMCG and durable product categories. In categories such as TV, music
systems and refrigerators, consumers go from shop to shop to get the best
bargain. In FMCG categories, it may be interesting to note that cherry pickers
may shop in kinds of storesprimary stores and secondary stores. They may
spend more in primary stores and pick up several small priced items in the
secondary store, which otters them a bargain. A retail consumer research may
bring in several interesting insights into cherry pickers. A large retail outlet like
Food World or FabMall or Giant in Hyderabad attempt to move cherry pickers
into loyal consumers by offering bargain prices as well as providing a one-stop
shopping environment of merchandise. Over the next few years, smaller
retailers are likely to experience strong threats from larger outlets, which would
be able to attract a major volume of cherry pickers.
Virtual Supermarkets
India may be away from a scenario in which consumers may be able to have
their own supermarket working with their personal computer. But, the state-of-
the-art technology has triggered several back-end systems by which a consumer
could create his/her own virtual supermarket from where the merchandise
could be ordered. Bangalore-based FabMall is a supermarket which deals with
groceries, CDs, books and jewellery. The online store caters to consumers from
many parts of the country and has implemented a number of promotional
schemes which enhance the loyalty of consumers. Customer retention is one of
the major initiatives of this online store and its online operations are able to
capture the buying pattern of consumers. As a result, the store is in a position to
customize its promotional offerings to several groups of consumers. An online
store has a number of advantages. It is networked with its warehouse or with
other large retailers and hence inventory could be managed better. This results
in lower SKUs than an off-line store. The online store has a better focus on
customizing information to a specific consumer. For example, in the US a
typical off-line supermarket may have about 100 types of cereals with several
types of information. An off-line store would have problems in getting all this
information within the focus of consumers who shop for a limited time and who
also buy a number of categories. An online store has the advantage that a
consumer could view the information at his/her own convenience and with a
focus. In FMCG categories where touch and feel are not critical, online stores
would be more appropriate. However, the delivery costs are to be considered
when an online store agrees to deliver the merchandise to consumers. The
geographical location of the store and consumers in this model play an
important role, because the delivery costs should not exceed reasonable
proportions. Tesco, the large retailer chain in the UK, is successful in its online
venture which trades in FMCG. The Tesco model has the online store
infrastructure closely synchronized with its offline chain of stores. Procurement
of large volumes from suppliers, packaging and warehousing facilities and
management of SKUs offer an effective synergy when online and off-line stores
function together. Closer home, Subiksha chain of stores, which pioneered
discount type of retail outlets in Chennai, has an online store in operation in
Chennai. A consumer could order online and the number of off-line retail
outlets take care of the delivery based on the consumer's locationthe chain of
stores are located in such a way that 80 per cent of Chennai's population are
within 2.5 km of its chain's outlets. Online retailing, as stated earlier, could
provide information to consumers who are hard-pressed for time to go through
the traditional media. They should target consumers who do not have the time to
do elaborate shopping. FabMall has opened off-line stores in Bangalore and the
strategic advantage of having both online and off-line stores could enable
FabMall to sustain profitability as well as retain consumers. Peapod is a well-
known online grocery outlet in the US. It uses interactive technology to provide
a unique shopping experience to its consumers. Using a PC, consumers can shop
for any product, compare the prices of brands and compare packaging costs
across brands. Consumers can also save and repeat a shopping list of items.
Peapod is an online store, which is linked to databases of several supermarkets
from where orders are accepted and delivered.
1
The Economic Times Retail (ET Knowledge Series), Changing Gears;
Retailing in India.
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Marketing and Branding: The Indian Scenario

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2: Dimensions of Distribution and Retailing

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4: Psychological Dimensions in Marketing and Implications for Marketing Strategies

3
Dimensions of Pricing
The Theme of Pricing
The practice of pricing that was once the science of economics has turned out to
be an art with an aura of scientific touch. Dynamic competitive pressures,
shifting lifestyles of consumers and proliferation of brands have opened up
several challenges to marketers. The theme of pricing deals with three broad,
topical and practice-oriented issues in the area of pricing and its link with the
strategy of marketing. The concept of value is one vital issue which is of interest
to marketers. The concept of value, managing value and value applied to
products and services are some of the important dimensions covered in this
chapter. The behavioural aspect of pricing that delves into the influence of
consumers perception of prices is another topical issue covered in this chapter.
The third issue is about creating value with organizational support and
marketing mix elementsthis aspect emphasizes the link pricing has with the
entire organization as well as with the marketing mix elements.
Pricing and Value
Pricing is one of the most vital aspects of the marketing mix in a changing
marketing context (like the scenario in India). While some of the traditional
pricing methods may have certain relevance to practice, several new pricing
techniques are adopted by marketers. Consumers do not think about price when
they buy brands in a competitive context; they think of value in their
transactions. A basic step in understanding pricing is conceptualizing what
value means in a given marketing situation. In simple terms, value is
enhancing the price-benefit equation. Benefits from a brand need not be just
functional; they can be psychological and social as well. Trust is a
psychological factor and could be useful to reduce the perceived risk associated
with an offering. Brands always attempt to enhance value depending on
competitive reaction; and often, marketing research is required to explore what
value means to a specific segment. The sales promotion of several brands, in
recent times (either offering more volume/units of the brand or offering some
other product category when another category is bought), is one of the ways of
enhancing value and this has become common in fast-moving consumer goods
(FMCG) categories. Pricing is an art, as it involves identifying the perception of
consumers. Value is associated with both FMCG type of consumer products and
durable categories. Akai created value in the TV category through its exchange
offer that initially involved the 29-inch TV. Vendee, a brand of edible oil,
created value at the lower-end of the edible-oil market (about 60% of the edible
oil is sold in unpacked, loose quantities in the country) by introducing edible-oil
vending machines. One aspect is that value can be created at both the lower and
the higher price points. Hence, value does not necessarily mean a low price. For
instance, a common example is the Reynolds brand in the ball pens market. This
market consists of a huge unorganized sector, and Reynolds introduced its
offering at an almost 100 per cent premium over the unorganized sector. The
smooth flow and consistent supply of ink coupled with good design (aesthetics)
created a value perception among consumers in this category. A number of
brands have entered the market since the entry of Reynolds with prices higher
than that in the unorganized sector. Maruti 800 (the no-frill version) represents
value to the entry-level car buyer and Astra could offer value to the
appropriate segment. The small packaging stock keeping unit (SKU) (like
shampoo in sachets) offers value to masses. About 70 per cent of the volume
offtake in the shampoos category is in the form of sachets. Chocolates, biscuits
and soaps are some of the categories in which brands are attempting to enlarge
their consumer base by introducing low-priced variants. In the chocolates
category, about 50 per cent of the volume is drawn from chocolates priced
below Rs 5. A distinguishing feature of the Indian market is the fragile
perception of value in several categories (especially the FMCG categories). In
the confectionery segment, a minor rise in price point (from 50 to 75 paise)
could bring in a decline in sales. Scissors brand of cigarettes went on to become
the largest selling brand during the 1970s, but found that a slight increase in its
price led to a disproportionate decline in sales. Clorets, initially priced at a
premium (confectionery category), took a decision to hold the price for a length
of time to avoid such problems. Topaz, a popular brand of blade, did not raise
its price for a significant length of time to ensure that the value perception was
not altered.
Mechanism of perceived value
It is important to understand the mechanism of perceived value, as this will be
useful for the marketers in the consumables, durables and services categories. If
price, which is reflected in a tangible manner, is taken as an objective indicator,
perceived value is drawn from the quality of the offering and the perceived
benefits of the offering. This perceived value varies from one segment to
another and from one category to another. A segment that buys a brand of car
can attach value to its status symbol and the same car can be bought by another
consumer because he /she likes the functional benefits offered by the brand. The
intention of the consumer to buy is influenced by these factors. The perceived
value associated with perceived quality is influenced by the store name as well
as by the brand name. Perceived value can have a number of dimensions as
indicated in the given table.
Dimension of perceived value Example
Multiple brand benefits Colgate Total
Symbolic value with features (Indian) Mahindra & Mahindra, Scorpio
Symbolic value with features (Global) Mercedes, Rolex
Innovative features Sony (walkman, Wega TV)
Service and taste at reasonable prices McDonald (most countries)
Cult-like group association (motorcycle) Harley Davidson
Convenience (hearing, storing music) Ipod from Apple
Ordering convenience Amazon.com
Affordability (buying sachets) Shampoo (velvette, Clinic)
Ambience Cafe Coffee Day
Impulsive indulgence Cadbury
Pleasure of gifting Titan
Performance and design Reynolds (ball pen)
Loyalty benefits Tesco supermarket (UK) or frequent flier programmes of airlines
Discounts/bargains Big Bazaar
Pre-sale service development Software
Bundling of service companies Consultancy

Marketing Orientation and Pricing
Pricing objectives should not be considered in isolation, but with several aspects
associated with the marketing orientation of the company. Several decades ago,
the fixed costs of running a business were low and hence mistakes in pricing
could have been tackled by companies. In recent times, fixed costs have gone
up, leading to a significant cut in profits. Hence, a company should not just go
by market share objectives or growth objectives in isolation. Marketing
orientation has four basic principlescustomer needs, focus on the segments
selected by a company, coordination (with consumers and within the various
functional areas in the company) and satisfaction of consumers with profits.
Companies in advanced markets are concerned about profits per customer.
Though traditional marketing refers to the value of retained consumers, an
organization would have to take into consideration the costs of a customer
(including those consumers who are retained by a company). Hence, a company
should select a target segment that is capable of serving thereby and earning
profits. While customer satisfaction is vital, it must be noted that it must not be
realized at the cost of profits. These complex considerations have made pricing
a prerequisite for the success of an organization. An organization serving mass
markets should ensure that there is a profitable market in the volume realized.
An organization that wants to provide premium services or brands has to
adequately price its offerings. There are several cases of brands in both the
Indian context and in the developed world, which emphasize the need to
carefully price brands. The following figure shows the complex link involved in
pricing an offering.

Competition also makes a constant attempt to ensure that consumer perception
is altered (either lowering the value of the competitive brand or enhancing the
value of its offering). American Online is a good example of highlighting how
costs of costumes could have an impact on the profitability of the brand. The
company came out with several freebies to consumers only to realize that at
some point of time, costs of the consumers were getting beyond profitability.
Hindustan Lever tried out a low-end toothpaste and withdrew it. It may be noted
that in a category like toothpaste, huge volumes are required for a low-end
brand. Babool, the low-end brand from Balsara, probably sold several times
more (in terms of volumes) than its other brand Promise (both brands were from
the same company) at a time when these brands were popular. A company
manufacturing tinplate has two options (tinplate material is widely used as a
packaging material for edible oil)if the company is a large one with research
facilities and if it is in a position to customize the product for stringent
specifications (for several national brands of edible oil), it has to choose the
higher end of the market. If it is a small-scale industry in competition with the
unorganized sector, it has to choose local offerings in tune with its pricing. It
would be a serious mistake for a large company to get engaged in a pricing war
simply by cutting prices and getting into competition with several smaller
companies marketing products which are not cut-out for value added higher
segments.
Behavioural aspects of pricing
Pricing has a number of behavioural dimensions associated with it, and
perception concerned with pricing determines the value consumers perceive
about an offering. The typical question which marketers should visualize is:
when and under what situation in a competitive context, consumers perceive
value? There are four aspects that influence consumers perception of prices
internal reference prices, external reference prices, transaction utility and
acquisition utility. Consumers recall an internal price point, especially when
they are familiar with certain product categories and when there are several
brands in a product category competing for consumers attention. The internal
price reference point gets into the psyche of consumers over a period of time as
the product category develops itself. In the category of colour televisions,
several brands have adopted different strategies in the last two decades after the
category was introduced during the early 1980s. Price points associated with the
category have been coming down and a 20-inch/21-inch colour TV is associated
with a price less than Rs 10,000 (it is not uncommon to find colour TV
advertisements emphasizing price points below this price). The second aspect of
internal reference price is the exchange value associated with the used second-
hand colour TV which forms a significant part of the total colour TV market.
Companies should monitor the environment to understand how internal price
reference changes over a period of time. This is also more common in several
FMCG categories as mentioned in an earlier section. External reference point
refers more to retail prices in a specific category. For example, a brand like Van
Heusen or Arrow may be priced lower in a specific outlet (may also be a part of
a planned promotion) than in other outlets. Availability of a brand at a lower
price point may be a compelling motivator for consumers to visit an outlet. In
FMCG categories, consumers visit specific outlets for getting the brands at a
lower price point. The factory outlets of leading brands, which sell their
merchandise at lower prices (like Madura Coats-apparel brands), should clearly
ensure that consumers perceive value at their high-end outlets (like Planet M) if
the company is interested in both types of outlets. A situation in which a brand
could offer extra features or benefits lower than the internal price point is an
ideal one, when value perception is enhanced with regard to both acquisition
and transaction utility. Scorpio from Mahindra & Mahindra (M&M) that
positioned itself as a multi-utility vehicle but priced itself below the brands in
this category is a good example. A brand of ready-to-eat foods could convince
the consumers about its quality, convenience and taste, and charge them extra
and create value at a higher price point.
TOUCH OF REALITY
India is an evolving market for consumer durable categories and the market is
also a complex one with the mass consumer segment being quite price sensitive.
LG Electronics has been managing value and, within a very short time, it has
established itself as a brand associated with value. Its innovative features,
feature-price combination and communication are the factors which have been
instrumental in brand acceptance. Realizing the need to tap the higher end of the
market, LG has launched several premium products with premium prices.
Refrigerator-with-TV at Rs 65,000, television sets at Rs 1,00,000 and home air-
conditioners at Rs 50,000 are some of the products. LG has introduced a few
strategies which are critical in the marketing of such premium durable
categories in a market like India, where high-end consumers will have to
perceive value with regard to the brand's offerings. LG has used sub-brands to
create awareness of its offerings. The television sets are branded as Xcanvas
(largest plasma televisions in the world); Dios is a sub-brand of the refrigerator
Whisen Art cool and they resemble wall paintings. LG has introduced exclusive
high-end outlets with specially trained sales personnel. LG also has launched an
advertising campaign innovative thinking to showcase the technology and
design of its offerings, with a distinctive campaign for each of its product but
using the same theme. It is to be noted that any pricing strategy will have to be
supported appropriately by other elements of the marketing mix and consumers
will have to perceive a synergy among them. Pricing and its combination with
other marketing mix elements are critical as consumers associate value with
price, and price always figures in the consideration set, especially for premium
offerings.
Quality-Price Association
Quality-Price associations have been an inherent part of consumers perception;
and as competition proliferates in any given category, these associations are
likely to get an increased attention from marketers. There are two aspects to the
dimension of quality-price associationthe first aspect is how marketers should
respond to the demands of the market and the second aspect is creation of value
associated with a brand in a given quality-price band. As competition
increases, quality-price bands are created in the category. For example, in
soaps, economy, popular, premium and super-premium brands exist with
quality-price associations within each of the price bands. The association of
quality and price concerned with a brand like Dove is different from that
associated with Hamam. In the motorcycles category, there are entry-level
offerings as well as executive/lifestyle segments. While Bajaj created value in
the entry-level segment with its Boxer, Hero Honda created Dawn in the same
price band. One aspect that is important for any brand is the perception of value
among consumers belonging to a specific price band. For example, when Bajaj
came out with a bike BYK that promised high mileage, the proposition may
have heightened the expectations among consumers. While there are several
combinations of quality-price which could be selected by marketers (high
quality and high price, medium quality and medium price, and so on), there is a
need to analyse the market and create a value which would be appropriate to the
segment in terms of price and functional utility (symbolic brands would have to
follow a different approach). Consumers should perceive a brand to be better in
quality than competing brands but at a moderate price (when compared with
competing offerings). The Indian context offers tremendous scope to achieve
these strategies because of the dominant presence of the unorganized sector in
several categories. Anchor in toothpastes, Shakti Bhog in atta and Sabena in the
dish-washing market are examples of brands which have created the appropriate
quality-price association in the respective categories. There is also another
strategy for brands that could make use of premium pricing strategies for an
offering that not only offers value in terms of its intrinsic characteristics but also
saves time and provides convenience. MTR's Ready-to-Eat offerings follow
this approach. Priced much above the prices that could be associated in the
home-made mode, these offerings provide not only taste and quality but also
convenience and time-compression for consumers who would be willing to
pay for these aspects. It may be worthwhile to analyse the need for such
premium offerings as it may not exist in all categories. For example, with the
low penetration levels of floor-cleaning liquids in mass markets, a high quality-
high pricing strategy may not work as consumers may have to be persuaded
about a need for such a product. In certain product categories, consumers may
have a problem in perceiving a better quality product like fairness creams and
lotions, and appropriate communication strategies may be required to back up a
premium pricing strategy In certain categories like twin-blade shaving systems,
there may be a need to introduce a low-priced offering to enable consumers to
try out the product, experience it and upgrade (in this example, consumers may
upgrade from the conventional double-edged blade to twin-blade shaving
system). The low-priced offering is relative to such existing offerings in the
given market. Gillette has tried out this strategy in the Indian market with its
Vector Plus low-priced offering. The objective is to present a superior product
experience (quality) to upgrade the consumer.
The power of managing value
In the present-day competitive context, it may be worthwhile to analyse the
various implications of value to both the marketer and the consumer. Today
Acura and Lexus may be luxury-oriented Japanese brands, but past historical
analyses show that the Japanese with their inventive imitation have been very
sensitive to the value offered by brands, whether it was Sony, Akai, National or
Sanyo, across a range of product categorieselectronic goods to cosmetics.
Wal-Mart, South West Airlines in the USA and Aldi retailer chain in Europe are
examples of how value-oriented brands could succeed in an environment which
relies so much on a host of psychological techniques and tools. Nirma, T-Series
and Bajaj are names that evoke the value imagery in the respective product
category. There are certain basic aspects that should be clear to marketers about
the concept of value. The power of this concept of value lies in the fact that it
could throw open a number of segments and marketers could target the right
segment(s) depending on what the organization is capable of in terms of
product/service offerings. The point is that different segments would require a
different combination of value. A consumer buying a PC from the retailer is
different from a consumer buying a PC as a replacement directly online from
Dell. The value as perceived by a low-end consumer when he buys a watch
from the unorganized sector (assembled) is different from a consumer wanting
to buy the Nebula jewellery watch from Titan. The former would normally look
at the functional utility, price and to some extent the aesthetic design of the
watch. The latter would, at the retail store, experience the degree to which the
brand serves his self-expression needs, the credibility of the retail outlet and the
after-sales service with which he perceives value. A different kind of
psychological benefit in the form of value could be perceived when perceived
risk is involved. A consumer shopping for a ready-made apparel may perhaps
find psychological security in choosing a brand with a great reputation for being
trusted. This consumer has paid more for obtaining the value of security and
risk avoidance.
TOUCH OF REALITY
Perceived value is important in commodities too, especially when there are
several brands in the category attempting to build brands. Commodities by
themselves have a strong price association in the mind of the consumer as
he/she has been used to price-sensitive behaviour for several years. In fact, in
typical middle-class families, price sensitiveness towards commodities can even
be a genetic behaviour triggered by exposure of the consumer to family
socialization over a period of time. Edible oil is a category in which there are
several brands, and some of them are brands which have been in the market for
a significant period of time. They have also been using several kinds of
branding strategies to build themselves. There are also brands which have
entered the market in recent times and have cornered a significant market share
for themselves. Fortune is one such brand which has given stiff competition to
well known brands like Sundrop and Saffola due to value perception associated
with them in the light of competition. The average price offered by Marico, the
company which markets Saffola, was Rs 92 as against the industry average of
Rs 73. Agro Tech which markets Sundrop attempted to bring down the price of
its Nutrilite by reformulating the mix and in the process consumers probably
perceived the brand as a soya brand (the earlier one was a combination of soya
and rice oils). Consumers might perceive a lower value for a brand priced high
in the soya sector as other soya brands are priced lower.
A combination of Indian cultural behaviour of being price sensitive to
commodities along with the perceived value aspect might pose difficult
challenges to marketers in categories like atta, edible oil and vanaspati when
they attempt to use pricing strategies as a part of branding.
Choosing a value proposition
A category assessment should be made before a marketer chooses a value
proposition. This is not only because of the difference in categories, but also
owing to the fact that as competition evolves, the value proposition could also
undergo a change. The choice of value depends on the category and on whether
it is high involvement, low involvement or commodity type of product. There
could be low-involvement products that may sell because of imagery association
like cola or soaps (they are dealt with later in the chapter). Commodity type of
products are tyres, automobile components, antiseptic cleaning lotions,
notebooks or products where consumers buy more out of inertia than any
involved purchase. Technological advances can provide value to such products
and create a preference for them among consumers. Bandag is a retreading
company in the West, which uses an electronic chip in the tyre to inform the
consumer about the wear and tear. This will enable the consumer to get prepared
for the next retread. A technologically advanced packaging of frozen vegetables
adds value to the commodity type of offering. Choosing a value depends on two
basic factors: (a) perception of value in the mind of the consumer and (b)
evolving market structure with regard to the category.
TOUCH OF REALITY
Sachets are perceived to offer value in a number of emerging markets.
Shampoos, detergents, biscuits, hair oil, instant coffee and fairness creams are
some of the categories in which sachets have become popular. The perception of
value emerges from the fact that large size packs are usually beyond the
affordability of masses. With weekly and daily earnings, economically
backward consumers not only get an opportunity to try out many brands in the
form of sachets, but can also move from one category to another depending on
their affordability and need at any given point of time. Sachets are perhaps more
suitable for categories where the consumer can use the pack for more than one
use and when consumers may not buy it frequently for daily use. About 70 per
cent of sale in the shampoo category is in the form of sachets. CavinKare's
pickle offering in sachets was a success. Consumers apart from upgrading to
larger packs of a brand after trying out the sachets may also find it affordable
and convenient to buy more of sachets. This will increase the frequency of
usage with regard to the brand or category and is a useful strategy to increase
the penetration of a category in an emerging market like India. One fallout of
the sachet strategy is the possibility of the brand image being diluted and this
may have serious implications for brand associations. Cadbury and CavinKare
use the strategy of different distribution channels to ensure that smaller pack
sizes do not have a negative impact on the brand image.
In any known category, a consumer is familiar with, consideration should be
given to what he/she perceives as value (as stated earlier). This may even extend
beyond the attributes of the brandfor example, sachets bought over a period
of time may even be expensive than large packaging of a tube of fairness cream
but the consumer may perhaps perceive value with regard to the control it gives
him/her over the usage of the product given the affordability levels. Similarly,
sheer affordability towards a particular SKU will provide value to a particular
segment of consumerbrands like Hamam are available in small packs in rural
areas. Price also sends a signal towards value perception (value meaning quality
in this context). An exclusive showroom in the apparel category like the up-
market Park Avenue or Levi's provides the perception of high quality. In certain
cases, this may even discourage consumers from the showroom as they feel that
the offering is expensive. This segment, while perceiving high quality with the
associated offering, is unable to perceive value because of the price. The
challenge for the marketer in this context would be to communicate value and
convince the consumer about the superior nature of the offering. One more
approach is to highlight the price in the advertisements so that the consumer is
made aware that the price is not as high as he had perceived it to be. This brings
the consumer closer to the acceptance of value (even if a cross-section of the
consumers get convinced because of this approach, these advertisements are
beneficial). Levi's and Tanishq brands have adopted this approach. One caution
the marketer should take is that this would be counter productive if the major
part of the segment is at the higher end of the market. At times, consumers may
perceive a value with regard to the component or part used in the product. Puf
used in Godrej brand of refrigerators became a major selling point during the
past (though it was not the first brand to use it). Herbal offerings may be
perceived as products that are very safe (which may not be the case in several
categories). A brand of shampoo containing a chemical for cleaning action may
have to convince consumers about the safety of the offering, as consumers may
perceive damage to hair because of the chemicals involved. Sometimes,
offerings may create confusion if the brand does not clearly communicate the
offering and its associated benefits. Ice creams and yogurt have had this
problem in the Indian context. Brand names could create a negative impact on
the perception of consumers after being successful. Titan was associated with
elitist orientation and the company had to come out with Sonata for the lower
end of the market (which contributes significantly to the volume of the
company). Price-benefit links should be clear in the mind of the consumer,
especially when a new concept product is introduced. Reva was an electric car
introduced last year and a major part of the sale was towards the second car
category. It may be interesting to consider the perception of consumers on a
product of this kind that involves a new concept (there have been several
launches of the product over the last several decades without success) in the
Indian context. The first frame of reference for the consumer is the perception
on the pricing of the offering. If this is priced on par or slightly lower than the
entry-level car in the Indian context (the no-frill Maruti), it would probably
take away the offering from the consideration set of the first-time car buyer
simply because of two reasonsit is not a tried and tested offering and besides
it does not offer the space of the regular car (besides the perceived risks
associated with the purchase). Running costs (assuming trouble-free running
based on technical progress) or the much hyped environment-friendly nature
of the product are unlikely to influence the perception of the buyer. This is
because of the context in which the offering is introducedbuying green
products is a societal value and this context has a long way to go before it can
be a criterion for making it a prerequisite for buying a durable. Procter and
Gamble had to change over to environment-friendly packaging in Germany
because of consumer resistance to anything that is not environment friendly
Such scenario, in the Indian context, is likely to happen only in a long run.
Perception is largely dependent on the context in which products or services are
introduced. Besides the core aspects mentioned about the electric car, there are
also secondary perceptions which are involved in the purchase situation
Would an electric car be as durable as the conventional one? What if the
manufacturer, especially the pioneer, discontinues the offering (this is less likely
to happen to a traditional brand of passenger car and even if this happens, it
happens over a period of time). There are intangibles like whether an electric car
would generate as much reference group appeal as that of a traditional one that
is an accepted status symbol.
Evolving markets and value
The perception of value in the mind of the consumer evolves over a period of
time with competition. This is one of the strong reasons for marketers to
introduce brand personality whenever possible. The idea is to bring in
differentiation through the inclusion of emotional value that will appeal to
consumers faced with a choice of several brands that are equally acceptable. In
the category of motorcycles, it was initially the speed, pickup and style, and
later on, the preference shifted to the personality of the brand. This happened
despite the fact that Hero Honda literally created a revolution by introducing its
bikes that gave double the mileage of any competing brand at the time of
launch. Fuel economy is a very tangible value addition and several years later,
there was a cross-section of consumers who just did not buy a brand based only
on fuel economy; they also required a bike with which they could identify in
terms of personality statement. The success of the Caliber has its underpinnings
on such change of perception, on what matters to consumers at a specific point
in time in an environment that is driven by change. Passion Plus from Hero
Honda is also a similar example from the motorcycle industry. Peter England
with the honest proposition of delivering value at a reasonable price went on
to create a niche for itself in the history of ready-made wear. The timing of the
brand with the proposition (and more importantly, the delivery of the
proposition) was most appropriate, if one considers the market structure that
existed at the time when the brand was launched. Higher end brands were firmly
entrenched, a few brands were in the middle price segment and there were
regional offerings. Peter England advertised on the core attributes with regard to
value and backed it up with the right price (enhancing the price-benefit link in
the mind of the consumer). After being successful, the brand attempted to
provide emotional lifestyle value through its present TV spots (which
dramatizes the overwhelming power of a person dressed in the brand). Bru, the
instant Coffee brand, too followed this approach. Initially, it appealed to the
value perception by identifying it with filter coffee taste and later, it followed
the lifestyle appeal to provide emotional value. Customer value is a complex
term and marketers would do well to research, probe, understand and interpret it
based on the category, context and changes that occur in consumer behaviour
and competitive offerings.
TOUCH OF REALITY
One of the challenging aspects in pricing is how consumers associate their
benefits (regardless of the category) with value. Philip Kotler. Deepak Jain and
Suvit Maesincee opine that consumer benefits consist of utility of the offering
plus value of the brand, plus value of relationship minus cost of offering and
cost of time. Some of these factors may be important more in a business-to-
business context (like relationship and cost of time). Features and design offered
by a brand like Samsung may be important to the consumer at the premium-end
of the market in consumer electronics, whereas the feature-packed, affordably
priced offerings of LG may appeal to customers in the mass market
(combination of features and price more competitive than the competitors
offerings). The target segment and the product category with regard to the
competitive context determines how consumers may be able to differentiate the
value offered by different brands. Philips introduced its VCD player at a low
price in the Indian market (penetration pricing). The brand name along with a
low price were instrumental in the success of the offering. Ray-Ban in the
eyewear category may carry value in the perception of some consumers in the
appropriate segment.
Concept of psychological utility and pricing
Behavioural insights into pricing have provided practical insights to marketers.
Research has focused on the behaviour of consumers and their reaction to
pricing. In simple terms, the concept of psychological utility analyses the
situational aspects which are associated with pricing products and services.
Given the changing lifestyle of consumers, these principles provide a number of
pointers that are useful for pricing. The following situation would explain the
utility of the concept.
A consumer who is on a vacation in a scenic location desires a soft drink.
He/she could procure the drink (any brand) either from a grocery store which is
a few kilometres away from the spot or from a star hotel located near the spot.
The point to be emphasized in this case is the consumption situationthe
consumer desires to have the drink during his/her experience of enjoying the
location. Going by research studies on pricing, most consumers in this situation
would perceive a higher price for the drink to be procured from a star hotel.
Though the perception on the price of the drink is likely to be higher than the
regular price when bought from both the outlets (the consumer expects the
grocery store also to sell the drink at a price slightly higher than the usual price
because of its proximity to a busy tourist area), the price perceived would be
much higher to the drink bought from the star hotel. It may be noted that in this
situation, nothing has changed except the perception of the consumer on the
need driven by the consumptive situation. The brand is the same, the contents
are the same and there is no service ambience enjoyed by the consumer either at
the grocery store or at the star hotel. The perception of the consumptive
situation adds up to the price perception of the consumer. Such situations could
also be visualized in the durable product categories. A consumer who would
like to buy an upmarket music system for Rs 50,000 from an outlet located close
by will not opt to travel a few kilometres for a saving of Rs 250 on the music
system (given the situation where all other factors are the same). The same
consumer may travel some distance probably to save the same amount (Rs 250)
to economize on monthly provisions. The absolute and relative value of money
(the amount is the same) is reflected based on the consumer's perception of the
consumption situation. The economics concept of pricingmoney is equal
has to be used in conjunction with the behavioural dimensions of the consumer.
There is no right approach in analysing the situations which were presented;
they just illustrate the impact of behavioural aspects on pricing. Even in the case
of service consumption, situations vary as do consumers perceptions on pricing.
In the hotel industry, there may be two kinds of consumersthose who would
like to go on a vacation and spend time to recharge themselves after being
subjected to work pressure for an extended length of time. There may be another
segment belonging to the same lifestyle category, but who view a vacation as a
personality statement (to reflect their status to others). Consumptive situations
should take such aspects into consideration before making pricing decisions. In
such situations, an additional element of branding, highlighting the aspects
which appeal to the psyche of the consumer, will be useful. Psychological
pricing can also be used effectively in sales promotion when consumer
perception of sales promotion is considered. Instead of announcing with a
conventional slogan Upto 50% off, Reebok offered vouchers which can be
used to buy merchandise worth Rs 2000 for every thousand rupees spent in the
showroom by the consumer. Besides leaving the choice of the merchandise to
the consumer, the sales promotion did not create the impression of its being
traditional. Reebok's sales volume exceeded the target by three times, besides
giving the retail outlets of the brand a positive buzz.
TOUCH OF REALITY
The concept of psychological utility is also reflected through mental
accountinga process in which consumers categorize buying situations in
terms of value derived more through a psychological process rather than any
specific logical process. Apart from the examples given under the previous
heading, a household budget in the mind of a typical middle-class housewife is a
situation associated with mental accounting, because of the high degree of price
sensitivity and the mental partitioning she may have for various categories of
products. As the lower end of the consumer segment (much below the middle
class) accounts for a significant percentage of FMCG consumption, the concept
of mental accounting is likely to be useful for brands deciding on sales
promotion schemes and discount offers at a particular point of time. For
example, the festive period is one in which there is considerable offtake of
consumer durables along with other purchases, and when consumers like to save
as much money as possible. Though the savings in terms of actual amount may
be similar to that at any time during the year, there is likely to be enhanced
satisfaction if such an amount is saved during the festive season, as the saved
amount can be used for other purposes. Retail outlets and firms offering brands
in different categories of FMCG have the opportunity of developing a
favourable consumer attitude towards their brands if sales promotion schemes
are timed well. Even in higher priced products targeted towards consumers in
higher economic segments, the concept of mental accounting can work. A
consumer buying a high-value washing machine or a music system is likely to
buy a safety cover for the product though he/she may not have budgeted for the
add-on. This is because, the consumer is able to mentally categorize the small
price of the cover with the high price of the category purchase.
Penetration pricing
Penetration pricing is a low-entry pricing strategy and is one of the popular
strategies in a country like India where price simply matters for the masses.
While low price seems to be an attractive strategy to get volumes for the
marketer, there are complex issues to be addressed if this strategy is to be
followed. The unorganized sector in several product categories is an example of
how this strategy is being used. Brands which have succeeded in slowing down
the rapid progress of multinational brands have followed penetration strategy
with a caution. There are brands like Ghari in detergents, Sabena in scouring
powders, herbal soaps in soaps, Shakti Bhog in atta, Chik in the shampoos
category and Anchor in toothpastes. These brands have provided a quality
which is higher than other unorganized brands, and priced them slightly lower
than multinational brands. These brands have also associated sales promotion
schemes to add to the perceived value of consumers. Entry-level pricing
strategies are meant to get volumes for the marketer and are planned for mass
markets. There is caution which companies need to take before such a strategy
is implemented. Most of the national brands create advertising visibility (pull
technique) when penetration pricing is followed. There would have to be
adequate volumes at the lower end to provide profits. Further, there may be
several price points in the product-line close to the lowest point and often
penetration strategy results in a band of price points. This could be observed in
tea, toothpastes and soaps. A company like Hindustan Lever or Colgate can
have two or three brands with variants in a specific price band. The lowest price
point in the penetration price band may start cutting into closer price points
over a period of time (cannibalizing another brand). For example, Aim
toothpaste introduced by Hindustan Lever may have drawn Pepsodent users.
Hence, product executives should consider the impact of penetration strategy
over a price band before using such strategies. Smaller brands might not be
having this problem apart from the fact that they may not have to cover national
territory during the time of their launch as their overhead costs might possibly
not demand such a strategy. Penetration strategies are best used when the lower
end of the market is evolving and there are not too many brands in this market.
Nirma, the detergent brand, which was one of the earliest brands to use
penetration pricing, timed the strategy to perfection. When such a brand gets
introduced in any category, national brands are forced to come out with a
counter-attraction to the new, low-priced brand. Hindustan Lever came out with
Wheel to counter Nirma. Another interesting aspect in this chain reaction is that
bigger brands are also forced to offer a value better than the brand which
induced them to introduce the new brand. Initially, Wheel's advertising (in some
markets) not only addressed fabric cleaning action but also the fact that it was
soft on hands during the process of washing. This is required to enhance the
perception of the brand, as consumers expect better value after a brand new to
the market triggers the penetration pricing cycle. This aspect is very similar to
the Japanese electronics and car markets in which brands keep improving
themselves and frequently launch improved variants. Titan's Fastrack watch
used penetration pricing as a part of its product-line pricing strategy when it was
repositioned. About 50 per cent of the watches sold are below Rs 500 and
Fastrack attempted to penetrate the price segment just higher than this Rs 500
mark. The company, in an attempt to motivate the youth segment to own
multiple watches, reduced the brand's price range from Rs 700-2200 (with
plastic-cased models in the collection) to Rs 500-2000. This was possible
because the brand all along was positioned as a lifestyle statement for the youth.
A lower level of pricing of an existing brand is possible only if the brand has a
sustained association in the psyche of consumersespecially a lifestyle
association. MTV Masala was used by Fastrack as a sub-brand for its watches,
at the lower end of the price band.
Strategies involving penetration pricing
The first brand in a category which takes a pioneering lead in applying
penetration pricing is likely to succeed. T-Series in audio cassettes introduced a
value-based offering at the lower end market and succeeded. In a market full of
unorganized offerings, a pioneering brand is able to create a value perception by
introducing an offering which is slightly better than what consumers have been
used to over a period of time. The subsequent brands which attempt penetration
pricing (after the success of the pioneering brand) may not be able to create a
value perception in comparison to that of the pioneering brand, because the
consumer does not perceive the comparison of value to be different in this case.
There seems to be a better value perceptive (in the psyche of consumers) in the
first set than in the second set (between the pioneering and the follower brand).
The dramatic increase in the value perceptive provided by a brand (in
comparison with unorganised sector offerings) creates the enhanced associative
with the pioneering brand. This is shown in the following figure.

This is because the leap in value (for example, quality) may not be as much in
the second set as it is in the first set for a given price period. The follower brand
would have a greater possibility of succeeding if it is able to create value (with a
better quality or feature) at a slightly higher price point. Another aspect is that
when there is a large unorganized market, there is a scope for development for
several brands in a category. For example, in the footwear category, around 80
per cent of the market is in the unorganized sector. Given the huge investment
costs for having a distribution network all over the country, there is a scope for
development for several regional/store brands. While this is happening at the
higher end of the market, there are not many lower end brands (like Lakhani).
Action is another brand which has very successfully made use of the
unorganized structure in the industry, and has developed itself into a middle
market brand. In the scouring powder category (utensil washing), Sabena and
Shineit are brands which have used similar strategies.
TOUCH OF REALITY
Penetration pricing can offer tremendous scope for marketers in an emerging
market like India; penetration pricing also poses a number of complex
challenges to brands that attempt it. Philips ushered in penetration pricing in
digital video discs (DVDs) at a price point of Rs 6990 in 2003 when competitive
brands were costing around Rs 10,000. In 2005, the brand had offerings at Rs
3990 and Rs 2990. With about 108 million homes having television sets in
India, this strategy apparently has tremendous potential but not without
challenges to Philips. The market in 2005 was estimated to be about 3.5 million
units and Philips was supposed to sell about one million units. About 40 to 45
per cent of the total market for DVDs is in the grey market in which Chinese
brands/makes pose a problem to Philips. Samsung, LG and other strong brands
in the DVD market provide value-based offerings at higher price points. Though
they are unlikely to enter the lower price range, the commodity orientation of
the DVD market due to falling hardware prices is a serious problem. Therefore,
the realization of profits will pose a challenge to the volume leadership of
Philips despite the fact that it has a strong distribution reach of about 15,000
outlets. Further innovation with regard to the value of the offering (with an
enhanced feature-price combination) and rapid diffusion of the brand based on
such value may help the brand sustain its penetration strategy.
In the service industry too, there is a lot of potential for using penetration
pricing strategies. In the category of hospitals and restaurants, there are
generally good offerings at the higher end, but at the lower end of the markets,
consumers may not perceive value and this could be created for several
segments of consumers. In services like cellular phones, a number of
companies/brands have recently started using penetration strategies by reducing
prices. However, in such services, marketers would have to understand that
consumers will be confused because of the various dimensions associated with
services. Handsets, pre-paid/post-paid, roaming services, voice mail services,
local/STD rates, free calls, instalments, basic and advanced services, and loyalty
schemes are too complicated for the consumer to understand and realize the
value even if a brand follows penetration policy on pricing all these frills. If a
brand in such a service wishes to follow penetration pricing, it has to clearly use
communication and pre-sale services at the retail level to inform the consumer
about the real value he/she is likely to obtain from such a strategy. Penetration
pricing in such service categories would trigger negative word of mouth
(WOM) among consumers and could be counterproductive if not executed with
customer empathy. The consumer has to clearly understand how the penetration
pricing offers value in comparison with the other brands (as a no-frill offering
or as a loaded offering).
TOUCH OF REALITY
Pricing has to take into consideration the value which is offered in a specific
context. Contextual value pricing (contextual emphasizes the situational
aspects) takes into account the consumption situation and the perception of
consumers associated with the consumption situation. Segmentation based on
occasion/situational factors will be very useful for marketers to arrive at
contextual value pricing. For example, a cereal brand like Kellogg's can
introduce a food extender offering (to be consumed with other foods) for adults,
a trendy can with cereals for teenagers and perhaps a cereal-based game for
kids. In all these three situations, the context of consumption and the segments
involved are very different. Adults will give importance to nutrition; teenagers
may give importance to the symbolic value of the packaging and kids may like
the experiential element of the game along with the taste of the offering, A
brand of detergent making a solution-based offering (meaning laundry services
with door delivery to a select set of consumers in a metro at a high premium) is
making use of the convenience value required in the context (the target segment
could be young nuclear families working in the metro with high pay scales and
finding time to be a premium factor). Gillette's Vector Plus twin-edged blade
developed for the Indian context at a price point lower than its original version
introduced in India is an example of contextual value pricing. Product offering,
pricing for value and segmentation aspects are the links that can be used to price
the offering.
Pricing In a Changing Environment
Pricing, especially when applied to a number of offerings in the product-line,
has to take into consideration the changing context in a highly competitive
market. If this is not done, the company's offering (with a specific price) may be
successful in the short run, but may create problems after the initial success.
Cars market offers one such example. Honda launched its Honda City before
2000 and the price band was between Rs 7 and 9 lakhs (approximately). There
were not too many brands in this segment and given the market for such cars
(niche) in India, the brand was progressing well. It was cheaper than Lancer
which was in the same mid-luxury market segment. After 2000, Ford came out
with Ikon and Hyundai with Accent and they were in the range of Rs 5 to 6
lakhs. Besides, there emerged the semi-luxury market brands including
Honda's own Accord, Ford's Mondeo and Skoda's Octavia. From the consumer's
viewpoint, Honda City was seen as a combination of unique style and power.
But with the emergence of the semi-luxury segment and lower price offerings
from a number of brands close to the mid-luxury market, like consumer had a
number of brands to choose from and Honda City was not in the consideration
set. The model had to reduce its price to stay in competition in this segment by
downgrading its features. The company decided to retain its brand as it had a
high recall. Incidentally, the model is known by another brand name and is an
entry-level model in several other world markets. The fairness cream market
provided another example on pricing and competition. Fair & Lovely (from
Hindustan Lever) was an undisputed leader in the category for almost two
decades. CavinKare, a relatively smaller company, came out with Fairever, a
fairness cream with saffron, and priced it higher than Fair & Lovely. With
consumers preferences getting nature based (herbal) in such categories,
Fairever, with good advertising, made significant in-roads into the market share
of Fair & Lovely within a short span of time. Hindustan Lever used Pears (soap
brand) to launch a fairness cream to counter Fairever (probably hoping that
Pears, made of natural ingredients, with its association with good complexion,
would create a positive impact). The brand was called Pears Natural. After a
period of time, the company re-launched Fair & Lovely with tremendous
communication (and demonstration in rural markets, which contributed
significantly to the brand's volume). The company also launched the herbal
variant of Fair & Lovely with an advertising campaign distinctively different
from that of the original variant. The herbal variant of Fair & Lovely was
positioned as a fairness cream with several herbals other than saffron (the
proposition of Fairever). In the meanwhile, CavinKare came out with Mantra,
another fairness cream, with a different set of attributes. Changing environment
with pioneering and following brands presents a number of challenges to
marketers of today.
TOUCH OF REALITY
In both FMCG and consumer durables categories, prices are dropping every
year (with price discounts, lower prices or sales promotions) and brands are
finding it difficult to differentiate themselves in the competitive clutter.
Perceived value pricing (which is in tune with the concept of brand positioning)
offers scope for marketers to enhance the value of their offerings and charge a
price premium for them. This has to be simultaneously done with appropriate
positioning strategies. The brands which are reputed for their symbolic appeal
score over new brands, making good use of perceived value pricing. Mont
Blanc, the premium pen, and Waterman pens (both brands have started their
operations in India), which have offerings priced at a few lakhs, are good
examples of perceived value pricing strategy. In the UK, Coke has launched a
mineral water named Dasani which costs US$ 1.7 (premium priced). The brand
uses tap water, but is packaged in blue cans suggesting fresh water from idyllic
surroundings (the positioning in this case Is associated with packaging). In a
commodity-based category like mineral water, the strategy not only gets a
premium for the brand; it also conveys a perception of a better quality. In the
durables category, a brand with excellent quality could make use of symbolism
to get the optimal value out of perceived value positioning.
Pricing and Marketing Mix Elements
While all marketing mix elements have to be in synchronization with one
another in any marketing strategy, there is a need to make a specific mention
about the link between pricing and other marketing mix elements, given the
high degree of consumer perception associated with such a dimension.
Wrangler, the well-known global brand of jeans, entered the Indian market more
than 15 years ago and consumers may not have been very receptive to this brand
in the past as they have been with some of the other foreign brands. Wrangler,
initially, had a price premium when it launched itself but was sold in multi-
brand outlets. It should be noted that a certain degree of exclusivity is required,
especially for an apparel brand associated with fashion if it positions itself with
a premium price. The brand's initial positioning was fit which was also the
case with a few other brands. Consumers will have to identify themselves with a
positioning of a brand and this is more vital for a multinational brand entering a
new developing market. Later, the brand positioned itself for consumers who
were above the age of 30 when the jeans market-was focusing on youth. The
cowboy positioning emphasizing its American origin may not have had a very
phenomenal appeal on its target segment. In an effort to re-launch the brand, it
launched several offerings with a product centric approachjeans with the
twill and worn-out look. A brand has to be very conscious about the marketing
mix links associated with pricing. Mont Blanc, the designer brand of fountain
pen, has only a few exclusive showrooms all over the world. Foster's, the
Australian beer, sponsors the Grand Prix race and has a selective distribution
channel in all its markets. Raymond's has a chain of exclusive stores all around
the country, showcasing its range of fabrics and ready-mades (Park Avenue),
though the lower-end fabric product is available in multi-brand outlets. The
exclusive showrooms enable the brand to maintain its premiumness in the mind
of consumers. Shampoo, as a category which was orientated towards the elite
about two decades back, became a mass product with the sachet packaging
which currently accounts for nearly 65 to 70 per cent of the volume sold in the
product category. A brand of premium shampoo has to either have a highly
differentiated symbolic appeal (with the appropriate packaging, communication
and selective outlets) or have a strong functional appeal (like that of Nizoral
from Johnson & Johnson). As a category develops, a premium brand has to
adapt itself to the changes and formulate strategies to maintain its premiumness.
Titan's Fastrack, the upmarket watch for aspiring urban youngsters, uses a
distinctive celebrity drawn from racing, and appropriate lifestyle advertising to
back up the premium pricing (the company has repositioned this brand recently,
introducing watches at lower price points, with the objective of developing
Fastrack as a youth brand). In tune with the strategy, the brand has entered other
fashion-oriented product categories. Titan launched the brand Sonata to create
lower end offerings (relative to its higher end offerings) without carrying the
name Titan to ensure a lower end association). Palmolive launched its Palmolive
aroma therapy soaps. Such an offering needs distinctive product benefits
advertising because of the new concept involved in the offering, selective
distribution and a very focused media selection. Vacuumizer, the innovative
product launched for food preservation some years back (which makes use of a
vacuum-based concept), initially provided the consumer with a choice to pick
up different sizes of containers depending on their usage. A specific price was
fixed for the package. As this did not work, the brand's price point was changed,
and then reduced for a package which had a few containers. There was also
retailer involvement in the sale of the product which was backed by
informative advertising. A new concept product of this kind requires attention
to several details of the marketing mix elements, especially when the consumer
has to take efforts and experience the product benefits.
Skimming as a Pricing Strategy
Brands (usually the premium ones) can skim the market with high prices.
Skimming may be an appropriate strategy when the brand has exceptional
features, symbolic appeal or both. Skimming strategy is usually orientated
towards a small niche market where consumers are prepared to pay a premium
price for the special offering. Hero Honda, after being successful with its
CD100, introduced Splendor and Passion at the higher end of the market and
skimmed the market. Dove, the brand of soap with moisturizer, uses a skimming
strategy. Onida was probably the earliest of the brands to use a skimming
pricing strategy, capitalizing on its symbolic appeal of neighbour's envy, when
the TV market was developing in the mid-1980s. Lipton tea (which is a special
type of Darjeeling tea) uses a high-pricing strategy, well above the normal price
range. Normally, in fashion products, consumer electronic products and hedonic
products (which are sensual and pleasure-oriented products) like beer, cigarettes
and perfumes, skmiming strategy is backed by a strong symbolic brand
personality which consumers associate with their lifestyle. Watches like Omega,
Rolex and Tag Heuer make use of such appeals. Mercedes brand of car which is
a status symbol worldwide, makes use of a combination of skimming pricing
and strong symbolic advertising. It should be noted that all premium brands
which follow this pricing strategy also offer excellent functional quality.
Baskin-Robins, which ventured into the Indian market with very high prices,
has slightly reduced its prices by introducing a range which is less expensive.
But, the brand will be also associated with skimming pricing and is a premium
brand in the category.
It should be noted that both penetration and skimming pricing should be fixed in
comparison with the competing offerings in a given market. In Baskin-Robins'
case, the pricing is still skimming (after the introduction of a lower priced
range), because prices are several times more than the lowest offering in the
category. There is a strong image association identified with a high-priced
brand, and even a brand like Mercedes experienced a dilution in brand equity
when it launched a car priced lower than its usual range. A closely associated
strategy which could be used with skimming is known as shielding. This
involves having a restricted channel supply with the specific objective of having
a short supply in the market. The idea is to widen the gap between consumers
who have bought the brand and those who aspire for the brand but are not able
to afford it. This strategy attempts something beyond exclusivity and ensures
that there is always an aspirational feeling among consumers who do not
possess the brand. Skimming is a strategy which is strongly in tune with brand-
positioning strategy. It is a form of perceived value pricing in most situations
because it promises more for more (as against value pricing which is more for
same or more for less). In categories like perfumes or cigarettes or even
apparel, the brand is driven by communication which has to, all the time,
emphasize the status or prestige appeal. There is also one more situation which
could be used in tune with slamming. A brand offering strong functional
benefits, like LG or Samsung, can have a premium on the offering and if there
are adequate consumers who may want such an offering, skimming will
succeed. While this strategy has been effective in household appliances in the
Indian context, it has not been effective in the case of super premium
motorbikes which were introduced by BMW. Slamming could also be used by a
brand to reflect its state-of-the-art position when it enters the market
(Samsung's 29-inch CTVs).
TOUCH OF REALITY
Loss leader pricing, which is generally associated with retailing, can also be put
into practice when brands want to use such a pricing strategy. The premium
fool-wear forms 4.7 per cent of the Indian footwear industry. Reebok, Adidas
and Nike are the multinational brands in this market. Reebok has firmly placed
its Rs 800 to 1000 price band even when it initially lost money in this range.
The strategy is to create interest and brand awareness among consumers in this
particular price range, as this range constitutes a sizeable proportion of the
premium end of the footwear Industry. The brand offers a number of designs
when compared with the competitive offerings which concentrate on the higher
end for profitable reasons (though they may have offerings at a price point
slightly above, that of Reebok-but with a lesser number of designs). In the
meanwhile, Reebok is working on achieving profitability at the lower price
ranges. As the lower end of the premium market is important, and with 120
exclusive outlets and more number of multi-branded outlets than its
competitors, Reebok seems to be making strategic use of loss leader pricing
which essentially attempts to build up the profitability levels for a brand in the
long run through a variety of associated strategies, after incurring a loss initially
when consumers are drawn to the brand by its low price, even though it might
not result in much profits to the company.
Applying Penetration Pricing and Perceived Value Pricing in
a Specific Context
Penetration pricing and perceived value pricing (which takes into consideration
the perceived value of consumers) should be applied in tune with the market
pricing structure in a given context. Perceived value pricing is more for more,
suggesting that consumers will pay for a perceived value. Tagamet in the ulcer
medication market was the leader. When Zantac was introduced for ulcer, the
brand had a few optionsto employ penetration pricing or to consider
perceived value pricing or price it on par with Tagamet with the follow the
leader pricing policy. Zantac had some advantages over Tagamet. It involved
an easier schedule of doses, could be taken safely with other drugs and had
fewer side effects. Consumers perceived value in the offering of Zantac and the
company decided to price it at a premium of 50 per cent more than Tagamet.
Zantac soon became the market leader. In another context of
telecommunications, Northern Telecom developed its Norstar system, which
was superior to the existing offerings in the market. Given the price war kind of
situation, it was felt that using perceived value pricing (at a higher price point)
will be counterproductive as consumers mindset will not be open to such a kind
of pricing. Norstar was introduced at the prevailing level of pricing. As
consumers realized the value of the offering, the brand started charging a
premium over other competitors who were fighting a price war. This shows that:
(1) perceived value pricing can be applied if the offering Is perceived with
superior benefits and if there is not much of competition In the market
especially if the market is dominated by few firms; (2) when the market has a
price war kind of situation and when consumers may have to realize the value of
the offering (as in the case of a business-to-business marketing context with
several buying influences), it may be worthwhile to apply perceived value
pricing over a period of time, after introducing the offering at prevailing prices.
Penetration and perceived value pricing policies will have to be implemented in
a timely manner, especially if the market is dynamic and if a brand wants to
compete in the national market. In the motorcycles market, during the period
20042005, the market share of TVS Motor Company came down from 18-20
per cent to 12-13 per cent. TVS never had an offering for a long time in the
economy segment (below Rs 37,000). The economy segment makes up for
almost half the total market in the product category. Hero Honda has Dawn at
the entry level and Bajaj Auto has CT 100. In January 2004, TVS introduced
Centra as the economical bike, which requires fueling once in a month, and
priced the brand at Rs 37,000. The executive segment (higher than Rs 37,000)
perceived the bike as an economical and a rugged bike, and the economy
segment found that there were lower priced competitive offerings in the market.
The price of Centra was subsequently slashed to Rs 32,000. Hero Honda
consolidated its executive segment market shares with its brands Splendor Plus
and Passion Plus. TVS, after introducing Victor, which was very successful
(with its premium price and celebrity endorsement), did not introduce a variant
for almost three years. It introduced Victor GLX 125 only after several
competitive offerings hit the markets. Finally, in October 2004, TVS introduced
its StaR brand in the economy segment.
Target Costing
One of the practical method to price an offering was initially introduced by the
Japanese, called target costing. This method is especially useful for entering the
lower end of the market with an entry-level offering (the method may be
useful in other situations also). The Japanese have traditionally competed in a
highly cluttered market and there was pressure on these companies to improve
their offerings quickly. Companies also had the potential to improve offerings
by managing technology with the changing needs of the consumers. Japanese
marketers have always started at the lower end of the market before moving up,
as evident in categories like consumer electronics, automobiles, two-wheelers
and relays. The strength of Japanese marketers lies in the manner they enter a
mature market and provide value with their offerings and kick-start a declining
market (pianos and cycles may be good examples). Target costing is a process
of obtaining the perception of consumers on what they would be willing to pay
as a price for a particular offering and working backwards within the
organization to arrive at the right value that could be associated with the
offering. The method promises to capture value that consumers associate with
an offering; and marketers also could decide if they could go ahead with the
new offering, given the value associated with the offering and the hospitality
involved in manufacturing the offering. The method provides an excellent way
to the firm to assess what constitutes value in the mind of the consumer. The
following aspects are vital for target costing to work.
o An excellent product management team/cross-functional team is a
prerequisite. Without such an arrangement, the concept of target costing
may not even get discussed effectively within an organization.
o Extensive marketing research information should be gathered on the
industry associated with the category, brands involved and the perception
of value in the psyche of consumers on the prevailing brands.
o The most vital aspect of the marketing research is the effort required to
capture value in a changing environment. Value may mean different
dimensions to different segments, and they keep changing over time. The
meaning of value for an entry-level segment in the car category is
different from that which could be associated with consumers who might
shop for a luxury car. Even in a consumable category like toothpaste, the
perception of value would change over time. Reva, the electric car,
launched by a Bangalore-based Company was after perhaps taking into
consideration the consumers perception on what the price level should be
for an electric car. Hindustan Lever, about three decades ago, made an
attempt to launch Hima Peas (green peas) in a ready packed form. After
finding that there was a seasonal consumption pattern involved with
regard to the category, the company decided to launch the product after
obtaining the perception of consumers. The company worked with
suppliers (supply chain aspects) and launched the product which was
ahead of its time even for urban consumers. Given the wide gap between
branded products offering value and the lack of quality in unorganized
offerings, the concept of target costing could be an extremely useful tool
in the Indian marketing context.
Price Bundling
Price bundling is a very effective strategy in both consumer and industrial
markets, especially when brands get converted into commodities because of
lack of differentiation and dependence on price discounts or sales promotion.
Typically, bundling involves a package of products or services which cost less
(in terms of price) than the total cost of individual products in the package.
Bundling could be useful if a distinctive bundle of products or services are
aimed at well-targeted segments.
o A fast food restaurant offers a combination of menu with Pepsi or Coke.
o A computer company offers a bundle of hardware and software
(standardized versions available with all brands or what could be termed
as add-ons).
These examples do not qualify for a price bundling strategy. In fact, they may
be a method of sales promotion as they, as a bundle, offer the package at a lesser
price when compared with individual products/services. In today's context, price
bundling has to involve a unique combination which is a solution to the
concerned consumer. Unless this is applied, price bundling would not offer a
sustained competitive strategy. When a company markets chemicals to small
firms, apart from the commodity type of chemicals, the marketing firm could
offer technical services which otherwise would be expensive for small buyers.
Even in consumer segments, a paint company like Asian Paints could provide
more value to car passengers if it offers a complete painting job for cars which
require repainting. If this is done with good quality and at reasonable prices (the
bundling), consumers would be convinced about value when compared with the
job which is done by their mechanic or even the expensive rates quoted by the
respective authorized service centre (which has large overheads and which may
also have a focus on revenue realization as a profit centre). In large industrial
projects, there is an extensive scope for price bundling. A solution in which a
mix of products and services creates a value would be more than the total sum
of its parts. Customization and integration would enable a company to achieve a
bundling strategy that also offers value to customers. Boeing manufactures jet
planes according to the specifications of customers. Apart from achieving good
profitability levels, a unique value-added bundling solution also forms a basis
on which a vendor can build a successful relationship with a customer. In order
to accomplish a value bundle, especially in industrial markets, selling teams
require training and the right kind of orientation as the process of developing a
bundle takes longer time; consumers may require a greater degree of pre-sale
service [enterprise resource planning and customer relationship management
(CRM) aspects are examples]. When a company attempts bundling, it should
also make an attempt to explore the market for any scope for further bundling
with other customers. This would enable a marketer to bring down the expenses
involved in formulating the bundle, because a number of consumers may be
interested in this bundle or slight variations in the bundle (industrial automation
project for the tyre industry may be an example). Bundling is not a one-time
effort on the part of the organization; it has to adapt itself to the changing
environment and offer a value bundle to customers whenever appropriate.
Strategies on providing solution
Providing a customer solution requires a different kind of organizational
strategy. Companies offer bundles without much value and if they do that, they
have problems of recovering the cost. Companies should realize that developing
a solution would require sound knowledge of the customer's needs. Solutions
cannot be sold like products and they may not only require a sales team which is
specially trained, but may also involve a number of personnel from the selling
organization which could be referred to as a selling centre. Solutions may take
a longer time when the marketing and buying organizations work together and
this may also involve convincing more personnel in the buying organization.
The service costs (of serving the consumer) are high, but may allow the
marketing organization to charge a premium if it formulates a value unique to
the buying organization. For example, a unique solution could be bundled in the
category of integrated building management systems which brings together and
integrates fire controls, security controls and air conditioning controls. There is
a large scope for customizing a solution. The solution (and bundling) varies
from one type of industry to another (from a commercial complex which
requires such integration to a factory producing pharmaceuticals). During the
1990s, IBM launched a project by the name Operation Bear Bug which
involved a dialogue of managers with customers on their needs, to create
distinctive solutions/offerings, thereby formulating total business solution for a
number of customers. One aspect associated with the marketing organization in
implementing a bundling strategy is the incentives and appraisal of sales
personnel. The incentives given to sales personnel should be based on their
ability to work with a team of personnel. In a number of situations, there may be
a need for the sales team to formulate two proposalsone, a straight proposal
on what the customer wants and the other on providing a solution to the
customer researching his own needs. A customer may not even be aware of the
solution to a problem which requires an integration of several products and
services as in complex industrial automation projects. The sales team of a
selling organization should be supported by personnel who are recruited from
the specific industry that is associated with the buying organization. For
example, for negotiating a deal with a textile industry, the selling organization
should have an expert in the industry as a part of the ongoing marketing team
which interacts both within its organization and the buyer's organization. There
is also a strategic perspective that needs to be analysed when a company enters
the solutions market. Siemens is a company well known for its various products
and services. In one of its major markets, when there was an opportunity to
customize solutions for a range of customers across different types of operations
like hospitals, airports and high-tech companies, the company allocated a new
project team to deal with the existing opportunity to ensure that its prevailing
structure and business were not interrupted. Similarly, a large chemical
company may require a team to analyse the solutions-based market. A company
which wants to specialize in formulating solutions should take care of quality,
internal co-ordination and delays. A strong internal team in the organization is a
major prerequisite for the strategy.
Pricing as an organizational effort
While the other elements of the marketing mix seem to have some kind of
ownership, pricing as a strategy does not seem to have an organizational
ownership. (Robert Dolan et al.'s Power Pricing could be referred for further
aspects of this school of thought). Finance managers are concerned about just
costs and sales managers are concerned about discounts and sales promotion.
The implications of a pricing structure needs to be well thought out by
executives of various functional areas. For example, when General Motors
launched its Saturn car brand, it introduced no haggling pricing policy in an
industry where discounts and sales promotion were almost a norm for a sale.
Swatch, the well-known global watch brand, has a watch priced at about $40 to
signal to consumers about the accessibility of the brand. Pricing, competence of
the organization and the costs involved in launching offerings have vital links.
This is especially important when a company prefers to have a product-line of
offerings for covering the entire market needs of various segments. Pricing and
the competence of the organization would have to be considered for long-term
planning. In the passenger car market, Maruti had a head start in terms of
offering a compact, small car, and this was a taming point in the car industry
which was dominated by Fiat and Ambassador during the early 1980s. Maruti
was able to provide value by introducing a car which not only looked compact,
but also offered fuel economy. After the success of mis offering, Maruti
invested in developing higher end models which have not been as successful as
the pioneering model (a few offerings are an exception). In the small car (mini),
no-frill segment, Maruti has problems of sustaining the no-frill offering,
because the dies used are wearing out and it would be an expensive proposition
to replace them (Business World, 8-15 November 2003). On the other hand, the
next segment (the B segment consisting of Indica (See Plate 5), Santro and Zen)
is highly competitive. Maruti's other offerings like Versa and Baleno have not
met with phenomenal success. Given the fact that there are millions of two-
wheelers in India, there seems to be a lot of scope for a small car from a
company like Maruti which had an excellent start for a product like a no-frill
offering. At some point in time, Maruti had an offering at an interval of every
Rs 25,000 till Rs 4 lakhs. Pricing and product-line management should involve
several functional areas in the organization. It is not enough for the organization
to introduce an offering which is successful; it also has to sustain the success of
the offering by bringing in innovation which would add value to the successful
offering. Value building after the initial success of an offering is a function
expected from the entire organization. There are about a million cars sold in a
year in India and out of the new purchases, only 60 per cent of the first-time car-
buying consumers go in for the entry-level no-frill car. The remaining directly
buy an offering in the next higher B segment. The implication of this is that a
company which has been successful with a no-frill car should have been
innovative to add value, to rapidly expand this market in which there are
millions of two-wheeler riders waiting to be upgraded to an entry-level car.
Customer's Perception of Value
Research has shown that a number of companies price their products on product
cost. They may add a mark-up and decide on the cost plus pricing. While the
price so arrived may be the basic starting point or the minimum price that could
be charged by a company, this method does not take into consideration the value
of the product in the consumer's mind. The process seems to begin with the
firm, and this gets reflected in the price the company may charge the consumers.
As mentioned earlier, it may be desirable to track how consumers perceive
value in an offering. The cellular phone industry is extremely competitive in the
Indian context and consumers often decide the brand based on the freebies
offered. A brand could offer a value package that a segment desires, which is
also at a competitive price level (and profitable to the company). Later, as
consumers experience the value of the package, it may be possible to increase
the prices. The basic prerequisite is careful selection of the consumer segment
(unlike the way in which brands are currently targeting several kinds of
consumers) and offering the value package which would be appropriate to the
chosen segment. Selecting a number of segments and offering several freebies
in the form of a wide range of services not only affects the pricing structure but
also dilutes the brand image as the brand fails to satisfy all segments of
consumers. One interesting and useful aspect of value in FMCG products may
be associated with the usage of the brand by the consumers for their desired
benefits. This aspect has been completely neglected by marketers in the Indian
context. This is especially useful for higher end offerings in tea, toothpastes and
detergents. These offerings are bought at a premium, assuming that the quality
of these offerings is superior to the lower end offerings. Companies should take
steps to educate consumers on how they should use their products for the
desired end result (Surf Excel does this in its package). Implementing this
strategy at the retail outlet level is preferable. This creates visibility about the
usage and also gives an opportunity for consumers to clarify their queries (vis--
vis TV or press advertisements or even directions on the packaging). A
consumer who pays almost double the quantum of money is interested to know
how the end result of using the product/brand would be superior to the lower
end offering; and companies would do well to create value through tangible
ways.
TOUCH OF REALITY
M&M went on a cost-cutting mission with its North Star operation to enhance
the profitability of its tractors. In 2003, the industry sale dropped by 22 per cent,
but M&M's profits were 70 per cent of the industry's profits. The break-even
point of tractors was reduced to 50 per cent of total sales. The organization's
exercise was initiated to come to terms with the saturation levels experienced by
the industry in recent times. The North Star project benchmarked different cost
leaders for different cost structures. It benchmarked DHL courier services for
supply chain cost management, Ricoh, Japan, for office automation costs and
Toyota for inventory costs. The objective of this cost restructuring exercise was
to reduce several costs like labour costs, marketing costs, overhead costs and
material costs, apart from several other costs. Material cost which is about 60
per cent of the total costs, was analysed by 12 teams. If one team worked on
vendor rationalization, then the other would work on compatibility of materials
between different models of the product. M&M's approach is useful to illustrate
the impact of an organization's efforts in providing a competitive and
sustainable pricing advantage in an industry that is saturated and driven by
short-term pricing strategies.
Pricing, costs and value
Besides a number of marketing factors, a company has to also take into account
the costs of manufacturing for pricing purposes. There is a need to combine the
marketing viewpoints with such decisions involving costs of manufacturing. A
company manufacturing 50,000 shirts sells it at Rs 700. The manufacturing
capacity of the factory is 80,000 shirts. The total manufacturing cost is Rs 3
crores, which includes a fixed manufacturing cost of Rs 1 crore. There is also a
fixed selling cost of Rs 20 lakhs. The company gets an order for 20,000 shirts at
Rs 500 per shirt, which is below the manufacturing unit cost of Rs 600. If a
decision-is to be taken on the order, how should the company formulate and
assess its costs? From the financial viewpoint, the company should take the
order because the price offered is Rs 500 per shirt and the variable cost is Rs
400 (Rs 2 crores divided by 80,000 unitsformal cost is Rs 1 crore in a total of
Rs 3 crores). The company will not incur any additional fixed costs because
excess capacity is available with the company. If the total costs are allocated on
a unit basis, they will change with volume, and hence it is better to treat them as
a whole and consider variable costs. The basic aspect illustrated by this example
is that when a company wants to take a decision under existing capacity,
equipment and basic operating conditions, fixed costs do not appear to be
relevant. In a situation like this, apart from the pricing decision, there is also the
branding decision involved. The manufacturer has to ensure that the two kinds
of customer segments buying the shirts from the company brand them
differently. If this does not happen, the customer who is paying more per shirt is
likely to pick up a conflict with the manufacturer. Customer value (value
perceived by the customer) should also be taken into account even when cost
aspects are considered for pricing decisions. If the personal computer category
is considered, it could be divided into a number of segments like corporate
segment, small business, home/office segment, government, education, home
segment, etc. Price need not be (lower price) the driving force behind the buying
decision. Every segment expects good value from buying the PC, but they may
not be price sensitive. Value could be drawn from economic, functional or
psychological factors, as detailed in a number of earlier examples. Economic
aspects are associated with the price and performance of the PC, functional
aspects are associated with specific features, and psychological aspects may be
concerned with the trust and reassurance provided by a brand. If an offering is
going to replace another offering which a customer is currently using, value-in-
use demonstrates the additional benefits associated with the new offering. For
example, gas stoves, though more expensive than conventional stoves, have
demonstrated their superiority in value-in-use. Computers over typewriters in
word processing is another example. In fact, in the days to come, price
perception analysis would, to a large extent, depend on value-in-use across
products and services. Brand equity also affects value perception. HP, Which is
a leader in laser printers, developed the Laserjet brand through rigorous research
and it commands a premium price over a number of competitors because of its
brand equity. Compaq (before its merger with HP), a highly successful
computer brand, withdrew from the printer market after making an attempt
because of the dominant HP brand. HP has thus become a benchmarked
standard in the psyche of consumers in the laser printer category. A brand's
competitive advantage based on functional and psychological aspects would
have a favourable impact on price perception.
Variation in customer's perception of value
In most categories of products, there is a possibility of customizing prices
depending on the value which is being perceived by consumers on the offering
as they may belong to different segments. Information/digital products is a good
example which typifies the situation mentioned. The same information may be
more important to one customer segment than to the other though both the
segments may require the information. Information on upgradability of a
computer may be more important to users in an Internet marketing company
than to home users. Hence, an offering may have a high value for an ideal
consumer than an average consumer. Philips launched a walkman (portable
play only tape recorder) with an FM radio. While both these features may be
important to music buffs, one segment may place more value on the radio as it
may not have the time or affordability to invest in tapes. If this is the case, the
company could separate out these two offerings and brand them in such a way
that each segment perceives the value differently and have the price perception
accordingly. A good example is the manner in which Polaroid introduced instant
photography. This market may not have developed in a significant manner as
expected, but the objective in this context is to highlight how the consumer's
perception of value has been mapped by the company. Polaroid not only knew
that innovator type of consumers would reflect a high degree of interest, it also
knew that companies in identity card business would immensely benefit from
the offering. They would not only be in a position to quickly provide service to
their consumers; they would also have the secure feeling of having taken the
right picture required by their consumers. Hence, the company came out with an
offering for $200 to target these segments. Two years later, the company
brought down the prices to half the introductory price to widen its market.
Airline companies make an attempt to create a different value perception among
business and vacation travellers. The no-frill vacation travellers may need
cheaper fares and an airline would enhance its yield by making the offering on
weekdays (or weekend) when business bookings may not fill up the seats.
Reader's Digest has a price for the consumer who picks up the copy at a news-
stand and another price level (cheaper) for a consumer who is prepared to order
a yearly subscription.
In the software industry, the upgraded version may be offered at a lesser price to
current users of the software than to new customers. One interesting aspect
which requires further probing by marketers (using research) is to find out if
heavy users of a category require more features than light users and if so, do
they perceive more value when such features are provided. Cars and television
brands in the Indian context competing in a highly competitive market would
draw a number of useful insights if they invest a part of their advertising
budgets for obtaining such research insights. In business-to-business marketing
too (industrial marketing), even a commodity type of product could make use of
the variations in perceived value associated with an offering. A company which
specialized in coated air bubbles realized that a certain application has more
value than other applications because of the lack of substitutes. For example, the
company concentrated on the packaging industry in which some products
required a superior cushioning for heavy items with long shipping time. This
application was instrumental in enhancing the turnover of the company by five
times in a time frame of 15 years.
The Concept of Value Subtraction
Just as value addition will enable companies to create value among consumers,
the concept of value subtraction could also be a useful pricing tool under certain
circumstances. IBM created a laser printer which was able to print 10 pages a
minute and it created another laser printer which printed five pages a minute.
Analysis of the two printers showed that there was an electronic chip, which
slowed down the performance of the downgraded version (5 pages/minute).
Spending extra to manufacture a downgraded product and pricing it lower than
the upgraded version does not seem to be the optimal pricing strategy for
pricing a product-line. There would be an exception made for the situation
mentioned, if the company could rapidly upgrade the majority of the consumers
using the downgraded version (in this example, having a printer which prints
less than 5 pages a minute) to the upgraded version and experience high levels
of profitability on the upgraded version. However, the example opens up a new
perspective on pricing strategies, namely the concept of value subtraction. A
company could develop a highly distinctive product for an ideal consumer (in
terms of value perception) who is not price sensitive and then offer several
versions of the downgraded product at different price levels. There are several
advantages of this pricing strategy. It has an implication for the entire
organization as development is involved and the company as a whole
understands the market realities. Developmental efforts are drawn to the optimal
extent and the company's internal arrangements are tuned to achieve the best.
The outcome in the form of a unique product or service differentiates itself in a
competitive situation and creates a branding for the company, and this offering
also showcases to competitors and customer segments that the company is at the
cutting edge of the business. Developing downgraded versions of the original
product creates several segments who would place a distinctive value on the
product/service. Pricing among segments would also be less complex in terms
of handling queries and suggestions from different segments (they pay
depending on the value perceived). Digital products, especially, offer a lot of
scope for this kind of pricing. PhotoScan, a company dealing with digital
images, has a top offering which is superior in terms of picture resolution. The
company has other downgraded offerings in terms of the quality of picture
resolution. The company had to incur the extra cost of creating an extra server
to store the offerings, but these costs are offset by the revenue generated, thanks
to several customers who prefer the offerings of the company as they can
choose the one which is best suitable for their needs. Even in certain business
markets like developing bearings for specific applications like gear box (in
terms of the number of hours of durability), the concept of value subtraction
could be applied. A company which specializes in pest elimination may have a
number of segments, but segments like hotels and hospitals may place a higher
value on the service of the company, given the fact that their consumers positive
WOM depends on the absence of pests. In this case, though the application of
the service is the same from the viewpoint of all consumers, some value the
service more than other consumers. While applying value subtraction, marketers
would have to ensure that consumers are charged differently for different
perceived values and at the same time be sure that the product or service does
not get resold between segments. A computer manufacturer, for example, could
be catering to a home user and a government organization which buys
computers for basic word processing purposes. A CD-ROM feature is likely to
be more valuable to the home user, and the government buyer is unlikely to
perceive more value in the CD-ROM attachment which is a part of the package.
While the company could charge the home user and the government user
differently, it is sure that the computer cannot get resold among these markets
and it is very unlikely that there would also be an exchange of product
information between these markets.
Price Sensitivity
Price sensitivity is a major aspect of pricing, especially in Indian markets (both
FMCG and commodities in industrial markets). Price elasticity is the percentage
change in quantity, given a 1 per cent change in price. If 1 per cent of the price
is raised by the marketer, the impact of this price rise on the volume offtake
reflects the concept of price elasticity. Price elasticity varies by product
categories and specific types of customers. There is a need to analyse the
specific product/market situation. There are a number of pricing situations
which may be linked to price sensitivity. A consumer who is sure to be covered
by a medical insurance policy for an illness is likely to be less price sensitive
than another consumer who may not have a policy. Business class consumers in
the airline industry may exhibit less price sensitivity if such expenses are
covered by their respective companies (vis--vis consumers who do not have
such a coverage). This is one of the reasons why airline companies advertise on
total experience provided for this class (they may be obtaining corporate
discounting for the entire business done, but by and large, the individual
traveller belonging to this segment may be less sensitive to prices). When the
cost of an item represents a major chunk of the customer's total expenditure,
consumers are likely to exhibit price sensitivity. For instance, consumers may
be concerned about the land cost in a real estate transaction than the cost of
paints. Premium brands which are priced high and are positioned for specific
occasions (like a wedding or a special event) generally are likely to be perceived
with lesser price elasticity, given the total expenditure which the consumer is
ready to spend for the occasion. These were items for a small part of the total
expenditure and hence may not get associated with price sensitivity. A marketer
selling a component or material (in business markets) for a company
manufactoring a premium item may experience less price sensitivity than when
selling the item/component to a company manufacturing an offering for the
commodity market. For example, fasteners can be made for a leading brand of
kitchen appliance and also for an offering in the unorganized sector. Bottle caps
(crowns) for soft drinks could be manufactured for leading brands which have a
rigorous testing process or for a regional brand. Price sensitivity would vary in
accordance with the manufacturer to whom the supplies are made. In certain
product categories like perfume or deodorant, consumers may use price as an
indicator of quality and hence may be less sensitive to prices. These are
categories in which branding backed by brand personality creation could obtain
a premium for the brand. These strategies ensure that the brand gets into the
consideration set of consumers who may not be price sensitive. Designer
jewellery and apparel are other examples. Consumers may not only link quality
with price; they may also link it with symbolism which adds on to the lack of
price insensitivity. Besides, these consumers also have the affordability to buy
such premium brands. In business-to-business marketing, consumers, with the
help of the Internet, may be in a position to shop with online facilities and
search for the right vendor, and they may be in a position to compare the various
offerings of prospective vendors. They may be able to trigger a cycle of
negotiation with a set of vendors with comparison on offerings and prices.
Under such a situation, consumers may be very price sensitive. This would be
more pronounced if the company has huge volumes in terms of offtake (Dell
Computers buys large quantities of components and assemblies from vendors).
This situation is also true in consumer markets where online shopping is used by
consumers.
Creating a pricing structure
A pricing structure, more specifically in industrial markets, should be created by
monitoring the value perception of consumers. For example, quantity discounts
are common in commodities and it would be appropriate if a marketer finds out
how the quantity discount based on price reduction on successive offtake would
impact profitability. For example, the first hundred units could carry a price,
followed by a slightly lower price for the next hundred units and so on. In
certain situations, this may be more profitable than the high discount offered on
volume as this may also motivate the buyer to go in for more number of units. It
should be noted that perception on the offering in terms of value matters and
this will differ from one consumer segment to another. Razor-and-blade strategy
is one more strategy in which the main core product is priced low and the
software or the replacement component associated with the product is priced
high. This strategy creates demand for the product and users would have to buy
the replacement component to use the product further. Camera and film is one
example in which the hardware could be priced low and the film could be priced
high. Nitendo computer games player followed this strategy-of pricing the
hardware low (computer-based hardware) and then pricing the software-based
game high. Once consumers got addicted to the game with the game player,
they wanted to use more software games, which were priced high. HP's laser jet
printer in India is another example of this strategy. The unit is priced low, but
the cartridge which has to be replaced is priced high and for a heavy user this
may be a frequent expenditure. Modi Xerox introduced a unique way to price its
after-sales service contract. The pricing strategy recognizes the fact that all
consumers may not be in a position to use the Xerox machine frequently. The
pricing strategy was based on the number of copies taken by the machine.
Movie distributors in developed markets sell a package of movies rather than
individual film, because the perception of packages varies across buyers and
hence offers scope for more profitability. In certain situations, there may be a
need to assess the value perception of an attribute, taking into account the
importance of such an attribute for a consumer segment.

A company in any market (consumer and business markets) could conduct
research into specific attributes/factors which are important to customers in a
given target segment, For example, for an educational institution, upgrad-ability
of application may be more important when dealing with a computer vendor;
but for a commercial enterprise, quick service may be important. For a
packaging material, user printability could be more important; and for another,
treatment of the inner sides of the container may be important. Comparison of
important attributes and their performance across the various brands in a
category could offer insights into enhancing the value of the offering by way of
an improved offering. This enhances the perceived value among the target
segment and hence could command better prices. These efforts would have to
be undertaken on a continuous basis.
TOUCH OF REALITY
As against price wars, good brands would like to create and nurture strategies
which give them a sustainable advantage in the marketplace over other brands.
Value creation involving the entire organization, as in the M&M case mentioned
earlier, is the state-of-the-art strategy concerning such competitive advantages
with regard to pricing aspects. The fundamental challenge is to create offerings
which would enhance the value in the consumer's psyche and also ensure that
they are superior to the current alternative offerings available in the market.
While such efforts may take time, involving elaborate planning with regard to
several functional areas, the results are effective in creating a brand image that
is unique and meaningful to consumers. MTR Foods in Bangalore, the brand
that markets ready-to-eat vegetarian meals is an example. The offering, which
is priced higher than its home-made substitutes, having a shelf life of several
weeks with a reasonable taste, is an interesting example. There are several
vegetarian Indians who travel abroad and the offering creates the value
perception among this segmentoffering convenience, taste and acceptable
prices (in comparison with the relatively expensive vegetarian food items which
may be available abroad and in most cases, such consumers have to travel a
significant distance). EasyJet, the budget airline in Europe, has also followed
such an approach of creating value to the respective target segment in an
otherwise price-led market. The airline introduced one-way low fare, did not
have a frequent flier programme, did not serve frills during the flight and
created value for upcoming entrepreneurs other than vacationers who were price
sensitive and were willing to forgo the usual frills and benefits to perceive value
in the airline's offering. Such value creation requires synergy and planning
across functional areas.
Competitors' reaction and pricing
Fixing a price or fee-tuning a price does not happen in isolation. It happens in a
highly competitive context in which there is reaction from competitors. Price
wars (as seen in the cellular phone industry) can be triggered by a few brands,
which have probably formulated, pricing decisions to capture the market share.
When price war sets into the context in the developing phase of a new category,
there is an all-round confusion for both the consumers and the marketers.
Consumers do not understand the value of the package and brands are intense in
attempting to grab the market share. Hero Honda competes with several brands
at the top end of the market. In a highly competitive environment where value is
determined by price, features, style and performance, any straight price
reduction could be matched by competitors. One move is to enhance the value
with additional features and another move would be to introduce a lower end
variant. Hero Honda introduced Dawn. Gillette's Vector Plus, the twin-edged
system at the lower end of the market, is also one such strategy. Even in
commodities market like chemicals and bearings, a huge unorganized market
attempts to induce a price war by lowering the prices. A brand which has the
strength to create value addition should provide services rather than just the
product and command a premium (rather than get into a price war). For
example, a chemicals company supplying simple washing powder/liquid (used
for cleaning purposes) across industries should find ways of avoiding price
wars. It could find out the needs of consumers in a specific industry (like
chemical, pharma or automobile) and formulate specific offerings which would
get differentiated in terms of colour, odour and other technical properties.
Certain applications could even cost less than the average price. In the ready-
made apparel industry, there are a few segments which are highly competitive.
On one end, there are premium brands like Arrow, Park Avenue and Van
Heusen and at the other end, there is intense competition among regional brands
and the unorganized sector. Indigo Nation has several offerings in the middle of
this spectrum. Peter England created value at the lower end of the market by
introducing offerings that provided value in terms of price and quality. In the
unorganized sector, in the personal computers category, there are a number of
brands which are priced low in comparison with national brands, As a response,
the well-known brands have also brought in a number of offerings which are
close to those in the unorganized sector. However, still some of the local makes
are popular among consumers in the respective regions. The interesting aspect is
that the price-ledreaction is orientated towards the initial purchase of the
personal computer. The local makes, through WOM advocacy, have strongly
entrenched themselves based on their quick response and after-sales service.
Consumers in a-price-led market may be price sensitive and may require
reassurance from a local offering, but they perceive value in the total offering
(including after-sales service) and not just on the core product offering. In the
small home appliances market like fans, irons, coffee makers and water heaters,
there is a huge unorganized market which is led by a price war and there are
national brands which are priced high and have a niche market catering to
consumers who are not sensitive to price. There is a big gap in the market,
which could be attracted through appropriate value. In fact, some regional
brands have strong markets in the cooking-mixers category. There may be
several alternatives available to a marketer in terms of the marketing mix
combinations, and these may be better ones than a price-led strategy.
Cost to Serve Consumers
There has been a shift in the market and hence there should also be a change in
the competitive strategies of companies. Few decades ago, with less of
competition and low fixed costs, companies were interested in the market share
and any mistakes made in pricing policies did not have a stunning negative
impact on the bottom line of the company. With fixed costs being high and
profit cut to the bone, there is a need for marketers to review the pricing
strategies. Share of the customer's requirements as well as the cost of serving
consumers have emerged as vital factors for marketers if they are to sustain
profitable consumers. While the importance and impact of these factors would
vary across markets and product categories, it may be worthwhile for marketers
to consider these factors before finalizing their marketing strategies. For
example, in the Indian context, do all cellular phone manufacturers make
money? Reliance was reported to have had a default consumer base of 15 per
cent (Times of India, 19 November 2003). Revenue realization is also a serious
problem with several industrial and credit card companies. In their enthusiasm
to build business and market share, sales executives could sell the product/brand
to several consumers without knowing how these consumers are going to
contribute to profitability. A cellular phone buyer should not only buy a set
which is subsidized in several situations; he/she has to be a heavy user (more
than the average user in the Indian context) to bring in profitability. If star hotels
are considered, there seems to be a mix-up between business hotels and resort
hotels. Each of these categories requires a specific infrastructure; costs are
different and hence pricing has to be different. A company can subsidize a
consumer, fully knowing that the consumer has a long-term potential, but doing
this in an unplanned manner may not be in the best interests of the company.

The figure
1
provides A, B, C and D quadrants. Customers in each of these
segments are different and they require a specific pricing strategy. Another
aspect is that a company may have to straddle across all these consumer
segments at any given point in time. A segment may be most suitable for
companies which could provide a high value and which also needs to charge a
premium for the high value provided. Hence, it has to be very careful about
selecting its consumers. Segment B may be the preferred one for several
companies but the danger is that over a period of time, these consumers may
feel exploited and hence it would be better for the company to move them to
segment A. Segment C may be ideal for a commodity manufacturer who is
unable to provide excellent value or quality but is able to have a presence close
to the unorganized sector. Marketers in segment C are ideally suited for a price-
based strategy and transaction orientation in dealing with consumers. Segment
D could be dangerous for a company if it has a majority of its customers in this
segment.
The art of establishing pricing cues
While consumers are all the time bombarded by advertisements, they seem to
always learn about various products and prices. But, research has indicated that
a number of consumers may not really be able to place the correct price of a
number of products. A few years back, in one of the regional TV channels, there
was even a programme which was on the lines of Guess the price right. A
high-involvement consumer attempting to buy a ready-made apparel finds that
he/she has a number of options: visit several stores, get a reference on a store
from a friend, compare brands and prices or just postpone the purchase. It may
be worthwhile for retailers to know how pricing cues could be used to enhance
the sale in a retail selling. Research has shown that just the word sale can
increase the sale at the retail outlet by up to 50 per cent (in the appropriate
segment). It should be noted that specific context-based research has to be
carried out to find out the effectiveness of such a retail strategy. Another aspect
is that there are stores which inflate prices and use the sale strategy. But
consumers may frequent a retail outlet if it genuinely uses the strategy. It may
be interesting to study the link between the overuse of sale signs and the
credibility of a retailer indulging in such overuse. Research has shown that
using a sale sign beyond 30 per cent of the total items at the retail outlet can be
counterproductive. One of the psychological ways in which prices could be
made appealing to consumers is to use prices which appear to be lower than a
specific higher point. Bata's famous Rs 699 and Rs 299 pricing strategy is an
example. The TV industry has a number of such points. Using a pricing cue of
having number 9 in the end of a price has been reported to be successful. In fact,
this has been so effective that a price with a higher number ending with 9 has
produced more sale than a lower price which does not end with 9. This has been
reported in the literature on pricing research. One explanation is that consumers
may feel that they are getting a value-based deal if a price ends with 9. A
variation which retailers could try out is the strategy of using 9 only on
discounted items. The strategy may be less effective if it is used with a sale
sign (both of them may not go together). Another strategy, which could be
adopted by retailers for pricing cues is the concept of signpost items. Most
consumers may not be able to recall the exact price for several items bought on
a daily basis, but they would certainly have an idea about the benchmark prices.
For example, a 100-g toothpaste tube (a common brand) cannot cost Rs 60.
Signpost items are those that are used by a retailer to attract consumers by
pricing these items lower than the usual prices. For example, a brand of 100 ml
shampoo may be used by a retailer as a signpost item by pricing it Rs 3 lesser
than the marked/usual price. The objective of this strategy is to enhance the
confidence and perception of consumers that the store provides value-oriented
deals. Signpost items should be selected in such a way that consumers have an
idea about the visual prices of these items and are able to sense the lower prices
offered by the store. It should be noted that a store should not choose an item
(for the signpost strategy) that all stores in the neighbourhood offer at a lower
price. This defeats the very idea of the strategy. Retailers will have to constantly
know what appeals to consumers by way of signpost items, by conducting
frequent marketing research.
Pricing of Services
While the basic approaches to pricing services remain the same, there are
certain specific aspects which need to be taken into account while pricing
services. A service is intangible, perishable; the customer and the service
provider in most cases are inseparable (they would have to be present) and
variable (the same service provided by the same service provider may not be the
same, however much standardization is attempted). For example, the strategies
of Jet Airways and other airlines to have an advance reservation of 30 or 15
days with a highly reduced price is close to what could be termed as yield
pricing. The airline makes an effort to maximize the yield in terms of occupancy
by introducing such a strategy. STD phone rates vary with the time of the day.
Southwest Airlines introduced short-travel flights; as also no-frill service to
reduce the overheads and charged a low price. A number of airline companies
have introduced frequent-flier programmes; and several complications may
possibly arise because of the attempted loyalty pricing. Most frequent fliers
may be travelling in more than one airline and may be eligible for several such
programmes, and this divided loyalty is likely to affect the overall profitability
of the concerned airline companies. Consumers may place an equal degree of
importance to secondary factors than the core service. In hotels and
restaurants, ambience, hygiene and several other factors may influence pricing
more than just the food that is served. Consumers may judge the quality of
service by the price tag, and expectations of the consumers may also be shaped
by pricing. In several categories, the concept of meta-markets is yet to be
explored. A consumer wanting to build a house requires several kinds of
services like architecture, security, material supply, painting, finance,
maintenance, approvals, etc. Meta-markets deal with related need sets of
consumers. A company offering a one-stop solution is likely to enhance the
value perception. A leading car company in Europe has introduced the concept
of accessibility. The car company supplies the car and takes care of all related
services. The consumers do not own the car, but pay a monthly fee for all the
services provided (including the core service of transportation offered by the
car). This could result in a win-win situation for both the company and the
consumer, because the services could be so priced that the consumer pays
relatively less than what he/she would have paid for at any given point in time.
Besides, the consumer is not burdened with services like maintenance,
insurance, change of spare parts, looking out for a reliable service provider, etc.
Even in the case of consumer durables, companies could have a specific well-
planned approach towards pricing after-sales service contracts. For example,
most brands of water purifiers have standardized contracts for thousands of
consumers (households). The usage frequency and duration varies and the
consumer ends up paying the same price regardless of the usage. The pricing is
so structured that even a consumer who does not prefer an after-sales contract
has to pay almost the same amount of money with the added risk of certain
spares not being covered if the contract is not taken out. While this is very
logical from the company's viewpoint, this may not be the best approach to
enhance the perception of consumers from the viewpoint of value. When
competition intensifies, having an after-sales contract pricing on the usage/needs
of the consumer would become a strong differentiator.
Analysing Services
In a number of categories like air conditioners, refrigeration and earth-moving
equipments, revenue from services is likely to be significant. Besides providing
good service, companies should also ensure that they profit from such, services.
A basic step in these and other similar categories calls for an analysis of the
specific service, with customer needs taken into consideration. For example, a
building equipment manufacturer or a manufacturer of air conditioners may find
that their service contracts do not even cover the variable costs associated with
the after-sales service of consumers. When sales for new products decline,
product profits also decline, thereby making services a very attractive option.
There is a need to study and analyse the needs of different segments of
customers in order to price them differently. In furniture segment, a service
interface could help a company to work out a distinctive price. In recent times,
Godrej has focused on this approach in response to changing customer
preferences in the market. Systems furniture is related to the corporate segment
and this includes not just chairs and tables in a conventional manner; it includes
several aspects of furniture that would be suitable for an organization (including
the right type of partition, cupboards, etc.). The company uses the integrated
design manufacturing marketability concept to customize to the needs of the
customer; and the service interface not only helps the company to arrive at the
price, but also gets closer to the needs of the customer. Alcatel, the French
telecommunications company, manufactures end-to-end telecommunication
equipments, which can be used by cellular phone operators. There is an
opportunity for this company to bring in a service interface into the sale of the
equipment. Companies need to gather information on the types of needs that are
concerned with consumers before they standardize services (especially after-
sales service). For a number of industrial equipments, costs of service vary by
configuration, usage and operating conditions. If the companies want to
customize these services, they should ensure that special needs, variation in
services and variety of services, demanded by consumers, are taken into
consideration before prices are finalized. Companies should avoid increasing the
prices of after-sales service just to improve revenues without taking into
consideration competitive implications. A company in telecommunication
services cannot have the same price for serving several segments of its
customers. The company cannot offer customized services unless it is sure that
it would make profits from such customers. It may not be right to assume that
all customers are price sensitive and would be transaction-oriented customers.
Response times, spare parts coverage, availability of services after office hours
and add on services are categories of factors, which may enable a company to
segment the needs of consumers. Companies need to identify the core needs on
services and build a package of services around these core needs. For some
customers, there may just be the vital need of having the equipment in order at
the earliest time (UPS for important applications in hospitals). There may be a
scope to develop a number of packages (different tiers of service elements) to
achieve the balance between a highly customized package and a standardized
one. A commercial shopping complex may choose a standardized service
package from a lift company, but may be interested in an add-on package for
the weekends when customer flow is very high.
Complexities in pricing of services
Pricing services may be a complex exercise. The perceived value of a customer
is the difference between perceived benefits and perceived costs (as perceived
by the consumer). In services, the perceived costs can involve several aspects
which are non-financial in nature. They may be time, physical effort,
psychological burdens like mental effort and negative feelings and even
unpleasant sensations. Hence, a service provider has to price the offering taking
into consideration the steps and processes involved in making the non-financial
aspects customer friendly. The added complexity is that perception of the
consumer (the same consumer) may vary from time to time with other aspects
of service consumption unchanged. For example, a consumer can experience
different kinds of value perception when he/she is utilizing the services of a
beauty parlour, over a period of time for the same kind of solution concerned
with enhancing his/her beauty. Creating an intangible performance (on the
factors mentioned earlier) makes the costing of these service intangibles
difficult. But, the performance on the intangibles is required every time a
consumer experiences or utilizes a service. For example, the consumer getting
the solution for his/her beauty needs (at the same price point) may demand more
attention from the personnel sometimes, may use up more of the cosmetic
ingredients to get a perception of value and may demand more time of the
personnel, on certain visits. In addition, there is also the variability of the
service provider even if the same personnel attend to the consumer for the same
kind of service demanded on two different visits. The amount of time taken by
the service personnel to complete a job (in this example, providing solution
associated with beauty needs of the consumer) affects the value perception of
the consumer. Depending on the time availability of the consumer, he/she
decides on the overall value of the service. Sometimes, in a number of services
like those pertaining to the hospitality industry, increasing the service time also
increases the costs associated with it. Another complex dimension is the
penetration pricing for the mass market in a country like India in certain service
sectors. Mobile phone services provide an interesting situation. Prices are
crashing at the lower end of the market, penetration of mobile phones is
increasing (with about 55 million users), but the average revenue per user
(ARPU) is not increasing and a recent report by Gartner shows that the ARPU
has the possibility of even dropping down to less than US$ 5 per month (in the
Indian context). The serious concern of profitability is a major challenge to
mobile service providers and they may have to raise their revenues, providing
value-added services like ringtones and downloads.
Strategies for pricing services
A number of approaches could be formulated for pricing services. The basic
approach is to have a broad segment of customer needs. There may be three
types of customer needs. One type of customers are apprehensive about huge
service bills and they may not be much concerned about a number of other
elements. A small-scale manufacturer of kitchen appliance components catering
to the unorganized sector at the lower end of the market may care less about
servicing of equipments, than a manufacturer of the same components supplying
to a leading brand of kitchen appliance. There are customers who need a
standard level of service and there are customers who require a high degree of
customized services. Even in application engineering services (like the
application of metal sections in a variety of industries), high level of pre-sale
services may be required, and the frequency of interaction and the complexities
involved may vary. Hence, the pricing would differ from one consumer to
another in the same type of industry. A basic approach to pricing these services
is to analyse how these prices could be arrived attime involved, personnel
overheads involved, fixed price jobs and the potential for value addition in
customizing services. The more the value addition, the greater should be the
price levels. An approach of this kind assures a greater level of performance by
the company. The level of understanding of a customer increases as the
company works with a customer for an extended period of time. A computer
manufacturer working with a commercial establishment for a few years
understands the customer well and hence costs of serving the customer may
come down (this would have to be confirmed by actual operations). Under such
a situation, a company could come out with a specific package of services
exclusively for such customers and price them differently. Certain customers
may want a one-off service operation whenever requiredthey would pay for a
specific job to be done. This segment may require a different pricing policy to
ensure that it is profitable. Hence, a company should list down the various types
of services required by such consumers and get an idea of profitability levels
which may be associated with such a segment. A very small number of such
customers may point out to higher prices to sustain profitability levels. Apart
from costing such services, the risk perception of such consumers could also
be studied and used as inputs to pricing. The risk associated with the loss of a
breakdown for the customer provides an idea about the response time required
for such consumers. There may be profitable consumers who may want a
company to not only repair the equipment sold by the company but also service
the equipments sold by its competitors. While such contracts may be profitable,
the servicing company has to weigh the risks involved (rare spare parts), costs
of servicing an old equipment (may be several years older than the equipment
supplied by the service provider) and the existing competence among the
service personnel before formulating a price bid for such a customer. Warranty
could be another strategy which could be based on segment-oriented needs. In
the automobiles market, certain type of customers would want a mileage-based
warranty and may prefer to maintain the car by themselves. They may prefer
warranty for important parts of the car. There may be customers who may want
a comprehensive warranty on both the car and the after-sales service provided.
For the latter set of consumers, the car manufacturer may want to offer a
comprehensive package of warranty and services, as such customers are not
price sensitive. When such pricing/service/warranty combinations are used,
marketers should ensure that the benefits are priced on the value of the package.
They should ensure that customers of different segments understand the
differentiation underlying the package. Companies should also have a basic
package which most customers are likely to opt for, as this type of strategy may
cover the fixed costs. Companies which handle services should develop terms
and conditions that cover risks involved in different combinations as they could
be used for different price levels. For example, if there is a request for reduction
in prices from a customer, the marketer should ensure that emergency calls are
priced higher than the usual charges.
Costs of Customization
One of the relatively recent approaches in marketing is the concept of
customization. While customization could be applied to both consumer and
industrial products, marketers would have to be sensitive to both the costs of
customization, which could vary depending on the needs of the customer, and
the infrastructure-related fixed costs which requires to be invested before a
company can attempt customization as a strategy. Customization could be very
effective in commodity type of markets (subject to the presence of scope in the
market), which are often orientated towards price wars and are traditionally
transaction-driven. There could be four kinds of customization approaches.
Mass customization consists of interaction, which marketers may have with
customers to identify and make specific customized products and services for
individual consumers. This kind of collaboration process is appropriate for
consumers who may not be in a position to articulate their needs and may be
confused with a product category which offers several options of
products. Paris Miki, a Japanese eyewear retailer, adopts this process. The
company spent five years to develop its own Mikissimes Design System which
assists consumers to select their eyewear (spectacles). The system makes a
digital picture of each consumer's face, analyses the features along with a
description of the customer on how he/she wants to appear with glasses on and
displays the digital image of the consumer's face with the glasses. The customer
and the optician collaborate to adjust or vary the shape of the glass until the
consumer is satisfied with the image displaced. Similarly, the consumer selects
from a number of options for hinges, nose-bridge and arms to complete the
design of the glasses. In adaptive customization, the marketer offers a standard
product, which the users could alter themselves depending on their needs. This
approach is suitable for consumers who would like to use the product in
different ways on different occasions. The technology makes it possible for the
customers to customize the product on their own. Lutron Electronics offers a
lighting system which offers a lighting arrangement in an office setting, or for a
party without having the customers to make too much of adjustments. For
example, different lights in a room can be connected for reading purposes or for
a group of people who would like to have dinner under diffused lighting
conditions. Cosmetic customization presents the standard product differently to
different users. This approach is useful when different customers desire a
different presentation. Nabisco, a leading snack company in the US, uses this
approach. The brand supplies to retail outlet chains like Wal-Mart and makes
different kinds of packages for different retail chains. For example, one retail
chain may want the snack to be packed in a minimum quantity, while another
may require a specific package, which it can use for sales promotion purposes.
The company has the infrastructure to choose pack sizes, labels and shipping
containers in accordance with the needs of the retail chain. Transparent
customization provides individual customers with unique products and services
without explicitly letting them know that the unique products and services are
designed for them. This approach is suitable when customers' requirements are
known and these needs are likely to stay stable for a length of time. The
marketer has a direct interaction with customers and works on specific details of
the needs to provide a highly customized product which the consumer is likely
to use for a considerable period of time. Chem Station is a company which mass
customizes industrial soap for a variety of industrial users. The industries may
be very varied. After interacting with each company, the company produces a
unique mixture of the soap which is fed with the company's tank in the premises
of the customer. The company follows the customer's usage pattern and delivers
the soap when there is a need for a repeat purchase without even asking the
customer. The company saves time and reorder costs, and gets the right type of
product best suited to its requirements. This approach breaks the commodity
approach as the product is customized to each customer.
Brand Equity and Pricing Decisions
In recent times, the Indian context has witnessed a marketing move across
several product categoriesprice cutting from colas to microwave-ovens.
Brands have slashed prices either by offering price discounts or by offering
freebies. Research would probably point out how the decision-making process
has been influenced by pricing (cutting down prices) and its implications on
branding. The implications of such strategies range from brand dilution to
commoditization. To better understand the role of pricing in the development of
brands, the following aspects are useful:
(i) Are there price bands in a category?
(ii) What has been the positioning of the brand?
(iii) Has the brand sustained its positioning over a period of time?
(iv) Niche brands.
Price bands in a category
Normally, price bands develop as a category evolves. In the automobile
passenger car market, the basic segmentation of offerings is based on price
bands. The Indian market in the category can be divided into mini, small car,
mid-market offerings, sub-premium ones, premium ones and super-premium
offerings. They range from the no-frill plain Maruti 800 to Mercedes. As
different brands (and variants) enter the market, there is a blurring of price tine
between highly competitive segments. The case of Santro is interesting because
the company has made a very focused attempt to clearly build up brand equity
in specific segments. When price bands start narrowing down, a company has to
ensure that its brands do not confuse consumers. Creating and nurturing specific
brands, which are adequately spaced in the product-line price ensures enduring
brand associations. This does not mean that brand associations are solely
responsible for branding. In a crowded market, brand associations are vital.
Santro, Accent and Sonata have developed very clear brand associations in an
evolving market by their price positioning strategies. In the category of soaps
too, price bands have emerged over time, and bringing in too many variants
around a price point may confuse the consumers. When competition attempts to
take on a leader in the premium segment in a price band with a lower price, the
leader has the option of bringing down the prices to match the competition,
create a new brand to pitch it at a lower price, or enhance its offerings well
above the follower's offerings. Liril, a pioneer in the category of lime-based
soaps, was under attack from Nirma Lime on the price front. As a brand with
tremendous equity built up over several years, it could have pitched itself well
above the follower. In the case of detergents, Hindustan Lever created Wheel to
counter Nirma's penetration prices at the lower end of the market. In one of the
initial campaigns during the launch phase, the brand was positioned as one
which is not harsh on hands, indicating a benefit of the brand (in the specific
price band). HMV created Sheer Magic as the premium brand to signal a clear-
cut offering in the premium end when the market was driven by price wars at
the lower end (with several unorganized offerings). The point is not about the
success of the brand created by HMV, but the manner in which it tactically
attempted to steer away from the price war (pricing alone cannot make a brand
successful in any category).
TOUCH OF REALITY
Promotional pricing is an important area in FMCG and in the times to come
may also become important In the durables categories. Sales promotion is
almost the order of the day to appeal to consumers of all segments in terms of
economic benefits. Consumers shopping in a high-end mall too look for
bargains and sales promotion. While price discounting is almost a routine
strategy for a price war-oriented brand, sales promotional pricing will have to be
handled delicately for a higher end brand, as wrong handling may affect the
image of the brand. Normally, a higher end brand may run a price promotion
when it is introduced in the market. Subsidized price promotion (in which one
offering of the company subsidizes another of the company from the consumer's
viewpoint, when both offerings are related with regard to usage) is very useful if
two higher end products which are related in terms of usage are to be offered in
a sales promotion for a limited span of time. For instance, Colgate Total came
out with a sales promotion scheme; the offer had the Massager model of its
toothbrush priced at Rs 50 being offered with the 75 g variant of Colgate Total
priced at Rs 28. The consumer had to pay Rs 32 for the toothbrush and Rs 18 for
the toothpaste variant, saving Rs 32. Such a price promotion is useful in: (1)
enhancing the trial of both premium offerings (both the brush and the brand of
toothpaste are premium offerings), (2) ensuring that there is no dilution of brand
image, especially when such offers are limited to selective retail outlets and
without much of advertising, and (3) initiating unplanned purchases with regard
to promotional offers at a retail outlet.
Positioning of brands and pricing
The traditional and well-known concept of perceived value positioning is the
key to finding out how a brand should be priced. Perceived value positioning is
always more for more. Perceived value not only includes functional attributes
of a brand, but also better performance of the attributes (than competing low
priced brands) with a marked symbolic appeal. The consumer pays not only for
the functional benefits of the brand, but also for the emotional benefits of the
brand. During the mid-1980s, Onida positioned itself as neighbour's envy,
owner's pride, pushing the price to the background. Rolex, Mercedes and Tag
Heuer are brands which have always offered functional utility with aspirational
appeals. Such brands should ensure that they lead the competition by offering
state-of-the-art benefits and symbolic associations involving status, personality
statement and lifestyle appeals. Santro is an example of how such strategies
have been used around price to build the brand. After ensuring that it offered
several functional benefits over the competing brands, Santro also used
celebrities to add a lifestyle appeal to itself. Fastrack from Titan may be
attempting this approach. A brand which has used perceived value pricing to
initially position itself would end up as a commodity quickly if it attempts price
discounting to overcome competition. Cielo, which launched itself as a premium
vehicle, went into price discounting and such a strategy may have gone against
such a positioning. Hush Puppies, a premium brand of footwear introduced by
Bata during the mid-1990s, took the discounting route and this may have had a
negative impact on the brand equity. Price is perhaps perceived as an indicator
of quality of high-fashion brands in such consumer markets. A drop in price or a
significant drop in quality (sometimes done to accommodate the lower price
point) is detrimental to the brand.
Value based on benefit/performance (price-benefit equation)
A number of brands are positioned on value pricing or on enhancing the price-
benefit equation. It should be noted that value could be created at a higher or
lower price point (in comparison with competitive offerings in a specific price
band). The detergents price war during the year 2004 among the top brands in
the category makes a very interesting study of how a brand should evolve
making use of this concept. In any market, higher the price of the brand, lower
would be its sales volume. It is generally not practical to have both high volume
and high profits. Ariel was the first compact detergent to be launched in the
detergent category at a premium with superior performance factors (attributes
which enhance the detergent action). Hindustan Lever followed in the same
premium category with Surf Ultra and later sustained the higher end offering
with Surf Excel (instead of Surf Ultra). It had Surf as the mid-price brand and
Wheel as the lower end brand. The price war has reached an all-time high with
Ariel being advertised at Rs 50 per kg. While the present users of compact
(premium) category detergents may probably have to select between these two
brands (and probably Henko), marketers of such brands would do well to
research the perception of consumers. From the viewpoint of value pricing,
should a pioneering brand (or a premium brand) which created value on
functional attributes rely on price-cutting or should it further enhance the
functional attributes to retain consumers at the premium end and make the brand
aspirational for consumers at the lower end? With an approach of enhancing
value, pressure on profits would be less and the vital point is that brand equity is
not diluted in the perception of consumers. Another example in a more
commoditized category like edible oils makes an interesting comparison. This
category has a number of well-known brands and there are also regional brands.
Most of these brands rely on high-decibel advertising. Saffola brand has
maintained a premium and a focused positioning on heart care as the rational
value (benefit). It has a Heart Foundation to create awareness on heart problems,
which would have a rub-off on consumers who were orientated towards health
choosing the brand (the brand had made a deviation from heart care for
sometime, but has reverted to its original positioning). The brand had about 6
per cent of the market share (by volume) in 2004, but was profitable and had a
very clear positioning. With progressive price discounting to keep up with
competitive offerings, low prices would dilute the equity built up over a period
of time. Value pricing is a sustainable and a powerful pricing tool if brands are
able to offer superior functional value and continue to lead the value pack
when competitors follow suit. Sony's Wega brand is an excellent example of
how value pricing is used by the company when a category evolves, with
several brands competing around a price point. The brand value is led by
innovation.
Sustaining the positioning strategy and its impact on price
perception
Price perception is strongly associated with positioning strategies and it is
important that a brand maintains or complements its positioning strategy over a
period of time. The perception of value is linked to the initial brand positioning
as well as the variants which may be launched by the brand. Lifebuoy is a good
example of how this price perception has been managed over several decades. It
was a macho soap in the rural markets with its well-known jingle,
characteristic carbolic perfume and freshness created by the germ-killing action
during bath. Its initial variants, Double Action and Gold (currently repositioned
with an international prefix), have had the same germ-killing action as their
USP with changes in packaging and perfume. In fact, the Gold variant,
positioned towards college-going girls, had a line in its packaging soft on the
skin, hard on germs. The repositioned original Lifebuoy (with its new herbal
variants) underscores family health as the proposition. It may be noted that the
germ-killing original proposition is complemented by the family health
proposition. The re-launched version has a slightly pleasant perfume and a
different packaging. The changes have been implemented in such a manner that
the perception about the brand is not significantly altered. Besides, the changes
are also perceived to be contemporary. Such a perception about the brand is in
synergy with the price perception and even incremental adjustments in the price
will be pushed to the background. This approach could be compared with just a
price drop or a large-scale sales promotion in isolation. Pricing for brand power
has to take the brand perception in totality.
Niche brands
Niche brands have to carefully bring in changes in pricing, as they are likely to
affect the equity of the brand to a greater extent. In fact, a number of global
niche brands place a lot of significance on the emotional value associated with
the brand and follow a strategy called shielding. This involves making the brand
affordable to a small base of consumers (niche) and enhancing the appeal of the
brand to several aspirational consumers. The idea is to create a psychological
benchmarking in the psyche of the aspirational consumers to ensure that they
become consumers of the brand whenever their affordability levels would
permit them to buy the brand. Even discounting such niche brands requires
appropriate communication. When a brand like Braun introduced shaving
systems for women, it made it clear that the initial discounting period was to
ensure good trials for the brand. Niche brands offer excellent quality, cater to
the special needs of consumers and if the category is associated with a definition
of lifestyle, the brand offers symbolic appeal as a part of it. It is very difficult to
imagine Mercedes or Rolex to make sales promotion or price discounting a
permanent feature of the promotional mix. In the Indian context, some premium
apparel brands have decided not to get into long-term sales promotion, as it
would affect their brand image. Exclusivity is retained only if a niche of
consumers buy or utilize the brand.
Pricing a brand is like synchronizing a symphonyrational and irrational
appeals of the brand would have to be balanced with the consumer psyche,
profitability and enduring brand image.
TOUCH OF REALITY
From the viewpoint of marketing, the Indian population can be divided into four
categoriesThe global India with about one million households (located in
eight cities) earning above US$ 10,000 per year; the aspiring India with about
forty million households earning between US$ 4000 and 10,000 per year; the
struggling India with about one hundred and ten million households earning
between US$ 1500 and 4000 per year and the destitute India with about forty
million households earning less than US$ 1500 per year. Hence, there is
tremendous scope for marketers of both fast moving goods and durable goods to
penetrate into Indian homes if they offer the right value with regard to their
offerings. Some of the value-based offerings which have been introduced in the
Indian context have rapidly diffused in recent times. Shampoo, in sachets (small
packs of 6-10 ml), has increased the shampoo-using population from 18 per cent
to 45 per cent in the last 10 years. Nestle and Cadbury in chocolates and Coke
and Pepsi in colas have introduced offerings at a fraction of a US dollar. Mobile
phone rates are the lowest in the world. Britannia has introduced its Tiger brand
of biscuits at a fraction of a US dollar. Lifebuoy, the soap brand for mass
markets, improved its quality and perfume, charged a premium and stemmed its
decline. This shows that brands can succeed in the mass market if only they
offer the right value.
Mass Market Pricing Strategies
There seems to be a high degree of activity with branding strategies associated
with brand associations and brand personality and functional benefits. Pricing as
a branding tool, especially for the mass markets, could be utilized to support
such branding strategies. The following aspects are critical with regard to
pricing strategies in the mass markets.
o importance of functional aspects and brand associations perceived by
consumers in the mass markets.
o Brand's product-line and pricing strategies.
o Service as a part of the pricing strategy.
Importance of functional benefits as perceived by consumers
The perception of consumers is important in the mass markets and what is
interesting is that it keeps changing over a period of time with changes in the
environment. In the soap market, cosmetic soap brands (beauty soaps) are being
preferred by mass consumers. A decade back, Lux was probably a beauty soap
brand at a level higher than the carbolic soap like the Lifebuoy brand. Over the
last several years, the market for carbolic soap (typically for the mass segment)
started diminishing. Godrej No. 1 is a brand with several variants priced
affordably. It also offers variants very similar to those which have been
available to only consumers at the higher end of the market segment. Lifebuoy
itself was re-launched with a beauty orientation offering herbal and
moisturizer variants. Lux re-launched with the international tag is priced
higher with added benefits. Regardless of the brand associations connected with
Lux or Lifebuoy, the strategy underscores the importance of creating a price
line, which is in tune with changes in the market. Godrej No. 1 too reflects the
need to capture the changing trends and develop variants for the mass market at
an appropriate time with the right kind of pricing.
Titan's success and the subsequent creation of Sonata brand by the company is
another example of how brands and brand associations will have to consider
price perception and also brand associations. Titan seemed to be too elite for the
mass markets and given the fact that a large proportion of watches in India are
sold in the lower price ranges, the company has created Sonata at the lower end
of its product/price line. Sonata also offers a range of price points to appeal to
several segments in the mass market. The company has also created Fastrack to
appeal to the upwardly mobile, urban youth. The company may be in the
process of consolidating both Sonata and Fastrack, taking its overall offerings
into consideration, but the point to be noted in this example is the creation of
strong brands with accompanying prices.
Britannia's Tiger is a good example in which brand associations and price points
have played a major role in creating an impression in the psyche of consumers.
The lower end of the biscuit market has a significant presence of the
unorganized sector and glucose biscuits too contribute significantly to the lower
end of the market. Britannia used penetration pricing (a low price point) and
strong brand associations (with even celebrities) to reinforce its offerings, which
is very similar to the glucose biscuits.
Price perception for the mass market has to include at least an incremental
component (when compared with existing offerings) in functional benefit, a
strong brand association and high visibility advertising to create awareness
about the offering. This combination is supported by a price point which is
lower than the one consumers are familiar with or a price point which is slightly
higher than the existing price point of current offerings in the market. Nirma
detergent powder was launched decades back at almost one-third the price of its
major competitor Surf backed by a high-visibility campaign and a strong
association with value. Ruf and Tuf jeans (set with fabric and accessories) was
launched for the mass market at a price point slightly above the other offerings
in the unorganized market.
TOUCH OF REALITY
A leading brand in the premium market can develop a brand for the mass market
and, normally, a new brand is used to ensure that the premium association is not
carried over to the mass market, Levi's is planning to launch its Workers brand
of khaki for the mass market comprising young people who have started
working after they have finished their studies, Levi's launched its mass market
Signature brand of jeans to compete with other brands in the mass market.
Recognizing the need for the young working class to be formally dressed in the
context of business, Workers brand of khakis will be priced around the range
that will be attractive to this target segment which has disposable income but
spends less on apparel. Levi's, other khaki and a global brand Dockers is
positioned at the premium end. Sonata from Titan too developed itself for the
mass market. Fairever fairness cream launched its Mantra, especially for the
mass market.
Brand's product-line and pricing strategies
Coke's and Pepsi's 200 ml introduction at Rs 5 is a part of the product-line
strategy of the brands with other offerings at 330 ml, 1.5 1, etc. In an emerging
market like India, introducing an offering at the entry price point is to enlarge
the base of consumers. Such a product-line strategy with appropriate price
points should eventually work towards product-line profitability. Consumers at
the entry-level price point should either offer adequate volumes to result in
profitability or move up the price point to offer profitability at higher price
points. With about 70 per cent of the volumes in the shampoos category coming
from sachets, leading brands with a product-line full of price points will have to
face the challenge of moving the consumers to higher price points. The
product-line strategy,apart from pricing, has to also rope in new variants in tune
with changes in the environment. For instance, introduction of the herbal
offering Ayush, Hindustan Lever's product-line of shampoo, may require
appropriate adjustment in the product-line pricing strategy. A balance of
offerings (variants), price points and profitability in a dynamic environment is
the challenge faced by brand/product managers. Titan with several offerings at
various price points may have to add, modify or even drop price points over a
period of time to ensure product-line profitability at a given point in time.
Having too many offerings at various price points and building brands at these
price points with strong brand associations might become a complex exercise.
Maruti has a number of offerings. Maruti 800, Alto, Esteem, Zen, Versa, Wagon
R and Baleno; and each of them have variety which differ in price aspects.
Given the competition intensity, there is a need to develop each of these brands
with a strong association; and the exercise has to result in profitability. Santro's
offerings are relatively more focused with Santro Zing, Getz, Accent and
Sonata. It may also be noted that Santro added a few features and re-launched
itself as Zing, while withdrawing the original variant. The new variant was
priced higher than the earlier version. The more for more pricing with the
original version withdrawn was probably a rare instance in the pricing history in
the passenger car market. A focused approach towards product-line pricing
results in a favourable brand perception, apart from benefits with regard to
product-line profitability.
In the televisions and refrigerators categories, the major chunk of the market
revolves around a specific variantthe 21-inch TV and the 165 1 refrigerator
(trends may be changing, but these models are important for the brand). A brand
needs to have a very strong offering whenever the market in a given category is
orientated towards a specific variant. As the market evolves, other variants (as
in both these categories) get diffused over a period of time. Mega brands in such
categories show case (known as line featuring) their best products, though the
market may not be ready for the most sophisticated offering in the category in
terms of volumes. The plasma TV, which is priced above a lakh of rupees, is an
example. The idea of such a strategy is to ensure that the rub-off obtained over
the entire product-line will be perceived favourably by consumers across price
points. Consumers will perceive a brand having the state-of-the-art offering to
be technically advanced and this perception may enable them to decide
favourably on the brand during their process of decision-making.
A brand may not have developed a product-line in a new category/concept like
World Space. The new concept offers several kinds of music (as different music
channels) all the twenty-four hours of a day. There is a receiver (hardware) and
to listen to the music there is an annual subscription. Given the high degree of
competition in the audio market, such a concept is likely to appeal to serious
music buffs who are particular about specific kinds of music and who may not
have the time to shop for such music. There is also a cost-saving angle in such
an offering. Normally, in such new-concept categories, consumers may perceive
a very high value with regard to the offering without being price sensitive. The
World Space concept is being offered by leading brands in consumer
electronics. Under such circumstances, advertising with a strong focus on price
points may not be a good idea. World Space, which was advertising with a focus
on the price point, has shifted to lifestyle advertising in recent times, though the
advertisement makes a mention of the price. Over a period of time, even a new
product/service category could evolve different price points to build up the
market. For example, World Space could offer a different subscription price
point depending on the number of channels or the types of channels required by
the target segment.
Pricing and services offered with PRoducts
One of the topical issues marketing managers face is the pricing of services
which are offered with products. While pricing of services is also an interesting
topic, the content discussed in this section is the services provided with the
product. A typical example could be television sets. There is a warranty period
during which free service is provided and a brand starts charging a consumer
after the warranty period for the service provided (either based on the
requirements of service or on the annual maintenance contracts in certain cases).
The fundamental pricing issue is the balance required between revenue to be
generated by the brand on such services and the perception of consumers on
service charges. While profitability is a strong motive for a brand under intense
competition on prices, over-pricing the services could lead to a bad WOM. Such
a bad WOM could work against the brand despite the brand delivering on
functional attributes. Marketing managers should take into consideration the fact
that apart from a good WOM, it is important to maintain a proper
relationship with the consumer. This is not only because of repeat purchase
from the consumer's viewpoint; it is also owing to the fact that the consumer is
likely to consider the same brand for a different (new category to the consumer)
product category. Electrolux, Samsung, LG, Godrej and other leading brands are
into several product categories. One approach for such brands would be to have
different revenue models for different segments by creating price points based
on the needs of segments. A segment which requires service within 4 hours of
breakdown will be different from that requiring service within 24 or 48 hours.
While all consumers would like to have their products set right as early as
possible, research could reveal that there may be segments which may prefer to
pay a premium for getting the product fixed quickly. In the case of washing
machines too, such categories of pricing-service links are possible. In urban
markets, there are double income families which earn a high income and which
would prioritize convenience to price especially when there is a strong need. A
sophisticated washing machine failing on a working day would be the last thing
which a working couple would like to experience. A home to home laundry
service till the machine is repaired could be both a source of revenue and brand
goodwill. The suggestions given in this chapter are suggestive and specific
revenue models will have to be worked out depending on the context.
Pricing strategies in a dynamic environment pose interesting challenges to
marketers. Consumer insights, competitive activity and profitability are major
factors which make such challenges interesting.
Pricing, brand benefit set and brand loyalty
Research done by the author with Jai Advani has produced an insight that a
brand's worth can be reflected from the perception of consumers through brand
benefit set (as dealt with in this study). Though the authors of the study dealt
with FMCG, the implications of the study will be equally useful to marketers
dealing with the durables category. Brand benefit set combines several aspects
of the brand which are not only tangible benefits but also other factors relating
to brand trust. Brand benefit set consists of the benefits of the brand and brand
trust. A consumer who perceives a brand high on brand benefit set (meaning the
consumer perceives the brand high on both its benefits and trust) will be less
price sensitive than a consumer who perceives the brand lower on brand benefit
set.The implication of the finding is that consumers who perceive the brand high
on brand benefit trust are important consumers to the brand and retention
programmes; and hence, pricing of promotional offers to this set of consumers
will have to be distinct and well formulated. Such a strategy will ensure that
such consumers are retained by the brand. These are also consumers who will
advocate the brand by their positive WOM. The topical relationship marketing
and related issues will have to take into consideration the perception of
consumers on brand benefit trust to ensure that pricing issues are formulated in
such a way that it complements or changes the perception of consumers as
appropriate to the segment of consumers. For example, an exchange programme
for a brand of car (in which consumers of a brand are invited to upgrade their
car from the company's offerings) should create an exclusive package to
consumers who perceive the brand high on brand benefit set, so that it
complements the perception of value and trust which is already high among
consumers. For consumers who perceive the brand low on brand benefit set, an
exclusive package which attempts to change the perception of the brand is to be
formulated. The challenge for the marketer is to create the two packages which
will not only be appealing to the respective segment but also be differentiated. A
strategy of this kind is likely to enhance brand loyalty among consumers.
Pricing in this context not only involves the price discount, but also is associated
with several aspects of service. The brand of car, for instance, may provide a
free emergency service for a certain duration of time to a cross-section of
consumers to enhance their perception about the brand. Researching the
perception of consumers (including both kinds of consumers who are satisfied
as well as those who are not satisfied), examining various aspects of
satisfaction/dissatisfaction and working out feasibility of several options for
various segments of consumers are the prerequisites of such an approach. The
research study (mentioned earlier) was conducted in the Indian context. Brand
trust is not only based on the price of the brand but also the confidence a
consumer has in the brand. Brand trust will ensure that consumers reduce their
perceived risk and repeatedly buy the brand. The brand value (in which the price
perception figures) is an important part of the trust. Consumers who express a
high brand trust may not be very sensitive to the price, but will demand and
expect sustained efforts on the part of the brand to ensure that the brand lives up
to their expectations. One of the best examples of brand trust can be illustrated
by the Tylenol example which was handled by Johnson & Johnson. Tylenol was
an analgesic (tablet) brand and when the brand found that some of its packages
were laced with a dangerous chemical (how this happened is a different issue),
the company destroyed stocks worth millions. Brand trust happens over a period
of time when consumers perceive value both in the brand's pricing and non-
pricing strategies.
Customer Relationships and Pricing Challenges
There is a topical need for marketers to approach CRM aspects from the
viewpoint of pricing because of the following reasons.
(i) CRM practices will have to lead to profits.
(ii) All customers of a company will not qualify for CRM and hence there is a
need to distinguish between the degrees of relationships with regard to a
company's customers.
(iii) As relationships are segmented based on customer needs and profitability,
pricing has to be differentiated with regard to each segment.
(iv) As a basic step, there is a need to identify a method by which different
kinds of customer relationship segments can be identified.
(v) After identifying the different stages of relationships, each segment can be
priced with price bundling. The method which identifies the different degrees of
relationships should also have scope for identifying transactional relationships.
The following sub-section deals with the identification of different degrees of
customer relationships with two basic frameworks which deal with the concept
of customer mapping.
There have been several dimensions explored with regard to CRM. It has been
explained as a long-term, co-operative relationship between the customer and
the marketer. There is an emphasis on relationships as opposed to transaction-
based exchanges. It has been suggested in the literature that relationship
marketing should have a focus on cooperative and collaborative marketing
actions which deal with the needs of consumers. Hence, the definition of
relationship management is an ongoing process of engaging in cooperative and
collaborative activities and programmes with immediate and end-user customers
to create or enhance mutual economic value at reduced cost.
The need for practice-oriented CRM strategies with pricing
alternatives
Though the concept of CRM has been clearly explained in the literature, and
there are several associated strategies practised by marketers, there is a need for
practice-oriented CRM strategies because of the following reasons.
o There is a need for a CRM model which would enable marketers to
formulate strategies by which loyalty would lead to a higher share of
consumers.
o Calculating the lifetime value of the customer and the period involved in
transacting profitable business from the customer in the retention phase is
very complex and the probabilities used may not be realistic because of
dynamic competitive conditions.
o While several CRM-oriented strategies are being practised by marketers,
marketers may not know whether they are targeting the right target
segment for such relationship-building purposes, and loyalty programmes
could lead the flier company into a loyalty trap (if they do not have a
clear-cut method to identify customers for relationship-building
purposes). With regard to supermarkets, loyalty programmes run the risk
of eroding already slim margins as chains are forced to engage in loyalty
wars.
o CRM works well if there is a high proportion of profitable consumers
under certain circumstances of profitability distribution. This may not be
a reality, as in a number of companies there may be many customers
contributing to profitability. The 80/20 rule of 80 per cent of the profits
achieved through 20 per cent of customers may not be applicable to
several buyer-seller relationships.
o Satisfaction may not contribute to loyalty. It could lead a company into
the customer satisfaction trap. Loyalty does not just depend on economic
benefits to customers. Sustainable retention occurs through both
economic and psychological benefits. This aspect emphasizes the need for
a CRM dimension which is not concerned purely with the economic
potential.
o There is need for a conceptual approach that would enable marketers to
explore several aspects associated with satisfaction/loyalty through
further marketing research. This would ensure that marketers work with
customers who exhibit degrees of relationship and any CRM programme
should recognize such layers of relationships. For example, AT&T offers
different kinds of services across all sections of customers who may
reflect different profitability levels. Dell uses a direct dialogue, which is
net-based, to interact with a specific class of consumers who may be
repeat buyers; and Southwest Airlines uses a database of 2.7 million
consumers to provide information about its click and save programme.
Recognizing the different layers of relationships will have implications on
managing the marketing mix of a brand.
The concept of customer mapping
The concept of customer mapping enables a company to position customers on
specific dimensions which would ensure that the relationship is furthered with
customers who would be the right customers for the mutually
profitable collaborative process associated with CRM concepts. Besides, this
would also ensure that the firm also builds up a relationship with consumers
who may, at a later point in time, become the ideal ones for a CRM programme.
There are two sets of simple dimensions which are considered for mapping the
customers. The first set of dimensions includes Customer satisfaction and
customer loyalty. This is reflected in the following matrix.

Customer satisfaction would have to measure the perceived value in terms of the
functional benefits and the psychological benefits like trust, mental peace,
belongingness, status appeals, etc. as appropriate to the positioning of the brand.
The following figure provides the CRM confirmatory matrix with the second set
of dimensions namely intention to buy the brand and brand's share of the
customer.

The second set of dimensions serve to reason out the gap that may be reflected
in purchase patterns which is concerned with the problem of customers not
buying the brand (or buying the brand with decreased frequency) though they
may express satisfaction with the brand. Further, the second set of dimensions
also attempt to explore the intensity of loyalty at a given point in time. For
example, if a customer is categorized under the high satisfaction, high loyalty
and low intention to buy the brand and high share of the customer cell, it could
indicate that the existing loyalty is weak and that the company may have to take
pre-emptive action (with an appropriate marketing mix). The mapping of
customers could be done after a given length of time (1 or 2 years, depending on
the need and competitive conditions in the category).
Categorization of customer relationships from which price
bundling can be formulated
The categorization of customer mapping results in four sets of customers.
(i) Hard-core set
(ii) Potential set
(iii) Doubtful set
(iv) Transaction set
Each category should be dealt with a different set of marketing mix elements.
Hard-core set. This set of customers consist of categories under the following
combinations.
Subset 1: High satisfaction, high loyalty, high intention to buy the brand and a
high share of the customer.
Subset 2: High satisfaction, high loyalty, high intention to buy the brand and a
low share of the customer.
Subset 3: High satisfaction, high loyalty, low intention to buy the brand and a
high share of the customer.
Subset 4: High satisfaction, high loyalty, low intention to buy the brand and a
low share of the customer.
The implications for the marketing mix strategies could be observed across the
subsets. While all the four subsets belong to the hard-core set because of their
categorization under high satisfaction and high loyalty (which is a strong
indicator of further CRM programmes), subset 1 has clearly a set of customers
who qualify for a customer centric CRM programme. Subset 2 is important
because the customers in this subset are inclined to buy the brand and the
brand's share of their requirements is low. Hence, they should be motivated to
buy more of the brand so that the brand would significantly make progress in
obtaining more of their share. The affordability level of the consumer may be
preventing the consumer from increasing the brand's share of requirements.
Pricing or the overall value of the brand may have to be analysed in comparison
with other competitive offerings. If necessary, a new variant could be launched.
Subsets 3 and 4 warn the marketer about an impending fall-out from the hard-
core setcustomers who have been very loyal to the firm may shift to
competitive brands. This may be because they feel competing offerings (which
have been of recent origin) are better.
Potential set. This category of consumers would consist of the following
subsets.
Subset 1: High satisfaction, low loyalty, high intention to buy the brand and a
high share of the customer.
Subset 2: High satisfaction, low loyalty, high intention to buy the brand and a
low share of the customer.
Subset 3: High satisfaction, low loyalty, low intention to buy the brand and a
high share of the customer.
Subset 4: High satisfaction, low loyalty, low intention to buy the brand and a
low share of the customer.
As stated earlier, this subset is one which deals with low loyalty in spite of a
high degree of satisfaction. These subsets are classified under the potential set
as the customers have expressed a high level of satisfaction. Subset 1 presents
an interesting situation in which the loyalty is low and the brand has a high
share of the requirement of the customer. This clearly relates to buying the
brand not out of complete commitment to it. In spite of satisfaction, there is low
loyalty, but the intention to buy is high. The customer is likely to switch if
he/she has a choice. In other words, the brand may be getting out of the choice
set of the consumeran indicator of weakening loyalty. The brand may be
bought (with high intention to buy) because of its low price or sales promotion
and this would result in a high share of the customer's requirement.
Subset 2 reflects a clear gap between the intention to purchase and final
purchase. Point of purchase or pricing or promotional offers may have to be
fine-tuned in the marketing mix elements, because the consumer has expressed a
high level of satisfaction and a high intention to buy. The consumer's non-
affordability may also be a problem. There is a gap between high intention to
buy and repeat purchase and this results in lack of loyalty. It may be worthwhile
to explore if any brand dominates the customer share of requirements, and if so
the reasons for it.
Subset 3 (which is associated with a high share of customer's requirement) is
clearly an inertia purchase. The high satisfaction with regard to the brand may
also be associated with a competitive brand (an aspect which could be probed
by research). While the customer has expressed a high degree of satisfaction, the
lack of loyalty and the low intention to buy the brand, points to the fact that the
customer buys the brand without commitment to it. (Subset 1 is associated with
a high intention to buy, there may be affordability involved and the consumer
could probably express a desire to buy because of the price.) Lack of choice
may also be a problem. The customer may probably prioritize convenience (for
instance, availability in neighbourhood stores or delivery in products like
industrial consumers) over product benefits/performance/quality. Competing
brands could displace the brand by closing-in on appropriate dimensions.
Subset 4 presents a situation which calls for immediate action, which could be
initiated after comparing the brand (on all aspects of the marketing mix) with
other brands in the consideration set of this category of consumers. Higher
level of satisfaction could be associated with several brands.
The potential set is also likely to apply to several categories in which consumers
may not be able to perceive high or low satisfaction in a focused manner
because of ambiguity in the product benefit itself (shaving creams, fairness
creams, soft drinks, shoe polish and industrial consumables like washing soaps
are examples of such categories).
Doubtful set. This set comprises the following subsets.
Subset 1: High loyalty, low satisfaction, high intention to buy the brand and a
high share of the customer.
Subset 2: High loyalty, low satisfaction, high intention to buy the brand and a
low share of the customer.
Subset 3: High loyalty, low satisfaction, low intention to buy the brand and a
high share of the customer.
Subset 4: High loyalty, low satisfaction, low intention to buy the brand and a
low share of the customer.
The subsets belong to the doubtful set because of the spurious loyalty reflected
through the low level of satisfaction. Several purchases in these sets may reflect
inertia purchases rather than commitment to the brand. This may be due to the
non-availability of competing brands or because of the lack of involvement on
the part of the customer in making the brand choice. High intention to buy
(wherever reflected) may be due to brand familiarity than any specific logical
reasoning. Subset 1 points directly to inertia. In subset 2, the high intention to
buy may be due to the psychological implication of the brand appeal (as this
situation is associated with a low degree of satisfaction which may be because
of the ambiguity involved in the evaluation of functional benefits). Subsets 3
and 4 may also point to inertia purchases.
Primarily, this subset is associated with low satisfaction and hence further
research is required on whether
(i) consumers have sufficient levels of involvement in buying these products
(specifically on functional benefits); and
(ii) brand familiarity provides the extrinsic cues (brand name and packaging),
influence the purchase and why they fail to get translated into a higher level of
satisfaction.
If inertia purchases reveal that consumers buy the brand because of the non-
availability of other brands, then the company may have to quickly improve the
quality of the brand and also create consumer involvement in the brand (through
trial purchases or through an appropriate campaign). If this is not done,
competitive brands may attack the distribution front (availability aspects) and
take away the brand from the mindset of consumers. This situation (doubtful
set) may occur in specific geographical areas where there may be a few brands
familiar to the consumers competing with generic offerings (unbranded ones).
Besides, most offerings in this situation may not provide the quality desired by
consumers. Commodities like sugar, rice, edible oils and snacks (especially in
the developing countries) may be categories which may draw consumers in this
kind of doubtful set.
Transaction set. This set consists of subsets characterized by a low level of
satisfaction and loyalty, and hence the purchases made may be one of inertia
types. This situation is likely to occur when consumers are highly price sensitive
and when there are several brands in a price war situation (tinplate used for
edible oil packaging in India, low-end chemicals used for low-price, low-quality
end uses are examples). There is tremendous opportunity in this situation to
build a brand, create awareness about the superiority of benefits offered by the
brand and ensure that consumers get involved in the brand purchase. Intention
of the customer to buy and share may in fact be fickle and fluctuating in a
situation of this kind where consumers are highly price conscious.
The doubtful and transaction sets would require the marketing mix strategies to
ensure that consumers are migrated to at least the potential set. In certain
categories like low-end chemicals, a company could even employ state-of-the-
art technology (customization, for example) to create involvement in a category
and gather a base of consumers who could be associated with the potential set.
For example, in a price war situation, a chemical manufacturing company may
produce a washing solution which could vary in its odour, colour or chemical
properties depending on the end use. This would create customers who could be
associated with the potential or even the hard-core set.
Price bundling can be formulated for each of the relationships based on
customer requirements, combinations of price bundling options and the
profitability aspects which are relevant.
Pricing an offering or bundling an offering based on the customer's share of the
wallet (the money spent by a customer on a brand as a percentage of the
customer's total requirements in the respective product category) and the degree
of loyalty is a practical strategy to address various segments associated with this
two-way classification. A McKinsey study has opened up several segments
based on this classification. For example, an Ideal segment is one which has a
strong loyalty (can be associated with repeat buying and advocacy of the brand)
and in which consumers spend a high percentage of money on the brand as a
part of their total expenses on the category. A Fertile segment is one in which
consumers may not spend a high percentage of money on the brand as a part of
their total requirements of the category, but may exhibit strong loyalty. The
marketing implications are different for these two segments of consumers. For
the Ideal segment, a company can introduce a special kind of relationship
programme (exclusive to this segment) and may offer them a number of
privileges. The company may deal with the fertile segment by focusing more
on the needs of consumers in this segment and by expending more of selling
efforts, as this segment has a high potential.

PLATE 1 Kannan Devan brand of tea is positioned on the benefit of strong taste.

PLATE 2 Though Chakra Gold mates a mention of taste of the tea, it also has a symbolic aspect of
relationshipgold is used as a metaphor signifying precious, sought after and preserved with the
objective of such associations to be linked to the brand.

PLATE 3 Titan's Fastrack goggles is positioned towards trendy, urban and fun-loving youth.
Fastrack in both its categories, watches and goggles, is positioned as a brand for the youth, reinforced
through its co-branded watches, with the iconic MTV.

PLATE 4 Van Heusen reflects the influence of intrinsic and extrinsic motivational factors on its
target segmentthe quiet confidence is intrinsic motivator and the elegant and sophisticated
appearance that goes with the inner confidence is the extrinsic motivator.

PLATE 5 Indica V2 communicates the power of its value-based offering in the highly competitive
compact passenger car segment.

PLATE 6 Parry's sugar is attempting to brand itself in the commodity market of sugar. The
advertisement, drawn from its TV commercial uses a metaphorthe innocence of a child linked to
the purity of the brand Parry.

PLATE 7 Amitabh Bachchan's charisma and credibility (inspite of being in a different age group)
makes him an ideal fit for a brand like Cadbury (in an impulsive category like chocolate). Research
also shows that the celebrity scores high on the fit with the brand.

PLATE 8 Exclusivity, class and a distinctive lifestyle provide the status appeal to Louis Philippe
one of the ways to create a strong reference group.

PLATE 9 Sunfeast the brand of biscuit from ITC uses a charismatic celebrity associated with fun and
frolic. This adds on to the impulsive nature of the category.

PLATE 10 Metlife uses uncertainty in life to appeal to consumer segments with a fast paced lifestyle
full of aspirations.

PLATE 11 Cote was probably the first brand in India to create a brand with a retro-effect appealing
to the emotion of nostalgia.

PLATE 12 Coke's Thanda reflects the efforts of the company to appeal to the rural market.
1
Shapiro B.P., Rangan V.K., Moriarty R.T. and Ross E.B., Manage customers
for profits (not just sales), Harward Buisness Review, Sept-Oct, 1987.
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Marketing and Branding: The Indian Scenario


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3: Dimensions of Pricing

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5: Role of Promotion, Marketing Communication and Marketing Mix Elements in Brand Building

4
Psychological Dimensions in Marketing and
Implications for Marketing Strategies
The Theme of Psychological Dimensions
With consumer behaviour being the focus of any marketing strategy, this
chapter addresses several aspects of consumer behaviour, which will be of use
in the context of marketing consumer products. While the conceptual aspects of
the subject appear to be largely theoretical, it is these concepts which enable
marketers to succeed in the marketplace. Consumer insights, associated with
both covert and overt behaviour, are important in several aspects of marketing a
product/service. The theme will help the reader to understand the importance of
approaching a mundane product, and that, required to approach a new concept
productfrom the consumers perspective. The theme throws light on how
individual psychological factors contribute to strategic elements of the
marketing mix. The examples used with each of the concepts illustrate the
nuances of integrating individual factors into the overall strategy, after
understanding the importance of each psychological factor. The importance of
various psychological factors in the decision-making process of consumers is
also highlighted. Adapting to the needs of consumers, differentiating (with not
only rationality, but with appropriate psychological irrationality) the brand
while such a process is taking place and sustaining the brand differentiation are
some of the key topical aspects of any marketing strategy, and this chapter
contributes to such important elements of the strategy.
Behavioural Dimensions of Marketing
TOUCH OF REALITY
Consumer behaviour with regard to consumer products is not purely governed
by plain logic ingrained in the psyche of consumers. There are several
imponderables that cannot be quantified by marketers and the domain of
consumer behaviour deals with such imponderables as an important dimension.
In 1985. the Coca-Cola Company decided to terminate its popular soft drink
Coca-Cola and replace it with a new formulaNew Coke. Coca-Cola is the
world's most recognized brand, with sales of about one billion drinks a day.
During the 1950s. Coca-Cola's rival Pepsi registered just about 20 per cent of
Coca-Cola's sale. During the next decade. Pepsi repositioned itself as the drink
for the new generation and followed this up with the Pepsi Challenge which
was about blind taste tests. Consumers were asked to taste both the offerings
(Pepsi and Coca-Cola) without knowing the brand names; and the exercise by
Pepsi revealed that Pepsi was a better choice. This fact was also used by Pepsi
in its advertising campaign. Coca-Cola, which was steadily losing its market
share, then decided to rework its formula and introduce its New Coke. The
Coca-Cola Company carried out taste tests among 2,00,000 consumers before
convincing itself about the superiority of its new taste prior to launching New
Coke. In fact, the taste tests were overwhelmingly convincing. On 23rd April
1985, New Coke was introduced and the old version was off the markets, and
this decision was later referred to as the biggest marketing blunder of all time.
A large percentage of the consumer population decided to boycott the new
offering and the company subsequently announced the arrival of the old version,
naming it asClassic Coke and withdrawing New Coke within a short time. The
company had completely overlooked the cult-like following the brand had
among consumers with their emotional bonding with the brand. Besides,
consumers did not want the company to change its real thinga brand
perception created and nurtured by the company for a long time. How can the
real thing change, may have been the perception of such passionate consumers
involved with the brand.
Marketing as a discipline has been developed by marketers in the past few
decades in the Indian context. In today's scenario of competitive offerings,
diversity of consumer preferences and proliferation of brands, consumer
behaviour has become extremely important for marketing decisions whether it
be marketing mix elements, segmentation strategies or exploring new
dimensions in consumer orientation in a changing environment. Several
interesting trends could be expected in the new millennium. Leisure and luxury
markets have boomed in recent times. Shampoos and creams, which were
within the affordability limits of only the elite a decade ago, are today marketed
in sachets across the length and breadth of the country. Westernization is
reflected in the selection of product categories and brands. Jeans clothing and
the brands which exist in this category is an example of the impact of
westernization. Even in a category of this kind, an innovative marketer has built
up an ethnic brand (Ruf & Tuf). applying the principles of consumer behaviour.
Shifts in psychographic and lifestyle changes have given rise to new eating
habits (fast foods, eat-outs and socializing during eating). A cross-section of
consumers may start consuming foods while being on the move in cars (this
trend called grazing is already reflected in developed countries). This
behaviour, in turn, may give rise to products like refrigerated glove apartments
and cup holders in cars, and perhaps yogurts in tubes. Consumer behaviour
provides the behavioural fit to marketing mix elements which need to be
changed from time to time by marketers.
TOUCH OF REALITY
The European Union has banned cigarette advertising in any form from August
2005. Cigarette companies spend about $250 million to sponsor Formula One
racing. Formula One is perhaps the last major sporting club to have continued
with cigarette advertising. The Olympic Games stopped it during the late 1960s
and Virginia Slim was sponsoring women's tennis till the early 1990s.
Approximately 150 million TV viewers view the event and this reflects the
importance of such a sponsorship for cigarette brands involved with the event.
Brands are planning an innovative method to continue with the sponsorshipat
least four of the ten Formula One teams are planning to retain the colours which
match the cigarette colour schemes on their cars, after erasing the cigarette
brand names of Marlboro and Lucky Strike. This approach makes use of the
concept of closure associated with the principles of perception. Closure is a
concept which enables consumers to fill in missing information (may be
visuals or brands or any other element) if they are presented information they
are already familiar with. Consumers have become familiar with leading brands
of cigarettes and their advertisements for the past several decades, and exposing
them to colours/designs associated with brands without the brand names
prompts them to spontaneously fill in the respective brand name. The concept
of perception is discussed further in this section.
Consumer behaviour deals with the psychological process of decision-making
by consumers in a social context, which also exerts group pressures on them. A
consumer buying a brand of two-wheeler, for example, is motivated by a need
to own the category, decide on the brand (based on the functional benefits and
emotional benefits) and buy the brand from an outlet. This buying behaviour
involves several psychological factors which govern the individual thinking
process (like motivation, personality, perception and attitude), decision-making
steps involved in buying (decision-making process), interaction of the consumer
with several groups like friends, family members and colleagues (group-
oriented concepts) and selection of the brand and outlet, depending on prices
and features and emotional appeals (marketing mix elements in a given
environment). Consumer behaviour links these four aspects to enable a marketer
to formulate marketing strategies. The basic elements of consumer behaviour
are: what the consumer buys, how he/she buys, when and where he/she buys
and how much he/she buys. This can be understood by the interaction of
different factors associated with consumer behaviour, as shown in the following
diagram.

Psychological factors
These factors deal with the psychological processes that are built into the
individual consumer's system. The important aspect to be noted with regard to
these psychological factors is that these factors are interlinked with one another
and these inter-linkages result in behaviour. For example, though perceptions
and attitudes are conceptually different in terms of their applications in a
marketing context, attitudes also contain a perceptual component. The body of
consumer behaviour views them distinctively to focus on specific applications.
This is done to provide conceptual clarity to students of consumer behaviour.
For example, in a product category like soaps or tea, perception may be
important, as positioning a brand indicates the differentiated
advantage/proposition associated with the brand. In a category like dishwasher,
attitudinal models may be important, as the objective of a marketer would be to
create an attitude towards the product, namely the dishwasher (incidentally,
perception may also be equally important to create a market for the brand if too
many brands enter the market). Personality concepts are important among
psychological factors because they enable a brand to associate itself emotionally
with the appropriate target segment of consumers. In most categories,
consumers do not just look for functional benefits; they also seek symbolic
benefits. Symbolic benefits are those which are perceived by consumers beyond
the functional qualities of the brand. These symbolic benefits may be emotional
in nature (gift as an emotionTitan), they may revolve around self-concepts
(Louis Philippe) (See Plate 8), may be associated with group appeals (Pepsi) or
may simply be associated with human traits (adventurous and rugged
Marlboro cigarettes) or with status (Mont Blanc pens). The personality of the
brand (which is formulated with personality or reference group principles) may
be reflected through the brand imagery. Brand imagery is strongly associated
with perception. As stated earlier, this also illustrates the fact that psychological
factors are inter-linked.
Learning is a concept which deals with the strength of associations and the
impact of stimulus on the response of consumers in a given situation. A stimulus
is any information input to any of the sensory organs (an advertisement is an
input to the eye and the accompanying jingle in the form of music or a song is
an input to the ear). The strength of associations is used extensively in the
formulation of advertisements to create the desired association with the brand
which is being advertised. Concepts of learning are also useful in exploring
brand loyalty, which is a topical area of interest to marketers, given the cost of
acquiring new consumers.
TOUCH OF REALITY
Consumer behaviour is useful to probe into several aspects of consumers'
psyche. Perceived risk and habit are two considerations, which may be useful
for analysing the behaviour of consumers towards the introduction of a new
product. When the perceived risk associated with the new offering is low and
influence of consumers habits is low, consumers may be receptive to a new
experience that also provides value. Fast moving consumer goods (FMCG)
categories that launch variants will find this approach most suitable. A brand of
shaving gel (Gillette has launched such a variant to be used with a brush) may
not be associated with a high perceived risk and shaving is a strongly
entrenched habit among consumers who shave regularly. But, consumers who
are using the traditional cream will be receptive to change over to the gel if it
offers a superior shaving experience at a price comparable to the present price,
which consumers are paying for their creams. When the perceived risk is high
and the influence of habit is low, consumers may require reassurance about the
performance of the product and a money-back guarantee if they are not
satisfied, to try out the new offering. Electrical shaving systems and electrical
toothbrushes are examples. When the perceived risk is low and the influence of
habits of consumers is high, brand positioning should ensure that the consumer
does not perceive the new offering to disrupt the habit. This aspect is applicable
to categories that have links with habits which have been a part of the social
culture for a long time. Kellogg's cornflakes is an interesting point. The brand
could have positioned itself as a healthy snack rather than as a breakfast
substitute in the Indian context, given the strong breakfast habits of Indians in
terms of the traditional food consumed for such an occasion. When both the
perceived risk and the influence of habits of consumers are high, value
reassurance to arrest perceived risk and word of mouth (WOM) about the value
offered by the brand are the key factors in diffusing the brand in the respective
market. Internet banking in India is an example. Consumers have a high
perceived risk with regard to the security aspects of Internet banking and by
habit too, many consumers may be reluctant to replace their off-line habit with
online banking. Banks (brands) have to clearly differentiate those banking
services which will provide substantial value to the respective segment and
position these services to communicate the value and security measures
involved in Internet banking with regard to the services identified. Once
consumers are satisfied with the delivery of value, there is likely to be good
WOM, which brings in more customers. In a service like banking, positive
WOM about the value offered is vital. There are several banks offering Internet
banking facility, but the challenge for such banks is to identify what constitutes
value for a segment and market the service, rather than offering a string of
services as a package that could confuse consumers.
Consumer decision-making
The area of consumer decision-making (CDM) deals with the sequence of steps
involved in the decision-making process and also distinguishes the decision-
making process with regard to low-involvement and high-involvement products.
CDM is helpful for the marketer to focus on a specific stage of the consumer
decision-making process. Even an established brand of shampoo like Clinic will
have to maintain a top of the mind recall through constant advertising (to
maintain brand awareness levels). A consumer durable like a mixer (Sumeet),
besides advertising, will have to continue with the demonstration of the brand
(which it has followed for a number of years) at the retail outlet. Demonstration
at the retail outlets is important because when the consumer enters the
evaluation of alternatives stage, he/she is faced with a barrage of options from
even local brands of mixers.
The post-purchase phase of the decision-making process is essential for
marketers to ensure that consumers are satisfied after the purchase has been
made. One more complex but interesting aspect of this phase is how consumers
get reconciled (or satisfied) with the brand they have purchased in a situation
where they are faced with similar or equally attractive propositions of
competing brands. LG brand of refrigerator offers the proposition of preserving
nutrition in foods stored in the refrigerator and BPL's Converter offers the
option of converting the freezer into storage space in the refrigerator. The post-
purchase phase heightens the impact of competing brands on the psyche of
consumers after they have purchased a brand.
TOUCH OF REALITY
Getting the attention of consumers is an important stage in CDM. Consumers
will attend to a message either in the information stage of decision-making or
during the evaluation stage of decision-making, which is very close to purchase.
Advertisers attempt several non-conventional ways to capture the attention span
of consumers. Mini USA, a sports model car from BMW, put the model on top
of a sports utility vehicle and displayed it in professional football stands,
creating tremendous amount of awareness. Closer home, Fa the fragrance brand
created fragrance zones in cinema halls and sprayed the product perfume. Surf
Excel and ICICI Prudential use mailers through dhabbawalas (workers who
carry meals to office employees in cycles) in Mumbai. These mailers were
inserted into the bags containing lunch boxes. There are instances of apples
being used to carry stickers of brands in the US markets Product placement in
films is emerging as a powerful medium. The brand is shown at the backdrop of
a sequence in the film (Golden Eye used several brands in the electronic
category), and several Hindi films are examples. Unconventional advertising
would work when the context in which it is used is in synergy with the overall
brand association. For instance, the film character James Bond normally uses
electronic gadgets which are made from state-of-the-art technology (in the older
movies, there were gadgets made based on science fiction!), and hence leading
brands in the category wilt find that this would reinforce their state-of-the-art
image. Making the brands too familiar may weaken the interest in the minds of
the consumers, as also if several unconventional approaches are attempted with
a brand.
Abstract levels of consumer's knowledge
The knowledge of consumers across product categories could be analysed in
terms of abstract levels. A cricket bat could have the following levels of
abstraction.
Level 1: Cricket bat as a sports equipment made of wood. Level 2: Cricket bat
as a sports equipment which is used for playing cricket.
Level 3: Cricket bat as a brand that helps the consumer to improve the
performance.
Level 4: Cricket bat as a brand of bat which is associated with enjoyment and
pleasure.
Levels of abstraction are important because it enables the marketer to focus on
a specific psychological factor or a decision-making stage. They are also useful
in exploring the broad spectrum of marketing communications. For example,
there are several brands of tetra-pack soft drinks. When Britannia launched Zip
Sip, a brand of tetra-packed milk drink on the health platform, it found that
consumers perceived the brand differently from the category of tetra-packed
drinks which were normally associated with fun and frolic. A health
positioning could have given Zip Sip a therapeutic touch and hence consumers
may not have perceived it along with other tetra-packed drinks. Britannia
relaunched the drink under the Milkman brand. In this example, changing the
perception was important. In some categories, the concept may have to be
sold; in certain other categories, brand personality may have to be emphasized
(as indicated in the cricket bat exampleat a higher level of abstraction, the
cricket bat may require a brand personality to convey the enjoyment associated
with the offering).
TOUCH OF REALITY
Consumers, may, think that they are very rational, but they are in fact influenced
by irrational behaviour quite often. This kind of irrational behaviour is just not
limited to selecting brands with symbolic appeal, which is a conspicuous
manner in which consumers choose their brands: to that extent, consumers may
feel that they have extended their rational choice. Recent research studies have
explored a strong relationship between emotion and trust. Interestingly, the type
of emotion experienced by an individual at a respective point of time influences
the decision-making process of which involves trust, if the decision-making
situation occurs close to the phase when emotion is being experienced by the
individual. Happiness, gratitude anger and guilt have been found to influence
trust. Another interesting finding from research is that emotional moods can be
manipulated by external stimulus. For example, a consumer may find a brand in
a specific category trustworthy after being impressed by the TV commercial of
the brand, which may have a happy story woven around it. Marketers can
research context-based emotion to promote brands with appropriate
advertisements and also explore how positive emotions affect consumers at
retail outlets. A new insurance brand, which is relatively unknown to the
context, can use the guilt appeal to reach out to the target segment (evoking the
guilt of ignoring the family, to motivate the segment to insure, with an
appropriate appeal). This may enhance the probability of the brand being
accepted as a trustworthy brand. The example is suggested as an application of
the research findings on trust. The idea is to suggest how an unknown brand in a
category with a perceived risk association can make use of such concepts to get
into consideration the set of consumers. The eventual success of the brand will
depend on several factors.
Group concepts
Reference group concept plays an important role in marketing communications.
Celebrity advertising has been used widely in recent times by marketers.
Testimonial advertisements and endorsements is an important area of interest to
marketers. Colgate, Coke, Pepsi, Lux, Boost, Samsung and Grasim are some of
the brands which have used celebrity advertisements. WOM is another powerful
group concept which will be useful to marketers. There are a number of
conceptual aspects which need to be considered by marketers before finalizing
on celebrity advertisements. The clutter of advertisements in a category, the
characteristics of the celebrity, the target segment and the objectives of using a
celebrity are some of the important considerations which will have to be
considered while applying group concepts to celebrity advertisements.
TOUCH OF REALITY
The world of experiential marketing broadly has four phases which are
intertwined with one another. Several aspects of consumer behaviour are
associated with these four phases and consumer behaviour concepts can be
made use of to enhance the experiential levels of these four phases. Almost for
any product/service category, the four experiential layers can be applied. For
instance, if biscuits are considered, the taste offered by Sunfeast brand (See
Plate 9) is associated with the brand experience (brand level). Consumers will
differentiate such a brand experience based on their experience with the product
category, which is the experience at the category level (in this context, the
category is biscuits). The consumption situation experience (at the consumption
level) is the experience of the consumer at the time when it is consumed. A
biscuit may be consumed at teatime, as a mid-morning snack or as an evening
snack. The positioning of the brand with regard to consumption of the biscuit
enhances the perception of the consumer with regard to the consumption
situation. Finally, there may be a cultural/social situation associated with
consumption of the biscuit. For example, having the biscuit while socializing
with friends adds a social dimension to consumption of the biscuit. Similarly, a
two-wheeler brand positioned with a reference group appeal (a group whose
attitude, value and consumption behaviour will appeal to a group of consumers)
has a social/cultural experience associated with it. Brands can make use of the
four phases of experiential aspects depending on their target segment and
product categories.
Consumer behaviour and marketing mix elements
Consumer behaviour enables a marketer to plan and fine-tune marketing mix
elements in a changing environment. Zip Sip, an example mentioned earlier,
was re-launched as Milkman with better product attributes. Titan developed
Sonata brand when it found that the brand Titan had an upmarket overtone in
the perception of consumers. Onida, which was launched as a premium brand of
TV, introduced a sub-brand logo to create a value-based perception among
consumers. There may be a need to analyse consumer behaviour strategies in
combination with the marketing mix elements of specific brands to obtain
insights into a brand's success/failure. This kind of analysis may involve more
than one aspect of consumer behaviour and could cover a combination of
concepts. These concepts, which explain a brand's success, may vary from one
product category to another, given the nature and intensity of competition in
each product category. Marketers would benefit if they understand the linkages
across concepts in a given product/market situation. This kind of analysis would
result in the following advantages.
(i) The marketer could formulate a brand's strategy after considering a number
of concepts associated with the competitive situation.
(ii) A pioneering brand would have followed a specific strategy for success and
it would have to combine a few strategies to sustain the success achieved.
(iii) A follower brand would be interested in identifying gaps in the strategies
of the pioneering brand, and a combination of concepts are likely to be helpful.
(iv) In a number of consumer product categories (both FMCG and durables),
advertising or marketing communication (positioning strategies in particular) is
given primary importance in the formulation of a brand's strategy. While this
may be critical, marketers would also have to be aware of the fact that other
elements of the marketing mix are equally important. In a competitive
environment, positioning would have to be strongly supported by other elements
of the marketing mix.
(v) A combination of concepts in analysing a brand's success or failure could
also help the brand to view brand differentiation with regard to the total
offerings of the company in the respective product category. For example, in the
category of beverages, tea is an important product-line for Hindustan Lever
Limited. While Red Label may be using the functional attribute of vitamins to
enhance the brand perception among consumers, Lipton's iced lemon tea may
have to use certain strategies to create an attitude among a different target
segment. A-l may be another brand targeted towards the lower end of the tea
market and the one, which is positioned on the aspiration of the masses. While
brand personality may be important for all the brands in the product-line, Red
Label already has a personality cultivated over a period of time and
repositioning the brand is the critical strategy. Lipton's iced lemon tea has to
focus on creating an attitude and A-l has to sustain the brand personality already
created by an advertising campaign. The three brands in the product-line require
a focus on different concepts with regard to the formulation of strategies, and
these strategies would primarily be instrumental in creating the brand
differentiation with regard to the product-line of tea.
The following example illustrates the usage of linking concepts. An attempt has
been made to link a brand's strategies with an appropriate combination of
consumer behaviour concepts, with a view to provide conceptual linkages which
may be of interest to marketing managers.
Brand: Tiger from Britannia
Product category: Biscuits
Concepts involved: Perception, culture, diffusion of innovation
The Indian context has a number of product categories which are dominated (or
where there is a significant share of) by the unorganized sector. Biscuit is a
category which has a high share of the unorganized market. A major part of
consumption occurs at the lower end of the market (in terms of price points).
The unorganized market consists of several local brands (catering to localized
markets in terms of geographical regions) and a number of unbranded offerings
from bakeries. There was a distinctive need for a brand which would offer value
at an appropriate price point (competing in the unorganized market). There was
a need for a brand to convey the value proposition through an effective
advertising campaignreassuring the consumers about the quality of the
product. Britannia introduced Tiger at the lower end of the market, making use
of its huge network of retailing, and created a campaign which conveyed the
value perception among the target consumers. The value was not just in terms of
the price point; it was in terms of the crispiness of the offering and the nutritive
value it contained. Britannia's association also enhanced the perception of the
brand among the target segment. There was a stimulus from the past (Britannia
brand), a stimulus from the present (Tiger brand to signify the new offering),
and there was also an effective communication strategy which reinforced the
positioning of the brandhigh value (when compared with competing offerings
in the unorganized market) at a relatively lower price point. The figure was the
brand Tiger and the ground was the various positive associations which could
centre around Britannia. The retail network (in semi-urban and rural areas, apart
from urban areas) conveyed the affordability aspects by associating themselves
with the brand (as against some offerings of the company which are urban
centric). The overall brand perception was created through a combination of
elements associated with die market mix.
Consumption of biscuits (probably even as a breakfast item) is a widely familiar
practice in the Indian context. It is a part of the eating culture in the country.
Britannia, by providing an offering which was affordable for the masses and one
which provided value, reinforced the cultural practice. The value would have
created a favourable perception among the target segment, which would have
compared the offering with those from the unorganized sector. This was made
possible in a category in which the diffusion was high but there was a gap (in
terms of value) at the lower end of the market. The characteristic of diffusion,
namely the relative advantage in terms of value was instrumental in making
Tiger a success.
Importance of motivation, ability and opportunity
Consumer behaviour involves the study of an individual's thinking processes
like perception, attitude, teaming aspects and personality. It also involves group
concepts like group behaviour, reference groups and socialization within a
cultural context. While several aspects of consumer behaviour and its links
provide a framework for the study of consumer behaviour, the motivation,
ability and opportunity (MAO) concerned with the consumer provide a
fundamental and important foundation for strategies formulated with the study
of consumer behaviour.
Motivation is the drive which impels a consumer into action towards the
accomplishment of a goal. A consumer who has the need for entertainment may
listen to a CD, visit a movie house or watch a TV channel after buying a TV. It
is important to note that the motivation would depend on personal relevance,
self-concept or involvement of a consumer with a specific situation/product
category. A consumer buying a soft drink, motivated by a need to quench
his/her thirst or to just have a drink, could express a low involvement with
regard to this buying situation vis--vis the same consumer attempting to buy a
TV. The involvement levels are likely to be more significant when a consumer
selects an apparel which would be in tune with his/her status. It should be noted
that engaging in goal-related behaviour is different from achieving the goal
itself. Motivation creates goal-related behaviours, but there are other dimensions
which would complete the accomplishment of the goal. A consumer may be
interested in being fit and may have the motivation and ability (intelligence,
knowledge and money) to select and become a member of a fitness club, but the
accomplishment of the goal would also depend on the opportunity available to
him/her and this may simply be the availability of time to carry out the schedule
prescribed by the fitness club.
The MAO of a consumer presents a number of important dimensions which
cannot be ignored by the marketer; for example, even for a brand of soap (which
figures in a low-involvement decision-making situation). While advertising for
the brand of soap, a marketer has to consider the opportunity with regard to
factors like distraction, and repetition of the advertising message may have to be
considered when the promotional strategy is formulated. A premium brand of
soap which targets a consumer in the upper segment of the market may prefer to
advertise the brand on the FM channel if it finds out that the segment is in the
habit of tuning to this channel while driving to work (avoiding the conventional
method of getting into the TV advertisement clutter). The strategy in this
situation would provide an opportunity for the marketer to avoid the distraction
caused by other advertisements (in relative terms on a TV channel which may
carry more number of advertisements and also because of the brand's unique
strategy of advertising on FM) and would also provide an opportunity to reach
out to the consumer more number of times (repetition also influences
information processing) to carry the brands message. Besides, the consumer
may also be time-compressed (pressurized for time) because of the busy
schedule and may spend very little time watching TV. A direct marketing
company may offer the provision of 24-hour ordering if it targets nuclear
working urban families. MAO provides several interesting combinations which
could be explored by marketers before they formulate marketing mix strategies.
The Concept of Perception
Sony, Raymond's and Mercedez are some of the brand names with which
consumers are familiar and these names spontaneously spark off associations
(brand images) based on the past encounters consumers may have had with
regard to these brands. The encounters may be purchase associations or the
exposure they have obtained through the advertising campaigns of these brands.
As in several aspects of life, it is the perception which mattersthe spontaneous
associations which brands, human beings and companies trigger when
individuals encounter their images. Perception is very unique to each
individual, and each person views the world through his/her own perception and
it is not just objective realityfive persons could have their own version of
describing the brand benefits according to their individual perception. Rolex, an
upmarket global brand, may be viewed by some consumers as a brand which
reinforces their personality by reflecting a prestige appeal; it may also be
viewed by some consumers as an expensive brand which is wasteful indulgence.
The difference in the interpretation is reflected in the differing perception and
there is no such thing as objective reality in this context, which has been given
as an example of how individuals differ in the meaning they add to what has
been sensed by them.
In simple terms, perception is the meaning added by an individual to the
information sensed by the individual through the sensory receptors (sensory
organs). The incoming stimulus interacts with the stored information (in the
memory of the individual) to give rise to perception. The following figure
illustrates the mechanism of perception.

TOUCH OF REALITY
Perception, which is associated with the meaning's that consumers attach to
brands (in a branding context), could have several critical implications for
marketers. Haier, a Chinese brand which has made considerable headway in the
highly competitive US appliances market (which has very strong brands like
Electrolux and Whirlpool), has entered India, but has opted not to make use of
its Chinese associations in its advertising campaigns. Colgate is a brand which
has several variants like Gel, Total and Herbal. A few decades ago, Colgate
would have had a specific association, but in a context in which there are
several variants for different types of target segments, there may be a need for
the brand to create specific brand associations which appeal to the respective
target segments. These associations will have to be managed in such a way that
they do not contradict or differ radically from the past associations created by
the brand. Britannia has created a health association around its umbrella brand,
lodex, which was a pioneering brand in the category of balm, had a traditional
sprain association: and the follower brand Moov created a back-ache
specialist association.
Pepsi advertisement (TV commercial) telecast during a cricket match may he a
stimulus. The stimulus interacts with the information already stored in the mind
of a consumer. The stored information may be associated with cola advertising,
specific brands in the aerated soft drinks category or the association which has
been added to the brands which are there in the cola category (these aspects are
covered in the chapter on Learning Principles). The individual is able to
spontaneously associate the brand Pepsi with cola, trendy, young generation
attributes.
TOUCH OF REALITY
Consumers do not just buy brands for what they can do; they also buy them for
what they meansymbolism involves symbols associated with a brand which
can trigger positive emotions. These could be oriented towards self-images of
consumers, group affiliations or status dimensions. When a consumer buys
Nike, he or she may not be buying the brand because of its utilitarian
(functional) value; the consumer may also perceive that his/her self-image gets
an elevation by being associated with the group of youth who are perceived as
fit, independent and modern because they are seen with the brand. Consumers
buying Rolex or Omega may feel that they are a part of the higher strata of the
society who are able to afford such status or prestige symbols. Saturn (the car
from General Motors) not only provided a comfort car with value, but was also
perceived as an in-thing car. The brand also created a club for owners of the
car and brought in a sense of affiliation among the members of the dub. Charms
cigarette brought with it (through its advertising) a feeling of independence and
non-conformist attitude. This may have appealed to a consumer who identifies
himself with a group of new wave youth. A brand may also develop an
imagery which uses both utilitarian value and symbolism. Maruti 800, after
having positioned itself as an economy-based (no-trill) car, has started
advertising it as an aspirational car for the middle-class consumer.
Dynamics of perception
Perception consists of several elementsselection, organization and
interpretation of stimulus. All the elements offer useful points to marketers with
regard to the formulation of communication strategies.
Selection of a stimulus, as stated earlier, depends on attention which could be
brought into the communication through contrast. Jenson & Nicolson, the paint
brand, used full pages in magazine advertisements with a few lines of copy to
enhance the contrast created by the advertisement, in a magazine cluttered with
different kinds of advertisements. Levi's used black and white advertisements in
magazines full of colour advertisements, to bring in contrast. Lack of contrast
can also be used to attract attention. Advertorials (advertisements of brands
which are similar to write-ups about them) could be placed close to the article
in a magazine in such a way that consumers would get into such
advertisements immediately after reading the preceding article. Reader's Digest
carries such advertorials. Contrast could also be attempted on the TV by
placing a TV spot close to the serial which is viewed, in such a way that
viewers would realize that an advertisement is being shown only when they are
well into it. Deltagram, a messaging service introduced in South India, used
this approach during their initial advertising campaign. Selection of a stimulus is
also based on the motivation of the individual with regard to his/her interest
levels in a specific product category. A consumer who is interested in buying a
television (selective attention) is likely to be attuned towards advertisements
which feature TV brands. Selection is also based on the expectation of the
individual. Some brands use unexpected visuals/audio effects to attract
attention. This is done by using unexpected visual/audio elements in the
advertisement. But such elements should take into consideration the match
they have with the category and the benefits offered by a brand. For example, a
brand like LG, which offers innovative and high-quality features, could start the
advertisement as LG is expensive and then have a copy which substantiates
the claim. This is likely to attract attention as consumers in recent times have
been used to freebies and low prices, and there is an unexpected element in the
advertisement. Bacardi, the liquor brand, attracted attention through its
unexpected visual and jingle (when such advertisements were allowed on TV).
Readers can refer to the section on brand building to get more examples related
to how contrast can be applied to marketing communication.
TOUCH OF REALITY
One of the topical areas of research, which will be interesting to academics and
practitioners of marketing alike, is the implication of using different kinds of
brand names. Should brand names convey something about the product offering
which will indicate a meaning consumers are familiar with or should they be
ambiguous and vague to evoke a feeling of novelty among consumers? The
theory of conversational implicature views that consumers will fill in
information to cooperate with the communication, in case they are familiar
with the various elements of communicationthey may add or subtract the
meaning from a communication with which they are familiar. For example, a
brand like Robin Blue (used to provide a blue tinge to white clothes) has
developed its imagery over a period of several decades and any moderate
change in its advertising will be viewed and perceived with its overall imagery.
Another theory, called the theory of incongruency, views that consumers will be
forced to think if there is an ambiguous brand name, which gives little idea
about the offering. Cascade Crash is a soft drink from Gatrode and it gives little
idea about the offering. Consumers may use their cognition (thinking) with the
perception that the marketer is conveying something new and hence such brand
names may be effective. Researchers opine that such ambiguous brand names
will be effective whenever sensory product categories like food and fashion are
involved and may not work with other categories. Both these theories need not
be mutually exclusive and researching the psyche of the target segment is
required before brand names are attempted.
The organization of stimulus involves three concepts, namely figure and ground,
grouping, and closure, and all these concepts offer insights into how an
advertisement may be affected by the perception of consumers. The figure in
any advertisement is well defined, concrete and is in the forefront. The ground
is hazy and continuous. In any advertisement, the figure should always be the
brand name and the unique selling proposition (USP) of the brand. The jingle,
humour or creativity should also be the ground and should not affect the figure
in a negative manner. Ericcson's advertisement for its cellular phones provides
an interesting examplethe brand used humour in its Black Coffee please TV
commercial and it became an effective advertisement. An observational study
among the prospective segment for the brand revealed that though the
advertisement was recalled well by the respondents, they associated the
advertisement with another brand, which incidentally had launched a press
campaign. This clearly reveals that it is not only important to attract attention
through advertisements; it is also essential to ensure that appropriate figure
and ground elements are presented in the advertisements. This is especially
important when creativity is resorted under the clutter of advertisements in
almost any category.
Grouping enables marketers to create associations by grouping stimulus in such
a way that brand associations are developed when consumers associate sets of
stimuli. Liberty used this technique to project Force 10 brand of shoes as a
lifestyle brand. The brand was grouped with burgers, jeans, cola and goggles.
Titan's Fastrack watch brand launched its initial advertising campaign in which
it was associated with a can of soft drink, implying a trendy, young lifestyle
with an overtone of westernization. The brand is positioned towards the youth
who lead a westernized lifestyle. Charms, probably one of the earliest Indian
brands associated with an attitude, grouped the brand with the jeans fabric-
like packaging to appeal to urban youth. Grouping is extensively used to shape
the perception with regard to brands.
Closure is a concept which is associated with an incomplete stimulus.
Individuals express the need for closure by organizing their perception to form a
complete picture. If they are exposed to an incomplete stimulus, they make an
effort to complete it. A circle with a small portion of its periphery missing will
be perceived as a circle. When an individual is exposed to an incomplete
stimulus, there is a build-up of tension in the individual and this motivates
him/her to complete the picture of the stimulus. The concept of closure leads to
a very interesting application in marketinga brand could make use of a TV
commercial (with a visual and a jingle with the audio part), constantly expose
the viewers to the commercial and then play the audio track (or the jingle)
through the radio (especially when FM is catching up) creating an incomplete
perception of the stimulus (TV commercial), making the consumer complete the
perception by recalling the visual images associated with the jingle used in the
TV spot. The theory of conversational implicature is related to the closure
aspect of perception. Yet another associated application is the development of
brand property, which has a long-term impact on brand association. This
association, based on the property of the brand (achieved usually by repeated
advertising and sustained association), serves as a differentiator and enables the
brand to maintain a unique image in the category. Titan's Mozart score (jingle)
and Give me red (reflecting power) associated with Eveready batteries could
be brand properties. This could be extremely effective in a low-involvement
category like batteries. The red (power association) combined with the youth
image appealed to younger generation, especially at a time when walkman,
cameras and cellular phones were catching up in urban markets. Kellogg's, in
some markets, uses hoardings which does not spell-out the brand name
completely, forcing the viewer to mentally experience closure and every time
this happens, it could have a cumulative impact on the consumer.
Perceptual interpretation is unique to the individual as adding meaning to what
has been sensed is based on the individual's experience. Marketers would have
to be careful when they choose brand names for their product categories. The
past image in the stored memory should not create an interpretation, which
would be unfavourable to the marketer. A snow thrower named Snow Pup was
unsuccessful because consumers interpreted the brand name (stimulus) as a toy.
The company changed the brand name to Toro and the product became a
success. Product design may also influence interpretation of the stimulus
(picture of the product). Chrysler designed and advertised one of its models as
minivans and sold more of them than such offerings from competitors who did
not position their offerings on such lines. In the Indian context, Hero Honda
Street was a product (two-wheeler) which had several city-friendly features.
But, the design could have reminded consumers of the M-80 mopeds which
were popular during the 1980s. Further, there was a price difference between the
two offerings (Street was introduced at the higher end of the two-wheeler
market and M-80 was associated with the lower end of the market). The
similarity in design perhaps created a barrier in the minds of the consumers who
had interpreted the offering of Hero Honda Street in an unfavourable manner.
Decades ago, Lever Brothers introduced Sunlight dish-washing liquid in the US.
The company, to its shock, found a cross-section of consumers using the
product as a tea additivebecause the packaging had a photograph of lime
printed on it and consumers who were used to lime tea interpreted that the
product could be used with tea.
Categorization is also an extended concept associated with interpretation of
stimulus. Consumers tend to associate any stimulus with a group of stimulus
they are familiar with. For example, when microwave-ovens were introduced,
even in developed markets, consumers associated them with kitchen appliances
before the product concept was familiar to them. Hero Honda's Street is another
example which would fit-in with the principle of categorization. Marketers
should be careful in product design, advertising and branding to ensure that
unfavourable categorization does not occur in the mind of the consumer. 7 up
re-launched itself as an uncola drink in the US and opened up a new category
in the psyche of consumers. Branding jewellery as Black Pearl and advertising it
with a celebrity endorsement may lead consumers to think that the brand is
expensive (even if price is not explicitly stated). Advertising a beer brand as
LITE may make consumers interpret it as light in calories (even when it is not
explicitly stated). Positioning strategies should take into consideration the
interpretation of the copy and the visual projected by advertisements. If
Raymond's is for the complete man, Digjam is the happening fabric for the
happening people. Given the situation that both brands are at the premium end
of the textile market, Raymond's may appeal to the middle-aged consumer while
Digjam may attract younger consumers. Wagon R positioned itself as a multi-
utility vehicle to distance itself from Zen, as both the brands are from Maruti.
TOUCH OF REALITY
Any element of a brand which is amenable for image development adds to the
image part of the brand which is distinctively different from the core offering
of the brand. The image associations create the perception surrounding the
brand, which is a combination of the core offering and the image. For
example, a cola named Sip with a different colour or a different bottle shape
cannot produce the same set of associations connected with Pepsi or Coke. In
certain cases, the core offering which would include the features of the brand
could also contribute to the image of the brand. Certain variants of Volvo car
brand known for safety, have additional gears though they are positioned as
family cars (which are different from sports cars) to cater to the perception of
target consumers in an appropriate manner. KBC (a quiz contest made popular
by Star TV channel) would be always associated with the well-known celebrity
who was conducting the quiz (regardless of the content of the quiz).
Perception and prices
Prices have always been used as an input to perception. It is not uncommon for
consumers to equate high prices with high quality (especially if backed up by
appropriate associations like a premium brand name or a premium retail outlet
with up-market ambience). In several product categories like TVs,
confectionery and fast foods, consumers compare the brand's price with a price
which they have in their mindinternal reference prices. A number of brands of
colour televisions price their products below Rs 10,000 as consumers may have
this as their internal reference price. Topaz, a popular blade among the masses,
did not increase its price for a long time as this may have affected the perception
of consumers. Soft drink manufacturers like Coke, Pepsi and confectionery
brands like Cadbury's and Nestle are concerned with price points especially at
the entry level (minimum prices). The re-emergence of 200 ml bottles in soft-
drinks at Rs 5 (the price was revised later) and the Rs 5 price point in
chocolates, 50 paise price points in confectionery and the Rs 2 pricing of
Nestle's liquid chocolate are examples of internal reference prices taken as an
indication of pricing offerings. External reference prices are those which
consumers compare across outlets for the same brand. Price discounts, offered
by different retail outlets in the category of consumer durables is an example. A
consumer wanting to buy a model of Videocon TV may compare the external
prices for the same brand and model across retail outlets. This aspect can also be
found in men's ready-made weara category in which leading brands like
Louis Philippe, Arrow or Park Avenue have factory outlets which offer a
discounted price for select offerings. These outlets may be appealing to a
segment which may want to own a brand after comparing prices across retail
outlets. This segment may also be prepared to select within a narrow range of
variety (designs) if they are able to find the brand of their choice at economy
outlets. These consumers compare external prices after having decided to
compromise on variety. Transaction utility is another factor which has an impact
on price perception. This relates to the satisfaction a consumer derives out of
making a deal within a particular range of price, which he/she has in the
mindset. This is closely related to the internal reference prices, and transaction
utility may be applicable to a cross-section of consumers who may
predominantly have their satisfaction tied to the transaction limit they have
had in mind. There may be a cross-section of consumers who may not mind
crossing over their internal reference prices and may not reflect a stringent
attitude towards transaction utility. A brand would do well to research its
customer segment to find out the degree of association with transaction utility.
Acqiusition utility is the extent to which a consumer feels that the brand he/she
purchased has matched his/her value perception. Though prices are important,
a consumer who is drawn towards acquisition utility may be prepared to pay
more for a brand if he/she is convinced that the pricing adds to the value of the
acquisition (may be features or convenience). The implication is that a brand
like LG which may carry a premium (over other competing brands) should
communicate the value it offers to consumers after choosing a segment which
would be interested in acquisition utility (prioritized over transaction utility).
Brands which have successfully used penetration pricing, like Nirma, T-Series
and Tiger, have used transaction utility to satisfy consumers. Perception also
gets associated with discounts offered by marketers. Tensile price claims that
can be used to promote a product-line or help a retail store save up to 50 per
cent is an example. Objective price claims provide a single discount level (save
30 per cent). Marketers would find it useful to conduct research among the
appropriate target segment before choosing the discount method. There are a
few more examples given with regard to behavioural aspects of pricing in the
pricing section.
Can the brand images be changed?
In a competitive context, there may be a need for a brand to change its image
depending on the product/market situation. There may be a few brands which
have successfully transformed their images when circumstances have been
favourable in the respective product categories. Cadbury's Dairy Milk chocolate
(mould version) was positioned towards children during the 1980s. As the
chocolate market expanded over the years and as adults were also inclined to
show interest in the product category (due to changes in lifestyle), Cadbury's
transformed the brand.
TOUCH OF REALITY
Bajaj defined the scooter category in India and during the 1970s, its Chetak
brand had a waiting list of several lakhs of consumers who had booked the
brand. Value for money, ruggedness, easy maintenance and Indianness are some
of the associations which are linked with Bajaj. During the year 2001, around 55
per cent of the revenue was from bikes and the brand's motorbikes outsold its
scooters. Bajaj initially launched RTZ, the motorcycle, and positioned it on
speed, agility and acceleration (with the Cheetah commercial). Then came 4S
with its functional proposition of fuel economy and comfort. The biggest
success of Bajaj was the brand Caliber, which sold over a lakh of units within a
year of its launch. Changes, which were involved in the perception of Bajaj,
were instrumental in the success of the brand. Bajaj took the emotional route to
position the brand. The personality trait of fortitude (or winning over adversity
in life) was at the core of its positioning. It shows a man going after his former
girlfriend, only to find that she has settled down in life. The sequel to this shows
an army man riding over uncertaintyhe joins his family for a holiday only to
be called back. There have been a few more TV spots and all of them emphasize
the personality with fortitude.
In recent times, Bajaj has also attempted to connect with youth and their
lifestyle. The Hamara Bajaj campaign of the 1980s projected the Indianness of
the brand while the sequel to this campaign shows a number of sequences,
which reflect the hip appearance of Indian youth (western overtone) who also
respect Indian culture (Indianness).
Brands and perception
The image of the moulded variant was changed in such a way that it was
repositioned to adults with a changed positioning. The target segment shifted
from children to adults. The warmth proposition of the previous positioning (a
gift for the children as a reflection of parental warmth) gave way to spontaneous
and enjoyable celebration associated with everyday life (cricket field dance
commercial). It should be noted that the change of image of the moulded variant
of Cadbury's was followed up by the launch of several sub-brands (other
offerings) from the companywhile Gems was positioned towards children.
Picnic and Perk were positioned towards teenagers. Sub-brands could also be
used (after careful research) to reposition and/or change the brand image to
signify a new offering of the brand.
Perceived risks
There are many kinds of perceived risksfunctional (a huge investment in a
durable may pose a performance risk), physical (preparing food in a microwave
oven using the radiation), financial (whether buying a water purifier would be
worth its cost), social (would the designer jewellery attract attention in a
gathering of friends), psychological (would the consumer feel happy about the
in-flight services provided by the airline) and time risk (would the consumer
waste time in evoking a warranty). Different categories carry different risks
depending on the consumer's familiarity with the product, economic status of
the consumer and the brand association perceived by the consumer. Marketers
would have to examine the risks associated with products, especially new
products. For example, an electric car, which is a new concept product, may
have to address several perceived risks while launching the offering. Retail
outlets could provide the necessary support to address some of the perceived
risks through demonstration or creating customized product awareness based
on the queries of the prospective consumer. WOM too plays an important
source of addressing perceived risks (for example, using a brand of shaving
system for women).
The following figure provides the various aspects of perceived risks associated
with an electric car.

TOUCH OF REALITY
Traditionally and academically, a brand name was supposed to indicate the
product benefits that were memorable with a support symbol which was
meaningful and pronounceable. While all this would still hold (SONY was
selected with the American market in mind so that it could be pronounced well)
in today's clutter, there are a few simple aspects.
A brand which registered excellent growth in the mobile market in a
competitive Hong Kong market is Sundayno association with the product
benefits. It appeals to the youth as it triggers off a lifestyle on a Sunday. If the
target segment is based on lifestyle, such associations could be useful. Charms
in the Indian context is another such example which was created on attitude of
the youth.
If the brand competes with low-value competitors, anything which reminds the
consumer of the benefit would be usefulVendee for good quality edible oil
dispensed from a vending machinefor that matter, any name would be okay as
long as consumers perceive the benefit (Alfa in moulded luggage or Vicks in
over-the-counter medicines or Reynolds in pens are examples).
McDonald, Kodak and a few more (based on either the founder or simply
meaningless) may have succeeded, but one has to remember that they were
pioneers and they did not compete in a clutter.
Finally, the top ten brands in the world released by Business Week every year
makes up brands which have used their company names (Coca-Cola, Microsoft,
IBM, GE, NOKIA, INTEL. DISNEY, FORD, McDONALD and AT&T). These
brands have been at the top of the ranking list in most of the years in recent
times. A variety of parameters have been used in the exercise and what is
interesting is that most of them belong more to the industrial context (ways of
the consumers' mind when billions of dollars are being spent on consumer
brands). Ayurvedic Concepts recently changed its umbrella brand to
HIMALAYAbrands could become generic if they are too close to the
category. They may also become generic if they are pioneering ones with a head
start (XEROX and DALDA and Aspro). In such cases, the brand should raise
the visibility levels through constant association with the category and of course
improving the product constantly.
Naming a brand is one thing and sustaining the success of the brand is another.
TOUCH OF REALITY
The following are some examples which reflect the efforts of the marketers in
managing their brand image in the Indian context.
o During the mid-1980s, Cadbury's made an effort to change the image
associated with its hot chocolate drink, Drinking Chocolate, by bringing in
a new brand Choco-Cheer positioned for the youth. The change
attempted was more towards the youth and the product category as a
new brand was used. It did not result in success, but it is one of the
approaches that may be very suitable in such categories in today's
context.
o Videocon introduced sub-brands like Challenger and Bazooka to reach
out to the higher end of the CTV market.
o BPL introduced Evalux in the CTV category to compete at the lower end
of the market without the SPL name, which was strongly associated with
the higher end of the CTV market. Titan also introduced Sonata on
similar lines. However, a marketer should know if the mother brand
alienates consumers or if it provides a sense of security for what they
buy.
o Brands like Mercedez. Nissan, Renault or Pugeot are plying as taxis in
several parts of the world, but they do not have the taxi association
(unlike the Indian Ambassador) because of their brand-building efforts.
o Nesfit, a glucose powder from Nestle, failed possibly because of its white
packaging when consumers associate glucose with green packaging. The
brand was endorsed by a string of celebrities.
o Johnson & Johnson named its prickly heat powder as Shower to Shower,
to reflect the new offering without the traditional baby association.
o Rooh Afza, a herbal fruit drink marketed in the country for several
decades, attempted to change the image by bringing in a visual imagery
consisting of youth. Gold Flake and Wills are other brands which have re-
worked their images on similar lines.
o Madura Coats has Louis Philippe as a premium ready-made (shirting)
brand. It introduced a new brand Spiritus when it entered the premium
informal wear. This is to ensure that Louis Philippe's image is not diluted.
o Pond's used the concept of Pond's institute to convey an updated image
when if introduced up-market cosmetic offerings.
o Titan focused on retail outlets to enhance the perception of consumers
on the brand. Some of its outlets have different kinds of lighting
depending on the models/target segments who visit the outlet. Brands
like Nebula, Royale and Regalia are projected to be perceived as
jewellery through lighting effects.
o Sony used the Trinitron sub-brand to indicate its state-of-the-art offering
in CTVs.
o Park Avenue is a formal ready-made wear brand from Raymond's. The
company introduced Parx when it entered informal ready-made wear.
o Cadbury's Dairy Milk (CDM) chocolate was positioned towards children in
the mid-1980s, and later in the 1990s it was positioned towards adults. It
introduced a variant called Cadbury's Gold also positioned towards
adults, but used permissiveness in its advertising. Cadbury's Gold was
later withdrawn and one of the reasons could have been its associations,
which contradicted the firmly entrenched CDM association.
o Onida TV positioned itself as a premium brand during the 1980s with the
famous neighbour's envy, owner's pride, positioning. The brand would
have probably obtained more mileage from the positioning if it had
brought in innovative premium products at regular intervals of time.
o Burnol was an ointment positioned as an application for burns. The
target segment was probably housewives using traditional methods of
cooking. When stoves (gas versions and others) started picking up, the
brand made an attempt to position itself as an application for burns, cuts
and wounds. Despite the best efforts of the brand to manage its image, a
number of consumers may still associate the brand with burns. The
brand attempted to position itself with Plus and 3-in-one prefix, but
the burn proposition seems to continue to be present in the consumer's
psyche.
Brand perception and country of origin
The perception of brands is also affected by the country of origin from where
the brands originate. The following are certain images of specific countries, and
brands from the respective countries invariably carry the country of origin
associations.
o UK (class and heritage)Rolls Royce
o France (style and class in lifestyle, fashion)fashion apparel
o Germany (quality and reliability)BMW
o Switzerland (precision)watches, knives
o Japan (miniaturization, value and features)consumer electronics and
cars
The country of origin enables marketers to develop stereotypes (pictures of
words which consumers carry in their mind). South Indian coffee or French
fashion or glamour could be applied to brands originating from the respective
country of origin. Bru, the instant coffee brand has used this by positioning the
brand as one which offers the taste of filter coffee (a South Indian delicacy).
Sometimes, a brand may not use the country of origin. Perfetti, the Italian
chewing gum manufacturer, has an American sounding brand name Brooklyn
(chewing gum is more associated with the American culture and the brand name
would be useful to position it to youth the world over who are favourably
disposed towards the American way of life).
Levi's, Coke, Pepsi and McDonald brands have Americanness in them and this
has been instrumental in the success of these brands. US triggers off
associations of high-tech, entertainment, enjoyment and diligent quality. In fact,
the US association (perception) is so strong among consumers that they give
more importance to brand names of US origin like Mattel, IBM, Nike, Walt
Disney and Wal-Mart, though a number of components/products marketed
under these brand names have the label Made in
Thailand/Malaysia/Vietnam/China. A country's name could also undergo a
change in the perception of consumers. About three decades back, Japanese
products were associated with cheapness-based economy pricing. Today,
Americans are prepared to pay a premium for some of the offerings of Japanese
brands (Sony, Mazda, Honda, to name a few). Taiwan and Korea have also been
successful in changing the perception of consumers about their country of
origin. LG, Samsung and Hyundai are successful brands across countries.
TOUCH OF REALITY
Creating a market for a new offering among substitutes is always a challenge for
marketers. The example provided deals with perception and marketing mix
elements. Milklood launched yogurt (sweetened curd in different flavours). The
proposition of the brand was that it offered better taste than home-made yogurt
(which is a staple food item in most parts of the country). Milkfood also
launched ice creams in different flavours. Both the categories were sold through
the same retail outlets in most of the areas. The pricing of yogurt was higher
comparable to home-made curds. Given this background, the consumer
probably mistook yogurt (taken as an alternative to ice cream in the US for
health reasons) to be a special kind of ice cream, which in fact did not taste like
ice cream. Besides, there may have also been some confusion because of the
flavours and also because the same brand name was used and sold through the
same outlets. The proposition of taste (at a higher price) may have also
discouraged trials and repeat purchases among consumers.
When a brand introduces a product which has close substitutes:
(i) It has to have a distinctive brand name, which ensures that there is no
confusion. The brand name should not be common to other products of the
company.
(ii) Point of purchase (POP) posters about the new product has to be there at the
retail outlets to ensure that consumers associate the offering as a new category.
(iii) Skimming the market with a high price may create transaction/acquisition-
based satisfaction and this influences the perception about the purchase of the
new offering (even in FMCG products).
(iv) Communication about the brand (new offering) has to revolve around an
aspect which is not oriented towards changing the belief on a strongly
entrenched perceptionespecially the taste of regular food (like curd), which is
a part of the cultural habit. (Health would have been a better option for yogurt if
the offering was made on those lines.)
Branding CommoditiesA Behavioural Approach
The penetration level of several branded commodities has been very low
considering the overall market size for such commodities. Rice, atta, sugar,
antiseptic lotion and floor-cleaning liquids are some of the categories in which
branded commodities are not penetrating in the market. In some of them like
antiseptic lotions and floor-cleaning liquids, the frequency of purchase by itself
may be low. Behavioural aspects could provide some insights to marketers to
overcome the challenges posed by such categories in which branded offerings
are being introduced. Parry sugar (See Plate 6), Nestle curd and Dettol floor-
cleaning liquid are recent introductions to such commodity type of categories.
The concept of branding versus commodity, target segment considerations and
the concept of involvement levels of the target segment are some of the
important aspects which drive the concept of branding commodities.
Commodity versus brand
Commodities are offerings which compete on price and branding them should
provide value to consumers: besides, the brands should also use a conceptual
approach towards conveying the value of such offerings. What is interesting is
that unlike the developed markets where branded offerings compete with retail
brands (even in the Indian context, there may be a few retail brands, but
organized retailing by itself is an insignificant part of the retailing), the branded
commodities compete with home-made substitutes which have a cultural
flavour, or branded offerings compete with offerings in the unorganized sector.
Therefore, the target segment selection and the meaning of value to them is
critical as they form the foundation on which the communication is built up.
There is one aspect which needs to be understood in terms of understanding
commodities. As stated earlier, they compete on price and brands create
perception about superior performance of product attributes when compared
with commodities. Hence, commodities could be found in any category in
which competitive branding has not developed, and the examples of rice and
sugar are ideal ones, as brands are just getting developed in a huge market
driven by price. For example, the branded atta market is just 2 to 3 per cent of
the entire market.
Target segment-related considerations
Normally, when brands get developed in a market that has been hitherto a
commodity category, there is either an advertising plan or a discount-based trial
where the brand is offered to consumers at a lower rate. Another route is to
introduce the offering in large retail outlets with a special counter. Very rarely,
there is a concerted effort to formulate a marketing mix plan taking into account
the fullest potential of the target segment that may be interested in the branded
offering. A long-term approach will be to sustain the initial purchase and the
data about the target segment are vital. Any brand which is a pioneer in
branding a commodity in the respective category will not be interested in having
a short-term orientation in trying to approach a target segment which may not
offer a long-term potential for the branded offering. A brand of vegetable
delivered fresh to consumers (some brands have attempted branding in the
vegetables category, but have not been successful due to a variety of reasons) or
a brand of rice can concentrate on how chemicals are not used in the processing
of such products. This approach is likely to be useful as environmental
degradation and usage of chemicals is a topical issue. But even with this
approach, the target segment issues are important. Psychographics is a useful
tool to identify the target segment and this would have far-reaching implications
on the formulation of the marketing mix as it provides useful leads to reach the
target segment in a consistent manner. Dettol's example is an interesting one. It
has launched the floor-cleaning liquid and the advertising emphasized the need
to use such a brand to prevent the frequency of illness leading to happiness
within the family. While the advertising makes an effective point, there should
also be an attempt by such a brand to identify a target segment which is
health/fitness conscious. Psychographics can help in identifying the activities
(going to health clubs or buying appliances which preserve nutrition like a
special refrigerator or a water purifier to ensure clean, pure water, free from
bacteria) or opinions about hygiene in various facets of life. It is interesting to
note that this kind of segment is quite different from consumers who may buy
such a brand because it is heavily advertised or because the brand is launched
with a discount. Once such data are procured, reaching the target and conveying
the value of the offering will take on approaches very different from the
conventional route of just mass media advertising. For example, such
households which are more likely to have a personal computer could be reached
through a website. Several creative contests can be run to get the consumers
traffic at these websites. Another important aspect to be noted is that this kind of
segment will buy the brand purely because of the intrinsic benefit and is likely
to be price insensitive (not the typical bargain hunter who goes after just deals
and where the trial of the brand is incidental). Emotional appeal that is
appropriate is also likely to add to the product attribute appeal of the brand. The
Dettol advertisement mentions that it is the role of the housewife to monitor
such aspects, adding to the self-worth of housewives. The emotional appeal is
appropriately brought in by showing the school-going boy who is unlikely to
frequently fall ill with a cleaner flooring made possible by the brand. Schooling
and studies of wards rank very high in the priority list of parents. Saffola Gold
too uses the housewife as the protector of her husband (an offshoot of a
segment which believes in a healthy lifestyle with an overtone of emotion) in
terms of health. In the US, a company marketing caskets (coffins, a product
category which did not have brands at that point in time) established itself as a
brand by appealing to the emotion of consumers, asking them to give a decent
final farewell to their loved ones by using the brand which was advertised with
some technical attributes. This example may be the ultimate usage of emotion in
selling a commodity, but it drives home the point of how various aspects
including emotion are useful in elevating the commodity status of an offering to
the brand status. The target segment also plays arole in the extent to which
emotional appeals should be used. A brand of motor oil, which was addressing
the target segment of drivers of trucks, suggested that as a part of the sales
promotion, a buyer could have an insurance policy with some terms of
conditions on buying the brand. The message had a negative emotional
connotation, as insurance in the minds of the target segment was directly
associated with death, a bad omen (a value associated with their way of life).
Imox, a brand of stainless steel products for household use (from the Jindal
group), was retailed through Lifestyle and Shoppers' Stop outlets reflecting the
up-market nature of the product (the brand is also available in other select
outlets). The brand was trying to establish itself in the commodity category of
motor oil a few years ago. Target segment psychographics, brand's message on
attributes and an appropriate emotional overtone form the basic foundation for
branding the commodity.
TOUCH OF REALITY
Commodity branding and involvement levels can suggest a practice-oriented
approach towards branding commodities. Commodity buying happens on just
price, and hence involvement levels will have to be heightened among the target
segment to ensure that they notice and buy the brand. Involvement levels, in
simple terms, means creating and nurturing a degree of personal relevance
between the brand and the consumer in commodities which are FMCG. Low-
involvement levels are to be harnessed to create and sustain the interest of
consumers. There are three stages in which such involvement levels occur. The
first stage is the thought process stage of the consumer where the brand is
associated with the beliefs of consumers in a favourable manner. Coconut oil
has been traditionally used for decades by consumers, but only in recent times
brands have got themselves developed. Parachute brand emphasized the aspect
of purity and substantiated it with its effective packaging and logo, directly
entering the thought process stage of the consumer who has all along believed
in the goodness of coconut oil for hair. After getting itself established in the
category, it created the jasmine variant which has the cultural aspect and that too
added to the beliefs of the consumer that a good brand is also available in a
favourite and culturally familiar variant, thus adding to the involvement levels.
This is a good example to show that a conceptual process enables advertising to
communicate the required benefit and creates a brand in a commodity category.
When the brand wanted to focus on the urban youth segment, its advertisement
mentioned that the offering can be applied before regular bathin tune with the
thought process of the urban lifestyle followed by the young in which the no
oil look is the in-thing in personal grooming. The next stage in the
involvement process is the Trial and experience stage where the consumer
tries out the offering after accepting the brand in the previous stage. The
product attributes of the brand come into play at this stage and it is important
that the brand lives up to its promise. The efforts of the previous stage will be
wasted if the consumer does not experience the benefit, which differentiates the
brand from commodity in spite of the consumer paying a higher price for the
offering. Reynold's pen is a good example of how the brand won the confidence
of consumers in a category which was a commodity at the time when the brand
was introduced. Ball pens were largely sold from the unorganized sector (there
were some high-end offerings at the higher price segment) and they were not of
good quality. Reynold's charged a premium, but offered a pen that had a sleek
design and the one which offered a smooth writing experience. Kohinoor
basmati rice offered good product attributes that offered a superior consumption
experience to consumers. The experience offered by a brand in a commodity
market should be discerning to the consumer. A strong differentiator has to be
built up at this stage of Trial and experience. The last stage is the sustained
feeling stage in which the consumer feels that the brand is able to sustain its
branding efforts. If the brand is successful in the first two stages, the consumer
will have a positive WOM about the brand. Sustaining the good feelings
associated with the brand over a period of time is the challenge to the brand that
has successfully branded itself in the commodity category. A relationship with
the consumer is built up only in this final stage and the brand has to carefully
devise a relationship programme with its consumers. The database of consumers
will also be useful to devise such programmes. Another strategy is to develop
several product-lines/variants which reinforces the competence of the brand.
Himalaya, the company which markets over-the-counter traditional ayurvedic
products has developed a number of products based on scientific research over a
period of time, and it is a strong brand in terms of consumers' perception of its
product attributes. The company has developed products in several categories of
personal grooming/other medication, and most of them are safe enough to be
sold over the counter without the prescription of doctors. The rigour associated
with the development of products, the variety offered and some in the variety
being new to a market like India adds to the credibility of the brand.
Branding commodities requires conceptual and consumer insights; such an
approach will ensure that the pioneering brand gets the best mileage for being
the forerunner in the category.
Consumer Decision-Making Process and Marketing Strategies
While a number of psychological variables are useful for obtaining insights into
consumers psyche, it would be worthwhile to probe into specific aspects of
CDM from the viewpoint of formulating marketing strategies. CDM could
enable marketers to visualize a broad framework made of stages, and apply
psychological and/or group variables to a specific product/market/brand
situation. The process of decision-making could provide several trigger points
on a conceptual level, especially when a brand wants to position itself in a
crowded product category or when it wants to enter a new-concept product
category or when it attempts to reposition itself. There are a number of
dimensions which could be associated with the process of CDM. The following
are some of these dimensions.
o What kind of approach (strategy) should a brand have when it enters a
crowded category with which consumers are familiar? (soaps, shampoos,
two-wheelers, etc.)
o How should a brand promote a new-concept product and how are the
stages in the CDM framework useful?
o What strategies other than advertising may be useful in specific stages of
CDM?
o How could celebrities be used at different stages in the decision-making
process?
o What are the different kinds of decision-making that consumers indulge
in?
o What are the specific differences in CDM between FMCG products and
durables?
o Can the needs be differentiated based on what a brand offers?
o Do consumers have different kinds of sets from which they select
brands?
o What kind of strategies could a brand use when consumers search for
information?
o How do consumers use evaluative criteria to take a decision across
brands?
o What kind of factors influence the selection of retail outlets when a
decision is taken to buy a product?
The dimensions mentioned have a strong link with one another and play a
significant role in CDM. They focus the attention of any marketer in consumer
product categories towards the perception of consumers on how they perceive a
category, a brand and their own needs.

The figure shows the several stages involved in CDM. It is useful to understand
the basic model of CDM and its implications for marketers before considering
other detailed aspects. Whenever a new product category is introduced by
marketers with a new concept, concept selling would have to be done at the
need stage, examining the actual and desired states of the consumer. Ceasefire,
the mini fire extinguisher which kick-started a new wave of demand of mini
fire-extinguishers among households (the brand no longer retains the same hold
over the market currently due to a variety of reasonsthe objective in this
context is to reflect how the brand used an approach to market a new-concept'),
was able to market the concept using primary advertising. Though the concept
of fire extinguisher by itself was not new to the market, the concept of having a
mini fire extinguisher was new and it was able to trigger a perception very
different from the huge and heavy ones (traditional ones) which were widely
used in cinema halls. The primary advertising mentioned the fact that different
kinds of fires (with an overtone of fear appeal) required different kinds of
extinguishing gases and that Ceasefire was the ideal solution for the need.
Concept selling has to discuss the benefits of the product in a detailed manner
and how these benefits solve the existing problem of consumers or how they
help consumers to reach a desired state. While primary advertising
concentrates more on the benefits of the product, with the objective of creating a
market for the product, secondary advertising has a focus on the brand. In case
of a pioneering brand bringing in a new concept, product primary advertising
has to be supplemented simultaneously with secondary advertising (in an
appropriate manner) to ensure that the pioneering brand gets the competitive
advantage of having marketed the concept. Titan may not have been a
pioneering brand in quartz watches, but it is currently a leading brand because
of the brand building efforts undertaken by the brand, though it was a follower
brand.
Which stage in CDM to target?
While the need stage is important for new concept products, there may be a
number of categories where most consumers in the respective product category
may be in the purchase stage and hence this stage may be important for those
product categories. For example, in the category of soaps (in most markets in
the country), consumers are in the purchase stage and they may not get too
involved with the information search or the evaluation stage, given the nature of
this low-involvement category. They may attempt a variant or a new brand
which they may have become aware of either through TV or POP material at the
point of sale. An existing brand could probably bring in a variant (possibly
Hindustan Lever brought in Lifebuoy Clear Skin at a competitive price to ensure
that loyalists of Lifebuoy do not pick up a competitive brand during the
purchase cycle). A brand (Margo) may also re-launch to ensure most consumers
stay with the brand. Hamam's herbal variant in soaps and Colgate's herbal
variant in toothpastes are examples of retaining consumers at the purchase stage
with the equity and loyalty of the brand.
Strategy for durables
In the category of durables, a different approach may be required to make use of
the basic CDM model. Information search stage for categories with which
consumers are familiar is an important stage for new brands, especially for ones
which provide value or which provide new features. LG and Samsung in
televisions (and LG in refrigerators) used the print media extensively to
highlight the new features offered in their brands. This is one of the reasons for
their above average performance in these categories (performance in the
industry in terms of the brands' growth). Information search stage is also
important for certain categories like microwave ovens and electric cookers for
which the needs may have been created by the brands over the last decade
(niche markets). The information search stage provides the consumers with
specific benefits and pulls them towards the purchase stage. It may be a good
idea for a brand of microwave oven or electric cooker to make use of the
information search stage in conjunction with the purchase stage. The
purchase stage occurs when consumers are pulled to retail outlets through
the information provided by the brand. Demonstration of the brand is vital at the
purchase stage, as this provides a heightened motivation for a consumer to
purchase the brand (some of them may also be impressed by the brand and may
have it in the memory for later reference). Evaluation of alternatives in such
cases also happens along with the purchase stage when consumers may prefer to
observe and evaluate brands based on their perception of brand benefits, price,
service and the demonstration provided at the retail outlet (especially for new-
concept products). It may be a conceptual error to take the consumer to the
purchase stage by offering the new-concept product as a freebie along with
another product costing much more than the new-concept product. For
example, if an electric cooker brand is given free with a refrigerator when the
consumer is not even clear about the product, the following could take place:
o due to the high-visibility campaign which is run to highlight the sales
promotion, prospective consumers (for the new-concept product) could
think that the new-concept product has failed in the market and hence is
being advertised as a freebie, and/or
o the consumer may not put the new-concept product to use as he/she does
not have adequate knowledge either about the benefits or about the usage
of the product.
It is to be emphasized at this stage that for any new-concept product to
succeed (especially durables), a good WOM is required at the post-purchase
stage, which succeeds the purchase stage of CDM. A satisfied consumer of a
brand of microwave oven would be an opinion leader among prospective target
segments (a housewife in a prospective residential area). This kind of opinion
leadership has a tremendous amount of credibility associated with it. Another
important aspect with regard to new to market durables is the after-sales
service at the post-purchase stage. A company would do well to allocate an
exclusive team to look into/follow-up consumers who are about 6 months old
with regard to the product (the team should make frequent visits/phone calls to
these consumers until they are familiar with regard to the brand usage features
and benefits, and a period of 6 months is recommended as a usage warm up
time). This would be an investment for a brand, though it could lead to higher
overheads in a short run. A fully satisfied buyer (within the usage warm up
period) is likely to become an advocate of the brand.
TOUCH OF REALITY
Providing value at the information search stage could also take the shape of a
high-visibility campaign for conventional durables like TVs and refrigerators.
Akai was a phenomenal success (the period of success was limited due to a
variety of reasons) in the category of colour television when the brand entered
the Indian context. The value was the exchange scheme provided by the brand
taking into consideration the scope and potential for second-hand TVs. There
was a huge potential for such TVs in the semi-urban markets, and urbanites had
the need to replace their sets. Akai successfully used the need aspect of these
segments along with a high-visibility campaign to capture a sizeable chunk of
the market during a short span of time. It should also be noted that the brand
came out with campaigns which reassured the consumers about the quality of
components used in the brand, and this ensured that there was no post-purchase
dissonance after the consumer purchased the brand.
Applying CDMnew or familiar products?
(i) New-Concept Product

(ii) Familiar ProductsCTV Akai's approach

Information search and purchase stages also hold a lot of potential for multi-
level based companies (a form of direct selling) like Tupperware or Oriflame.
Given the nature of personal selling involved with the marketing of these
companies, CDM model could be very useful. Tupperware markets kitchen
containers, which carry a premium price and a lifetime warranty. Oriflame
markets upper-end herbal cosmetics. While cosmetics may be luxury items,
personal selling gives an opportunity for the consumer to interact with the sales
personnel on several dimensions of the product related to the end benefit
healthy skin care. In the case of Tupperware high-priced containers, the
information stage offers the opportunity for sales personnel to convert it into a
purchase (trial of the product). The sales personnel can emphasize the value
delivered by such premium containers at a higher price point. They can compare
the product with the usual containers the consumer may be using (a large chunk
of the market is in the unorganized sector which may not offer the quality which
could be associated with an international brand) on dimensions of durability,
air-tight characteristics and the aesthetic appeal involved in the brand. Though
there is a price premium, the value perceived by the consumer may motivate
him/her to try the brand (choose a few from several variants offered by the
company).
CDM and celebrity usage
Santro, the car brand, is an interesting case of celebrity usage which can be
associated with CDM. As the brand was new to the Indian context, it used a
topical celebrity to get into the attention span of consumers, which could be
associated with the information search stage. The brand came out with a
campaign which explained the problems associated with cars and how Santro
was built to address these problems. The next campaign was comparative
advertising campaign comparing Santro with Matiz and Zen brands which were
close competitive brands. These strategies associated with the information
search stage, reduced the perceived risk among consumers (as the brand itself
was new to the Indian context, perceived risks had to be addressed by the brand
and it was an appropriate strategy) and a number of them bought the brand. The
excellent service provided by the company (in the perception of consumers) led
to a positive post-purchase feeling leading to a positive WOM. After observing
a brand like Santro, a brand of car can have the following approach.

Impulsive purchase and consumer decision-making
Soft drinks, chocolates, branded blades, biscuits and ice creams are products
which could fall under impulse-buy categories. The need reflected at the
beginning of the CDM model is associated with an urge to buy the brand with
disregard to the consequences of purchase. This impulse need could be triggered
by an attractive display, brand packaging of material. Gillette (blades) in a
number of markets in the world attempts to trigger the impulse purchase of the
brand by attractive and observable display at the POP. Consumers at any given
point in time (significant number of them), in a number of markets, buy more
blades than what may be currently required and keep them in stock probably
due to the impulse triggered by the brand. When impulse buy takes place, the
consumer may move directly from one need stage to the purchase stage. A large
retail outlet like FabMall may be interested in researching into the impulse
profile of its consumers across product categories with a view to carry out
decisions on display arrangements. The impulse profile could vary by
psychographics and demographics and hence it should be obtained for different
kinds of segments. Normally, impulse products are low-cost items unless the
target segment is at the upper end of the social strata and are willing to splurge
on high-cost items as a result of impulse. Impulse buying is characterized by the
consumer's urge to buy the product/brand for his/her hedonic pleasure
(sensual/fantasy oriented and symbolic pleasure at the time of consumption) or
excitement. In recent times, some researchers (Wood for instance) have
reflected the view that any purchase made for excitement, hedonism, status, or
excitement can also be termed as discretionary unplanned buying. This means
that lack of planning to buy (lack of buying intensions) and compressed
decision-making (short duration decision-making) need not necessarily qualify
as impulsive buying.
TOUCH OF REALITY
Technology and psychology have come together in recent times to explore what
is known as spare change effect. Research studies have shown that consumers
buy products with loose change that they will not buy with unbroken bill or
when the bill is in round figures. For example, a consumer buying products in a
fast food chain for Rs 8.60 is likely to spend another Rs 1.40 on other products
than consumers paying a bill for Rs 10. Fast food chains like KFC and Taco
Bell in the US are introducing innovative software programs to tap this kind of
impulsive buying behaviour and they are registering about 5 per cent increase in
their sales through such impulsive buying of consumers. The software program
analyses the past data from consumers, looks for a pattern before making an
offer at the counter when the consumer is about to pay his/her bill. The pattern
identified by the software could be that consumers buying noodles also buy a
lot of side dish packaged in sachets. For example, if the consumer has a bill for
Rs 8.60, the software may offer a discount for an item, which is priced at Rs
1.40. For instance, if the consumer buys a brand of noodle for Rs 8.60, a small
sachet of a side dish which costs Rs 1.40 may be offered at a discount just when
the consumer is about to pay the bill. About 35 per cent of consumers pick up
the discounted product under such spare change situations.
Substitutability of products
The need stage has assumed significant importance in the present-day
competitive context when brands may compete to substitute each other in
related product categories (related from the viewpoint of the needs of
consumers). The competitive aspect of certain product categories may be
indirect and for some categories it may be direct. For example, ice cream may
compete with soft-drink, mithai or snacks and this amid happen in an indirect
manner. Though substitutability does not occur in the real sense of the word, the
consumer prioritizes his/her need before making the purchase and there is a
possibility that purchase of other items in the priority list may be postponed (or
may not happen at all in the case of durables). Creating a high-visibility
campaign on both the product category and the brand could help the marketer to
place them on top of the priority list (in FMCG categories). Walls ice cream
adopted this approach and created interest in the category by also having a
number of price points in the category. In the case of durables, the brand could
get prioritized by offering value/benefit, which would be of interest to the target
segment. In the category of entertainment products, TV is a highly prioritized
product both in urban and rural markets. But when it comes to World Space
music (non-stop music with a number of channels), the benefit would have to be
defined and this requires careful selection of the target segment. There is also
some amount of substitutability/complementary aspects involved among the
target segment. The target segment is likely to have a music system, radio, etc.
and still would like to substitute/complement World Space music system along
with the existing set of offerings, which cater to entertainment needs. The
prospective segment is likely to be one which (apart from affordability) has
limited time to spend on entertainment and is one which would prefer a music
system to TV (or at least prioritize music to TV viewing); the target
segment may also be interested in many kinds of music. The product World
Space music (currently marketed by four brands) offers the appropriate target
segment a variety which could be accessed spontaneously throughout day and
night.
There is the interesting product category of branded mineral water in recent
times. A sizeable chunk of the market is in the unorganized sector and the
market leader is Bisleri. Aqua Fina from Pepsi and Kinley from Coke are brands
of mineral water which have been launched by lifestyle positioning targeting
youth. The categories soft drink and mineral water are consumed for thirst,
group activity and fun (soft drink in recent times is more associated with fun
than with thirst). Each category is likely to substitute the other depending on the
positioning involved. For example, if fun element is associated with the
positioning of a brand of mineral water, it may be perceived as a substitute for
soft-drinks (aerated or other drinks), not just during summer but all round the
year. Bisleri probably may have to invest to increase its retail availability to
match that of Pepsi and Coke if it is to be made a substitute for colas/soft drink.
The need stage and the purchase stage (during which the positioning strategies
of brands are likely to work) are important from the viewpoint of brand
building.
Types of consumer decision-making
There could be different degrees of CDM depending on the unit cost of the
product, involvement levels of consumers with regard to categories, effort
involved and the importance attached to the purchase. At the outset, there is a
need to differentiate between purchase involvement and product involvement
before taking up the different kinds of CDM. Purchase involvement is the
interest in purchase process triggered by a need to consider a particular
purchase. This kind of involvement is short term and temporary and could
involve an individual or a family. Product involvement is enduring and
consumers may be involved with a brand (Colgate for example) or with the
product category of toothpastes. A high degree of involvement with a brand
could form the basis of brand loyalty and a loyal consumer may prefer the brand
without much information search or evaluation. Purchase and product
involvement may have several implications for marketers. For example, a
situation could be highlighted to create purchase involvement and the
brand attributes may be highlighted to create brand involvement. A new kind of
offering from LIC (insurance) could highlight the need for the offering
(purchase involvement) and also underscore the benefits of the brand (brand
involvement).
Habitual CDM
This kind of CDM involves no decision-making at all. The consumer buys the
preferred brand whenever a need arises (appropriate to the brand) and the
evaluation of the brand may take place only when the brand fails to perform as
expected. This kind of CDM happens only when there is very low involvement
with the purchase (involvement levels and decision-making have been treated
separately in the book, under branding commodities). In such situations, the
alternative of not buying the product may not arise. A consumer who has run
out of a brand of toothpaste (may be Colgate) may buy the same brand when he
visits the store. There could be two types of decisions under habitual (also
referred to as nominal decision-making) decision-makingbrand loyal and
repeat purchase decisions. Repeat purchase decisions (without loyalty) are ones
which the consumer makes without staying committed to the brandcould be
out of inertia or because other brands are not available or because he/she selects
the brand because of lack of alternatives. There is also one more situation in
which consumers may buy a brand but not be committed to it. A consumer may
keep buying a brand of detergent until the logic of buying it is not challenged by
some other brand.
Limited CDM
This is a kind of CDM between habitual or nominal CDM and extended CDM.
The difference between nominal and limited CDM is that the consumer may
search for limited information before making the decision. A consumer who has
run out of tea may compare prices across brands, may compare the sales
promotion offered across brands, or may consider trying out a new brand and
hence may get information on what kind of tea leaves are used by brands
(newness of offerings may also be taken into consideration). In limited CDM,
there may be internal search (memory) and a limited amount of external
search. Normally, limited CDM also occurs under low-involvement
conditions. In both nominal and limited CDM, post-purchase dissonance is
highly improbable.
Extended CDM
This kind of CDM reflects a high level of purchase involvement. An extensive
memory search or an external search results in complex decision-making with a
number of alternatives/choices open to the consumer. There is likely to be
dissonance after purchase on the correctness of the decision. Extended or
complex CDM is likely to occur when the unit cost of the product is high and
when there is a great deal of involvement as stated earlier. Products like cars,
PCs, home-theatres and televisions are categories which are likely to go through
this kind of decision-making. There are also certain products/services which are
likely to receive a significant amount of emotional inputs in the CDM process
and they may be as important as the cognitive information associated with the
evaluation of high-involvement products. For example, health resorts/holiday
packages are being heavily advertised by firms. Besides the financial aspects
and information about specific locations, the decision-making draws heavily on
the importance the consumer places on the experience which he/she is likely to
visualizemoments of happiness, how important the memories are for the
consumer and how well the family as a unit perceives the experience (if a family
is involved) are some of the factors which may highly influence the purchase
decision.
CDMImplications to marketers
Type of CDM Implications to marketer
Habitual Cultivate brand image, constant advertising required
Limited Launch variants, establish brand superiority
Extended Provide excellent value by introducing reliable products with useful features
Marketers, through primary research, can find out the degree of involvement
(even across durable product), dissonance-inducing aspects (post-purchase),
how a specific brand could address the dissonance (with its unique offerings in
comparison with competition) and how specific marketing mix elements could
be fine-tuned to the expectations of consumers. For example, a washing
machine or a refrigerator brand claiming low consumption of electricity should
be in a position to demonstrate the claims under operating conditions associated
with regular consumer usage. If this is not done, dissonance is likely to set in,
especially in a competitive positioning context.
Brands and CDM
It would be of interest for marketers to examine how consumers decide to buy a
brand from a set of brands. These aspects have a number of implications on
positioning brands, introducing trial offers or for examining what kind of
objectives advertising should have, at a given situation, in connection with the
respective brand. Should the advertising enhance awareness of the brand so that
it could be further considered by consumers or should it mention and highlight
its benefits so that consumers use the information in their final phase of
decision-making? It will also be useful for marketers to find out consumer
readiness with regard to purchase of the product category so that it could be
appropriately used for communication strategies. For example, in the category
of hair dyes, what kind of consumers and how many consumers are using the
product currently and how many are prepared to attempt a trial could provide
useful information. Further awareness of brands (Godrej has been in the market
for decades) in the category and awareness levels of new brands (L'Oreal)
would also be useful. At the next level of product differentiation, it may be
worthwhile to find out how many consumers are willing to try out a brand
which could be used for colouring purposes as well. As can be observed,
awareness of the category, brand, benefits, perception on benefits and intention
to buy the category/brand are critical while specific stages of brand
consideration are marked out for strategy formulation purposes.
The brand set of CDM process (to be used in along with the basic CDM model
and types of CDM) is shown as:

The consumer for any product category progresses from total number of
brands to choice set (impact of different stages could vary from FMCG
products to durable products). The total number of brands refers to the total
number of brands in a category available in the market (for example, 100 in
mineral water). Awareness set refers to the set of brands the consumer is
aware of in a specific category. Ray Ban launched a campaign to enhance the
awareness levels of the brand among the target segment during its initial stages
of entry into the Indian market. Consideration set is a set of brands a consumer
is likely to consider based on his/her criteria, and choice set is the set of brands
from which the consumer makes the final decision on buying a specific brand.
Product/market situations and the USP of a brand and other details from primary
research data should be considered (as stated earlier) before the brand could
finalize its strategies. There is growing research evidence which indicates that
POP material at the retail outlets could be useful in influencing the purchasing
decision of the consumer. This essentially means that in certain categories
(especially in FMCG), POP material could take a brand into the choice set
stage at the POP (retail outlets). In certain categories of durables, information on
features (novel ones) could place a new brand in the choice set of the
consumers. This is especially advantageous to brands in durables (being high
involvement purchases) where there could be a number of established brands in
the market with a strong place in the awareness or even consideration set of
the stages. For example, in categories of refrigerators and TVs, there were a
number of well-known/established brands in the Indian market, when LG
entered these product categories. Godrej, BPL, Videocon, Akai, Whirlpool,
Kelvinator and Voltas were some of the brand names. LG's success in this
situation could be attributed to its positioning based on novel features in these
categories, which probably placed the brand in the choice set stage of the
model. LG's TVs had the golden eye feature (wrinkle-free easy viewing) and
its refrigerators had the nutrition preservation feature when most competitive
brands were positioning themselves on traditional propositions. It should be
noted that the choice set connected with LG brand in this situation is relevant
to those consumers who had the criteria of novel features for their TVs or
refrigerators. In the TV category, LG appealed more to the replacement (CTV)
segments.

The following aspects about this model are to be noted:
(i) It provides suggestive directions for a new brand to make an impact on the
consumers' psyche.
(ii) With appropriate strategies, it may be possible to eliminate stages or at least
ensure a short period of transition across stages in the brand set.
(iii) There is a need to use specific strategies (communication as well as other
aspects of marketing mix elements) to take the consumer quickly to the
Choice Set stage. For example, Gillette in the Indian context came out with a
campaign for shaving gel (a niche market) by associating this version of the
product with shaving brushes (as it is a part of the shaving habit for a majority
of consumers to use a brush, though gel could be used without a brush).
Besides, the brand also came out with special packages, which could get the
attention of consumers at the retail (POP) environment.
The brand set model provides creative scope for marketers to consider
moving a brand from one stage to another depending on the changes in needs
and psychographics of consumers and the competitive offerings. It could be
used as a tool in a dynamic environment.

The effectiveness of advertisements, especially for durables, could be analysed
through primary research. A study by Indica Research showed that in the
category of cars, around 40 per cent of consumers did not depend on
advertisements for information search (18th October 2001, The Hindu
Businessline).
TOUCH OF REALITY
This example illustrates how a brand can make use of CDM without going into
the overall success or failure of the brand. Whirlpool entered the refrigerator
market during the mid-1990s when there were established brands in the market.
It owned the brand Kelvinator for about 18 months (the brand went to
Electrolux later) by an arrangement with Electrolux. Whirlpool made use of
Kelvinator (a well-known brand) to build a relationship with the trade
(distributors/retailers), and it also fine-tuned the distribution drawing a few
aspects from typical FMCG categories. The following stages reflect how a
conceptual approach (after analysing the entry of Whirlpool) can be applied by a
brand towards CDM to get into the consideration set of consumers despite its
late entry. The example does not discuss the elaborate product-line strategies of
a brand: it attempts to provide an approach for brands entering a marketing
context, which has strongly entrenched brands.
It is also useful to highlight the importance of perceived product/brand benefits,
especially in durables. For example, in refrigerators, consumers may not
perceive benefits in brands which may offer multiple doors. The perceived
benefit is as important as the technological feature which is offered. In the same
category of refrigerator, consumers have not perceived one frost free aspect of
refrigerators as a major benefit (as reflected by the growth of this sub-product
category since the time it was introduced). Consumers may also be pulled to
the purchase stage of CDM because of certain secondary benefits like after-sales
service, especially in an environment where good service is an exception rather
than a prerequisite. A number of new brands in durables have realized this
aspect and scored over established brands, which have had tremendous equity in
the past. This aspect is also important in the post-purchase stage during which
consumers may develop a dissonance. Positive after-sales service also triggers a
positive WOMcould be a tool which is even more powerful than advertising
in this changing environment.
CDM and upgrading the consumera continuous process
A number of FMCG companies have product-line offerings at various price
points. Though these price points are oriented towards different target segments,
these companies would also be interested in ensuring that the consumer
upgrades from one offering to the other. The other aspect of upgrading the
consumer is to ensure that he/she stays loyal to the brand. For example, in the
category of toothpastes, there may be consumers using ash who should be
upgraded to use tooth powder and then to an entry-level toothpaste. Though it
may be difficult to plan to upgrade consumers from the basic entry level of the
brand to the highest offering of the brand in the respective product category,
there has to be a plan at least to upgrade the consumer to a few price points over
a period of time within the respective product category. This may involve a
number of elements associated with marketing mix.
In the category of toothpastes, Colgate has tooth powder at the lowest price
point and this offering is followed by a number of variants involving price
points upwards. Colgate has Binaca as an entry-level toothpaste, Colgate CDC
at the next level; Colgate Herbal in between CDC variant and Colgate Gel. It
has Sensitive Care, which has a strong therapeutic proposition. The toothpaste
market has markedly shown two basic directions in terms of consumer
responsetoothpastes which are oriented towards the traditional functional
benefits like cavity prevention, strengthening of gums and the cosmetic
proposition of white teeth with related symbolic benefits. The cosmetic segment
or the gel segment has been positioned towards the youth (Close-Up and
Colgate Gel) or lifestyle positioning. If a brand like Colgate Total is considered,
which is at the top of the price points, it may be able to attract both the segments
(functional as well as up-graders from the gel version who may want to revert to
a functional toothpaste with superior benefits). Incidentally, Colgate Total
(with its 12-hour protection) had also used a celebrity who may have a
charismatic appeal over the youth segment. Colgate Total was initially launched
during the mid-1980s with the premium pricing strategy. The brand was re-
launched during the 1990s with the celebrity and it is positioned as a brand with
a number of functional benefits with an all-in-one proposition.
Consumer decision-making and convincing the consumer to use an updated
version of the brand involves applying strategies which would have an impact
on several stages of the CDM model as shown, and the approach is
conceptualized after analysing the offerings of Colgate.

Brand building is a continuous process which has the objective of retaining and
upgrading consumers.
Information search and CDM
Consumers expend effort on information research to varying degrees. Some take
extra efforts to probe and explore the information with regard to product
categories/brands, while others go through CDM, more through sources other
than advertisements. As stated earlier, the importance of positive WOM is vital
in the latter context. Information search may be internal or memory based or it
could be an external search in which the consumer scans the environment to
offer inputs to the CDM process. Information search could consume effort, time
and money. There are benefits of information search and these include selection
of a brand which has a better value or higher quality or one which reassures the
consumer arresting his/her perceived risks associated with the purchase.
Nature of information search
Whenever consumers feel a need which is to be satisfied, appropriate
information from long-term memory is used to determine if a satisfactory
solution could be arrived at and if there are several alternatives in the form of a
solution. A consumer who has the need for food can think of a fast food
restaurant, a brand of fast food or could even prepare a meal himself/herself.
Besides, there is also the type of food and associated costs, which the consumer
may want to consider. This kind of search is the internal search. If a solution is
not reached, the consumer may undertake external search for solving the
problem and this results in external search (the same consumer may want
information about eateries when he/she is in a new city). A number of decisions,
which consumers take with regard to low-involvement products, are likely to be
based on internal search. External decision-making may include the following
aspects.
o The opinions and attitudes of friends, relatives or opinion leaders.
o Information provided by promotional aspects associated with the brand
such as advertising, personal selling or brochure.
o Direct product trials (in two wheelers or cars).
There is another type of on-going information search which consumers may
indulge in even without a specific problem. For example, there may be
consumers who may be much involved with motorcycles. These consumers may
or may not be owners of motorcycles but any information on motorcycles may
hold their interest and they may be involved in ongoing search with regard to
this product category. This kind of information search occurs both because of
the pleasure involved in seeking information and also because such information
may be useful to the consumer at a later point in time. Ongoing information
search may be extremely useful to marketers. It may be worthwhile to identify a
set of consumers who may not be interested in buying the product at a given
point in time, but the ones who may be interested in the category due to their
high level of involvement. A brand which is able to build up a relationship with
such consumers stands to gain at a later point of time when the consumer is
ready to buy the product categorythere is a high possibility of consumers
considering a brand with which they have had some interaction (besides
familiarity). TVS Scooty conducted a contest through an online promotional
method involving the target segment (youth) and collected a valuable base of
information about the target segment within a short period of time. Establishing
contact and nurturing the established relationship through specific media and
promotional methods as appropriate to the ongoing search segment could be
extremely useful to the brand, especially as the category becomes competitive
with several brands.
Types of information sought
Consumer decision-making requires the following types of information
alternatives available, criteria for evaluating the alternatives and the probable
outcome in terms of the performance of each alternative. A consumer is likely to
search for information until he is satisfied that he has these types of information.
Different brands with different USPs form the basic information with regard to
alternatives available. Normally, in a number of consumer product categories,
consumers perceive and interpret this kind of information through the
positioning strategies of brands. For example, Lux could be an entry-level
shampoo (the brand was introduced in a few markets); Sunsilk, a shampoo for
hair care; Clinic may be a shampoo for the family in terms of therapeutic care
and Clinic All Clear may be for the youth. In fact, the perception of consumers
on the probable outcome of using the brand (getting rid of dandruff or having a
bouncy glamorous hair which would attract attention) is also an outcome of the
positioning strategy of the brand. The positioning should be such that the
consumers identify with and perceive the benefits of the brand. A brand of
toothpaste had the fast spreading action, as its USP and consumers were not able
to identify themselves with the benefit. Clear-cut positioning of benefits
(functional or emotional) helps the brand to influence the evaluative criteria,
which consumers (target segment) may formulate through external search. The
gel toothpaste with its cosmetic white teeth and lifestyle positioning appealed
the youth and this created a new criterion in the toothpaste category. Consumers
also have what is called as the inert set of brands or back-up brands about
which they may accept information. These brand(s) may be benefited if the
consumer's preferred brand is not available. A consumer who has made up
his/her mind to buy Colgate Total based on multiple benefits criteria may
choose another brand if Colgate Total is not available. This happens because
consumers may be tuned to information, which is close to their evaluative
criteria. This could also happen in durables but branding could play a vital role
because of the high degree of perceived risk present in high-involvement
products.
The expectation on the performance of the brand could depend on four
aspectsmarket characteristics, brand characteristics, consumer characteristics
and situational characteristics. Market characteristics would include alternatives
available, how well the product category has been accepted (diffusion of
innovationthis has an influence on reducing the perceived risk and/or making
the product category a necessityexample, cooking gas stoves), availability of
information through advertising or sales personnel or independent sources or
through personal sources. Brand characteristics would depend on differentiation
of the brand, the value perceived (the benefits perceived would also be
dependent on this). Consumer characteristics would depend on learning and
experience, social status, age in the life cycle, perceived risk, familiarity with
the product and the level of involvement with the product category. Situational
characteristics would include availability of time, whether the product is
intended to be used by the consumer or to be used as a gift, physical and mental
energy to gather information and the affordability to buy the brand. The
outcome in terms of performance is a complex one based on several factors,
which are associated with the types of information sought and that would
depend on a set of characteristics.
The influencing factors (types of characteristics) have significant implications
for marketers. A microwave oven, for example, may not be perceived as a high
priority durable item in households where one of the family members (husband
or wife) does not go to work. An online grocery store is likely to attract the
attention of a busy, young and aspiring couple, both pursuing active career
goals. The search for information on brands like BMW and Mercedes may be
important for a niche of consumers who may be actively involved in deciding
on the type of car to be bought, not in terms of utility value but in terms of
status. This kind of information search by this niche of consumers will be quite
different from those who may also learn such information without having an
intention to buy such brands.
Perceived risk as a consumer characteristic could provide several dimensions in
which marketers could approach and provide information to the respective
target segment (especially in durables). For example, there may be a brand of
electric car which could be launched in the Indian context. The information
search involved with regard to perceived risks of the consumer could open up
several strategies associated with marketing mix elements planned for the
launch. This could be shown as follows:
Perceived risks and information search (e.g., electric car
brand)
Risk factor Implications to the brand
Social risk Would the appeal of an electric car be comparable to that of the traditional one? (in terms of status)
Financial risk It the brand is going to cost as much as an entry-level price of the regular car, would it provide value? Is buying the brand an
experiment?
Peformance
risk
Would this new type of car perform as well as a traditional car with which the consumer is familiar?
Operational risk Would consumers be comfortable enough to get used to the operations of the car when they may have learnt driving using the
conventional car?
Financial, operational and performance risks may be associated with the
perceived benefits of the brand and could be addressed as value risk.
It may be worthwhile for marketers to obtain primary information from the
prospective consumers on the types of perceived risks associated with the
product category or even when a brand introduces a new feature which is not
associated with the category. For example, if a brand of air conditioner (like
LG) advertises about a feature which provides clean air, then there are likely
to be certain perceived risks associated with the featurelike after-sales service
because of the complexity of the product, the value provided by the feature or
even certain apprehensions about the process through which such a benefit is
delivered by the brand.
Information search and marketing strategies
There are two aspects which are important with regard to information search
type of decision which influences the level of search and the nature of the
consideration set which influences the direction of search. There are six kinds
of marketing strategies possible with the two dimensions taken into
consideration.

As stated earlier, CDM is a dynamic process and the strategy chosen by a brand
should take into account the specific product/market situation at a given point of
time.
Maintenance strategy
This kind of strategy is probably applicable to regular FMCG products like
soaps, toothpastes, tea, coffee, biscuits and soft drinks. The brand is in a
situation where it is bought regularly (or habitually) and it has to ensure that the
commitment levels of consumers (to the brand) are sustained. Sustaining the
favourable behaviour or maintaining the habitual behaviour towards the brand
may involve product development, launching variants, ensuring that advertising
keeps the brand on top of the mind and avoiding stock-out situations in
distribution channels. The last one is as important as the others, because in a
competitive situation, especially in low-involvement categories, consumers are
likely to try another brand in case their favourite brand is not available at retail
outlets. POP is important to ensure that the consumer is further motivated to buy
the brand. Colgate, Close-Up, Surf, Horlicks, Britannia, Lux and Red Label are
some of the brands which have employed this strategy. Red Label launched its
brand with vitamins; Britannia offers a number of variants; Pepsodent
introduced a two-in-one toothpaste (gel with the usual white toothpaste). The
objective of such a strategy is to ensure that consumers do not leave the brand.
Iodex, Vicco, Amrutanjan and Robin Blue (Whitener) were brands which were
extremely popular a few decades back and if these brands had pre-empted their
competitors with updated offerings (as they did in recent times), they could have
maintained their stranglehold over the respective market.
Disrupt strategy
When a brand is not a part of the habitual buying pattern (not in the
consideration set'), there is a need for the brand to disrupt the existing decision-
making pattern. This is difficult because the consumer may not seek externa!
information (under nominal decision-making). Free samples and coupons are
ways to break the habitual decision-making of consumers oriented towards a
competitive brand. This strategy could be very useful for brands which are new
to the market and would have to compete with a number of established brands in
the respective category. A significant and a relevant product (brand) benefit
could also be useful to break the habitual decision-making. Fair & Lovely is
associated strongly with the category of fairness creams. The brand is being
used by a large base of consumers. A new brand Fairever (with the benefit of
saffron as ingredient) was able to capture a sizeable trial share when it was
launched in the market. There have been several brands like Ovaltime, Ragimalt
and Drinking Chocolate in the past several years in the category of malted
drinks. However, Horlicks continues to hold a dominant position in the market.
Competitive brands in this category could have built up an effective disruptive
strategy. A new brand of herbal shampoo would do well to sample the brand,
especially in specific geographical areas where national brands may experience
weak loyalty. Anchor toothpaste came out with sales promotional schemes in
semi-urban areas, where the loyalty with regard to the category may not be as
strong as it is in urban areas. Good retail brands offer excellent scope to
disrupt FMCG purchases associated with leading brands with which
consumers have been familiar for decades. Penetration pricing with advertising
visibility during the time when consumers down trade may be a very effective
disrupt strategy. Nirma Lime and Nirma Rose priced appropriately and
advertised widely may have disrupted consumers from making their habitual
brand purchases (as reflected by the market success of these brands). Low prices
especially with no-frill services, have succeeded well as disruptive strategies
in the category of airline services all over the world (Southwest Airlines being a
globally known example). Penetration pricing backed up by good brand equity
may also be an effective strategy in the fast foods category. The pizza market in
India is dominated by multinational brands and Amul's entry with a penetration
pricing policy (almost 60-70% below that of the existing brands) may be
effective in weaning away at least a cross section of consumers already
consuming the product. A value based on a higher price point may also be a
good strategyReynolds was introduced at a higher price point but consumers
accepted the brand because of the superior benefits associated with the brand.
Disrupt strategy could be also effective in retailing. The success of supermarkets
for the middle-class consumers as reflected by a network of retail stores shows
the manner in which consumers could be disrupted from approaching their
regular grocery stores in the neighbourhood. (It is to be noted that even today
almost 97 per cent of retail purchases are made through neighbourhood stores in
the country.) The ambience, the width of merchandise, the SKUs and the value
offered in terms of sales promotion across categories are some of the factors
which may have worked well as a disruptive strategy for such organized retail
outlets. The value (in terms of quantity and price) has been made a disruptive
strategy in the cola (soft drink) category by both Pepsi and Coke when these
brands introduced bottles priced at Rs 5. In a number of FMCG categories,
close competitors would keep resorting to both maintenance and disrupt
strategies especially when there is a need to achieve market share. Bisleri
introduced a number of SKUs with a view to increase its market share in the
category of mineral water in which the unorganized market accounts for almost
half the market.
Capture strategy
Limited CDM is an area in which consumers look out for very little external
search and they may repeat purchase the brand (unless it falls short on
availability). A brand which is currently being used by consumers should ensure
that it captures a large share of the consumer's purchases (large share, because
even in spite of the limited nature of decision-making, consumers may try out
other brands in categories like soaps and toothpastes). The evoked set has to
have the brand on top of the consumer's mind. There may also be a need to
introduce a number of SKUs to ensure that consumers do not leave the brand
(Close-Up, Fair & Lovely, Surf Excel and almost all leading brands in the
shampoo category are examples). This is important in the Indian context
because the unit price is of vital significance and consumers may buy different
brands for different occasions. The dominant brand (in the basket of purchases
concerning the category) should ensure that it increases the consumer's share of
purchases. In-store information (discussed later in the chapter), may be a useful
strategy. This may be a pre-requisite strategy for leading brands. The in-store
merchandising adopted by brands like Bournvita, Colgate and KitKat in
supermarkets are likely to influence the purchase decisions when consumers are
present at the retail outlet. Brand loyalty assumes a lot of significance in the
capture strategy. There may also be infrequently purchased items like antiseptic
lotions and air fresheners. A leading brand (for example Dettol or Lizol in
branded floor-cleaning category) should ensure that it develops the market,
builds the brand and captures a large number of consumers as the market for
the category evolves. For example, in a largely unorganized market for floor-
cleaning products (household care), Domex and Lizol have built the brands and
are attempting to expand the market. If a leading brand in a category (which is
yet to evolve into a mass market) does not take a pioneering lead, there may be
the possibility of later entrants making a dent into the market share of the
pioneering brand as the market evolves. Vim in the dish-washing category was
there in the market for several decades. In recent times, it was forced to come
out with variants and promotional campaigns because of the growing presence
of regional brands like Sabena and Shine-it. Vim launched the major Vim
Challenge campaign to ensure that it sustains its pioneering lead. Capture
strategy also emphasizes the need to introduce a downward stretch in a product-
line especially if a company is a leader in the market. Hindustan Lever Limited,
which was a leader in the detergent market, introduced Wheel following
Nirma's onslaught at the lower end of the detergents market. Monitoring the
environment and developing the product-line as the market evolves is an
important strategy. A brand like Colgate launched its gel version several years
after a competitive brand (Close-Up) was launched in the market to attract the
youth segment.
Intercept strategy
When the consumer is in the limited CDM mode and the brand is not there in
the evoked set, the marketer would have to intercept to ensure that the brand
gets into the evoked set. Sales promotion is one way of getting into the evoked
set and also ensure brand trial but the brand cannot get into the sales
promotion trap. When this happens, the brand is likely to get into the evoked
set only when there is a sales promotion announced. New brands could intercept
by getting the attention of the consumer through a strong positioning strategy
(even in a limited CDM situation). Aquafresh's toothbrush positioned strongly
on attributes (hence benefits), Promise toothbrush's positioning on its angled
design and Tropicana's health positioning for its pure juice are examples of an
intercept strategy. Another intercept strategy could be to reposition competition
(though sometimes there is a risk of using a positioning against established
beliefs). Savlon, the antiseptic brand, repositioned its competitor Dettol by
positioning itself as a brand, which is free from odour and the one which does
not produce a stinging sensation when it is applied to cuts. Adding new benefits
in a competitive situation could also be an intercept strategy. Fair Glow, a
fairness soap launched by Godrej, combines both the benefits of a soap and that
of a fairness cream. Even in commodities, intercept strategies could work. A
free flowing brand of salt offering with a specific proposition could be
examples. The intercept strategy could be useful for new brands to get
themselves established in a given category.
Preference strategy
As the CDM involves extensive information collection, there are situational
possibilities which could make use of this strategy.
(i) When the intention to buy the brand is high (as it is already in the evoked set
of brands).
(ii) When the consumer has already bought the brand and wants to consider
replacement of the product.
There is research evidence to show that intention to buy may not be a strong
indicator of final purchase (though a number of studies in the Indian context are
conducted on this dimension). But intention to buy indicates brand awareness
and even a preference for a brand. The gap between intention to buy and
actual purchase could probably be traced to the POP or the retail outlet
(especially for durables). The retailer's recommendation carries weightage in the
Indian market. A brand should ensure that the retailer gives a recommendation
about the respective brand only if it fits into the need structure of the brand.
This is important in the long-term interests of both the brand and the retailer.
Retailers would have to be trained on these dimensions.
A durable national brand may have around 5,000 to 6,000 (in same categories
even more) retail outlets and a major chunk of these outlets are likely to be
multi-brand outlets. It is essential for a brand to ensure that the right offering
as per the needs of the consumer is recommended by the retailer and not
offering which may be updated in terms of features. The consumer may develop
dissonance towards the brand and the retailer if he/she is pressurized into buying
an expensive TV. The preference strategy should ensure that the brand is
viewed positively even after it is bought. One more possibility of a change in
intention to buy could be because of WOM (on a competitive brand) obtained
from a personal source. A marketer may not be able to counter this directly, but
he/she can use the primary research on CDM of consumers who have already
bought a specific brand. Researching past decisions could be through
information on how the consumer knew about the brand he/she purchased,
various brands considered, the gap (if any) between intention to buy and the
final purchase and the various personal sources used for information search.
This research would enable a marketer to have inputs for preference strategies.
The preference strategy may also be associated with the existing brand the
consumer is using at a point in time. The preference strategy could be a part of
the customer relationship programme. There are brands like BPL, Whirlpool or
LG, which are not just in one category but in several categories. A brand which
has been bought by a customer (in any category) goes beyond the evoked set of
brands and creates an experience with the customer. The relationship phase
based on the experience determines the evoked set of brands not only when the
customer wants to replace the product, but also when the consumer desires to
buy a different product category in which the brand competes actively. Right
from installation or giving information on the usage of the product (by the sales
personnel or through a brochure in the regional language if required) to the
stage of reminding the customer about the replacement of the product at the
appropriate time, a brand (and hence the company) could work out a number of
dimensions associated with the preference strategy. This is a very powerful
strategy which could be used for customer retention. There are several brands
(in durable categories) offering exchange promotion for the replacement market.
There does not seem to be many brands which offer privileges for a consumer
who has bought the same brand in his previous purchase cycle~(Maruti in the
passenger car category attempted this for one of its models). The frequent flyer
programme offered by airlines is an example of preference strategy being used
to retain consumers (this has to be designed for profits).
Acceptance strategy
While the preference strategy tries to capitalize on the positive impact already
made on the consumer by the brand, the acceptance strategy attempts to create
an acceptance for a brand which is not in the evoked set of brands when the
consumer is about to pursue CDM. This becomes all the more difficult because
of strong and well-entrenched brands that would already be in the evoked set of
consumers. A strong brand name (with value perception) could be a good
acceptance strategy to get into the evoked set of consumers. Akai created a
value-oriented exchange programme, when it entered the Indian TV market.
Indian experience in durables has shown that value is as important or even more
important than the brand name. LG and Samsung (Whirlpool's strategy was
discussed earlier) are examples of acceptance strategy successfully created by
marketers through useful features. Santro's strategy discussed earlier is also an
effective acceptance strategy. An acceptance strategy should ensure that
consumers visit the retail outlet to know about the feature and benefits of the
brand. Automobiles and two-wheelers could advertise trial runs. Ceilo, the
brand of car, even came out with an extended trial period scheme in an effort
to motivate the consumers to consider the brand in the evoked set. Long-term
advertising with an emphasis on attracting attention (this would result in
incidental learning among the prospective consumers) is another type of
acceptance strategy. The objective of such a campaign is to get the brand into
the evoked set of consumers.
The different kinds of strategies suggested across types of CDM are suggestive,
and a number of variations are possible with the marketing mix elements. The
framework attempts to provide a structured perspective on CDM.
Dimensions of Information search
Information search could be explained in three kinds of dimensionsdegree,
direction and sequence. The degree of search represents the total amount of
search. This is associated with the number of brands, stores, attributes and other
information sources considered during the search process. Category killers, like
Vivek and Co. or Kids Kemp (the former for consumer durables and the latter
for apparel), carry a number of brands and it becomes easy for consumers to
compare brands or attributes. Consumers may also not visit several stores for
comparison purposes. Direction represents the specific context of search. The
focus in this kind of search may be specific brands or stores. The sequence is the
order in which search activities take place.
The degree of search is significantly dependent on the type of decision-making
process. An extended decision-making will involve a considerable amount of
information search. In the case of durables, if the consumer is satisfied with the
brand which was purchased, he/she may minimize the search time by
considering the same brand during the replacement cycle. Consumers can be
segmented based on the degree of information search (based on primary
research) and they could be grouped into a number of categories (suggestive)
low-search group, purchase-friend-assisted group (assisted by a known person),
high-search group or a moderate search group. A manufacturer of a durable like
a TV or a refrigerator may find that consumers who are in the high-search group
are more likely to buy the brand than other categories of consumers. The brand
could probably come out with advertisements which may encourage consumers
to search for information. This is more applicable to durable brands which offer
new features to maintain a competitive edge over other brands (Golden eye in
LG TV and flexigerators introduced by Whirlpool are examples). Consumer
segments which engage in a considerable amount of external search may be
easier to reach than consumers who rely on internal search. Consumers who rely
on internal search may probably be approached through direct marketing.
Marketers may be interested in the direction of search for a variety of reasons.
They would be interested to know what kinds of product attributes attract
consumers; the price range in which consumers are interested. Distribution
decisions may be fine-tuned based on where consumers buy products (type of
retail outlets and specific geographical locations). A brand may find that in a
geographical area, a specific store enjoys a considerable amount of store loyalty.
The company may not appoint additional retailers in that area. In consumables,
like FMCGs or house wares, in-store information or POP material may play an
influential role in CDM. There is growing research evidence to show that in
some categories, buyers make their decisions making use of in-store
information. Electronic information kiosks may be useful in large stores if
consumers need information about specific brands, sales promotions or about
the ingredients of brands. This may be applicable more to supermarkets, which
attract a large number of consumers.
The search dimension is concerned with the order of search activities.
Consumers may be involved in a brand search sequence (processing by brand)
in which each brand is examined along various attributes or they may be
interested in the attribute search sequence (in which brand information is
collected on an attribute by attribute basis). For example, a consumer may
process by price, warranty and features (in that order). Comparative advertising
could be followed by a brand which is confident of emphasizing its superiority
over competitive brands if consumers compare brands and attributes. This
advertising is becoming common in the automobile product category (Santro,
Indica and Wagon R are examples). Marketers may also be interested in finding
out the sequence in which information sources are being made use of by
consumers. They may, for example, depend on TV for awareness, newspapers
for specific details and WOM for a final endorsement by a source which they
consider as credible. It may be worthwhile for marketers to prioritize the
dimensions of information search.
Importance of in-store research (FMCG products)
o Do consumers compare prices when they buy commodities/essentials?
o What is the time consumers spend in reading in-store promotional
material?
o How many consumers check if a price deal is available at the store in the
product category they are about to purchase?
o Do consumers read the labels of the brands they select (especially if they
make a brand switch)?
o Do consumers spend time on brands placed at the entry point of the store?
o How many consumers buy products based on advertising/WOM when
they make the brand switch? How many change their decision based on
POP material?
o Do children influence consumers at the retail outlet?
o Do consumers change their decisions when co-operative sales promotion
is involved? (a brand from a category given free with a brand of another
categoryfor example, a Dettol soap given free with Lizol?)
These questions are likely to be useful specifically for a large retail outlet
dealing with FMCG products in an urban context.
CDMoverall perspectives
The model on CDM can be used with its interaction with individual process and
environment and marketing mix elements. Applying CDM along with several
situational factors (in a specific product-market situation) will enable marketers
to fine-tune one or several marketing mix variables and also to appreciate the
dynamic nature of CDM in a changing environment. CDM in an overall context,
viewed with primary information could help a brand/product manager to analyse
several alternatives in terms of formulating strategies. For instance, there are
several brands in the category of tea and there is a need to change the strategies
in tune with the changing environment. Consumers may select different brands
of tea for different occasions; some may even alternate between loose and
branded tea at the lower end of the market; companies have been attempting to
upgrade consumers while there has been a decline in the overall consumption of
tea. The beverage may also be competing with coffee and soft drinks. The
challenge, especially for a company with several offerings (HLL or Tata tea), in
the category is to ensure that there is an overall growth in the company's share
of the market. There may also be a need to expand the market. HLL has
introduced Lipton iced lime tea. When such an attempt is made, there are a host
of associated challenges. Should such a brand position itself towards growth? It
may be difficult to change the habits of elderly consumers who have been
drinking tea for decades. The younger segment may probably be more likely to
experience iced lime tea in between their cola consumption. What kind of
communication should be developed for the brand, especially if a lifestyle
positioning is attempted (it should not get lost in the lifestyle positioning
associated with soft drinks) taking into consideration the long-term sustainable
core proposition of the brand? Should the appeal be inner-directed or other-
directed? (Inner-directed appeals are oriented towards the psyche of consumers
associated with themselves. Other-directed appeals are oriented towards how are
individual attempts to impress others). How should the distribution channel for
the brand be planned? The brand is being offered through fountains (at a lower
cost per cup) so that trial would be initiated. When the brand was introduced, it
was introduced through terra packs. Should the brand be introduced through a
number of SKUs (stock keeping units)? The brand may have to choose a
specific occasion to position to ensure a place in the mind of the target
segment.
As can be observed from the example, the marketing strategy for any product-
line (with several brand variants) is a continuous process and the model given
here may be useful for marketers to incorporate changes in marketing mix
elements over a period of time.

The model offers the following inputs.
o What aspect of the marketing mix elements should be changed/modified
at a specific point in time? (Planning this would also help the organization
to initiate product management initiatives.)
o How should the changes with regard to a brand be viewed with the other
brands marketed by the company? (Brand equity in terms of what it
stands for and cannibalization are important aspects associated with this
input.)
o How could CDM be influenced taking into consideration competitive
offerings/strategies?
o What aspect of the individual (psychological) is most suitable for
formulating/modifying the communication associated with the brand?
(In the example discussed, should the brand of iced tea shift to attitude creation
after creating basic awareness about the new products?)
The soap market in recent times has been posing a number of challenges for
marketers. The popular segment (Rs 7-11 onwards) grew by just two per cent
(around the time period 2000 to 2001) and the sub-popular segment (Rs 6-7)
grew by sixteen per cent. Research studies have also indicated that consumers in
this category down-trade (they have switched over to an offering that is priced
below the one they were using). Lux is an international brand and in India HLL
has Lux Beauty Bar, Lux International and Lux Sunscreen variant. Lux Beauty
bar is in the popular segment and has always been differentiated based on its
packaging and fragrances. The brand also has a strong brand property (celebrity
association over the last several decades). HLL has attempted to strengthen the
differentiation of the brand using new ingredients like honey, milk and almond
oil. The product oriented (rather than image oriented) image enhancement is
probably to ensure:
(i) the brand does not get into a price war (this is likely to dilute the equity of
the brand); and
(ii) to reverse the pattern of down-trading by offering a superior productas the
growth is in the sub-popular segment, the company probably hopes to upgrade a
cross section of consumers in the sub-popular segment to Lux based on superior
product attributes (Lux at this point in time had about one-third of the popular
soap market). This is yet another situation which emphasizes the importance of
the dynamic nature of the process of CDM with its environmental linkages.
Cognitive dissonance and CDM
There is a distinctive possibility (in the Indian context) of a consumer thinking
about a brand after he/she had purchased another competitive brand even after
careful deliberation, as there are a number of brands in a specific category.
When most brands have a number of features in the same price range, the
consumer could experience cognitive dissonancehe/she experiences dis-
equilibrium (tension) because he/she feels that the unselected alternative (brand)
may have been a better choice than the brand selected. This aspect of CDM is
cognitive dissonancethe perceived inconsistency between the decision-
making process and the final choice made after the sale is over. This could
happen only when the unit price of the product is high, there are many brands
which are compared by the consumer before deciding on the purchase and when
there is an effort expanded in terms of information search. There may also be
self-esteem involved in certain products like furniture considered for home to
reflect a specific lifestyle. Whenever this kind of dissonance is experienced, the
consumer obtains more information about the selected brand, changes the
attitude towards the brand or rationalizes his/her decision of having bought the
brand. A brand of refrigerator advertised on the following lines: If you have
bought a refrigerator other than... brand, our condolences. This is an attempt to
trigger cognitive dissonance among purchasers of competitive brands with the
objective of dampening the WOM. Automobile companies in developed
markets (a highly competitive one) create exclusive advertisements for buyers
of the brand reassuring them with slogans like what a feeling! or emphasizing
that they have made the right purchase. Improper information/assistance on
product usage can create dissonance, when the consumer attempts to eagerly use
the product after purchase and installation. Good warranty policies may also be
useful to prevent cognitive dissonance. A company could further face
dissonance from buyers of its brand when it introduces an improved version (in
terms of value) within a short time after the consumers had bought their earlier
version. On the other hand, a competitive situation may require the company to
introduce such versions. One solution is to have a value-based exchange
programme for such consumers and another is to ensure such improved versions
are timed well.

TOUCH OF REALITY
Microwave ovens were introduced more than a decade ago but they have not
picked up even in urban markets to a substantial extent (where consumers are
likely to experience time pressure and convenience, and the microwave oven
may add value to the quality of life). In a market, where about six to seven
million televisions are sold, microwave ovens have reached a mark of just about
a lakh of units. There have been several reasons for the product's slow growth
lack of awareness of benefits, the influence of traditional practices, high price,
apprehensions about the preservation of nutrition and adaptability to ethnic
delicacies may be some of the important reasons. During 2003, there was an
increase in the volume of the products sold. It is interesting to note that several
brands offered some features which may have motivated consumers to buy the
product. Whirlpool introduced a design which was capable of producing the
tawa effect required for rotis and crisp South Indian preparation. Samsung
introduced an offering with a special ceramic coating, which is supposed to
preserve the nutrition of the food cooked. Besides, there were several offerings
below Rs 6,000. Consumers should have the motivation to buy the category and
to buy a specific brand. Food is a part of any culture and preparation of food is a
tradition which is also a part of any culture. If innovative products could be
adapted to important aspects of eating culture in a given environment, the
consumer's intention to buy would get translated into sales.
Impulse buyingan emerging trend
There is marketing explosion all around ranging from tea to high-tech cars and
marketers are getting out of marketing inertia using several concepts of
consumer behaviour.
o A consumer visiting Food World picks up the KitKat chocolate he/she
never intended to buy.
o A kid influences his/her mother to buy the Kissan jam based on the funny
commercial he/she saw (in which a leading celebrity endorsed the brand).
The point to be noted is that the kid was able to recall the brand at the
retail outlet based on the visual merchandising done at the store. Another
interesting aspect is that the display was organized when the brand was
creating the pull effect through advertisements on the TV.
o In a different shopping context at Shopper's Stop (different because of the
products and consumers involved in the situation), a corporate executive
makes use of her credit card to pick up a brand of watch which was
associated with a contest at that point of time.
In all the three situations, the consumer has bought the product (or the brand)
without planning to buy it. The power of impulse buying is manifesting itself at
the retail outlets. While the degree and nature of impulse buying may vary from
one product situation to another and from one target segment to another, it may
be worthwhile to understand the dynamics of impulse buying.
Impulse buying is the purchase which has not been planned by the consumer. It
is to be noted that the unplanned aspect of the purchase will be oriented
towards the urge to gratify an impulse. In the examples mentioned, it could be a
reminder of the taste of the chocolate sparked off by the display or the urge of
the kid to connect with the celebrity shown in the advertisement or could just
be the urge to possess the brand of watch triggered by the context associated
with the brand. In fact, studies abroad have revealed that impulse buying
resulting in a dominant form (because of which a considerable amount of time
and money is spent on products and brands) could give rise to a specific
category of consumers who could be labelled as Shopaholics. In today's
marketing context, which is characterized by growing levels of aspiration,
willingness to spend on the part of consumers, influence of westernization and
the availability of products, marketers and retailers have several opportunities to
make use of impulse buying. While impulse buying could also be applied to the
category of durables (high-end watch brands targeting the up-market
consumers), it may be worthwhile to discuss impulse buying in the context of
FMCG, as these cover a broad range of consumers. Besides, shopping in
supermarkets (at least in urban cities) makes it important for retailers to
appreciate the value of impulse buying.
Reference Group and their Implications
o Sachin Tendulkar appeared in Pepsi and Boost advertisements.
o Amitabh Bachchan endorsed BPL and Cadbury's brand.
o The traditional grandma (very Indian) appeared for Ayurvedic Concepts
(which was later changed to Himalaya brand), which offers a number of
over-the-counter remedies based on traditional Indian medicinal system
of Ayurveda.
o Lux brand of soap has been in the Indian markets for decades using a
topical celebrity.
o Gold Flake and Charms cigarettes (during the 1980s) projected the brand
as the one popular among urban youngsters. Bacardi is another brand
which made use of the group to forcefully market its brand of liquor.
The appeals given are some of the appeals which make use of reference group
concepts. A reference group is a set of people with whom individuals compare
themselves to shape their attitudes, values, knowledge and behaviour (including
buying behaviour). These concepts are used by brands in a number of situations
and celebrity usage is one of the vital applications of reference groups. A brand
would derive value from celebrity associations if celebrity usage is done in a
conceptual manner. Marketers would need to know the aspirational groups with
which target consumers may like to associate themselves. These aspirational
groups would have to be represented in a manner which would appeal to target
consumers. There could be three kinds of reference groups. The aspirational
group is one which the consumer admires and likes to emulate but a group in
which he/she is not a member. The consumer does not have a face-to-face
contact with this group and hence it is a secondary group. Associative reference
groups are those to which the consumer belongscircle of friends, family,
college group, sports club, professional group, etc. The consumer has face-to-
face contact with the group and hence it is a primary group. Besides the
aspirational group, associative groups are also useful to marketers in their
positioning strategies. For example, Allen Solly, with its semi-formal apparel
would have appealed to specific professional groups like software and
advertising professionals who work in an informal culture. The very successful
Lalithaji campaign from Surf during the 1980s would have appealed to a
number of middle-class housewives because they would have identified
themselves with Lalithaji. While there may have been an overtone of
aspiration in the hard-bargaining character of Lalithaji, it typified the
behaviour of a middle-class housewife. Dissociative groups are those groups
which an individual may like to avoid. McDonald decided not to use Ronald
McDonald in its advertisements for the Middle East market, because it felt the
religious consumers may avoid the trendy and Zany model with their religious
beliefs.
Reference groups could also be described with a number of other criteria.
Degree of contact (primary or secondary) is one. Degree of formality is another
criterion. An athletic club may have a number of formal rules which would have
to be followed by its members. But an informal friendship group does not have
formal groups. Homophily is another criterion which may be important,
especially for products which may be in the category of apparel, perfumes,
cigarettes, watches, etc. Homophily refers to the degree of similarity among
group members. This is because consumers with similar interests are likely to
meet frequently and exchange information on a variety of aspects associated
with buying behaviour and WOM is a very strong influence. Density refers to
the extent to which group members know each other well. Even household
neighbourhoods may differ in terms of density associated with groups.
Neighbourhoods with a western lifestyle (compared to ethnic lifestyle) are likely
to reflect a lower degree density. The degree of identification, though not
associated with groups, may be important because this deals with the degree of
identification a consumer may have with a specific group. A consumer may be a
part of the software group but may like to dress more formally. Individual
identification with the group has an impact on conformitythe extent an
individual would like to behave as the group wishes.
Another characteristic of a group may be tie-strengtha strong tie may indicate
a close and intimate relationship and a weaker tie may reflect a distant one with
limited interpersonal contact. MCI, a telecom company in the US, introduced
the Friends and family programme offering discounts to consumers who were
able to identify about 20 people who they call frequently (strong ties). Weak ties
are also useful, because they can act as gatekeepers to transfer information to
various groups. A consumer can learn about a brand (a brand of bicycle for a
teenager) from a weak-tie and transfer the information to a group with which
he/she has strong ties. Sometimes weak-ties may also result in embedded
markets, because they can influence how a consumer may react to them. For
example, a consumer may prefer to buy an Amway cosmetic or a Tupperware
container from an agent who is his/her neighbour rather than from a unknown
agent though the relationship tie may be weak between the consumer and the
neighbour.
TOUCH OF REALITY
Celebrity advertising is popular in India. There is a need to match the celebrity
used with the brand's personality, taking into consideration the target segment of
the brand. Yamaha, Fastrack (eyewear) and Wrangler are brands which made
use of John Abraham. Yamaha, the motorcycle brand, which has been in the
Indian market for the past several years, used the model in an effort to update
the image of the brand. Smart, sporty and innovative are probably the
characteristics which bind the brand with the celebrity. Both Yamaha and
Fastrack have reported good results from using the celebrity. Apart from such
an objective, a brand can also use a celebrity to raise the awareness of the brand
in a low-involvement category like bulbs. Using the sheer charisma of the
celebrity is useful in several categories. Amitabh Bachchan is used in several
categories (See Plate 7). Consumer electronics (BPL). chocolates (Cadbury's),
soft drink (Pepsi), detergent powder (Rin), pen (Parker), battery (Eveready), car
(Versa) and bank (ICICI) are some of the categories which have used Amitabh
Bachchan. Rural markets too are known for celebrity advertising. Decades ago,
Rajdoot, the brand of bike, used a celebrity known for ruggedness and macho
appeal. Sunny Deol, associated with ruggedness and a relaxed nature, is used by
a tractor brand. Pepsi has used celebrities popular with youth in a specific
geographical region. The readers can also refer to another Touch of Reality
box provided on celebrity advertising in the section on brand building.
Reference group as a powerful source of influence
The importance of reference group influence can be seen in the figure as it is a
personally delivered source and also a non-marketer dominated one. Opinion
leaders (who provide information and opinion about a product or service to
opinion seekers) and market mavens (who provide information about different
products or retail outlets or other market-related dimensions to opinion seekers)
emerge from one of the quadrants of the diagram.

While advertising can create aspirational groups, the credibility of sources in
quadrant 4 is likely to be high when the consumer interacts with them,
especially for consumer durable products. It may be worthwhile for marketers to
identify opinion leaders and market mavens through marketing research.
Opinion leaders can also be used in advertising. Celebrities, models and
representatives from various social groups could be used in advertising as
opinion leaders. There may be subtle differences in the usage of such opinion
leaders, depending on the objective of the communication. Surf's Lalithaji is an
opinion leader (common man appealthe consumer was able to identify
herself with the model and feels that the product would be good enough).
Bournvita, Horlicks and Complan also use housewives (mother's role) and
children in an attempt to reflect opinion leadership in their advertisements.
The grandma of Himalaya (Ayurvedic concept) could be a spokesperson for
the brand as she endorsed all offerings of the brand introduced from time to
time. Kapil Dev and Tendulkar played the expert role when they advertised for
Boost ('success of my energy'). An expert is a person (opinion leader) who
could endorse a brand based on his/her knowledge and training in a specific
field (a sportsman has to have knowledge and training to spot out a drink which
supplies energy). The endorsement role can be played by a celebrity simply by
reflecting the satisfaction over a brand used (more by usage rather than by
expertise). Celebrities used in Pepsi, the ones used for passenger cars and
Amitabh endorsing BPL brand would fall under the endorsement type of
celebrity appeal. Surf Excel detergent used the slice of life appeal in its
reference group-based advertisements in which the consumer understands how a
problem is being solved by the product (for example, stain removal). The target
segment is likely to associate themselves with the model shown to follow the
solution suggested by the brand.
Normative influence
This aspect deals with the social pressure designed to encourage conformity to
the expectations of others. Some of the normative part of influence is acquired
by the consumer during his/her socialization process with the family. The
consumer will develop certain behaviour about the types of product categories,
types of brands to be bought, places to purchase them and methods of using
them. Normative influence affects brand choice congruence. Consumers are
very much likely to buy what others in their group buy (generally in certain
product categories like clothes, foods or cars).
Product characteristics affect normative influence depending on whether the
product is consumed in private or public (where people can see it). Water
heaters and antiseptic lotions may be private products and cars and two-
wheelers may be public products. Products could also be classified under
necessities and luxuries. Research studies have established that reference groups
could influence product category purchase or brand choice or both depending on
the types of products and how they are perceived in a given product/market
situation. For example, choosing a brand of two-wheeler may be associated with
reference group influence rather than choosing a brand of kitchen mixer. Luxury
products, especially if they are public products like hand-held camcorders or
high-end cameras, may be subjected to reference group influences.
Consumer characteristics also affect normative influence. Certain consumers are
susceptible to interpersonal influence and they may have a need to enhance their
self-image by acquiring products or brands which they think would be
approved by the reference group of which they are a part. They may exhibit
conformity to enhance their self-image. A personality trait called attention to
social comparison information is related to normative influence.
The following diagram reflects the degree of reference group influence on brand
choice depending on the nature of the product.

(Note: Marketing research is required before any categorization is done using
this framework.)
Informational influence
Informational influence is the extent to which sources offer information to help
consumers make decisions. This kind of influence is important because
reference groups can provide information which could reduce the information
search for consumers. Informational influence could be triggered by specific
advertisements which create awareness on products/brands/features,
Informational influence may influence purchase decisions when offerings are
complex and the perceived risk is high. This is also likely to work when
perceived brand differentiation is high among durable products. Consumers who
are oriented towards informational influence will seek product-relevant
information. Regarding consumer characteristics, information influence is likely
to be greater if the source communicating the information is regarded as an
expert (an ace racing champion communicating the benefits of a car's features).
Informational influence may also benefit FMCG products. An event associated
with coffee sponsored by a company like Hindustan Lever or Nescafe could
trigger off product-related exchange of information on coffee (such events
would provide the content for informational exchange to take place). Common
man appeal (as appropriate to the product and target segment) may
have informational and normative influence on the target segment because of
source similarity (as they perceive the source to be similar to themselves).
Word of mouth and reference groups
Word of mouth refers to information about products or services communicated
verbally. WOM can be persuasive because of the credibility associated with it
(vis--vis marketer-dominated media) and also because of the face-to-face
association involved in the communication process. The credibility is higher
because the consumer usually chooses his/her sources for WOM. Research has
shown that WOM could be seven times more effective than print media, twice
as effective as broadcast media and four times more effective than sales
personnel. WOM could have a dramatic impact (positive or negative) on the
perception of consumers. WOM referrals can be very effective in consumer
durables where there are a number of well-known brands but as a product
category the consumer perceives risk because of the high unit cost. Even in the
case of FMCG products, WOM could be effective. Some of the services like
medical, entertainment, financial and beauty care could also benefit through
WOM as a number of intangibles are involved in these services. Body Shop,
which manufactures environment-friendly cosmetics, has created international
awareness through WOM. Marketers would have to promote favourable WOM
and prevent negative WOM. BMW, the reputed brand of premium cars is
known to sell cars at reduced prices to diplomats to trigger WOM about the
brand. Viral marketing is also a variant of WOM. Hotmail is probably an
interesting example of how viral marketing could work. With millions of
hotmail users opening their account, it became an important advertising site.
There are several strategies to deal with rumours when they carry negative
WOM. One strategy is not to react at all to rumours. The consumers may
actually hear about the rumour when marketers of a brand attempt to correct it.
A study found that 35 per cent of consumers learned about McDonald's worm
rumour through the brand's anti-rumour campaign. A second option is to out
down the rumour on a limited basis responding only to those consumers who
also enquired about it. Procter & Gamble sent information only to those
consumers who enquired about the controversy surrounding their logo (which
had man-in-the moon perceived to be associated with devil worship). Another
option is to discretely deal with rumours. When the public in the US perceived
oil companies to be greedy, the companies launched public campaigns
highlighting the socially desirable things accomplished by them. Another option
is to use creative advertising to refute the rumour. GM launched an advertising
campaign designed to put down the rumour that it was getting out of business. It
advertised that its brand Oldsmobile sells more vehicles in America than
Mercedez-Benz, Infiniti, Acura, BMW Volvo and Lexus combined. Online
communities could also be used to refute rumours or bad WOM. A brand would
benefit building an online community, which could be useful both to spread
positive WOM and to control negative WOM, especially at a time when there
may be several anti-brand sites which could be set up based on the negative
experiences of consumers (Wal-Mart and P & G are brands which are
attempting to come to terms with such sites). The movie The Witchblair
Project became a runaway success after it was able to creatively construct an
interactive site (blairwitch.com) by which browsers could get involved in the
story. The advertising expenses for this movie was insignificant compared to the
$200 million for the movie Godzilla (which resulted in US market revenue of
just $138 million). Rowling (creator of Harry Potter) sold five million copies of
books more because of WOM than due to any creative advertising. There are
companies in the developed market which attempt to quantify the impact of
positive or negative WOM on brands through research studies tracking WOM.
TOUCH OF REALITY
Taste is a very strong aspect of any culture and tea is one of the categories in
which the consumer is extremely sensitive to taste. There are two kinds of tea
dust and leaf and the strong (kadak) taste of dust is very much a part of the
Indian psyche, with the leaf type of preference (milder taste) more prominent in
a cross section of urban markets. Parivar, a brand of tea that was mentioned as
the fastest growing brand in the category by AC Neilson ORG-MARG,
managed to create a preference for leaf tea, despite the milder taste and high
price (leaf tea is costlier than dust variety). Parivar was introduced in
Maharashtra villages at Rs 42/250 g when dust tea was retailing at Rs 32 for the
same quantity. Innovative promotional approach with an ethnic touch and a new
approach to retailing (which too had an ethnic touch) was responsible for the
success of the brand when several other established brands failed to evoke such
a response even after the traditional approach of bombarding the consumer
either with advertising blitzkrieg or following hackneyed sales promotion
methods. Parivar, meaning family (a family is a strong word in the Indian
cultural mindset), employed a novel and ethnic promotional method to create
awareness and interest among rural consumers. Parivar, branded nameplates
were given to households who could write the name of the household and hang
it on their doors. WOM spread the novel scheme and the brand made contact
with about five lakh rural consumers. Recognizing the fact that the village
community respected and had headmasters and teachers of schools as opinion
leaders, the brand conducted quiz on general matters in schools. The quiz also
had some questions on the tea-drinking habits. School children were given a
sample of the brand besides erasers. Villages had unemployed youth who were
used as agents of the brand to make contact with retailers and households. With
very strong reference groups created with a careful selection of opinion leaders,
the brand was not only able to achieve rapid strides but also achieved a rare
marketing accomplishment in the category of tea among price-sensitive
consumers. It was changing the taste from dust to leaf at a price pointan
ethnic version of creating a community!
Brands and Online Positioning

The figure deals with two dimensions which may be of use to brands to position
themselves with regard to online positioning. A brand could have a high
attribute orientation and a high community orientation. Brands which have been
launched on lifestyle to build itself over the years but which are required to
enhance their attributes due to intense competition could follow this approach.
Close-Up is a brand of toothpaste which was launched in the mid-1970s in India
with the lifestyle appeal of Close-Up smile which featured a boy and girl with
romantic overtones. Over the years the brand has followed the same positioning
slant and has been targeting the youth. With competitive brands following the
same approach and brands from several other categories following similar
positioning the brand seems to have lost its positioning lustre. Online
positioning involving a youth community, which could be achieved through a
few contests on updated attributes with regard to the product offering, could
reposition the brand effectively. Community orientation is also in
synchronization with the target segment of the brand. A brand having a low
attribute orientation could have a high community orientation. Cigarette brands
and soft drink brands, which can formulate little product differentiation
strategies, could develop a community of brand users in a sustained manner.
Mountain Dew's positioning, which involves a group of youth, is in tune with
the online community orientation. Low online community orientation with high
attribute orientation could be applied to brands in any category which is highly
innovative and sustains a product-line which addresses the changing customer
needs. While community orientation could help any brand to build itself, in a
country like India where mass markets rule volumes, a durable category brand
like Haier (the Chinese brand which has already entered India) may like to
address the mid-market and develop a strong product attribute association with
thousands of consumers who may not have personal access to computers. Low
attribute orientation and low online consumer community orientation would be
suitable to a number of no-frill brands at the lower end of the market which
competes with unorganized offerings (offerings which are marketed at the local
market and the ones which may not be marketed in a systematic manner or the
offerings which may not have completed the legalities required for marketing
them) required for marketing the offerings in the category in a market like India
(electrical appliances, watches and footwear in the Indian market are examples
of such product categories).
TOUCH OF REALITY
Innovation in the digital age matters to online brand positioning. Functional
attributes and community orientation can have a tremendous impact on the
WOM among consumers. The video gaming market is a booming market, and
Play Station 2 from Sony is a popular gaming device. It sold 91 million consoles
in about 5 years' time (21 million in Asia). Microsoft competed with Sony by
introducing Xbox in the video gaming market in Japan (the second largest
market for game console after the US) but this failed. Microsoft sold 21.9
million game consoles (1.8 million in Asia). But, Microsoft is likely to have a
head start (in terms of time) with its Xbox 360 before Sony introduces its Play
Station 3. Xbox failed, as it did not have rale play-based fantasy games that
are popular in Japan (The kill them games are favourites in the US market).
Xbox 360 was launched in the US market during the Christmas of 2005 and
consumer reaction is promising. Video gaming has a strong community
orientation (with most users likely to have an online orientation towards
relationships in general) and competition in such markets heats up with WOM.
Online brand positioning in such categories will benefit from community
building that lays the foundation for a cult brand.
Perceived risk and branding
With consumer markets opening up, several product and service categories, one
of the important considerations which requires a mix of concepts and marketing
practice, is the facet of perceived risk while dealing with consumer products.
Perceived risk in the psyche of consumers poses several interesting questions as
well as challenges for the marketer. The following are some of the questions
that the marketer needs to answer if there are issues concerning perceived risk.
o What kind of perceived risk is relevant to a given product category?
o What are the perceived risks associated with new-concept products?
o Can perceived risk vary according to the target segment?
Product category and perceived risk
The basic fact is that consumer durable categories will be associated with
greater perceived risk than FMCG because of the price factor involved. But
there could also be factors beyond the basic price-related risk which deal with
the value (in terms of functionality) associated with the product. A hair
colourant has the social risk associated with it. There is apprehension in the
mind of the consumer whether the promise of colour and its impact on his/her
appearance will result in proper social approval because image and self-esteem
of the consumer is associated with his/her product category. It is in this context
that the brand name provides reassurance to the consumer on the outcome of
product consumption. A computer institute advertises that its courses address
the placement risk associated, with the outcome of going through the course.
Such risks increase if the service advertised is something with which consumers
are not familiar. A few institutes which advertise for their air hostess courses
make a mention of the placement potential of their courses to reassure the
candidates (consumers) about the positive outcome of the course. Hospitals
brand themselves to address the perceived psychological risk of patients. Such
brand building (not necessarily through advertising) is helpful especially when
consumers do not have much expertise in the given service/product category.
Even in a familiar product category, a well-known brand can help the marketer
to establish confidence in the mind of the consumer when the brand has a new
offering about which consumers have no prior idea. Citizen's Ecodrive watch is
a good example. Being a new concept in watches, the consumer's perceived risk
would have been far more greater without the familiar brand name. When
consumers have perceived risk containing safety (physiological risk), branding
is vital. It will be interesting to note that in a category like talcum powder for
babies, Johnson & Johnson has been having the stranglehold over the market for
several decades. Though the sub-category is a niche market which commands a
premium, several other brands (including Pond's) have not been successful in
the Indian context. The target segment consisting of mother as the consumer is
unwilling to try out any other option when the brand has been perceived to be
safe for several decades. A well-known brand of medicine usually taken for
fever was found to be insufficient on several medical parameters by a reputed
product testing association. However, in reality, several consumers were likely
to stock the well known brand of medicine because it has been perceived as the
best by doctors and consumers for the last several years. Glaxo at one point in
time was producing two brands of milk substitute for infantsone in Glaxo's
name and the other with some other brand name. Consumers bought Glaxo in
large numbers over the other brand because of the aura of assurance provided by
the brand. Branded offerings in several categories of products offer value but in
certain sensitive categories where consumers strongly perceive
usage/performance/other risks, brand names offer an intangible value, which is
reassurance about the ability of the brand to tide over the perceived risk. While
value-based perceived risk is some thing which is a part of the normal buying
process which has a focus on the tangible aspects of the offering from the view
point of the consumer, the other kind of risks are more associated with the
positive intangible power of branding wherever the product category is
appropriate.
New concept products
There is a difference between products with which consumers are familiar and
those which are new to consumers. The fundamental aspect is whether these
new offerings are substitutes to the existing offerings or whether these offerings
solve a problem which is not addressed by the current offerings in the market.
For example, ATM is a new offering and to a great extent substitutes the service
at the banks if money withdrawal is considered. A consumer can withdraw
money any time from several locations. If perceived risk associated with such
an offering is considered, the target segment has to be taken into consideration.
Upwardly mobile who are engaged in high paying jobs and who have a
compressed time schedule during working hours will perhaps have little
perceived risk as against retired pensioners who also need to draw money
frequently to manage their expenses. Fear of the machine not working,
apprehensions about getting used to the operation and more than anything else,
not having human contact as in a bank are likely to discourage such segments
from making use of the machine.
Diffusing durable categories
If a product like a dish-washing machine is considered, even the urban segment
similar to the one, which is receptive to ATM, is likely to be resistant to the
product due to several reasons. Though such a machine too is a substitute to
manual labour, which is normally employed at homes, it offers several other
advantages over such a substitute. It can be used any time and it does not
depend on any timing during which manual help is available. The first risk is
value risk. Would it offer as much value indicated by the initial price of the
machine? Another risk is about the performance of the machine. Would it
perform as dependably as manual help? Usage risk is another. Would it be
easier to use or will it be complicated? With these kinds of risks, it is usually a
small percentage of consumers who are classified as innovators who may try
such a product. How could an unknown brand tackle such risks. Selling the
concept and carefully locating the target segment is vital because the WOM
about new products is crucial during the initial phases of the launch. The
washing machine market though a limited one has grown in the urban markets
over the years even though the product was completely a new offering when it
was introduced a few decades ago. In contrast, the vacuumizer (a product
introduced by Real Value company to preserve food in its original flavour) did
not take off at all. When such new offerings are introduced, it is imperative to
find out how the product is likely to be useful to the maximum extent to a
specific segment. This requires careful analysis of several segments. A dish-
washing machine is likely to be useful to a high double-income family, which
has a busy lifestyle both on working days and weekends. The family resides in
posh residential areas where manual help is difficult to hire or not safe to hire
because of security reasons. The family requires the dish/utensils being washed
within a short notice and the household would also use a variety of utensils
ranging from the traditional ones to microwave-type ones. Being in the higher
income bracket, such a segment will also be price insensitive provided the
product offering is a good one. Due to the demands which need to be met with
regard to dishwashing, this segment is likely to perceive a better value in a
dishwasher than a typical higher middle class family where employing hired
help for such household purposes is almost part of the culture. Performance risk
and value risk (based on both the result of using the machine and dependability
of the machine) are the ones to be addressed if such a segment is to be
approached for marketing the product. Product demonstration during the presale
phase is a good phase to start the marketing effort after the target segment is
identified. Door-to-door selling is one of the methods but given the time
pressure of the segment and the need for privacy, this method may not be the
best alternative. Besides, adopting the method for an unknown brand may not be
a value-adding approach as consumers may be even less willing to entertain a
sales person when he is associated with an unknown brand. The brand should
demonstrate in high-end outlets where the target segment visits for making their
purchases, though in different categories of products. This is a situation where
an unconventional approach to retailing is likely to work to the benefit of the
brand. Following up on the leads generated through demonstration and ensuring
complete satisfaction with the brandright from usage aspects for best results
to postcare service for the productis likely to be effective in spreading the
good WOM. The higher end segment today is exposed to several kinds of
information and the conventional advertising with the claims of the brand may
not be as effective as the convincing WOM perhaps from a neighbour or a
colleague at work. The innovators (in this case, consumers who initially try out
the product) have to be given extra attention as they may be opinion leaders
consumers who are approached by other prospective consumers with regard to
the new product offering. What is to be remembered by marketers is that value
of a new product to the market is defined by the target segment and it could be
convenience, time saving or any thing which will enable them to make the
quality of life better given their lifestyle pressures: value may not just stop with
performance or functionality viewed in the traditional sense.
Intention to buy matters
There may also be consumers who may try out the product during the
demonstration stage or follow-up stage, but who may not buy the offering.
These consumers offer a rich source of information concerning the
reasons/resistance associated with the new offering. A consumer may not
purchase the offering because he/she may feel like waiting till the offering
gathers ground among a significant number of consumers. In an emerging
market like India, given the low penetration levels of even products with which
consumers are familiar, intention to buy is a strong factor in favour of the brand.
Consumers who have a strong intention to buy but who may not like to be
innovators have to be approached in a different manner. They may perhaps like
to interact with satisfied consumers: they may have to be convinced about the
seriousness of the brand through specific information on manufacturing or the
support infrastructure created by the company. There may be another segment
which has been experiencing bad WOM not about the brand but with the
category itself and the company should attempt to create the intention to buy in
the minds of such consumers. For example, the introduction of electronics in
several products/devices like cars, washing machines and electric cookers
initially created apprehensions among consumers. When Kinetic Honda
introduced the initial version of its scooter (which incidentally was not the first
offering in the scooter category), there were apprehensions about its
suitability for Indian roads and the company sponsored an event associated with
a rally to Himalayas to build the brand's credibility.
Addressing perceived risk depending on the needs of a specific segment
requires in-depth information about the segment and it also requires a well-
planned approach. Direct marketing and selling can be a part of the approach
after the intention to buy the new offering has been established in the mind of
the prospective consumer. Perceived risk is an area where the conventional
marketing mix elements could be used in an unconventional manner: changing
environment demands a creativity of that kind.
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Marketing and Branding: The Indian Scenario


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References

5
Role of Promotion, Marketing Communication
and Marketing Mix Elements in Brand Building
The Theme of Branding
Branding, by virtue of its outward presence with regard to the marketing
discipline and glamour orientation, has attracted professionals both from
marketing and other functional areas in an organization. The traditional role of
advertising is changing with changes in the lifestyle of consumers, emergence of
digital channels and the need to optimize on several methods of promotion. This
is from both the viewpoint of promotional effectiveness and the need to
economize on the monitory outlay, involved in promotion. Besides, there is also
the challenge of developing and nurturing brand associations amidst intense
competitive brand building. This chapter on branding attempts to address and
impress upon three aspects. First, brand building in the present-day context
involves a combination of several factors relating to value, not just advertising.
There is a need to apply holistic marketing to ensure that value is delivered to
the target market. Second, there is a need for a conceptual approach towards
marketing communication to ensure that the strategy blends with the overall
brand strategy. Third, various issues emerging from the first two sets of factors
are addressed in the Indian context, taking into account the unique nature of
Indian markets.
TOUCH OF REALITY
Keniche Ohame mentioned that any nation that has less than US$ 10,000 as per
capita income is a developing economy. About 86 per cent of the world's
population lives in developing economies and most of the multinationals have
been concentrating on the other 14 per cent of the world's economy. The
challenge for marketers especially in emerging or developing economies
therefore is to develop products that are adaptable to such markets and
communicate the value of such products to consumers through branding.
Communication alone is not likely to sustain the success of marketers in such
economies. MTV has less than 20 per cent of non-domestic content in its
programmes. Hindi programmes in India, salsa-oriented ones in Brazil,
programmes oriented towards family values in China and programmes with
strong islamic content in Indonesia back up the success of the channel that reach
the youth all over the world. Hindustan Motors in India with an Australian
partner developed the eight-geared Rural Transport Vehicle (RTV) that has
flexible seats for accommodating people and cargo (a strong need in the rural
markets of India), shock absorbers to take on rural roads and minimum
requirement for after-sales service. Intel has developed the community PC that
can work with electricity interruptions, self-booting as a part of overcoming
problems and can withstand dust and heat of Indian conditions. E. Wong, a
Peruvian retailer has made use of what is being referred to as the Ricochet
economy. This refers to the economy that flows through the network of
relationships which involved the immigrants and their relatives in the respective
countries. E. Wong has an arrangement with Visa in the US by which relatives
receive gifts and products from their relatives who pay for them in the US. With
several Indian software professionals working abroad, such opportunities may
be explored by Indian retailers too. Bangalore based MTR has come out with
vegetarian ready-to-eat fast foods that can be carried in packs that have several
months of shelf-life without refrigeration.
Water and electricity are not freely available in India and any product that
utilizes water or electricity will have opportunities to be explored. P&G has
developed a water purification powder called Pur in Mexico, where potable
water is not freely available. Product adaptation to different market
environments is the key for marketing success in emerging economies with
intense competition among brands.
Understanding Marketing Communication and Promotion
A brand is built not on just advertising or sales promotion; it is built by several
elements of marketing mix and these elements vary from time to time in
accordance with changes in the environment. Advertising is one aspect of brand
building. A brand in the present-day context has three elementsvalue equity,
brand equity and retention equity. The three elements together form customer
equity.

Value is associated with the functional value offered by the brand and retention
equity has the objective of retaining the customer and enhancing the brand's
share of customer's requirements. Brand equity is concerned with the value
added to the brand beyond the functional equity. It attempts to add emotional
value to the brand. Advertising can communicate any element associated with
any of the three factors, but the emotional factor associated With brand equity
develops the brand image and brand personality associated with a brand. While
a brand has to be ideally associated with the three factors, it is only practical that
several brands focus on one of the specific factors at any given point in time.
For example, a new brand like Anchor toothpaste would be concentrating on
conveying the value of the brand both in terms of functional performance and in
terms of the emotional aspect associated with the 100% vegetarian value to the
target segment. A durable category brand like Samsung or LG may be interested
in retaining customers to cross-sell different product categories (selling a
different category of the brand to an existing customer). Marketing
communication has to be used in synergy with the marketing mix elements to
ensure that the brand delivers on all aspects of customer equity over a period of
time.
TOUCH OF REALITY
TV Ad Index, a firm that tracks television (TV) advertisements, reports the
following:
o The number of brands advertised on TV in 2004 was around 11.500, up
from about 3000 a decade ago.
o The car category alone had 104 TV commercials in 2004.
o In 2004, cricketers starred in 108 advertisements and film stars in 259.
The clutter of marketing communication and the fragmentation of channels
indicate the complexities of reaching the target segment. It is not just the
creativity innate to the advertisement which matters: creating and sustaining a
favourable brand image in the psyche of consumers using a unique mix of
channels and promotional elements is the major challenge for the brand
manager.
Marketing communication cannot be isolated from marketing
mix factors
TOUCH OF REALITY
Branding and marketing inertia seem to offer interesting dimensions to
marketers, especially in the Indian context where a number of household brand
names have lost their stranglehold on the market in the last three decades,
despite winning the goodwill of consumers. These brands probably were
pioneers in the respective categories but somehow were unable to apply the
right kind of marketing mix elements at the appropriate time to maintain their
leadership position. Marketing inertia is the inability or the reluctance of a brand
to adapt to the changing environment in which consumers and competitive
offerings keep changing in dynamic ways. Bajaj's Chetak is one such brand. The
brand was introduced in the early 1970s and consumers had to almost wait for a
decade after booking the brand. It was an ideal offering at the time when it was
launchedrugged, tough and easy to maintain. The vehicle was almost
unchanged in terms of its offering for about three decades. Around 10 million
Chetak scooters were sold during the three decades before the company stopped
rolling it out on 31 December 2005. The brand had probably remained
constant for too long. On the one hand, the brand was created during the time
the company had the monopoly and before the markets were opened up, and it
also created loyal consumers, but on the other hand, this was not good enough
during competitive times when consumers started demanding scooters and two-
wheelers with more features and life style orientation. A brand has to not only
establish itself, but also constantly innovate to ensure that it remains profitable
and competitive.
The creativity involved in marketing communication should ensure that the
objective of advertising is accomplished as demanded by the marketing
situation. The objective of advertising may be to create brand awareness, to
remind consumers about a brand, to announce a sales promotion or to build a
personality of a brand in terms of human associations. Liril, Lifebuoy, Raymond
and Dettol are examples of brands which have built up brand personality
through consistent and continuous advertising. Selection of media (channels
such as press, direct marketing (DM), TV or the Internet through which
messages are communicated to the target audience) is an important part of
managing marketing communication because of both the effectiveness involved
in conveying the message and the media costs associated with the process.
National media channels are 8-10 times more expensive than regional satellite
channels. The channel chosen has to be appropriate to the target segment
consumers. TV channels had increased their advertising expenditure in press
(newspapers and magazines) during the year 2003 to inform their consumers
about the programmes in the respective channels. Sales promotion is one more
element of promotion which is frequently used by brands (sales promotion
involves discounting, sampling and contests). Public relations involve
systematic and structured contact which marketers have with media, share-
holders, government and consumer groups. A promotional mix formulated for a
brand has to combine marketing communication with several aspects of the
promotional mix. The promotional mix has to address the equity factors over a
period of time, and it has to be backed by other elements of the marketing mix,
namely product, price and place (distribution) for an offering to emerge as a
mega brand.
TOUCH OF REALITY
Brand imagery in the form of brand association could have an important impact
on the development of brands. Garden was a saree brand launched more than 25
years ago and it used to be a popular brand with women in the age group of 18-
25 years. Today, the brand name may not evoke the same association which it
bad evoked during its launch. Garden also made an entry into men's fabrics with
the name Vareli when sarees were sold under the label Garden Vareli
(subsequently sarees were sold as Garden). The exclusivity which was
associated with the brand seems to have faded out, probably because of factors
such as lack of updated offerings, not adapting the brand to changes in fashion
(offerings beyond saree) and not sustaining the branding associations. Maruti
800 (the entry level no-frill offering), a few years ago created the aspirational
association with a typical middle-class family aspiring for this offering. In a
market with millions of two-wheelers, this is likely to be a very effective
association even if it appeals to a small cross-section of this population. The
association of a celebrity like Amitabh Bachchan could probably provide the
charisma and reassurance to a brandICICI, Pepsi. Cadbury's, Reid & Taylor,
Hajmola, Dabur and Parker are some of the brands which have chosen the
celebrity's association (which is likely to add a positive feeling besides the
brand attributes).
Psyche of Consumers
The psyche of consumers has to be understood before a brand attempts to build
or formulate a promotional mix. There are certain general and universal
characteristics associated with the human mind and they are relevant to
advertising. The consumer is overexposed to advertising and there is an
information overload which acts on the consumer's mind. Hence, creativity is
required to cut through the clutter of advertising. This is purely to get the
attention of the consumer and the next stage would be message delivery, which
has to create the required involvement with the brand. There is growing
complexity associated with creativity in the cluttered environment. Creativity is
required to ensure that the advertisement stands out, but too much of creativity
may kill the focus on the brand's proposition if precautions are not taken. In the
Indian context, apart from press advertisements and TV commercials,
consumers are also exposed to hoardings in both urban and semi-urban markets.
Attracting attention is one of the critical prerequisites to initiate consumer
involvement and this is one of the reasons for several brands across categories
to make use of celebrities. In categories where celebrities are used to convey the
product/brand benefits, brand associations are likely to be highLux makes use
of topical celebrities to convey the benefits of good complexion and care. Even
global brands face the problem of information clutter and attempt several ways
to overcome the problem. Coke has an electronic hoarding in a prime area in
London which responds to external weather changes. Such an advertisement
attracts involuntary attention and may help reinforce the brand name which has
a strong brand image. Marketers also explore non-advertising alternatives to
strengthen brand image. In recent times, research has shown that a significant
degree of advertising effectiveness is lost (due to various reasons) in traditional
marketing communication. Cadbury has a chocolate village in Bournville
which attracts several thousands of tourists. Brands, such as BMW (a niche
brand), have made effective use of the Internet to advertise their offerings.
Emotion is an effective way to hold the attention of consumers and get their
involvement. Several experiments in the medical field have revealed that
messages with emotion register faster in the human mind. Michelin tyres used a
child to convey the brand attribute of safetythe child has a narrow escape
when the-vehicle with this brand comes to a grinding halt in a dangerous
situation involving the child. It is to be noted that any emotion used in
advertising should be related to the product/brand attribute. Human minds do
not like complexity and hence marketing communication is formulated with
great care for new concept products or technological convergence products.
They are best formulated after researching consumers. The complexity in the
situation is associated with that of the product itself and hence precaution is
required. It would be very difficult to creatively explain a multi-use product like
a personal organizer cum PC cum mobile cum fax. A leading brand is working
on a personal digital organizer cum mobile phone. History has proved that there
are very few convergence products which have succeeded in the market. The
human mind requires reassurance, which reduces perceived risk and enhances
the credibility of the brand. This is the reason why brands use testimonial
advertisements endorsed by experts related to the product category. A leading
brand of analgesic could advertise itself as the largest selling analgesic in a
developed market. Complan, the milk additive brand, follows this approach.
TOUCH OF REALITY
One of the topical areas of interest in branding is how sound can be used to
influence the target segment. Daniel Jackson introduced the concept of sonic
branding which deals with the creation of sound effects associated with the
brand, and using such effects consistently and strategically across several touch
points, which has an interface with consumers (touch points can be TV, cinema
and online advertisements). The concept has interesting applications with regard
to the sensory aspects of branding, considering the fact that film music over the
past several decades has influenced the perception of the audience. There are
two aspects in sonic brandingcreating and sustaining the sound effects unique
to the brand. In the Indian context, Titan used Mozart's music with its
advertising jingles and it has been using the jingle over the past several years. It
will also be interesting for marketers to research and understand how the sound
effects of the brand should be sustained in order to positively influence the
perception of consumers with regard to their brands. For instance, the initial
sound effect of the brand Liril was the splashing of waterfall, and the jingle
expressed the feeling of indulgence. It will be worthwhile for marketers to
understand how will the original jingle compare with the re-launched version of
the brand with its La-lra-lla jingle. Another example is one of the re-launches
of Close-Up, which used old-time film songs while positioning the brand to
youth.
The Psychological and Sociological InterfaceThe Four
Forces
The psychological and sociological interface and related links would have to be
understood both by consumers and marketers. The brain, body, mind and
society are interlinked and are dependent on one another. The brain receives a
part of the order from the external world and social forces strongly influence
neurons in the brain. Every individual goes through the experience of these vital
links between the four forces (namely mind, brain, body and society; brain
houses the neurons used for thinking and mind is the product of conscious and
unconscious thinking which goes on in the brain). Wherever one of the four
forces changes, it has an impact on the other three forces associated with it.
Consumer behaviour and marketing communication draws upon these important
links of four forces. A number of top companies in the world such as Coca-
Cola, IBM and HP are learning about the four forces. Marketing
communication and advertising is not concerned with one of these forces as it is
widely practised by marketers; they are associated with all the four forces.
Advertising is concerned both with the conscious and unconscious thoughts of
consumers. The social context has to be considered along with these aspects. In
an experiment performed by Gerald Zaltman, people were introduced with an
odour and were told that it came from aged cheese. Most people were slightly
averse but indicated a willingness to taste the cheese. When another group
was told that the same odour was from old gym socks, they recoiled from the
odour. Hence, the social context in which an object is perceived can influence
even the psychological reaction of people. Advertising and marketing
communication deals with several kinds of social contexts. It may be interesting
to consider an example of factors influencing the purchase of a two-wheeler by
a consumer (could be a bike) who typically belongs to the urban youth segment.
The consumer may have several emotional needs like being perceived as
adventurous, stylish, modern and youthful. The external influences such as
advertising or other consumers decisions to buy a motorbike, may have
influenced the internal forces of the youth. They may be based on the nostalgic
memories of having seen a relative buy a bike during childhood days. These
internal experiences enable the consumer to create meaningful experiences
based on advertising information, test driving, buying and using the bike. There
is a need to understand the inner world of the consumer to communicate to
him/her through the brand's communication. Even researching consumer
behaviour (with a view to formulate positioning strategies) requires an
understanding of how consumers respond to marketers' probing questions. For
example, marketing surveys conducted in Japan by European car manufacturers
have shown that satisfaction ratings varied depending on how the questions
were structured (when the repair frequency aspect was probed first in the
questionnaire, the satisfaction ratings decreased). Such situations/findings can
have very critical implications for marketing communication. Human thought
arises from call images. There are images which consumers gather when they
see, hear, smell, feel and taste responses in their environment. There is a
difference between how a thought emerges and how a thought is consciously
experienced. Marketers must distinguish between how consumers form
images/thoughts and how these thoughts are interpreted and experienced by
them. Words can trigger thoughts and enable consumers to express them.
Research studies have found that about two-thirds of all the stimuli (information
to sensory organs) reach the brain through the visual system to provide visual,
verbal or other experiences. A consumer who experiences the aroma of
chocolate near a chocolate factory may find that a picture of his son's favourite
brand is triggered; the consumer may get an image of the chocolate being shared
by his son with others in the family. Thus, different kinds of images and
thoughts are linked to one another. Marketing communication needs to
recognize and research the vital linkages discussed.
TOUCH OF REALITY
Companies are using advertising, personal selling and several other marketing
communication tools to create awareness, acquire and retain customers. Return
on investment (ROI) marketing is gaining ground in developed markets. While
complex situation models, sifting through plethora of data and analysis of
consumer behaviour form the basis of ROI marketing, the concept
fundamentally aims at achieving optimal ways of using promotional expenditure
with regard to building brands and sustaining customers. A mobile/telecom
company may find that it takes, for example, Rs 3000 to acquire a new customer
and the customer may provide a profit of Rs 6000 annually if proper customer
profile selection is made. By retaining this customer for 1 year the company
would have gained substantially both from the viewpoint of costs of acquiring a
new customer and the profitability of the existing customer. At one point of
time, Kellogg's found that around 59 per cent of the millions of dollars it spent
on trade promotions did not contribute to profits and the other 41 per cent of
money which was contributing to profits was not good enough for overall
profits. Hence, the company started diverting a part of the money towards
innovation and other aspects of brand building. Walt Disney found that (at one
point of time) vacationers were spending only 25 per cent of their vacation
expenses on Disneyland (consumer-centric metric). Hence, the company built
hotels and shopping malls and also had sales promotional arrangement with
airline companies. This enabled the company to acquire 75 per cent of vacation
expenses of vacationers. Disney, which had successful theme parks, would not
have achieved the outcome if it had simply increased the amount on advertising.
A retail chain, having several stores, may advertise on TV, radio and press.
What is important is how does each store gain in terms of profit when the
channels are used at a given point of time. ROI marketing could provide the
quantitative edge to the qualitative creativity of marketing.
Changing Environment and BrandsImplications for
Communication and Promotional Strategies
Marketers keep spending huge resources on several kinds of communication
strategies. There has been a great deal of proliferation of brands in almost every
product category. Each category consists of brands new to the category:
successful brands, which have sustained their success for a period of time and
continue to be successful, and brands which have been very successful in the
past but are struggling to revive their success.
Questions of interest relating to communication strategies could be as follows:
(i) Should brand communication strategies be different for different categories
of brands?
(ii) What factors are to be taken into consideration before formulating the
communication objectives for brands in each of the categories?
(iii) How should communication be combined with promotional methods to
achieve the objectives of communication?
A structured approach towards communication objectives not only enables
marketers to focus, but also enables marketers to take into account several
changing factors in the environment, relevant to the respective marketing
situations. Besides, the communication objectives themselves may change from
time to time. The objective of a new brand (relatively) like Himalaya in the
category of cosmetics and over-the-counter (OTC) drugs, may be to create
awareness and initiate trials before building conviction around its brand values.
The objective of Pond's or a brand like Fair & Lovely, which has a huge base of
consumers, may be to emphasize the conviction, which consumers may have
shown over the years by buying the brand. This may perhaps be achieved by
ensuring that consumers try out the new herbal variant of the brand, it may be
observed that in this hypothetical situation, the brand not only has to emphasize
the brand value to make the conviction stronger, but also has to ensure that at
least a cross-section of consumers so convinced would try the new herbal
variant in an environment which is largely shifting towards herbal formulation
with regard to the product category. Monitoring the changes in the environment
is vital for communication strategies.
TOUCH OF REALITY
Celebrity-based appeals are probably being used to the hilt in the present-day
context, where brands vie with one another to get into the psyche of consumers.
Using a celebrity depends on the objective of the brand and also the product
category. The charismatic appeal of Amitabh and the impulsive nature of
chocolates with the established category association of Cadbury provide the
right synergy for the brand. A rugged and macho appeal of a celebrity can
provide the differentiation required, through brand personality for a brand like
Thumbs Up. Sachin's charisma with his youthful and playful presence added to
the appeal of Pepsi. Lux's association with film stars to convey the benefit of
clear skin is legendary. A fabric softener brand in a developed market chose a
celebrity with her daughter (to convey the feminine appeal associated with
softness) and showcased the attributes of the fabric softener by showing the
usage of a bath towel by the celebrity and her daughter (bath is associated with
sensuousness and softness, and bath towel is a good choice to illustrate the
attributes of the fabric softener brand). Max New York Life used Rahul Dravid
to link reliability and dependability with its brand. Using celebrities over a
period of time helps to enhance the brand recall among consumers. Pepsi has
been using Sachin for about 14 years and Shah Rukh Khan for the past 9 years.
New brands which have made an impact in the category with
limited marketing communication
In the category of a commodity like atta, branded offerings have been advertised
by multinational company (MNC) brands (Annapoorna and Naturefresh). While
there are national brands with huge advertising expenditures, a brand like
Shaktibhog is leading in several markets in the northern part of the country,
which consumes the major chunk of the category. The new brand has a market
share which is significantly higher than that of MNC brands in the respective
markets. In such fast-moving consumer goods (FMCG) product categories with
which consumers have been familiar for several decades, value is the criterion
on which consumers perceive a branded offering. Value in a category like this is
not just lower price; it is also the taste that matches with the palate of consumers
in a specific geographical region. Shaktibhog delivers on both these factors and
the new brand is slowly gaining equity. The brand may not spend heavily on
advertising but it has launched sales promotional schemes, which MNC brands
resort to frequently. This ensures that there is an overall value perception
associated with the brand. In the liquor market, white spirits have an
insignificant share of the overall market. Bacardi, a new brand, has made an
attempt to expand the market by introducing ready to drink alcoholic
beverages in different flavours. The target segment is executives in the 25-30-
year age group and the most interesting aspect of the brand's strategy in the
introduction of Bacardi Breezer is the price point at which the prospective
consumer can try out the beverageRs 35-40 for 330ml. A new brand in any
category has to provide a differentiation, which would appeal to consumers at
that point of time. This varies from one category to another. Medimix herbal
soap differentiated itself on the herbal plank two decades ago when there were
only synthetic soaps. A new brand of herbal soap launched in today's context
has to probably define the herbal qualities through an enhanced mix of
ingredients to convey the differentiation because herbal is the proposition of
several brands, both new and old. The established Medimix brand launched a
campaign which conveyed the brand benefits through appropriate imagery.
While consumers all along have perceived herbals to be good for the skin in the
category of soaps, there is a need for an established brand to communicate the
benefits through appropriate visuals/imagery because a number of brands have
been launched in the category. This is the response of an established brand to
the strategies of new brands which have entered the market. Ayush, a brand
from Hindustan Lever, uses the expert endorsement route (accredited by a well-
known ayurvedic hospital) and another brand uses the enhanced ingredients
mix route to appeal to consumers. An established brand, apart from formulating
strategies to improve its market position, is also forced by new brands to time its
communication strategies/objectives (Medimix, for example). In a typical
context of this kind, the frequency of advertising also becomes important for the
established brand because visibility has to be maintained to reduce the number
of existing consumers trying out new brands (or to reduce the frequency of
purchases concerning new brands). This is a vital objective, because the loyalty
of existing consumers is based on experience and a brand cannot afford to lose
the trust and goodwill among the loyal consumers (in a category like soaps, in
which consumers tend to try different brands despite exhibiting loyalty towards
a specific brand).
TOUCH OF REALITY
Branding strategies could open up an emotional dimension in low-involvement
product categories in which brands have attempted various kinds of strategies to
get the recall in the psyche of consumers. Low-involvement products,
typically, are low priced, do not involve too much of consumer decision-
making, do not involve very serious consequences as a fallout of wrong brand
solutions and, in general, consumers are likely to try out a number of brands
over a period of time though they may be loyal (buy the brand more often) to a
specific brand. Lubricants used in several kinds of vehicles are an example of
low-involvement category. While one cross-section of consumers may carry a
specific brand, most consumers go by the selection made by the mechanic or
spend little time wondering what brand of lubricant they should use for their
vehicle. Manufacturers of lubricants have made an effort to reach out to the
retail customer segment, which periodically visit petrol bunks to fill in petrol.
Servo brand's TV commercial makes an interesting example. It shows a set of
people moving towards different kinds of vehiclesbus, car, train and bikes.
These people finally meet as alma mater of an institute. Any reunion (in this
context the reunion of alumni after a number of years) has emotional overtones
attached to it and the brand probably attempts to use an emotional proposition to
get into the consideration set of consumers (the message is projected through
the line Everyone depends on Servo'). Once a number of consumers buy the
brand often, the brand could focus on its functional benefits. This approach is
different from what could be attempted in several categoriesstrengthening the
brand on the functional platform before attempting the emotional route
(Raymond).
In FMCG categories, a strong product-based differentiation (in the herbal
soaps sub-category the differentiation centred around amplifying or enhancing
the benefits) can achieve positive results within a short span of time. Such a
differentiation also backs up the communication objective of ensuring trials
among a competitor's brand besides bringing in new category users who would
want to try out the new brand. Fairever (in the fairness cream category), which
came into the market with a strong differentiation (saffron-based cream), is an
example of a new brand making its presence felt in a category almost dominated
by a strong brand over a considerable period of time. The differentiation never
existed before (at least in a branded and advertised offering) and the brand has
gained a quick market share in the category within a short span of time.
The differentiation brought in by a new brand would have to be perceived by
consumers. Optima and Ultra Doux in shampoos, Prudent in toothpastes and All
Care in soaps are brands in the respective categories which do not seem to have
made rapid strides after their introduction, though considerable amount of
marketing communication efforts could be associated with them.
TOUCH OF REALITY
Brand building, to a large extent, depends on creating value to consumers. In a
changing marketing context, creating value depends on the application
of holistic marketing. For example, Procter & Gamble (P&G), which had a high
degree of focus on the higher segments of developed markets such as the USA
and Europe, is currently trying to develop low-cost innovations for developing
markets such as Brazil, China and Russia in categories like detergents and
nappies. P&G has been catering to probably the top 5 per cent of the world's 6
billion population. Holistic marketing is associated with internal marketing,
integrated marketing in which several programmes and processes are integrated,
relationship marketing and social responsibility marketing. For example, several
consumers in rural China may not have even heard or used baby nappies (P&G
has been catering to the top 8 per cent of China's population in urban markets in
China). Introducing products for low-end markets requires several kinds of
restructuring related to supply chain management and new product introduction
based on new manufacturing systems. P&G has initiated a manufacturing
project known as Garage in Vietnam to try out new product introduction for
low-end markets backed up by several elements of holistic marketing. The
social responsibility element in such ventures is also very relevant to the
changing context in developing markets, where several millions of consumers
struggle to get their livelihood and a few million consumers who have the best
of opportunities join their fellow consumers in developed markets in terms of
opportunities and lifestyles. P&G is in the process of developing a low-cost
water filter aimed at serving low-income consumers in a developing market.
Successful brand building with advertising as one of the
marketing mix elements
Horlicks, Titan, Cadbury's and Hero Honda are some of the brands which have
been not only successful, but are also the ones which have sustained their
success (in terms of market share) over a period of time. Horlicks has a strong
nutritive association. Though the brand may have appealed to only convalescing
people a few decades ago, it is currently positioned towards children. During the
mid-1980s, the brand made the transition in positioning, from being positioned
for people who are coming out from sickness to several segments who may
require nutritionprofessionals, dancers and children. This was made possible
through appropriate imagery. While the brand may not have maintained
consistency in its association with regard to its user-imagery, it has been able to
successfully sustain its nutrition association. The brand was also re-launched a
few times over a period of two decades with improved versions of the offering.
The brand also strengthened the Tumor variant. Horlicks is reinforcing its
nutritive association by the introduction of its cold shakes (under the brands
Horlicks and Boost) targeting teenagersan attempt to bring in synergy
between product-line management, changes in the needs of consumers and
appropriate positioning strategies reflected through advertising imagery.
Titan has a dominant share in the quartz watch market, which comprises a huge
chunk of unorganized offering. There have been periods when the unorganized
sector had grown faster than the organized one. Titan has followed the
specialized strategy of offering different variants for clearly defined segments.
The development of the gift and warmth associations over a period of time and
the varied offerings to diverse segments with a clear-cut positioning strategy
have been instrumental in sustaining the market share of the brand. Titan has, to
a great extent, attempted to balance the positive aspects/associations of the
mother brand with the option of using sub-brands to appeal to several segments.
For example, Nebula is a jewellery watch, Bandhan targets businessmen, World
Time the globetrotter and Fastrack target the aspirational and upwardly mobile
urban youth. Titan also moved the experience of buying a watch in the
crowded market place to one which is memorable in the ambience of the
exclusive outlet. Titan has been able to bring together various elements of
marketing mix to become a leader in the quartz segment. A very interesting
strategy from Titan has been for creating the brand Sonata. When Titan found
that a large chunk of prospective consumers perceived an elitist orientation
towards it, Sonata was created without Titan's association with offerings
covering a wide price range. Sonata contributes significantly to the sales volume
of Titan. This strategy is a good example which reflects the caution required in
leveraging the equity of a successful brand.
Cadbury is one of the rare examples in which the target segment itself was
changed radically with regard to one of its established offerings. The brand's
Cadbury Dairy Milk (CDM) mould type of chocolates targeted children till the
mid-1990s. The positioning was built over warmth associated with the
relationship between parents and children. In an attempt to enlarge the chocolate
market, CDM changed its target segment to adults. There were a few campaigns
which effectively used imagery in relation to adults. The first one showed adults
from different walks of life enjoying the chocolate; the second campaign
focused on the joys of daily life by highlighting the spontaneous enjoyment on
the cricket field. The brand's next campaign showed adults sharing the chocolate
brand during joyful and sorrowful times (vicissitudes of life). Cadbury also
repositioned 5 Star on the firmly entrenched energy proposition. Cadbury also
enlarged the market by introducing lower priced stock-keeping units (SKU)
besides introducing the wafer-chocolate Perk. Wafer-chocolates have been
finding growing acceptance among consumers in recent times.
In all the three cases (Horlicks, Titan and Cadbury), sales promotion aspects
have not been much pronounced (when compared with a number of other
FMCG brands). Sales promotion has been very limited and this ensures that
consumers do not rush towards the brand only when a sales promotion is
announced. Horlicks has had a sales promotion (contest) which reinforces its
brand values. The contest involved matching statements on why different types
of consumers preferred the brand and winners were given prizes. Besides the
thrill of the contest, this kind of sales promotion also helps to reassure the
consumers about their choice of the brand. This could prevent consumers from
switching over to a competing brand. In the case of Titan and Cadbury, the
brand had made an attempt to adapt to the changing environment by introducing
appropriate product-line/pricing/branding strategies, which have been
instrumental in sustaining their success (especially with the entry of Nestle in
chocolates, and Citizen and a number of other offerings in the unorganized
sector in the category of watches).
Marketing communication cannot be the only strategy
There have been a number of brands (some of them being a pioneering brand in
the respective category) which have not been able to sustain their success or the
stranglehold they may have had over the market in the past. There may be
complexities which go beyond marketing mix elements, but from the viewpoint
of marketing, these elements have not been timed to capture the changes in the
post-liberalization era. Maruti, Moov, Modi Xerox, TVS mopeds, Park Avenue,
Reynolds, Compaq, Pepsodent, Liberty, Hero Honda and Nirma (in the
respective category) are brands which entered the Indian context much later
after the pioneering brands which dominated the pre-liberalized era. Most of
these follower brands still continue to make rapid strides in the market by
closely monitoring consumer behaviour, trends and competitive strategies. It is
clear that the equity built up by brands would have to be sustained through a
continuous process of marketing planning.
TOUCH OF REALITY
There are various kinds of appeals used in advertising, and negative appeals are
also used in certain product and service categories. When Ceasefire (a cute
looking fire extinguisher) was introduced, TV campaigns with negative appeals
were used to educate and create awareness about the need to have a product
which could handle such emergencies. Insurance companies (See Plate 10) use
negative appeals which revolve around unpleasant situations to advertise their
offerings. Negative appeals would have to be used with moderation as they may
create a tear among consumers and as a consequence result in a negative rub-off
for the brand using such appeals. Saffola, the edible oil (which competes in a
highly competitive price-driven market), used a strong negative appeal to
convey the brand's proposition. The proposition of the brand was heart care
(using the brand would be beneficial towards a healthy heart). Fear appeal was
used to dramatize the problems and emergencies associated with the heart. The
campaign showed a person being carried off in an ambulance with the
interpretation that anybody not using the brand may end up in a state portrayed
by the advertisement. The brand, after several years, has moderated the same
appeal by launching a press advertisement Saffola urges you to take care of
your heart with a statement that one out of every four Indians may be at risk of
heart disease. The advertisement also carries the photo of a bubbly and smiling
kid.
Importance of links between marketing communication and
other marketing mix elements in the Indian context
There is a heightened clutter in advertising and brands are increasing their
advertising budgets as in the past to get the most of focused TV viewership
associated with cricket. While such strategies may enhance the recall of brands,
they tend to be short-term oriented. A brand's communication (at least until the
time period it can be associated with symbolism) should be driven by benefits.
Benefits in a market like India where value-based competition has set in has the
power to firmly get imprinted in the psyche of consumers. A brand which is
strongly entrenched on benefits also has the advantage of capturing attention
when it comes out with a new offering (in the same product category and
perhaps even in other categories it ventures into). The brand could also bring in
symbolism after it has been accepted for its functional benefits. The Indian
marketing context could be divided into three categories with regard to benefit-
based communication and brand success.
(i) Brands which have pioneered benefits and not developed themselves over a
period of time on benefits with regard to their offerings.
(ii) Brands which failed to register significant success because benefit
positioning was not clear.
(iii) Brands which have pioneered and sustained benefits over a period of time.
Several brands (mostly in the pre-liberalization phase) had built themselves
solely on benefits but have gone into inertia because they did not sustain the
pioneering benefits or because they did not get into a downward stretch
(meaning that they did not launch offerings at the lower end of the market after
being accepted as value brands offering benefits). Pioneering benefits and
following it up with an appropriate line of offerings (product-line) is a critical
brand management strategy for sustaining success accomplished by a brand
during its initial stage. This strategy is likely to be effective to deal with several
brands, which may enter the market when it opens up because of liberalized
policies.
HMT, Colgate, Bajaj (scooters), Liberty and Zodiac (in ready-made shirts),
Glaxo (in biscuits), Fiat and Ambassador (in passenger cars), and Jawa, Yezdi
and Rajdoot are just some examples across categories. HMT in watches was not
only associated with Indianess but also had a high-quality association with the
category, and the brand also had considerable variety in tune with the market
demands during the 1970s. Changing consumer preferences and technological
advances dictated a different spectrum of benefits in terms of style and quartz
moment besides the need for value, with the right balance of price and features.
Today, HMT is probably the only brand which manufactures manual watches on
a large scale in the country. Whenever there is a radical change in trends and
benefits, a trusted brand name is extremely valuable to a company because it
addresses the perceived risk triggered by radical changes. It is just not enough to
be also a pioneer in following the change; there is a need to understand the
benefits associated with the category and develop a strong product-line before
the benefits can be communicated. If this does not happen, a follower brand
might establish itself, if it responds faster to the changing environment.
TOUCH OF REALITY
Building brands require several aspects of marketing mix elements and some of
the critical factors involved in building brands are as follows:
o A company should have a clear product-line, with offerings for several
segments.
o Brands should have a clear differentiation among themselves to ensure
that benefits are differentiated.
o Meaning of brands should be managed over a period of time without
inconsistency.
o Meaning of brands should be managed in such a way that consumers do
not get confused when faced with choices. If required, sub-brands
should be used.
o The product-line offerings should be updated in tune with changing
consumer trends.
o Communicating the benefits of brands in an appropriate manner.
Parachute brand of hair oil reflects an effective and planned brand strategy put
in place over a period of time. The strategy reflects the various critical aspects
required for effective brand building. Parachute brand was a pioneer in
heralding a change of coconut oil packaging from tin to plastic. It also
introduced its Re. 1 variant. Parachute offered premium grade, pure and
consistent quality. Parachute Jasmine and Parachute Rose hair oil was
introduced for the consumer segment which did not like the aroma and
stickiness of the conventional coconut oil. The jasmine variant leads in terms of
market share in the value-added coconut oil segment. Parachute Advanced
variant was introduced for the new, young generation with its pleasing fruit
fragrance being its proposition. The brand was also advertised as the hair oil for
the trendy youth. Parachute Sampoorna was a blend of herbs targeting those
consumers who were using home remedies for hair care. Such a practice
required a cumbersome process of making and applying the home remedies and
the brand offered value with convenience. The company introduced Oil of
Malabar as the coconut oil from the land of coconuts (place of origin
association). The company positioned this offering for the rural markets with its
distribution strengths. Hair & Care was positioned as the lightest perfumed hair
oil which was 50 per cent lighter than any other hair oil. It was positioned for
young consumers in both urban and rural markets.
It also had another variant Silknshine, an offering for women who were exposed
to outdoor life and also for detangling the hair. Shanti Badam Amla was
introduced to target amla hair oil users as there was an opportunity in this
segment. Mediker anti-lice treatment was introduced to target mothers of school
going children (in both urban and rural markets) who had the problem of lice
and its variant Mediker Oil was for consumers who wanted an oil product form
for the same problem.
Bajaj in scooters had such a reputation for quality and value that it was booked
by consumers who were prepared to wait a few months for its delivery even
during the late 1970s (when other brands like Alwyn, Vijay and Lamby where
readily available off the shelves). Today, Honda Activa with its new to market
features (and benefits) is making a successful attempt to revive the scooter
market, which has been swamped by the motorcycle market. Bajaj probably had
two optionseither to ensure that the scooter market did not decline by
introducing new models with benefits which would be favourably perceived by
consumers or to take the lead in the motorcycle segment by introducing
offerings which create discontinuity in the market (like the high-mileage bikes
pioneered by Hero Honda). A pioneering brand which is known for value has to
develop a product-line oriented towards valueat an appropriate point of time.
Bajaj has been making attempts to bring in discontinuity in the motorcycle
market with its offerings positioned on value which mattersentry level pricing
and fuel economy. Maruti created revolution in the Indian market by
introducing its 800 version, which was positioned on economy of fuel
consumption. After almost two decades, it is difficult to associate the brand with
this kind of proposition as the brand has offerings in segments which are
associated with benefits other than fuel economy. While one would certainly
agree that fuel economy may not be the value consumers may look for in
segments other than the entry-level one, it is to be noted that the pioneering
benefit heralded by Maruti was on fuel economy and furthering the pioneering
proposition adds credibility to the brand in a competitive context.
Godrej in the category of furniture is a good example of a brand not stretching
its value proposition to the lower end of the market (especially when the appeal
is built on quality trust and benefits). The steel cupboard category has a number
of unorganized manufacturers and Godrej created a reputation with its quality
offering over the past several decades. An offering appropriately priced at the
lower end of the market would have enabled the brand to capture a better share
of the market. This approach would also have furthered the value proposition of
the brand.
Park Avenue was not the pioneering brand in the category of ready-made wear.
Zodiac and Liberty were pioneering brands which advocated the concept in the
country. Zodiac even created a classy association during the 1980s with its
famous bearded model to spell class. Today, a number of other brands are
present in a wide band of price range. Some of the brands besides denoting
value also denote status, and some of them are firmly entrenched on the value
platform, for example Peter England. Raymond created the formal dressing
segment with its Park Avenue and has also entered the casual segment with its
Parx. Raymond itself was positioned strongly on benefits throughout the 1980s
as the best guide for a well-dressed male.
Iodex was almost synonymous with the category of pain balms for several
decades, but Moov, in recent times, has captured a significant share of the
market. Moov was also the first to create the proposition of non-stickiness
which is a definite value add in today's context where convenience and
grooming matters. Consumers under time pressure would prefer to use a brand
which is non-sticky. A leader should sustain its position by creating value as a
dynamic process, especially in a category of this kind where only functional
benefits matter. Besides, an opportunity lost would mean a number of other
established brands entering the category, such as Himalaya in the field of herbal
products.
TOUCH OF REALITY
With changing times of the digital era, marketing practitioners are concerned
with the effectiveness of marketing expenditure in general and advertising
expenditure in particular. The concept of ROI (discussed earlier in this chapter)
is one of the topical areas of interest for marketers, though as a concept this has
been discussed since the 1960s. There have been certain developments in the
environment in which consumers operate and these developments have had an
impact on the lifestyle changes of consumers. With the proliferation of TV
channels, consumers are particular about what they would like to see with
regard to a specific channel, may indulge in multitasking (they may speak over
the phone while watching the TV or students may be doing their homework
while listening to their favourite songs) and they also have a better control over
Information with their digital/online orientation. In developed markets such as
the USA, the prime time advertising expenditure is on the increase but viewers
are on the decline. How can marketing companies respond to this kind of
situation? They need to decide between growth objectives and maintenance
objectives when they want to spend money on marketing communication.
Growth objective is related to reaching new consumers or increasing the
frequency of consumption among existing consumers and maintenance
objective is concerned with maintaining a presence in a competitive scenario.
Companies will have to identify brand drivers and ensure that they spend in
media/alternative methods of communication (other than the traditional media)
that strengthens the brand to provide brand loyalty. Companies will have to
combine traditional methods with emerging methods of marketing
communication. For example, if a brand like Fastrack uses a celebrity associated
with racing, such a brand has to carefully select between well-established
channels of communication and sponsorships of events or product placement in
films (product placement involves placing the brand as a part of a film scene).
Companies will also have to conduct an end-to-end review of their marketing
expenditure and returns. This will include expenses on advertisement, sales
promotion, in-shop promotion expenses, expenses related to retaining loyal
consumers and expenses involved in building and retaining brand associations.
The revenue from all such expenses should be tracked so that companies will
have an idea about the return on their marketing expenditure.
Importance of communication elements (not just appeals)
There have been brands which have not been positioned clearly on benefits.
Picture and picture TV introduced during the 1980s by Videocon is an example
where the consumer may not have been clear about the benefits of viewing two
programmes on the TV screen, given the ambiguity of the benefit itself. Rice
cooker is one more category in which the concept selling by pioneering brands
did not emphasize the benefits of rice cookers. Home theatre entertainment
systems (Merlin was the pioneer) required any brand in the category to clearly
spell out the benefits over the existing alternatives. Four-stroke scooters like
Legend and Spectra probably did not make a phenomenal impact on consumers
because they were not sure what benefits are being offered by the brand. There
are several herbal brands in cosmetics which do not clearly spell out the
benefitsherbal feature as a proposition has become too generic in FMCG
categories.
Benefits (especially when a new brand is introduced) should take into
consideration the expectations of consumers who may be using alternatives.
This is especially applicable to those product categories which may not be
amenable to symbolic appeals (like two-wheelers, watches or four-wheelers).
Honda Activa clearly communicates (even given its low-decibel advertising)
how it is different from other scooters, perhaps even to the point of convincing
prospective motorbike-buyers! The benefit communicated should take into
account the needs of the target segment. Maggi noodles effectively
communicated taste to children and convenience to the mother, and both the
segments are important for deciding on a brand in the category of ready-to-eat
foods. A different brand may like to focus on teenagers and, if appropriate, may
highlight occasiona mid-morning snack served at various outlets near
schools/colleges at affordable prices. There are several brands of ball pens
launched after the introduction of Reynolds. A few of these brands (where gel is
the proposition) have communicated a different benefit. HMT followed Titan
with a range of quartz watches. It is difficult to visualize a concrete benefit as a
differentiator from the one-time leader in the category. There are several brands
of cars which have the proposition of luxury or comfortthis would have to
be communicated in a manner through which consumers would perceive a clear
benefit. Videocon and Philips perhaps could launch campaigns highlighting
their reflective features in the walkman category.
Brands which have sustained success
A few brands, which developed value, succeeded and sustained success through
the development of an appropriate product-line. Hero Honda developed and
introduced an offering which clearly conveyed the mileage benefit. It then
introduced SS, Splendor and Passion variants (some of them had symbolic value
attached to them), and its latest launch Dawn at the lower end of the market also
signals value. Tiger, the brand of biscuit from Britannia, introduced a low-
priced value offering to effectively compete with unorganized offerings. Later it
introduced several variants and though some of them were priced higher than
the original one, they could be associated with value pricing, given the pricing
and variety of competitive offerings (several variants of cream). Titan, after
establishing itself on functional accuracy as well as on emotional bonding
associated with a gift, has developed several sub-brands for different segments.
Creating, nurturing and communicating benefits to be favourably perceived by
consumers involves a mix of factorsexploring consumers' perceptions,
developing benefits with a good product-line and communicating new offerings
in a changing context.
TOUCH OF REALITY
Building brands in food categories is a challenging proposition in the Indian
market. Maggi probably was the only fast food type of brand which quickly
became a national brand with its 2-Minute positioning stance as a snack food
for children. Kellogg's cereals made an attempt to change the breakfast habits of
consumers (urban markets) but found it very difficult despite reasonable trials
during its launch phase. Snacks, soft drink juices and ready-to-eat meals are
some of the subcategories in which brands are making an attempt to build up
brands. MTR and ITC have introduced a variety of offerings in the ready-to-
eat segment, probably targeting urban homes which have nuclear families with
both the husband and wife having a time compressed lifestyle. The ready to
eat offering is positioned on convenience, variety, hygiene and adequate taste.
Dabur is attempting to make a mark in the food and soft drink categories.
Home-made pastes, which are spicy pastes used as add-ons for cooking and
real brand of fruit juice are offerings of Dabur. Research conducted by Dabur
showed that housewives considered cooking as a pride and placed great
importance on the main meal though they were prepared to experiment with
ready-made foods. Value for money (the price should be comparable with
home-made alternatives), freshness and convenience are vital factors to be
considered by a brand entering the food category, Dabur also has ethnic
variations in its home-made paste/chutney offerings to cater to regional taste
variations. It has invested Rs 1 crore in investing in machinery, which would
produce an offering very close to home-made alternatives. Given the right
product distribution (having a supply chain which will ensure freshness), pricing
(which would create a positive value perception) and communication (which
will convey the value proposition and break the traditional mindset about ready-
made foods that they are artificial) are prerequisites to build a brand in the food
category.
Synergizing Marketing Communication
Whether it is a serial in a regional satellite channel or a one-day international
cricket match, there is a stream of advertisements which clutter the commercial
break. Well-established brands attempt to sustain brand recall while new ones
try appealing to prospective consumers to get into their consideration set.
There are advertisements for children, housewives and youth. With advertising
expenditure in the order of Rs 8000 crores per annum in recent times and the
proliferation of brands across categories, there is a strong need to consider the
effectiveness of these advertisements. The contemporary approach is not to
cease advertising but to consider how decisions would have to be considered
with non-advertising alternatives. These non-advertising alternatives may also
enable a brand to create and sustain consistent associations, which may be
desirable in terms of long-term implications. A contemporary approach which
creates a synergy between various aspects of a promotional mix (advertising
included) provides a refreshing approach towards marketing communication.
Synergizing integrated marketing communication involves several elements of
the promotional mix to convey a consistent image of the brand. It is a
comprehensive promotional plan with the seamless integration of messages.
There may be several objectives of advertising and a promotional mix could be
used in an innovative manner to address each of these objectives depending on
the product category and target segment. When a new brand enters a category or
creates a new to the market offering, it needs to create brand awareness. This
would depend on whether the product is a consumable or a durable. The
involvement levels in a specific category also matter on how a brand would
want to create awareness. Itch Guard, a new branded offering for minor skin
problem used a simple humorous TV commercial to convey the concept. While
the unit cost of the product may be low, the involvement level of the consumer
on the solution offered by the brand could be high. A brand in this situation is
likely to also benefit from point of purchase (POP) material at pharmaceutical
outlets, departmental stores and even kirana type of shops. The high-utility
solution has to be conveyed to the target segment, which probably was using
traditional substitutes. In this example, a typical brand personality need not be
built, at least before the benefit is sold to the consumer. Hence, all promotional
efforts should be directed at conveying the benefit and creating a brand
association with the category itself (as it is a pioneering brand in the category).
This objective would be achieved by advertising, reminder purchase posters at
the point of sale and perhaps conveying the superiority of the offering through
the route of doctors (though it is an OTC offering).
Kissan Bistix was a unique offering aimed at children, who have to initially
make a change in their habits regarding the consumption of this offering (should
be eaten with a biscuit stick after it is dipped in chocolate/any other side dish
flavour which is a part of the package), Moreover, the price of the offering is Rs
5 and this would be associated with low involvement. In addition, there is a
strong presence of generic competition and children could buy a number of
alternatives and some of them may have price points below the Rs 5 level. Mass
advertising perhaps could create trials, but it may be difficult to sustain the
purchase only through advertising. Innovative contests built around popular
hobbies would have enabled the brand to not only create excitement, but also
sustain the interest over a longer period of time. This may create repurchase and
probably a cross-section of the segment may make the consumption a part of
their eating habit. Acceptance of an offering like this requires a longer time
interval and an innovative approach towards promotion rather than typical sales
promotion or mass advertising or display at the counter of retail outlets. Besides
the price point and the offering, there is also a need to be selective in market
coverage for the offering.
Creating awareness in a durable category (even if the consumers are familiar
with the category) requires a different approach. A strong feature-back up in
the offering leading to a possible word of mouth (WOM) from users of the
brand will be effective after the initial advertising awareness is created by the
brand. LG, Samsung, Santro and Whirlpool are brands which have been
successful but are less than a decade old in the Indian context. LG introduced
several new to market features in its various product categories; Samsung
which created brand awareness through its World Series advertisements also
introduced innovative features in its products. Santro's success (in terms of its
market share) can be attributed to product design, advertising and launching of
variants after brand acceptance. New brands depend on innovative features to
create awareness and this happens both by advertising and by positive WOM.
Promotional aspects like an event involving the brand formulated to strengthen
the WOM could add to the effect. The approach of one new brand of car could
be compared with the advertising of several new brands of cars. Skoda, almost
an unknown name in India, has been able to meet with considerable success (in
its niche) because of WOM for its Octovia model than through conventional
advertising. The brand has also been selective in its market launch and this adds
to the expectation excitement for prospective consumers in other markets to
enhance the impact of WOM. The brand started advertising after its initial phase
of success.
Concept Selling and Marketing Communication
When an offering is a durable product and new to market, it poses a challenge to
the company. The product may be a good one but the initial selling concept
plays a vital role in the diffusion of the product. Advertising has to be used in
conjunction with retail demonstration wherever appropriate. TV could be used
for creating awareness of the category but print advertisements are required to
address the differing perceptions of consumers about the risks and value
associated with a new offering. The low penetration of the rice cooker may
make an interesting case study. How should the offering be positioned
especially when in the urban context gas stoves have a high degree of
penetration? Would the device be useful for cooking menu other than rice?
What is the perception of the target consumer? Or is it worthwhile to position
the offering effectively only as an occasion-based household device? How could
demonstration be used to change the negative perception of consumers? Should
all retail outlets be used or only specific retail outlets in an area be used? How
does the usage cost compare with substitutes? As can be observed, these
dimensions require a mix of promotional decisions.
There is a need to differentiate between primary and secondary advertising
while selling product concepts. Primary advertising sells the concept while
secondary advertising highlights the features of the brand. It may be difficult to
generalize how a firm should link these two kinds of advertising. There is a
need to consider the product/market situation before such discussions are taken.
When a brand has a competitive advantage in terms of time (first entry), it could
sequence the two kinds of advertising effectively. When washing machines
were introduced in India (even now the penetration of washing machines is-not
high) about 15 years ago, Videocon used a very effective primary advertising to
sell the concept and create awareness about the category. It washes, rinses and
dries was the message and slowly over a period of time Videocon
advertisements starred features, which are very specific to the brand. Later,
competitive brands were launched in the category.
The situation becomes complex when a number of brands start introducing their
offerings at the same period of time. The category of quartz watches provides
such an example. HMT made an attempt to sell the concept during the initial
stages when the category was introduced. Titan, which has a huge chunk of the
category, took a major initiative not only to build its brand but also to sell the
concept of quartz watches. Besides, there were also a number of offerings from
the unorganized or assembled sector which offered low-price points at the lower
end of the market. In this situation, the pioneering brand or any brand which
builds itself quickly stands to gain. This is because consumers become familiar
with the category within a short time, especially when prices come down
rapidly. Besides, such quick diffusion is also enhanced by the fact that the
category is a necessity rather than a luxury. There is also the element of social
visibility associated with the category. Hence for a national brand, mass
advertising is a prerequisite, provided it is supported by other elements of the
marketing mix.
Creating Differentiation and Marketing Communication
Advertisements convey brand differentiation and this may be important in
several categories, which consist of several brands. In FMCG products such as
tea, coffee and detergents, differentiation awareness can be created by TV
advertising, but in certain categories, there may be a need to demonstrate the
effectiveness of brands. Differentiation with which consumers cannot connect
may have a negative implication and if a brand connects consumers with its
differentiation, it is likely to also differentiate itself in terms of getting identified
with the consumer. A detergent or a washing machine which claims a low
water consumption has to demonstrate this claim at a retail outlet, especially
given the fact that the quality of water varies across areas even in a specific
geographical region. It is also essential that a good differentiation proposition
results in a positive WOM.
In a certain situation, the company may have two offerings in a product-line and
there is a need to differentiate them clearly depending on the target segments
involved. This is a complex situation where differentiation decides the growth
of the brand and the perceived difference between the offerings. An added layer
to the complexity is that the same brand name is used for the offerings. Fairness
cream is a category in which the benefit is the fairness of the complexion. A
brand like Fair & Lovely built over the years still has a strong association with
the category but under tremendous pressure from competitive brands. The most
important criterion, which these brands offer is the herbal touch associated with
them. Herbal ingredients are becoming popular with consumers in several
categories and personal care in India has a strong tradition of herbal care. Fair &
Lovely had to launch its herbal variant (it used the same brand probably because
of the brand equity built up over the years). The interesting fact is the
differentiation being conveyed by advertising. The original version uses an
aspirational route in which the brand's ultimate benefit is success through
confidence. The girl in the advertisement becomes a cricket commentator, based
on the confidence built up by using the product. The herbal variant's advertising
has a strong focus on the traditional product benefitfacial complexionwhich
appeals to the youth. The nature of the models chosen is different and the
ultimate brand benefit is conveyed to be different (though any fairness cream
is supposed to be associated with fairness). From an explicit benefit associated
with the category (fairness), the advertising differentiation carries the variants of
the brand to a different plane of differentiation. The differentiation also suggests
typical consumer types who may be drawn towards the respective variants.
Goodlass Nerolac in its recent advertising campaign for decorative paints which
uses Amitabh has a focus on imageryjoggers, housewives and children who
have a positive attitude towards the celebrity. Marketing communication is an
area which offers a high potential to brands to analyse the utility of several
promotional inputs.
TOUCH OF REALITY
With personalized communication being considered as a good approach to get a
brand's message to the target segment, one topical aspect which needs to be
considered in marketing communication strategy is how and when personalized
communication can be used by a brand.
Customer experience has been defined in a number of ways by academics and
practitioners. The core aspect of customer experience deals with the product
experience as perceived by a consumer whose wants and needs are quite distinct
from other consumers in the same segment. Personalization of communication
as a part of the multi-channel communication process and a combined strategy
will result in a better consumer experience. Press. TV, outdoor advertising and
e-mail can be used effectively by a brand to convey and sustain customer
experience. There are three aspects which need to be considered in order to
combine customer experience and multi-channel communicationnature of the
product, the type of customer segment and formulation of communication
strategies.
Nature of the product deals with not just the product but also with the
involvement level of the consumer. Once the involvement level of the consumer
is known, several consumers with a similar involvement level will form a
segment and a formulation of communication strategies will depend on this
segment of consumers. Marketers should not premeditate the usage of
personalization of communication before the first two factors, namely the type
of product category and the type of consumer segment, are known. For example,
coffee is a commodity kind of category in which marketers are attempting to
build brandsBru, Nescafe and a few regional brands are present in the market.
Normally, is a convenience good for most consumers? It is bought frequently, it
is a consumable and the search effort is not very high. However, for some
consumers, it is a shopping good. They may visit a neighbourhood kirana store
or a supermarket, compare prices and attributes of brands, sales promotion
offered by various brands and consider private labels in stores before they make
a purchase.
There may also be another class of niche consumers who are very particular
about their coffee and they may believe in making purchases in places like Cafe
Coffee Day or other up-market supermarkets which offer high-end brands and
also a special combination of coffee. For such consumers, coffee is a specialty
product, given their involvement levels. The conventional segregation of
products has to be considered with the involvement levels of consumers before a
communication plan can be formulated. Personalized communication is to be
incorporated accordingly. For example, for the first segment, a discount
advertisement or a price-related advertisement is all that is required in a local
newspaper or a point of sale display at the retail outlet. For the second segment
of consumers, TV advertisements to create awareness and interest (like Chakra
Gold in tea and Bru in coffee), backed up by retail outlet communication (with
reminder point of sale posters) may be required. It is important to note that this
second segment of consumers, though views coffee as a shopping good, may not
just be looking for the lowest price. He/she is interested in attributes of the
product and a brand will do well to highlight them in the advertisements which
may be showcased through newspapers (as elaborate features and benefits are to
be explained to this segment of consumers). Marketers are also to note that
while this kind of consumers belonging to the second segment is interested in
product experience, this kind of consumer may not be interested in buying a
premium product with personalized offerings that will also be profitable to
marketers. The third kind of consumer segment (connoisseurs) are clearly the
ones who will be price insensitive and who will go to great lengths to have that
ultimate consumer experiencestarting from the type of coffee bean used to
making the coffee as per their personal taste. The scope of personalized
communication or permission marketing, besides the normal mass media
channels to create awareness, is very obvious with the third segment of
consumers.
The process of considering customer experience can be summed up as Type of
product

This simple approach can be applied to a variety of categories and offers several
combinations of using multiple channel options.
Factors which enhance advertising
Philip Jones, the world-renowned advertising/branding wizard, has established
through research that almost 50 per cent of the money spent on advertising by
companies (in recent times) turns out to be a waste as it fails to translate into
consumer buying. While the percentage indicated may vary from one context to
another, there is a growing conviction among marketers that they would have to
resort to several other kinds of communication besides advertising to appeal to
consumers. This section attempts to highlight a few aspects which may make
advertising work.
Around 40-50 per cent of new product offerings as well as several existing
brand offerings fail to take off despite heavy advertising blitzkrieg. Going back
to the basics, most consumer product categories (impulsive products may
sometimes be exceptions) compete with each other on brand differentiation,
which is getting to be difficult in a competitive situation. Gokul, a brand of
sandalwood talc, has been a strong and dominant brand in the category and
leads the market over a well-known MNC brand. Gokul advertises only in niche
channels and through outdoor channels. Nirma, which pioneered the low-cost
detergent powder, succeeded with its high-visibility advertising campaign
because consumers perceived value (at almost one-third the cost of a well-
known competitor). In the present-day context, Ghari, a brand of detergent, is a
threat to well-established brands in the category in some markets, though the
strong brands continue to heavily advertise themselves.
Close-Up is a leading toothpaste brand launched almost three decades ago. The
gel category of toothpaste itself seems to be on the decline and the leading
brands in the category continue to advertise sometimes with several variants.
The gel category when introduced during the mid-1970s offered a change to
consumers who were over-used to the functional benefits of brands like
Forhans or Colgate. Close-Up used a lifestyle proposition to position itself in
the psyche of consumers and today this may no longer be a viable brand
proposition, given a situation in which several brands (across categories from
apparel to banking) use lifestyle appeals. In terms of benefit-based
differentiation, what does a gel brand offer to trigger the purchase motives of
the consumer? In fact, the Tingly Red variant of Close-Up, used an
advertisement which is permissive and emphasizes on price-gram-age
association. Nurturing the long-term associations of brands is an important task
of advertising imagery.
Growth of the product category as a factor
Bread, fast foods, frozen foods, antiseptic lotions, floor cleaners and branded
kitchenware are categories in which growth has to be encouraged before
secondary brand advertising could convey any brand's proposition. A brand has
to be careful to grow the category and also ensure that it is placed on top of the
consumer's mind when he/she thinks of the product category. Brylcreem (hair
cream) carried several advertising campaigns during the past. Unless the
consumer is convinced about the usage of hair cream, a brand in the category
would not be able to trigger a purchase through high-visibility advertising. The
vacumizer is one more brand (and an innovative product too) which advertised
heavily without registering the expected success. There are several other
promotional tools which may be used with advertising to ensure category
growth. Sometimes, there may be a need to use other aspects of marketing mix
elements to develop the market.
Rexona is a brand which has a strong equity. Hindustan Lever used it
innovatively to develop the market for the deodorant segment. While heavy
advertising was used to promote the offering, there was a strong support on the
product aspect of the offeringaffordable variants introduced for the mass
market. This is an interesting example where the brand altered the very
perception of consumers on the categoryfrom that associated with a premium
one to a category which masses could experiment. The market has expanded
significantly in the last 8 years and this has kick-started the market.
TOUCH OF REALITY
One of the challenges to marketers is to determine the extent to which a brand
can be extended. A study published in the Harvard Business Review shows that
luxury brands will increase their profitability only when their premium degree
increaseswhen they are extended to product categories that are adjacent to the
core brand. The study covered 150 luxury brands, interviews with about 300
executives and 10 years' worth of financial data. Adjacent category will mean
one that fits in with the image of the core brand. Cartier extended its brand from
jewellery to watches, perfumes and accessories to achieve success. Louis
Vuitton extended itself from handbags to perfumes, clothing and jewellery.
Pierrre Cardin, after extending itself from apparel to perfumes and cosmetics
during the 1960s, indiscriminately started extending itself into several categories
that did not maintain its premium degree. By 1988, it granted about 800 licenses
in 94 countries and achieved an annual revenue of about one billion but its
profits went down. The study also found that luxury brands with a lifestyle
orientation (rather than a strong functional orientation) were able to extend
themselves into other categories more easily. It is interesting to note the
example of IBM. IBM extended its name from mainframe to personal
computers and at one point in time PC business contributed to 50 per cent of its
business. But eventually IBM lost US$ 15 billion in its PC business over a
period of 23 years and sold its PC business. Whether a different brand name
would have made a difference raises an interesting debate. Toyota chose a
different brand name for its upper end car (Lexus).
Even in a category which is associated with impulsive buying, the category has
to be developed before continuing with heavy advertising. However, in a
category associated with impulsive buying, heavy advertising may trigger trials,
but other forms of promotion may be required later to sustain the purchase (for
example, the new concept Bistix tried out by Kissan).
In the case of durable categories also, development of the category is vital. The
washing machine category provides a good example of how the category has
evolved over a period of time (though the annual volume is one million units
only). Videocon's simple washes, rinses and dries TV campaign (as mentioned
earlier in this chapter) highlighted the concept of washing machines during the
early 1980s. Today, there is a niche market for fully automatic and even fuzzy
logic machines. Product development, geared towards the Indian context in
terms of lesser consumption of power and water and the ability of a brand to
demonstrate these benefits would drive the category and the brand faster than
what constant advertising can do. In certain categories, which are new and
where product usage is simple, advertising may be useful. Paras, the company,
which launched Krack, Livon brands, spends about 30 per cent of its sales
volume on advertising.
TOUCH OF REALITY
Cartoons have been a part of consumers lives much before the digital and
entertainment revolution took place. Cartoon characters continue to appeal to
consumers all over the world. Walt Disney, the pioneering brand which created
several cartoons (which later became a brand by themselves), is a good example
of how the leader pioneered and nurtured the category of cartoons over a period
of several decades. Cartoon characters are sold as toys, bringing billions of
dollars as revenue for the firm. Mickey Mouse and Winne the Pooh bear are two
of the top revenue-generating cartoon characters. Winne celebrated its 80th
birthday in 2005 (has been regaling kids for the past 80 years). Such a heritage
brand offers scope for brand extension as well with its association among its
target segment. Winne the Pooh is to be extended into apparel and furniture
(currently toys are the offerings with this name) for the target segment. The
character's friendly, trustful and goodness image is at the origin of such
extension strategies.
The category-appeal
The fit between the category and the brand's advertising appeal makes a
difference with regard to how an advertising campaign works. The appeal has to
create a better perception of a brand when it is considered in a competitive
context. The brand will have to contain the category appeal which would make
consumers notice the brand. The category appeal could be drawn from any of
the marketing mix elements and may change from time to time. The advertising
can highlight the low price of the brand (or high price to add to the offering if it
is a symbolic one), highlight an exclusive distribution channel if shopping
ambience matters (for a brand like Park Avenue, for example) or highlight the
attributes or benefits of the brand (non-stick cookware). It is important for the
brand to find out what the target segment would be interested in a product
category at a given point of time.
The category appeal of the re-launched Rin brand is that it is free from minerals
and that it would not damage clothes like other detergent soaps, which contain a
significant amount of minerals. The category appeal shifts over time depending
on how innovative brands bring in differentiation. Lower consumption of water
could be another category appeal in some parts of the country for a detergent
brand. One of the variants of Surf Excel attempted this appeal.
Sometimes there is so much of fast-paced development in the market that
neither the brands in the category nor the consumers who perceive various
brands in the category are clear about what the category appeal is all about. The
cellular phone category is one such example. With the proliferation of brands,
with appeals ranging from high-tech attributes to emotional and symbolic
appeals, and with airtime charges undergoing rapid shifts, it may be difficult to
point out a category appeal. Brands keep launching advertisements on revised
tariffs on service charges. Brands would do well to research several segments
and the benefits expected by these segments before assuming that mass
advertising on service charges or incoming calls would be of interest to all
segments. The category appeal can also be extended to subcategories, especially
when brands compete in a saturated market. For almost 100 years, Coke has
been the leader in the soft drink category. Pepsi created several subcategories
Gatorade (sports drink) and Mountain Dew (highly caffeinated citrus drink).
Red Bull pioneered the subcategory of energy drink. MP3 players and hand-held
computers are also subcategories in their respective categories. Companies
require the organizational strength and market awareness to time such product
subcategories in a timely manner.
Advertising and brand confusion
Extending a brand to a number of variants and categories (even related ones),
especially if the brands across related categories are advertised immensly, may
confuse the consumer. A shampoo or toothpaste extended to too many variants
(too many colours') and each variant carrying a specific message could confuse
the consumer. What does the red variant of the toothpaste convey and is it
totally different from the green variant or the lemon variant and, if so, does it
have links with other variants? Can each variant be distinctively different?
These may be some of the dimensions associated with variants. A fairness
cream extended to soaps and anti-scar cream may require frequent advertising
on all categories (some perhaps with herbal variants) and consumers may be
confused on several aspects related to the offerings. World-class brands like
Levi's, Porche and Miller (beer) have suffered from brand stretching and related
consumer confusion. This is not to suggest that brands should never be
extended. A middle of the road approach like having a few sub-brand may
work (though an in-depth research into mother brand-sub-brand associations
would have to be conducted). Having too many sub-brands may also create lack
of differentiation, if consumers are unable to perceive such differentiation even
though brands may heavily advertise. Bajaj launched several sub-brands such as
Classic, FE, Priya, Bravo, Chetak and Cule. With the exception of Chetak other
brand names do not seem to have made an impact on the psyche of consumers.
If sub-brands are used for symbolic purposes, there should be a close
association between the mother brand and the sub-brand in terms of consumer
perception, and an imagery which would enhance consumers perception should
be reflected in the advertisements. Bajaj as a scooter is known for its middle-
class orientation, value for money and workaholic nature. Bajaj Classic was
positioned as a scooter, associated with riding pleasure on a countryside'-like
drive for the executive. While the enjoyment experience was captured in the
advertisement, consumers may perhaps not associate this with the original
image of the mother brand (with congested and bad roads in urban pockets
adding a perception of myth to the countryside experience'). Advertising could
certainly work well even in today's context if it is conceptually associated with
several marketing mix elements and brand associations.
TOUCH OF REALITY
Brands are not built on high-visibility campaigns. Marketing mix elements
would have to address the changing environment which reflects consumer
behaviour, technology and competition. Tortoise was the pioneer in the category
of mosquito coils (introduced in the 1970s). The brand had a market share of
around 32 per cent in 1998; in 2003 this was reduced to less than 3 per cent.
Electronic devices (like the one based on mats) and aerosol have emerged over
the last decade, and strangely the share of electronic devices has been
decreasing (mat based) in the last few years and the share of coils has increased
during the same period (as the share of the overall mosquito repellent market).
There may be a number of reasons for this kind of pattern and they may include
the traditional perception linking smoke and efficacy (electronic devices with
mats do not give out smoke)perhaps there is a niche market for liquid-based
electronic device. In fact, Good Night test marketed a smokeless coil and found
that consumers were not receptive to the concept. Mortein, which also entered
the coil market, used a different ingredient which is supposed to be more
effective than that used by rival brands (Mortein had the highest share of coils in
2003). Tortoise, the pioneer, may have developed the brand with a stronger
distribution network, more visibility (when compared with Mortein's TV
campaigns) and timely introduction of variants. Jet, a brand managed by Godrej
Sara Lee, has a strong presence in Andhra and there could be specific research
on why a certain brand succeeds in a regional market. Odomos which probably
created the category pioneering a branded offering (with its cream version) has
not been able to sustain its pioneering effort. The cream variant itself has an
insignificant sales volume in the category.
Symbolic Branding
Raymond, Scorpio (the utility-based passenger car from Mahindra &
Mahindra), Omega and Mont Blanc are brands that have symbolic and
emotional overtones, besides the regular functional features associated with the
respective offerings. While emotional benefits have been recognized by
marketers as a prerequisite for sustaining brand success, they would have to
follow a structured approach to create and nurture emotional branding.
Symbolic branding is useful in a number of ways to the marketer. It is able to
build a relationship with the consumer and if this is sustained, the loyalty, which
is so cultivated, has a lasting psychological impact. Harley Davidson in bikes,
Mercedes in cars and Ray-Ban goggles are examples of symbolism attached to
brands in various waysstatus, fun and adventure or simply gratification of
inner needs. In fact, an emotional brand could also become a cult brand over
time with appropriate marketing mix elements. It may not be possible for most
brands to become symbolic/emotional brands without establishing themselves
on the functional platform. In most product categories (even in service
categories such as banks, hotels and travel services), consumers seek benefits
that can add value to their time, convenience or performance. In apparels, easy
maintenance adds to convenience; goggles protection of the eyes adds value to
the well-being of the consumer and his/her performance in various activities.
There are some exceptions. Soft drinks, ice creams, perfumes, cigarettes and
chocolates are categories which convey sensual gratification and hence they are
sensory products. The difference between functional and sensory product
categories is that consumers can have a tangible and realizable perception of
functional benefits but with regard to the sensory experience, it would be
difficult to have a firm assessment of the sensory experience. Given the nature
of such experiences, an individual may perceive them to be better or average
depending on a variety of sensory inputs which change from time to time
interest levels, priority given to such an experience, mood during consumption,
etc. The basics of symbolic branding involve identifying the specific category of
service or product to find out how amenable the category is to emotional
branding. The magnitude and intensity (or even the time frame involved) could
be different for different categories. Coke advertises with the words Sparkle on
your tongue (in the US context), emphasizing the sensory experience.
Cadbury's World, a well-known visitor's centre in the UK, emphasizes sensory
experience and even the Cadbury's moulded version advertised in India does
that. In all these examples, the focus is more on experience than on emotion. In
contrast, Cadbury's Temptations uses emotional appeal in its TV commercial.
Symbolism in this context is broad-based and could be the feeling of belonging
to a group, self-concept, relationships and self-esteem. There are a number of
brands of perfumes and deodorants that are relationship-oriented appeals. Pepsi,
another product in the sensory category, uses the feeling of belongingness
through reference group appeals. Coke, in India, also uses group appeals, which
generally involve groups and activities appealing to the target segment. A
brand in the sensory category can either highlight sensory consumption
(consumption situation) or resort to emotional appeal. A powerful brand such as
Coke or Pepsi could even alternate between the two kinds of positioning,
ensuring such strategies complement one another.
Conveying the functional utility
The next approach is towards those categories that are not sensory in nature,
namely utility-oriented categories. One category is the typical FMCG category
and the other category is that of durables. There seems to be a proliferation of
emotional branding in FMCG categories. Chakra Tea, Close-Up toothpaste,
Dettol antiseptic lotion, Johnson & Johnson's baby powder and Saffola in the
edible oil category are just some examples. Most of them have also conveyed a
functional proposition in the seemingly emotional proposition protectionwell-
being through the germ-killing action of Dettol, whiteness of the teeth in Close-
Up and taste (sensory benefit) in Chakra tea are examples. While it is interesting
to observe this combination, there are also a number of FMCG brands which
have used strong functional benefits and have achieved significant success as
well. These examples could include the garden freshness of Kanan Devan, the
germ-killing action of the re-launched Lifebuoy soap, the natural ingredients of
Hamam, the moisturizer of Dove and the 12-h protection of Colgate Total.
Culture-based emotion is another category which some brands have used
effectively. Here, an emotional belief is attached to a cultural belief. Reliance
Mobile showed an advertisement in which the father gifts a mobile to his
daughter who is marriedan emotion clearly tied to the cultural belief of
marrying off the daughter. Even today, Vicco Turmeric vanishing cream uses
the occasion of marriage in its advertisements. Godrej's Storwel cupboard was
one of the earliest brands to position itself as a gift for the bride, with the
advertisement having all the trappings of a typical wedding. Mecca Cola, a fast
selling cola in Paris and the UK, draws upon the emotion strongly associated
with the cultural feeling that the cola has a religious anchoring.
In the category of durable products, emotional branding seems to play an
important role in influencing the psyche of the consumer. Santro, one of the
fastest selling passenger cars, has a strong celebrity-based emotional overtone.
Tata Safari repositioned itself as the in thing for the segment, which requires a
lifestyle statement. It may be observed that in both these examples, the
functional utility of the brand was well projected before the emotional approach
was tried out in communication. Titan is another example where the emotion
surrounding the gift proposition was effectively captured by the watch brand.
Currently, the brand is attempting to position itself as a lifestyle accessory with
a sub-brand. Caliber, the successful bike brand from Bajaj, was completely
based on symbolic branding built around personality characteristics. Scooty, the
scooterette, also used a symbolic association to position itself.
Can brands use both benefits and symbolic associations?
Whirlpool, with its quick-ice proposition, has combined both symbolic and
functional propositions (the present TV commercial shows family members
delighting the lady of the house). LG, with regard to its TV, washing machines
and refrigerators, has creatively combined the emotional proposition. In
refrigerators, the emotion is safety and trust (preservation of nutrients); in
washing machines, it is fabric care (trust); and in TV, it is Golden Eye (care).
Such a positioning, backed by a good product and service, is certain to get
positive WOM. There may be categories, which fit into such a functional-
emotional combination. Marketers would have to consider the category along
with the target segment to visualize such combinations. The Vicks
advertisement of the past is a classicthe son drenched in rain offering a
bouquet to the mother on her birthday and the mother using Vicks for the
occasion. Baby products involving the infant and the mother (Johnson &
Johnson uses this) are another example. Clinic Plus initially positioned itself on
the mother-daughter bonding. Pepsodent uses the down-to-earth mother-son
problems to highlight how the brand takes into consideration the realities of life
(the snacking habit of school going children with the habit being practised on
the way to school), which the mother has to accept as a part of her child's life.
Cult brands have entered the lexicon of marketers and the Harley Davidson
motorbike is a frequently cited example of a cult brand. A cult brand is one that
offers a group-affiliated, brand-based experience to consumers who are
passionate about the brand and promotes the relationship within the members of
the cult. Drawing from the example of Harley Davidson, a cult brand cuts
across demographics and psychographics and brings together various kinds of
people to experience the brand. The bike brand has members from various
segments such as engineers, executives, doctors, students and blue-collar
workers. A cult brand cannot be created overnight; it has to evolve over time by
WOM on the experience created by the brand. Riding a Harley Davidson as a
member of the cult group, with the accessories associated with adventure, is an
experience enjoyed, communicated and nurtured by thousands of brand loyalists
through various off-line and online clubs. Symbolic branding makes a brand an
inherent part of the consumer's psyche and provides the ultimate bonding any
brand can hope to achieve.
TOUCH OF REALITY
Building a brand today involves powerful product features which would
translate themselves into status symbols for the youth. Innovative product
features and building a WOM around them to yield a symbolic in thing
measuring is a very effective strategy that could be used by brands in consumer
electronics who also have the state-of-the-art technology with them. Aiwa is
planning to introduce audio models which would be compatible with personal
computers and would have features which will enable the user to have his/her
own juke box (basically a machine famous during the 1960s which could play
specific records based on the consumer's choice from a collection of songs
recorded on conventional records). HP has introduced digital cameras which
could be used for instant imaging on a PC. Philips has introduced audio models
which has a computer interface. Key chains (chain holders) which would have
digital cameras are likely to be introduced. India has a youth population (below
the age of 25) accounting for 51 per cent of the nation's population. High-tech
status symbols are powerful marketing concepts, especially if a company can
sustain its innovations on consumer products which have a social appeal.
TOUCH OF REALITY
Washbasins and closets are products which have attracted very little attention in
the past from the viewpoint of consumers. Even such product categories are
making an attempt to make a shift from commodity orientation to brands by
bringing in several strategies. Hindustan Sanitary Industries Ltd (HSIL) has
launched several brands in the upper end of the market such as Matteo Thun,
Romantik and Vivano, and they have special features such as easy cleaning and
better hygiene. The company has also launched 13 models of bathtubs in
colours which match its sanitary product range. The company also has shower
enclosures to match the needs of consumers who require a dry area in their
bathrooms other than the bathing area. HSIL has opened up the concept of a
total bathroom solutions provider and this provides a lifestyle orientation. The
company has 380 shop-in-shop outlets, 21 exclusive outlets (apart from regular
dealers) and plans to expand the retail reach further. The products are available
over a wide price range. Parryware is another strong brand and leader in the
sanitary product category, and has enlarged its product range in recent times. It
is interesting to note that the symbolic appeal associated with consumer lifestyle
has extended into bathroom products perhaps after being associated for a long
time with several categories such as music systems and furniture. These have
been traditional products which have been associated with lifestyle appeals.
Besides being lifestyle products, these product offerings (brands) also serve to
drive the feeling of indulgence which is gaining ground as an experiential
gratifier.
TOUCH OF REALITY
There seems to be an enigmatic link between brand extensions and the black
box of the consumer. Even brands with a high degree of equity seem to fail
when being used for highly related product categories. Fair & Lovely, the
fairness cream brand, was used to test the talcum powder market in Andhra
Pradesh before being withdrawn. Vaseline Talc was withdrawn after being in
the market for 2 years. Vaseline is a winter care brand with lotions and creams.
Lifebuoy's hand wash version is also not widely seen on retail shelves. Pond's is
registering a double-digit growth in the talcum powder category, though the
category is not growing to that extent. Consumers' reaction to brand extensions
(even when highly related categories use well-entrenched brands) seems to be
dependent on
(i) the strength of association with regard to existing brands in the market
especially brands which have nurtured themselves in a category for a long time
(like Pond's in talcum powder);
(ii) the strength of the benefit (or differentiation in terms of the benefit) offered
by a new brandeven if strongly related brands are used for entering into the
category;
(iii) penetration of the category or subcategory in the marketantiseptic liquid
soaps may have a very low penetration and hence it may be difficult for too
large brands to operate in the market even though the extension is strongly
linked to the original offerings. Dettol liquid soap has a hand wash variant and a
similar offering from Lifebuoy may not be appropriate in a small niche market.
Advertising appeals
There are several kinds of appeals which are used in advertising campaigns.
Depending on the product category, target segment and competitive appeals, a
brand attempts to formulate appeals. The proposition of the brand has to be
clearly conveyed without getting lost in the creative elements of the
advertisement. Rational appeals could be used to convey the value being offered
by the brand. Wheel, the detergent brand, initially came out with the
advertisement which conveyed that it is harmless when used as a detergent for
washing clothes. Wheel was launched several years after Nirma had made a
strong entry at the lower end of the detergent powder market. The rational
appeal has to offer a focused proposition, which would motivate consumers to
try out the product/brand with the perception that it would be better than the
brands currently being used by them. Peter England came out with the appeal
Honest shirt meaning that it offered good value for money as a ready-made
wear in a category which was full of brands which were at the top-end
emphasizing lifestyle (like Arrow or Louis Philippe) or offerings at the lower
end of the market which did not have much advertising visibility as they were in
the unorganized sector. The appeal used by Peter England was in tune with the
position (target segment) selected by the brand. Emotional appeals are useful
to either brands which are established in the FMCG sector or brands which have
established themselves in durable categories. Hamam combines the herbal
purity appeal with warmth in its mother-child imagery. Coke and Pepsi use
emotional appeals or fun appeals with celebrities from fitness and sports. Titan
pioneered quartz watches as a national brand in the Indian context, providing
the head start in the category of digital watches. During the mid-1980s, the
brand launched the initial campaign to emphasize that Indians need not shop for
watches at duty-paid shops (which was the practice to shop for foreign watches)
when equally good watches were made by the brand. The brand quickly
introduced the Mozart jingle (which is being used even after a decade) with
the emotional gift proposition, which was a very powerful occasion-based
appeal. The brand's approach fits in with the conceptual model on semiotics,
which deals with how consumers interpret meanings from symbols. The model
has the object, image and interpretent as the elements as shown in the figure.

The object is the brand name, which is Titan, image is the gift association
conveyed by the brand, and interpretent is the interpretation of consumers,
which is warmth, remembrance and a special relationship. The appeal and the
elements of the advertisement (like the jingle and sequence of presentation of
the brand) have been formulated in such a way that the gifting with warmth
has been used to cover two kinds of relationshipsromantic as well as parental.
Such effective usage of an appeal is rare in TV commercials. Negative appeals
involve fear. Research shows that negative appeals used in moderation could be
very effective to convey the proposition of the brand. LIC and United India are
insurance companies which regularly use negative appeals in their advertising.
Ceasefire, the fire extinguisher brand which made rapid progress during the
early 1990s, used negative appeals to very effectively sell the concept of a mini
fire extinguisher. The appeal was so effective that an unlikely product category
like a fire extinguisher was brought within the product ladder of consumers
psyche. The negative appeal highlighted that different kinds of fires required
different kinds of chemicals to extinguish and the brand will be suitable for
most kinds of fires. Another TV commercial based on negative appeal with the
right kind of visuals was the one on the Voluntary Disclosure Scheme, which
was initiated by the government to stem black money. It effectively conveyed
the negative appeal by use of several advertisements. One of them hinted about
the deadline date which was drawing close and the time left for the target
segment consumers to act to preserve their peace of mind.
TOUCH OF REALITY
Retro-advertising is one of the recent approaches adopted to market brands.
Coke introduced the Indianized Elvis look alike to launch its vanilla coke.
Halls, Close-Up and Nestle's Kit Kat are other brands which have followed this
approach in the Indian context. While such an approach may break the
advertising clutter, managers associated with brands should consider the
following aspects before introducing retro-appeals associated with the brands.
o Retro-appeals are associated with a sense of nostalgia. Hence, is it
appropriate to introduce such trends in youth markets? Would such a
reverse trend be acceptable? For example, Vanilla Coke's model (See
Plate 11) associated himself with scooter and apparel, which belonged to
the golden era and this may perhaps strike a chord with much older
consumers. Elvis may have a following in specific international markets
but would such an approach be suitable for the urban Indian youth in the
digital age of mobiles, software and acid rock music? Marketing research
studies and the feasibility of reaching the target segment should
provide the answers.
o Would retro-appeals be a sustained part of the brand personality
association or is it a short-term strategy in product categories which do
not have anything to offer in terms of proposition?
o Would retro-appeals affect the associations which consumers have with
the mother brand (in case a sub-brand is used)? Coke's Vanilla Coke is an
interesting case.
Directness and Subtlety in Advertising Appeals
Thousands of advertisements impinge on the psyche of consumers. Most of
them, like the innocuous waves attempting to reach the seashore, get lost even
before creating a dent on the psyche. Only a few of them touch the consumer's
mind; fewer still make any lasting impression. This section makes an attempt to
examine advertisements through the eyes of directness and subtlety. The
focus of the section is neither to discuss successful and unsuccessful
advertisements nor to address the correctness of creation of any advertisement.
The intent is to highlight an approach that will complement existing practices of
marketers.
Directness in advertising is any obvious reference to a product, service
attributes or a benefit. Supreme edible oil's tummy reduction advertisement
focusing on the tummy enlargement syndrome is a high
visual direct advertisement. Onida's neighbour's envy owner's pridean
advertisement that pioneered in creating a status symbol out of a TVbelongs
to the subtle category. It uses the metaphor of TV brand Onida to convey the
status of the consumer owning the brand. Most status-oriented brands adopt
the subtle approach. Raymond's relationship, Titan's gift proposition and
Samsung refrigerator's dependability (reflected through a modern housewife
having a traditional outlook towards marriage) are a few in this
category. Direct advertisements are quite common in the FMCG sector.
However, Tata Chakra's (a brand of tea) recent TV spot exploiting the appeal of
romance as a metaphor of taste, and the projection of Bru (a brand of coffee) as
a mood elevator are some typical exceptions.
Both approaches have their own merits and demerits. Directness conveys
product benefit without any distraction. It is effective in conveying the brand
proposition. Shampoo brands adopt the directapproach by highlighting their
benefits (though some of them make use of celebrity-based romantic themes
like that of Pantene). Directness is very effective when the brand (consumable
or durable) has a strong competitive benefit significantly superior to those of
competing brands. Hero Honda projected fuel economy as its proposition by
offering almost double the mileage of competing brands when it entered the
Indian market. Dove moisturizer soap created a direct advertisement projecting
its superiority over ordinary soaps.
However, directness can become ineffective when brands need to convey an
emotional proposition. In the current competitive context, the emotional feature
is an almost inevitable proposition. Brands keep improving over a period of
time and it may be difficult for a brand to sustain itself purely on a functional
platform. Hence, there may be a need to adopt the subtle approach. Moreover,
premium brands normally emphasize psychological exclusivity and this is
possible through subtleties. Some brands like Titan create a strong
psychological proposition (gifting) and make the brand a part of such a
proposition. Certain categories, by virtue of their characteristics, revolve around
the subtleapproach because it may be difficult to highlight any strong benefit.
Given the subjective nature of taste, it may be difficult to make taste a
permanent proposition in categories such as soft drinks and chocolates. Even the
well-known brand Cadbury (a near-household name in the middle class and
above) portrayed warmth to be associated with the chocolate during the 1980s.
Later, it projected the joyous girl on the cricket ground to reflect spontaneous
celebration in everyday life, with Cadbury's being a part of the celebration.
TOUCH OF REALITY
Is it possible to effectively interweave directness and subtlety in the same
advertisement? Liril's classic TV spot having girl-waterfall-freshness links is
one such example. The waterfall advertisement had several research insights
behind it. It was one of the few advertisements in the Indian advertising history
to move from cinema halls to household TV (perhaps with some minor
changes). The advertisement had directnessfreshness attribute being
highlighted by the green soap used by the girl in the waterfall; the waterfall also
conveying freshness in an indirect manner. It also had subtlety captured by the
indulgence of the girl in the waterfall, and associating this indulgence with
freedom from daily chores through the freshness of the brand. The most recent
advertisement of Liril (LA-IRA-ILA) employs overwhelming subtlety to
communicate its freshness. This illustration is just to exemplify the
simultaneous presence of boththe direct and thesubtle. The objective is not, in
any way, to compare the advertisements in terms of effectiveness.
If subtleties fail to evoke any contrast with other brands, the advertisement may
not leave an impact on the target segment. For subtlety to succeed, its intensity
should be in tune with the nature of benefits communicated by the
advertisement and the type of target segmentthis is a
rarity.Subtleties formulated could also be closely related to the brand benefit.
Johnson & Johnson's advertisement displaying warmth and love of a mother is
a good fit with the brand's attribute of mildnessabsence of any type of
harshness to the baby's skin. The tender skin of a baby is generally associated
with lovable warmth. There is a synergy of various subtle elements here.
A novel benefit hitherto unknown to the market can be conveyed
through direct advertisements. Fair One (15 day fairness promise) in the fairness
cream category and Colgate's whitening variant (14 day whitening promise) are
representative samples of recent origin.
Subtleties and Celebrities
In recent times, celebrity associations are common strategies followed by
marketers. A celebrity could have expert opinion linked to the product category.
The celebrity directly endorsing a brand attribute by virtue of this expertise in a
specific field can be associated with the direct approach. Lux exemplifies this
kind of approach. Over the past several decades, it has been following this
approach across the globe. Lux is associated with complexion care and the
reigning celebrity is perfectly suited to endorse the brand benefit by virtue of
her success in an area where the (brand's projected) end benefit is a cause for
success. Sachin Tendulkar's Boost is the success of my energy is another such
example. When celebrity association is not overtly connected with the benefit,
the subtle approach is adopted.
Santro initially used a celebrity to showcase the brand
attributes (direct approach) and later brought in another celebrity to join him,
projecting it as the sunshine car. Sunshine has an intuitive association with
brightness, joy, new hope and perhaps success (shine and success have close
cognitive association). Santro represented sunshine and the approach of subtle
analogy was used in its advertisement.
There are some celebrity-based advertisements that follow neither of the
approaches. They bank more on the charisma of the celebrity. Amitabh's
association with Parker pen and with Cadbury's chocolates belongs to this
genre. If a brand attempts to win back the goodwill after being in a contentious
phase (like Cadbury's), then there may not be any need to apply either of the
approaches. However, if the brand has the long-term objective of creating a
brand personality (like that of Thumbs Up), subtleties may be used effectively.
In order to be different from competing aerated soft drinks, Thumbs Up
employed a celebrity to create a macho and adventure association. In this kind
of approach, success is likely after a prolonged period of exposure. Normally,
various campaigns launched by the brand in a specific period of time should
have synergistic binding. Consider Airtel and Thumbs Up. It will be an
interesting research exercise to identify the type of association created by the
topical celebrities projected by the respective brands. Subtleties need to be
linked to a theme to ensure an association unique to the brand. Even
if subtleties are employed to focus on specific associations, it may not be a good
idea to use a diverse set of unconnected visuals to advertise the brand. A brand
attempting to create long-term associations by employing either of the two
approaches may find its frequent sales promotion announcements inhibiting its
attempts. This may be due to the non-reinforcing advertisements utilized for the
announcements.
Projection of a celebrity along with subtleties may not be appropriate for a
brand belonging to the durable category, especially when the brand is
attempting to position itself in a low-growth market. Take the case of a washing
machine. A new brand needs to put across its attributes/benefits in a manner
convincing to the respective target segment. This is all the more important if the
brand does not have any cumulative association in the minds of consumers due
to its being totally new to the market. In such a situation, it may not be
appropriate to Lise a celebrity and weave subtleties around the celebrity.
However, in conspicuous categories such as passenger car, subtleties involving
celebrities can have an impact because of the reference group appeal. This is
more likely of brands perceived to be having strong attributes. Skoda's
advertisement makes use of subtleties to convey its internal space. Note that the
washing machine being an inconspicuous product necessitates a shift in focus to
features and intrinsic product-related aspects.
Embedding Subtleties in the Cultural Context
In any social context, culture influences marketing communication to a great
degree, and in emerging markets there may be several kinds of cultural
dimensions. In the Indian context, traditional culture has an impact on a large
number of product categories and on a large proportion of consumers. The high-
degree consumerism fuelled by the neo-rich culture and the emerging youth
culture-related product categories are stark realities, to name a few. Marketers
will need to examine the best ways of exploiting the various approaches
discussed here in the context of the relevant culture setting.
Coke's thanda TV commercial exemplifies the usage of a cultural habit in
taking a brand to the masses (See Plate 12). The commercial makes use of a
celebrity who is popular with the masses through movies. The TV spot takes
advantage of the practice of chilling fruits and soft drinks with a bucket of
water. This depiction identifies itself with the masses by empathizing with their
non-aifordability of the refrigerator. The cold habit associated with the brand
along with a story woven around the theme is the approach of subtleties glued
with the cultural habit. Vicco that probably created the fairness cream market
(though not positioned as a fairness cream) took advantage of marriage as a
culture-based association to position itself. Special and traditional cosmetic
offerings were a part of culture-based tradition of the masses at the time of
launching the brand, and they continue to be so even to this day.
Given the proliferation of the urban youth population and its fancy for cameras
and the Walkman, Eveready created the Give me Red campaign for a low-
involvement product like batteries. Red has a cognitive association with being
adventurous. It also stands for energy, a concept closely associated with
boththe active youth and batteries. Duracell has launched a campaign in India
with its rabbits story' in which the rabbit associated with the brand keeps up its
physical activity nonchalantly while other rabbits get tired. While the cultural
aspect may not get reflected to the fore as in Coke and Vicco, the need for
energy in a fast-paced culture is well captured, and associated with the brand of
battery. It may be interesting to note that in a number of mundane products,
suchsubtleties in synergy with the familiarity of well-known brand names yield
effective advertisements.
Marketing creativity is not based on any phenomenal breakthrough. It is based
on dimensions of nonlinear thinking. Differentiating
between directness and subtlety could be one of them.
Urban Time Poverty and Marketing Communication
Urban time poverty is the lack of time for most consumers in the urban markets
for even mundane shopping activity. Nuclear families with both the husband
and wife working, especially with high-pressure jobs, is an example of how
consumers experience time pressure in their daily lives. These consumers
indulge in polychrome activity (simultaneous multiple tasking}. Around 60 per
cent of US consumers are reported to be doing some thing or the other while
eating. While the Indian context may not have such levels of multi-tasking,
there is definitely the pressure of time poverty. Grazing (eating on the move) is
one type of implication and products which promise time convenience (like fast
foods which do not have liquid contents that would spill, or packaging
introduced to fit in with car holders) will have considerable potential in urban
markets. Such consumer habits provide a good opportunity, provided the target
segment is well researched and the message is effectively communicated. This
approach to marketing communication has to be different from the traditional
approach to mass media and advertising. Marketers would have to be sensitive
to the time consumption of target segment consumers and plan both the
content of the messages as well as the channels in accordance with how
consumers get involved with time. Time as a segmentation base opens up
several avenues for the marketer and there could be specific products and
services which could be targeted to different types of consumers. The time
consumption pattern varies from one type of consumer segment to another. The
following categorization of time consumption would be useful from the
viewpoint of marketing communication.
Flow time. This is the time when the consumer is actively involved in a specific
activity typically at his job or place of work. This is not an ideal time for
marketers to communicate any product idea/service idea. It is common for
several well-known brands of credit cards to indulge in telemarketing of their
offerings to certain groups of target segments during working hours. Marketers
would do well to keep away from this type of time consumption.
Occasion time. Consumers respond to several important occasions in their daily
lives. While the degree of attention given to this type of time may vary from one
occasion to another, a brand which is able to communicate the occasion-based
timing will attract the attention of the respective consumer group. Titan used
the gift occasion; Raymond, the strongly established fabric brand, is targeting
the wedding occasion by its TV commercial showing the model in an ethnic
wedding dress. In 1980s, one of the most successful brands used occasion to
convey its offering in a category in which brand success is rarethe 2-minute
noodle from Maggi which positioned the brand as a snack for children
(implying snacking occasion). Young, well-earning professionals abroad may
use an occasion to buy a product category/brand, which could be sent to their
relatives in India.
Leisure time. This is the time used by consumers to experiment and know
about new activities/interests/opinions and provides an excellent opportunity for
marketers to communicate their offerings. One point to be noted is that though
TV viewing happens in leisure time, there are a number of advertisements
which may interfere with the effectiveness of any specific advertisement and
alternatives would have to be researched by marketers. A brand of microwave
oven has brought in several promotional elements in selected gymnasiums so
that consumers would get involved in the offering. Media-graphics deals with
how consumers (specific groups) use the media, and leisure time media-
graphics could be useful. A niche magazine like Readers' Digest will find it
useful if its offering is targeted towards consumers who have a profile which is
in tune with the readers of the magazine. Researching on leisure time, Internet
surfing will also be useful to marketers to find out the type of websites
consumers visit.
Kill time. This kind of time is the time which consumers have on their hands
because they are waiting for an activity to commence or get over Waiting at the
airport or waiting at a contest to pick up children are examples which reflect this
kind of time. Subject to suitability, Internet kiosks (which are interactive) could
be used to spread knowledge about new products or new concept products at
airports. Similarly, having an in-house stall to demonstrate the taste of a new
brand of coffee or tea at a busy railway station could be more effective than
spending heavily on advertisements as the only approach to introduce the brand.
Small vendors dealing with unbranded and ethnic varieties of snacks at bus
stands and railways stations demonstrate the usage of kill time to target
consumers interested in snacking during the kill time.
TOUCH OF REALITY
Brand building in traditional product categories Involves introducing a unique
offeringunique in terms of product differentiation. It is also important to
create an enduring association with the unique offering depending on the target
segment selected. Integrated marketing communication is useful in nurturing
and sustaining such associations by making them consistent and relevant over a
period of time. Soft drinks have been in the market for several decades. Red
Bull is an Austrian brand of energy drink (also available selectively in Indian
retail outlets), which had a sale of one billion cans worldwide between 2002 and
2003. Differentiated ingredients, an association with edgy and adventurous
sports and the youth target segment (which would always have consumers
falling into the age slot of 13-19 years) provided the winning combination for
Red Bull, which has also become popular as a mixer in bars. Coke, Pepsi and
Anheuser-Busch are some of the leading companies which have entered the
energy drink segment. The long-term strategy of Red Bull would be to sustain
its marketing communication/event management involving sports in an
innovative and exciting manner.
TOUCH OF REALITY
With regard to durable categories, the Indian marketing context has been
experiencing marketing action in urban markets. However, changing
demographics and psychographics point out to the fact that in durable
categories, a significant volume of sales is registered with semi-urban and rural
markets. Thirty-three per cent of flat TVs are sold in such markets; frost-free
refrigerators and fully automatic washing machines account for 28 and 20 per
cent, respectively; all these figures are from towns which have a population of
below 1 lakh people. LG, the leading brand in several durables such as TVs,
refrigerators, microwaves and washing machines, gets around 60-65 per cent of
its revenue from semi-urban and rural markets, which is very much above the
industry image with regard to durable categories. LG is probably the first
national brand to recognize the semi-urban/rural potential and invest in a
distribution channel with central sales offices and remote sales offices in semi-
urban and rural markets. Besides, LG's managers have the decision-making
flexibility to customize branding activities in a specific geographical area, and
these include sales promotion and even free trial. Given the social and cultural
complexity in the Indian context, changes in lifestyle have added one more
dimension to marketing challenges, which could open up a new area of
specialization called rural branding.
Building new brands in developed markets
Asian brands getting established in developed markets such as the USA, UK
and Europe are one of the areas of topical interests to marketers. As stated
earlier, there are a number of strategic aspects, other than advertising, which
have made this possible for successful Asian brands. For a long time, Chinese
brands have been supplying products (different categories) to several leading
brands in the world and to private retailers in the USA. A few such offerings
have grown as brands in the USA. Haier, China's biggest appliance
manufacturer, is selling small refrigerators under its brand name. Quick and
innovative product development has been a very useful strategy for this brand.
The small refrigerators double up as PC tables and this is useful for the
Americans who largely live in flats. In Europe, 80 per cent of the refrigerators
sold are replacement purchases and consumers seem to prefer the brands which
they are familiar with and the ones which offer features and value. For
household appliances, profits in the US market is worth about $2 billion, which
is nine times the profitability in China and 100 times that of Brazil. For
consumer electronics, profits are around $1 billion, which is 10 times more than
that in China. Chinese brands have the strategy of producing competitively
priced offerings, which are of high quality. Galanz makes microwave oven for a
number of leading brands in the world. Little Swan supplies General Electric
with dishwashers and Changhong Electric supplies Wal-Mart chain of stores
with TVs. Chinese brands (most of them) have no distribution channels or
service networks in developed markets and advertising prowess has not been
their forte. SVA, a Chinese brand which is known for its TVs, had a distribution
arrangement in the USA when it first entered the market. It invested heavily in
famous retail chains in the USA as they would expect very high standards of
logistics and service. SVA worked out promotional schemes for its distributors.
The brand avoided the low end and highly competitive colour TV market and
concentrated on higher end offerings, which do not have too many Chinese
brands. The products are of high quality but were priced competitively. The
company hired executives who knew US markets well and used consumer
research to fine-tune its offerings for the market. The company's expected
revenue in 2003 was around S80 million. TCL, a Chinese brand in consumer
electronics, purchased a German brand Schneider in September 2002 to launch
it in the European market. It uses the well-known brand to market to chain
stores and hypermarkets. TCL could slowly co-brand the offerings with both
brand names and strengthen its position in the European markets. Technology,
right prices and good service could build brands in developed markets.
Samsung, with a revenue of $32 billion per annum, is a global brand in
consumer electronics. It acquired 50 technology-based agreements and the
brand started as a supplier to private label brands in the USA. It learnt about the
market over a period of time and built its sales and manufacturing operations in
developed markets. The company's flat-screen monitors, TVs, digital high-
definition and digital mobile phones were launched with strong marketing and
technological research. In the late 1990s, Samsung launched itself as a global
brand with about $1 billion in advertising and sponsored the Olympic Games. It
spent $7 billion on introducing cutting-edge products (5 per cent of sales on
research). It then shifted its channel focus from mass-market chains to upmarket
retailers. Samsung was ranked 25th in the ratings of world brands worth $108
billion by Interbrand Consultancy in 2003. Marketing communications form a
part of the overall brand building.
TOUCH OF REALITY
While multicultural contexts require multinationals to adapt customized
campaigns with the localization content to build brands in several countries of
the world, Coke, McDonald and Nike are some of the brands which believe that
the youth population is the same all over the world when it comes to certain
FMCGcategories. McDonald collaborates with MTV, Coke is planning a global
campaign and Nike has launched the global campaign I am what I am. Apart
from cost saving reasons, a simple global campaign also lends itself to be
translated into the local language in a specific country. With changing lifestyles
and western brand names becoming lifestyle statements, global campaigns seem
to be a logical sequence to the consumer behaviour trends reflected in both
developed and emerging markets. What is to be noted is that while such an
approach would work in impulsive categories (which also happen to be
lifestyle-oriented ones), it may not work with all categories, especially if the
objective of the brand is to reach out to the masses in emerging markets.
Emerging markets may require a value proposition and profitability models
much beyond the advertising glamour of global campaigns.
TOUCH OF REALITY
Brand sense, the concept advocated by Lindstorm, has interesting applications
in the Indian context. Brand sense deals with how brands can benefit from the
sensessmell, sight, sound, taste and touch. The Indian cultural context, in
particular, provides several avenues that can be used by marketers, who would
like to use brand sense. Fast foods and even chocolates require a unique taste,
which may vary from one region to another. Dark chocolates which are bitter
have never caught on in the Indian market. Nestle withdrew its dark chocolate
version after introducing it in India. Limca's success, especially during its earlier
period, can be attributed to the nimbu pani taste and the lemony look of the
drink. Most detergents have a blue colour and adding a blue tinge to white is a
well-known cultural practice in fabric care. Onida, the TV brand, launched its
KY series with special sound effect as the loud audio component is an important
aspect of TV purchase. Good Knight mosquito coil was received well in the
Indian context (and other makes of coils too) probably because smoking away
insects is a part of the Indian culture (smell aspect). Dettol is a popular
antiseptic solution with its stinging sensation and unique odour. Moulded
luggage offerings have a rugged feel in the low priced segment and a
sophisticated feel in the premium priced segment. Touch could be used in
product design after taking into account the relevant cultural perspectives. In the
past, Rajdoot provided the rough and rugged feel required for the rural market
where bikes are used by merchants for transporting goods.
TOUCH OF REALITY
Tata introduced Tata Sierra in 1991. It was an offering in the passenger car
segment with several features including a two-door concept targeting upmarket,
upwardly mobile urban youngsters. The brand was positioned as a sports utility
vehicle, which could be used for long, out of city drives. Passengers found the
two-door concept difficult as rear passengers would have to fold the front seat to
get inside (similar to the two-door Herald version of the 1960s). The rear
portion of the vehicle did not have a regular window (it was covered with glass
to enhance the looks of the vehicle) and had to depend on the rear air-
conditioner, which had problems in its efficiency. Besides, consumers in the
habit of spitting pan found the design to be a barrier. By 1995, there was
competition from various models offered by competitors. Tata attempted to
introduce a variant Turbo Sierra, which also failed. With a product ahead of its
time, priced with a premium (around Rs 5 lakhs in 1991) and with consumers
not in a position to appreciate the features offered by the brand, the brand was
withdrawn. Positioning, which had the lifestyle appeal like It is not owned. It is
possessed or 18 till you die, did very little to pep up the brand. Timing and
value-based features are important for a durable brand to succeed.
Media Planning Strategies
Freedom, the brand of two-wheeler from LML, Gold Winner, the regional brand
of edible oil, and the all new Zen from Maruti are brands from different product
categories which focus on a specific target segment, and each of these brands
requires a different media planning strategy in tune with the concept of
integrated marketing communication stated earlier. There are two sets of
decisions to be taken in media planning. One set of decision is concerned with
the selection of the specific media (print/TV/Internet/hoarding) and the other
more basic decision which is more vital (because that would decide the specific
media planning channels) is how a brand would like to approach its markets
(typically a national brand), which is spread out throughout the length and
breadth of the country. If a brand such as Videocon or Horlicks is taken
(whether the category is a FMCG or a durable one), there are markets where the
brand is strong or dominant; there are markets where the brand may not have a
large market share; and in both these kinds of markets, there may be strong and
weak competitors. A brand must decide how it would like to distribute its media
resources before deciding on media channels. One indicator or guideline for
deciding on this strategic direction is the affordable population (the number of
households or consumers) who can afford to buy the brand and the penetration
of the brand or even the product category itself. This kind of assessment would
enable a company to weigh several alternatives and decide how maximum value
could be derived out of the media spend (the money spent on media by a brand).
After having selected the specific market, the brand can consider a number of
factors associated with media selection. One is the target segment
characteristics. Dove and Hamam are both soaps but given the psychographic
profiles associated with each of these brands as well as the price points,
different kinds of media and different kinds of media vehicles are selected (for
example if TV channels are selected as the media for a brand, each type of TV
channel is a media vehicle). Product characteristics also influence the choice of
the channels. A new concept product like an electric car would just create
awareness in the TV. Several aspects of the product should be explained and the
perceived risks of prospective consumers should be addressed through
newspaper or magazine advertisements, relevant to the target segment. A brand
like Himalaya, which is a contemporary herbal offering planning to target
affluent urban youth (for its facial cream offering), may have to advertise in
Femina or Star Dust. An antiseptic lotion like Dettol may have to remind
consumers at the POP posters at retail outlets, simultaneously advertising about
the brand benefits on an appropriate TV channel to ensure that the brand
purchase stays as a priority item in the mind of the consumer. There are a few
more factors which are to be taken into account to get an idea about the value
which may be derived from the media spend (which may differ from company
to company). Reach refers to the number of households or consumers reached
by a media schedule at least once during a time interval. Different media and
media vehicles would have a different reach and these aspects would have to be
researched before media selection is made. Frequency is the number of times
message/household or consumers are reached by an advertisement during a time
interval. Grass rating point (GRP) is the product of reach and frequency. If the
reach for a media is 60 and frequency is 4, then GRP is 240. Secondary sources
of information, which are published by different agencies/research firms, can be
used by companies before formulating the media mix for a brand.
Managing the Promotional Process (The Basics)
Marketing strategy formulation is a dynamic process as continuous planning is
required amidst intensive competition. Promotional plan is an important element
of marketing strategy and marketers would have to carefully plan promotional
activities considering the objective of advertising at a given point of time,
synergy of advertising with certain other promotional elements such as sales
promotion, POP posters, event triggers and even personal selling (wherever it is
appropriate). While advertising receives considerable degree of attention, a
brand would have to also focus on what it aims to achieve through a campaign
over a specific time period. Lack of attention to promotional linkages may affect
the brand in the long run. In a number of product categories like soft drinks,
cosmetics, soaps, two-wheelers, apparel and durables, continuous visibility is
required (though bouts of intensive advertising may be required during specific
periods) to keep the brand in the consideration set of consumers. Specifically,
sales promotion, which is concerned with discounts/extra units/contests, would
have to be handled in a synergistic manner with other promotional elements.
While there are a number of research methods available to measure the
effectiveness of advertisements, there has to be certain conceptual directions
which would enable marketers to formulate the objectives of advertising (for a
given campaign).
An established brand with a large base of consumers should ensure that the
brand is kept within the consideration set of current users and it also has to
ensure that non-users of the brand try the brand. There should also be trials from
consumers who are using competitive brands. There are three objectives in this
situation and it may not be worthwhile having three campaigns simultaneously.
Besides the cost aspects, too much of diversity in the execution of the
campaigns may also confuse consumers. For example, a brand with different
kinds of visuals will fail to develop a sustained image for itself in the psyche of
consumers. An important caution in a situation of this kind is that, if the brand is
an established one and is likely to carry certain associations, these associations
should be preserved irrespective of the promotional linkages.
Symbolic Promotional Plans
The following table considers three established brandsCadbury, Colgate and
Surf (variants can also be considered with appropriate changes in strategies).
There are also four factors associated with regard to consumer behaviour
priority in terms of usage of the product category/brand, the type of buyer, the
influence of purchasing power on the selection of the brand and the scope for
sales promotion. Each of these factors should be considered with the respective
brand to analyse the promotional linkages. If chocolates are considered, they are
impulsive purchases and consumers would like to associate themselves with the
brand imagery. The brand probably can decide on a contest revolving around
enjoyment, fun, excitement and symbolic associations (associated preferably
with sports or film celebrities). For a given number of wrappers (for instance)
there could be a range of prices offered. The wrappers can be enclosed with a
short story associated with fun and adventure experiences of the consumer. A
celebrity can also be roped into the contest to meet a few contestants, who
qualify on certain parameters. This type of contest reinforces brand association
and also serves the promotional objectives stated earlier. Consumers have
something to look forward to and there is also an opportunity given to them to
articulate their experiences associated with the brand. This is not to mention that
the typical sales promotion (more for same price or one free with a purchase)
should never be done. In such product categories, established brands could often
introduce sales promotion that enhances and nurtures brand associations which
are already present in the consumer's psyche. There is also one more aspect
involved in this kind of promotional strategy. There is a strong WOM element
involved and this is likely to be very useful for promotional aspectsinvolving
symbolic aspects. The WOM is just not limited to the value one gets from the
offeringit assumes several dimensions which may be appealing to the group
which discusses the contest. The celebrity association also encourages the
WOM. An occasional event (the same celebrity launching a variant of the brand
if found suitable for the target segment) may also be in synergy with the
promotional plan. In a category associated with symbolism (taste, in this
example, may be the basic motivating factor), managing the symbolism may be
important in sustaining the association the brand may have with existing
consumers.

Value-based promotional plans
Toothpastes and detergents are need-based categories and value may be strongly
associated with the quantity and extra units given by way of sales promotion.
There is also a clutter of communication from a number of brands which
compete in the category. Some of the brands like Close-Up among toothpastes
may also be amenable to symbolic promotional campaigns. There may be a
huge number of consumers who are price sensitive and who may be interested
in the brand only as long as sales promotion is being continued. One approach
in this context is to have continuous advertising making use of user imagery
having a focus on consumers who use the category. Generally for detergents, the
imagery has the housewife as its core element (Rin, Surf, Nirma). Some years
ago, Surf created Lalithajia stereotype of a typical middle class housewife.
The TV commercial showed the hard-core bargainer choosing the brand as it
was oriented towards high value (because of lower usage apart from cleaning
action). When a stereotype of this kind is strongly associated with a brand (the
stereotype refers to the typical housewife carried by the target segment), an
occasional sales promotion is likely to add to the value created by the
advertisement. This is because value of the offering is built into the core
values of the brand and a sales promotion may be perceived as a plus. This
could be very useful when the brand is competing with brands that only focus
on cleaning action. The event trigger could involve having the same
celebrity/model used in the brand's campaign in a contest that could be held at
different geographical locations. The common man commercial involving the
stereotype model slowly builds up the credibility of the brand and the model
itself could have a reference group impact on the target. An event of this kind
attempts to extend the stereotype created by the commercial.
In the case of toothpastes, Pepsodent is an interesting example which illustrates
the power of promotional linkages. Initially, the brand advertised a much
focused propositionprevention of germs/cavity and related aspects. It also
used effective imagery of having children in TV commercials. There were also
promotional efforts to create awareness about the brand (like merchandising).
The advertisements highlighted the need for an offering of this kind among a
well-defined target segment. At a later point, the brand brought in the buyer of
the brand (the mother) and created a TV commercial in which a child gets
tongue lashed for eating snacks on his way to school. The advertisement ends
with the assurance of Pepsodent. The snack theme involved would appeal to
the mother (buyer), because it is almost a part of the culture, especially among
the typical middle class. A discount off or any other sales promotion introduced
by the brand is likely to push the price factor to the backdrop and the brand is
likely to be closely associated with the benefit. Essentially, the advertising
campaign has laid the foundation for sales promotional campaigns preserving
the USP of the brand.
Promotional aspects and new concept brands
A brand (with a new product concept) has to follow a different approach
towards promotional elements. National was a rice cooker brand. The concept
of rice cooker will have to be sold before a sales promotion can be attempted
with another durable (the brand had a tie-up with another durable). While the
brand's objective may be to reach out to several households to spark off trials
(usage of the product), a careful analysis of the perception of consumers is
required in such a situation. A new brand, especially one which pioneers a new
concept, will do well to involve consumers at the retail outlets through the
demonstration of the product. In fact, promotional elements should be oriented
towards building up traffic at retail outlets. POP posters at several outlets
explaining the usage of the product would also help. TV commercials can create
awareness about the product and if the brand is a known one (though new to the
category), advertisements can also reassure consumers based on the trust
associated with the brand. Hindustan Lever came out with a campaign, which
created awareness about deodorants, when it introduced Rexona. The market
has grown to a significant extent in the last 5-8 years. Trial discounts should
never create a perception among consumers that the company is attempting to
price-cutting as a desperatemeasure. This is important especially in niche
products, which will be new to the market like electric shavers.
In consumables (FMCG), an extended campaign creates awareness and trials.
There are two kinds of segments with regard to FMCG, which may react
differently to different promotional approaches. The lower end of the market
may try out the brand if a sales promotion is introduced. Regional brands of
detergents can try out this approach. If there is a brand for the higher end of the
market, probably advertising through appropriate media vehicles could be
useful. Ayurvedic Concept brand, currently known as Himalaya, can be an
example from the OTC category of products in pharmaceutical categories.
While certain approaches have been suggested on formulating promotional
plans, there is a need to explore the perception of consumers associated with
product categories and brands before deciding on promotional strategies.
Advertising linked with several other promotional elements will provide a
strong value for marketers, especially during times of down-trading by
consumers across product categories.
Direct Marketing
Direct marketing (DM) is any consumer direct channel, which is used to reach
out to the consumers directly without any intermediaries for the sale of a
product or service. These include personal selling, Internet, direct mail and
multilevel marketing. DM works well when a company has a large database of
consumers and their preferences and is in a position to customize offerings and
promotional messages to rather individual customers (an advanced form of DM)
or to specific customer groups. While the cost of reaching specific customer
groups may be higher than in mass advertising, DM has the advantage of
reaching out very relevant customers if formulated in a planned manner. DM
can work very effectively with regard to services like retail banking,
investments, travel and even medicine, simply because of the high degree of
interactive exchange of information (between the consumer and the marketer)
involved. Higher this interaction, higher is likely to be the focus on consumer
needs (which are very specific in services). This will lead to customer
satisfaction, which triggers repeat purchase. However, even in FMCG goods,
DM offers vast scope, provided marketers like Fab Mall or Food World have a
stronghold on consumers. Tesco, the well-known retail chain in the UK has
around 14 million consumers who are offered promotional packages. The chain
with its well-researched database identifies specific need-based segments and
offers different kinds of promotional deals (without offering standardized deals
for all consumers). Around 80 per cent of these consumers avail the promotional
offerings. DM can also be very effective in premium products which could be
marketed to a very specialized niche. A brand like Red Tape or Floresheim (in
the footwear category) can have an exclusive showroom and have a DM
programme for a very selective niche segment which may not only be interested
in multiple ownership of footwear offerings but also be interested in the
category as a fashion statement. The brands being super premium can also
maintain an aura of exclusivity required by consumers in any fashion-oriented
super premium category. The catalogues and the offerings can be highly
customized and the offering could become designer brands, enhancing the social
signalling value of consumers. Dell in computers follows the DM route to
market to reach knowledgeable consumers who are able to specify their needs
clearly. Value, in terms of specific needs, at prices lower than competitors
prices are achieved by Dell with most of its offerings for a variety of customer
needs. Savings in intermediary costs and inventory are strong drivers behind the
success of the brand. Dell also has intranet arrangements which foster a direct
dialogue on several aspects of pre- and post-sale with customers. Multilevel
marketing (followed by Amway and Modi companies in India) involves a
distributor of the brand (who is an individual stocking limited range of the
brand during initial stages of distributorship') appointing several other
individuals as distributors. These distributors also carry the offerings of the
company and they in turn appoint further distributors. This network of
distributors sell to individual consumers. The distinguishing aspect of an ideal
network model is that the distributor at any level gets a commission for the
sale made by distributors appointed below his level. The negative aspect of this
model is that if demand is not driven by value for money in terms of product
quality and consumer perception, there would be negative WOM on the brand.
This is because there may be thousands of distributors carrying sale offerings
of the brand (normally they are being bought by these distributors) and there
would be no consumer to buy the offerings if the brand receives a negative
WOM. Negative WOM will spread faster because both the distributors and the
consumers who have tried out the product will actively bad mouth the offerings.
Most of the offerings sold by companies using this model of DM are very
expensive, costing almost double the price of other well-known competitive
brands sold through normal retailing (tea, detergents, skin care products, soaps
and special cleaning offerings for consumer articles are some of the categories
dealt with multilevel marketing brands). The positive aspect of multilevel
marketing is that good intrinsic value of the offering triggers an excellent WOM
and the brand diffuses rapidly without huge advertising expenditure for brand
buildingbecomes an ideal model for DM as brand acceptance is based on the
value perception of consumers. Maximarketing is a concept which deals with
DM aspects detailing the various steps involved in initiating, selling and
developing a relationship with consumers.
TOUCH OF REALITY
It will be interesting for marketers to know how global brands are being
perceived by consumers across different countries. Sixty-two per cent of the top
100 brands in the world, as ranked by Businessweek, are American brands and
Americanization is likely to be perceived by consumers when they consider
global brands. But research conducted by Holt, Quelch and Taylor across
countries (which also included India) throws up certain interesting insights. A
cross-section of consumers may not like American brands but when they
consider purchase they may still select American brands. Brand association is
more important than the country of origin. This research also showed that
there are three major factors which are important to consumers when they
consider global brandsquality of the offering, myths built around brands and
the social concern of the companies, which market the brand. Global brands
constantly provide value with regard to their offerings and innovate over a
period of time. Contrary to popular perception, myths are not only important to
luxury and premium brands; but are also important to several other categories of
products or services such as software and oil. IBM, at one point of time, was
considered as arrogant and bureaucratic and its campaign associated with
Solution for a small planet showing Italian nuns and other kinds of non-
business people generally not associated with computers, talking about IBM's
technologies. It helped IBM create a favourable perception among its
consumers. P&G demonstrated its commitment to social concerns in Latin
American countries by attempting to use its technology to provide drinking
water in an environment where water was contaminated. Indian brands in any
category can use such dimensions (besides quality) to appeal to global
consumers. For instance, there may be an opportunity for a brand like Tata to
build a global brand around its brand of cars being exported to other countries.
Experiential brand building
Experiential marketing is emerging as a new facet of brand building. Experience
could be created with regard to any stage in the buying processbefore the
product/service is bought while the offering is being used and after the usage
phase namely post-purchase. When a soft drink like Mountain Dew advertises
with a visual of a consumer who is absolutely happy after the consumption of
the brand, the brand creates a pre-pur-chase experience. A detergent brand can
bring in the freshness associated with its brand by visually showing the valley,
spring flowers and mountains in a green backdrop. This is also creating a pre-
purchase experience. Consumption experience happens when the consumer
consumes the offering. For example, with a brand like Gillette Vector Plus, the
lower end offering the twin-blade system created for the Indian context, the
consumer (who has been used to the double edged or conventional blade) should
be able to have a superior shaving experience when using the new offering. The
category experience and the brand experience is compared by a consumer when
he/she goes through the consumption experience. The advertisement for a brand
also adds social and cultural aspect to the whole experience. For example, in the
Gillette example, the social and cultural experience of having a well-groomed
look for a professional dress code could be highlighted. There are several ways
in which experiential brand building could be done. A Japanese cosmetic
company in the USA retails its range in a retail environment where consumers
can use an interactive kiosk to try out a range, which they think will match
them. The company follows up interested consumers with the use of database
marketing. Post-purchase experience is the service experience especially
important for durable categories. Services such as travel and financial retail
banking provide a positive experience through highly interactive ways
customized to the needs of the consumer. A consumer of a travel agency should
have a very positive experience about the arrangements made by the agency on
a complicated business tour involving several international destinations. A
service provider would do well to meet the related needs of the consumer. In the
case of a travel agency-related needs to airport transfers, finding the right kind
of lodging and the internal transport in a specific destination are certain aspects
which can offer scope for experiential marketing. The advantage of experiential
marketing in services is that it leads to high levels of loyalty and the consumer
would become an advocate of the brand. Experiential marketing has its value
addition in the core product or service offering and cannot substitute for a bad
offering. A brand of ready-made apparel has to offer a fine fabric and
appropriate fit as a major part of experiential marketing and either a good
advertisement or retail experience will not get substituted for a bad offering.
Experiential marketing follows the following cycle and marketers would have to
work with marketing mix elements to create an experience at several stages of
the buying process. An example for a bike is associated with the concept.

It is important to note that though there are several dimensions of experiential
branding, in a highly competitive market, there will be a huge market for any
brand which is able to come out with a new market disruptive product which
would be simple to use, less complex and would cost less (various aspects of
value). Battery-driven transistors and personal computers created history by
providing a new experience to thousands of new consumers who otherwise
would not have had access to such products. Sony created 12 such disruptive
products between 1950 and 1981 (including the portable TV, walkman and
video players).
Mass markets and branding
Businessweek, in the past several years, has ranked Coke, Microsoft and IBM as
top brands among several brands of the world (the value of the top three brands
range from around $69 billion to $50 billion). While branding strategies offer
several advantages to the marketer, one fundamental question which should be
addressed by marketers is whether there is so much need to spend on brands if
they target the lower end of the market (bottom of the pyramid). The idea is not
to suggest that marketers could do away with brand building, it is rather to
advocate that functional utility and value are more important than advertising
blitzkrieg, especially when entry-level markets are considered.
Colgate, Clinic, Cadbury's and Pepsodent are a few brands in FMCG categories
which advertise widely to the respective target segment. While these brands
have also introduced low-priced SKU to enlarge their base of consumers, there
are still several millions of consumers who may perhaps be aware of the brands
but may not be able to afford them on a continuous basis.
The structure of Indian markets
The Indian population is classified into destitute consumers, climbers, aspirants
consuming class and the rich. The consuming class (which has an annual
income in the range of Rs 45,000-2,45,000) has millions of households, and
destitute and climbers comprise an even larger base of consumers. There is a
huge presence of unorganized markets in almost every category. Tiger in
biscuits, perhaps MTR in ice creams in Bangalore and A-l in tea are brands
which have successfully addressed themselves to the lower end of the market.
Given the low level of income and the flow of income (daily and weekly salary
distribution), there is a greater need to address the lower end of the market, and
the focus shifts to product dimensions rather than the communication
dimension. There is a need to research habits, beliefs and consumption patterns
so that appropriate offerings could be developed. Vendee, the edible oil brand
dispensed in loose quantities, was a good example of approaching such issues.
While the success of such initiatives would depend on a host of factors, it is
such an idea which can open up mass markets. There is a huge segment of
consumers who can neither afford to buy branded edible oil nor afford to buy
loose oil in huge quantities. Most consumers also experience adulterated loose
oil when they buy it in loose form. Vendee provided these consumers good
quality loose oil in the quantity they required at an affordable price.
The lower end of the market seems to be offering unlimited potential and the
applicable product has to be backed up by an appropriate distribution network.
The figures given by Mr Gopalakrishnan, Executive Director, Tata & Sons, in
one of his publications, is insightful in terms of the growth the entry-level
markets may experience in the years to comein 1951, there were 2.5 lakh
retail outlets in the country and today there are more than 5 million retail
outlets. The number of retail outlets per million consumers has increased from
600 to 5000. The people in the unorganized sector will reach 430 million in the
next 10 years. Formulating the right product with a combination of
performance, features and price, and finding the right combination of
distribution structure is probably more important than high-decibel advertising
for marketers attempting to win over mass markets.
The Challenges
The following aspects would interest mass market companies or companies
(perhaps even regional brands or local offerings) which may be interested in
developing offerings for the lower end of the market.
o Is the product category familiar to consumers?
o Are the lower end price points explored by existing offerings?
o What is the level of substitutability of a given product category?
o Would consumers be interested in upgraded offerings or would they use
the upgraded offering sporadically?
Product category familiarity
While attempting to upgrade consumers at the lower end of the market, there is
a need for marketers to know whether consumers are familiar with the product
category. When a large multinational brand of baby foods entered a developing
market, it found that consumers were not familiar with the category resulting in
wrong usage of the product One aspect is the usage and another aspect
associated with familiarity is the appreciation of value.
Unless consumers are familiar with the concept of washing machines, they may
not be able to appreciate the value-based semi-automatic machine from a brand
like Videocon. Consumers are familiar with quartz watches and they are able to
perceive value in the new brand Maxima, which has a number of watch models
targeted at the lower end of the market. Shakti Bhog is a brand of atta in the
northern markets of India and it is perceived as a value brand. The same
familiarity may not be applicable to categories such as mouthwash or perhaps
fabric softener. If the familiarity is low, an offering has to not only sell the
concept to the target segment but also design the offering in such a way that
consumers would be in a position to try out the product in terms of affordability.
Rexona's deodorant launch in low-priced variants is a very interesting example
of this approach. Shampoo as a category, which has at present reached very high
levels of familiarity, owes its success to sachets sold at very low price points.
The category of shampoo traditionally was more associated with luxury than
with necessity.
One other factor related to the familiarity aspect is the product category
(product ladder), especially among the segments at the lower end of the
market. Mixers (used for processing food) have caught on among the middle
class, because it can benefit the consumer, hard pressed for time in an urban
environment. Mopeds as a category is very popular in some semi-urban and
rural parts of the country, because it is a priority for the small trader to carry the
merchandise and it also makes him mobile without being dependent on public
transport. The importance given to a category is critical, because of the generic
competition where a number of products compete for the purchasing power of
the price-sensitive consumer (who has limited amount of purchasing power in
fits and starts). A typical average consumer at the lower end of the market may
not regularly buy branded detergent, shampoo, toothpastes and soaps. He/she
may alternate between branded offerings across categories and an offering
perceived to be low on price and adequate on functional features would have a
greater chance of being chosen more frequently.
Are lower end price points explored by current offerings?
In a number of categories, the lower end price points may not be explored by
marketers, though some national brands have attempted this often and they have
been successful during certain times. A brand built on a low price-no frill
offering could use it as an extension to explore related product-line items. Tiger
from Britannia provides a good example of using this approach. After having
achieved success at the lower end of the market, competing largely in the
unorganized sector, the brand has launched cream variants at (relatively) low
price points. Household appliances, fans, plastic products for households, fast
foods, snacks and ice creams are areas in which low price points could be
further explored to offer the right product for the target segment. In the area of
fast foods and snacks, some brands have been launched in recent times, but the
price points (for a given quantity or volume) are too high to touch the mass
markets and they are targeted more to the higher end consumer who prefers the
convenience of getting the offering ready-made, tasty and hygienic, and is
prepared to pay a price for it.
Substitutability
Mass-market consumers are more likely to down-trade (switch to lower priced
offerings) than consumers at the middle or at the higher end of the market. Any
offering should decide on value after taking into account the substitutability
associated with the offering. There may be a marked down-trading in the
category of tea and the loose tea market experiences a growth at the cost of the
branded offerings, during certain time periods. Would a consumer buy an
offering (which is based on value) more number of times if he/she perceives
value taking into consideration the substitutes which may be used currently?
In certain cases, there may even be branded substitutes which need to be taken
into consideration (toothpastes and toothpowder are examples). Shampoo and
certain herbal soaps which are being used for hair care could be other examples
of substitutability. Facial creams and soaps which contain fairness ingredients
could be one more category where consumers may substitute offerings. One
strategy of marketers would be to encourage consumers, to increase the
frequency of usage of the branded offering, though in general consumers may
down-trade to balance their monthly income, especially during times of
recession. A consumer who down-trades from a detergent like Wheel to a bar
soap could be still motivated to use the lower end brand of detergent for specific
and selective occasions. Home made versus branded readily available fast foods
could be an option for the consumer in entry-level marketswhen he/she
desires convenience and speed. There could be the branded offering for which a
slight premium is charged and the consumer over a period of time
increases the frequency of the branded offering provided value is perceived. The
only precaution required in this case is that the price, as perceived by the
consumer, should be within the plausible rangethe consumer should not
think there is a heavy premium. For example, a multinational brand offering
branded and packaged curd may be too expensive for consumers at the middle
end of the market, even for occasional trials.
Mass markets offer a huge potential to marketers who could develop appropriate
offerings. The best advantage they would have is the positive WOM if the
offering is accepted by consumers.
TOUCH OF REALITY
Digital advertising is catching up in several markets of the world and hence it
may be worthwhile to be aware of the state-of-the-art concerning the field.
Researches have revealed that consumers are influenced by implicit and explicit
knowledge. Explicit knowledge is the information and knowledge consumers
obtain based on their conscious domain. Typically, a consumer who is on the
look out to buy a colour TV would gather information about the category and
brands; a consumer who is a car buff may also get involved in a similar search.
In contrast, there is knowledge a consumer would accumulate based on his
implicit knowledge, which is gained through his/her psychological processes
beyond the conscious domain. Consumers learn about products and brands even
though they may not overtly attempt to get information. This may be one of the
reasons why brands, especially in fast moving consumer product categories,
keep advertising throughout the year and sustain their advertising on a
continuous basis. Outdoor advertising and digital technology have opened up
new avenues to marketers to enhance both the implicit and explicit knowledge
of consumers. Yahoo, to advertise its automotive website, has an outdoor
hoarding which would enable passing consumers to play a video game (starring
cars) with their mobile. A company dealing with outdoor advertising is planning
to track consumers in order to change the advertisements in outdoor hoardings
in accordance with the interests of consumers. For example, a digital hoarding
could track the FM stations of cars passing through a road (with its electronic
antenna), know the preferences of the motorists and change the subsequent
hoardings to carry advertisements which may be of interest to the motorists. If it
finds a number of motorists listening to classical music on its FM, it would
perhaps advertise CDs dealing with such a kind of music; if it senses several
FMCG brands advertising in the station, it could change subsequent hoardings
to carry the advertisements of the respective brands.
TOUCH OF REALITY
With the digital era, a few companies seem to combine the advantages of
cutting-edge technology with lifestyles to launch innovative sales promotional
methods. Sony, which applies front-end technologies to entertainment, has
announced the launch of its e-music with McDonald's consumers, who visit
McDonald's outlet. They can download music from Sony when they buy a
combination of menu. Sony has also announced that its Sony Connect would
offer around five lakh songs 99 cents per tune to music lovers who would like to
enjoy music the digital way. This would compete with itunes of Apple. There
are two aspects to Sony's strategiesone, using lifestyle segmentation to market
its digital music in combination with McDonald's. A cross-section of young
people may visit McDonald's (known for value, consistency of taste and
service) to spend their time (McDonald's chain is also popular for quick bites
for consumers in a hurry). Given the widespread interest associated with music
among youth, the sales promotion offer blends with the lifestyle of these
consumers. Secondly, Sony, which pioneered mobile music through Walkman
and a number of product attributes associated with TV and music systems,
adapts to the digital environment in an innovative manner by bringing online
music to music lovers who could customize their favourite combination of tunes
as a package.
The Power of Brand Imagery
Consumers are exposed to several kinds of advertisements during a daysome
of it may have a conscious impact, and some have an impact in a subconscious
manner (a consumer may start liking a brand or develop a kind of association
towards it because of the constant exposure over a period of time even without
realizing it). A TV serial may be watched by thousands and there are several
kinds of advertisements. There are consumer products such as the FMCG,
durable category brands and also services. Some of them use lifestyle appeals
and some use celebrities. Given the proliferation of marketing communication
clutter and the limited time which consumers have to comprehend these kinds of
communication, it is critical to have the right kind of imagery associated with
the brandimagery is the kind of image associations which a brand could get
associated over a period of time. Imagery has an impact on how consumers
perceive the brand and how consumers would react to the brand in the long run.
For example, Horlicks had a drink for the sick association a few decades back.
Would consumers have a clear association with Boost which is from the same
company? What kind of association would a niche drink like Drinking
Chocolate have in the minds of the consumers? As can be observed, the
examples are drawn from brands mentioned in the milk additive category but
brand imagery plays an important role in shaping the brand association in the
psyche of consumers, in almost all consumer product categories. Several years
ago, there were only a few brands in most categories and hence it was easier to
develop an association with a brand, and once an association was developed it
stayed with consumers for a long time. However, the present-day context is
different with several brands attempting to create an image. Old brands are in a
complex situationit would be difficult for them to suddenly develop a trendy
new imagery and the images which they have developed are either not very
relevant today or competitive brands are developing other relevant images. For
several years, Robin Blue has been associated with whiteness of the fabric. The
packaging and the bird on it symbolized whiteness and was a household brand.
Bajaj scooters had a family vehicle image in the past and now Honda, which
leads in the scooter category, has developed a different image. Iodex, a brand
which was identified with sprain, is overshadowed by other brands which have
developed several associations which may be relevant to the times. It may be
interesting to know how many consumers currently think of pioneering brands
in any category and the reasons for probably not thinking about them when the
need arises (several pioneering brands have a low market share or are no longer
there in the market). Creating brand imagery or not being to sustain it is one of
the reasons for these brands being absent in the consideration set of
consumers.
Why is brand imagery important?
Brand imagery is important because it conveys the positioning stance of the
brand. Raymond (TV spot) advertisement showed the corporate looking
executive playing with pups. The changing stereotype of the corporate executive
is conveyed by this positioning stance of the brand, which places an emphasis
on the finer aspects of the lifestyle which executives would like to follow. It
uses an imagery which goes beyond the functional attributes (for which the
brand has established a reputation). Imagery is important because a brand has to
adapt it to the changing environment. Vicco's facial cream has all along been
positioned for the wedding occasion. Fair & lovely, a brand which was launched
later, had taken a different kind of imagery and the brand is adapting its imagery
to the changing scenario with the use of variants. HMT, which was positioned
as a value-based Indian brand watch, was overshadowed by Titan which
developed a distinctive and memorable imagery (besides providing the state-of-
the-art technology). Imagery is important because a company which has several
brands for several segments could use it to ensure that strong associations are
created with each of its brands. Creating the right kind of imagery avoids
confusion in the minds of consumers. Both Fastrack and Sonata brands are from
Titan but have a clear image with regard to their target segment associations.
Imagery is useful for a brand to create a contemporary image. For several years,
VIP travel luggage had relied on the attribute image but has taken a new
approach to create a mood around the brand with its Bye Bye commercial.
The commercial, apart from bringing in emotion to the travel situation, also
showcases the ease of handling, which may be an attribute which consumers
look for when they select their luggage brand. Imagery is required to sustain a
brand's association (managing imagery is a different aspect by itself and is not
addressed in this section). Vicks' popular offering of the past, Formula 44,
which was not advertised in recent years, is being advertised now. Imagery has
to be sustained especially when competitive offerings get introduced in the
category Imagery may also be useful to create fresh associations with a brand
(circumstances under which such strategies could be adopted is again a
conceptual issue which requires an in-depth understanding of the market and
consumer behaviour). For almost three decades, Liril was having an imagery of
fresh green, waterfall kind of imagery but it has attempted to create a freshness
association through the orange route-variant, packaging as well as the visuals,
which are involved with the brand's advertising and POP posters. The brand also
attempted to create a contemporary image by the commercial, in which a young
couple play with the soap. The bike brand Centra from TVS attempted to create
an imagery which will get associated with fuel economy (TV spot). When
several brands in the category were using functional attributes to convey brand
proposition, Caliber introduced a brand personality to convey the self-esteem
associated with the brand by the use of a story with appropriate imagery.
Fortitude, courage and perseverance were the personality traits which could be
associated with the brand's imagery. Imagery could also involve logos which
can enhance the awareness levels among consumers about a brand's proposition.
Air India's Maharaja symbolizing hospitality is an example. Imagery is very
useful when a brand attempts a strategy which is very different from the one
associated with its past strategy. Timex entered India with its low-end offerings
and in the past few years has introduced a number of high-end watches, creating
the appropriate imagery in its advertisements. Without such a change in
imagery, consumer perception about the brand cannot be altered. Eno (digestive
powdered drink), which probably created the category in India several decades
back, Iodex pain balm, Cadbury's Drinking Chocolate, Ezee liquid detergent
from Godrej and Brylcream brand of hair cream are probably some of the
brands from the past which could have made better use of imagery in terms of
creating a contemporary perception about the respective brand in the mind of
the consumer. Lifebuoy and Lux brands, which have been around for several
decades, have managed themselves with several kinds of imagery with variants.
Imagery is useful when a brand introduces a variant after it has established itself
on a specific benefit. Dettol soap brand, after establishing itself on the protective
proposition (positioned as a soap which takes care of the bacteria-ridden
environment), introduced a variant with moisturizer and it employed a different
kind of imagery for this variant.
Kinds of imagery
There could be various kinds of imagery which brands could use. Attribute
imagery consists of amplifying the specific attribute which is being used by the
brand. After a long interval Promise brand of toothpaste started using its clove
oil attribute in its TV spots. The imagery created could be visuals or copy in the
advertisement. Puf, which was highlighted by Godrej refrigerator, created an
attribute-based imagery and it enhanced the brand's perception. The current
positioning of several brands in durable categories attempts attribute types of
imagery supported by visuals. The sixth sense pitch of Whirlpool refrigerator
and the atom (denoting compact size) air conditioner from Hitachi are
examples. Attribute-based imagery helps a brand if it could constantly stay
ahead of competition through its attributes, which are well received by
consumers. Sony, with its strong thrust on technological innovation, is an
example with its Trinitron and Wega sub-brands of TVs. An attribute, which
conveys a strong benefit, could also be used by a pioneering brand if the benefit
is relevant to the consumer. Herbal ingredients as an attribute was blended with
the stereotype of an elderly lady by the Himalaya brand (formerly Ayurvedic
Concepts), which specializes in herbal OTC products. Certain kinds of attributes
like oxygen in a toothpaste or colourless cola may not convey clarity from the
view of consumers.
Benefit-based imagery has a focus on the benefits. Colgate was perhaps the
earliest of toothpastes to advertise on the benefits of using the brand. Low-
involvement categories such as lubricants could also use benefits. Speed brand,
showed the reliability of using the brand through an emotional reunion of
college students and how the brand helped them to speed up for the reunion.
Ericsson's mobile phone advertisement illustrated the compact size of the brand.
Samsung conveyed its extra space viewing on one of its TV models using a
theme. LG's Golden Eye also used a story to convey its benefits. For certain
categories of products benefits could be conveyed directly so that consumers
can quickly comprehend the benefit. Fast moving goods which do not have a
glamour orientation (like a dish-washing bar) could make use of this approach.
Vim washing bar followed this approach to reinforce its durability. Sunfill, the
soft drink concentrate from Coke, conveyed the benefit of economy to appeal to
the segment, which may not frequently be consuming soft drinks. Moov, which
was not the pioneer with regard to pain balm, created an appealing benefit of a
non-sticky-based imagery leading to the brand's acceptance. By this strategy,
Moov effectively used imagery to reposition its competitor Iodex on the
staining aspect of the application of the offering. Britannia's success in the
biscuit category could be attributed significantly to the use of imagery with a
focus on health. Kannan Devan's tea brand (See Plate 1) captures the freshness
benefit in its packaging.
Symbolic imagery, which revolves around fantasy, status, self-image and group
fun, is popular in certain categories such as soft drinks and cigarettes, apparel,
liquor brands, cars and TV. Onida was probably the first TV brand to use the
status appeal. It created the Onida devil, which symbolized the jealousy of the
neighbour. The visual was effectively backed with the copy owner's pride;
neighbour's envy. It should be noted that in a durable category the brand should
offer technological features concerning the quality of the offering or the
aesthetics of the brand offering to sustain such a symbolic imagery. It can be
observed that this imagery did little for the brand when it came out with other
electronic products, after its success with TVs. Even well-known brands like
Mercedes and Rolex strengthen their symbolic imagery with attribute-based
positioning at periodic intervals, so that consumers will be able to perceive the
brands as superior offerings. Coke and Pepsi are well known for their imagery
associated with symbolism in the Indian context with the backdrop ofcelebrities.
As mentioned earlier, this approach is used by apparel brands for men and
women (Be and Allen Solly being the brands for the latter). Almost all cigarette
brands in the higher end of the market were using this approach in their
advertisements and may continue to use this approach with the new categories
they are into in the form of brand extensions, as blatant advertising of the
category has been banned (Wills Lifestyle apparel brand). Bacardi used this
approach to create awareness about the subcategory. Hero Honda's Passion Plus
and Kinetic's Zing had cool features to back up symbolic imagery.
Imagery and management of imagery is a crucial aspect of brand management,
as brands are perceived through associations as opposed to reality.
TOUCH OF REALITY
The Indian context with its low personal computer penetration may not offer
much scope for web advertising. But it is worthwhile to know the state of web
advertising in developed markets. Though consumer markets may not expand
through Internet advertising In India, business-to-business markets will start
making increased use of the web as an advertising media. Fraudsters pose
several challenges to marketers to opt for the web as a medium for launching
their advertisements. In 2003, there was revenue of US$ 9 billion from web
advertising and 40 per cent of the total Internet advertising was done on search
sites like Google. An advertiser has an arrangement with a search engine site
and pages for every click registered on the advertisement. Hence, a typical
advertiser has a preplanned budget for a specific number of clicks. In other
words, this model of budgeting allows a specified number of prospective
customers to click on the advertisement for the brand and obtain information.
The most vital aspect of this kind of advertising Is that it should ensure that the
consumers buy the products or services advertised. When the consumer base
grows through such an approach, it would result in profits. A disturbing trend
revealed by analysis is that a number of websites receive several clicks from
prospective consumers without the sponsoring brand getting business, which is
in tune with the traffic of consumers. Fraudsters are able to write up software
program, which would repeatedly click on the advertisement to eat away the
advertising budget of the advertiser. This would also ensure that several genuine
consumers are unable to access the advertisement. There is also another model
by which the advertiser even pays consumers who click through the search
engine and hence some of the consumers may perhaps be motivated to become
fraudsters.
Critical Aspects of Brand Repositioning
Brand repositioning is required because of several reasons.
o When new offerings flood the market, the superiority of the established
brand has to be reemphasized.
o When new offerings enter the market, established brands may not be in a
position to offer either the same features or the variants that are being
offered by the new brands ( brands Ambassador and Robin Blue are
examples). Hence, there is a need for these established brands to
reposition themselves in a timely manner, relying on the consumer
goodwill they enjoy or by exploring ways to appeal to the consumers.
o When contemporary image is required in some categories because of
changing psychographics.
o When brands desire to change their target segment (which may be rare).
o When brands want to communicate improved offerings.
o When motivation to buy the category is low among consumers.
New brands with new offerings keep entering the competitive marketing context
and unless established brands reposition themselves, consumers may not have a
contemporary perception of established brands.
Timely repositioning
Contemporary perception could involve either the image or superior functional
utility. Iodex was almost the undisputable leader for several years in the pain
balm market but the brand was forced to reposition itself by Moov which made
rapid strides in the market. (The Iodex example is repeated again to reinforce
the power of repositioning competitive brand.) Dove is repositioning itself as a
superior soap with moisturizers (as against its previous trial for results
positioning) because of the various new offerings in the market. Vim challenge
was a response to several regional brands emerging in the dish-wash market.
Esteem's shall we go for a drive please (the son asking his father for a drive in
Esteem knowing that the pleasure of the ride is good enough to ensure that his
father doesn't notice his bad mark) repositioning was triggered by the various
offerings which entered the mid segment passenger car market. If repositioning
is not attempted by a brand in a timely manner, there may be instances when the
brand may not get a second chance. The powerful positioning of economy by
the no-frill Maruti 800 during the mid-1980s could have been preempted by
Ambassador, not necessarily by the same economy proposition. Ambassador
even today is widely acknowledged as a comfortable car for Indian roads and it
is also known for its space attribute (some of the recent offerings in the
passenger car market of today are using this as a strong proposition). The brand
could have used this effectively to obtain a favourable perception among a
cross-section of consumers. Maruti 800 almost became a legend as much for
derailing Fiat and Ambassador, as it is for its fuel economy. Even in FMCG
involving mundane household products, timely repositioning matters to protect
leading brands. Ujala brand of liquid blue added to whiten clothes made history
with its liquid variant. The pioneering (and the brand which held the dominance
for years) Robin Blue had a powder variant before Ujala was introduced.
Powerfully repositioning Robin Blue (even before introducing the liquid variant
as a follower) might have reduced the impact of the new entrant because of the
favourable brand image of Robin Blue which consumers had used and trusted
for several decades. Burnol, the antiseptic cream for burns (it did attempt some
repositioning exercises), was probably a pioneering brand in the category of
burns in the past. It would be interesting to research if consumers still associate
the brand with burns. Women continue to cook as before and probably most of
them are in a hurry to catch up with the pressures of life. Burnol as a handy
brand to overcome the inevitable small burn during cooking could have been a
probable brand proposition to reposition the brand. With several categories
jostling to get into the mindset of the consumer, there is a relevant proposition
required for a brand in the small burn category to get it into the considerations
set of the consumer. The timing of repositioning (in such cases) should be done
to ensure that the category does not fade out from the consumer's mind because
of a number of other categories emerging to create a generic competition in
terms of the share of the consumer's wallet. For example, a brand traditionally
used for burns may be forgotten, because of several categories of products and
offerings such as a cream for heels, herbal antiseptic ones for multiple injuries,
corn caps, etc. which attract for consumer's attention and get a share of
consumer's expenditure. Over a period of time, the contemporary offerings
could wipe the consumer's memory of traditional offerings/brands, if brand
repositioning is not formulated (with or without product
attributeimprovements). Forhans toothpaste, Zambac, Saibal, the multipurpose
antiseptic ointments, Enothe gas reliever, Waterbury's compound for the
after-cough recovery and Crook's lactocalamine are some of the brands which
could have maintained their dominance in the consumer's memory with
appropriate repositioning strategies.
TOUCH OF REALITY
Brand positioning is associated with the strategies of the brand to get into the
consumer's psyche, amidst competition. Some of the contemporary ways of
positioning can possibly help existing brands to reposition themselves. With
competition intensifying with a slew of brands in almost every category, there
are new ways of positioning/repositioning brands. Reverse positioning is a
strategy in which the brand offers a no-frill offering but has one or more of
contemporary aspects, which are valued by consumers. These contemporary
aspects may not be associated with the core functionality of the brand. Ikea is a
renowned brand in modular furniture, which consumers assemble by
themselves. Home furniture being assembled by consumers themselves is
almost the lowest rung of the no-frill offerings in the category of furniture.
This is a category where companies carry a huge inventory, assist consumers to
select the required complete, furniture (as against the modular kits of Ikea which
needs to be assembled by consumers) and deliver the furniture to the residence
of consumers. Ikea showrooms are known for their ambience besides having a
cafeteria and a creche where children could be safely left when consumers do
the shopping. In the Indian context, there are several complex, ambiguous and
confusing offerings in the cellular/mobile category. A brand which charges just
for the talk time (without monthly rentals or any other form of charge) and
showrooms which offer several other information technology applications for a
selective segment of mobile users will be using a reverse positioning strategy
effectively. Breakaway positioning involves a brand getting itself dissociated
from its basic category and establishing itself with a different association in the
consumers psyche. Swatch watch positioned itself as a fashion accessory when
other brands in the watch category were positioning themselves as jewellery
watches. In the Indian context, Titan positioned itself as a gift and has
strengthened this association over the years. Cafe Coffee Day and Barista
outlets have positioned themselves as socialization joints for the urban youth
rather than as coffee parlours. Stealth positioning involves positioning a brand
in order to break the resistance of consumers towards the product category
itself.
When new concept products are introduced, consumers may offer resistance to
such products because of non-familiarity with technology or fear of technology.
Under such circumstances, stealth positioning will be useful. Eyetoy is a
hardware cum software product. The product can be placed on top of a TV so
that the consumer along with a group of people (family or friends in front of the
TV) can participate in a game involving the group in the TV screen. They will
be able to interact with each other on the screen by moving their body or hands.
The device has excellent potential as a communication product with several
technological features, which could be used for interactive purposes. But by
positioning Eyetoy as a novel toy which could be used by even elderly members
of the family, it hopes to become familiar with consumers who would have
otherwise resisted such a product perhaps due to its advanced technological
features. For a large category of the mass market, goggles mean a symbolic
lifestyle item than a protective device against harsh sun, and a brand of
sunglasses ready for launch in India can make use of a symbolic approach to
build the brand, without highlighting the state-of-the-art production process
which adds to the functional utility. There may be several variations in using
such a positioning stance, and the psyche of the consumer has to be researched
before using this positioning strategy. Normally, technologically complex
products (which are likely to meet with resistance from consumers who may be
apprehensive of technology) can be positioned effectively using this kind of
positioning.
Contemporary image
Contemporary image matters in some categories which are conspicuous in terms
of consumers usage and observation. With changing lifestyles and nuclear
families in urban markets (especially in the upmarket segments), the role of the
male in the family is undergoing a change. The relationship repositioning of
Raymond is a good example of a brand coming to terms with the changing
psychographics of the target segment. Fair & Lovely's repositioning as a brand
for the aspiring girl making a mark in a male-dominated world (woven around
the cricket commentator commercial) is one such example. Pepsodent's
commercial concerned with the snacking habit of school going children (in
which the child gets tongue lashed by the mother for snacking and the brand as
a protector of teeth) is an example of repositioning associated with traditional
habits which have been highlighted to create a realistic association between the
brand and the target segment.
Product/brand attribute, relevance to the habit of the user (children) and the
buyer of the category (concerned mother) have been used to reposition the
brand. Lifebuoy's repositioning on hygiene is an attempt to take into
consideration the priorities consumers place on health in a deteriorating
environmentone of the issues raised frequently by the mass media and
consumer groups.
Changing the target segment
It is difficult for an established brand to change its target segment overnight,
because of the prolonged associations related to the user imagery and the
perception of consumers about the offering, its price and other associations
related to the brand. However, there have been rare instances of a brand
repositioning itself for a new target segment. Cadbury's, in an effort to make
chocolates appeal to adults, created the repositioning around spontaneous joy
(the girl's dance in the cricket field) and since then the mould version of its
offering continues to be positioned for adults. With the company providing
different offerings for different segments, the strategy for the mould version
synergizes with the overall strategy of the brand. Timex, which was targeting
the lower end watch market when it entered India, has introduced expensive
watches with high technology for the higher end of the market. Technology with
its rub-off in the product's attributes could be a powerful factor in repositioning
a brand from the lower to the higher segment. Changing the target segment for
an established brand is a delicate marketing exercise and several aspects of
marketing mix elements are involved. These are important from the viewpoint
of consumer perception.
Bata, during the late 1980s and early 1990s started dealing with designer
brands: it had developed the Power brand for youth and it also had a number of
offerings for the middle-class consumers. In recent times, it has segmented its
retail outlets and this includes discount retail outlets and higher end ones. In
such a situation, it may be difficult for the brand to reposition itself with a clear-
cut association. Communicating the newness can be seen in new, improved
versions of old established brands. The point that is important in such a kind of
positioning is that consumers should be able to relate to the improved claims
made by the brand. If Rin brand of detergents is repositioned to provide extra
whiteness which consumers desire, the attribute should be perceived by
consumers.
Decisions concerning repositioning
A brand need not always rely on repositioning; the decisions concerning
repositioning are related to the strength of the company, competitive context and
consumer perception. A brand could create several sub-brands over a period of
time in tune with the changes in the environment. Hero Honda, after the success
of its CD 100 almost two decades back, continues to hold sway over the market
by creating several sub-brands each distinctive from the other. It created SS,
Passion and Splendor brands with different kinds of appeals. Occasionally, a
premium offering needs to be repositioned when consumers become more
receptive to the brand over a period of time. Colgate Total, a premium offering
in the toothpaste category, was initially positioned on multiple benefits but later
the same benefits were positioned with the 12-hour protection proposition.
Brand positioning and repositioning deal with the psyche of the consumer.
Brand repositioning is more complex as it has to take into account the
perception already created in the mindset of the consumer.
TOUCH OF REALITY
Brand building will continue to challenge marketers in the years to come.
Increased pressure from discounts, private labels from retailers, changing
preferences of consumers and saturation levels with regard to cost cutting
measures are some of the vital aspects that will make brand building a dynamic
challenge to marketers. Proctor & Gamble and Lever Brothers are among
several multinationals that have reduced the number of brands in several
markets. One approach is to build brands by strengthening their proposition. But
this approach needs careful analysis. Mass markets are price sensitive and if
strengthening brands involves pricing them higher, the strategy is likely to meet
with resistance from consumers. The strategy may work in categories such as
perfumes and jewellery, in which consumers may be more attracted to the
lifestyle statement value offered by the brand. Incidentally, strengthening the
product attributes also will matter to these consumers. In emerging markets like
India a vast majority of consumers may be more receptive to innovation, which
will result in a lower price when compared with the existing offerings in the
respective category. Cost reduction is another approach and this could be
achieved through information technology-enabled supply chain management.
But a number of multinationals seem to have already maximized their savings
through this approach and may not be able to continue this approach for an
extended period of time. Nestle and Levers attempted to raise their productivity
and cut costs by closing down about hundred manufacturing plants around the
world in the last few years. Distribution is one more area where the
multinationals may be at a disadvantage to their smaller local counterparts due
to their increased overheads and expenses. New brands are emerging in rising
markets. The Peruvian soft drink maker Kola Real provides a good example of
success in both Peru and Mexico. Fast food Is one area which is prone to local
cultural tastes and ingredients will have to be sourced from local suppliers.
Haldiram and MTR are examples of local brands effectively competing with
multinational brands such as Tasty Bites and Lays. Companies which cannot
invest in research and development or huge advertising budgets need to consider
manufacturing for private labels/retailers. This is likely to be a profitable option
for them given the high degree of competition in FMCG. Brands also use
extended services to build themselves in an effort to differentiate themselves
from competitive brands. Brands in western markets are adopting this strategy.
Nestle's Nespresso coffee is packed for usage in special espresso machines and
sold through malls and boutiques. Danone Waters supplies water directly to 1.7
million residential and business customers. Hindustan Lever, which has several
detergent brands, has test-marketed its laundry services. The same company has
Lakme beauty care salons for women for complete personal grooming care with
regard to cosmetics. Godrej has home services to disinfect homes.
Branding Strategies in a Changing Marketing Environment
The Indian Context
India has been going through radical changes in the marketing scenario in the
last decade. Globalization in terms of MNC brands entering Indian markets,
emergence of young professionals in urban areas, opening up of luxury and
leisure markets, impact of mass media and the influence of westernization are
some of the critical aspects which have forced Indian marketers to adopt
branding strategies. These strategies have been formulated in the backdrop of
Indian culture, which is strongly entrenched in the consumer psyche amidst the
changes in the social environment. India with over a population of billion
people has been broadly divided into the following households: (a) the
destituteclass, (b) climbing class, (c) aspiring class, (d) consuming class and (e)
the rich class. While these divisions have been made on the basis of income
levels, they also reflect consumption patterns of consumer products (both
consumables and durables). The destitute class and climbing class base their
buying decisions on price, though the product offerings may not, in most of the
cases, satisfy the basic prerequisites in terms of effective functioning. They buy
unbranded offerings. The aspiring class is the-one which tries out branded
offerings before they can afford to consistently buy such offerings in the long
run. The consuming class (which earns between approximately US$ 1000 to
US$ 5000 per annum) is the target segment for a number of brands in both
consumable and durable product categories. The rich class is the target audience
for premium brands (Baskin-Robins, Sony, Pizza Hut, Whirlpool, Honda City
and Parker brands to name a few).
Challenge of mass marketsreaching out to down-market
consumers
India has a huge population of destitute (annual income below Rs 16,000 or
below approximately US$ 350). There are 33 million households in this
segment and between the annual income of Rs 16,000 and Rs 45,000 (US$ 350-
950) there are around 97 million households. Hence, there are vast unorganized
sectors almost in every product category. An unorganized market/sector is one
where offerings are not branded. Besides, there would be several (hundreds in
certain geographical region) small manufacturers of these offerings. These
unbranded offerings would be priced much lower than the branded ones and
each manufacturer in the unorganized sector would market the offering within a
specific geographical region (very often within 25 km of the place of produce).
Besides low infrastructure overheads, the distribution overheads are also low.
The offerings are seldom comparable with even the lowest priced branded
offering in terms of quality. They are sold by small outlets (grocery outlets, if
the category is a fast moving consumer product like edible oil or biscuits or
small durable outlets in both urban and semi-urban areas if the product category
is like a fan or watch). The extent of unorganized sector across product
categories could be observed by their proportion of the total market in several of
these categories. In tea, edible oil and cassettes, it is about 60 per cent; in
footwear it is about 80 per cent; in watches, detergents, biscuits and in mineral
water it is about 50 per cent. There are about 6,25,000 villages (rural area) in
India and most of them are serviced by offerings from the unorganized sector in
most categories. A village is a geographical area which is declared as a rural one
if the population is below 5000, if 75 per cent of the rural population has its
employment in the agricultural sector and if the population density is below 400
per km
2
. Eight per cent of towns (4000) carry 65 per cent of the population
(urban area). In certain categories, there are material brands which have
penetrated into rural areas with the help of a firm distribution network. These
are national brands which have been in the country for several decades.
Lifebuoy (the largest selling soap in the world by volumes), Nirma detergent,
Fair & Lovely cream, Colgate toothpaste, A-l and Red Label tea, and Lux and
Vellvette shampoo are examples of brands which have been successful in
penetrating the lower end of the market. Hindustan Lever is a company which
has a strong reach throughout the country (Lifebuoy, Fair & Lovely, A-l and
Red Label are brands of this company). The company has about 7000
redistribution stockists and it has a direct reach to about one and a half million
retail outlets. The indirect reach includes some of the outlets covered by the
company reselling the brands in the hinterland. Besides marketing the offerings
to the huge population in rural and semi-urban areas, the unorganized sector
also caters to the lower end of the population in urban markets (cities and
towns). Loose tea, loose edible oil, assembled watches, loose biscuits, mineral
water and locally made footwear are some examples of the unorganized sector
marketing its offerings in urban areas. Hindustan Lever and Colgate are
probably two of the top companies to have a major reach in both urban and rural
areas throughout the length and breadth of the country. Fifty per cent of the
turnover of Hindustan Lever (around US$ 2000 million is the turnover of the
company) comes from the rural market.
The typical approach followed by national brands to attack the lower end of the
market is to introduce an offering which is just priced above the unorganized
offering. The idea is to upgrade the consumer from the unorganized offering to
the branded one. A-l in tea, Tiger brand of biscuits (introduced by Britannia)
and Nirma brand of detergent are some examples of success with regard to the
approach. Tiger brand of biscuit introduced by Britannia has been a major
success at the lower end of the market (90 per cent of consumption of biscuits is
associated with hunger appeasement) with the company launching several
variants of the brand within a short span of 5 years.
Apart from national brands and unorganized offerings, there are also regional
brands in certain product categories at the lower end of the market. The regional
brands may be present in a geographical area which covers several markets of
the unbranded offerings (normally present within a state which may typically
comprise eight to ten town markets). Apparel, edible oil, dish-washing powders,
ice creams, detergents, tea and fans are some categories in which regional
brands are present. Sabena and Shine-it dish-washing powders (regional brands)
have forced Vim (a national brand from Hindustan Lever) to revamp its
marketing mix elements in recent times. The marketing strategy for the lower
end of the market could be a combination of low price and an offering with an
adequate efficacy, high brand building efforts across the country, developing a
distribution network which would go beyond cities and using locality-specific
media. Hindustan Lever uses video vans in certain rural areas to create
awareness about its brands. The video vans film movies which may be of
interest to the consumers of the locality. In between the breaks, commercials of
the brands are shown to create awareness.
Mass Markets and Brand BuildingExamples
India is a country of diverse income ranges, languages, customs, habits and
beliefs, and any national brand would have to formulate appropriate strategies to
manage the diversity. The diversity would have to be managed with the
marketing mix elements.
TOUCH OF REALITY
The Indian watch market can be divided into two sectorsthe organized (40 per
cent of the market amounting to Rs 6,000 crore or US$ 1200 million} and the
unorganized. The price range in the unorganized market is around US$ 7-10.
Maxima a brand, which was launched in 1996, has a market share of 17 per
cent. Its average unit price is around US$ 8 and has a range of 1300 models. It
has built up about 6000 multi-branded outlets In both urban and semi-urban
areas. It made extensive use of regional print media (predominantly
newspapers) before launching TV advertisements in regional channels. After
establishing itself on the price platform competing in the unorganized sector, the
brand's TV commercials are oriented towards emotional appeals. One
commercial shows an athlete breaking a record and another shows a girl from
the audience being called onto the stage in a musical performance. In a complex
market where there are only two major national brands (HMT and Titan)
Maxima brand has achieved success in a significant manner by providing value.
The total size of the ready-made shirt market in India is 600 million pieces. This
market accounts for 35 per cent of the total market and the price is in the range
of US$ 5 to 10. Research done by Madura coats revealed that consumers had a
perception that premium shirt brands were overpriced. It priced its brand Peter
England in the mid-priced range and positioned it as the honest shirt. It used
hoardings and TV commercials in urban towns across the country. Madura
Coats had an excellent retail network too. It sold two million pieces in 4 years
and became the largest selling shirt in the country. Peter England had provided
value in a segment slightly above the economy one.
In a number of cities, the urban segment consists of several nuclear families in
which both the husband and wife have full-time jobs. Products ranging from fast
foods to durables such as microwave ovens may appeal to these households
because of the convenience factor required in their daily lives. There are two
segments even in the urban sectorthe consuming class households with an
annual income range between Rs 16,000 and Rs 2.15 lakhs (US$ 350-4500).
Seventy per cent of durable products namely refrigerators, colour TVs, washing
machines and microwave ovens, are consumed by this segment. The lower
cross-section of this segment normally purchases on instalment-based financial
schemes. The durable categories manufacturers have several exclusive outlets to
display these brands. Besides exclusive outlets, the brands concerning these
categories are also marketed through multi-brand outlets and large category
killers, which stock several brands. The proposition of category killers is lower
prices, especially during festive occasions. The higher end models (like no-frost
refrigerators, automatic washing machines and even categories like vacuum
cleaners and microwave ovens) are bought by consumers who earn beyond the
consuming class. There are 1.6 million households belonging to this category
of rich consumers.
Every year around five million colour TV sets are sold in India and there is a
great demand for already used colour TV sets. It is also interesting to note that
50 per cent of the colour TV sets belong to the replacement market. Akai
entered India and institutionalized the second-hand market. It introduced a
promotional exchange scheme by which a consumer could exchange his/her old
colour TV for a new 29 inch colour TV set by paying almost half the cost of a
new colour TV set. This strategy, besides opening up the 29 inch TV market
which was almost non-existent, also ensured that retailers in semi-urban/rural
areas made margins by transporting used sets from urban areas. The rural
consumers are also benefited by getting a colour TV set (though a used one) at
an unimaginable price. The brand achieved almost 8 per cent share in a span of
3 years. A number of brands have introduced exchange schemes in several
categories (though not attractive as Akai's) after the success of Akai's scheme.
LG, another TV, brand has been able to effectively tap the TV market in rural
areas by introducing TV models with programming menu in regional languages.
These models carry the sub-brand Sampooma. BPL, another well-known brand,
markets several models (mostly over the mid-price range) in urban and rural
markets with a retail distribution chain of around 4000 outlets. The colour TV
market is shared among the major brands like BPL, Onida and Videocon.
Managing consumable products/brands is accomplished by brands using price
points and packaging. Around 70 per cent of shampoo consumption in the
country is attributed to sachets (8-10 ml packs). Fifty-gram soap packs are
distributed by almost all well-known brands both in the urban and rural areas.
Tea packs are also sold in sachets in the rural areas. Toothpastes and beauty
creams are also sold in sachets. Both Nestle and Cadbury's recently have
introduced a form of liquid chocolate bars priced at Rs 2 (the lowest price point
for chocolate bars). Incidentally in a topical country like India, liquid chocolates
do not require refrigeration. Cadbury's has a number of price points for its
variants in the product-line. This has resulted in millions of consumers trying
out these low-priced variants. About 95 per cent of retail outlets are small shops
(kirana shops) and product units with a low price would find readiness to stock
among most retailers. Economy packs across almost every category is also
being marketed by leading brands through supermarkets and larger retail outlets
in urban markets. Small unit packs also enable the retailer to rotate his capita!
faster, especially given the fad that most of these retailers cannot afford to invest
in huge stocks. Packaging at a low unit cost is extremely advantageous for a
brand in any product category. Edible oil, cigarettes, biscuits and chocolates are
distributed in small quantities by retailers who buy large packs. This practice is
followed both in the urban and in the rural areas. This is because given the
frequency of income (apart from the income being low) there are several
consumers who are paid on a weekly or even daily basis. Hence, there is very
strong generic competition among several consumable brands across categories.
The small purchasing power with the masses could provide several options
to them, in terms of what they would like to buy at a given point of time.
Traditional snacks could compete with ice creams or a cola drink (both Pepsi
and Coke have introduced 200 ml bottles in several markets in India). Besides,
there may be special occasions during which a toothpaste brand may be used
(the penetration of toothpaste is quite low and a number of consumers at the
lower end of the market either use toothpowder or traditional herbs and neem
sticks). Low unit packs enable consumers in the lower segment to choose and
buy different product categories. Even in higher end detergents such as compact
detergents (Surf Excel and Ariel), a significant portion of sales is from sachets
(small packs which could be used twice only). In cassettes, T-Series brand was
extremely successful with its low pricing and value (providing more songs per
pre-recorded cassette). There are around 200 brands of mineral water in the
country, most of them in the unorganized sector (an exception in this category
being the offerings branded by manufacturers in the unorganized sector though
they are never advertised). National brands including Aqua Fina from Pepsi and
Kinley from Coca Cola target urban consumers with their retail network.
Importance of managing traditional and changing Indian
culture
There are a number of behaviours, habits, beliefs and perceptions which could
be associated with a specific culture. These factors are important in product
formulation and communication strategies. These could be associated with
product categories such as bindi (a spot of colouring on the forehead) worn by
women in most parts of the country. It is essential that a brand name selected for
such a product category should have an ethnic sounding name. A western
name is likely to be counterproductive. Tang, the orange juice brand, was
initially introduced as a breakfast juice in a country where even in the upper
strata of the society such practices may be unusual. An interesting example
which effectively makes use of cultural behaviour is the Pepsodent commercial.
Consuming snacks on the way to school (and back) is a cultural habit passed
on from one generation to another for the past several decades. It is typically a
behaviour which could be associated with masses. The commercial for the
toothpaste captures the behaviour (and the traditional behaviour of the mother
scolding the child). This gets the attention of viewers before the brand benefit of
protection is conveyed effectively. Food is a strong cultural dimension and any
brand in the category would do well to take into consideration the cultural
dimensions associated with food. Bread has been in the market for several years
but it is still not a part of the staple food. It may be recalled that even a Chinese
food like noodles (Maggi brand) was positioned as a 2-minute convenience-
based snack food for children, making use of the cultural practice of providing
home-made snack food for children which is prevalent across different layers of
social strata. Nature-based ingredients have been used for ages for skin care in
India. Nihar, Medimix and Vrinda in soaps, Meera in the shampoo category are
examples of brands which have been effective in such practices. The focus on
whiteness in clothes led to the creation of the whitener category for
clothesinitially, Robin Blue and Ujala during the 1990s. It is a practice that
has been followed for several years when clothes are washed. The practice of
applying soaps for washing clothes is so strong that a brand like Ariel, which
pioneered the category of compact detergents and positioned it as a detergent
which eliminates the need for a soap, had to introduce a soap version. Samsung
has introduced a washing machine exclusively for ethnic wear like sarees to
ensure that they do not get entangled. A major market, which would have a lot
of potential in the Indian context is the toy market if a brand is to be built in this
market. Mattel, Fisher and Funskool are western brands. While there are a
number of offerings in the unorganized sector, a brand could be built up around
toys against the backdrop of India's rich and ethnic cultural heritage
(mythologies and stories drawn from Indian culture). Kellogg introduced its
corn flakes positioning it as a nutritional breakfast alternative in a country where
consumers have been used to spicy breakfast for generations (including
consumers in urban markets). There is a strong need to consider the habits of
consumers in a country like India.
Importance of changing cultural mindset and its implications
Cultural values matter to a number of product categories and positioning
strategies. Charms, the cigarette brand for the youth launched in the 1980s
became a rage among young smokers because the positioning was in
consonance with the changing valuesthe spirit of freedomCharms is the
way you are symbolizing adventure, independence and a non-conformist
attitude. The jeans-like packaging added to this appeal. However, cultural
values have not changed enough for marketers to launch a cigarette for women
(Ms was the brand launched during the 1980s). Values are important because
they reflect culturally acceptable behaviour. Valentine's Day cards may have
been almost a taboo before a decade but at least in urban markets they have
caught on. Bacardi, the brand of liquor positioned itself on the spirit of
enjoyment (during the days of liquor advertising), and its success among the
intended target audience also reflects the changing values. The launch of Close-
Up brand of toothpaste during the 1980s was perhaps ahead of the values which
prevailed during those times. The Close-Up smile was advertised through
cinema halls and was positioned towards teenagers. Later on, the permissiveness
was diluted with the group that was brought into Close-Up commercials.
There may also be certain beliefs which could have an impact on marketing
communication. The cultural belief that fairness is beautiful has made Fair &
Lovely a strong brand. One commercial (TV spot) of the brand is based on the
cultural belief about the superiority of the boy child over the girl child. The girl
child proves that she could be as successful as a boy to the joy of parents
(thanks to Fair & Lovely). Vicco turmeric cream positioned itself as a cream
which would be useful for the would be bride to enhance her complexion, and
applying turmeric for skin care is a part of the Indian tradition in many parts of
the country. Vicks Vaporub captured the emotional bond between the mother
and the son to convey the brand's benefit. Clinic Special also captures the
traditional care a mother showers on the daughter. Caring for the family is
another appeal woven around the present-day housewife's role. Trupti atta used
this and currently Bharat Gas is using it as cooking food and serving love.
Ruf & Tuf, a brand of jeans fabric, achieved major success by combining the
concept of jeans (western) and the strongly entrenched cultural trait of respect
for elders, especially in the rural areas of the country. The positioning showed
an urban looking youngster who highlights the respect for elders. The brand,
competing with a number of offerings in the unorganized sector in rural
markets, was priced low, used a celebrity who was perceived as Ruf and Tuf
among the target segment. The most interesting aspect of the brand was that it
was a fabric which required stitching and the brand roped in tailors in rural
areas, as they are generally perceived as a part of the informal clique by
consumers in rural areasthe trait ethnocentrism suited to the rural context was
made use of by the brand to market a western concept of apparel.
Another aspect which is important is the commonality which could be found in
spite of the diverse cultural tastes, especially in the category of foods. Any
packaged food product (such as curd, sweets, cosmetic or food additive) would
have to compete with home-made substitutes with regard to taste and price.
Dabur introduced Lemoneez, a ready-to-use packaged lime mix, and priced it
extremely high. Packaged curd, which is widely available in various regions, is
used by select segments because of the price factor Packaged sweets targeted at
masses (usually by the unorganized sector) is always priced at a price point
which is tantalizingly appealing to the target segment (given the labour involved
in the preparation). While Pepsi foods and other branded offerings may be
present in the market with a wide range of ethnic food delights, they are priced
very high when compared with the home-made substitutes and are normally
bought by consumers belonging to the higher strata of the market. While the
unit package price may be low, they are priced much higher than the homemade
substitutes and cannot be afforded by the masses.
MNC brands and the Indian contextimportance of marketing
mix
Nike, Kellogg, Adidas, Tang, Rothmans, Sony, Ray-Ban and Citizen are
multinational brands which entered the Indian context and did not have to make
significant inroads into the market. These brands could be called as high-
equity brands based on their popularity in terms of consumer recall even before
they entered the market. Rolex, Tag Heur (watches), Evian (mineral water),
Mercedes and Toyota Qualis (cars), Baskin and Robins and Movenpick are
niche brands which entered the market. Santro (cars), Akai, Whirlpool, LG
and Samsung (TV and household appliances put together) and Hero Honda are
adaptation brands in the market which have made tremendous strides in terms
of their performance in the market against firmly established brands. Coke and
Pepsi are probably the only two multinational brands, which are in the mass
market. Multinational brands in this context are brands which have entered the
Indian context during the post-liberalization phase in the FMCG category.
High-equity brands
There are a few observations with regard to these brands and they are as
follows.
(i) They were premium priced and micro-niche brands (Nike, Adidas, Tang and
Ray-Ban) priced about 500-700 per cent more than the Indian brands, which
were in the market at the time of entry of these brands. Citizen introduced the
unique Ecodrive, which works on any energy, priced almost 15 times more than
the average price of a watch sold (75% of watches sold in India are below US$
10).
(ii) Some of these brands had neither the variety which consumers wanted nor
the after-sales service back-up with which they could have offered value (Sony
TV and Citizen watches).
(iii) Some of the brands (Kellogg and Tang) did not take into consideration the
cultural context in which they were launched.
While lower end consumers prefer products/brands which are low priced and
are of just acceptable quality, higher end customers (brands which have above
average price points) look for value with regard to several aspectseconomic
utility, emotional symbolism, emotional reassurance and product features.
While some of the brands may have addressed some elements of the value, none
of the brands seem to have addressed several dimensions of value as perceived
by the target customer. In the case of Ray Ban and Rothmans, there was the
additional problem of grey market pricing which was lesser than the retail
prices. The initial lukewarm response of consumers towards high-equity
brands clearly reflects the fact that MNC brands, especially the ones with which
consumers are familiar, will have to provide value. The challenge to these
brands would have to provide value at a higher point without charging a
premium, based simply on the equity of the brand or the brand's country of
origin. Most of these brands have launched variants at price points lower than
the one with which they were launched.
Adaptation brandslocalization MNC brands
The following points could be noted with regard to the brands under this
categorization (these points are discussed from the viewpoint of how such
brands have adapted to the Indian context and not from the viewpoint of how
companies have managed themselves in an overall manner).
o They have registered substantial growth within a short span of time. They
were in competition with strongly entrenched Indian brands which have
been in the market for about two decades. Some of these brands have
registered a growth greater than that of the industry growth (Santro in the
category of cars).
o Most of the brands which figure in the category were almost unknown to
consumers before their entry into India and they have created a value
association indicating the inferences about high-equity brands.
o Some of the brands (Akai and Whirlpool) have taken into consideration
cultural aspirations, beliefs and habits of consumers in the Indian context.
Akai's exchange programme has been explained earlier in the chapter.
Whirlpool undertook research to transfer inputs from consumer insights
into product benefits (it introduced flexible refrigerators and enhanced the
mechanism to make quick ice, and both were prioritized as benefits for
consumers). In washing machines, the brand introduced an agitator
(White magic model) to add on the rigour in washing clothes. Washing
rigour, as stated earlier in the case of detergents, is a strong perceived
belief which is associated with the cleaning action of washing clothes.
White magic is an automatic washing machine which was successful in a
market where 1 million washing machines were sold and about 75 per
cent of them were semi-automatic ones. LG introduced colour TVs with
the Golden eye feature which reduces the strain on eyes. It introduced
refrigerators which preserve the nutritional value of foods stored. LG also
introduced air conditioning products which purify air. Samsung
introduced extra-space viewing TVs. LG also introduced washing
machines which ensured fabric care, which was a benefit beyond washing
clothes effectively. Santro (from Hyundai) had a design which was
different from competitive makes but its success was because of the car's
performance (currently rated as the best family car as advertised by the
brand based on its researchthe brand advertised this in the print media)
and excellent after-sales service which triggered positive WOM. Given
the fact that only about 6.5 lakh new cars are annually purchased in India
and 45 per cent of the market is with the Indian brand Maruti (which has
been in the market for almost two decades), Santro's significant market
share has been achieved within a short span of time.
o Most of the brands have conveyed a focused value proposition in their
communication/advertisements. Santro's advertising campaign was unique
to the Indian context. It launched a sequential three-phase campaign. In
the first phase, it was endorsed by a well-known topical film celebrity.
The second campaign highlighted the problems associated generally with
cars (created awareness on problems associated with cars). The third
campaign was a comparative advertising copy comparing the brand with
competitive brands on several product attributes and benefits. LG's air
conditioner advertisement featured a woman in the family way
(prospective mother) and the copy emphasized that if LG's pure air-
conditioned air is good enough for the lady in the advertisement, it should
be good enough for anyone. Santro, LG and Samsung have introduced
several variants after getting brand acceptability among consumers.
Santro had an unusual design which appealed to consumers, initiated
professional after-sales service (in an environment where service levels
are not satisfactory) with a good distribution network and offered a
product which conveyed value with a good combination of economic and
functional utilityperformance (the zip drive facility which enables easy
handling of the car) of the brand as well as the spacious inner design.
Besides, Santro was the first car brand to use a celebrity who
demonstrated the ease of handling the car. It does not come as a surprise
that brands with the maximum market shares in most durable categories
are the ones which entered the Indian context about a decade ago. Well-
established brands of the past have become follower brands.
Developing a deep MNC brandimportance of intangibles
A brand is a complex symbol with several levels of meaning. The levels of
meaning go beyond the product attributes, are linked with associations and they
contribute to the equity of the brand. There is a need for MNC brands to develop
deep brands after they are able to achieve a reasonable degree of success. This
would ensure that the success achieved is sustained through a complex set of
combinations involving both tangible and intangible benefits. The intangibles
ensure that the brand differentiation is sustained even when competitors catch
up with the brand on functional attributes. Santro is well on its way towards
creating a deep brand.
TOUCH OF REALITY
There are several aspects to manage brand associations in the long run. The
initial brand association has to be complemented in a number of ways over a
period of time to ensure that the brand is nurtured. Managing brand associations
adds strength to contemporary offerings of the brand. The following example
reflects how Santro, the car brand, can become a deep localized brand over
time.
Brand
attributes:
Tall car (referred by the brand as the tall boy design), zip drive
Brand
benefits:
More space for passengers, ease of handling in crowded traffic [this is a very critical advantage as the traffic in a typical urban road
in India is a unique one with a mix of cycles, cars, lorries, trucks, autos (three-wheelers), two-wheelers such as motorcycles and
pedestrians]
Brand self-
image:
The off-beat design of the car and the celebrity approach to endorsing the brand conveys a strong sense of pride in the ownership
of the brand. Given the aspiring nature of the target segment the brand addresses others' social concept of self-image
Brand
personality:
Dependable, trustworthy and large-hearted (space aspects)
Brand culture: Professional service, warm-hearted treatment of customers
Brand
imagery:
Family vehicle for upwardly mobile (highly placed in terms of income) young consumers (typically software professionals and
business entrepreneurs in urban cities)
Santro's brand essence over a period of time could be caring which takes into
consideration the various aspects of the deep brand discussed, including the
customer's need for self-image.
Niche brands
The niche brands, with their premium pricing and selective distribution are in
the process of establishing themselves. Even in this category, it is interesting to
note that Baskins and Robins (ice cream) has introduced variants at lower price
points compared to the ones which were introduced when the brand was
launched. Toyota Qualis, a multi-utility vehicle, has established a niche
presence in the market (the company later introduced Innova, replacing this
model). A significant number of units of the car have been sold to organizations
(corporate sector) and companies involved in taxi operations (the value
perception may be instrumental for the situation). Several multinational watches
including Swatch, Rolex, Omega and Raymond Weil continue to be niche
brands. These niche brands would take time to grow in the respective niche.
There has been very little localization with regard to these brands. Toyota
Qualis' one of the advertising spots had an ethnic touchit created an imagery
of rich Indians dressed in ethnic apparel probably in an attempt to appeal to a
small base of rural rich population in certain states besides the brand's urban-
oriented target segment.
Co-branded MNC offeringsa combination of technology
adaptation and marketing
There are co-branded offerings from MNC-Indian companies which have been
successful in the Indian context. The two-wheeler industry offers a few
interesting examples. TVS Suzuki, Hero Honda and Kawasaki Bajaj in
motorcycles are brands which have been successful brands (which account for a
large market share in motor cycles) have worked on the following strategies
(some of these companies may not have the affiliation of the foreign brand
names but the following points indicate their approach towards the Indian
market):
(i) using the technology of the foreign brand to adapt to Indian conditions to
create a value-based product (value in this context is the functional aspect
combined with pricing);
(ii) creating a distribution network to support the value through the Indian
brand;
(iii) communicating the value through appropriate positioning strategies; and
(iv) launching new variants offering value (value in this phase may be symbolic
or functional) after the brand is accepted.
Hero Honda entered the Indian context during the mid-1980s. It created the first
four-stroke model of motorcycle in India which conveyed the concept of double
the mileage of competing brands. Distribution and service centres were
established with the help of the Indian counterpart brand. The positioning was
unique with the slogan, Fill it: Shut it: Forget it, effectively conveying the
mileage proposition. The brand after getting acceptance has used several sub-
brands to create variants with both functional and symbolic appeals. Hero
Honda SS was created for the rural market with a broader tyre base. Splendor
was a sub-brand created for urban youth with a symbolic appeal and so was the
sub-brand Passion and later Passion Plus. Recently, the sub-brand Dawn was
introduced for the entry-level market conveying functional value. TVS Suzuki
in the early 1980s entered the Indian context before Hero Honda and initially
launched powerful bikes with mileage much better than the existing brands and
after gaining acceptance, launched variants for different segments with sub-
brands. Though it launched its first four-stroke model (Fiero) late in the market,
it was able to strongly position the sub-brands to specific segments which
became a success. It launched the sub-brand Samurai and positioned it as the
no problem bike. It launched Max 100 aimed at the rural sector with additional
fittings for people to carry things common in rural areas. It launched Shogun the
power and style bike aimed at urban youth. In both the cases, an excellent
distribution and service network was developed by the Indian counterpart brand
to support the value created by the co-brands. Hero Honda continues to be the
leader in motorcycles and the late launch of a four-stroke model by TVS has
been the factor responsible for its declining performance. Another co-branded
offering Kawasaki Bajaj with the same approach of creating and sustaining
value over the last decade is a close competitor of Hero Honda. Kawasaki Bajaj
created several models starting with the value version and went on to introduce
variants which included a power version and the popular Caliber sub-brand
which is positioned on symbolic appeal of self esteem, perseverance and
fortitude to target urban youngsters. TVS introduced Victor with various
features and Bajaj came out with Pulsor at the higher end of the market and both
these models have been successful in the market. The examples reflect the need
for a well-managed product-line with brands targeting the respective segment.
The examples also indicate that right timing is required in terms of creating
updated offerings.
The value-based product-line strategy for brandsprioritizing
marketing mix elements for sustainable advantage
High adaptation brands and co-branded offerings, which have been successful
in the Indian context, have followed an approach which could be conceptualized
as the value-based product-line strategy cycle.

The model ensures that brand equity is built up over a period of time after the
brand is accepted in the market. This model takes into account both functional
and symbolic associations for brand-building purposes.
MNC brands, consumer involvement levels and Indian culture
The author (in a joint research study) studied six categories of products and the
cultural factors influencing the success of MNC brands and proposed the
cultural-orientation model. The study covered cars, watches, refrigerators in
durable categories and detergents, jeans and cereals. Several cultural traits,
relevant to the respective category along with several factors associated with
low arid high involvement were considered. The framework could be useful to
MNC brands entering the Indian markets to adapt to the Indian context.

Ritualistic masses
Low-involvement products such as detergents and food categories seem to
reflect strongly entrenched Indian cultural values like value'-based buying
(detergents) or eating habits, which are a part of cultural habits/beliefs. MNC
brands should therefore position themselves on value in categories such as
detergents and perhaps additionally make use of family orientation (in the form
of benefits to the family by using the brand) in their communication. The
objective is to provide value and create emotional links which will reinforce
feelings and emotions common to the culture. In a category like food or
beverages, MNC brands should not position their offerings as a substitute for
existing offerings (as Kelloggs did when it entered the Indian context). The
brands in such categories could position themselves as snacks, which could be
eaten with existing offerings. Creativity in positioning involves creating links
between existing foods and the offerings of MNC brands in terms of taste
combinations as perceived by the consumers. Pricing should be comparable
with existing offerings and the distribution strategy should ensure that the MNC
offerings (like cereal which may be new to most consumers) be placed along
with the traditional ones with regard to shelf display. This would create both
trials and a perception of the offering belonging to the respective existing
product category. Sales promotion should be attempted (preferably with existing
offerings) to initiate trials. Given the strong links with the traditional habits, an
ethnocentric orientation could be effective. An MNC brand could position itself
as an offering exclusively developed for the Indian context. The habits are a part
of the cultural rituals for the consumers belonging to this category.
Global followers
There could be certain products like jeans, which may be associated with
passing involvement (which cannot be categorized under high involvement).
The involvement in these categories (jeans or sun glasses) are more because of
the western orientation associated with the fashion statement (symbolic
involvement) and this could change over time. MNC brands would have to
ensure that fashion orientation is communicated in a manner which is not
perceived as permissive. These brands will have to launch offerings at the lower
end of the product-line (to take care of afford-ability of consumers) and ensure
distribution costs do not make the price very high. The ability of MNC brands to
create a fashionable but affordable perception holds the key to success.
Glamour trialists
MNC brands operating in certain durable categories such as automobiles or
watches may be low on cultural orientation though they may be high-
involvement categories. There could be two dimensions of being low on cultural
orientationthe product category could be either low on cultural orientation
and high on value (like Swatch) or low on cultural orientation when compared
with functional attributes. Santro, for example, could have a peripheral cultural
orientation as reflected by celebrity-oriented communication, which may bring
the brand into the consideration set of consumers. But the final success of the
brand depends on functional attributes, which is a result of adaptation to the
Indian context.
Hard-core culturists
There could be certain high-involvement categories such as refrigerators and
washing machines which will appeal to consumers (a) if a high degree of value
is provided by new features developed for the Indian context (which would
contribute to time orientation through convenience); (b) if such offerings are
competitively priced in such a way that consumers perceive value for money not
necessarily at lower price points; and (c) if a high degree of cultural orientation
is reflected in marketing communication (such as feelings of warmth, and
benefits to the family's well-being, and which addresses women who may exert
considerable amount of influence over purchase decisions). Whirlpool adopted
such an attempt in India. Another brand, LG (an MNC) which holds a
significant market share (leader) in the premium segment of refrigerators, has
also followed the value-based approach (value at a higher price point with the
state-of-the-art features) and a communication positioning highlighting the
health benefit to the family (the refrigerator was positioned as a brand which
would be able to preserve the nutrition levels in the stored food, contributing to
the health of the family members).
Applying the framework to an MNC with two mass market
brandsCoke and Thumbs Up
The framework in the study provides an approach which could be adapted to
several product categories. It can be useful to an MNC to manage two brands.
The cola market in India accounts for around 60 per cent of the aerated soft
drink market and perhaps India is the only country where Coca-Cola manages
two brands of colaThumbs Up and Coke. If the framework is considered, both
the brands are in the low-involvement and low cultural orientation space.
Thumbs Up was a popular brand of Indian cola even before Coke was launched
in 1995 (around 20 years after it made an exit from the Indian market). Thumbs
Up was initially built on the proposition of enjoyment. Happy days are here
again was the brand's proposition in cinema commercials. During the late
1980s, Thumbs Up brand graduated to the adventure proposition
(complimenting the earlier proposition and probably making it more
contemporary). When Coke was launched in the mid-1990s, the company
stopped providing promotional support for Thumbs Up for nearly 3 years.
Realizing that Thumbs Up had a strong equity especially in semi-urban markets,
it was re-launched and endorsed by a popular film celebrity associated with
aggression, adventure and macho qualities. Coke, on the other hand, has
attempted several positioning strategies using sports and film celebrities. In an
attempt to relate to the ethnic aspects of the Indian context, Coke positioned
itself to rural markets with a campaign involving a celebrity in a rustic outfit in
a village backdrop. Rural consumers have the habit of washing fruits with cold
well water and the commercial has the celebrity drawing coke bottle from well
water. The chilled coke is emphasized in the commercial. Coke also advertises
to urban markets with sports and film celebrities. Coke being a super-brand is
able to successfully straddle different imageries created in its advertisements.
This may not be possible for another brand which does not have the kind of
equity which Coke has among consumers. The company has a huge retail
network of around seven lakh retailers and promotes Thumbs Up more actively
in certain regions. Coke is being promoted as a national brand. Another strategy
which Coca Cola attempted was to compare Thumbs Up with its rival Pepsi (as
evident from certain campaigns). It used the bitter taste of Thumbs Up as a
drink for grown up men as against Pepsi, which is positioned towards youth.
The value-based product-line strategy model and the cultural orientation model
are complementary to each other. An MNC brand in any quadrant of the
cultural orientation model can make use of the value cycle model when it is
competing with substitutes. While value could mean a combination of
functional, economic, social and psychological benefits, MNC brands would
have to start with a combination of functional and economic benefits as
appropriate to the cultural context. An MNC brand will have to research
consumer perception on three aspects while using both the modelsWhich is
the quadrant for the brand with regard to cultural orientation and involvement?
What are marketing mix factors which may be useful to the value chain in the
category? What kind of variants are to be launched after the brand is accepted
(acceptance as gauged by the product/market context, e.g. Santro)?
TOUCH OF REALITY
The importance of brand familiarity can be illustrated by the research findings
which suggest that there is a direct correlation between brand familiarity and
brand preference. Robert Zajonc was one of the earliest social scientists to
establish the importance of exposure effect. He had used randomly assigned
words like Biwojni and Saricik and found that strangely even such nonsense
words were generating preferences among respondents when they were
continuously exposed to them. Familiarity seems to increase liking at least up to
a point. When the Eiffel Tower was built the people of Paris disliked it!
Mexican children dislike chili con foods, but adult Mexicans love it. This does
not suggest that brands by sheer familiarity will be eternally preferred ones. In
Impulse and FMCG, consumers spend insignificant time in their decision-
making process and well-known brand names are likely to score over others
because of their familiarity. A number of brands, in the Indian context, keep
advertising throughout the year to ensure familiarity. Besides familiarity, brands
should also make an attempt to change and innovate to keep up with the
changing needs of the consumers without which familiarity will not work. In the
passenger car market, even recent buyers of cars will be familiar with the brand
Ambassador and most consumers may even agree that it is one of the most
comfortable cars made for Indian roads. But when it comes to decision-making
as reflected by market shares of brands, consumers may choose other brands.
HMT in watches, Binny in textiles and Pilot in pens were familiar brand names
for consumers of the past. Brand familiarity should be augmented by benefits,
which consumers look for as the environment changes. Intel is an interesting
example. Though the end consumer buys the computer. Intel Inside familiarity
(created through a powerful campaign) coupled with innovation ensures most
consumers buy computers with Intel chip inside (including those who buy
unbranded personal computers). Hero Honda in the bike market augments its
familiarity with several branding initiatives in a timely manner to remain as a
top brand in the market. Microsoft is one of the sponsors for a regional TV
commercial largely viewed by housewives! Brand familiarity is certainly the
byword.
Power of Contrast in the Marketing
In simple terms, contrast is the state of being strikingly different when two
objects are viewed with respect to each other in juxtaposition. It offers infinite
possibilities when combined with the behavioural principles of perception and
experiential marketing. Perception is concerned with selection, organization and
interpretation of information, and experiential marketing is concerned with
sight, smell, sound, taste and touch. A combination of these concepts is useful in
marketing communication and product design. Dettol, a brand signifying
antiseptic products, is more popular than Savlon in India. The consumers'
familiarity with the odour, stinging sensation of Dettol contrasts with the bland
qualities of Savlon that started advertising much later. Essentially, the product
attributes of a leader create a perception that can highlight the contrast when
there is a follower brand. Such an approach is extremely useful to FMCG where
differentiation is difficult to sustain in the long run. This section deals with a
few aspects that have important implications for marketers.
Discernment of Contrasts by Consumers
Consumers possess varied information or advertisement processing capacities.
Since any contrast created has to be comprehended by the consumer, research
into the cognitive processing capabilities of consumers would be useful.
Advertisements, apart from conveying the positioning of the brand will have to
create a contrast that consumers will be able to accept and internalize over a
period of time. The contrast would have to be relevant to the positioning of the
brand. There is also a need to study the clutter of advertisements in the
environment to formulate a contrast that would adequately and effectively
appeal to the consumer. When almost all airline companies are advertising
themselves on luxury, comfort or service, Sri Lankan Airways simply created a
contrast that is memorable and brand specific. It captured the very essence of
service personnel's traits (warmth and compassion) in an airlinethe storyline
revolved around an episode involving a young girl full of compassion and
warmth who later in life becomes the air hostess of the airways. The example is
amenable to subjective interpretation. However, a relevant and unique contrast
(relevant to the target segment and unique from the viewpoint of the clutter
being perceived by the segment) results in the desired meretricious effect
brand awareness.
Marketing is a process by which interest in a brand is triggered by marketing
communication. The right contrast helps a brand to get into the consideration
set of the consumer when the consumer's decision-making process gets
activated. The Dettol example is an extreme one extending the usefulness of
contrast almost to that of an entry barrier to competing brands. Contrast has to
take into account the perception of a product category. For example, Pepsi
introduced a colourless cola that did not take off. Bisleri, at one point in time,
positioned itself as the quiet soda without effervescence. Soda in India means
effervescence. Thus, culture too plays an important role in the consumer's
perception. Indian culture is a paradox especially in these days of liberalization
and consumerism. There is a strong cultural belief even in urban markets that
the Indian woman is a homemaker, although there is a strong growing
awareness about the aspiration levels of women reflected in several walks of life
(academics and professionals). To this extent, there is already a prevailing
contrast in cultural beliefs. Fair & Lovely in the fairness cream market has
effectively used this cultural belief by creating an interesting contrast of a young
lady succeeding as a cricket commentatora field being a traditionally
exclusive forte of men until recently. The contrast provided by the visual (TV
spot) is topical, in tune with changing cultural beliefs thus establishing linkages
between brand benefit (confidence from using the brand) and success in life. An
advertisement should take into consideration several consumer-centric factors
along with contrast, to leave a lasting impression in the minds of consumers.
Capturing Consumers' Emotional Contrasts
If marketers seek to capture contrast of emotions, the affective component of the
mind (that which deals with emotional aspects) could be made use of.
Emotional contrast has to be supported by cultural aspects and at the same time
be product relevant. The present TV advertisement for HDFC Insurance
captures the need for independence among elderly people in an environment of
uncertainty. The traditional habit of saving (prevalent in the Indian culture) has
been well captured with the changing environment in which elders may have to
depend less on their wards. Titan captured the emotion associated with the
gifting ritual and built a brand property around it by using one of Mozart's
musical offerings. Gifting has been a cultural aspect for decades. The brand did
well by involving sentimentally appealing emotional visuals along with a
universally well-known Mozart's musical piece that also has a sentimental
appeal. Titan is probably the only brand of watch in the world to amplify and
dramatize explicit gifting to the hilt. This generates a sharp contrast not only
with other brands in the watch industry, but also with regard to other
categories having gifting options. Rasna's recent TV spot (child missing the pet
elephant) reflects the emotional bonding ever present between children and
animals. In most of these cases, it is not the novelty of theme, but the emotional
contrast provided by the advertising storyline, which is new and refreshing.
Tyre manufacturer Michelin associated a child with its safety attribute thus
contrasting itself from others in a category that was drab and uninteresting from
the consumer's viewpoint of buying a tyre.
Emotional contrast can also be created by forming reference group appeals. A
reference group appeal influences a consumer's actions, values and behaviour
thus inducing the consumer to follow the group's norms and trends. Charms
cigarette and Pepsi are examples of such reference group-based emotional
contrast. Fun, frolic and romance are some of the oft-used emotional bases for
such appeals. Marketers should be careful to avoid the beaten track while using
such reference group appeals, and it is in this context that creative synthesis of
emotional contrast executes effective communication with the target segment.
McDonald recently launched an integrated marketing communication exercise
that combines emotional contrast and experiential aspects. Super Bowl is a well-
known event watched by millions around the globe. The company created a
WOM story around a themesomeone in a village had found a fry resembling
Abraham Lincoln's physical profile. With emotional expectations of the
consumer built up on the curiosity plane, the firm launched an advertisement
involving the character who found the resemblance. This was carried as a Super
Bowl commercial. Excited consumers saw the advertising spot and were also
surprised to find McDonald launching a web-based auction involving such a
French fry. McDonald used emotional contrast (when compared with other
mundane products) based on experiential involvement.
Several years back, Marlboro used emotional contrast provided by the cowboy
image drawn from the American culture to stand out of the communication
clutter created by other cigarette brands. Even when the brand is well
established for its functional utility, emotional contrast could underline it.
Raymond's relationship campaign dealing with the finer emotion's of one's life,
and Eveready's Give me Red signifying emotional energy of the youth are
some of the established brands exploiting emotional contrast to impact the
consumer's psyche.
Communicating Contrasts through Experiential Aspects
Emotional/sensual contrast can be achieved in the experiential dimensions of
smell, taste, sight, sound and touch. Parle's Krackjack and Britannia's 50:50
are brands that mix saltiness and sweetness to create a distinctive sense of taste
thus providing a welcome contrast to consumers. These contrast-filled tastes
such as the simultaneous presence of salt and sweet are liked by Indian masses.
The KY series from Onida produced a special sound providing contrast
through the audio content of the TV. Loud sound and music again is a part of
the Indian culture. It is not difficult to come across blaring speakers at street
corners of interior Tamil Nadu.
Marketers should not err by not emphasizing on contrast while developing new
offerings. Consider sight, a powerful factor in discerning the visual aspect of
any product (especially a durable product). Hero Honda introduced its Street
version (of the motorbike) laden with several features for city rides, and priced
it much above that of mopeds. However, the design resembled that of a step
through vehicle (like that of M-80 from Bajaj) priced much lower than Street.
Tide's scented version introduced in the USA not only used the sense of smell to
provide a contrast in the detergent category but also formulated an
advertisement that provided a visual contrast (in comparison with
advertisements of other brands in this category). The advertisement showed
several places (such as mountains and valleys) that could be associated with
freshness. Freshness, the proposition of the brand, was communicated through
smell-visual links. Advertisements pertaining to Gillette's Mach 3 and Vector
Plus (created for the Indian context) exploited the sense of touch to create a
sensual contrast (with respect to other brands) when consumers use these razors.
As with other categories, cultural acceptance is a prerequisite for any successful
experimentation with regard to creating a sensual contrast in the food/beverage
category. While MTR brand may be successful due to contrast in traditional
food categories, iced tea and corn flakes are offerings that are not a part of the
cultural menu. Consequently, the contrast provided may not find extensive
immediate receptivity. In contrast, the McDonald menu may have better appeal
to hip youngsters of the urban markets, because of the reference group contrast
when compared with taste familiarity. The youth culture in cities operates in
reference groups. The experiential contrast of spending time together in a
restaurant offering trendy western ambience is probably more vital than the taste
factor for the success of the brand.
Bru is a popular instant coffee brand among coffee drinkers of the south,
essentially because of its lack of contrast (in taste) with traditional filter coffee
that uses the coffee-chicory mix. With the ritual of preparing filter-based coffee
becoming an arduous task, Bru offers a trade-off to those consumers who would
like a close substitute. Hence, lack of contrast too is a useful tool for marketers,
provided they attempt some other useful contrast (which could be a convenience
of preparation as in Bru). In an environment used to home-made curds, branded
curds may have to get the taste and creaminess factors very close to their home-
made counterparts for accelerated diffusion among the consumers. Capturing
the taste and aroma with which consumers are pleasantly familiar is a major
challenge for marketers of fast food and snacks. The recent introduction of the
chat variant of Lays chips is an interesting case of how a brand is attempting to
adapt itself to local tastes as in the case of Bru.
While the list of examples mentioned here is not exhaustive, the important
driving point pertains to the illuminating presence of contrast in our daily life.
Marketers could use this in a creative and profitable manner. This is more
relevant in the present-day context when creativity in marketing and advertising
seems to be touching a saturation point.
Brand LoyaltyMyth or Reality
Traditional marketing paradigms have always stressed the importance of brand
loyalty and marketers have always believed that brand loyalty, would lead them
to customer relationships, which in turn would enable them to make the best use
of customer lifetime value. While the academic literature has several articles on
some of these latest concepts, practical considerations suggest certain cautious
ways of applying these concepts. Marketers may have to probe deeper into the
concepts of loyalty to understand the buying pattern of consumers before they
embark on loyalty schemes. Traditional approaches to brand loyalty have
stressed the importance of the fact that it is less expensive to maintain an
existing consumer than to explore and get new consumers. Consumers who are
loyal to a brand are likely to spend more on their loyal brand and they are also
likely to spread the positive WOM to other consumers (advocates of the brand).
While these may be true in the present-day context, there may have to be certain
changes in the environment that would have to be taken into consideration
before a policy on loyalty is formulated. If the soap category is considered, there
may be a propensity for consumers to try out many brands and they may be
loyal to more than one brand of soap though the frequency with which they buy
their loyal brand may differ. A consumer may frequently purchase a herbal
brand but may keep alternating with other moisturizer brands. The case of the
detergent category too may have such patterns. Even with a cut-throat price war
on, not all consumers may prefer top end brands when they purchase the
category. A significant number of consumers may alternate between top-end
offerings and middle-end offerings on several occasions.
This is very probable in markets where the income flow is unpredictable or not
uniform as with urban markets. Weekly paid and even hourly paid consumers
form a substantial portion of the target segments for such brands in semi-urban
and rural markets. Even in urban markets consumers shopping in departmental
stores may alternate between national brands and store brands, especially when
promotional schemes are announced by the departmental stores.
On the advocacy aspects associated with brand loyalty, while these aspects may
be more applicable with regard to durable categories, consumers may indulge in
thrill advocacy which is more associated with the thrill associated with a new
offering rather than a WOM which would have lasting effects. Vanilla variant of
Coke may have triggered such a WOM and could have also ended in a few
purchases but such instances may not really end up with sustained loyalty of
consumer groups.
Challenges of brand loyalty
Some of the loyalty based challenges faced by today's marketers are as follows:
o How should loyalty be created and sustained?
o Are there different approaches for FMCG and durable categories?
o How should retail networks be used to build loyalty at the retail outlet
level?
o How should loyalty programmes be floated so that they are profitable to
companies also unlike several programmes which do not realize much
value for the brand?
The global example of a frequent flier programme is one in which several
billion miles are logged by frequent fliers and several companies are
apprehensive about profits from loyalty programmes. This is a good case of how
the brand wagon effect has created problems for companies who have had to
jump into it because of competitive demands. To make things complex, a
sizeable cross-section of consumers are members of more than one frequent flier
programme as they patronize several airlines across their routes. While there are
no easy answers to the challenges on brand loyalty, it is at least worthwhile to
have awareness that loyalty programmes do not have fairy tale endings. In
consumable categories, companies attempt to bring out brand variants
with limited success. Close-Up brand had attempted several variants but has
been able to sustain only a few. Introducing variants at the same price points
serves to hold consumers who may need variety with regard to their
consumption. This is different from product-line strategies which attempt to
upgrade the consumers to a higher price point by offering variants (though there
may be some similarities in both these approaches). Britannia has a number of
variants on some of its offerings at the same price points. This strategy is useful
in a category like biscuits which is amenable to variety seeking because of the
hedonic experience associated with the consumption of biscuits. If it is
detergents, consumers would perhaps look for functional benefits and the
company too may have to think of differentiated price points to convey the
value (like a scented version of a detergent brand). Both the approaches in both
the categories aim at loyalty, but the segments of consumers and the buying
motive of consumers are different. The company, depending on the scale of
operation, has to take into account not only the profitability aspects of the brand
but also that associated with its range of offerings on the product-line. Al brand
of tea may have had a number of loyal buyers but the company with its string of
offerings would have to also take into account the profitability associated with
its overall offerings in the competitive context of regional brands and entry of
multinationals in the category. Fair & Lovely has several variants and even a
niche soap like Pears has an oil control variant. Managing the product-line
variants to sustain loyalty and profitability is a delicate strategy. In case of
durable categories, repeat buy of the brand could depend on how well the
service has been provided by the brand but beyond this consumers may also
require feature-rich offerings when they update their offerings. For example, a
consumer who had bought a brand of washing machine 10 years back would
like to replace the machine with updated features, rather than repeat buy the
same model and the brand should be in a position to offer such features to
ensure that the consumer is not lost out to competition. It may be interesting to
research if consumers desire updated features because they require it, or because
competitive brands offer them. This would enable a brand to define what value
is all about for a loyal consumer. Having an ongoing relationship with the buyer
is another strategy to keep the brand on top of the consumers mind. The
Passport scheme of Hero Honda related to service after the purchase is a good
example where the consumer may perceive a value after the purchase is made as
there are privileges which could be put to use while using the product. Retail
outlets augment loyalty in a variety of ways. Shopping experience is one,
offering value on the merchandise with sales promotion bundling is another and
loyalty programmes are also one of the ways of developing retail loyalty.
Shoppers' Stop has a loyalty programme which is run in synchronization with
consumer preferences strengthened by a good supply chain system which would
enable the company to save on procurement. A good information technology
system is a prerequisite for any retail chain which has a good database of
consumer purchase patterns.
Loyalty-based strategiessome critical factors to be
considered
Past purchase patterns would provide several insights into the behaviour of
consumers. In a number of cases, there may be more than one pattern of
purchase and hence different programmes may be required for different
consumer groups. A group of consumers may be interested in the discounts
obtained through bundling of products in a retail chain. Another group may be
more interested in the variety of brands being offered by the outlet especially in
the case of cosmetics, personal care, apparel and commodities.
RFM, namely recency (how recently a consumer has bought from the retail
outlet), frequency (how frequently the consumer buys from the store) and
monetary value is a good pointer to arrive at various groups of consumers for a
reward programme. However, the limitation of this approach is that it does not
take into consideration the profits per consumer and for a given period does not
take into consideration the probability of purchasefor example, an infrequent
purchaser could shop just after the time period considered and the analysis is
likely to miss the probability (a consumer buying once in 5 months as against
one buying once in 4 months for a time period of 1 year).
There is a concept known as the double jeopardy effect which essentially
mentions that smaller brands (in terms of market share) have few buyers and
even fewer repeat buyers. This means that smaller brands are likely to have a
loyalty propensity lesser than large brands. In several categories in the
organized sector, a category may be dominated by large brands and checking for
the presence of this effect may open up new avenues to probe loyalty and the
motivation for the buyers. For example, in the category of fairness creams
dominated by large brands, a small brand may find that consumers are reluctant
to try out new brands because of the perceived risk associated with product
formulation or because they are used to a formulation which they do not want to
change. Communication campaigns or even personalized communication (as
appropriate) may be useful based on the insight.
The brand wagon effect discussed earlier makes an interesting point with regard
to loyalty-based strategies. A profitability analysis as well as the analysis of
strength of the brand is required before a brand decides to follow competition
for initiating loyalty programmes. A brand offering a strong product
differentiation (which has to be backed up by the organization) may not have
the need to have a mundane loyalty programme simply because the competition
has one. In fact, it has the competitive advantage of developing a segment of
consumers who value the product rather than the undifferentiated loyalty
programme which is offered by competitive brands.
Firms should examine the product category before firming up loyalty
programmes.
In a category like atta where only 2-3 per cent of the market accounts for
branded offerings, there is an immense potential to get new consumers besides
retaining existing consumers who may have tried a branded offering. Hence, the
pros and cons of investing in a loyalty programme should be weighed. A good
loyalty programme has to offer profitability and add equity to the brand rather
than directing it towards a price war, which would dilute its equity.
Brand failure
In an era of brand loyalty and brand experience, it is important that marketers
analyse the causes of brand failure as they could offer valuable insights. While
there may be several reasons why brands fail (both internal and external to the
organization), this section focuses on the conceptual aspects of brands. It should
be noted that brand failure as defined for the purpose of the article is the
withdrawal of a brand from the market or a brand failing to capture a significant
portion of the market relative to the market structure in a given product
category. The objective is to apply academic reasoning across a variety of
situations taking into consideration the overall market for a product category
and competitive offerings at a given point in time.
Category development?
Normally, in a number of categories, brands evolve over a period of time as the
category evolves. Soaps, biscuits, shampoos, pens, washing machines and audio
products are just a few examples. When the category itself does not evolve,
there is probably a lack of favourable perception in the minds of consumers or
perhaps they do not understand the nature of the product and hence do not take
it into their consideration set whenever they buy the category. A considerable
amount of research and a marketing mix follow-up thereafter is required to
ensure that the category registers among the target segment. The onus of doing
this falls on the pioneering brand which kick-starts the category (or one of the
earliest brands). While this was just creating awareness some decades ago, it
could be a complicated exercise in a competitive context. Red Label, Horlicks,
Surf, Dettol, Colgate, Cadbury's and Scissors may be some of the classic brands
which have been responsible for the respective category to grow since their time
of introduction. Incidentally, all these brands also have a track of successful
advertising campaigns over the past several years. While some of the brands
mentioned may have been under intensive competition in recent years, it is
important to note that they have been a part of the product history in the Indian
marketplace.
Brylcream is one brand which probably could have contributed to the growth of
the hair cream market. It had attempted to revive itself in recent times. Clinic,
the well-known shampoo brand, also extended itself to hair cream but there are
no indicators in the market to reflect that the category is getting diffused in a
considerable manner. Brylcream (and later a few brands) was the pioneering
brand in the category. Despite using a celebrity during the 1970s, the category
did not explode even when there was sufficient awareness and interest in
personal grooming. There are certain interesting questions regarding the product
category.
o What was the target segment for the brand when it was launched?
Executives or travellers, men who were in a travelling profession or the
younger segment which belonged to a particular lifestyle slot?
o What were the brand benefits? Convenience of carrying the pack (as
against hair oil) or better grooming properties?
o Did pricing restrict the growth of the brand (vis--vis hair oil) and if so
did the brand attempt niche marketing strategies?
o What was the perception of consumers with regard to the frequency of
usage, hair care grooming and even the stickiness aspects?
While the brand may have gathered some of the information mentioned over a
period of time, it is difficult to think of a conceptual sequence of steps by which
the brand was promoted over decades. Given this scenario, it is not difficult to
understand why several brands are not found in the category Development of
the category, especially by brands which are early to the category determines
not only the success of such brands, but also determines how subsequent brands
may perform in the category. This is not to make out that later entrants may not
succeed in developing a category (there are several of them which have
successfully done it). A pioneering brand could become associated with a
category and hence be in the first in the mind of the consumer. Later it could
make appropriate changes in the marketing mix to ensure it leads with a
sustainable advantage. Close-Up in gel toothpastes is a good example to reflect
how the brand has succeeded after pioneering the subcategory, though it has
taken time to achieve this. Ariel introduced the subcategory of compact
detergents and could probably attempt strengthening the category and itself.
Timing of the brand
Timing of a brand (in a product category) is important. There are two options
for a brand to diffuse itselfeither introduce a new concept and develop it over
time waiting for the market to develop or introduce a new concept when the
timing is right. The former approach calls for a greater commitment of money,
time and organizational resources. The latter approach would be successful if
there is adequate and ongoing research into understanding the behaviour of
consumers. Time share in the vacationing market may have just evolved in the
Indian context and even today it is a niche market. A brand attempted this in the
mid-1980s. The timing for fruit juices (pure) is right even though it is still a
niche market. For almost two decades, there was only one brand of pure apple
juice (not widely available) but Cadbury's attempted to launch a brand in the
mid-1980s. Hima Peas was a brand of green packaged peas introduced during
the 1960s when lifestyles were very different from the current ones and when
consumers were not under pressure to buy frozen vegetables. The brand
launched by Hindustan Lever after a good deal of research, targeting a niche of
modern households (during the 1960s) did not take off as expected. Hero
Honda's initial proposition of economy was well timed at a time when
consumers were willing to purchase two-wheelers for personal transport and
when the purchasing power of the target segment had improved. Brands in
commodity items such as salt and atta have been introduced when consumers
need more time convenience and good quality. There may be even situations in
which timing plays a role with regard to changing lifestyles.
Contact lens is a category which has been in the country for the past 30 years.
The dropout of consumers who had tried out the product had been high in the
past. The branded offerings which have been in the market for the past few
years have attempted to market the product through a mix of strategies.
Changing lifestyles coupled with convenience and personal grooming aspects
may have changed the perception of contact lens in the mind of consumers. The
time is right for such a product if brands adopt a well-structured strategy
beginning with the identification of appropriate segments. Baby talcum powder
is another product category in which many brands have failed to make progress
in a niche market (includes brands such as Pond's and Glaxo). A related market
like baby soaps has seen a few brands in recent times. Given the awareness of
the consumers, affordability levels and the attitude of parents towards child
care, it may be appropriate to build brands in such categories though the market
for such products may be niche ones. Brands like Itch Guard and Krack (used
for cracked heels) have timed their launch well in a changing environment.
Cultural dimensions
Culture is unique to a market and can offset several attempts of marketers. The
clear lime drink in the carbonated or soft drink market (like Campa Lime or
Sprint in the 1980s or the bitter lime popular in the West) would not make
significant progress in the country because they are not a part of the culture
(eating is a strong cultural habit). While a number of consumer products may
get diffused because of changing lifestyles, food products which are not a part
of the culture in a market will meet with strong resistance. Bread, which has
been in the country for a long time, has a low penetration in several parts of the
country. Kellogg's made an attempt to market cereals for breakfast. Tang,
during the 1980s, positioned itself as a breakfast drink. Philips and Braun
recently launched electric shavers. Though aimed at a niche because of high
prices, it would be difficult to enlarge the niche within a short span of time
because of the strongly entrenched habit. The same reason also holds good for
shaving systems for women (Braun). Soaps (herbal ones) and shampoos with
natural ingredients have built brands on cultural practices associated with the
usage of such ingredients. Godrej's Storewell advertisements (steel cabinets)
have the traditional marriage occasion as its backdrop. Brands which are
associated with strongly entrenched cultural practices/beliefs would have to be
careful before using a westernized appeal. Fair & Lovely, the leading fairness
brand has its core benefit built from cultural beliefs, and its latest TV
commercial also makes use of the cultural belief where a girl child is perceived
inferior to a male child (and how the brand reverses such beliefs). The brand has
also recently launched a herbal variant. The concept of family soap in the soap
category does not seem to have worked to the expected extent. Protex from
Colgate and All Care from Godrej are brands which have this proposition. The
family togetherness may be stronger in rural areas given the fact that in urban
nuclear families there are very strong individual preferences for FMCG
categories. Lifebuoy has re-launched itself as a family soap (the brand
incidentally has a huge market in rural areas).
Drinking Chocolate is a brand of chocolate drink from Cadbury's and it has been
in the market for the past several decades. While it can be taken in hot or cold
form, chocolate itself is gaining ground among adults only in recent times.
Besides, the tinge of bitter taste of the brand may not be in line with the sweet
toothed tastes of Indian consumers (Bournvilte, the bitter chocolate brand also
from Cadbury's and which has also been in the Indian market for a long time,
caters to a small niche). The brand Drinking Chocolate made a good attempt in
the 1980s by introducing the offering as Choco-Cheer targeting the younger
generation. Sustained brand building with both advertising and below-the-line
promotional activities would have perhaps built the brand. The advantage of
targeting youth for such products is that they may be more open to new tastes
when older consumers may have got tastes internalized as a part of their eating
habits drawn from culture. Besides, youth may be more amenable to such
change of habits. It may be worthwhile for marketing academics and
practitioners to give as much importance to brand failures as they give to
successful brands.
Brand Perception and Brand Strategies
Classification of brands with regard to certain factors with which they are
associated will enable marketers to use a specific approach towards branding.
This kind of classification, as shown in this section, will enable marketers to use
branding within a category and also enable them to extend branding strategies in
different categories of products, depending on the brand association indicated in
the framework.

Historical factors refer to a brand's lineage and historical aspects. Proposition
factors relate to the innate aspects associated with a brand. Charisma factors are
linked to the associations which the brand obtains through its links with third
parties such as spokespersons and celebrities. Under each of these factors, there
can be brand strategies which can be applied within a specific category and
beyond the specific category.
Classy brands are the ones which have a history within a category that
reinforces the brand's offering. IBM, Mercedes and Lexus are examples of such
brands. Ferrari's backdrop with regard to its racing cars is legendary. Beyond
Features brands are those that make use of the origin, and the origin can
support brands beyond one category. Siemens and Audi have strong German
associations of thoroughness, dependability and reliability. Feature brands are
those which have demonstrated the quality of their offerings in the past. Volvo's
quality with regard to safety and reliability and De Beer's quality in the category
of diamonds are examples. Focus brands use either attitudes or ethics to
transcend a specific category. Virgin is a brand that promises fun, excitement
and adventure in the categories it competes. Wipro promises applying thought
(as reflected by its advertising campaigns) in several categories it operates.
Titan's Fastrack, an attitude-based youthful, vibrant and urbane brand, is into
watches and goggles. Expert brands are those that use endorsements from third
party sources, which has knowledge about the brand's category. Colgate's
advertisements during the late 1970s and early 1980s featuring endorsements
from dentists is an example of such an approach. Kapil Dev's and Sachin's
Boost is the success of my energy is another example. Non-expert brands
differ from endorsement brands in that they seek endorsement from celebrities
who may not be associated with a specific category and who may not have
knowledge about the category they endorse. Compaq uses Schumacher and
Santro uses topical celebrities in India who also endorse several other categories
of products. Over the years, Rolex has been endorsed by celebrities from
various fields (including Tiger Woods). While the framework provides useful
directions for managing brand associations, there may be brands which may fit
in more than one categorization. Marketers will have to take competitive brand
associations and long-term strategies into consideration before planning out
brand associations.
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