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FROM THE EDITOR
Dear Readers,
Recently I was startled to find the marriage of two iconic
automobile brands with mutually exclusive target
segments. Aston Martin has definitely played down its
image of a marquee by partnering with Toyota for the
development of a small car. Such move by AM to reap
volume targets would definitely antagonize its loyalist. It
is a perfect example of brand abomination as said by
Mark Ritson. How brands and companies can mark a
difference and also create new opportunities in
tumultuous times without brand
abomination, can be learnt from LG
and Bharat Matrimony. While the
former one has started developing a
50ltr refrigerator for rural India, the
latter has come out with a facial
recognition tool to search your life
partner possessing similar facial
traits of your dream celebrity and
Our June 2009
this is what I call an innovation in
Cover
marketing.
Keeping innovation in marketing as the agenda, the cover
story analyzes how three essential commodities have
gone through the cycle of branding and have opened up a
completely new chapter in the branding of commodities.
Right from water, salt, sugar, steel to of late branding of
eggs has proved beneficial for all the partners in the value
chain and has been immensely appreciated by consumer
forums. But as a mark of caution, one should only choose
those commodities where branding can create
differentiation in the perceived value of the consumer
that was previously missing in the raw product.
We are again back with the Pandora’s Box section, long
after the first issue discussing the potential benefit of
humor in advertising to capture the consumer mindshare.
The exponential growth in the use of WOM in the virtual
market space along with the statutory strategy to be
adopted has been exemplified in the perspective section.
How Kishore Biyani managed to save Pantaloons in the
midst of recession by following a customized 4P strategy
is made available in the strategic analysis section.
We are really proud to present the guest of our month Ms
Nadia Chauhan, Jt MD & CMO of Parle Agro. An icon for
many management graduates, she has proved her
competency by revitalizing the company portfolio with
breathtaking brands like Appy, Bailley and several
initiatives to her credit. She carries an aura of command
in business, which is clearly reflected in every word she
spoke for the interview.
Further entrenching our corporate column, we bring you
Ramesh Jude Thomas, President and CKO, Equitor
Consulting, who has spoken about the innovative way of
brand mortgaging to leverage brand equity and thus
monetize it.
Our Silent Voice section has created flutter across the BSchools of the country with largest ever entry received.
We have gone a step ahead to get the entries evaluated
by creative designers of Ogilvy & Mather India and to
bring professional approach to our system.
Please continue your support and wishes and let
Markathon explore the world of marketing with passion.
Asit Kumar Jain
THE MARKATHON TEAM
EDITOR
Asit Kumar Jain
SUB EDITORS
Dilpreet Singh Gandhi
Parul Gupta
Pranab Talukdar
Ritul Singh
Saurav Kumar Bagchi
CREATIVE DESIGNERS
Soumyasanta Roy
Keshav Sahani
2
Markathon | Aug-Sep 2009
CONTENTS
PERSPECTIVE
World of Word-of-Mouse
4
PRITESH JAIN, AMMAR TAMBAWALA|IIM A
VARTALAAP
Ms. Nadia Chauhan
6
JT. MD & CMO, PARLE AGRO
EYE TO EYE
Umbrella Branding: A Marketers Dilemma
11
GUNASEKAR ARUNACHALAM| IIFT DELHI, ABHA SINHA|IIM S
ARUN SALURU, ABHISEKH BAKSHI, MOHIT KHEMKA| IIM S
CORPORATE SPEAKS
What would u rather lose?
12
18
RAMESH JUDE THOMAS| PRESIDENT & CKO, EQUITOR CONSULTING
PANDORA’S BOX
Humour Quotient in Indian Advertising
20
KAUSHIK SRIRAM |ROHINI RAMACHANDRAN, IIM BANGALORE
STRATEGIC ANALYSIS
Pantaloons Retail (India) Ltd.
24
SAISHREE D | TAPMI
COMPETITION
Silent Voice
26
EYES DO MATTER: RAY-BAN
UPDATES
VARSHIK N, ESHA ARORA | IIM SHILLONG
COVER PHOTO: PAUL SAPIANO
28
markathon
COVER STORY
Commodity Branding
3
Perspective
Markathon | Aug-Sep 2009
World of Word-of-Mouse
Pritesh Jain, Ammar Tambawala | IIM Ahemadabad
When Hotmail inserted “Get your private, free email at
http://www.hotmail.com” at the bottom of every
message sent out, little did it know that it was
pioneering the concept of a new age marketing
technique called word-of-mouse that would create a
buzz just a few years away.
Hotmail then sat back and let its users promote its
product – a “free email account”, a revolutionary
concept at that time, to their network of friends and
associates. Hotmail’s instant success enticed marketer’s
world over to follow the suit, to explore the potential of
employing word-of-mouth marketing techniques in the
virtual world.
Word-of-Mouth (WOM, also used for word-of-mouse)
marketing strategy encourages individuals to pass on a
marketing message to others, preferably in their circle of
influence. Word-of-mouse is basically an extension of
this concept, with the communication being through
electronic means, which increase the rapidity with which
the message spreads and the number of people
communicated to. There is an exponential growth in the
message's exposure and influence, especially since as a
society we have started moving from vertical trust to
horizontal trust, i.e. from trusting authorities to trusting
our peers. Due to its similarity to rapid multiplication
growth observed in the spread of various viruses, this
technique is also termed as viral marketing by some
experts.
Various social networks have relied heavily on WOM to
get more users hooked onto them. In today’s world,
blogs and podcasts have proved to be powerful tools
that have assisted marketers in implementing their
WOM marketing strategies well. Vodafone’s use of
YouTube to promote its Zoozoo campaign showed the
rise of a new and effective tool. With so much support of
the viral medium at their disposal, a marketer just has to
concentrate on some basic elements to make a
successful WOM marketing strategy. Here are some
guidelines to design a WOM campaign:
 Give away products or services
‘Free’ is the golden word. It gets people to try your
product. You might not reap profits in short terms, but
then you know that WOM marketing’s strength relies
in its network expansion effect. Even a marginal
charge can be a big deterrent.
 Provide for effortless
message to others
transfer
of
Not everyone is a good salesman. Make sure that your
message is simple to transfer and has potential to be
self-explanatory. The more the effort required for the
user, the lesser are chances of the spread of the
‘virus’.
 Scale easily from small to very large
Be prepared for a sudden surge in demand. If you are
not well equipped to serve the rising customer base,
you better not get into WOM. It can work against you
if there are unsatisfied customers or the one whom
you are unable to serve – as a negative message can
spread as quickly, if not more so.
 Exploit
common
behaviours
motivations
and
Nobody wants to miss on a rising trend. There is an
innate need to be ‘cool’, to be a part of those ‘in the
know’. Identify these motivators and make sure that
you are exploiting them.
 Utilize existing communication networks
You don’t need to reinvent the wheel. However
irritating those “your friend abc has invited you to join
xyz” mails, they have been effective in expanding the
user-base for many a social networking site. It is only
now that their effectiveness, due to the saturation of
these messages has come down. Facebook updates,
chat status messages, tweets are all examples of
communication networks that carry updates, and links
to interesting videos.
4
Perspective
 Take advantage of others' resources
Blogs, podcasts, YouTube, Twitter – all these tools are
put in place by someone else and are at your disposal.
Engage your customers in every possible way.out of
cash and closing stores all over the try. Although they
have no hopes of opening these outlets just as yet,
they do plan on reworking their format through
expansion by way of franchisee units. Many foreign
ventures with domestic firms are falling out while
previously established foreign retailers are looking for
alternate strategies.
Some examples of WOM campaigns used by Indian
companies recently are:
1. Makkadman (www.makkadman.com): Produced to
promote a new social networking website
desimartini.com, this video rose on popularity chart
at a rapid pace riding on the email-forward and
recommendations through various blogs. Companies
like webchutney have a large portfolio of campaigns
similar to this and were used to promote various
organizations in a creative way.
2. Jaagore.com (www.jaagore.com): An initiative
supported by Tata Tea and Janagrah, was aimed to
raise awareness of voting rights. It encouraged its
users to invite their friends to join the movement and
be a responsible citizen.
3. Animated videos have been used by companies to
promote their product in funny, offbeat ways. The
video usually starts off in a completely different
context, with no indication of it being an ad or
promotion, but just another spoof. The brand or
product is brought in right at the end, along with a
humorous twist. Some examples of this are the
Rajnikant-Castrol video where he is shown
outrunning a bullet on his bike, the McDonaldsSholay video with the sons of the original stars, and
the tagline of ‘Aap ke zamaane mein baap ke
Markathon | Aug-Sep 2009
zamaane ke daam’ brought in at the end and the
‘Thakur ka Inteqaam’ video made by Orbit, indicating
the advantages of strong teeth.
4. Vodafone used the YouTube channel to not only
popularise Zoozoos, but also to show the making of
the ads, which got users even more hooked on when
they found out it wasn’t animated, but in fact actors
in special suits.
5. Seven wonders of the world 2007: Though this
campaign was not started in India, it raised huge
curiosity. Lacs of Indian users voted to keep Taj in the
list of wonders. The mail chains urging users to vote
for Taj made multiple rounds for almost a year.
On the other hand, the power of word-of-mouse can
also be used by unscrupulous agents to spread
erroneous information about the company or its
product. The infamous Mentos in Coke emails and
videos is the first thing that comes to our mind. In such
cases, it is important to react promptly and push a clear
rebuttal; otherwise it can get almost impossible to stop
the rumour mails.
However, word-of-mouse is not without its sceptics. Paul
Martino, the man behind Tribe, an early social network,
believes that interpersonal connections on these
networks are often of low quality, since few people
disconnect former friends, or reject unwanted friend
requests from mere casual acquaintances. While this
may eventually lead to a lot of clutter and unwanted
updates, time would also eventually bring tools to
remedy this phenomenon, like ‘mute updates from this
person’. While muting updates may limit the spread of
many campaigns, it could also make them more
powerful, as one would give more importance to the
fewer updates he/she did get.
5
Vartalaap
Markathon | Aug-Sep 2009
INTERVIEW WITH NADIA CHAUHAN
Joint MD & CMO of parle agro
Ms. Nadia Chauhan is Joint
Managing Director and Chief
Marketing Officer at Parle Agro Pvt.
Ltd. In her role, she oversees
Product Development, Marketing,
Sales and Distribution for all the
brands of Parle Agro Pvt. Ltd. She
also leads new business ventures.
Nadia has played a pivotal role in the
phenomenal growth of Parle Agro
over the years. She has big plans and
expectations for the future of Parle
Agro and is constantly driving Parle
i Agro towards being India’s number
oi one FMCG Company.
Vartalaap
Markathon: As multinational cola czars are sharpening
their focus on 'non-cola' drinks, how are Indian players
like Parle Agro gearing up to fight these multinationals
in the Indian fruit-drinks market?
Nadia Chauhan: The fruit drinks market has been seeing
rapid growth over the last few years. And that has
motivated various F&B players to invest and foray into
the non-cola drinks segment.
Besides the multinationals, there are several local
players who have sharpened their focus in this
segment.
From our point of view, we welcome competition.
Since, for one, it helps further expand the market, and
additionally, it ensures that the older, more established
players in the segment do not lose focus. We enjoy
being kept on our toes and are constantly looking for
new ways of expanding our business in this segment.
To quote a cliché, nobody remembers the second man
on the moon. And fortunately for us, we have the first
mover advantage in this segment, and that can take us
a long way. It keeps you on top of the mind for a long
time. With so many firsts to our name, Parle Agro has
the proud sobriquet of being a pioneer in the Indian
beverage industry.
With rising competition, Parle Agro does not just bank
on its pioneer status. Constant innovation, an open
mind and a vision for the future will ensure that we
are always ahead in this race.
At Parle Agro, we focus a lot on the kind of
products we create. With one of the most
advanced R&D facilities, we have developed some
of the most path-breaking products, all first of its
kind in India.
With an established distribution network, we
ensure that no matter where in India one goes, our
products are available.
And finally, an aggressive approach to marketing has
helped us create and continue creating some of the
most iconic brands in India.
Needless to say, our focus on quality is what’s allowed
us to garner the trust of the billion in our country.
Markathon | Aug-Sep 2009
Markathon: Now bottled water has become more of a
commodity. What initiatives are you taking to make
yourself different from your competitors?
Nadia Chauhan: Over the last few years, the bottled
water market has seen a growth of over 40-45% per
annum. This growth has been tapped not just by the
existing players in the market, but by various new
players as well. Our various initiatives have ensured
that Bailley has been growing at the rate of 150% every
year.
“Parle Agro has the proud sobriquet of
being a pioneer in the Indian beverage
industry”
There was a time when most consumers would go into
the market and ask for Bisleri, the then generic for
packaged drinking water. Even if they were given a
brand other than Bisleri, they would have happily taken
it. That was the time when bottled water was far more
of a commodity.
Today, things are different. You have premium water
(such as mineral water brands), you have the premium
water brands within the packaged drinking water
category and you also have imported water brands.
The hospitality segment, which plays a large role in
this category, is rather choosy about the brand of
water that they serve. They aren’t necessarily
serving the cheapest brand. They are serving a
brand that fits their requirements. In terms of look
and feel (overall image) of the brand. These are
signs of the bottled water market becoming more
and more of a branded segment and less of a
commodity
Today, the bottle of water a consumer carries with
him to the gym is a reflection of his lifestyle, his taste. It
is almost becoming like a fashion accessory. Having
identified this transition over the years, we invested in
revamping our bottle design/structure, our branding,
our distribution and our communication, to create a
specific preference for our brand.
Now, you see Bailley being sold at retail stores, fine
dine restaurants, premium star hotels, at airports and
7
Vartalaap
various other key locations. Bailley is also sold on many
premium airlines as the preferred choice of water.
Every effort invested in the brand Bailley is in line with
the fact that the bottled water market is no longer a
commodity market.
Markathon: Parle Agro is in an aggressive mood to
capture greater market share in the beverages
segment. The launch of LMN and Grappo Fizz proves
this point. What is your take on this?
Nadia Chauhan: We have a clear vision for Parle Agro.
We want it to grow and be a Rs.3500-crore FMCG giant
in the industry and every introduction from Parle Agro
is in line with this vision.
This year, we’ve introduced more
products than in the past. Whether it is
LMN, Grappo Fizz, or even Saint juice.
Each of these products is an entity within
3 separate beverage categories. And
each of these products has different
goals to achieve in the market.
We’ve always been aggressive and
this year is no exception. We’ve only
gotten better. This is because we enjoy
responding to the needs of the market,
and we have seen a growing need for variation, for
innovation, for quality and for aspirational brands.
Hence, each of our introductions has been in line to
cater to this.
Markathon: “More important than pricing and
distribution
network,
the
advertising
and
communication strategies are the vital determinants in
deciding the success of the beverage products”. Your
comment.
Nadia Chauhan: Whether it’s a beverage or any other
product. Whether it’s your success or mine - as
individuals. Whether it’s the success of your institute or
the success of my organization. None of these successes
is guaranteed on the basis of a single factor. Think back
and you may agree.
For the success of any brand, there are multiple factors
that are responsible for it.
Firstly, you’ve got to have the right product at the right
time. Many a times, sophisticated R&D facilities
Markathon | Aug-Sep 2009
develop some of the best products that are the most
advanced but don’t last too long in the market, because
they are introduced at the wrong time. Timing in life is
everything.
Sometimes, a product is either too early for its time, or
too late. I’d use one of our own examples for this. Many
years ago, we launched a product called Jolly Jelly. A
jelly drink that was marketed in Tetra Pak packaging in
India. When we launched it, most consumers either
didn’t know what jelly was or believed that jelly had to
be non-vegetarian. Struggling to communicate (though
we advertised extensively) we decided to withdraw the
product. However, if we were to launch it today, a time
when you see Jelly based confectionery all over the
market place, even in the smallest of markets and the
smallest of outlets, we might taste success.
This learning has lasted us a long time, and has
ensured with every launch we’ve asked
ourselves one question – is this the right time.
This doesn’t mean that you stay away from
innovation, but you take calculated steps
forward to ensure your innovation is
introduced at the right time.
Choosing the right packaging, the right
branding and the right packaging design is
the second most important aspect,
before you can see any success for your brand.
Remember, that packaging is the first form of
advertising. It tells the consumer why he should pick up
that product and what the product has for him.
Pricing is a major determinant
and is linked to my next point,
which is distribution. Whether
you have a mass product or
you a niche product to
market, you have to pay close
attention and understand the
consumer psyche in detail
with regards to pricing. It
differs from portion packs to
take-home packs. You find
that the psyche towards
portion packs is far more
sensitive than that towards
take home packs. Retailers in
India understand the importance
of pricing to the consumer as much as most marketers
8
do. Hence, a product with a pricing that is not relevant
or justified results in the retailer refusing to stock it,
hence restricting your distribution tremendously.
Besides price preference of whether it’s priced too high
or too low, brands over time have established branded
price points, which has created a preference or a
convenience factor amongst consumers. Whether it’s
Rs. 10 for a pack of Frooti or the Rs. 5, which was
established by Maggi. These are magical price points,
which most brands strive to have for themselves.
The right pricing can ensure right distribution. But
besides the pricing, having a strong distribution
infrastructure is key. Focusing on retail distribution
rather than wholesale distribution is the key. Ensuring
vast product placement is again important. When a
consumer sees your product everywhere, he
immediately begins to think - “Wow, this product seems
to be doing really well, let me try it out.”
Now, after you have done all of this, and you’ve
stabilized, your advertising becomes important. How
you promote your brand in the market space and how
you create need for your brand in the minds of the
consumer through an emotional platform on television
or other mass media.
Mass communication ensures that your product works
itself towards being top of mind. It also ensures that a
buzz is created around your brand. But this alone could
not do anything for your brand. In fact, if you have
fantastic advertising and a bad product, you’re in
trouble. If you have fantastic advertising and no
distribution, you’re in trouble. And even if you have
fantastic advertising but a bad price point, you’re in
trouble.
“Frooti was the first beverage in
India to be sold in a Tetra Pak”
Markathon: Frooti is your group’s flagship brand and
market leader in its segment. What are the new
initiatives taken by the company to maintain this
position?
Nadia Chauhan: Frooti has achieved this position
because from the day it was introduced, it set new
standards for the beverage industry. Being the first
national mango drink in the country and the first
beverage in India to be sold in a Tetra Pak, Frooti raised
the standards of innovation, quality and vision to
another level for its time in 1985.
Frooti did not stop there. Every few years Frooti
ensured that it re-invented itself, to make it relevant to
the youth and move with the time. The product never
changed, and never will, but everything around it did,
ensuring that it was always as aspirational, always
trendy and always your favourite brand.
Even today, Frooti continues to innovate. Frooti was the
first fruit-based beverage to be introduced in PET not
too long ago. We also have just revamped our entire
package design. We introduced some path-breaking
SKUs, which have made Frooti affordable to all those
who’ve heard of Frooti and wanted Frooti, but could
never buy one. This was possible with our triangular
pack, which was originally launched at Rs.2.50 and
maintained the same price for a few years. It is now at
Rs. 5.
The communication for Frooti over the years has kept
evolving, making it contemporary and relevant to the
youth. This year, Frooti has been ranked as not only the
number one fruit drink brand in India but also as the
29th most trusted brand in India amongst a 100 FMCG
brand survey, by the Economic Times.
9
Vartalaap
Markathon | Aug-Sep 2009
Markathon: Parle Agro is the trendsetter with respect
to packaging of beverages, whether it is Tetra Pak or
PET bottles. And as packaging directly impacts end
consumers, how do you take these decisions?
Nadia Chauhan: Parle Agro was the first company to
introduce beverages in Tetra Pak in India. Not just that,
Parle Agro was also the first to introduce fruit drink in
PET bottles. As you’ve rightly mentioned, packaging
innovation is an intrinsic part of Parle Agro’s product
success philosophy.
Besides working very closely with our packaging
companies to create new benchmarks and create
innovative packaging options for our brands, we also
have a large team of highly experienced packaging
specialists who work on achieving the various goals that
are set for our brands.
Packaging decisions are based on type of product, the
best way to experience it (consumption pattern), the
target consumer and most importantly, the pricing.
“
I see Parle Agro achieving its goal of
being a Rs.3500 crore company.
”
Nadia Chauhan: I see Parle Agro achieving its goal of
being a Rs.3500 crore company. I see Parle Agro
growing further to achieve new heights. We’ve grown
already from being a major beverage player to having a
dynamic confectionery and recently introduced snack
food range as well. Parle Agro, in the near future, will
not only be a
major Food &
Beverage player,
but will make
way into being a
major
FMCG
player in the
country.
Markathon: Finally, we would like to hear about the
competencies required by the management graduates
for making it big in the Indian FMCG industry.
Nadia Chauhan: FMCG is a fiercely competitive and
demanding sector to be in. In the current economic
scenario, it is amongst the few sectors that have
maintained a steady growth rate, braving the global
recession and the rough times the country has been
through.
Besides the above, packaging decisions are also based
on shelf life of the product that we’d like to achieve,
especially considering the complexity of the distribution
system in India.
For those aspiring to make it big in FMCG, you need to
have the zeal to win. You have to be energetic and
confident to take on new challenges, be persistent and
be prepared to work very hard. These traits will help
you develop the right kind of attitude required to fit
well in the FMCG industry.
While the above might highlight most of the functional
and technical aspects in the decision making process
with regards to packaging, there is a softer side as well.
Besides these, you need a fair degree of commitment, a
quest to learn, ability to deliver results on time and a
great deal of passion for the work you do.
One major aspect with regards to packaging is the
ergonomics. The package design, the aesthetics. We
work very closely with our communication partners
who are trained on the various forms of packaging that
we operate in, so that we can achieve the highest level
of output for each brand in terms of the aesthetics.
Once again, like I’ve said before, we give a lot of
importance to packaging, because we realize that it is
the first and most impact generating form of
communication.
Like the American author John Maxwell once said, “A
great leader's courage to fulfill his vision comes from
passion, not position.”
Based on email conversation with Saurav Kumar Bagchi
Markathon: Where do you see Parle Agro in the near
future?
10
Eye to Eye
Markathon | Aug-Sep 2009
Umbrella branding sends a
common signal to consumer,
conveying credible information
about
unobservable
product
quality. Further it saves the firm a
lot of money in new brand
Gunasekhar A
building. But, the degree to which
IIFT Delhi
a brand’s signal is bonded is a
function of not only the amount of money at stake
(either in terms of sunk costs or future profits), but also
the degree to which this money is vulnerable to future
consumer sanctions.
Most often Customers are informed imperfectly about
product attributes. Bad news travels fast. This lethal
combination can pull down the sales and future
revenues of all the products under the same brand on a
single mishap.
A company that gets into using a single brand across
diverse categories aimed at diverse target groups, it may
on paper have economies, but it can’t do an efficient
selling job. Transferring brand value and emotional
appeal of a product for a set of customers to another
product for a different set of customers in a different
category is a difficult and costly job with low success
rate. It has to find the fit and an overlap not only with its
products but also with customers.
Moving up a value chain with an umbrella brand is
almost impossible. You cannot convince a customer that
all of a sudden, this brand on this product alone is more
than what it is used to be, while it stands same for all
other products. He wouldn’t have convinced but
confused.
Independent brands can be better processed, more
robust and better positioned. Umbrella brands can be a
hindrance, when the firms want to diversify or move-up
the value chain.
In this era of recession, when
companies are worried about
their advertisement budget,
umbrella marketing offers
them a solution. Brands like
Videocon, Johnson & Johnson
Abha Sinha
and Kellogg’s use the same
IIM Shillong
name for the entire range of
their products. It provides a cost effective and
intelligent option to explore. The consumer is
exposed to the same brand name repeatedly, so it
has a much better brand recall. Asian Paints despite
having several diverse sub-brands prefers umbrella
marketing. Whenever a company comes up with a
new product, a lot of money goes into marketing of
the product. But if it comes with a familiar name, it
can always lead consumers to trial purchase and has
a product acceptance advantage. It is likely that a
successful umbrella brand will enable a company to
spend only a quarter of advertising budget in their
campaigns as compared to others. For instance, after
having rolled out Amul Milk in pouch form in Delhi in
2003, GCMMF was able to tap 5,000 retail outlets in
just five to seven days without even spending a
single penny on advertisement. Now-a-days brands
want to have an intense ethical image. Any ethical
practice or CSR practice adopted by a brand will
have a positive effect on all the products. In case of
individual brand marketing, it may be difficult to
build ethical image for each brand of a company. In
case of brands like Amway and Ayush which prefer
direct marketing, companies always prefer to use
sole brand name to connect better with the
consumers.
“Umbrella Marketing – the right way to go”
“Independent Brands: More Robust and Better Positioned”
Umbrella Branding : A Marketers Dillema
Therefore, when a product line stands for the same
values and has the same emotional link attached,
umbrella marketing is the way to go. It however,
poses a collective responsibility among the brands to
maintain the quality of standard.
Topic for the next issue’s Eye to Eye is – “Recession marks the end of ethical marketing”
Your opinion (view/counterview) is invited. Word limit is 250-300. Last date of sending entries is 15th September.
11
Cover Story
Markathon | Aug-Sep 2009
Marketing Guru’s Philip Kotler and Kevin
Keller had said that commodity as a
product is so basic that it cannot be
physically differentiated in the minds of
the consumer. Some people are of the
opinion that commodity is sold on the
basis of price and not on any
differentiating factor. But in his classic
article titled, ‘Marketing success through differentiation – of anything’, Theodore Levitt
COMMODITY
BRANDING
begins by saying, “There is no such thing as a commodity. All goods and services
are differentiable”.
BY ARUN SALURU, ABHISHEK BAKSHI, MOHIT KHEMKA | IIM SHILLONG
12
Cover Story
The biggest pitfall in the branded commodities
market is the sense of lethargy prevailing in the
commodity industry itself. The corporate culture
in these businesses makes the blunder of
emphasising only on operations, scale and sales;
giving second treatment to marketing. They put
less stress on segmentation, positioning, delivery
speeds and customer service and in turn lose out
on making larger margins on their products by
creating consumer demand for their specific
products.
On the other hand, we are strongly of the
opinion that marketing information would save
the company from price wars, margin cuts or
over delivery of value. Analysis of branding of
commodities consumed at retail level (B2C)
shows that manufacturers must effectively
differentiate their product offering vis-à-vis
competitors as it moves the buying decision
Markathon | Aug-Sep 2009
away from the price factor and therefore
generates long-term profitability and
sustainable advantage in a crowded
marketplace.
We think that every commodity can be
branded if the value proposition fulfils the
needs of the target segment. Essential
commodities like water, milk, vegetables,
food grains, salt, sugar and commodities like
gold, all have been branded. Tanishq's 24
carat gold is one of example how even gold
can be branded. The huge opportunity has
drawn several companies, both domestic and
multinational, in the branded commodities
arena. But the most difficult task for the
marketers is to identify these differentiations
and thus create value for the consumers that
too results in increased bottom-line.
We will explain the branding of commodities by taking leafs from the industry.
13
Cover Story
Water
Water has always been available in abundance on
earth and also been considered as a vital organ of
humanity. It has occupied a pure and a dignified
status both in terms of religion and spirituality, in
the various civilizations across the world and more
so in case of India. Pure and safe drinking water
has always been a necessity. Earlier wells and
natural sources were used to get drinking water
and were stored in earthen pitchers. In the
tradition of welcoming the guests and visitors to
households, water would be the first thing that
was offered. People had the mindset that water is
a commodity which nobody would be willing to
pay for.
But the tradition of serving and consuming
drinking water has changed significantly almost a
decade and a half ago, with the introduction of
packaged drinking water. It was the institutional
consumers like hotels, offices and commercial setups that were the first consumers of packaged
drinking water. They were the harbingers of
change. Then with passage of time, and change in
the life style, general public also started
embracing safe and convenient packaged drinking
water. The need to travel frequently and for
longer distances and staying healthy during travel,
led travellers to purchase packaged drinking
Bottled Water Market
Market Size
Growth Rate
Natural Water Market Share
In the Natural water category, the water is packaged
from the source and no processing is done except
for disinfection. The ordinary bottled water is
chemically processed. Packaged drinking water is
derived from any source and has to be treated and
disinfected, a process that could involve filtration,
UV/ Ozone treatment and reverse osmosis, before it
is fit for human consumption.
Himalayan of the TATA’s is the market leader in
the Natural water category. In fact it is the only
Indian brand of natural bottled water to be
internationally accepted in the markets across
Europe and US. The USP of Himalayan is the
distinctive taste derived from its origin and also
commands a premium in the market for this value
proposition. It is positioned at the high end of the
value segment. Evian is another major
international brand of mineral water by Danone
Markathon | Aug-Sep 2009
water. More over the economic upliftment has
led the society to increasingly value their health
and well being. This created demand for premium
products like natural water. The inability of
Municipal Corporations to provide safe potable
drinking water due to tremendous pressure on
infrastructure, and adding to it the exorbitant cost
of medical treatment and cost of lost time due to
illness, has led families to adopt processed
drinking water. ‘Safe’ and ‘Pure’ were the two
words, on which packaged drinking water
marketers led their charge on the tap water, which
was available almost free. Earlier even during
travel, Indian families used to carry water from
home in dispensers, but now as lifestyle has
become fast and happening, ‘convenience’ is
regarded in high value. Indians have altered their
buying preferences on the basis of taste,
processing technology, health factors and
convenience. It was the time when branding of a
commodity – water, was complete and also the
moment when companies both national and
international lined up to woo them and offer a
bottle of water to quench the thirst.
The bottled water market is divided into two
categories
1) Natural Water
2) Ordinary/Packaged bottled water.
Size/Growth
Rs 8500 Crores*
25%
10%
*Source: Data Monitor
India Pvt. Limited. Other brands present in this
segment are Aava of Sheelpe Enterprises, FontanaAquafontana, Catch, life, L-spring, L-supreme, Qua
etc.
The leader in the Indian bottled water market is
Bisleri with a market share of 16 % followed by
Kinley and Aqua Fina with a share of 14%, and the
rest of the market is dominated by regional and
unorganized products. Bisleri has built its market
share on the proposition of freshness, purity, safety
and easy availability at affordable price. IRCTC has
packaged drinking water with the brand name ‘Rail
Neer’ to meet the need of railway passengers. The
introduction of cheap water pouches by Rail Neer, is
another innovation to bring down the cost for the
lower value segment. Companies are also involved
in innovative packaging like PET bottles, easy to
hold bottles and different colored bottles (pink in
14
Cover Story
case of Himalayan), in a bid to create
differentiation. Provision of water dispenser is
another differentiating factor being brought by
some of the industry players. Some brands project
the process of treatment like ozonisation, UV
treatment, reverse osmosis etc. as their unique
propositions. (Manikchand’s Oxyrich). Ever since
bottled water has become a prestige product in
India, companies are offering retail margins of
20% to 40% against 8% to 10% on soft drinks and
are enticing retailers for more of their refrigerator
space.
Markathon | Aug-Sep 2009
desire for international quality and these new
practices have contributed immensely to the
producer’s of steel. The focus of almost all of these
producers has moved from steel production to steel
branding and also to steel servicing. Companies are
promoting their product as a brand using synergic
brand name and tag line. SAILMA, SAIL TMT, Tata
TISCON, Tata Shakti, Tata Steelium, Vizag TMT,
Ispat, Sujana TMT, Ramswarup, Balaji Shakti, Jindal
pipes, Rathi Sariya and corrugated sheets to name a
few. In 2006-2007 Tata Tiscon became the largest
branded Rebar in India. Today the emphasis is on
product- specific slogan and advertisements.
The single factor deciding the viability of a water
brand in the market is the transportation cost.
According to a standing committee on railways
report (2006-07), in the bottled water segment,
raw material charges constitute about 45% of the
total cost, while transportation, operation and
other overhead makes around 45% of the sales
cost.
There are just about eleven natural mineral water
licence holders, while there are several hundred
packaged drinking water licences approved by BIS.
With about 70% of packaged water market still
fragmented, the industry provides a good
consolidation bid opportunities for the major
players. The industry has also paved the way for
new product segments such as flavoured, vitamin
based and herbal waters.
The organised packaged drinking water is facing
severe competition from local packaged drinking
water producers, ‘Zero B’ water dispensers of Ion
Exchange Limited and Aqua guard and other water
treating dispensers, and also from carbonated
beverages and fruit juices. The industry is also
facing erosion in sales due to rampant prevalence
of spurious products.
So the need of the hour is to secure the brand
value and continuously move up the value chain
to keep the consumer delighted with its unique
value proposition.
Steel
In the aftermath of the de licensing process took
place in 1991, the steel industry has undergone a
dramatic change. There was a metamorphosis,
from sellers’ market to purely buyers’ market.
From customers’ side, there is a more open
outlook towards new ideas, technologies and
Branding and servicing of steel needs a clear-cut
assessment of the steel market dynamics. Steel
producers cater to two segments of customers; B2B
and B2C. B2B customers are more knowledgeable
and rational in approach and make better informed
purchase decision since they have wide exposure to
sources of information. They stress on the technical
aspects of the products before making the purchase.
Industries like automobiles, white-goods makers,
real estate/infrastructures development companies,
engineering goods producers, rolling stock
manufactures, ship manufacturing units etc. form
the major B2B segment. B2C customers on the other
hand are more emotional and less rational in their
decision making approach, they buy the product
because of the manufacture's goodwill and
reputation, brand name and reliability it promises
and hence making the brand value significant in the
final purchase.
Customers have started moving from low to high
expectations, from ignorance to full knowledge,
from local to global access, from a platform of little
or no option to multiple choices, from being
submissive to dominating. They have grown more
15
Cover Story
sophisticated, demand global standard of
technical and functional quality, tailor-made
product, fast delivery, quick response to
complaints, reasonable price, payment terms and
conditions based on supply milestones achieved,
complete satisfaction of their techno-economic
requirements etc. Today, before planning of order
for special grade of steel, they visit the plant
premises of producers to assess their R&D, quality
control and testing capabilities. Yesterday’s
differential offerings have become today’s
essential requirements.
In the changed scenario, steel marketing is
defined as the process of identifying and selecting
prospects, customers who can be turned sooner
or later into a profitable accounts, understanding
their changing techno-economic expectations i.e.
Customer Value Dimensions (CVDs), suggesting
the
required product (grade, technical
specification), pricing them based on market
administered pricing technique (MAPT), making
them available at convenient places in required
quantity and on time, frequent communication,
initiating sales action (on-line and off-line),
rendering services with pace, proper order
execution and people backed by physical
infrastructure to support repeat orders and
establish a competitive edge.
To succeed in this marketing warfare, it is
essential for steel producers to come out with
differentiated offerings. This would require
formulating customized 8Ps of the steel marketing
mix for various segments. Focused steel marketing
would mean harmonizing all elements of the 8Ps
of marketing-mix — product, price, place,
promotion, process, pace, people and physical
evidence to their advantage for mass
customization. While it is necessary to offer
differentiated steel products and adherence to
technical CVDs, it is also necessary to adhere to
functional CVDs including packaging, guarantee
and warranty and customized services. The
distribution strategy should ensure faster delivery
of goods to customers. Thus, while direct
distribution to be continued, introduction of
dealers/stockists in the rural areas and smaller
towns should also be expedited. Already
companies like Tata Steel are channelizing some of
their products through steel service centers (SSC)
and conversion agents (CA) which are acting as a
linkage between the steel producers and the
customer (for example, Tata Ryerson). SSCs and
CAs are being considered as an extended arm of
Markathon | Aug-Sep 2009
steel producers and a critical element of steel
supply chain.
In the ‘buyers’ market’, marketing of steel products
will not be an easy ball-game. Huge competition is
expected even among the integrated steel
producers in India. This necessitates proper
branding and servicing of steel through well
designed supply chain management so as to deliver
steel products to the customers with least cost.
There is a fundamental shift from one grade /
tolerance/size fits all to market of one. There is
more room to create brands, with specific benefits
for specific market segment, for which customers
will be prepared to pay different premium price.
Developing new brand and consistently nurturing
the existing one and offering customized product
will benefit the steel producers in terms of gains
either as price premium, customer preference,
customer loyalty or market share. The greater the
number of brands in the market, the greater will be
the degree of customization and better it will be for
the industry as well for the customer. Moreover
technology is transforming customer choices and
techno-economic requirement which in turn, is
transforming the market.
What Indian steel
producers need today more than anything else is a
total break from old mindsets. Instead of being held
hostage by their past styles, they need to think and
act afresh.
EGG : “Eggs”quisite Branding!
Any commodity which has to be converted to a
‘Brand’ has to be positioned differently from the
existing products. There has to be some kind of
product innovations or differentiation in order to
prompt the customer to buy a branded commodity
in place of a low-priced, unbranded one. In case of
eggs, the differentiation is generally achieved by
means of attractive packaging and design. While
good packaging can be a good starting point to
make the packed box of eggs recognizable in the
market place, there should be other differentiating
factors that do justice to the price premium of
almost 100% that branded eggs command.
Innovations at many levels are responsible for
successful branding of eggs, right from Poultry
scientists to Branding experts to Package Designers.
Branded eggs’ manufacturers have positioned their
product in the market with a touch of innovation in
terms of additional health advantage. They are
being marketed as eggs which have higher
nutritional value and added health benefits as
16
Cover Story
compared to regular eggs. The consciousness of
consumers for supplementary health advantages
from everyday-use products or commodities is
continuously on the rise. This changing trend has
resulted in development of products like Sugar for
diabetic patients, Diet Coke etc. To enhance the
health benefits of eggs, the hens are fed on a
special diet that enhances the quality of the egg.
The diet comprises of fish oils and grains. The
resulting egg, though looks and tastes just like the
regular egg, possesses the potential to reduce
cholesterol levels in the body, decrease the risk of
coronary heart diseases, decrease the risk of
cancer, and also the risk of age related diseases.
Even the shelf life of eggs is claimed to have
improved because of its packaging. Moreover, the
manufacturers are also providing a leaflet showing
all the health benefits the consumer will enjoy
after purchasing that particular box of eggs. All
these value additions justify the additional price a
consumer pays for a nicely packaged box of extranutritious eggs!
Brands like Diet Eggs, Mother Hen's Golden Egg,
and Suguna can be seen in most Indian
supermarkets like Food World, Vitan, Reliance
Fresh & Nilgiris. Though most of the branded eggs
purchased by a consumer is more of impulse
purchase from a supermarket’s shelf, these value-
Markathon | Aug-Sep 2009
adds do result in tremendous repetition. But in
order to be sustainable, the producers have to
continuously keep finding ways to differentiate
their branded products from unbranded
commodities in order to maintain sufficiently
reliable price inelasticity. India produces more than
50,000 million eggs per year (Research by: Dr I.
Satya Sundaram, 2009), but the per capita
consumption of eggs is just about 40 eggs per
person per year. Though India is one of the topmost egg producing nations in the world after
China, the market for branded eggs in India is only
3% of the total eggs sold in the country, leaving
behind a huge untapped market ready to be
exploited. With branded egg industry growing at an
astounding pace of around 20% per annum, the
future of the industry seems to be exciting with an
array of players flaunting there designer eggs . Most
of the buyers of Branded eggs in India are major
Hotels and other bulk buyers. Hence, though there
is a considerably stable demand for branded eggs
from the B2B market, the potential for growth in
B2C is more appealing.
‘An egg a day keeps the doc away’ seems to be the
mantra now, after knowing the health benefits that
are promised by the makers of this “Egg” citing
variant of a commodity!
17
Corporate Speak
Markathon | Aug-Sep 2009
What would u rather lose?
Ramesh Jude Thomas | President & CKO, Equitor Consulting
The case of football’s most prized hoofers
reminded one of another famous Latino asset that
was reported insured a few years ago for over
USD 300 million (although her spokesperson chose
to finally neither confirm nor deny it).
Why did Ronaldo and Jennifer Lopez decide to
insure what they did? And what does this have to
do with Kingfisher’s loan?
Let’s begin with the prima donnas. Ronaldo,
Jennifer and their respective commercial brains
simply focused on those assets that had the highest
impact on their value to the world. (For Ms Lopez it
certainly wasn’t her voice or her face!!)
Last month two defining headlines caught my eye.
The first was about the venerable State Bank of
India granting a USD 400 million loan to Kingfisher
Airlines (ET). The second was the insuring of
Christiano Ronaldo’s legs for 90 million dollars.
What attracted my attention about the first was not
the generosity of SBI to an airline in the current
turbulence, as much as the fact that the loan was
secured against the Kingfisher brand. And then the
SBI were willing to go out and actually speak about
it.
Now think of why it made perfect sense for State
Bank to safely dole out USD 400 mn against the
Kingfisher brand name. Like for Ronaldo and Lopez,
this was about the company’s most prized asset.
The one that Mr. Mallya would most hate to lose.
more than his planes or his breweries.
Companies (and regulators) often miss the point
about how value is created and captured. That it is
best served by the most valuable assets in their
possession. And to find out what these really are,
just ask owners what they are most afraid of losing.
Malaysia’s oil, Apple’s unique design capability,
Coca-cola’s brand name…you get the drift?
18
All are invited
Markathon | Aug-Sep 2009
WINNERS
Best Article: Ammar Tambawala & Pritesh Jain, IIM Ahmedabad
Congratulation!!! They receive a cash prize of Rs. 1000 & letter of appreciation.
Silent Voice Winner: Kunal Arora, NITIE Mumbai
Congratulation!!! He receives a cash prize of Rs.500.
WRITE FOR MARKATHON
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19
Pandora’s Box
Markathon | Aug-Sep 2009
Measuring the effectiveness of humour quotient in Indian
Advertising
Kaushik Sriram, Rohini Ramachandran | IIM Bangalore
In this article, we explore the humour quotient in Indian
advertising through the lens of certain television ad
campaigns that have tickled the consumer funny bone in
order to evaluate the effectiveness of such campaigns.
We diverge from the traditionalist body of literature that
brackets humour in advertising as risky and at best, as
effective as other ads. Our contention is that an ad
campaign built on humour stands out from the crowd
and captures the consumer mindshare.
Introduction: When using humour to advertise a
product, the main challenge for marketers is to link the
advertisement to the underlying brand so as to translate
consumer enjoyment to consumer purchase. This linkage
is questioned by numerous researchers, they quoted the
chief flaw of such a strategy is the distraction of the
consumer from the brand. We diverge from this view –
our contention is that the industry context and basis of
competition is also critical to the nature of
advertisements used. Our frame of analysis includes
campaigns that are recognized for their innovative use of
humour including Fevicol and Fewikwik, Happydent
White, Vodafone Zoozoos, Idea Cellular, Frooti, Amaron
and Axe.
Types of Humour:
Back in the 1960’s, a golden rule in advertising,
propagated by the founder of Prentice-Hall, was to
never mix humour and advertising. i Today, with the
proliferation of product offerings, humour is increasingly
being looked upon not as a distraction that trivializes the
product, but as an effective means of distinguishing the
product from the crowd and drawing the attention of
consumer. Humour can come in many forms and the
choice of the appropriate type is highly dependent on
the target audience, the cultural bias, the choice of
advertising medium and the product itself. Some of the
more popularly used forms are:
•
Personification: This is where inanimate objects
assume human characteristics and the inherent
humour in observing such behaviour is used to
highlight some quality or the desirability of the
brand. One such example is Pepsi’s ‘Oye Bubbly’
campaign in which various objects such as the car
stereo and the garage are shown coveting the Pepsi
bottle.
•
Exaggeration: Here certain attributes of the product
are magnified out of proportion like the Fevikwik ads
where the fisherman uses Fevikwik on a stick to
catch fish, trumping the sophisticated fishing gear of
the person next to him.
•
Slapstick: This particular brand of humour deals with
the ludicrous/exaggerated and presents situations
where the humorous aspect of the ad, far from
being subtle, strikes the viewer in the face, the
Chlormint ads being a prime example of this.
Other forms include sarcasm, comparison, pun,
understatement and irony. However, there is a strong
cultural context for such advertisements. Individualistic
cultures like the US and UK typically feature
advertisements having one or two dominant characters
while in more collectivistic cultures like Thailand, ads
revolve around groups. Similarly, the degree of
uncertainty avoidance and the amount of masculine
dominance in the culture of a country are key factors in
influencing the type of humour that can be successfully
used in advertisements, with countries high on these
two parameters tending to prefer slapstick or direct
humour to subtle nuances and double entendres.
Analyzing the Indian advertising scenario keeping this
cultural context in mind, certain key trends can be
identified. Given the traditional family oriented culture
of India, Indian advertisements, in the past, have mostly
derived their humour from the interplay between
multiple characters. Also humour has tended to be
largely slapstic, based on filmy spoofs and ridiculous
situations. This part can be attributed to the diversity of
cultures and languages found in India. Humorous ads,
therefore, must tread the thin line between keeping the
cultural idioms of their target audience in mind and
taking care not to offend the cultural sensibilities of any
group. Slapstick offers an easy way out with situational
20
Pandora’s Box
Markathon | Aug-Sep 2009
Figure 1: Sales and Advertising spend by Amaron (Source: Capitaline)
1,400
20
18
1,200
16
1,000
14
800
12
10
600
8
400
6
4
200
2
0
0
Mar
00(12)
Mar
01(12)
Mar
02(12)
Mar
03(12)
Mar
04(12)
Net Sales (INR cr.)
humour having a broader reach while also ensuring that
the punch line is not lost on the audience.
Evolution of Indian Humour:
Over the years, there has been a gradual evolution in the
use of humour in Indian advertisements. The most
obvious change has been the increasing use of humour
with advertising agencies increasingly trying to grab the
attention of consumers through their funny bone. In
1993, only 28% of commercials were humour-based. By
2001, at least 46% tried to incorporate some form of
humour. And while in most countries, funny ads have
largely been associated with low-involvement products,
in India, even high-involvement products like televisions
and insurance have tried their hands at humour.
A more subtle change that has been taking place is in the
type of humour employed. From pure slapstick, ads are
moving towards more intelligent comedy ii, with a more
individualistic bent, be it the Vodafone Zoozoos, which
cleverly depicted a variety of situations, each with some
link to a feature offered by Vodafone, or the Fasttrack
‘Move on’ commercials, which perfectly captures the
changing nature of Indian society today. India today is at
a crossroads, between its traditional past and a more
modern future, which perhaps explains the success of
ads across the entire cultural spectrum – be it the group
oriented Fevicol truck ad showing people stuffed into a
truck, or the more individual oriented Fevikwik
fisherman ad, from the slapstick Akai TV ads of old to the
Mar
05(12)
Mar
06(12)
Mar
07(12)
Mar
08(12)
Mar
09(12)
Advertisement (INR cr.)
more subtle Camlin Marker ads, to the extent that even
potentially controversial ads like the Axe series have
found acceptance in India, which is viewed to be
conservative.
Right from the Market:
Here we are illustrating the different types of humour
that work in the Indian advertising context and also to
measure the effectiveness of these campaigns along
multiple dimensions: Amaron, Frooti, Axe and Max New
York Life Insurance.
Amaron (Amara Raja) batteries: The iconic claymation
advertisements with the catchy slogan of ‘Lasts Long
Really Long...Ting Tong’ captured the imagination of the
public and acted as clutter busters in 2002. The ‘Hare
and Tortoise’ ad and the ‘Kumbhakarna ad’ were aired
on Doordarshan and other satellite channelsand brought
in tremendous brand awareness for Amaron batteries –
a late entrant into the automotives battery space in
2000.
Interestingly however, the expected spurt in sales did
not materialize. The product was a low involvement one
with incumbent advertising focussing on the toughness
and macho image of the car battery. The dominant
player at that time, Exide, was well entrenched and
Amaron did not manage to make a dent in their sales.
The ad agency – O&M went back to the same claymation
studio in 2004 to come up with a follow up, the ‘Pandu
Mangal’ ad. The uniqueness of this ad was the universal
21
Pandora’s Box
Markathon | Aug-Sep 2009
Figure 2: Performance of Frooti in the fruit juice segment in India (Source:
120
36
Euromonitor)
35
100
34
33
80
32
60
31
30
40
29
28
20
27
0
26
2000
2001
2002
2003
Market Share (%)
nature of the humour – the bumbling cop in pursuit of a
wily thief was instantly recognized and appreciated
across all segments of people. We also theorize that the
humour was well received as it relied on simple age-old
themes and had powerful visual imagery. This ad
consolidated Amaron as a powerful brand and was a
platform for their explosive growth post-2006. In 2006
Amaron reverted to a stereotypical performance based
campaignusing racing stars like Karun Chandok and
Narain Karthikeyan. Our take is that the humour based
advertising helped establish the brand awareness but
did not add to the top line due to the low involvement of
the car owners in the buying decision and the lack of
product differentiation as the ‘Lasts Long’ promise held
true de-facto in the business.
Frooti: The Digen Verma ad blitz that lasted for 15 days
in February 2001 catapulted the brand into public
imagination and generated a tremendous buzz across
the country. The campaign was centred on a faceless
college going guy called Digen Verma who is idolised by
his friends, girls and even peons – in general everyone
who knows him except for the stodgy old college
professor. The teaser campaign combined with the new
caption for Frooti – ‘Just Like That’ was aimed at
repositioning Frooti from a kids drink to one for the
youth. Hence, a rebellious theme was adopted in the
campaign.
2004
2005
2006
2007
2008
Sales (mn litres)
The last series of ads in this campaign show Digen
ordering Frooti (of course Digen himself is not shown on
screen) – this causes pandemonium across the country
and everyone switches to Frooti immediately! This
campaign was unique in the effective use of
suspense(watch this space approach) and humour in
engaging consumer attention through various innovative
forms of media (messages telling Digen to remove his
car from the parking lot were flashed in theatres, bus
stops had posters asking if Digen would be on the next
bus and so forth).
A look at the sales figures show a marginal increase in
the year the campaign was aired followed by steady
increase in sales – the market share decline was halted
by thiscampaign though. Sceptics however claimed that
the Digen Verma persona had become more famous and
had marginalized the brand. Later, Frooti switched to
their old theme of ‘Fresh and Juicy’ which did worse
than the Digen Verma campaign – hence in comparison
the use of a unique style of humour proved to be more
effective for Frooti.
Axe: Our inclusion of Axe is a little controversial as its
ads have straddled a thin line between sexism and
naughtiness in terms of the humour. Its analysis is due to
the unique nature of the advertising – the same
campaigns are aired worldwide and there has been no
attempt to tone down the humour or modify it in any
way for India.
22
Pandora’s Box
Markathon | Aug-Sep 2009
Chart Title
35
900
800
700
600
500
400
300
200
100
0
30
25
20
15
10
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0
2001
2002
2003
2004
Retail value RSP (%)
This dispels the notion that Indians are conservative in
their humour – of course the marketing for Axe was
backed up by a great product too. The Axe effect in
terms of sales and market share has been spectacular to
say the least. HUL (the parent company) replaced their
old deodorant brand Denim with Axe due to its
spectacular success.
Axe is by far the naughtiest brand in India and is
targeted at the male aged 16-25. The ads highlight
various situations where the guy, usually an ordinary
next door neighbour kind of chap rather than a hunk,
gets pursued by different women. Seduction is the
dominant motif here, with the women making the first
move – a bold idea for Indian audiences. Yet, it has
captured the pulse of its target audience perfectly.
Max New York Life: When Max New York came out with
their advertising featuring an overzealous dad with his
young child as he exhorts the child to repeat words of
increasing complexity, consumers sat up and took
notice. The advertisement poked fun at Indians who
have a propensity to push their children into various
activities at a young age. Interestingly, the humour in the
ad was well received – wry humour had worked on
Indian screens after a long while! The ad demonstrated
two things – one that Indians were willing to laugh at
themselves and two, high involvement products could
be advertised using humour.
2005
2006
2007
2008
Retail value RSP (INR mn)
The sales of new policies shot up from the slowdown in
October – further the weighted new received premiums
too shot up. The ad had worked its magic. Max New York
followed it up with another humorous ad in Apr-2009,
this time poking fun at the retired Indian male.
Thus, the use of humour, in products where consumer
preferences play a vital role in selection, not only helps
bring the brand into the consumer’s consideration set
through increased brand awareness and recall but also
appears to translate directly to an increase in sales.
Figure 4: Performance of Max New York
2,50,000
(Source: IRDAIndia)
400
2,00,000
300
1,50,000
200
1,00,000
100
50,000
0
0
No. of policies
wnrp (INR cr)
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Retrieved Aug 02, 2009, from India-Server: http://www.india-server.com/news/indian-advertising-industry-using-more-7904.html
Retrieved Aug 12, 2009, from Ad Club Bombay: http://www.adclubbombay.com/index.php?option=com_content&view=article&id=1718:theintelligent-evolution-of-funny-in-advertising&catid=34:industry-news&Itemid=34
ii
23
Strategic Analysis
Markathon | Aug-Sep 2009
Pantaloons Retail (India) Ltd.
Strategy in the face of the economic downturn
Saishree D | Tapmi, Manipal
When Kishore Biyani started Pantaloons Retail (India)
Ltd.(PRIL), he must have hardly expected to hit in such a
manner in the short time frame. What started off as
India’s first brand for formal trousers back in 1987,
transitioned into what is now the country’s largest retail
giant with its footfall in every arena the modern-day
consumer believes to be part of his/her lifestyle. How
has retailing helped shape the needs of the modern-day
consumer and direct his/her quest in fulfilling these
needs?
PRIL, the flagship company of the Future Group,
operates through a large number of formats that target
different aspects of consumerism. These largely centre
on –
• Sports and Fashion - Pantaloons, Central, Brand
Factory etc.
• Food – Food Bazaar, Fair price etc.
• Home products – e-Zone, Staples, Home Town
etc.
• Leisure and Entertainment – F123, Bowling Co.
etc.
Assessing the damage
To ascertain the strategic moves PRIL has adopted given
the current economic scenario, we must first examine
the environment it operates in as a result of this
slowdown. We will then be able to understand the
necessity for these strategic steps. This has been
explained using the Five Forces Model prescribed by
Michael Porter.
Threat of Entry – MODERATE
PRIL’s rivals Shopper’s Stop and Vishal Retail only grew
by 3.3% and 17.8%, with operating margins falling over
last year‘s. This hardly seems a lucrative opportunity to
any big names scanning the horizon. In addition to this,
the latest budget did nothing to spur growth when it
made no mention of the relaxation in FDI norms for the
retail sector – a longstanding demand by the major
players in the sector, along with recognition as an
industry. However, considering AT Kearney’s predictions
of the potential in the Indian retail market, the threat of
foreign entrants looms large in the near future with the
first Wal-Mart in India opening just a few weeks ago.
Threat of Suppliers – LOW
Market share generally reflects the focal firm’s influence
over its consumers, competitors and suppliers. Rather
than the traditional ‘Producer-push’ format of supplychains, large retailers enjoy the advantage of the
‘Consumer-pull’ format. The Pantaloons’ supply-chain is
said to be the most cost-effective in the world.
Threat of Substitutes – LOW
Substitutes to this sector may largely come in the form
of Internet, wherein direct selling of consumer goods
may take place. But considering this phenomenon has
not gained momentum in India, its chances of posing a
major threat to the sector is fairly low.
Threat of Buyers – HIGH
The retail sector has always faced trouble retaining
consumer-loyalty. The gloom of the meltdown has
spread rather rapidly in the consumption segment with
same-store sales in most retail chains dropping to
abysmal numbers. In the current scenario most
consumers prefer deferring purchases of retail items,
and hence pose the largest threat.
Threat of Rivalry – LOW
PRIL’s immediate competitor, Vishal Retail is running
out of cash and closing stores all over the country.
Although they have no hopes of opening these outlets
just as yet, they do plan on reworking their format
through expansion by way of franchisee units. Many
foreign ventures with domestic firms are falling out
while previously established foreign retailers are looking
for alternate strategies.
24
Strategic Analysis
PRIL’s strategic moves
The growth in the retail sector has now dropped to
below 7% and consumer spending has tightened.
Pantaloons’ sales fell in February, and the company saw
dipping consumer demand and rising costs. But despite
these conditions, Edelweiss Securities expects
Pantaloons Retail (India) Ltd. to survive the carnage
pretty well. In fact, PRIL’s shares rose by over 60% come
March. This, when PRIL’s competitors are completely
pulling out of the sector! How has PRIL managed to do
this?
PRICE
• Kishore Biyani’s ability to forecast the future
definitely paid off for PRIL. Back in January 2008
the CEO initiated the cost-cutting campaign ‘Garv
se kaho hum kanjoos hain’. Through emails to his
employees, Biyani made sure to instill awareness
of the dim future amongst each of his employees
and to devise processes to meet the
requirements within 6 months.
• PRIL started converging back-end operations 6
months ago, and plans on continuing in the
future. This exercise that primarily involves
converging the back-end operations of all similar
lines of businesses has proved profitable in terms
of cost-saving on resources.
• The company took steps towards strategic
realignment and cost-control techniques way
back in 2006. Through a series of scenario
planning exercises and continuous review of
business plans, it was able to bring out the best
possible levels of ‘efficiency, productivity and
resilience to the external environment’.
PLACE
• As per Fitch Ratings, the company is now
concentrating on supply-chain efficiency, highmargin private labels, and reworking lease
rentals. PRIL is one company that has always
promised value and quality at lower prices.
Markathon | Aug-Sep 2009
Hence maintaining low prices is at the heart of all
strategies they will be implementing in the
future.
• The company has also succeeded in cutting its 5level supply-chain structure to a 2-level one.
• A very strategic decision in terms of real estate
helped the company gain considerable cost
advantage over its competitors. It had acquired
land for reasonable rates a few years ago, as it
expected the increase in real estate prices.
PROMOTION
• In addition to all the above, PRIL also introduced
shopping festivals, end of season sales, exchange
fairs and days dedicated to low-price shopping.
Through a partnership with McKinsey & Co., they
were able to develop a process-driven approach
towards discount planning and inventory
management.
OTHERS
• Future Group had plans of restructuring its
flagship retail company into a holding company
(under the name of Future Markets and
Consumer Group) early this year, but put these
plans are on hold in the hope of the new
budget’s FDI norms for the retail sector. Despite
the disappointment the budget posed, these
plans will not be completely scrapped but
pursued in the near future when the situation
starts looking up for the sector.
• The new budget has brought out incentives for
consumers to get back to their old spending
habits, like the abolition of Fringe Benefit Tax
and the increase in income tax ceiling. PRIL
hopes to exploit these opportunities to motivate
consumer spending.
PRIL is currently India’s largest retail chain and continues
to dominate the sector while its competitors bite the
dust. An insight into this company’s immunity reveals
how its restructured strategy worked to its favour.
25
Competition
Markathon | Aug-Sep 2009
Silent Voice
LAST MONTH’S RESULTS
Theme: “Eyes do matter: Ray-Ban”
Judge: Mr. Talapada Raman, Senior Visualizer, Ogilvy & Mather
WINNER: Kunal, NITIE
Congratulations!!! Kunal receives a cash prize of Rs 500.
HONOURABLE MENTION
Krishnakant, TAPMI
26
Competition
Markathon | Aug-Sep 2009
Chandrima, IIM Calcutta
The response to this time’s
Silent Voice was huge. As many
as 30 B-Schools participated in
the competition and from that
excellent collection; we bring to
you the best five.
Abhay, MICA
Sandeep, IMT Ghaziabad
NEXT THEME FOR SILENT VOICE:
“Cadbury Bournville: fine dark
chocolate”
LAST DATE OF SENDING THE PRINT
AD: 15th September, 2009
EMAIL ID:
markathon.iims@gmail.com
27
Specials
Markathon | Aug-Sep 2009
BRAND LAUNCH:
COMPANY WATCH:
Domino's India launches range of Pasta
Harley-Davidson is ready for India
Domino's Pizza India Ltd has launched a new range of
pasta to expand their product portfolio. Pasta is a niche
segment in the Indian market and Domino’s aims at
expanding this market by offering its pasta range at
affordable prices. The range of Pasta will be available in
Tangy Red (Tomato based) and Cheesy White (Cheesy
white sauce based) variant, in both vegetarian and nonveg.
Harley-Davidson Inc is finally ready to sell its legendary
brands in India in 2010.India is the second largest
market for bikes in the world. Harley, whose large and
powerful machines account for half of the motorcycle
sales in the United States, has been hurt by a slowdown
in its biggest market and last month reported a slump in
second-quarter net profit and slashed its 2009
shipment forecast. In contrast motorcycle sales in India
rose by 15 percent over the last one year.
UB group tastes wine
Four Seasons Wines Ltd (FSWL), a part of the UB Group,
has unveiled its Four Seasons varietal wines. This marks
the entry of the UB Group into the fast growing Indian
wine market. The company produces its wines at the UB
Group's
state-of-the-art
winery
at
Baramati
(Maharashtra) with grapes selected from vineyards in
the Sahyadri valley.
Playstation gets slimmer!
Sony launched the latest version of its iconic PlayStation
in a slimmer avatar. The company used a press
conference on the eve of the Gamescom gaming expo
in Cologne to make the announcement. The new
slimmed down console is 32 per cent smaller, 36 per
cent lighter and consumes 34 per cent less power that
the original. The company expects this launch to give a
major boost to its pre Christmas sales.
Café Coffee Day slates expansion plans to foray into 8-10
cities
Café Coffee Day plans to spend around Rs. 150cr to
open up to 200 cafes taking its store count from 800 to
1000. Currently, it has a presence in 130 cities and this
expansion will see it expand to 8-10 more cities
including Gangtok and Dhanbad.
Nokia goes musical
Nokia officially launched its music store in India. With
more than 3 million tracks across various genres
available for download, it is easily one of the largest
stores of its kind designed for Indian users. Nokia has
collaborated with Indian music labels such as Tseries,
Yashraj Music, Saregama, BIG Music and Venus to
ensure that the content is localised.
KFC Krushers: Crush, Blend, Slurp
Titan to step up retail presence
Kentucky Fried Chicken (KFC), a Yum! Restaurants
brand, known for its Chicken bucket and Zinger burgers
so far, introduces its new line-up of beverages,
Krushers, with advertising that borders on an edgy and
sensuous approach.
Titan plans to add 40 World of Titan stores to its
existing base of 274 in 122 cities across India by the end
of the current financial year. It is expecting an 18%
growth this fiscal and will invest 10% of its revenue on
marketing initiatives.
PRODUCT LAUNCHES
Maruti Suzuki earmarks Rs. 1,000 crore for its R&D
centre in Rohtak
Volkswagen banks on Polo
Volkswagen plans to launch its first small car, Polo in
the early part of 2010. It will be positioned in the A2
segment and the company hopes that it will be a strong
contender to the likes of Maruti’s Swift.
Media reports suggest that Maruti Suzuki India, which
sells every second car in its domestic market, will set up
an India specific research and development (R&D)
centre spread over 700 acre at Rohtak, which will entail
an investment worth Rs. 1,000 crore. This is in addition
28
Specials
to the Rs. 9,000 crore that the company has earmarked
for a diesel manufacturing plant, a port-based facility
and modernization. It has also been learnt that the land
allotted for the R&D facility will be the largest one
outside Japan built by Suzuki Motor Corp.
M&M looks to drive into the US market
M&M will spend around Rs 2,000 crore to augment
capacity at its Chakan plant as it looks to crack the US
car market that accounts for more than a fifth of the
global car market. M&M will debut in the US in
February-March 2010 with a US-specific pick-up truck
and will follow up with the American version of Scorpio
a year later. The company has tied up with Global
Vehicles, which will be its US distributor.
BRAND WATCH:
The dark truth about Cadbury Bournville
For a niche market and a new product like dark
chocolate, Cadbury has created a blog, titled The Dark
Truth, and developed a virtual character called Old
Hound, who is the author of the blog. Old Hound , a 40
year old architect, who enjoys adventure sports, travels
a lot, eats chocolates and reads books, unfolds and
shares various mysterious experiences or legends
strengthening the 'earn it' concept. This is aimed at
engaging the target audience on a higher level and
creating the right imagery of the dark chocolate brand
in India.
Markathon | Aug-Sep 2009
Dettol educates consumers about Swine Flu
If you search for keywords such as 'Swine Flu', 'H1N1',
'Swine Flu symptoms' and 'hygiene' on Google.com, you
are likely to see a sponsored link on the search results
page, with the headline, 'H1N1 Flu (Swine)' and the
description – "Dettol kills 99.9 per cent bacteria and Flu
viruses. Learn more now!"A click on the ad redirects
users to Dettol.co.in, wherein a sub-section, H1N1 Flu
guide has been created. The guide carries various
frequently asked questions on Swine Flu.
Zen bids adieu
Maruti Suzuki is retiring its iconic Zen from the Indian
market. The brand which has defined Indian aspirations
for more than a decade has finally run its course. Maruti
is revamping the platform and the newest models will
no longer carry the Zen brand name.
AD WATCH:
Bourbon: The sweet taste of deception
For a biscuit brand that has abstained from advertising
in the 55 years of its presence in India, Bourbon has
done a good job of making inroads into Indian homes.
But in a major shift of advertising strategy Bourbon has
telecast advertisements on national television for the
very first time.
~ Esha Arora, Varshik N | IIM Shillong
29
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© Team Markathon, IIM Shillong