Tag: Marketing

Automation is needed to manage complexity in marketing

Automation is needed to manage complexity in marketing

[Bruce Brown is managing director of Unica Corporation’s Asia Pacific operations.He oversees Unica’s sales, marketing, and business development throughout the region.]

1. Can you shed some light on critical changes that are taking place in the marketing arena?

As the business environment becomes complex, firms are operating under tighter internal and external constraints than ever before. For example, on the one hand we have multiplicity of communication channels leading to a need for higher spend in these areas. On the other hand, businesses are increasingly demanding higher and higher accountability from the marketing spend.

The major forces that have contributed to this increase in marketing complexity are:
a. Product Proliferation

Marketers today have to deal with massive product proliferation and it’s not just the sheer number of products in each product category but the different models of the same product, giving customers an almost infinite number of options. For example, in the US alone, there are about 8000 digital camera model that consumers can choose from, making the job of the brand manager rather difficult. Such a clutter on the shelf space means that marketers must work much harder to become the preferred product for the customer.

b. Multiplicity of marketing communication channels
Unlike in the past, when there were limited options to reach out, consumers of today are bombarded with marketing messages through television commercials, mailings, web sites, email, billboards, and more. The number of messages each consumer receives has grown dramatically in just the last two decades. In 1985 it was estimated that the average consumer was exposed to 650 marketing messages every day. Today it is more than 8,000. This is due in part to the increased number of channels marketers and consumers can use. For example, traditional media has become extremely fragmented. In other words, there are more and more TV and radio stations, magazines, and newspapers in the world. In 1960 there were 5.7 average TV channels in each home, and a total of 4,400 radio stations and 8,400 magazines. By 2004, those numbers had grown to 82.4 channels, 13,500 radio stations and 17,300 magazines. In the 1980s, 80 per cent of an average marketer’s target audience could be reached with one 30-second, off-peak television ad. Today, accomplishing the same reach often requires literally hundreds of prime-time commercials. In addition to this traditional media phenomenon, new media have emerged and multiplied. The most recognisable examples include web sites, SMS and email. There are many others, such as dynamic point of sale promotions and in-store kiosks. These new media further clutter a consumer’s daily life with marketing messages. The challenge this clutter poses to marketers is obvious: getting a message to register with consumers is incredibly difficult.

c. Growing consumer expectation
The growing number of marketing messages is driving consumers to take steps to control how marketers interact with them. This is done in part through the adoption of new technologies that filter marketing messages, especially from new media. The most well-known examples are SPAM filters and web pop-up ad blockers. But tools are emerging that impact more traditional media, as well. Digital Video Recorders (DVRs), such as those sold under the TiVo brand, allow consumers to eliminate TV commercials when viewing their favourite programmes. Today DVRs are at a much lower adoption rate than SPAM and pop-up blockers (roughly 15 per cent as compared to over 50 per cent according to a recent survey), but it is clear that the desire to control advertising exposure is a growing trend. In addition to adopting new technologies, consumers are demanding that marketers adhere to new standards of behaviour that put consumers in the driver’s seat when it comes to determining when and how to send messages. Clearly articulated privacy policies and “opt-out” choices are now a required practice of any company seeking a genuine and positive relationship with its customers. As a result of both these new technologies and practices, marketers today must not only identify the right target for their message and plan a strategy to get through the clutter, but also consider whether that message will actually reach its intended target.

d. Regulatory constraints
Marketers now have to comply with more regulations than ever before. Some of these regulations, such as do-not-call (DNC) lists, strict anti-spam laws and the EU’s Data Protection directives are related to the clutter of marketing messages and consumers’ desire for greater control and privacy. The effects of this type of legislation are widespread. According to a recent survey, over half of marketers reported that such legislation will impact their direct marketing programmes more in the next two years than in the previous two. No matter what the nature of the regulation, the fact is that marketers have new process issues to consider.

e. Marketing is being made more accountable
Gone are the days when you spent half you money on marketing without knowing whether it worked or it didn’t. The increasing market complexity is continuously putting pressure on companies’ profit margins and as a result departmental budgets within each enterprise. Marketing is no exception. Marketing budgets are being scrutinised by top management and marketers are required to account for their investments and demonstrate, with hard numbers, the returns they are getting. In other words, not only are marketers being asked to do more with less, but they must justify decisions and investments.

That’s the reason why marketers have to move from handling by spreadsheets or handling marketing activities manually to some sort of system that automates that process – 1000s of different contacts that need to be tailored. You can’t do it manually. You need to do it fast, to be able to turn around that do that – contact the customer quickly is impossible if you do it manually.

2. You talked about proliferation of products. What about parity of products?
You’ve raised a very good point. The product orientation does not differentiate you from your competitors anymore. You see, there is just too much out there and therefore you will have to focus on what the customer wants. This trend of moving away from product focus to customer focus is most evident in the retail banking sector where you now have segment managers, not product managers.

Take the case of OCBC bank in Singapore – they are increasing adopting EBM – where instead of making similar offers to a “segment” which may comprise of a 100,000 customers, what they do is monitoring specific events, transaction or things that the customer does – and they have 100 of business rules that are in place. For instance if a customer’s average quarterly balance crosses a certain threshold, it triggers some kind of communication. Similarly when the average account balance suddenly deviates, it triggers a service call from the bank to explore what this deviation might mean to the customer. The principle here is to “win the customer at the moment he needs the service”. Of course this requires a lot of training on the front office on what to say and what not to say

3. What is the role of new and emerging technologies in transforming the way marketing is
done today?

Technology has enabled the real shift to what we call “addressable marketing”. In the past, most of the emphasis was really about brand marketing or awareness marketing. Organisations have realised that they need to focus on their customer base. As a result, we need marketing to be more able and more accountable. We want it to be able to the return on investment on all activities. So the focus is now shifting to addressable marketing, which means targeting the customers with something that is likely to be more relevant to them. This is possible because you’ve done the analysis and you’ve looked at their propensity to buy something. In addressable marketing, we use technology to measure whether the customer responded, to which campaign did he or she respond, how long did he take to respond and so on and so forth. Having done the homework, you contact them through technology channels like SMS or email. You may even ask them how, at what time and where they want to be contacted. When you contact your customers in the way they wish to be contacted and with an offer that excites them, you are no more bothering them and invading their privacy. In fact you are providing them with a service. So technology is helping companies become more customer-centric. It is really enabling marketing to do more, and measure it tangibly.

4. What is Enterprise Marketing Management?
Enterprise Marketing Management (EMM) is software that helps marketers reduce costs, boost productivity and grow revenue across brand, interactive and direct marketing operations. EMM consists of customer analytics for understanding and anticipating customer behaviour; interaction and campaign management for implementing and executing timely, consistent communications across customer touch points; lead management to ensure leads are delivered and acted upon; and marketing resource management (MRM) for managing budgets, creative production, marketing content, and other resources. Individually or as an integrated solution, these capabilities reduce time-to-market through automation, improve customer strategies and targeting through analytics, and prove the value of marketing through closed-loop measurement and reporting.

EMM provides support for customer analysis, demand generation and strategic planning and resource management. Additionally, a complete EMM offering provides the ability to measure the performance, profitability and bottom-line impact of marketing efforts. Customer analysis includes capabilities such as data mining and predictive modelling, which provide a richer, deeper understanding of customers across all interaction touch points. It also gives organisations the ability to monitor and track segment behaviour and trends over time thereby enabling better targeting and increasing the likelihood of response to specific marketing activities. Demand generation solutions focus on acquiring, retaining and growing customer value. Strategic planning and process management solutions, sometimes called Marketing Resource Management (MRM) or Marketing Operations Management (MOM), help marketers create plans, coordinate the execution of those plans and analyse the results. These solutions streamline processes and centrally store marketing information such that marketers can quickly and easily see how their marketing efforts and plans are progressing – from tradeshows, advertising campaigns, direct mail, events, and more. By using these capabilities, marketers are able to measure the performance of all their marketing efforts, assess their profitability and bottom-line impact and optimise their investments and operations. In addition to customer analysis, demand generation, strategic planning and process management, a complete EMM solution must provide the ability to measure the performance, profitability and overall impact of all marketing efforts.

5. What according to you is the single biggest requirement that an organisation must take into consideration when adopting EMM?
A pre-requisite for doing a successful marketing automation campaign management is making sure that you develop the analytical skills. I see a lot of organisations who haven’t gained that expertise. Analytical capabilities help the marketer to customise the offer to an individual by revealing what the customer might want at various times. Such information will enable you make offers that are relevant and therefore more attractive. If you’re setting out on this path, you have to make sure that you have this capability whether you develop it in house or outsource it.

6. Using examples, can you elucidate the advantages of EMM over traditional marketing approaches?
EMM technology helps marketers bring together disparate parts of marketing; planning, designing, executing and analysing. By automating and supporting each of these areas, EMM lets executives, marketing managers, analysts, field marketers, creative designers, achieve increased effectiveness, efficiency and accountability. Here are a few examples that describe EMM in practice in planning, designing, executing and analysing.

Planning with EMM: A major retailer of electronic goods recently purchased and implemented an EMM solution to streamline and manage marketing processes and track overall marketing effectiveness. Using EMM, they are automating marketing planning, managing marketing project workflows, facilitating collaboration, optimising assets, and most importantly, notifying and alerting marketers of changes in their marketing programmes and key performance indicators (KPIs) giving the marketers greater control over the outcome of these initiatives. As a result of using EMM, this organisation has increased visibility into all marketing initiatives, improved marketing velocity and productivity and has been able to enforce best practices and processes across the organisation, resulting in significant cost savings and increased revenue.

Designing with EMM: A large resort real estate company and ski resort operator that uses EMM to identify previous guests for a specific resort who have a high likelihood of revisiting the resort from mid January to the end of April – when ski vacation bookings are slow. Individuals likely to respond were included in a targeted multi-wave "come back" campaign. The results showed that the people the models predicted would visit during this period responded to offers and booked at a rate roughly 133 per cent above those included but not identified by the models. Additionally, the booking rate was 5 per cent with an 8.5 per cent increase in skier revenue, and an increase of 3.5 per cent in actual skier visits.

Executing with EMM: A leading specialty retailer uses EMM to execute a targeted email communication to all individuals who have made an entertainment purchase online within a specific time period. Email content is dynamically selected for each individual. With EMM in place, this communication runs every Tuesday without manual intervention. In terms of results there are consistent weekly click-through rates as well as a distinct increase in customer profitability and loyalty.

Analysing with EMM: A US-based mortgage division of a diversified European financial services provider was able to minimise losses when it quickly identified a significant increase in mortgage holder attrition, using EMM technology. After further investigation, the company determined that monthly programmes targeted at mortgage holders were not effective in retaining customers. With mortgage rates changing almost weekly, the organisation needed to respond faster to competitive market conditions to maintain its customer base. By
leveraging templates, analytics, and automation found in their EMM solution, the organisation was able to rapidly execute more effective marketing programmes in order to combat competitive pressures and decrease attrition.

Playing a long Innings

Playing a long Innings

History of our planet proves that adapting to change is the only way to survive. Those who do not or cannot adapt, become extinct. This is true of human beings, animals and even brands. Brands that do not change disappear from the marketplace… and the consumer’s mind. While many brands have survived for a long time, in the recent years the pace of change has increased manifold and consequently the time available to respond to the changes has shrunk considerably. The problem with many of us is that we think of future as faraway. The future is here. It’s not some event that will take place five, 10 or 20 years from now. It is something that is as close as tomorrow. The pace of change in the recent years has shortened the distance between yesterday, today and tomorrow.

In preparing your brands to survive into the future, it might help to look to the past and learn from it. The first real "brands" began to emerge at around the same time as marketing began emerging as a serious business management discipline way back in the late 19th and early 20th century. By the mid-1900s, marketing had already established itself as a central business function and the four Ps became the tactical tools of marketers. Over the next 30-40 years, the strategic development of marketing as a business function has evolved constantly to adapt to continuous and discontinuous market changes. Concepts such as segmentation, differentiation and competitive advantage emerged and proved extremely useful to marketers in successfully introducing and establishing brands.

But things have been different in the last decade or so. Technology and product breakthroughs, discovery of newer markets (and stagnation of older ones), rising incomes, and telecom and media proliferation require newer and innovative marketing approaches. Because the time to react to competition is shorter than ever before and there is little, if any, scope for blunders. While earlier, a brand could get away with some slip ups, the consumers of today are unforgiving and punish brands that do not live up to their promise by shifting their loyalties to other brands. No wonder so many brands of yesteryears have just disappeared from the shelves. It seems like only yesterday when cars in India meant Ambassador and Premier Padmini; shoes meant Bata; cooking oil meant Dalda or Postman, and colour TVs meant BPL or Videocon. Most of these brands are nowhere close to their positions 10 years ago. Some of them have completely disappeared.

On the other hand, there have been brands that have stood the test of time. Changing consumer preferences, cultural transformation, substitute products, economic recessions, technological obsolescence and many such problems notwithstanding, these brands have been quick to adapt to the ever-changing market dynamics and consumer demand, and grown consistently. These brands have shown what is known as brand resilience.

What is Brand Resilience?

In the year 2000, Indian superstar Amitabh Bachchan rose like the proverbial phoenix. After a long hiatus from Bollywood and a disastrous shot at going corporate that left him bankrupt, Bachchan came back with a vengeance. Today he has not only paid off his debts, but is the busiest star in the film industry, delivering more hits in the year than any other star and has endorsed/is endorsing more than 20 brands. He was also voted as star of the millennium in an online poll by BBC. Brand Amitabh Bachchan is a great example of a brand that possesses resilience.

Brands like Coca Cola, Pepsi, Levi’s, Harley-Davidson, Rolex, Kodak, Nikon, Sony as well as home-grown brands like Thums Up, The Times of India, Parachute, Onida and Amul are resilient brands as they have all been around for many decades during which markets and consumers have both changed beyond recognition. Many of these brands have survived recessionary trends and adverse market conditions and yet have managed to retain their leadership positions in their markets. In fact, many of the world’s top 100 brands are over 100 years old.

The quest for brand resilience

Brand resilience can be compared with a healthy person with strong immunity. A healthy person fights of diseases by practising healthy habits like eating right, following an exercise regime, maintaining hygiene and consulting a doctor when sickness strikes. Similarly, a brand builds resilience by following sound marketing practises, maintaining a fresh appeal, and reinventing itself to remain relevant. Here are a few suggestions on how to build strong, resilient brands.

Survival of the quickest
Brand that don’t respond promptly to a challenge often perish just as brands that are quick to respond get brownie points from the consumer in the form of loyalty. In 1995, when Sony launched PlayStation, the first CD-based video game console, Nintendo and Sega were both unprepared and took time to react. They paid heavily for their sluggishness by losing market to a new entrant like Sony. Today, PlayStation is the market leader by far and also the cash cow for Sony. Nokia, on the other hand, was quick to respond to Sony-Ericsson’s camera phones. Although Sony-Ericsson’s phones became a hit, Nokia launched its own versions of camera phone quickly, ensuring that its market leadership remained intact.

Maintain Consumer Connect
Resilient brands acknowledge that consumers of different generations have different values and ideologies. These brands also know that consumer preferences evolve over time. Liril and Colgate are FMCG brands that have been around for decades and have successfully connected with the consumers of many successive generations. The recent repositioning of Liril (with Aloe Vera) is a case in point. Adding sex appeal to the brand and introducing a male character in its advertising is a marked shift from the age old “waterfall” premise that Liril was associated with.

Remain Loyal to Core Value Proposition
Resilient brands have a personality with which consumers identify them. Sony has always stood for sharp, leading edge technology. The recent repositioning notwithstanding, Liril still stands for freshness. Coca-Cola has quenched thirst for over 100 years and its Thanda Matlab Coca Cola campaign only reiterates that proposition. Colgate means strong teeth, fresh breath. Mercedes still stands for top class and BMW for pioneering engineering. Brands build resilience by taking a stance and sticking to it. They remain loyal their original values and their consumers remain loyal to them.

Kodak Brand’s Resilience From Building Strong Brands by David Aaker

The Kodak Instant Camera (introduced in 1976 to compete with Polaroid) had captured one-third of the instant camera market after one year. However, the company was forced to discontinue the product in 1986 after a successful patent encroachment suit by Polaroid. Kodak’s forced withdrawal of a product from a market it virtually owned is about as bad as it gets. Many brands would have been irrevocably tainted by such a calamity. The fact that Kodak survived this debacle is a tribute to its innate brand strength and to its handling of a painful situation. Every camera owner was invited to return their Kodak Instant Camera in exchange for either a Kodak Disk Camera and film, fifty dollars’ worth of other Kodak products, or a share of Kodak stock. Kodak thus used the incident and the surrounding communication opportunities to reinforce Kodak associations and to support the Disk Camera.

From Building Strong Brands by David Aaker

Why bother about resilience?

Because resilience pays rich dividends in the following ways:  

Provides Longevity
This one is the most apparent benefit. Resilience implies staying power, which translates into l
ongevity. As mentioned earlier, resilient brands survive many generations of human life. Indeed, some have been around for a couple of hundred years. The Times of India was established in 1838. After 168 years, it is the largest selling English daily in the world. That it’s published from India, a country where English is not a native language, tells a lot about the resilience of the brands.

Helps in tiding over adversities
Brands that are resilient are better prepared to survive an unforeseen eventuality, both internal and external to the company. Kartikeya Kompella, business head of a leading DM agency in Chennai says, " Tough times don’t last but tough brands do." In 1982, when other car manufacturers around the world suffered disastrous sales, Mercedes continued to do well and often sold up to 50 per cent more than other European competitors.

Offers scope for market leverage
Resilient brands can try experiments in the market that could be too risky for other brands. In April 1985, when Coca Cola repositioned its flagship brand as New Coke, which was not well received by the market in spite of blind tests showing that New Coke tasted better than Pepsi and earlier Coke. There were protests by a section of Coke fans and Pepsi took advantage of the situation by taking digs at Coke. Coca Cola’s sales had begun to dwindle and the company was forced to reintroduce the old formula drink, which it called Coca Cola Classic. By the end of the year, Classic Coke was substantially outselling both New Coke and Pepsi, putting the company back into the number-one position, which it has enjoyed ever since. Coca Cola got away with its experimentation because the brand was resilient.

Survives onslaught of competition
A brand that has been around for years and has kept its promise with the consumer can often fight even heavyweight competition. Think about Thums Up, which was bought over by Coca Cola on its re-entry to India. Between the mega battle of Pepsi and Coke, Thums Up was grossly ignored by its new owners. In spite of this neglect, Thums Up outperformed both Coca Cola and Pepsi to remain market leader and forced Coke’s management to take the brand seriously.

Sometimes, brands only pretend to be resilient but are not. In times of crisis, such brands often try and take refuge in advertising but usually fail. In A New Brand World, Scott Bedbury points out that no amount of advertising can build or save a shallow brand. “Advertising is the megaphone, not the message,” he says. Many of you will recall that BPL was one of the top three colour TV brands in India in the early 1990s. When crisis struck in the form of entry of Korean Brands, even Amitabh Bachchan’s endorsement could not save BPL TVs from perishing. Cadbury on the other hand used Amitabh effectively to counter the serious threat from the “worm” controversy and is today back to the top. Cadbury was resilient; BPL was not.

Conclusion

It is wise to know that resilience is not infinite. The advantages of possessing brand resilience are many. But that does not mean that strong brands cannot falter and fall by the wayside. Even resilience has an expiry date. But the good news is that brands can get this date extended substantially by remaining loyal to their original value proposition and by being true to their consumers.

When in Rome…

When in Rome…

When developing nations like India began to open up their economies to foreign direct investments, many economists argued that rich multinationals will swamp these markets and liberalisation will sound the death knell of local brands. More than a decade later, nothing of the sort has happened. In fact several large companies have failed to make a major dent in the Indian market, leave alone acquire leadership positions. Many who entered with a mindset of “might is right” had to alter their strategies dramatically. Clearly, even as globalisation is the favourite buzzword of economists and politicians alike, business managers and marketers around the world have discovered, often painstakingly, that the world is far from being one homogeneous market.

When in India, do as the Indians do…
Centuries ago, in 387 AD, when St Augustine arrived in Milan he observed that unlike the Church at Rome, the Milan Church did not fast on Saturday. He consulted St Ambrose, bishop of Milan, who replied: “When I am at Rome, I fast on a Saturday; when I am at Milan, I do not. Follow the custom of the Church where you are.”1 Eventually this comment metamorphosed into “When in Rome, do as the Romans do”. The bishop’s words have since then become an oft-quoted piece of advice. And the advice is perhaps most relevant to marketing professionals of the 21st century.

Product managers from MNCs will do well to commit this adage to memory, especially if you market your products to a heterogeneous country like India. For some time now, India’s appeal as a market has increased manifold. And why not? The Economist Intelligence Unit forecasts an average of 6.9 per cent real GDP growth for India from 2003 to 2008. Combine this with a GDP growth that is more than double that of the United States and the United Kingdom during the past decade and you know why India is one of the world’s most promising and fastest-growing economies, and why multinational companies are eagerly investing here. Yet the performance of these multinationals has been not been consistent. While some of them have managed to decode the Indian Consumer Code, many others have failed to create a dent in the market, leave alone significant market shares – and this despite the huge investments of time and capital.

Experts concur that one of the primary reasons these companies have failed to take off in India, in spite of being successful in other nations, is because they did not localise their product offering.

Merely bringing a tried and tested product from another country need not succeed in a country like India, which has its own idiosyncrasies. Any strategy must be rooted in a detailed understanding of the customer and market conditions. Companies that have resisted the lure of replicating their global product offerings, and have instead spent time and energy understanding the Indian market, are the ones that have managed to make their mark. India’s purchasing power lies in the middle and lower income groups and a company that ignores these high-volume segments may have to sacrifice significant revenues and profits. Targeting these segments requires that the company understands the buying psychology of the typical price-conscious Indian consumer.

A new country, especially a diverse one like India, should not be treated as merely a new market where you extend your existing business and marketing models. It should be taken as seriously as launching a new business, with an exhaustive business and marketing plan. The management of an MNC will do well to keep in mind the following considerations while developing their marketing mix for India:

1. Product
Just because your product offering has been successful elsewhere it does not mean that it will be lapped up by people from another country, who believe in a different set of values, hail from different cultures and have their own tastes and preferences. Real Value vacuumisers, launched in the mid-1990s, bombed despite the product being very effective in what it claimed to do. What Real Value failed to consider was that Indians like their food freshly made and will never be comfortable with the idea of storing food in containers. Yet there are companies like MTV India, Nokia and McDonald’s that understood the local preferences of their Indian consumers and modified their offerings accordingly.


The Taste of India
Local flavour Nestle, the global food major, realised that it is hard to neglect the ethnic Indian food market. According to KSA Technopak, this market is estimated to be to the tune of Rs 6,50,000 crore in India. After finding success in the packaged curd segment, Nestle India is now in the process of test marketing ‘Lassi’ in Maharashtra thereby competing with players like Amul and Britannia. The ethnic Indian food market includes dairy products, ethnic snack foods and staples. Nestle India has also joined hands with South based retail major Nilgiris to co-brand a whole range of dairy products like dahi, paneer, ghee and milk.
Source: Do Indians Make the White Elephants Dance! By AGV Narayan

2. Advertising and Promotions
According to one study, customers are four times more likely to make a purchase when they are addressed in their native language. Localising an advertising or marketing message is crucial to the success of the brand. Just like while finalising their product offering, a marketer must understand the deep-rooted values and its culture to ensure that their communication does not offend their sensibilities. Coca Cola and Pepsi realised this early and Indianised their advertising by roping in Indian cricketing and film celebrities, which the Indian audiences relate to easily. When Kellogg’s launched in India, they tried to position themselves as lighter, and therefore, better than parathas. It backfired, because parathas are a habit with Indians, a part of their lifestyle. Kellogg’s learnt the hard way that it can be an interesting addition to the breakfast options in India, but can never replace parathas and idlis.

3. Pricing Strategy
There’s no denying the fact that Indians are a price-sensitive, value-conscious lot. Brands that have failed to take this into account have faced problems. On the other hand, companies who have responded to the price-sensitivity of the Indian market have done well. (See Box Kellogg v/s Paratha and Idli).


Kellogg v/s Paratha and Idli

The case of Kellogg, the US cereal giant, demonstrates that it is not only local competitors who can sense the need for mass marketing and deliver it. Kellogg, lured by the prospect of a billion breakfast eaters, ventured into India in the mid-1990s. Like many of its counterparts, Kellogg’s market entry strategy proved unsuccessful and, after three years in the market, sales stood at an unimpressive $10 million. Indian consumers were not sold on breakfast cereals. Most consumers either prepared breakfast from scratch every morning or grabbed some biscuits with tea at a roadside tea stall. Advertising positions common in the west, such as the convenience of breakfast cereal, did not resonate with the mass market. Segments of the market that did find the convenience positioning appealing were unable to afford the international prices of Kellogg’s brands. Disappointing results led the company to reexamine its approach. Eventually, Kellogg realigned its marketing to suit local market conditions: the company introduced a range of breakfast biscuits under the Chocos brand name. Priced at Rs 5 for a 50-gram pack (and with extensive distribution coverage that includes roadside tea stalls), they are targeted at the mass market and are expected to generate large sale volumes.
Source: Strategies for Entering and Developing International Markets by David Arnold

Almost every successful MNC worth its salt has altered its pricing strategy in India. McDonald’s current campaign in India promoting their “Happy Price Menu” shows how critical pricing is to successful operations in this country. Sony Corporation, known to believe in premium pricing, has launched its low price, feature stripped variants in the highly competitive consumer electronics industry. Ford’s Ikon is positioning itself as a sedan available at the price of a small car.

4. Distribution
As stated earlier, India’s markets revolve around the middle and low-income segments. These segments reside largely in small towns and villages spread across the length and breath of our country. Geographically, India is not only diverse, but it is also the seventh largest in terms of sheer size. By 2007, middle and high-income households in rural India are expected to grow from 80 million to 111 million, while in urban India they are expected to grow from 46 million to 59 million. Therefore, the absolute size of markets in rural India is expected to be double that of urban India. Moreover, different regions in India are as good as different markets, each with its own peculiarities. MNCs often find it extremely difficult to manage this diversity.

HLL: Here, There, Everywhere

HLL’s key strength in a vast country such as ours has been its unmatched distribution reach through a stockist network of 7,000 and a retail reach of over 1mn outlets. It is the only company, which distributes its products to more than 50,000 villages. Innovative programmes like Project Bharat have been undertaken which aim to make available to every consumer in the remotest corner of the country, products that meet his day-to-day requirements. HLL’s management is known for its marketing savvy. It has over the years studied and understood the Indian markets as no other MNC player has. It has adapted its products to suit the Indian tastes. A lot of wars have been played and won on the price front, acknowledging that the Indian consumer is extremely price sensitive. The financial strength to cross subsidise new initiatives with existing profitable businesses has enabled the company to achieve its zeal of being the dominating player in all markets that it enters into.
Source: Indiainfoline.com

FMCG MNCs such as Colgate-Palmolive and Hindustan Lever Ltd have always known the importance of rural and semi urban markets in India and have strong distribution networks. Their success in India can be largely attributed to their widespread distribution networks.

Conclusion: Building global brands in local markets

So how does one go about building a global brand with so many local considerations? Marieke de Mooij, president of Cross Cultural Communications Company and author of Consumer Behavior and Culture: Consequences for Global Marketing and Advertising answers, “A global brand is one which shares the same strategic principles, positioning and marketing in every market throughout the world, although the marketing mix may vary. It carries the same name and logo. Its values are identical in all countries, and it has a substantial market share in all countries and a comparable brand loyalty.” Sony stands for technological edge and quality across the globe, though in India it fixed its price to suit the Indian market. Kellogg has changed its advertising positioning in India to focus on health instead of convenience. Coke’s Thanda Matlab Coca Cola is a unique positioning only for India. MNCs have so far been humming the “Think Global, Act Local” mantra. Perhaps its time for them to memorise a new mantra, “Think Local, Act Global.”

References:
1. www.trivia-library.com
2. The Right Passage to India by Kuldeep P. Jain, Nigel A. S. Manson, and Shirish Sankhe, The McKinsey Quarterly, Web exclusive, February 2005
3. Strategies for Entering and Developing International Markets by David Arnold, Published by Financial Times Prentice Hall