Tag: Strategic Marketing

A global brand is bleached with the culture of the respective country

A global brand is bleached with the culture of the respective country

[Dr Michael Dorsch is the associate professor of Department of Marketing, University of Business and Behavioural Science, Clemson, USA. Dr. Dorsch’s work has appeared in the Journal of the Academy of Marketing Science, Journal of Personal Selling and Sales Management, Journal of Business Research, Journal of Financial Planning, Journal of Professional Service Marketing, and various national proceedings.]

1. How has marketing evolved over the last decade and how is it different from the marketing that was practised in the 1980s and 1990s?
Michael DorschMarketing has experienced quite a bit of change over the past two decades. During the 1980s, marketing witnessed increasing and vigorous interest in several areas including services marketing, relationship marketing, brand equity, and pricing. Prior to this time, marketing efforts focused primarily on physical goods and on marketing transactions. In addition, during the 1990s and 2000s, marketing experienced a renewed interest in the use of technology for strategic marketing decision-making; thus the notion of marketing engineering was born. Furthermore, the introduction and growth of the Internet has fuelled marketing interest in employing technology in reaching and serving customers. The past two decades have also witnessed increased attention on marketing in a global context. Technological advancements along with social and political changes have resulted in an enhanced interest in appealing to a global marketplace. More recently, the marketing discipline is beginning to place a renewed emphasis on the customer with the notion of customer relationship management and customer equity.

2. Can you emphasise the role of technology in shaping marketing thought in the 21st century?
Technology will continue to play an important role in shaping marketing practices during the 21st century. Technology refers to both expertise/knowledge and the tools (e.g., equipment and machinery) needed to accomplish marketing activities. Consequently, reliance on the role of technology will extend beyond the machinery to include attention to how the technology may be employed by both customers and businesses to make more informed decisions. I expect that businesses will use some technology to further develop their organisational learning systems. For instance, some technology is likely to be used to help businesses learn more about the market (e.g., customers, competition, and other environmental factors) in order to make more informed and timely marketing decisions (e.g., web blogs, discussion groups, customer loyalty programs, decision support systems and so on). Other technology will be used to deliver the marketing plan (e.g., e-commerce, tracking tools for monitoring the distribution of products, the use of web cookies to store information about customer preferences) and regulate the marketing plan (e.g. customer relationship programmes). Still other technologies will be used by customers, who are likely to increasingly rely on the Internet to search product information, make purchases, track their expenditures, and so on. It is also likely that consumers will increasingly rely on technology to communicate with others and to become informed of local, regional, national, and global events.

Both businesses and consumers are likely to place great importance on learning the benefits of certain types of marketing transactions, their ease of usability, and their security and privacy characteristics. Moreover, an increasing reliance on technology will require both businesses and consumers to change their marketing-related behaviours. In some instances, the behavioural changes will be minor and easily adapted. In other instances, businesses and consumers will be required to make more significant changes in their shopping/purchasing behaviours, which is likely to slow the acceptance of technology.

3. Considering the current trends, what will be the shape of marketing in the next 10 years? What will be the major forces that will drive marketing efforts in the next decade?
Given the rate of change that is occurring worldwide, it is difficult to confidently describe the shape of marketing during the next ten years. However, a few trends seem likely. In particular, the world is expected to continue to change at a fast rate in a number of environmental areas such as the technological, social, political factors. These changes are expected to significantly influence marketing activities used to appeal to the ever- changing marketplace. Moreover, the world is becoming smaller as it is easier and quicker to learn about and experience other societies. Correspondingly, it is likely that consumers in the future are likely to exhibit more global awareness (i.e., diversity). Furthermore, information is also increasing at an increasing rate, which means that data are becoming more readily available and may be acquired and processed more quickly (e.g., in real time). This trend has important implications for businesses and consumers. Businesses, for example, will need to develop more effective and efficient methods for managing their organisational learning systems (e.g., data bases). In addition, the increasing availability of information to consumers indicates that consumers are likely to become more knowledgeable about the products that they purchase and more discriminating in their choices. As consumers become more sophisticated customers, their standard of living is also likely to increase and they will be more interested in the quality of the experience rather than focusing attention on the quality of materials (e.g., products) used to create the experience. As a consequence, it is likely that experiential marketing may become increasingly important approach to serving the market.

4. How has globalisation affected marketing practices of Multinational companies? How are multinational firms dealing with the growth of emerging countries like India and China?
Globalisation is likely to have a very significant impact on the marketing practices of multinational companies, especially in terms of effectively serving diverse markets. More specifically, many countries are not at the same level of economic development, which is likely to influence the type of market offerings desired by each country. Likewise, differences in the cultural practices of each country will influence the marketing practices. Accordingly, the marketing activities that are successful in one country may not be successful in another country. Similarly, the political and legal environments also influence marketing practices. As a result, MNCs that are interested in serving emerging countries like India and China are advised to become intimately knowledgeable about the countries before formally entering market. Recognising that learning about a country before formally entering it may take considerable time and money, MNCs may benefit from developing strategic alliances with companies already serving the countries or, possibly, the country’s government itself. In this way, the MNC may make use of the existing knowledge of its strategic partner to help become established in the country that it wishes to enter. The use of strategic alliances is likely to become an increasingly common practice among MNCs.

Once a multinational firm decides to enter a new country it must carefully weigh its decisions to utilise a single marketing strategy to be applied to all countries it services or to develop unique marketing strategies that appeal to particular countries. While the first approach, i.e., a globa
l marketing strategy, is likely to be less expensive – to be successful the global brand must symbolise common desires and practices across the countries to which it applies. With the latter approach, individual brands would be created that emphasise and match more closely those unique desires of individual countries. However, the development of marketing plans that closely match the uniqueness of each country is likely to be very expensive, as unique marketing plans would need to be developed. At issue is whether the incremental costs of serving each of several countries are offset by the incremental revenue/profit realised from the incremental increase in demand. The decision of whether to use a global marketing strategy or a set of individualised marketing strategies depends on the similarities of countries being served. The more similar the countries are in terms of their environmental factors (e.g., cultural, economic, political, and technological), the more likely that a global marketing strategy will be successful. In contrast, when the countries are more diverse, country-specific marketing strategies are likely to be more effective.

5. What are the characteristics of a global brand? How does a marketer build such a brand? What challenges does he face in the process?
Most research on branding and brand equity has focused attention on branding within a single country. The notion of a global brand is relatively new and research on the creation of global brands appears to be in its infancy. Nevertheless, it may be possible to offer some insights into the development of a global brand by drawing on existing knowledge about branding. A brand is basically the name that a company assigns to one of its product offerings. The value of the brand name to the customer, which has been referred to as customer-based brand equity, depends on the type of associations that customer evokes about the company’s product offering when the brand name is mentioned.

Businesses may help customers develop strong positive associations for their brand names through promotional efforts, including favourable customer word-of-mouth communication (i.e., buzz marketing) and ensuring favourable customer experiences related to the purchase, use, and disposition of the product. From this perspective, it may be argued that the creation of a global brand requires businesses to develop a set of similar and consistent positive associations (opinions and beliefs) that connect the customer to the brand of a particular company, irregardless of the country in which the product is offered. Consequently, the development of a consistent set of customer opinions and beliefs about the brand is likely to be based on a common set of characteristics and/or experiences that are desired by each country. In this regard, a global brand may be described as being based on a set of associations that are shared across countries.

One advantage associated with a global brand is that it communicates to a common set of customer expectations that is not altered by country effects. For instance, customer expectations of a “McDonalds experience” is the same, regardless of whether they visit a McDonald’s in the US or India. Correspondingly, companies that are interested in building a global brand may need to downplay the unique characteristics and experiences associated with a single country. In this regard, it may be argued that a global brand is bleached of the uniqueness associated with the culture of a specific country.

The bleaching of a brand of those characteristics that are unique to a particular country represents a potential disadvantage associated with a global brand. Even though, customers desire consistent expectations when using a product, they also enjoy variety. Thus, bleaching a brand of country-specific associations inhibits the uniqueness of experience desired by many customers. For example, many US tourists prefer eating at McDonalds when travelling in other countries simply because they expect the dining experience to be similar to that enjoyed in the States. Similarly, many other US tourists tend to avoid McDonalds for the same reason. When travelling outside of the US, these customers seek unique experiences that are not readily available within the US and thus avoid those businesses that resemble those in the States.

6. What are the chief behavioural differences between consumers in India and those in the US? Are there any similarities? How can MNC’s from both countries manage dissimilarities in cultures while exploiting similarities between consumers of the two nations?
I am unable to provide informed opinions about the similarities/dissimilarities between US and Indian consumers or about actions that MNC may take to efficiently and effectively target consumers in each country. However, from a very general perspective, it is very likely that people, regardless of culture, have similar basic needs for food, clothing, shelter, protection, and so on. In addition, it is likely that people, in general, have a desire to be respected, to take care of family, make effective use of their resources (money, time, labour), and to self-actualise (i.e., achieve their potential and to make a difference). As a result, MNCs increase their chances of success by recognising common benefits (or improvements) sought by their consumers, regardless of culture, and then adjusting their marketing efforts (i.e., price, promotion, distribution, and product form/packaging) to match the unique circumstances of each culture. The uniqueness of a country may be attributed to many factors including geographical climate and terrain, distinctions in the cultural philosophies that guide the behaviours of a country’s inhabitants, the political climate of the country, and so on. The process is analogous to the concept of mass customisation, whereby the basic market offering is similar across cultures, but the specifics of the market offer are customized to the unique circumstances of each country.

7. What, according to you, are the strengths and weaknesses of the “Made in India” tag? What best practices would you suggest to Indian companies that wish to become internationally competitive?
This is a difficult question to answer for two reasons. First, I am unsure of the image that India has within the US. In addition, research on Country-of-Origin issues has produced mixed results. Some research indicates that the use of “Made in” labels have influenced consumer perceptions and purchase behaviours, whereas other research indicates that no relationship exists. More recent research suggests that “Made in” labels become more important when consumers are not very knowledgeable about the product and little other product related information is available. In contrast, “Made in” labels appear to be less effective when other product information is available to the consumer. In addition, the effectiveness of “Made in” labels appears to be influenced by the type of market offering. When using “Made in” labels to evaluate market offerings, consumers oftentimes base their assessments on their perceptions of the country itself. In these instances, consumers use their perceptions of a country to determine whether the manufacturing country is likely to produce a high quality form of the product. Whether a country is truly capable of manufacturing a high quality product is oftentimes less relevant then the consumer’s perception of the country’s capability. These perceptions may be derived from a number of sources including the consumer’s personal experience, experiences of others, or stereotypes created through the media. Consequently, a country’s products are more likely to be favourably received by consumers if the consumers believe that the country has the technological capabilities and expertise to manufacture the market offerings.

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

How much below the line?

How much below the line?

One can argue that most ad spending today is utter waste and does little to meet its supposed objective, especially the really expensive monthly-quarterly campaigns. Everyday we come across average looking and ineffective (more important that ‘just being creative’) ads in the newspaper and on television.

Yet at times, the product itself is so good it outperforms the ineffectiveness of the ad campaign and this is mistaken as a triumph for those attempts in traditional marketing and advertising. Competing firms, either from the same industry or otherwise, look at this and assume huge ad spends to be the answer to their problems, before they realise it’s too late and then axe themselves in their foot once again, this time with a different promise bearer who yet again is into ‘edgy stuff’.

In the same breadth, it is not always wise to assume that promotions and events are a good blind substitute or will always prove to be better as opposed to ad spends. When buying a television, the promise of a free duffelbag is hardly a carrot. Talk about free software (licence fee waived off) along with a branded computer and yes consumers will show interest.

Invite the customer to relate to what you are offering and she/he will excuse you for carrot dangling. That is how custmers think by and large.

Elementary, my dear Watson

Elementary, my dear Watson

JOHN WANAMAKER, pioneer of department stores in the US, once confessed that he knew that only half his advertising works; the problem was, he didn’t know which half. But today’s marketers cannot afford to makes such a confession. With marketing accountability becoming the motto of the top management, companies are increasingly looking for return on every marketing rupee spent. Developing effective marketing programmes is now the most important objective of marketing practitioners. But what exactly does the term marketing effectiveness imply?

Marketing is what marketing does

In Economics, we are taught that money has no inherent value. It is simply some printed paper or some numbers in the account books, unlike air, water and other basic necessities, which are indispensable to life. The value of money lies in the function of serving as a medium of exchange. Money, then, is what money does.

Twist this statement a bit – replace money with marketing and you get another universal truth: Marketing is what marketing does. Marketing tactics (including advertising, sales promotions, product development and brand management) are useless, unless they serve the purpose for which they were designed. That purpose, the endpoint of all marketing, is sales. No matter how brilliant your marketing strategy, if it does not ultimately result in sales, then it has failed.

EFFIEs and effectiveness

The New York American Marketing Association introduced the EFFIE Awards in 1968. Every year, EFFIE awards are given away to the most effective advertising campaign of the year in the respective country. Winning an EFFIE is about meeting a challenge and succeeding. In the words of a recent winner, “Effective advertising is advertising that sells; advertising that builds market share. The EFFIE award is the symbol of effective advertising and a tribute to the client and agency partnership that strives to create it.”

Of course, there are no absolutes in the world of marketing, no formula for marketing effectiveness. Every marketing challenge is unique and requires a distinctive approach. Having said that, there are certain best practices in marketing that have stood the test of time. These practices have a few factors in common, all of which are inter-connected and must be considered carefully before embarking upon any marketing programme. Surprisingly, these factors lead us back to the basics. So let’s re-visit these basic principles.

Essential Ingredients of a Successful Marketing Campaign

CONSUMER INSIGHT tops the charts. Every sensible marketer knows the importance of relevant consumer insight. The consumer is the king around whom the world of marketing revolves. And that makes consumer insight the single most important factor that shapes a successful marketing campaign.

According to Sunil Lulla, “Consumer insight is crucial if you want to be effective in your marketing efforts. Post that it’s the ideas and the execution that make all the difference. For instance, Sony Entertainment Television’s marketing campaign for ‘Jassi Jaissi Koi Nahin’ was truly differentiated and innovative and was driven by a very strong consumer insight – that people tend to judge others by the way they look. Hence we launched a campaign, which never revealed the protagonist but only built her attributes and character.”

Lynn DeSouza adds: “I believe it’s hitting on the right consumer insight, which is an outcome of good planning and knowledge of consumer behaviour. Touching the right chord in the consumer’s mind and/or heart can actually lead to faster results requiring lower investments and ad budgets. The anti-FD campaign of Franklin Templeton is a great example of a hardworking consumer insight translated into interesting creative execution that required much lower ad spends than competitors to win great results for the company.”

But consumer insight alone is a necessary, and not a sufficient, condition. Rohit Srivastava says, “Consumer insights are interesting because they can often define the opportunity or create a strong leverage for marketing the brand; not as an end in themselves. However, a competitive leverage for an effective marketing program could come from other sources as well, such as a price or distribution advantage, a product edge or a service differentiator.”

THOROUGH PLANNING plays an instrumental role in the success of every marketing effort. Planning enables marketers to get a complete picture of where they stand, where they want to go, and the paths available to them to reach there. Planning helps obtain relevant data relating to consumer preferences, market and competitor activities, economic trends and prospects and other such information that is necessary to make informed decisions with respect to available options.

Srivastava says, “Planning to me is a very broad word and to that extent it will always be the key force behind marketing effectiveness. That’s because the world is too tough, too competitive for great results to be achieved as a matter of chance or luck. On the latter I always remember what one of the golfers is credited with saying: “the harder I practice, the luckier I get!”

Yet, if the basic assumptions about the market (and the consumer) are erroneous, the plan will fail. Consumer preferences are ever-changing and therefore, it is important to capture the pulse of the market in order to minimise the risk of failure. Here, focus helps.

FOCUS is a corollary of planning. It implies having clearly defined marketing goals and the strategies to reach those goals. Without focussed strategies, marketing efforts tend to become fragmented and the outcome is diluted. So does one bring focus into one’s marketing effort? Pranesh Misra answers, “Campaigns that follow the ‘Be clear – then clever’ principle tend to be more effective. Campaigns have to be clear about some critical issues: who is the key competitor, who is the core consumer, what is the key communication challenge, what is the insight driving the brief, and why the consumer should believe it. Being clear means having only one answer for each of these questions and not multiple ones. More that one answer means that the brief is not focussed.” Focussed inquiry will lead to identification of tasks at hand.

IDENTIFICATION entails discovering, and defining clearly, your organisation’s strengths and weaknesses, weigh it against market opportunity and the competitive and economic threats, and finally develop possible strategies to exploit the opportunity and avoid the threats. Srivastava explains this comprehensively, “Within the broad ambit of planning, I look for one or more of the following, which are good drivers of marketing effectiveness:

1. Sharp diagnosis of what’s ailing the brand or the category. This is where most organisations falter. They are either blind to the core issue or too scared to face it. If the diagnosis is clear, it does not take rocket science to figure out what needs to be done to drive the desired results.

2. Sound understanding of the opportunity. Again as someone said, just because there is a gap in the market, does not mean there is a market in the gap! If the opportunity is genuine, large enough and well-defined, it significantly raises the odds that the brand will be effective in the marketplace.

3. A grasp of what it will take to exploit this opportunity. Marketing is a game of leverage; does your strategy give you enough leverage? A big leverage means you can move the market with disproportionately lower investments, at least relatively speaking.”

SUSTENANCE AND PERSEVERANCE are essential for a marketing programme to achieve lasting results. It is said that perseverance and failure cannot coexist. Failure happens when you quit. Planning, insights and focus will lead you nowhere, if the marketing activity is not sustained over a period of time. Srivastava says, “All of these can come to naught if they remain on paper or a PowerPoint slide. Marketing effectiveness calls for a sustained activation of the game plan.”

TIMING often deceives even savvy marketers. A strategy or a tactic that has worked yesterday, may not work today. At one time, the Onida Devil worked wonders for the brand. But after a few years of uninterrupted presence, the magic of the devil began to fade – the devil had outlived his utility. So campaigns are time-sensitive. The problem is that it is often difficult to discard a once-successful campaign because it has either lost its relevance or it has lost its charisma. Again, to recognise that a campaign will not work anymore is easier said than done. Marketers must develop a keen perception of the market mood, trends and patterns. That allows them to be open to change and flexibility. (Incidentally, Onida has recently brought back the devil in a new avatar. What it does to Onida’s fortunes remains to be seen.)

FLEXIBILTY really comes from acknowledging that marketing is a social activity that depends on many societal factors. Change is in the nature of all human beings. Everything changes over time – consumer’s preferences, buying behaviour and spending habits. Good marketers have a built-in contingency plan in the marketing programme to deal with any unpredictable or unseen changes in the marketplace.

PASSION of those working on the campaign may not be recognised as a necessary element of marketing programme; nevertheless, the lack of it can lead to a lacklustre campaign. Passion is required to come up with creative and original ideas that work. Passion is required to intuitively understand the ever-changing marketplace. If insight, analysis, planning and focus are the blood, passion is the oxygen of marketing. Srivastava says, “Marketing programmes need to be driven with the passion and zeal of a crusader. They must be created by, and in turn create, believers of the brand. This calls for honesty, commitment, passion and a relentless pursuit of the cause – the consumer’s cause.”

When we falter…

So what happens when we lose track of these basic principles? Let’s consider an example of a failed marketing campaign. The Maruti Versa launch campaign unleashed last year, failed, in spite of Amitabh Bachchan endorsing the brand. The big B factor worked to the extent that it brought prospective consumers to the showroom. But the product disappointed them. Mind you, there was nothing wrong with the product or with AB’s endorsement of the brand; it was the positioning that went wrong. Because of AB’s presence, the consumers expected a larger-than-life kind of a product. But what they saw was a small wagon-type family car – there was a mismatch between product expectation and delivery. “The inability to grasp the real communication challenge is at the core of all failures,” says Misra. In this case, the communication challenge was finally met, when Maruti launched another campaign, this time showcasing it as the family.

What happens when we fail to obtain consumer insight? Lulla believes that when the campaign is not based on insight, it will not resonate with the consumer. “You may have a great looking campaign that may grab attention but might not achieve much after. It is not just about getting noticed; it is about being effective and creating the desired impact.” Srivastava adds, “Most brands in most categories settle into a state of mediocrity with no real differentiators and no genuine effort to create them. There is helplessness and far too ready an acceptance of the status quo, resulting in an over reliance on ‘an advertising idea’ to pull the brand through. Even this, where the brands have one, is confined in its expression to a typical mass media campaign. There is little follow through, poor support and negligible activation programmes that drive the idea and take it forward. In some cases, the idea itself is sacrificed with a premature change of the campaign; driven by a change of the marketing team or the agency.”

A few years ago, after the tremendous success of CeaseFire fire portable extinguishers, the company (Real Value) launched another innovative product – vacuumised containers. The product bombed, in spite of bigger ad spends and massive advertising on TV. There was no real demand of the product in the Indian market. Lack of planning causes marketing’s effectiveness to diminish. This happens because without proper planning, there is no way to determine deviations from the path and consequently no way to take corrective action if/when it is required. “One of the key reasons of ineffectiveness of marketing is inadequate homework – about the consumer, the way she or he is changing, and about one’s competitors and their strategies,” says DeSouza. Indeed, for look at what inadequate homework did to one oil company in Australia, which spent three million dollars on a TV advertising campaign only to find that 60 per cent of the target audience thought the ad was from the competitor. So in effect the company spent three million on advertising for their competitor. Proper planning might have prevented this unfortunate loss.

Wrapping up

A marketing campaign, however glamorous or expensive, does not yield the desired results, then it not marketing at all. We have all seen some heavily criticised marketing efforts yielding good results for the brand (Dandi Salt). We also know about high-profile and much-written-about marketing campaigns that have failed to push up brand sales (HomeTrade.com). In the end, the measure of marketing effectiveness lies in brand sales. Nothing else counts.

And effective marketing, as we have discussed above, is a process of planning and executing strategies with clearly defined goals, in a sustained and flexible manner, using relevant consumer insight. Provided that we stick to these basic principles, and do not lose sight of the ultimate objective of increasing sales, we will succeed in our goal of attracting, retaining or converting consumers. As Sherlock Holmes would say to his friend and confidante: “Elementary”.

The author expresses his thanks to the following experts for their views:

  • Pranesh Misra, President and Chief Operating Officer, Lowe India
  • Lynn DeSouza, Director of Media Services, Lintas India Group
  • Sunil Lulla, Executive Vice President, Sony Entertainment Television
  • Rohit Srivastava, National Planning Director, Contract Advertising
Low penetration means big opportunity

Low penetration means big opportunity

Manoj Khatri: What are the principal drivers that influence the underlying profitability of the brown goods industry?

Gulu Mirchandani: In the current market scenario, where the value erosion stands at 15 per cent for 2003-04, it is increasing becoming difficult to hold on to the bottom line. Nevertheless, the following are the key drivers of profitability in this industry:

Volume Growths: The low penetration levels of these products is a big opportunity area and the industry is strongly taking this route of increasing the production and sales volumes in order to make the most of the economies of scale. With increasing consumption, the raw material prices have been moving southwards, thereby enabling better profitability

Product Mix management: The challenge is to be able to have a healthy mix of high-end products contributing to the bottom-line. This can only be achieved by offering products which are unique and where the customer sees value in his purchase. The customer is ready to pay more if she feels that she is getting something, which will improve her life and enhance her lifestyle.

Product Innovations: It is also important to catch the changing trends in consumer lifestyles and offer the right product at the right time. Basically, we must innovate on a continuous basis in keeping with the changing consumer needs and to differentiate in the market.

Operational efficiency: It is important to gain overall operational efficiencies like inventory management (Overall inventory less than 15 days), debtors management (Ideally nil bad debts and zero days operation). A good, committed and loyal network also contributes significantly to the bottom line.

Manoj Khatri: Which forces (macro as well as firm-level) are likely to play a major role in shaping the future evolution of the consumer durable industry, say, with regard to growth in demand or introduction of new value propositions?

Gulu Mirchandani:Growing disposable incomes and the low penetration levels: Substantially low levels of penetration, coupled with the growing disposable incomes, will ensure greater share of wallet for the consumer durables industry. The changing lifestyles of the consumers will generate demand and need for this products. The new markets and the resultant demands will be strong influencers on this industry

Opening up of the market/easy access to multi optional inputs: With enhanced possibility of better and easy cross border talks with the suppliers worldwide, the range of offerings has gone up while the cost is coming down

Entry of new players: With the number of players increasing, there has been more action throughout the year and the industry has a buzz around it with constant high pitch communication from the industry to the consumers.

Technological advancements: Innovations and inventions will play a major role in shaping of this industry’s future. Technological advancement has always been at the back of most of the peaks in this industry’s growth. Right from the introduction of colour picture tube to the recent technological advancement of CRTs becoming pure flat, technology is the prime booster for this industry. Advancements in future technologies like the LCD panels and DVD recorders and the like will critically impact the industry. It is expected that by 2008, 33 per cent of the worldwide demand will be met by LCD TVs and Plasma TVs.

Manoj Khatri: Given the competitive scenario in most brown goods segments, what are the central challenges an electronics company like yours must address, in order to retain its price competitiveness and market share?

Gulu Mirchandani: The core to handling various market challenges is to protect the bottom line while being competitive in the market.

Constant Product change: It is critical to have constant newness in the consumer benefit offerings so as to be relevant to the consumer and to be differentiated against the competition. Also, it is important to have low turn around times on the creation of benefits for the consumer, in order to be effective and ahead of the competition.

Operations Integration and Efficiency enhancement: In order to get better return for the inputs, organisations will have to look at integration on backend (components required for the making of the product, logistics etc) as well as the front end (customer touch points, direct sales etc)

Brand Positioning: Every purchase of the consumer is not guided by the cheapest of the prices, but by the benefit that she perceives for the investment planned by her. Hence, it is critical to be appealing to the image seekers while being relevant to the value for money seeker. With lifestyles improving and becoming important to individuals’ personalities, the brand’s positioning and its relevance to the consumer will become more important than ever before.

Customer Relationship Management: The experience that the consumer goes through during the entire purchase cycle and the post purchase usage experience is critical to the organisations’ future business. Managing customer relations and the experience that is offered to her throughout will be a challenge for all players.

Channel Management: A strong influencer on the buying decision is the network, and the organisation that manages the network better, has a substantial edge over others.

Manoj Khatri: What broad strategic initiatives were affected during the last few years by Onida in order to exploit any opportunity that the market offered and also hedge against any underlying risk? To what extent have these initiatives benefited Onida?

Gulu Mirchandani:The past couple of years could be termed as the most dynamic years in the history of this industry. We have witnessed the rise of MNC brands and its adverse effect on the Indian counterparts. Many Indian brands have become almost extinct. We are probably the only Indian brand who have not only survived but have grown during this period. Today, Onida enjoys a high brand salience and is seen as a trusted and reliable brand, with a very high degree of product satisfaction among its users. These have been our key focus areas where we have taken major initiatives. Today Onida offers three principal assurances to the consumer, which is key to our success:

Brand Image – A TV today is a lifestyle statement for the consumer and hence the brand must evoke that sense of pride of ownership in the consumer. At Onida we truly believe this and hence over the years we have been investing on making the brand more modern and contemporary. Today, we enjoy top-of-mind recall and our being among top three brands of the country proves that our investments on the brand have been worthwhile.

Product – TV is seen as a high-tech product with a high risk of obsolescence associated with it. Hence a consumer tries to buy the best at the time of purchase. Onida lagged behind a bit on this parameter primarily because of the delay in introducing flat TVs. However the brand has greatly regained its technological edge in the recent past based on strong focus on Onida Black, the flat screen TV, and today we are at par if not better than the multinationals in this segment. For very high-end consumers who value technology and who would like to have nothing but the very best, we are in a process of introducing plasma and rear-projection television, which is the latest technology available anywhere in the World. Onida is a brand where lot of action can be expected in the very near future. We will touch consumers at all levels and if one is looking for any product related to consumer electronics and home appliances, Onida will definitely change his world.

Service and Quality – Given that TV is a high-ticket purchase, the consumer needs a strong reassur
ance from the brand in terms of reliability. Longstanding brands that have proven track record of trouble-free product performance score on this parameter. Onida is seen as one of the most reliable brands in the TV category and we keep quality at top of our priority list. Like any product, electronic goods suffer wear and tear. It is how fast you address the problem that is important. We believe a satisfied consumer is the best brand ambassador we can get.

Manoj Khatri: Against the backdrop of slackening of demand in many categories of brown goods in recent times and entry of powerful MNC competitors, how are you redeploying their resources * be it with regard to ad spend, sales promotion, distribution channel or sales organization * with a view to maintaining a threshold level of growth in both top and bottom line?

Gulu Mirchandani:To start with, unlike the overall brown goods industry, colour television industry is growing and we expect the market to grow by 10 per cent this year. Industry CAGR as of now is 15 per cent, with all India-penetration of 18 per cent. So there is a huge potential in this market. Even in the metros, the opportunity is huge, with a penetration of around 40 per cent. Therefore, the industry is definitely poised for growth. The major part of the industry is expected to come from the black and white up-graders. Hence we have special focus on this segment. Our distribution strategy is to reach the rural markets and hence we have our sales and service teams spread across India through 30 branch offices, 150 service centres and 35 godowns. We are also looking into our distribution network and trying to seek other opportunities to increase penetration. Our advertising will also be focussed on both the bottom and the top end of the consumer triangle so that we get the best of both – the replacement and upgrader segments.

Another key area that we are redeploying our resources is our new businesses. We have just launched air-conditioners, which have been accepted very well among the consumers. This category is expected to grow at a very high rate in the years to come, and we expect to be among the top brands in the air-conditioning industry. We also have plans to re-launch washing machines in a big way this year. We are targeting 7-10 per cent market share in washing machine business, and have very strong marketing plans to achieve the same. Over all the brand is in the upswing and as of now we are among the top 3 brands in the country. Financially we are clocking profits every year, unlike many multinationals, which somehow lose focus on the bottom-line in their mad race to achieve market-share. So overall you can say we are having a healthy profitable growth both in terms of top and bottom line.

Star Struck!

Star Struck!

Stars, who are known to shape destinies, cast an enormous influence. No, we’re not talking about astrology here. We’re referring to the powerful effect of celebrities on the destinies of brands. One approving nod from a famous face can translate into millions in brand sales. Perhaps that’s why the world over, companies have been using stars to endorse everything, from food to food chains, from soft and hard drinks to health drinks, from clothes and accessories to cars (and the tyres on which they run). Even political parties are awestruck by the charisma of stars. Such is the magnetism of celebrities in this country that during the recent general elections, major political parties fielded a record number of film stars and cricketers to contest from important constituencies around the country. So what about celebrities drives companies to spend in millions on obtaining their stamp of approval on their brands?

Celebrity Endorsements as a strategy
Signing up stars for endorsement is a time-tested strategy and has been effectively used by some of the top brands in the world including Nike and Pepsi. In India too, HLL has used Hindi film stars to endorse their beauty soap Lux since the fifties. Vimal, Thums Up, Gwalior and Dinesh are some of the other brands that used star-appeal in the early days of mass advertising. And who can forget Kapil ‘Palmolive’ Dev?

The ultimate objective of using a celebrity in an ad is the impact on the bottom line. Star endorsements have several benefits, key among them being building credibility, fostering trust and drawing attention… any or all of which can translate into higher brand sales. So how does one decide whether to put a celebrity in an ad? Ideally, this should be dictated by the communication idea. MG Parmeswaran, Executive Director of FCB Ulka says, "As advertising professionals, we recommend celebrity endorsements when the case is justified. There are many cases where you need to use the celebrity to break out of a category clutter. At times celebrity endorsement is used to build credibility to the brand offer."

Most experts concur that, when used judiciously, celebrity endorsements can be an effective strategy. According to Mohammed Khan, Chairman of Enterprise Nexus, "Using a celebrity by itself is not a bad idea provided it is done intelligently."   And there are many examples of good use of celebrity status. Amitabh Bachchan has been used remarkably well by Parker Pens and ICICI Home Loans. And Shah Rukh Khan’s endorsement of Hyundai Santro too seems to have worked well. Parmeswaran adds, "We used cricketers like Rahul Dravid for Castrol in an attempt to break out of the clutter, as well as have an image rub off of ‘dependability’ on to the brand."

Six uses of Celebrity Endorsements
Establishes Credibility:
Approval of a brand by star fosters a sense of trust for that brand, among the target audience – this is especially true in case of new products
 
Attracts Attention: Celebrities ensure attention of the target group by breaking the clutter of advertisements and making the ad and the brand more noticeable

Associative benefit: A celebrity’s preference for a brand gives out a persuasive message: because the celebrity is benefiting from the brand, the consumer will also benefit

Psychographic Connect: Stars are loved and adored by their fans and advertisers use stars to capitalise on these feelings to sway the fans towards their brand

Demographic Connect: Different stars appeals differently to various demographic segments (age, gender, class, geography etc.)

Mass Appeal: Some stars have a universal appeal and therefore prove to be a good bet to generate interest among the masses.

Idea First
Celebrity endorsements are very expensive therefore their use in an ad should be justified. The message strategy should warrant celebrity endorsements – there should be a strong need to consider use of a known face in an idea. Sadly, very often, the celebrity is hired first and an idea is then weaved around his or her presence. Khan stresses, "The important thing to remember is that putting a celebrity in an ad is not an idea in itself. Unfortunately, this is how most celebrities are being used in Indian advertising where they just become a prop. Ideally, there should be an idea that makes the celebrity relevant to the product and the consumer."

Celebrity’s presence in the ad should be contextual. When Sachin Tendulkar says declares, "Boost is the secret of my energy," it doesn’t seem out of context. Internationally, Nike’s association with Michael Jordan is legendary and also logical.

Apple Computer introduced its anodized Aluminum range of Powerbooks, the 12-inch and the 17-inch models, with actor Verne Troyer (from movie "Austin Powers" as "Mini Me") and Houston Rockets centre player Yao Ming. If you think that Apple has simply engaged two celebrities to brand their laptops, you are wrong. They have engaged a very tall person (Yao Ming) and a very short person (Verne Troyer), to contrast the size of their small and large Powerbooks, by having Verne Troyer use the 17-inch PowerBook, while Yao Ming uses the miniscule 12-inch model.  [1]

When it doesn’t work
In the last decade or so, there’s been a spurt in the use of celebrity endorsements. And with it, there’s been an increase in the number of instances of brands failing to take off in spite of the biggest and brightest stars endorsing it and consequently leading to speculation about the soundness of celebrity endorsements as a communication strategy.

According to leading management thinker Dr Seamus Phan: "Many celebrity endorsements fail because they identify a celebrity they like in an emotive and un-researched manner, and then try to create advertising to force-fit the celebrity into the creative concept. Often, the finished advertising is at best contrived, and often, simply laughable. At the end, the brand suffers from a mismatched concept and celebrity, and millions of dollars are flushed away. If this company is publicly listed, imagine the disservice the company has done for its shareholders." [2]

There are several reasons why celebrity endorsements fail to produce the desired effect, and each of them has to more with the core communication strategy and less with the celebrity’s pull. "Celebrities cannot really be blamed if their endorsements fail to push up the brand sales," says Adrian Mendonza, Executive VP and Creative Director of Rediffusion DY&R. Indeed, for it is important to recognise that celebrities can create interest – whether that interest converts into sales depends on various factors such as brand-celebrity disconnect, improper positioning, clutter of celebrities, or even product life-cycle.

Five causes of letdown
It’s worth going over some of the reasons why celebrity endorsements may not work:

Improper positioning
Associating with a star, however big he or she may be, in itself does not guarantee sales. The most it can do is generate interest in the product or create a buzz around it. Take the case of Maruti Versa, which was launched amidst a lot of fanfare about three years ago. In spite of Maruti signing up superstar Amitabh Bachchan and his son Abhishek Bachchan as brand ambassadors for Versa, the brands sales remained sluggish. To be fair, the Big B magic did work and the ads created significant interest, drawing people into the showroom. But perhaps the positioning itself was faulty as people were expecting a larger than life car, just like the brand’s ambassador. Last year, we saw Versa being re-positioned as a family car, with the core proposition being, "the joy of travelling together." In the words of Ravi Bhati
a, General Manager of Marketing at Maruti, Versa has started doing well and has witnessed an upswing since the new positioning. Last year, the average sales were 80-100 vehicles a month. Now they are selling 450 vehicles a month. [3]

Brand-celebrity disconnect
If the celebrity used represents values that conflict with the brand’s positioning and the values it stands for, the advertising will create a conflict in the minds of the target audience who may reject the proposition. Take for instance Toyota, one of world’s leading auto companies. Toyota chose teeny-pop singer Britney Spears to for its brand Soluna Vios, which is a family sedan which is preferred by married men and women with children. According to Phan, a youth icon like Britney would’ve been better used by Toyota for a sleek sports vehicle and for Soluna Vios, Toyota should choose someone like a mature man, Harrison Ford for example. [4]

Clutter Flutter
In recent times, there’s been such a deluge of celebrity endorsements that it has led to the very clutter that it aimed to break. For instance, Amitabh Bachchan endorses or has endorsed Pepsi, ICICI, BPL, Parker pens, Nerolac, Dabur, Reid & Taylor, Maruti Versa, Cadbury and a few social messages too. Bollywood badshah Shah Rukh Khan with Omega, Tag Heur, Pepsi, Hyundai, Clinic All Clear and Airtel has to his credit more television commercials than feature films since 1992. This over-exposure can be bad for the brand. Khan adds, "We seem to have just 2 ½ celebrities in a country of 1 billion people which is a terrible tragedy. Consequently, each celebrity is called upon to push maybe a dozen brands or so. Which is great for the celebrity but I think it is pretty daft for the brand because the impact of the celebrity reduces as the number of brands he endorses increases." Parmeswaran agrees, "Unfortunately in India, we have too many brands chasing too few celebrities. And the recall value drops by a huge margin when you move from an A Class celebrity to a B Class."

Bad idea/product
Using a celebrity is not an excuse for not having a brand idea. You cannot sell an ordinary product just by making a celebrity endorse it. Parmeswaran says, "Unfortunately using a celebrity seems to be the easy way out of a parity product situation." In fact, if anything, the product will fail faster because the presence of the celebrity will create a buzz and more people will know about the "ordinariness" of the product.

Confusion/Scepticism
The use of celebrities can be confusing. Some viewers quickly forget what product a celebrity is giving his or her stamp of approval. Others are so spellbound by the personality of the celebrity that they completely fail to notice the product/brand being advertised. The brand is overshadowed in the overwhelming presence of the star. In some cases, a celebrity can give rise to scepticism because it might be a bit too much for the masses to believe that the celebrities who are rich and can afford the best in the world are actually using a mass product, being advertised on television. On the contrary, people might speculate about such things as "how much did the brand pay to rope him/her in as the brand ambassador?"

A study done by Cogito Consulting of FCB-Ulka Group has tried to fathom the truths behind why some celebrity endorsements work and some don’t. They have developed two indices, Trait Fit Index and Compatibility Index. TFI is derived based on the top five Brand Personality Traits and the top five Celebrity Personality Traits. CI is derived based on the respondents’ perceived suitability between the celebrity and the brand. The study shows the CI is more important than TFI. The implications from the study were:
1.  an aura cannot overcome a complete conflict of the celebrity with the brand’s personality
2.  when it comes to finance, a young icon is not convincing enough
3.  in the case of youth brands, it is especially important to get the latest heartthrob
4.  use of celebrity helps break the clutter

So using a celebrity just helps you break through the clutter. And if there is low CI and low TFI, that is all that will be achieved.

Courtesy: M G Parmeswaran, Executive Director, FCB Ulka


Risks associated with Celebrity Endorsements
It is important to consider risks associated with celebrity endorsement. Fame is fickle and fleeting companion and can ditch the famous at the slightest provocation. Celebrities, being human, make mistakes. But their mistakes get as much attention as their celebrity status and this can adversely affect the brands that they are endorsing. There are number of examples, both Indian and International, where scandals and scams involving celebrity endorsers have caused embarrassment to the brands they endorse. Companies have to make quick decisions when one of their endorsers comes under fire or their own image could be tarnished. Guilty by association in a consumer’s eyes describes it best.

Magic Johnson lost his endorsement deals when he announced in 1991 that he’s HIV-positive. It wasn’t until July 2003 that he landed his first endorsement deal since the announcement. [5]

It’s a tricky situation for marketers. If a brand continues with the celebrity, it may adversely affect the image of the brand and consequently, brand sales. If the brand chooses to distance itself with the tainted celebrity, the huge costs spent on roping in the celebrity and making of the ads may go down the drain and even then the association of the brand with the celebrity might by then be so ingrained that the damage is already done. "It’s a two-way street. One way it shows the strength of the brand promotion. But it is also fraught with risk if your brand ambassador fails to perform in the related field," says Reliance India Mobile (RIM) marketing head Kaushik Roy. RIM uses Cricket star Virendra Sehwag as its brand ambassador. Roy added, "We want to try and avoid the celebrity endorsements as much as possible. Over-dependence on them will create problems in future so we should stand on our own legs." [6]

Hedging the risk
The first thing to ensure, when zeroing in on a celebrity, is to try and choose someone whose record is impeccable. Having said that, it’s best not to depend on one celebrity, for that can backfire. Instead, it’s better to use many celebrities who represent the same values. Pepsi does this quite well. Capitalising on the popularity of cricket and films in Indian, Pepsi uses several cricketers and film stars in their ads. So when Azzaruddin and Jadeja got embroiled in the match-mixing controversy, Pepsi’s severed its association only with these stars, but its relationship with cricket continued.

So what’s the big deal?
Star endorsement deals are big in every way. They are big on expenses and can have big implications on the brand’s fortunes. Celebrities have enormous potential to shape the destinies of the brands they endorse, albeit sometimes negatively. Therefore, marketers who use celebrities must do so prudently, thinking through the concept of such endorsements carefully before adapting it into the message strategy. Experts concur that you must consider a celebrity endorsement if, and only if, the message strategy warrants it, not because the celebrity’s pull value. And last but not the least, one should seriously consider the risks of associating with a well-known personality, and hedge against a future scandal by not relying on just one celebrity and instead linking the brand’s association with a broad theme represented by several celebrities. If you can’t afford many celebrities, then get your thinking caps on, and come up with a better, safer idea.

Notes
[3] www.exchange4media.com/brandspeak
[1, 2, 4] Does celebrity branding always work? By Dr. Seamus Phan,
www.allaboutbranding.com
[5] Companies Ditch Celebrity Endorsements,
http://advertising.about.com
[6] The brand ambassador gamble, April 08, Online Edition, The Tribune

Generic positioning platforms will not work any more

Generic positioning platforms will not work any more

MK: Can you chart the evolution of liquor industry during the last 10 years?

Alok Gupta:
The alcoholic beverage segment represents a vastly different scenario today in comparison to a decade ago. Since last 10 years, the Indian liquor industry has evolved at every stage. To start with, the industry has changed from being "seller’s" market to a "buyer’s" market. Consumer groups, which earlier were targeted as one large demographic island, have got fragmented into distinct psychographics’ groups. Brand and media proliferation, information boom and easy access to wide variety of brands have all had a significant impact on the buying behaviours of consumers, who are now clearly seeking "value" over "price". In many ways this reflects branding of a commodities market which was dominated by heritage brands.
Sociologically, the country has undergone a sea change. Lifestyles have changed drastically. Today, drinking in moderation is not looked upon as a social taboo. Youngsters today are often seen sharing a drink with their parents which was unheard of a decade ago except among a very few upper class families. Social drinking among women is also on the rise.

Unlike a decade ago, the consumer today also has a number of options in terms of brands and segments – A fast emerging change is in terms of flavour substitution depending on consumption occasion. Earlier an average consumer would stick to a preferred flavour say a whisky or rum but now the flavour basket has many more like whites, wine, RTD etc. Marketers need to understand the trigger for such switches and evolve the marketing initiative.

Market is fiercely competitive and marketers are fighting for value share, value paradigms are being redefined, new fronts of customer engagements are being created. In the market, where the imperatives are neither PCC nor penetration driven, the fight is for market shares and larger share of the organic growth.

MK: What forces drive the liquor industry in India?

Alok Gupta:
Some of the key drivers of the liquor Industry are Duty structures, Excise rules and regulations, product-pricing, marketing initiatives to promote the brand and to communicate with the customers, distribution and several regulatory issues like licenses to manufacture, labeling etc. On issues of excise and duties, these are fast coming to WTO levels. The industry does not have many entry barriers and with the opening up of the economy there are multiple ways of market entry; it could be Bottled in India (BII) or Bottled in origin (BIO) or Bulk import and locally bottled.   While this will enable world class quality brands entering India, there is a fear that the stagnating markets overseas may trigger dumping of cheap liquor into the Indian market, which will not be a healthy trend for both the Indian consumer as well as the domestic liquor players.  

MK: How many segments, branded or unbranded, exist in the liquor industry and in what proportion are they growing? How are the brands of UB groups performing vis-à-vis the competitor’s brands?

Alok Gupta:
The IMFL industry in India is estimated at nearly 84 million cases and is growing at 8 per cent per annum. Consumption is largely skewed towards whisky, which accounts for over 60 per cent of the market. Brandy accounts for 21 per cent, rum for 14 per cent and Whites (Gin, Vodka, others) for 5 per cent.

The UB Group Spirits Division (UBSPD), which comprises McDowell and Co Ltd and Herbert sons Ltd, is likely to cross 35 million cases in 2003-04. Growing faster than the industry average of 6 per cent, the Division further consolidated its leadership and grew its market share to 37 per cent. UBSPD ranks as the fifth largest beverage-alcohol group in the world. Last year, we registered a record growth of 14.5 per cent. We hope to grow in volumes this year too.

UBSPD is the dominant player in the spirits market in India with the other players at a distance. We dominate the market not just in market shares but also in our manufacturing capacities, product ranges and distribution strengths.

MK: What are the marketing challenges that a liquor company faces (with specific reference to India – constraints on mass advertising, social responsibility and consumer preferences)? How is UB group dealing with these challenges?

Alok Gupta:
A highly regulated environment and poor shopping infrastructure in the Alco-bev industry is unfortunately diametrically opposite to the direction India is heading. Consumer today is demanding more and more information on products and services and in absence of a communication platform the industry faces a major handicap. The industry body CIABC has proposed a Self Regulation Code, which has been drafted after a careful study of similar platforms across the globe, and being followed both in the western and the eastern economies. We are hopeful that one day such a code will become a reality.

We are a firm believer in investing in social-awareness programmes and have in past run campaigns on "Responsible Drinking." As a policy, we do not sponsor or organise events at college level. In addition, we take all necessary precautions to ensure that we do not hurt anybody’s social or religious sentiments.

MK: What, according to you are the key performance metrics against which a firm must excel in order to be the leader in your industry? How does a firm set benchmark against each of these performance metrics?

Alok Gupta: The Indian consumers have come of age today. The entry of international players has increased the consumer expectations. As the leader, UBSPD remains aligned with the evolving consumer expectations and the market realities.  

1. Marketers today need to look at the industry with new lenses and break away from the traditional price-value equation and start creating value for which the consumer will happily pay the right price; this will considerably enhance profitability also.

2. Focus on brand building, create unique and relevant proposition to command a larger market share. This will reduce dependence on the highly regulated trade and bring down the cost of sales.

3. Balance the short-term with the long-term; while one must focus on today, it is imperative for the marketer to plan for tomorrow, especially in view of the opening of the market, as duty trade barriers will slowly disappear.

4. Adopt and customise global benchmarks, both for products and the overall product experience. To sum it up, the company that aligns it’s thinking to global levels but connects with the consumer at a local level will thrive.

MK: What are the value propositions that a firm in this industry can draw on, to create a distinctive positioning in the minds of the target customer groups? How does possession of a number of power brands, help in building market share and obtain price premium?

Alok Gupta:
Business model and strategy are not independent of the social and economic milieu we operate in. Value proposition would obviously depend on the target consumer group. One thing is however sure: generic positioning platforms will not work any more; proposition will have to be based on consumer insight and marketers that commit themselves to this process are more likely to succeed.

Though McDowell’s Signature is positioned on the platform of "Success" the communication strategy is based on the consumer insight that in today’s context, success goes beyond material wealth and its apparent symbols and trappings. Success today is all about new rules – it is about new ideas – and this forms the backbone of the "The new sign of Success" campaign in which real life individuals, who stand for such success, ha
ve been showcased as "Signature success icons". The campaign inspires and produces an emotional connect and more importantly, is relevant to the target consumer leading to brand adoption and loyalty and, to some extent, even word-of-mouth.

Given the market realities, UBSPD has consciously followed a strategy of being present at different price points across different flavours. Our focus on building brands has given us an enviable portfolio of as many as eight "millionaire" brands, the fourth biggest basket of brands in the world. We have identified a set of Power brands to provide a range of solutions to meet the mood, occasion, expectation and retain the consumer. Another significant advantage is trapping higher value as the consumer moves up the economic ladder. UBSPD is the leader and trendsetter in India, and we have no intention of reducing ourselves to a niche player.

MK: Finally, what are the core value propositions of the UB Group and how are they different from competitors?  

Alok Gupta:
Our core value is to continuously adapt to the changing consumer and therefore to stay relevant, in a unique way, in the fast changing socio economic and cultural context. We believe in offering a wide range of products to be able to meet the demands of all types of consumer groups. Innovation has always been our thrust area and as market leaders we are focused on challenging the paradigm. This allows us to stay in the lead all the time. As of now, we are close to being the fourth largest liquor marketer in the world. Quality delivery has always been recognised as the most important imperative. Efficient and friendly servicing of the market ensures that we have the nest support of the retail and the on-premise network.

In the beginning was the word…

In the beginning was the word…

Word of Mouth communications is as old as humankind. In the Garden of Eden, after Eve tasted the forbidden fruit, she strongly recommended Adam to take a bite. Eve’s insinuations stirred up in Adam heart an irresistible temptation which led him to try the fruit himself. And thus was set in motion the first ever word-of-mouth phenomenon.

Though marketing communications has certainly evolved since the days of Adam and Eve, the power of the word remains unchallenged. Every business in the modern era, either knowingly or unknowingly, generates word-of-mouth that is either positive or negative. While positive word-of-mouth increases sales and helps raise brand equity, negative buzz is usually harmful to business.

Even as positive word-of-mouth can substantially reduce your marketing and advertising costs, negative word-of-mouth is accompanied by the danger of annihilating your brand. Therefore it follows that every marketer in his right mind will aim to minimise negative buzz about his brand while maximising positive buzz around it.

The power of Word-of-Mouth

George Silverman, President, Market Navigation, Inc. says, "In study after study, with almost every category of buyer, word of mouth has been shown to be what is known as the proximal cause of purchase – the most recent thing that happened just before purchase."   [1]

Ask yourself what you do when you’re looking for a doctor, lawyer, plumber, architect or a financial consultant? Seek a reference from a trusted friend? You bet.

There is a small automobile service centre in this writer’s neighbourhood. It specialises in service and repair of Maruti cars and has thriving business. The owner is a thorough professional and believes in providing true to service to his customers. He never fixes anything that doesn’t require to be fixed, and goes that extra mile to ensure that the car delivered to the customer is as perfect as it can be.   His work is brilliant – the car always runs smoother and better after a visit to his garage. He never charges you for minor repairs. He’s installed computers at his office to record the repair history of all his customers. His bills are never inflated and his charges are quite reasonable – certainly much lower than what an authorised centre would charge. Almost all the Maruti cars in the area (numbering in hundreds) turn up at his garage for servicing. This, in spite of the fact, that there is a Maruti Authorised Service station right next to his small little garage. His business is brisk because he believes in consistent quality service. His customers (including this writer) swear by his service and bring their friends, colleagues and associates to him. His is a local business and he does absolutely no advertising.

The Bukhara of ITC Maurya in Delhi, which is now ranked seventh among the top 50 restaurant brands in the world, has never been advertised.

According to Gautam Anand, general manager, ITC Maurya Sheraton, Delhi, "Bukhara is like a temple of the Indian experience where it’s stayed relevant for 25 years and nothing has changed – not its menu, not its ambience or even its seating style. It offers a very predictable experience and people know what to expect consistently. It has just been the buzz that has made it so." The brand has grown and has lent itself neatly to ‘Kitchens of India’, the ready-to-eat, canned premium range from ITC Foods and not just that; the restaurant itself has spread to other cities such as Chennai and Mumbai, albeit as Peshawari. [2]

On the negative side we have the Palio car from FIAT. Its sales picked up very well only to slacken down later because of the buzz that it is a petrol guzzler. In spite of Sachin Tendulkar’s endorsement, the brand could not hold on to the market share, as negative word-of-mouth about its poor fuel efficiency caught on.

The above examples of positive word-of-mouth are by no means exceptional. In a study of 7,000 consumers in seven European countries, 60 percent said that they were influenced to use a new brand by family and friends. [3] See Box: What do people "buzz" about?

What do people "buzz" about?

  • Exciting products (like movies or destinations that offer exciting experiences)
  • Innovative products (like web browsers)
  • Personal experience products (hotels, airlines, vacation)
  • Complex products (in order to reduce risk people talk about products they do not understand like software, medical devices)
  • Expensive products (a very expensive vacation package will make potential buyers ask about what it offers and how good it is since it requires a big investment by the buyer)
  • Observable products (people engage in discussions about what they see in other people, e.g. clothing, expensive cars)
  • Personal activities (like attending a cultural or sporting event, people usually talk about this kind of experiences while socializing with friends and relatives)

Products like books, films and entertainment depend heavily on buzz. It is common knowledge that word-of-mouth is the single largest determinant in the success or failure of a film. In fact, a 2001 McKinsey report found that buzz plays a major role in entertainment. The report states that motion pictures and broadcasting are two of the categories largely driven by word-of-mouth. The report also says that 54 percent of sales across industries are affected by word-of-mouth. [4]

Because this is the age of the Internet, e-mail, websites, chat rooms, and video teleconferencing, word-of-mouth is even more important to businesses today than ever before. Information travels faster than ever before.

Word-of-mouth marketing contributed significantly to the success of many large companies and brands such globally recognised brands a KFC, Harley Davidson, Body Shop, Hotmail and Apple.

Apple did not advertise until very late in the game, and relied almost entirely upon word-of-mouth in the form of dealer recommendations and friends telling friends. [5]  

Coca Cola re-entered the Indian market in 1993 after 16 long years of absence, yet its brand awareness among the youth was substantially high. They had heard about Coca Cola from their parents and other elders who knew about the brand.

Studies have shown that a satisfied customer will tell an average of three people about a product or service she likes. Yet, more importantly, a customer will tell eleven people about a product or service with which she had a negative experience.[6]

The average urban consumer is exposed to 200-800 commercial communications per day, but only acts on one every week or two, and then mostly to get more information, not to buy.[7] When people ask someone about a product, they are likely to ask, "Did you face any problem using X?"

Another reason that word-of-mouth is so often negative is because the positive experiences are expected and soon forgotten, but the negative experiences cause people to be angry and frustrated, generating negative word-of-mouth. Studies have also shown that unexpected extraordinary service also causes strong positive word of mouth. In fact, some of the strongest and most frequent word of mouth results when a customer who has been let down is turned around by an extraordinary response to their expression of dissatisfaction.

Advertising versus Word-of-Mouth

Research shows that word-of-mouth can be seven times more effective that print media, twice as effective as broadcast media and four times more effective than sales personnel. Why? Because the source of word-of-mouth communications is normally independent of the company – the person is offering his or her own candid opinion and therefore, the information appears credible. On the other hand, advertising is the renting of a medium to send out a carefully crafted message to a specific audience.

"People are deluged with promotional information, and they are beginning to distrust it [advertising]. People are more likely to make decisions based on what they hear directly from other people, including friends, experts, or even salespeople. These days more decisions are made at the sales counter than in the living room armchair," wrote Regis McKenna, considered the marketing guru of Silicon Valley. [8]

Management consultants Cap Gemini Ernst & Young found only 17 per cent of the 700 U.S. consumers it surveyed in the past six months said TV ads influenced their car-buying decisions. Ads on Internet search engines influenced 26% of consumers. Nearly half, or 48%, of the consumers said a direct-mail offer from a car dealer would influence their vehicle purchases, but the most influential measure was word-of-mouth, cited by 71 per cent of consumers. [9]

The findings are significant because, as a group, automotive marketers are the largest purchasers of advertising and skew heavily toward TV advertising.

In a report in Advertising Age, Mike Wujciak, a vice president who oversees Cap Gemini’s auto practice said, "We think manufacturers and their dealers are wasting money on broad-based TV advertising instead of a direct-marketing approach," said While he’s not suggesting carmakers entirely ditch their TV ad budgets, he said "maybe they should re-evaluate the media mix, because TV is such a big part of their budgets." [10]

Yet, a good advertising campaign has the power to trigger off a strong word-of- mouth phenomenon. Like, what the legendary Bill Bernbach, considered father of modern advertising by many, said, "A great ad campaign will make a bad product fail faster. It will get more people to know it’s bad."

Harnessing the Power of Word-of-Mouth

Ensuring a good product and high quality service are best things you can do to avoid negative, and generating positive, word-of-mouth communications. Yet most marketers feel that WOM is like weather – you can do nothing about it.
 
The best way to get people talking about your company or its products is to create some excitement. Wendy’s did it years ago with a funny demonstration of the competitive advantage their burgers hold over McDonald’s. By asking "Where’s the Beef?" they were able to build name recognition and show customers why their burger is better. The humorous and offbeat approach helped turn a successful consumer campaign into a positive word-of-mouth campaign.

As recently as September 2003, Sony Entertainment Television launched a massive buzz campaign to launch and promote its new comedy series Jassi Jaisi Koi Nahi. Besides TV, print and outdoor, the channel also fired up other offline initiatives such as flash mobs, PR, email marketing, radio, SMS, leaflet messages and phone-in messages, all of which saw a steady build-up from pre-launch to post-launch.

Another way to create excitement is to give something away. Car Company Chrysler went directly to business leaders to introduce its LH series, offering new cars for a weekend to 6,000 top executives. The subsequent exposure in newspapers and the electronic media brought immediate public relations benefits. According to statistics in follow-up surveys, 90 percent said their opinion of Chrysler had changed; 98 percent said they would recommend the car to a friend; and at least 32,000 people know about the car as a result of the 6,000 weekend test drives.[11]

But marketers must remember that ultimately artificially created buzz can do only so much. If ultimately the consumer does not like the product, it will fail anyway – and maybe faster due to the buzz.

Dealing with negative word-of-mouth

Often, companies and brands become victims of negative buzz. Unfortunately, people are more likely to talk about your business when they are unhappy than when they are happy or satisfied. Recent research reports that 92.6 per cent of rumours about companies or brands heard in the past year by consumers were negative in nature.[12] Whether the negative buzz is a rumour or reality, marketers must deal with the situation carefully. You must control damage as early as possible, definitely before it blows out of proportion and harms the image of your company or brand.

The best way to counter negativity is to create positive word-of-mouth. Try to find the source of the problem and specifically answer the charges.

Sometimes keeping quite and doing nothing about it is the best option because consumers may actually hear about the rumour only when marketers attempt to correct it. Many years ago in Ohio, the McDonald’s Corporation was the victim of a nasty rumour. The focus of the rumour was that McDonald’s hamburgers contained worm meat in them. McDonalds tried to counter the rumour by posting a letter from the Secretary of Agriculture which claimed that hamburger produced by the effected establishments is "wholesome, properly identified and in compliance with standards prescribed by Food Safety and Quality Service regulations." In spite of these attempts to quell the rumour, it remained strong. Later, a study found that 35 per cent of consumers learnt about McDonald’s worm only when they saw the company’s anti-rumour campaign.[13]

Another option is to deal with negative word of mouth is address it discreetly. When people in the US perceived oil companies as greedy, companies launched campaigns highlighting the socially desirable things that they had achieved. [15]

Another idea employed of marketers to deal with negative word-of-mouth is to release creative advertising to get consumers to think about something else. For example, during the time period of the worm rumour, McDonalds could have advertised their cleanliness and the quality of their food. Here, without mentioning worms, the rumour is indirectly addressed by getting consumers to realise that a clean McDonalds is a wormless McDonalds. [14]
 
For business-to-business and service industries, negative feelers are often a result of discontented customers. Compile your customer complaints, and check for a pattern. If a particular product or service emerges as the problem, rectify the problem immediately.

Final Words

The Holy Bible say: In the beginning was the Word, and the Word was with God and the Word was God (John:1:1-3). Well, from the above discussion we can safely conclude that as far as marketing communications go, the Word is still God.

WOM has the power to both accelerate and slow up product acceptance. Most marketing professionals, even those who understand the power of electronic broadcast, believe that WOM is the most compelling way to bring in new customers. It is credible, spreads fast, is low-cost and triggers purchase better than all other form of communication. Time and again, WOM has proven to be more effective in stimulating sales than any other medium, mass or niche.

When used effectively in combination with other tools like mass media advertising, direct marketing and public relations, WOM can lead to substantial savings in your marketing expenditure. Take my word for it!

Notes:
[1, 5] How to Harness the Awesome Power of Word of Mouth by George Silverman, Direct Marketing Magazine, November 1997, pp 32-37
 [2] Flash mobs! That’s buzz marketing by Shamni Pande, The Economic Times Wednesday, December 24, 2003
[3] "Marketing Management" by Philip Kotler, 11 E, 2003
[4] "The Buzz on Buzz" by Renee Dye, Harvard Business Review, November-December 2000.
[6] "The Secrets of Word-of-Mouth Marketing How to Trigger Exponential Sales through Runaway Word of Mouth" by George Silverman, Amacom 2001
[7] "Heard it from a Friend, The Secrets of Word-of-Mouth Marketi
ng" by George Silverman, Quirk’s Marketing Research Review, Feb. 2002,
[8] Regis McKenna, The Regis Touch (Addison-Wesley, 1985)
[9, 10] Advertising Age, October 13, 2003
[11]
http://www.smartbiz.com
[12, 13, 14] Rumor Has It That Word-of-Mouth Can Be Dangerous by Michael A. Kamins, www.marketingprofs.com
[15] Conceptual Issues in Consumer Behaviour: The Indian Context, 1/e by S Ramesh Kumar, Pearson Education 2003