Issuu on Google+

February 2011

Mark-Avenue by Mercur-I ‘Shopper’ Marketing: New game for retailers and manufacturers -Nikhil Gupta

Inside this issue: Article—”Shopper” Marketing

1

Article—Rebranding of ‘Kizashi’ - The Maruti Suzuki way

2

Article—Small Businesses??? - Branding basics are here...

3

Article—Great Indian Noodle Market Growth Story

3

Article—Getting Started with MARKETING

4

Article—Harley Davidson—Do they sell ‘bikes’?

5

The moment you enter into a supermarket, 5,000 items start clamoring in your face to grab your, ever so important, share-of-mind. And then you also find promotion flyers in the store – “buy one get 30% off, buy two get 50% off” – influencing your purchase decisions. While shoppers might not put too much thought behind those purchases, creating campaigns that capture shoppers‟ attention and subsequently influence their purchasing decision is a serious business for retailers and manufacturers. In recent times, companies have been spending their energies and money on what they call “shopper” marketing. Shopper marketing is gaining popularity as stores and consumer goods manufacturers seek a way to capture the attention of a consumer whose spending is increasingly siphoned off by websites and other media. Though businesses believe in the purpose of this concept, they are not fully convinced of the definition – a few burning questions: Is it about in-store\outof-store deals? Does this take into account what a customer feel before entering into the store, or merely what s/he sees on the store shelf? Experts from industry and from marketing research companies have a divergent view on this. While experts from research agencies believe that it is simply a recycled consumer marketing with a

„shopper‟ name put on it, experts from industry believe that Shopper marketing is bigger than customer marketing because it takes into account what customer is thinking when s/he is outside the store and not planning an immediate purchase. Tommy Hillman, a market-

next three years. What does this imply? – Marketing money will now move closer to point of purchase than traditional media such as TV and newspapers. Earlier supermarkets had a belief that customers‟ relationship is with

“Consumers will no longer see purchasing goods online, via mobile phones or from retail stores as three different activities” ing manager at General Mills, put forth an explanation that includes working closely with retailers "to help them win their share of wallet, aligning with their programs, offering solutions that are going to ultimately benefit them the most." But roadblocks remain for successful shopper marketing; it is difficult to change the habits of grocers. The amount of shelf space allotted to a product depends upon the trade allowance and promotions for that product. Grocers‟ merchandising department doesn‟t work along with the manufacturers‟ marketing and sales team. For a successful shopper marketing, grocers and manufacturers have to collaborate more effectively. According to a study by Grocery Manufacturers Association and Booz & Co., 83% of food, beverage, health and beauty and household product manufacturers said they plan to spend more on shopper marketing over the

store and not manufacturers but a reversal in trend is going to be the next wave in which retailers will lose control. Today, customer walks into the store to make a purchase only after using the Internet to research about the brand they want to buy. Hence the power is shifting to brands which can play a crucial role in influencing purchase decisions. Having said that – the objective here should be to "build a relationship with customer so that they take that relationship into the stores and manufactures don't have to work as hard to win in that moment when they're at the shelf." As the markets become mature and competitive, consumer product companies are not seeing the expected lift in sales from their traditional advertising and promotional expenditures. Shopper marketing is the new way in which retailer and manufacturer work together to attract shoppers.


Mark-Avenue

Page 2

Rebranding of ‘Kizashi’ - The Maruti Suzuki way - Shashank Verma

Marketing Two-Upmanship A salesman was demonstrating unbreakable combs in a department store. He was impressing the people who stopped by to look by putting the comb through all sorts of torture and stress. Finally to impress even the skeptics in the crowd, he bent the comb completely in half, and it snapped with a loud crack. Without missing a beat, he bravely held up both halves of the 'unbreakable' comb for everyone to see and said, "And this, ladies and gentlemen, is what an unbreakable comb looks like on the inside."

Two shoe salespeople were sent to Africa to open up new markets. Three days after arriving, one salesperson called the office and said, "I'm returning on the next flight. Can't sell shoes here. Everybody goes barefoot." At the same time the other salesperson sent an email to the factory, telling "The prospects are unlimited. Nobody wears shoes here!"

The Japanese word "Kizashi" means "something great is coming". Maruti Suzuki India Ltd. (MSIL) must be hoping its newest luxury sedan of the same name (launched in India in February 2011) lives up to that promise. But there are many who question the viability and even success of the company's foray into the larger luxury segment. What‟s our take on this? What comes to your mind first when you come across the term „MARUTI SUZUKI‟? It always absolutely has to be a Maruti 800,

chase decision or a customer for Kizashi opting for sophistication and finesse. (b) MSIL has indicated a change in its car distribution strategy in the country. It plans to set a network of as many as 20 plush outlets across the metros. Until recently, the company‟s presence was limited to highly populated city areas with high footfall of buyers of masssegment cars such as Alto, Swift and Dzire mostly through private franchisees. But for the luxury car segment, MSIL found it pragmatic to have its own presence in all

MSIL’s biggest challenge is to change the brand perception of the consumers. best known as „The Middle class car of India, or an Alto, Wagon R among many others. MSIL rules the small car market in the country. MARUTI as a brand itself is seldom looked at, as a luxury brand. It is more linked with the middle socioeconomic class and over past many years Maruti has maintained & up to an extent restricted its Target Market to the same. Maruti Suzuki brand is seen as most trusted & relatively economic brand. The luxury sedan segment represents just 1% of the total Indian car market and has grown 53 per cent in the first three quarters of this financial year to 13,838 units. As per Mr. Shashank Srivastava, CMO - MSIL , "We are putting together a direct selling team dedicated to Kizashi. We would spread awareness through a 360 degree promotional campaign with emphasis on digital activities to cater to specific consumer groups." (a) „Way of Life' has replaced 'Count on Us' as the tagline of the mother brand Maruti Suzuki. „Way of life‟, Maruti hopes, would open up products for consumers across segment, whether she is a buyer of Wagon R looking for safety and reliability while making her pur-

major metros, so that it could focus more on post-sales service in a better way. (c) MSIL has set up a website (www.kizashikicks.com) with videos, car comparisons and all the

data you‟d ever want to know about Kizashi. Applications and advertisements in this web-site feature the Kizashi head to head against the luxury sport sedan rivals.

But our question still remains -Will Kizashi find space on Indian roads? (a) The unsocial people: The daggers are already out on social networking sites against „Kizashi‟ . Netizens are finding it a little difficult to believe that Maruti Suzuki‟s latest offering in India is a luxury car. They are not sure if one will

spend Rs 17 lakh to have a Maruti branded car. “Imagine you have spent 17 lakhs on a car and then you see big 'M' on the grill,” tweets Saurabh. These Tweets somewhat sum up the sentiment of consumers and the marketing experts. (b) The bumpy road: Customer acceptability would be the biggest hurdle for Kizashi. “Luxury car is all about prestige, social status and personal esteem, which brand Maruti may not be able to deliver. (c) Right Target Segment: Well established Japanese rivals, Toyota & Honda, and the European carmakers, who have carved a niche with strong brands like Mercedes and BMW will make it more challenging for Kizashi to find its own place. Maruti will have a tough time shaking off the „every Indian‟s car-maker‟ image. Experts believe, “The Target Segment for the luxury segment goes for the „status‟ factor and Maruti as of now fails on that front.”

Shashank Srivastava, wards off such skepticism, as he feels that similar doubts were raised when Maruti had entered the A2 segment with Ritz and Swift, and then in to the A3 segment with DZire. “But we not only performed in those new segments, we are also market leaders,” he says, adding, “we have now entered the A4 segment with Kizashi and we look to capture fair market share in this segment too. Maruti can excel on its brand promise and values”.

Let’s see how Kizashi fares in the Indian market…… Amen!


Mark-Avenue

Page 3

Small Businesses??? - Branding basics are here... - Harish Kumar Raju In most of the marketing literature, strategies for branding are targeted towards large organization. The highly noted terms brand promotion, brand management and brand equity might create an impression that branding is meant for big players. Organizations seek a long term strategy when marketing their product. They need to target and position rather than being a generic product. Branding is done to differentiate the products by the company name which should be considered as brand. For example, if you produce and supply unbranded salt to retail outlets, then your company name will act as a brand. The corporate brand where the sales and transactions happen will identify your product. Well, one of the most important advantages is that brands help to identify and distinguish the seller. Even while selling commodities, the buyer needs to identify the seller and developing a corporate brand that helps in getting repeat business from the customer. Let‟s get it straight! The first step in creating effective brand is to make conscious decision about the spending. The investment to create

individual brand name or corporate name will bring a huge change towards success. Branding over the years will create brand personality and hence the investment is a long term strategy.

that goes out from the firm be it visiting cards, gifts, brochures etc. Foremost thing is to protect our vital assets like Brand Name, Logo, etc. This is very important to prevent plagiarism and copy cats.

It’s not about money, Folks! It‟s the level of involvement and the precise decision to be taken by the marketer for the brand consciously. Though the small players might have the budget constraint, even small steps now will go a long way in establishing a powerful brand in the future. It is possible for small enterprises to build powerful brand through a consistent investment in smart branding practices. This budget shall be a systematic investment rather to see it as an expense.

What about Promotion? The ubiquity of media has given huge number of low cost promotional opportunities especially for small brands. Basic rule, as the competition increase the rates go down, Isn‟t it? Well, media has kept the low advertising rates for second string media. Small brands can utilize the regional media options in a much more effective way than large brands operating in a national scale. Local newspapers, radio stations, cable TV channels offer excellent cost-effective path for small brand promotions. Initially, we can‟t expect a substantial ROI through these low cost media promotions or a significant impact in sales. In the long term, such small media exposure will reap, thereby increasing the visibility of the brand. For the corporate brands,

March Ahead! After the decision is made to build a brand, next is to develop powerful brand elements. Brand elements include name, logo, symbols, mascots, color schemes, taglines etc. These brand elements should be prominently displayed in every communication

which operate in a B2B environment, should handle differently. Not to forget the sales professionals are the biggest promoters of the brand. It is important for small businesses to ensure that the sales force is communicating the right kind of message to the customer. To increase the visibility there are communication materials like brochures, pamphlets etc and these materials offer some amount of information about the company and products. When endeavoring to brand development, these materials are of immense value. In general it is observed that these communication materials are not used as a branding tool but just serve as a product catalogue. Do you think brand building is expensive? Not exactly, brands are built over time systematically and through consistent investment plan. The ever growing environment has given us enough cost effective promotional options which should be identified by the small players to build their brands.

The Great Indian Noodle Market growth story! - Kiran Krishnan Knowingly or unknowingly we are also contributing to the great Indian noodle market growth story. The influence of Pi shop and our own “mess” in creating an appetite amongst us in consuming one of the fastest growing instant food products in India is truly commendable (no pun intended). For many of us, instant noodles have become a way of life..! Err.. At least a part of our life..! J Noodles entered India in the early 90s when Nestle was brave enough to introduce Maggi whereas other major players like HUL, ITC etc were observing how nestle was going to go about changing the

tastes of Indian consumers. Maggi was predominantly targeted at the children and as an easy way out for mothers who just need to spend 2 minutes for feeding their children! But as ti me passed by, it started targeting the youth as well as the working class persons in urban India. According to the current market estimates, the instant noodle market in India is worth over Rs 1,300crore ($260 million) and is grow-

ing at a phenomenal rate of over 17 -20% per year. The market until lately was of monopolistic nature with only one player Nestle India Ltd which had a market share of 90+. However r ecen t reports suggest that, on an all-India basis across urban markets, Maggi has been steadily losing market share to the new entrants. From a 90.7% market share in December 2009, Maggi slipped to 86.5% in July 2010. This can be attributed to the avalanche of product launches in this segment by other main FMCG players

like GSK, HUL, ITC etc. These 3 new entrants have thrown their hats into the ring over the last one year withHorlicks Foodles, Knorr Soupy Noodles and Sunfeast Yippeerespectively. And as per the current trends, Maggi is more likely to have lost more market share after the last released statistics on their market share. Apart from HUL and GSK which have positioned their noodles as „healthy‟ snacking options targeting kids and mothers, others like Indo-Nissin‟s Top Ramen, Capital Foods‟ Ching‟s Secret and CG Foods‟s Wai-Wai , though around for long, are stepping up market-


Mark-Avenue ing efforts to take advantage of category growth. Besides, private brands like Big Bazaar‟s Tasty Treat and Aditya Birla Retail‟s Feasters are notching up share. GSK is piggybacking on the brand equity of Horlicks as well as its strong distribution system to make a dent in the market share of Maggi. Foodles, a new instant noodle brand was launched in late 2010, focussing on health issues, with the tagline, 'Noodles without the No'. Market reports points out to the fact that the initial response to Foodles was much higher than GSK‟s expectations. On the other hand, HUL is using the strength of its Knorr brand -already popular for its soups range -- to muscle its way into the instant noodles category. Insider sources in HUL were even reported saying that the top management were very pleased with the performance of Knorr Soupy noodles.

Page 4 Tasty Treatwas the second biggest instant noodles brand in its Big Bazaar stores after Maggi. The brand packaging was revamped last year and Future plans to roll out additional variants in a month‟s time taking the number of variants to nine from the existing three. Most of these new entrants are trying to target the health conscious Indian youth by offering healthy snacking options to stay abreast of changing consumer psychographics. The best example is the launch of whole wheat Atta Maggi, a variant to avert health conscious mothers from switching brands or even giving up the purchase of noodles altogether in favour of healthier food choices for their kids.

women in the workforce has led to a manifold increase in households with no parents at home to act as caretakers.

Key Buying Factors These launches represent a smart move by manufacturers to capitalize on the fundamental shifts in socio-economic patterns of the Indian society, rather than a „me-too‟ strategy. The manufa ctur er s ar e trying to tap the potential, this change has to offer. Some of the chief reasons responsible for this explosive growth include: 1.

Lack of time amongst the youth coupled with the relative ease with which you can prepare noodles

2.

Instant noodles are perfect for on the go consumption

3.

Rise in the no of working professionals living away from parents.

4.

Increasing

employment

of

5.

Indian consumers are more amenable to changing their eating habits and far more demanding of more choices now than he or she ever was before.

6.

Other reasons can be clustered as country's young demographic profile, increasing family income, accelerating urbanization, global travel, increasing exposure to global cuisine and so on

Thus, to sum up, the competition in this space is set to sizzle while providing diverse consumer segments with an ever-increasing set of options to suit their unique preferences. So the next time you enjoy your cup of noodles, remember to take a note as in to which company‟s market share you are contributing your money..!!

Getting Started with MARKETING - Kumar Vaibhav Guerrilla Marketing Guerrilla marketing is unconventional, non-traditional, not by-thebook, and extremely flexible means of marketing. Some factors make it different from old-fashioned marketing 1.

It‟s more about relationship building rather than sales, for long-term relationships are paramount

2.

Guerrillas strive to aim marketing messages to individuals, not to groups

3.

All guerrilla marketing is intentional and direct and meant to create an impact in minds of customers

4.

It uses psychology and basic human behavior to make a relationship

5.

It is about giving customer an experience and feel of the product which result in increase in brand awareness

The heart of guerrilla marketing

lies in having a plan which can help you relate to your customers through common sense and realistic expectations .It is very effective way of building relationships with your potential customers and also a great way to make people aware about your products or company as a whole. Guerrilla marketing keeps the things very simple so that customer is able to get most out of the campaign and there is no doubt about anything Ambush Marketing Ambush marketing is an act whereby another company, often a competitor, try to capture upon public attention relating to some event, thereby deflecting attention towards itself and away from the sponsor. Often classified as a form of “guerrilla” marketing, the term was coined by Jerry Welsh, the originator of cause-related marketing when he was at the American Express.

Although marketing is something which is perfectly legal but it hurts on legitimate sponsors badly, their claims often provide no basis for legal action. Marketers are often concerned about ambushing because any loopholes can result in giving oppor tunities to competitors who are always ready to take on such opportunities with both hands.

campaign in Mumbai to launch their new variants of Pantene Shampoo so they came with the huge outdoor hoardings all over in Mumbai stating „A Mystery Shampoo!! 80% women say is better t h a n anything else‟. This was done to create hype and anxiety among the people about the brand which was to be launched in some time

One such incident happened in 1996 Cricket World Cup. Coca-Cola was the official sponsor and paid a whooping amount for the rights so they were Official partner of the cricket world cup 1996 but PepsiCo cheekily stole all the limelight with its „Nothing official about it‟ campaign.

When the suits at HUL found out, they saw an opportunity to score a point. They ambushed P&G and Mumbai woke up to another hoarding that was upfront, and suggestive of its source of inspiration. It said: „There is no mystery. Dove is the No.1 shampoo‟ It was too open to attack, and Dove took the bold step and stepped in.

Recently P&G launched marketing


Page 5

Do they sell ‘bikes’? - Srinath Akula “What a weird question it is? How are you living under sun without knowing about the Cult-brand!” This must be the first thought which came to your mind when you read the title of this article. You‟re right! But they don‟t “just” sell bikes; instead they sell “Harley Experience”. Brush through the rest of the article to know how? Imagine yourself to be looking casually through the window of an apartment, across the cross-roads in Milwaukee, USA on the sunny day of June 13, 1998. You can‟t believe your eyes. And in the fraction of a second, you can‟t even believe your ears. You hear a sound, thump, thump, thump. Thousands of Harley bikers, riding on their beasts appear like they‟re invading the city. On the street, 50,000 proud Harleys roar through the city. Can you believe, among those riders are senior executives, CEOs and many famous people? That was the 95th birthday of Harley and over 125,000 people attended the „Come Home‟ rally. And in 2008, on 105th anniversary, only 75,000 riders were chosen out of 150,000 riders who registered. The city was flooded with 500,000 HOG members during 2008 rally. Confused what is „HOG‟? That is the acronym for Harley Owners Group. The HOG was created as a tool to strengthen relationships between customers, dealers and employees and also as a tool to allure the potential buyers. The company sponsored rallies and gatherings wherein Harley owners could participate, share experiences and people not owning Harley could try the bikes out. Th e se pr o mo ti on a l ev en t s strengthened the community, gave the owners a sense of belonging and pride. The company also organized campaigns like Super Ride in 1983, where people were invited to test ride the bikes and about 40,000 prospective customers accepted the invitation. The suc-

cess of HD can be attributed primarily to these strong relationships that the company decided to build with its customers, offering them more than just a bike. This only objective has enabled HarleyDavidson to take its brand beyond simple ‟success‟ and turn it into a Cult Brand. Increase in HOG membership base to 450,000 today, from around 73,000 members in 1987 just shows that.

A short flash-back Harley-Davidson Motor Company began with William Harley and the Davidson Brothers in 1903 with their first prototype of an engine designed to assist a bicycle. Within a few years, they had produced their first trademark two cylinder, the V twin engine. By mid 1920s, HD was the largest motorcycle manufacturer in the world and became to be known for its modern

heavyweight motorcycle market.

can customize through the website

Marketing Strategy

How do they Promote?

Though you might criticize me of being bookish, I can‟t resist speaking about the 4Ps we learned in the two marketing papers. There is no single P of the marketing 4Ps, which was given lesser importance by HD. Let‟s look at the people they aimed; in marketing words, the Target Segment. In the mid 1980s, HD targeted the riders in the young adult age range. But during 1996, they started to redirect their marketing efforts towards targeting motorcycle riders in the middle age (40-60 years old) and old age (60+ years old) ranges. As a result of this, there was a 40% increase in sales. Let me get more technical from here.

Can you expect how much HD spent on advertising from 1984 to 1996? BIG FAT ZERO!! That‟s true. They spent all their money in building a top-notch product and creating the community which will build the brand by itself. In 1997, HD spent just about $1 million on advertising.

Product they offer They just didn‟t confine to bikes. Their product lines include many products like helmets, gloves, eyewear, jackets, belts, tee shirts, jeans, boots, bags, jewelry, wallets, key chains, caps, lounge wear, and home collectables. All of these complimentary products help complete the image of the cult. Comes with Harley-Davidson a 2 year/ unlimited mile warranty, after sale insurance, accessories, service of fully trained technicians, specialist engineering equipment, computerized diagnostic equipment and technical updates. Places at which they offer

design, the “teardrop” gas tank and front brake. Soon, they produced new models to address the demand of a new market that consisted of recreational consumers with money to spend. In the 1970s, HD was in ailing situation with the competition from Japanese bikes. The company made a great comeback in the 1980s with the help of a tariff on imports and its new plan to restructure. By 1987, HarleyDavidson owned about 25% of the

The company first conducts their own research to strategically determine where to place the dealerships that would optimize their sales. Once an expansion in an area is determined based on market studies, Harley-Davidson selects the dealer through interviewing the candidates on their entrepreneurial position and knowledge of motorcycling. And not all dealerships provide the same products/ services. Also, HD doesn‟t offer customers to order online, but they

HD always focuses on advertising the brand, over advertising specific products. They promote the image and lifestyle that a HarleyDavidson embodies. They allow customers to visit Tour centers in some of their plants. At these centers, customers will be guided through the process of manufacturing and assembling and they can also buy souvenir. These are in addition to what they do through rallies and events. They also sponsor NBA team Milwaukee Bucks,

women riders‟ events and other motor sports. HD bikes appeared in innumerous Hollywood movies including blockbusters like Terminator-2, X-men etc., How much Price do they charge? Price is a very important factor in HD's marketing mix. They use a premium pricing system. The company believes, its products continue to command a premium price because of the features, quality, styling and strong resale value associated with the custom products. As Harley Davidson owns close to 50% of the US‟s motorbike industry, it is evident to see that


Page 6 their customers value the products ‘Indian’izing that they produce. Rolls Royce said, “India is the single most important market for us The Harley Davidson FXD 105th in the next 5-10 years” and LamAnniversary Edition reflects the borghini said “We came to India company's „value based‟ pricing system. The cost to produce the Special Edition FXD increased by $200-$300, whiles its retail value increased by $5625 in comparison to a non-special edition FXD. That is the power that can be enjoyed by a premium brand.

not by chance but with a plan”. Neither HD has a differing view. HD launched 12 models in the price range of Rs. 7 lakh to Rs. 34 lakh in India in July 2010 with their first outlet in Hyderabad. Their limited tri-color Indian edition gives a hint about the localized marketing strategies they are going to follow. India‟s high import tariffs(60%) and taxes(30%), roughly double the prices of HD bikes which are

now imported as CBUs. But HD is building its second assembling plant in Gurgaon to import the bikes as CKDs. This will be the first assembling plant outside US for Harley. The cheapest Harley Superflow that costs around Rs. 5.5 lakh in India then would become 40-45% cheaper. Then I too can think of upgrading from my Avenger (Harley lookalike) to a Genuine Harley. Am I being overambitious ?

Funny Side-UP

We want to hear what you think about this issue…..

Please send us your comments\suggestions\feedback at mercuri@iimidr.ac.in.

Monthly Article Writing Competition, Cash Prize of Rs 500/- for the winner

Please send your entries by 25th March 2011 EOD. If you have any query regarding the competition, please reach out to us at mercuri@iimidr.ac.in Important note—We’ve come across few incidences of plagiarism in past months, please avoid such acts and clearly state the references in your article .

MercurI Team

Harish Kumar Raju, Kiran Krishnan, Kumar Vaibhav, Nikhil Gupta, Shashank Verma, Srinath Akula


Mark-Avenue Feb 2011 Edition