Thursday, February 27, 2014

Marketing in Practice : The Online Marketplace Conundrum

The blistering growth of e-commerce in India (estimated to be around a size of $ 1.6 billion) has thrown up a Pandora's box of problems for marketers. The channel conflict has become intense between the traditional brick and mortar channel members and the online market place. The conflict is real and brands are caught in between the fight for the customer's wallet. 

The issue has come to the forefront  with brands like Toshiba, Lenovo and Cannon publishing advisory to customers on purchasing their brands from online retailers. ( read news here : Lenovo, Cannon). The basic issue between the online retailers and the traditional channel members is the predatory pricing adopted by the online retailers. Traditional retailers with their huge overheads and investments are not able to match the pricing of the online retailers.
The issue has become more complicated with large online retailers like Flipkart, Snapdeal adopting the 'market place' model . The eCommerce market has two models- Inventory model where the online retailer owns and controls the inventory and the market place model where the online retailer acts as the platform which connects the consumers and the retailers. 
In India, the trend is that many major players like Flipkart, Snapdeal etc have moved to the market place model. So these big online brands using technology as the enabler connects the customers and retailer partners and ensures seamless transactions between them. 

Online retailers like Flipkart and Snapdeal are able to patronize large number of retailers to its market place thus offering a huge spread of categories and brands to the customers. The online market place is a Two-Sided market where the success of the online retailer lies in his ability to increase the number of partner retailers and also the number of shoppers to the site.
Because there are large number of retailers in the online market place, the pricing becomes predatory and huge discounts can be offered to the shoppers. This has proved to be the point of contention. It was impossible for traditional channel partners to match the price cuts offered by the market place. With increasing popularity and adoption of e-commerce in India, its normal for the traditional channel members to cry foul.

To pacify the traditional channels brands has been adopting major initiatives like
  • offering additional services like additional warranty on products purchased through traditional channels.
  • Policy on uniform discounting across channels. 
  • Issuing advisory to consumers on benefits of purchasing through authorized retailers.
  • Issuing certification to authorized retailers who agrees to abide by common rules.
  • Advisory against un-authorized retailers. 
However in many cases, consumers overlook the advisory and take the risk of purchasing from unauthorized retailers. The price takes the front seat in comparison with the warranty offers. 
Experts opine that these issues will be sorted out but will take time. Brands are now increasingly asked to provide clear differentiation to traditional retailers so that their business is not suffered . It has to be noted that traditional retailers offer many valuable services to consumers in terms of information , product display etc. Consumers being smart avail these services at the traditional retailers and make the final purchase at the online retailers.

Sunday, February 23, 2014

Brand Wars : Perk Vs Munch

Its been a long time since Indian advertisement world saw a humorous fight between the brands. There has been high profile competitive wars between the brands like Horlicks Vs Complan, Vim Vs Dettol, Dettol Vs Lifebuoy, Pepsodent Vs Colgate etc but these were serious fights. 
Recently the new war started between the arch rivals Perk and Munch. These brands were keeping different paths between each other for quite some time. Both were trying to position themselves on different attributes ; Perk focusing on the glucose content while Munch was focusing on the crunchier proposition. However, Perk decided to poke Munch by launching the first TVC featuring the son - Monu leaving home because his father gave the bigger, heavier Perk to his brother Sonu.
Watch the TVC here : Perk Monu

Not to be left behind, Munch countered with another TVC which features Sonu leaving the father because he gave the tastier Munch to the brother Monu.

Watch the TVC : Munch Sonu

The Perk TVC was hilarious with the brand trying to outsmart Munch by talking about the difference of 1 wafer and 5.5 grams with the Perk. 
Munch however tried to downplay the grammage comparison by focusing on the taste. The brand humorously counter's Perk's claim by stating that chocolates are eaten for taste and not weight. While this argument is weak counter for Perk's claim, what saves Munch was the humour and the instant fight back to Perk's offensive.
 Had Munch not reacted , Perk could have used the "high grammage " value for money proposition  very effectively 
Munch was recently investing heavily in the promotion by taking in cricketer Virat Kohli as the  brand ambassador . Perk was struggling with the positioning proposition and was in my opinion had a weaker platform based on the glucose content. Perk was trying the break away from that weaker spot by launching an offensive against Munch.
With the two brand's paths crossing now, it will be a interesting space to watch for.

Read more brand war
Brand war : Sensitive Toothpaste
Brand war : Colgate Vs Pepsodent

Sunday, February 16, 2014

Marketing Strategy : Toothpaste majors fights challengers effectively

A recent article in ET mentions that the challengers in the Rs 7000 crore toothpaste market like Anchor,Ajanta Babool and Vicco were wiped out by the major brands like Colgate, HUL etc. A few years ago the major toothpaste brands like Colgate and Pepsodent were shocked by the huge challenge from brands like Anchor ,Babool etc . The challenger brand used price as the major USP and gained more than 15% share in the market.

Its interesting to understand how the majors fought these challengers. The following are the strategies used by the major brands to fight the price competition -
  • React aggressively : The assault from the challenger brand was faced by the major brands aggressively. Brands like Colgate, Pepsodent etc reacted sharply to the competitor first by reducing the price to arrest the severe market share loss.
  • Flanker brands : The major part of the success of market leader was the use of flanker brands to ward off price competition. Colgate effectively used Cibaca as the flanker brand to fight the price competition thus preserving the price premium of the market leading brands.
  • Use smart SKUs : The toothpaste market leaders also used less prices SKUs to neutralize the price competition. The availability of big brands in affordable packs in a way prevented the consumers from switching to a less priced local brand.
  • Advantage in differentiation : The age old concept of Positioning and Differentiation helped the leading brands to effectively fight the price competition. The low priced brands failed to counter the brand-equity with price alone. 
  • Deep pockets : The deep pockets of the likes of Colgate and HUL enabled a large aggressive and sustained offensive against the challengers. Regional brands didn't had a chance fighting the deep pockets.
The lesson for the challenger brand is not to fight the big players without credible differentiation. 

Wednesday, February 12, 2014

Marketing In Practice : When Celebrities de-endorse !

Pepsi was in a soup recently when the celebrated endorser Amitabh Bachchan publicly told the media that "  he stopped endorsing Pepsi some years ago, after a young girl asked him why he was advertising a drink her teacher said was “poisonous " ( Source ET)

The brand was obviously embarrassed since Bachchan was endorsing Pepsi for more than 8 years.  Although the media took the  sensational issue initially, the issue died down thanks to the clout of Pepsico. 
The problems that brand faces when celebrities turn rogue is nothing new. There has been a spurt in the recent past on these kind of mishaps because more and more celebrities are being roped in for endorsements. But things are different here in this case of Pepsi where BigB has virtually de-endorsed ( new word) the brand by subtly saying that he made a mistake in endorsing .
Celebrity like Big B is not going to be affected and may even will be praised for saying such things. But for sure this is a thoroughly unprofessional act . It is the brand that suffer when such de-endorsement happens.

What is the lesson learned ?

There is no new lesson but a reminder that brand and not celebrity should be the highlight in campaigns. Although obvious, brands tend to forget this simple dictum. Brands try to derive maximum equity from the celebrity hence would act as a second fiddle in the campaign. 
Brands should try to balance the power sharing with the celebrity. One way to balance is to portray that celebrity is also deriving much benefit from consuming the product. 
 Understand that the celebrity-brand relationship is contractual and transactional. Hence if the entire equity of the brand is going to rest with celebrities, then these events will hurt more. 
There is not much a brand can do when celebrities de-endorse. Just sulk  and move on and pray that no one noticed .And probably build a clause in contract to prevent such de-endorsement.
In the long term,what the brand should do is the plan the nature of engagement and dis-engagement while using celebrities in campaigns.
What's your take ?

Sunday, February 09, 2014

TRESemme : For Salon Style Hair

Brand : TRESemme
Company : Hindustan Unilever

Brand Analysis Count : # 539

TRESemme launched in 2012 was an attempt from Hindustan Unilever to prevent the competition from attacking from the flanks. There premium shampoo from HUL was Dove which was more of a Masstige brand rather than a luxury brand. Hence HUL feels that there is a gap in the product porfolio in the premium shampoo segment which is open for competitors. Already the shampoo brands from HUL stable is facing increasing competition from Lo'real, P&G  and the likes. 

TRESemme was born in 1950. The brand name was coined in honor of Edna Emme who was a cosmetologist and a community leader.The brand came to Unilever from the acquisition of Alberto Culver in 2010.Originally the brand is sold only to salons.

The positioning of TRESemme is interesting .The brand is positioned as a salon like experience for the hair. The insight is through a research which stated that ladies feel that they get more satisfaction when they get salon treatment. Also they trust the salon stylists advice when choosing the brands.This insight made the brand adopt the USP of a 'Salon Like Experience '. The brand initially target the salon frequenting  consumers who was usually the opinion leaders in the category. 
The brand which is priced at a premium is positioning itself as an expert in hair-care. The ads are styled internationally and the message is very rational. 
Watch the ad here : Tresemme ad
The brand over the last one year also have used Youtube very effectively . The brand's youtube channel is rich with videos on hair styles and hair care thus reinforcing the positioning as a premium expert. 
TRESemme will force the competing brands to think about launching their own version of professional endorsed shampoos. Right now Lo'real and P&G have salon products which are not sold outside . It needs to be seen whether the competitors will bring in those brands to fight  TRESemme.