December 12
Marketing Magazine of IIM Shillong
Volume 4 | Issue 6
Cover Story:
Brand Building in Emerging Markets
Prof. Parasuraman Professor and Director (PhD), School of Business, University of Miami
FROM TEAM MARKATHON Dear Readers, In these festive seasons we see everywhere brands diving in the race to bag consumers’ share of wallet. This sight is bliss for all marketing enthusiasts providing them the opportunity to see how companies becomes innovatory to differentiate themselves in the neck to neck competitive market. FDI has been on the hot topic of discussion for quite a while but there has been another topic too that has taken center stage among the thinkers. Reverse engineering! Does this ring a bell. The developed market is near saturation and top MNCs are turning their focus on the developing and thereafter the emerging economies. Markathon team thought to take the discussion to the new level. The cover story for this edition looks at the emerging economies from the lens of marketing. The story looks for factors that assure MNCs of money to be made at the bottom of the pyramid. It discusses the change in consumer behavior in such economies viz-a-viz the developed nation and suggests marketing strategies to target these consumers. For corporate speaks, we have Mr. Nitin Bhat and Miss Aditi Vidyarthi both Senior Associate Consultant at Infosys, sharing insights on understanding the Hispanic customers. They go on to suggest the opportunity that lies within this big segment to the companies who should be looking positively on this market. Moving on, this month’s Vartalaap feature an academician Prof. Parasuraman. He is a Professor and Holder of the James W. McLamore Chair in Marketing (endowed by the Burger King Corporation) and Director of PhD Programs at the School of Business, University of Miami. In this exclusive interview with Markathon, he talks about his industry and academic experiences and the growing importance of Services in Marketing. With the junior team joining in, we take this opportunity to welcome Annam Vaibhav, Ashok A, Kamalpreet Saluja, Pallavi, Prateek Gaurav, Shashank Tomar, Sushree Tripathy and Swikruti Panda into the
Markathon family. With some of the brightest and the most creative minds, we are sure the magazine will reach new heights with interesting sections and articles for our beloved readers. As always, we will try to improvise and ascertain that together we will learn and grow. Send in your feedback/suggestions to markathon.iims@gmail.com. It will go a long way in helping us create a better magazine or all of us. So get into the mood of reading to discover the whole new emerging world of marketing. Happy Reading!
Team Markathon THE MARKATHON TEAM Editors G S N Aditya Piyush Agarwal Mayur Jain Sowmya R Swati Nidiganti Umang Kulshrestha
Creative Designers Priya Kumari Agrawal Rushika Sabnis
Other Members Annam Vaibhav Ashok A Kamalpreet Singh Saluja Pallavi Prateek Gaurav Shashank S. Tomar Sushree L. Tripathy Swikruti Panda
markathon |december 2012
CONTENTS FEATURED ARTICLES PERSPECTIVES WHEN WORDS HAVE MORE IMPACT THAN ACTIONS BY ROHIT TIWARI, WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT AND RESEARCH CORPORATE SPEAKS UNDERSTANDING THE HISPANIC CUSTOMERS MR NITIN BHAT| MS ADITI VIDYARTHI |SENIOR ASSOCIATE CONSULTANT AT INFOSYS, MBA FROM GOA INSTITUTE OF MANAGEMENT
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COVER STORY MARKETING IN EMERGING ECONOMIES SHASHANK|PRATEEK|PALLAVI|IIM S
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PERSPECTIVES MARKETING TO WOMEN-THINK BEYOND PINK BY PRIYA BHAT, IIM KOZHIKODE
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VARTALAAP PROF. PARASURAMAN PROFESSOR AND DIRECTOR (PHD), SCHOOL OF BUSINESS, UNIVERSITY OF MIAMI
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WAR ZONE EYE 2 EYE SHOULD TATAS HAVE USED THE NAME ‘TATA STARBUCKS’ INSTEAD OF ‘STARBUCKS’ IN ORDER TO LEVERAGE THE TATA COFFEE BRAND ASIF IQBAL | XLRI, JAMSHEDPUR | DEEPAK | XIM, BHUBANESWAR SILENT VOICE LAUNCH OF STARBUCKS IN INDIA
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SPECIALS ADDICTED UMANG KULSHRESTHA & G S N ADITYA | IIM S
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BOOK MARK SOWMYA| IIM S
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UPDATES MAYUR | IIM S
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WHEN WORDS HAVE MORE IMPACT THAN ACTIONS Rohit tiwari, welingkar institute of management development and research “From the west to the east, From the north to the south You´ll never get bad information If you believe in the Word of Mouth...”
of traditional marketing, an effective word-of-mouth
These lines from a popular 90’s song by Mike + the Mechanics, would certainly strike a chord with marketers across the world. Many a present day marketing wizard would swear by the efficacy of a Word-Of-Mouth (WOM) campaign. Arguably one of the oldest and cheapest forms of marketing, word-ofmouth distinguishes itself from the other modes of marketing, as it involves the consumers and makes them a part of the marketing process. “Nielsen’s Global Trust in Advertising Survey of more than 28,000 Internet respondents in 56 countries reveals that 92% of consumers around the world say that they trust earned media, such as word-of-mouth or recommendations from friends and family, more than all other forms of advertising.” Consumers tend to value the opinions that are
expressed directly to them. In times when the consumers are bombarded with ever-growing barrage
message permeates the noise and captures the interest of the consumers. Today, WOM exists in many forms such as referral programs, viral marketing, brand blogging, product seeding and influencer marketing. In fact, a few companies also invest in generating intentional WOM to ensure that their products enjoy a good launch. A notable point about wordof-mouth is the fact that it cannot be controlled. For instance, a marketer cannot put words in the consumers’ mouths or exercise any control over what message they convey about the product or service. However, they can orchestrate or build a strong base for a WOM campaign to bear on their business; and this is precisely what differentiates a successful WOM campaign from the ones that fail to garner attention and soon become moribund.
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The Essential Ingredients of an Effective Word-of-Mouth (WOM) Campaign: The Right Content: To have an influence over consumer decisions, it is imperative for a successful WOM message to address the distinguishing features of a product or service. It should explicitly state how consumers can benefit from the product or service. For instance, for the priceconscious automobile customer in India, the mileage (of the car) may be of prime concern when purchasing a car. Thus, in such a case, an effective word-of-mouth message would be the one that lets them know that the mileage of particular car is among the best and in addition, the car also comes with exciting features. The Right Communicator: Trust is an integral aspect of a successful WOM campaign. The WOM receiver should not deprecate the sender’s message and should trust that person and believe that he/she is experienced enough to pass a judgment on the product. For instance, a person trying his/ her hand at cooking for the first time is more likely to turn to his/ her mother for advice on which brand of spices he/she should opt for. In this case, the mother has had a direct experience with the Product- different brands of spices- and so, her opinion would hold weight. The Environment:
Right
Messages that are passed within trusted networks tend to have a greater influence in comparison to the ones that are circulated through
dispersed communities. Come to think of it, when making an important investment decision, you are more likely to trust your highly credible and trusted network of contacts on LinkedIn rather than going with the advice of a group you met on your night out the last weekend.
Leveraging The Power of Word-ofMouth...“Baaton Baaton Mein� Although many marketers across the globe vouch for the efficacy of word-of-mouth marketing, some others still avoid it, considering it to be a relatively immature marketing discipline in comparison to other highly sophisticated methods of marketing such as promoting a product through print and TV ads. An important point to consider here is the fact that while most companies focus on actively managing their conventional marketing activities, very few companies actually engage in dedicatedly managing a word-of-
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perspective
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mouth marketing campaign, the potential gains from which can be huge.
limited budget with regard to communication.
Some of the major brands that have reaped the benefits of WOM marketing include IKEA, Starbucks, Amway and Harley Davidson. Apple has saved millions on marketing, thanks to the cult status of its gadgets and the successful word-of-mouth practice that precedes and follows its product launches. In fact, last year, Apple spent less than 1% of its sales on advertising. As a matter of fact, the sales growth of Apple has been outstripping its advertising budget considerably. Apple’s ad spending last year was just $933 million. This figure pales in comparison to that of its rival Microsoft, whose ad spending was $1.9 billion in 2011.
Community Marketing:
Types of Word-of-Mouth Marketing Buzz Marketing: As the name suggests, it refers to generating an excitement or a buzz about a product or service. It involves getting the satisfied and loyal customers to share their views on the concerned product or service. Buzz marketing usually takes place through various media such as discussion forums, blogs, chat rooms, social networking and video sites. Buzz marketing can be productively used during the pre-launch period of a particular product or service. It can yield fruitful results for start-ups, small and medium sized firms that have
Example: Red Bull is known to have built its equity through a carefully planned and executed buzz marketing strategy.
It may be defined as a strategy that essentially focuses on the needs of the existing customers and involves forming and supporting niche communities that usually share common interests about the brand. Example: When Perfetti Van Melle (India) Pvt. Ltd. (PVMI) launched Mentos in India, it realized that the global positioning of this wasn’t making any significant effect on the Indian customer. Subsequently, Mentos Helpline was created with the objective of helping poor soul in distress by providing them the ‘Mentos way’ out of uncomfortable situations. The Helpline was created to tap into the youth audience and involve it more rigorously with the brand. In addition to the above mentioned examples, word-ofmouth can manifest in other forms, such as Viral Marketing, Product Seeding, Influencer Marketing, Brand Blogging, Conversation Creation and Referral Programs.
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perspective
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The P&G Story: One company that was convinced about the fact that ‘Word-ofMouth Marketing’ is not only about luck and that its power can be harnessed to boost the sales, is the global FMCG giant Procter & Gamble. After exploring the challenges and promises offered by word-of-mouth marketing, P&G came up with a marketing division called ‘Tremor’ with Steve Knox as the CEO. During the time that Tremor was launched, P&G had little information with regard to the teen market. Tremor was a word-of-mouth program that was specifically aimed at teenagers. It drew the teenagers from other websites frequented by them and then selected on the basis of their response to a survey questionnaire. The questions tested the teenagers on eight key character traits, including persuasiveness, connectedness and inquisitiveness. With Tremor, P&G looked to connect with the segment considered to be the most influential of all consumers.
women with children aged 19 years or below. By May 2006, P&G had engaged as many as 225,000 teenagers in Tremor and around 600,000 moms in its other program- Vocalpoint. Analysts were of the opinion that P&G’s word-of-mouth marketing strategy proved fruitful, as research proved that there was an upward shift in the sales of the products promoted through P&G’s this network of people referred to as “Connectors.” In India, WOM marketing has worked wonders for the popularity and business prospects of ecommerce website Flipkart and Indian travel start-up Ixigo.
The selected members then get to sample new P&G products and advertising concepts before these are released to the general public. This way, P&G not only gets their valuable feedback but also expects that the Tremor members will spread the word to their peers online. In March 2006, P&G launched Vocalpoint- a program that gave it an access to moms. Vocalpoint recruited
No wonder then, that in times when technological innovations have provided the marketers with many more new, innovative marketing tools, and when companies are shelling out billions of dollars on advertising, it is the age old contrivance of the Word-ofmouth that still seems to be ruling the roost with regard to the effect on sales. And with social networking websites becoming an integral part of everyday life, WOM is only expected to grow stronger. So if you happen to visit Honolulu and spot a few locals animatedly mouthing the lines, “hand la glass-u, glass la scotch-u...eyes-u full-aa tear-u...Why This Kolaveri Di,” don’t give them a puzzled look; it’s Word-of-mouth at work here too.
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corporate speaks
markathon|december 2012
Understanding the Hispanic Customers Mr Nitin Bhat
Ms Aditi Vidyarthi
Senior Associate Consultant at Infosys, MBA from Goa Institute of Management
Senior Associate Consultants at Infosys, MBA from Goa Institute of Management
Every year, US marketers lose millions perhaps billions of dollars in sales by misunderstanding their country’s Hispanic market and clinging to a simplistic notion of its structure. Many see the isolated market as comprising two groups: a segment that speaks only Spanish, and an assimilated English-speaking segment whose preferences are barely distinguishable from those of the general consumer market Hispanics constitute a major chunk of the United States population. Every year, there are millions of people immigrating to the US from countries like Mexico, Spain, Cuba and other parts of Latin America. The estimated Hispanic population of the United States as of July 1, 2011 is 52 million, making people of Hispanic origin the nation's largest ethnic or race minority. Hispanics constituted 16.7 percent of the nation's total population. In addition, there are approximately 4 million residents of Puerto Rico, a Caribbean group. In terms of absolute numbers, United States has the second largest
and is a potential segment that cannot be ignored by any company that wishes to operate in the US. According to HispanTelligence (the research arm of Hispanic Business Inc), Hispanic spending power has skyrocketed to $700 billion and is projected to reach as much as $1 trillion by 2015. The Hispanic Customer What is the main reason for marketers to have a look at the growing Hispanic segment? For most marketers, the reasons are size, growth rate, concentration and
Hispanic population in the world, only Mexico (112 million) has a larger Hispanic population than the United States (52 million). The number of Hispanic family households in the United States in 2011 is 10.5 million. The median income of Hispanic households in 2008 was $37,913. As far as education is concerned, the percentage of Hispanics who are 25 and older that had at least a high school education in 2011 is 62%. All the above stats lead us to one conclusion; the Hispanic customer base in the US is exponentially rising
purchasing power. The below facts give a quick snapshot into the Hispanic demographics. 1. Big, and getting bigger: As mentioned above, Hispanics constitute a big chunk of the US population and are poised for further growth in the coming years, making Hispanics the fastest growing minority/ethnic group. 2. Young: Almost 70 percent of US Hispanics are under 35, compared with less than 50 percent of non-Hispanics. Their median age is 26,
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corporate speaks against 35 for the rest of the population. Their relative youth is likely to furnish growth opportunities for marketers of young products such as music, entertainment, fashion, and fast food items. 3. Rising income: Although median household income is 30 percent lower for Hispanics as compared to Americans, the gap will shrink as the percentage of Hispanics of working age
increases and the proportion of those born and educated in the United States rises in relation to the proportion who arrived as immigrants. Over the past five years, Hispanic purchasing power has grown at a compound annual growth rate of 7.5 percent, compared with 4.9 percent for the rest of the population.
4. Geographic concentration: Hispanics are tightly concentrated geographically. The 12 metropolitan areas they most favor accommodate 70 percent of all US Hispanics, but less than 30 percent of the total population.
markathon|december 2012 In fact, more than half of US Hispanics live in two states, California and Texas. These dense concentrations make it easier for them to maintain their own culture and institutions Every year, US marketers lose millions perhaps billions of dollars in sales by misunderstanding their country’s Hispanic market and clinging to a simplistic notion of its structure. Many see the isolated market as comprising two groups: a segment that speaks only Spanish, and an assimilated English-speaking segment whose preferences are barely distinguishable from those of the general consumer market. Adherence to this bi-polar view causes marketers to overlook the vast majority of consumers who speak both English and Spanish and make up a third, acculturated segment. (Exhibit 1) 5. The acculturated segment is the largest and fastest-growing of the three groups, currently accounting for 57 percent of the Hispanic market and on course to take 67 percent by 2012. To serve it, marketers must approach it in way that considers its particular needs and estimated preferences. Above all, they need to project an identity that is Hispanic and American in equal measure. Understanding the Customers Some marketers view the Hispanic market as a monolithic entity that can be reached simply by advertising in Spanish. Under this model, marketers seek to serve the assimilated segment through their pitches to the general market, but tailor their especially Hispanic efforts to the perceived needs of the isolated segment. A third, more nuanced model recognizes that most Hispanic consumers are neither assimilated nor
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corporate speaks isolated, but acculturated. They speak Spanish and English, though they may have a preference for one or the other. They have taken their place in US society, yet are proud of their Hispanic heritage. Acculturated Hispanics retain the core values of their traditional culture while adopting many of the behavioral norms of the general market. The growth of this segment correlates with Hispanics attainment of critical mass in certain regions of the United States where they have achieved saliently large and concentrated populations to be able to sustain their own community, institutions, culture, and language. The Biggest Opportunity The acculturated segment represents the most attractive growth opportunity for most marketers. Not only does it represent the largest portion of the Hispanic market, but, on the basis of language preference, income, and projections of time spent in the United States, it is also growing the fastest: by an annual rate of 11.9 per cent a year compared with just 3.5 per cent forth market overall. Companies seeking maximum mileage from their budgets should consider the costs and benefits of addressing each segment. While the assimilated segment can largely be reached through mainstream marketing with a few tweaks, the isolated segment usually demands a parallel effort, with the duplication of existing expenditure. The only exceptions are niche players whose products or services are oriented to this segment (such as importers or producers of Latin American foodstuffs), or whose services meet special communications needs (international long-distance travel and telephony). It’s the acculturated segment that provides marketers with the biggest bang for the buck. While a campaign targeted to this segment calls for a modicum of sophistication, companies need to understand how acculturated consumers preferences differ from those of non-Hispanics.
markathon|december 2012 Grocery chains Albertsons and H-E-B and retailer Sears have successfully targeted the acculturated segment by tailoring all aspects of their marketing (advertising, promotion, merchandise selection, store layout, and customer service) to the needs of bilingual consumers whose preferences and tastes reflect a mix of Hispanic and Anglo-Saxon influences. Marketing to the Segments Once marketers understand each segment from a cultural, behavioral, and attitudinal point of view, they must work out how to attract and retain the desired segment. Four steps are essential to success: ASSESS THE FIT How far a company should target a particular segment naturally depends on the size of the opportunity. The step is to assess the attractiveness of the segment for the product or service being offered. Its position in relation to the vertical axis in the diagram below is defined by its consistency or otherwise with traditional Hispanic values and experience. The horizontal axis denotes Hispanic share (current and potential) of the addressable customer base. It relates to such issues as product affordability and geographic relevance. A snow shovel, for example, would be at the low end of this axis because most US Hispanics live in warm climates. Conversely, affordable domestic leisure air travel on southern or southwester regional carriers such as Southwest or Air Tran would be at the high end because of the concentration of Hispanics in Texas and California. Companies in the top right corner of the grid should aspire to be segment owners: that is, they should seek to dominate the segment because it is their natural territory. Cosmetics manufacturer Avon provides a good example. Consumer research shows that Hispanics set
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corporate speaks great store by personal appearance. Similarly, their preference for face-to-face relationships based on trust gives Avon’s network sales method an edge in the market. In addition, the company’s price points suit Hispanics income levels. As a segment owner, Avon would be expected to devote resources to tailoring its marketing to the acculturated segment. It might, for example, develop product formulations to suit Hispanic skin tones and color preferences, advertise in Hispanicoriented publications, and distribute bilingual literature featuring appropriate merchandise. Conversely, companies at the lower let of the grid should limit the resources they devote to the Hispanic market. Callaway Golf, for example, can aspire to be no more than an opportunist. Unlike soccer, golf is not a sport in which Hispanics have a long tradition of participation. And since Callaway’s clubs are expensive, Hispanic purchasers are unlikely to make up more than a fraction of the customer base. Accordingly, the company should probably pursue opportunities on an ad hoc basis, perhaps soliciting endorsements from Hispanic golf pros or promoting its products in areas with a high concentration of wealthy Hispanic golf players. SHOW COMMITMENT The second key to success is to show commitment to serving Hispanic needs. Many marketers feign interest, but fall short on action. Having made serving Hispanic customers an important strand of its turnaround
markathon|december 2012 efforts may well appeal to more than one market segment, the acculturated group is the obvious target. PROJECT AN IDENTITY The third key to success is to project an identity that validates both Hispanics cultural heritage and their aspirations to make it in the broader context of US society. By tying products and services to this identity, marketers can create an emotional hook for their goods. A few pioneers have shown the way. Consider Latina magazine, the brainchild of Christy Heidegger, a Stanford-educated attorney of Hispanic descent who noticed that acculturated Hispanic women did not have a magazine that spoke to their needs. Haubeggers initial efforts to gain support from publishers failed, but in 1996 she acquired the backing of Essence, a leading publisher of periodicals for African Americans. Latinas success is the result of several qualities. First, the magazine focuses on subjects important to acculturated Hispanic women: traditional concerns (fashion, parenting, the home), contemporary issues (culture clashes, social and religious issues), and aspirations (careers, money management, education). Second, it is produced to a high standard with superior copy, photography, layout, paper, and binding. Third, it is bilingual, and so can be shared by different generations in a multilingual household. During its first year, Latina achieved a circulation of 300,000 and switched from quarterly to monthly publication. Brewer AnheuserBusch is another case in point. It runs television and print advertisements for its Budweiser brand that depict Hispanic people in successful careers and include boxing, soccer, and other sporting events popular with these consumers. Conclusion
strategy, Sears shows what can be done. It is the leading retail advertiser to Hispanics using Spanish and English media; it publishes magazine with a circulation of 700,000 exclusively for Hispanics; it sponsors community events such as Fiesta Broadway in Los Angeles and the Coho Festival in Miami. Though these
Size, youth, economic clout, and geographic concentration all make the Hispanic market attractive to consumer goods companies. Understanding how the market is constructed and then determining the most appropriate segment to target are the keys to success for those that want to begin building lifetime relationship with one of the fastest-growing ethnic groups in the United States.
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cover story | Brand building in emerging markets
markathon|december 2012
Cover Story Brand building in emerging markets
Shashank | Prateek | Pallavi | IIM S
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cover story | Brand building in emerging markets “Emerging economies are defined as the countries that are restructuring their economies along marketoriented lines and offer a wealth of opportunities in trade, technology transfers and foreign direct investment”. They fall into two groups – firstly, the developing countries in Asia, Latin America, Africa and the Middle East; secondly, the transition economies in the former Soviet Union and China. With an increase in spending power and standard of living, the emerging markets are turning to be the next playground for multinational companies. Big brands are knocking at the doorstep of these markets to get a share of the pie which is growing impressively and providing unlimited avenues to grow and establish their might in their respective domains.
markathon|december 2012 Pyramid: Eradicating poverty through profits’, there is money to be made “at the bottom of the pyramid” owing to the logic that even with low individual incomes, the massive population in the less developed parts of the world make attractive locations for business. However, these markets pose unique challenges due to their less sophisticated institutional environment and the weak resource endowment of local firms. Businesses may have to look for different strategies and new business models to serve not only the few wealthy customers in these areas, but the mass market where lies the long term opportunity. Look Before you Leap:
The emerging markets’ young and dynamic population Emerging market economies are not homogeneous, acts as a major catalyst for growth as they are the even within the same geographic region. people with dreams in their eyes and swollen Environmental scanning forms an important part of disposable income to realize them. While 21% of the the process by which organizations adapt to population in US is under the age of 14, India has 33% discontinuities, complexities and uncertainties of and Brazil has 29% of below 14 years population. emerging markets. A key example that showcases the The potential of emerging economies can be gauged after-effects of lack of extensive research and from the performance of American companies in experimentation before entering into emerging these emerging markets. For example: Kraft acquired markets is the initial failure of Kellogg’s in India after it Cadbury in a bid to increase its presence in emerging was launched in the year 1994 in India. market and 25% of its sales come from these nations. Likewise, 45% revenue of Colgate Products need to be tailored to and more than 50% of Coca the reality of fragmented, ‘The Fortune at the Bottom of Cola are contributed by these market-stall economies. In countries. The companies are the Pyramid: Eradicating such markets, branding aggressively looking towards poverty through profits’, there serves as the means for the emerging economies with is money to be made “at the providing reassurance of heavy investment plans. bottom of the pyramid” consistent quality to Recently, Pepsico announced spatially dispersed customers $500mn investment in India alone for whom brand substitutes for over the next two years showing the personal relationship. For example, beer faith these MNC’s have in developing countries. companies initially saw China as a huge monolithic As C.K. Prahalad argues passionately in his best-seller market waiting to be tapped with their global megabrands. But after the first push failed, it became ‘The Fortune at the Bottom of the
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cover story | Brand building in emerging markets
markathon|december 2012 retailers like Walmart & Tesco deliver the same basic quality. Thus they are more prone to use price as a differentiator. However, in emerging markets, the dynamics of perception of price and quality are different. One of the biggest differences between mature and emerging markets is the popularity of recreational shopping. People in mature markets place retail therapy high on the list of preferred activities, in contrast to emerging markets, where people devote most of their budgets to food and basic needs. The different types of consumers in emerging markets can be segmented as follows:
clear that this market could be won with one local market at a time. In the words of Wai Kee Tan, VP, Corporate Affairs, Asia for Interbrew SA, "China is a nation, but not a national market." MTV and HSBC have succeeded by making their global brands local, market by market around the world. Although limited incomes & infrastructure may seem impenetrable barriers, the large consumer base in the emerging markets can be tapped by reducing package size, offering small payments, using demand pooling, and tailoring products to small spaces (opposed to big ticket size items), thus building billion-dollar markets with a few pennies at a time. Difference in consumer behavior in developed and emerging economies: In mature markets, people are more likely to assume that all brands stocked by mainstream multi brand
Global: The global segment of consumers in emerging markets consist of consumers who want offerings having the same attributes and quality as products in developed countries, and who are willing to pay global prices for them. When emerging markets open up, multinationals based in developed markets quickly come to dominate this segment of consumers because it is their natural niche. Also many multinationals find it difficult to serve other segments because of the institutional voids in emerging markets. Local: The local segment of consumers represents the layer below the emerging middle class. The local consumers in emerging markets look for products with global (or near global) quality, but with local features and prices. The consumers in the local segment typically consist of lower middle class. Local knowledge is a powerful source of competitive advantage in this market segment, both to tailor products, and to navigate voids. This makes local companies market leaders in this segment and multinational enterprises need to adapt to reach this consumer segment. Emerging middle class: The emerging middle class segment of consumers in emerging markets is consumers who demand products or services having a
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cover story | Brand building in emerging markets
markathon|december 2012
combination of global and local price, quality, and features. Reason for shift from developed to emerging economies:
Saturation of developed markets Removal of trade restrictions Avenues of growth- power, infrastructure, healthcare, education Large, segmented consumer base with a huge appetite for goods and services Low factor-cost production centers Labor- availability of young, well-educated talent pool Increasing penetration of technology High economic growth rate and increasing income levels
Strategies markets:
for
entering
the
knowledge of local consumer behavior, help in building political goodwill JVs & staged acquisitions- establishing a new operation jointly owned with a local firm, to gain a foothold, especially where legal constraints inhibit acquisitions. Investor may thus obtain access to local distribution channels but only limited control over the positioning of local brands (or their possible discontinuation) Aggressive Entry Modes (Multiple and brownfield acquisitions)- to build a strong nationwide market position in traditionally
developing
Market penetration starts with the entry strategy, which has to provide access to local resources, such as distribution networks and access to local businesses and authorities. In emerging economies, commonly used entry modes by investors are Greenfield, acquisition and joint venture (JV).
Acquisition- includes seeking access to distribution channels, access to a fuller range of local assets, including brand names and
fragmented markets, and to create a portfolio of local brands for multiple regional or niche markets The diversity of Carlsberg’s entry strategies in different nations throws some light in this context. Carlsberg entered Poland with a partial acquisition in 1996, and has built a strong position using staged, multiple, and indirect acquisitions. In Lithuania, Carlsberg took over a local brewery in 1999 and acquired further local brands in a global merger in 2001, thus developing a dominant market position. In Vietnam, Carlsberg entered as early as 1993 with two JVs that serve both the mass market and the local premium market, which generated handsome profits. In China, Carlsberg initiated in 2003 an aggressive strategy of acquisitions aiming
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cover story | Brand building in emerging markets to capitalize on its emerging economies experience. Branding strategies used in emerging economies are: Global branding strategy – indicates global brand with little or no adaptation, positioned as premium brand. The volumes are typically small, yet margins in terms of profit per unit sold may be large. Local branding strategy – includes portfolio of local brands which is positioned to serve mass markets, wherein market share is built through economies of scale and volume sales Multi-tier branding strategy – includes portfolio of global local and brands, positioned to serve different segments of the market. Parallel coverage of multiple market segments provides some protection against market fluctuations. Meeting consumer needs in emerging markets The companies are looking to develop brand loyalty from these consumers and are making their moves to develop long-standing consumer relationships. Getting into the initial consideration set of the consumers is perceived to be the biggest hurdle for the firms. Emerging countries are perceived as countries where consumers are buying their “first” products; consider China for example where more than 30-40 percent laptop purchasers are buying their first laptop. A similar figure for automobiles is close to 60%. It is evident that “Word of mouth” plays a pivotal role in shaping consumer’s decision in these parts of the woods as their awareness about the products is low so seeing their loved ones using the same provides them reassurance about the quality of the product. Another important factor to be
markathon|december 2012 considered while shaping the strategy for emerging economies is the in-store experience. The in-store war gains prominence while considering price sensitivity of consumers and their penchant for “value for money” items. According to a 2008 McKinsey survey, 45% people in China said they left the store with a different brand than they planned for because of the sales person’s suggestion while the same number for USA was 24%. Price- An important driver The consumers in emerging markets are price sensitive and prices influence majority of the purchase decisions made by the consumers. The companies while marketing their product have to keep this fact in consideration to capture maximum market share. However the good news is the rising middle class with a swollen income level, consumers are open to spending to fulfill their desires. According to a FICCI survey, the middle class in India is expected to swell up to 91 million households by 2030 up from 21 million currently. Likewise, in China, the urban middle class household
population is expected to shoot up from 25 percent in 2005 to 75 percent in 2020.Moreover, product prices are also perceived as a promise of quality wherein higher prices imply better quality. The global economic slowdown has increased the price consciousness of consumers and many of them are actively seeking discounts, comparing prices across channels, buying store brands, using coupons,
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cover story | Brand building in emerging markets and shopping with retailer loyalty cards. Many firms also resorted to coinage pricing to address the price sensitivity of consumers. Coke for example came out with Rs. 5 bottle for 200ml in India to target the lower income segment of consumers and its advertising campaign which was a huge success ensured heavy
markathon|december 2012 at which the distributors operate which is 23% lower than the global average to reach the markets which are difficult and costly to cover via direct sales force. The only way to fight this peculiar market scenario of competition and lower growth at the top-end, and increased local competition from the bottom-end is to prioritize product localization strategies and realization upon the fact that the middle market is so compelling that both local competitors and multinational companies cannot afford to ignore such a large market opportunity. Digital Media Marketing in emerging markets
revenue for the company.While there is a gradual shift in population distribution with the balance shifting towards urban population, still a considerable fraction of Indian population resides in the rural regions highlighting the need for dedicated rural marketing and distribution strategy.Talking about India, Infrastructure and transportation have been the limiting factors in emerging economies. The companies must ensure that local retailers keep adequate inventory especially for products which are expected to have fast response time. Hub and spoke model are applied in certain places to address issue of inventory cost and transportation infrastructure for the items with slow response time. For Example: Colgate implemented this model in rural India wherein they employed local youth to distribute its products in villages and weekly markets which helped in reducing inventory cost. Other emerging nations echo a similar behavior. Coca Cola in Africa set up a manual distribution center in which an individual was given the rights to distribute Coca-Cola products within a defined area. There are instances where strong distribution network has fortified performance of firms. For example in Turkey, companies take advantage of the lower profit margin
With the increasing internet penetration in the developing countries, social media marketing is gaining rampant popularity. Companies are gearing up to cash in on the trend and have begun to shift their focus from TVC to online marketing campaigns. An interesting trend is the ease of acceptability of online advertisements in emerging markets as compared to the mature ones. According to a research by Microsoft advertising, 17 per cent of consumers in emerging markets readily accept video adverts online versus 18 per cent of consumers in developed markets who feel they are flooded with many of them. Similarly, 12 per cent of consumers in developed markets think there are branded social networking sites in plenty, contrasting with emerging markets, where 25 per cent of consumers are open to experimenting more. Moreover, the revenue from developing economies are expected to grow faster as marketers are aggressively looking to target countries like BRIC countries, Indonesia, Mexico and the likes as in these nations, social media penetration ranges from 56% to 86%. The difference between developed and developing economies lies in the fact that the former prefer third party ecommerce sites for making shopping decisions while in the latter, online shopping is still in a nascent stage. Consumers render higher level of trust to
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cover story | Brand building in emerging markets people and brands they encounter on social media than on ecommerce sites. To gauge the engagement level and gain feedback from consumers, the companies have come up with “listening centers” that are responsible for keeping a track of customer activities in social media and gain valuable insights from them. It seems that online media advertising is soon going to give TVC, a run for their money with increasing acceptability of online ads and growing Internet penetration in emerging economies.
markathon|december 2012 Shifting focus from BRIC: Exploring new markets in CIVETS The next wave of fast growing emerging economies is here in the form of CIVETS, a group of six countries Colombia, Indonesia, Vietnam, Egypt, Turkey, and
Market potential index (MPI) This indexing study helps companies in comparing the Emerging Markets with each other on several dimensions, so as to ascertain the potential returns generated by investment in such markets. The eight dimensions and their weightages are- market size (10/50), market growth rate (6/50), market intensity (7/50), consumption capacity (5/50), commercial
South Africa. While the past decade was about BRIC, these economies, like the developed countries are slowing down and the spotlight is now on CIVETS , which have posted a growth rate of more than 5% outpacing the BRIC group in the first half of 2012. Although lacking the heft and size of the BRICs, the CIVET countries offer a more dynamic population base, increasing domestic consumption and more diverse opportunities for businesses seeking international expansion. Many economists advice that this is the right time to capitalize on their growth while the competition is fixated with BRIC countries, and take the first mover advantage as establishing an early presence could help the company to become a trusted brand for a new generation. These markets are especially attractive for the digital marketers owing to the high internet usage in these countries with a combined base of 176 million Internet users – more than any European country on its own. So multinationals will have to approach these markets with an open mind and flexibility to evolve with them. Conclusion
infrastructure (7/50), economic freedom (5/50), market receptivity (6/50) and country risk (4/50). Singapore tops the Overall Market Potential Index, with China and India the third and sixth highest indices respectively. The table shows comparative MPIs of the top fifteen emerging nations in 2011 and 2010.
Emerging markets presents an array of opportunities for both local players and MNC’s. The companies must be open minded and at the same time must carefully analyze the market scenario before taking a plunge into these economies. Consumer in these nations holds the key for tomorrow’s market leaders. So it’s time the goliaths of the business world embrace them with open arms and chart a new growth story.
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perspective
markathon|december 2012
MARKETING TO WOMEN- Think beyond pink By Priya bhat | IIM – Kozhikode “The great question which I have not yet been able to answer, despite my thirty years of research, is 'What does a woman want?'" -Sigmund Freud
According to findings of the Boston consulting group 2008 survey, women feel vastly underserved and patronized in the market. The same survey also revealed that marketers have traditionally underestimated the female purchasing power and promoted female stereotypes. This, despite the fact that Women account for 85% of all consumer purchases including everything from autos to health care. Women play crucial roles in household purchasing decisions. They usually choose the contents of the refrigerator, the appliance to be bought next, interiors of the house, what her children and husband wear, where they go for vacation and when they schedule doctor’s appointments. Her roles are diverse; voice is strong and purchasing power, limitless.
Women are from Venus men are from mars Men and women are different, anybody would agree with the simple premise, yet only few have transformed this into marketing implications.
The notion /definition of the ‘big picture’ appears to be vastly different for men and women. The way men approach a big decision is, focus on the few most important things and discard all of what they consider unnecessary details. A woman’s idea, on the other hand, is to have a total grasp and in-depth understanding of the situation. She will harp on the finer nuances and complexities. This way, women are about the important things….and extras. When a woman decides to buy a phone, she will gather information, talk to people, search the net, evaluate all options and hence join the little pieces to complete her own puzzle. This hunger for clarity and information is what makes women tougher customers than men. The minds of men tend to work in a linear fashion. They will just go to a store and think “this is what I want, the price seems right, I’ll buy it’. If the shop owner happens to remember the name of his children that would be nice, but would hardly make a difference to his purchase decisions. However the same things, respect from the owner or mere perception of empathy will greatly influence where a woman will buy her next product from. The female mind is oriented towards the conceptual, the underlying dynamics and relationships between things. Women are more interested in what a technology can do for them, rather than the technology itself.
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perspective “Because the hemispheres in her brain are so connected, she filters ideas and concepts through the lens of her emotions” says, A.K. Pradeep, CEO of NeuroFocus, Inc. , and author of the newly released The Buying Brain: Secrets for Selling to the Subconscious Mind (Wiley, 2010). To women, a little extra service will go a long way.
markathon|december 2012 their needs and aspirations.
Psychologists report that men and women literally see things differently, men are better at focused short vision while women have peripheral vision. Women are elusive. While they continue to succeed in the corporate world with a strong sense of independence, they still hold onto some of the traditional responsibilities and roles of the past. They cherish family and friends while pushing up the corporate ladder. They hope for an engagement ring as much as they yearn for that next promotion and are confident enough to efficiently juggle both these aspects of life. Understanding this tension between the past and present can be the key for garnering lasting brand loyalty.
What motivates a woman to buy? Women are all for frills and flowers, so throw in a dash of pink here and there and you have their attention. Well, not exactly. A woman does not want your product or service. She wants answers to her problems, solutions to her needs, pathways to her desires, or a secret door to her earnest wishes. Women today want to be taken seriously, and have marketers understand
Why market differently to women? Traditionally we have assumed that men and women operate in the same way, pretty much. It’s now becoming increasingly clear that, especially in the context of consumerism, women have a very different set of priorities, preferences and attitudes. One cannot market to men the same way as they do market to women. It's not just the transformation of changing colours, fonts or packaging. The future for marketers lies in a deeper understanding of how the trends in women’s economic and social status will continue to transform them, and the world around them.
So, who is doing it right? Dove- you deserve something extra'… 'Meow FMthe only radio station dedicated to women'… 'L' Oreal- because I am worth it' The essence of all these extremely successful ad campaigns above appears to be women empowerment. It is a fact that the last thing the women of today want is to be pigeon holed into a stereotype.
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perspective She is an individual with her own idiosyncrasies, which she loves, and is not willing to change herself for anyone. DeBeers launched the Right Hand Ring campaign in 2003, which catered to this persona perfectly: women are, independent, powerful and financially capable to buy themselves a diamond ring, yet they maintain love for traditions, like the love of their life gifting them with an engagement ring.
markathon|december 2012 confidence into women about themselves, showing them how they are beautiful in their own right. Nike Women, a campaign launched in 2001 brought about a sort of cultural shift that changed the way female athletes are perceived. Nike realised that women athletes are feminine and tough at the same time and they wanted their running shoes to cater to this nature of theirs. Nike began to develop products designed especially for a woman’s body, shifting away
Dove’s campaign of real beauty is another example of how a company used the right strategic indicators to
from the generally applied formula to adding pink into the men’s shoes.
appeal to the psyche of women. Every woman has a right to feel beautiful but the stereotypes that have been fed to them for decades have made them feel otherwise. The campaign conveys a message to induce
It is obvious that these companies have been successful in marketing to women because they were able to look beyond stereotypes and typical gender roles that have been around for decades. They realised that they would have to take risks to entice the elusive female audience. And that is the lesson we all should learn.
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vartalaap
markathon|december 2012
An Interview with Prof. Parasuraman Professor and Director (PhD), School of Business, University of Miami
Parasuraman ("Parsu") is a Professor and Holder of the James W. McLamore Chair in Marketing (endowed by the Burger King Corporation) and Director of PhD Programs at the School of Business, University of Miami. He obtained his Bachelor of Technology degree in 1970 from IIT-Madras and Master of Business Administration degree in 1972 from IIM-Ahmedabad, India. He is an active consultant and has conducted dozens of executive seminars on service quality, customer satisfaction and the role of technology in service delivery in many countries. In this exclusive interview for Markathon, Professor talks about his industry and academic experiences and the growing importance of Services in Marketing . Markathon: The importance of service has been emphasized a lot of late. But when service has turned more into an order-qualifier and is taken for granted, how does one aim to achieve a distinctive advantage through service alone? Mr Parsu: The importance of service has indeed been increasing and companies are starting to pay more attention to it. However, only a small minority of companies in any sector currently excel in service delivery on a consistent basis. In my view, what you are referring to as “order-qualifier” service is simply another attribute of a market offering that all competitors in a given space have to offer in order to meet their markets’ minimum requirements. For instance, competing car companies may offer the same basic warranty service. Retailers selling electronic goods may have look-alike product guarantees and product-return policies. Competing banks may offer similar services such as online banking, electronic fundtransfers, etc. Likewise, most major airlines have
frequent-flier programs that are not discernibly distinct. These types of add-on, “me-too” services are not difficult for competitors to copy. Such services, therefore, quickly become commoditized and incapable of generating sustainable competitive advantage. On the other hand, offering a service to keep up with competition is not the same as being able to deliver the service excellently and create a “wow” experience for the customer….herein lies the key to achieving a distinctive advantage through delivering a service superbly and doing so consistently. The effectiveness of simply augmenting a company’s offerings with “order qualifying” services is likely to be short-lived. Delivering the services excellently so as to make an emotional connection with customers is what is likely to separate the winners from the also-rans. And, delivering superior service on a consistent basis requires a customeroriented corporate culture, which is more difficult for competitors to copy and which therefore offers a much firmer basis for sustained market differentiation.
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vartalaap perspective
markathon|december markathon|november 2012
Markathon: One of your research articles is on ““Defining and Measuring E-Service Quality”. Do you think an e-service facility can replace the personal touch that a human interaction brings? How receptive do you think customers would be to this idea?
products and services. It is important to note that TR is a measure of mental inclination, not technical competence. There are many people who are technically competent but still reluctant to use technology-based systems.
Mr Parsu: Commensurate with the rapid advances in technology on multiple fronts, company-customer interactions are increasingly occurring through selfservice technologies (SSTs)—e.g., online booking of train and air tickets, self-service check-ins at airports and hotels, etc. As a consequence, service transactions that are traditionally handled by human employees are now being rendered through SSTs, with customers supplying the necessary labor to complete the transactions. Regardless of whether service transactions are handled by humans or by technology, customers do assess the quality of the service they receive. However, insights from research conducted by my colleagues and me (and discussed in the article to which you refer) suggest that the attributes on which customers assess quality differ somewhat between the two modes of service delivery. For instance, for routine transactions that are completed electronically through a website, customers are most sensitive to aspects such as efficiency (the ease and speed of accessing and using the site) and system availability (the correct technical functioning of the site); they do not value as much traditional “touchy feely” aspects of service (which may in fact impede efficiency). On the other hand, when something goes awry with a routine web-based transaction, customers do expect immediate assistance, preferably provided by a human representative who is readily available on the premises, online, or via telephone. So, even for customers who prefer to use SSTs, the need for a human-delivered personal touch, although diminished, cannot be dismissed.
Technology readiness consists of four distinct facets: innovativeness, optimism, discomfort and insecurity. Innovativeness relates to a general willingness to experiment with new things and to be an 'opinion leader', i.e. 'spread the word' to other people. Optimism has to do with having overall positive feelings towards technology. Customers who score highly on innovativeness and optimism are much more inclined to adopt technologies than are low scorers. The discomfort and insecurity facets of TR are inhibitors of technology adoption. Discomfort relates to a general paranoia about technology and a feeling that it is controlling you rather than vice versa. Insecurity also has to do with fear of technology but it is more transaction-specific. Findings from several studies that employed a scale to measure TR, called the technology readiness index (TRI), consistently reveal five customer segments that have distinctly different profiles in terms of their scores on the four facets of TR: explorers, pioneers, skeptics, paranoids and laggards. As one might expect, preference for technology-based (over human-based) service systems varies across the five segments, being highest for explorers and lowest for laggards.
Furthermore, insights from another technology-related research stream of mine suggest that not all customers are enthusiastic embracers of technology. Specifically, customers vary in terms of their technology readiness. The notion of technology readiness (TR) relates to people's propensity to adopt and use technology-based
Thus, getting back to your question, the need for the personal touch through human interactions will continue to be there….much more so – and for much more time to come – for some customer segments than for others. Marketers, in formulating their customerservice strategies, would do well to heed this variation across segments in terms of preferences for high-tech vs. high-touch service. Markathon: “Globalization has helped nations transcend their geographies, but not their cultures”. How different are service expectations across cultures? As a marketer, how does one leverage these cultural differences?
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vartalaap perspective
markathon|december markathon|november 2012
Mr Parsu: A good question! Let me address it from two levels. At a macro or general level, I would say that (basic) service expectations are more similar than dissimilar across counties and cultures. For instance, based on my service-quality (SERVQUAL) research stream (in collaboration with Professors Len Berry and Valarie Zeithaml) and my experiences in travelling around the world, I believe that customer expectations are pretty much the same at the broad level of SERVQUAL dimensions such as reliability, responsiveness and assurance. For instance, worldwide, bank customers expect their financial transactions to be executed accurately; hotel customers experiencing problems with their accommodations expect prompt assistance and problem resolution; hospital patients expect reassurance that they are getting appropriate medical treatment.
service at its restaurants (perhaps a manifestation of the more leisurely culture of those markets).
The message for global marketers is that, when it comes to service delivery, “one size may not fit all.”
At a more micro level, expectations can and do vary across countries due to cultural or other differences across countries. For instance, while customers experiencing service problems expect prompt resolution, the definition of “promptness” – and customers’ tolerance for delays – may vary across countries. To understand and capitalize on such differences in service expectations, marketers should carefully study their target markets’ expectations (rather than simply make assumptions about them) and then modify their service strategies accordingly. The message for global marketers is that, when it comes to service delivery, “one size may not fit all.” Even McDonald’s – a pioneer and ardent practitioner of service standardization -- has been savvy enough to make appropriate adjustments to its service strategies to cater to different country markets. For instance, while around 70% of McDonald’s sales revenue in the US is generated via drive-through windows at its restaurants (reflecting the “fast, on-the-go” U.S. culture), the bulk of McDonald’s revenue in some Latin American markets is generated through sit-down dinner
Markathon: Technology is a great facilitator in marketing products and services. But how does one market the technology itself?
Mr Parsu: Effectively marketing a new technology to customers requires a good understanding of the target market’s composition and needs— this is of course no different than in the context of marketing any new product or service, regardless of how technologically sophisticated it is. However, a critical additional consideration in the context of marketing a technology is the target customers’ technology readiness (TR) that I talked about earlier. For instance, if a company wants to market a technologically sophisticated smart phone to the population at large, it needs to be aware that its target customers will vary in terms of TR levels; in other words, its target market will simultaneously have a mix of explorers, pioneers, skeptics, paranoids and laggards who differ in terms of their reactions to and time of adoption of the smart phone. As such, a one-size-fits-all marketing approach is unlikely to be effective. For example, a promotional campaign touting the technological features of the smart phone will appeal to early-adopting explorers, but may be much less effective (and may actually turn off) late-adopters such as the paranoids and laggards. Likewise, customerservice and -support strategies also need to be modified to fit the distinct needs of the different segments. For instance, explorers may view problems with technology as an interesting challenge that they would like to tackle on their own. For such customers support can take the form of web-based help menus and other self-service technologies. However, late-adopting paranoids and laggards would require a considerable amount of 'handholding' when they experience problems. In general, it will be a mistake for companies marketing new technologies to assume that customer-support
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perspective vartalaap strategies that worked efficiently and effectively in the initial few months after rolling out a new technology will work equally well later on as new waves of customers, with different TR profiles, come on stream. Markathon: You have consulted a number of firms such as IBM, Godrej & Boyce, Airgas Inc. etc. Share with us your most challenging consulting project. Did you find some common problems that these firms were facing?
markathon|december markathon|november 2012 view, senior management support and commitment of resources are perhaps the most crucial requirements for designing and implementing service-improvements. Markathon: What would be your advice to budding managers like us?
Mr Parsu: Having conducted research and worked with companies on customer-service issues for almost three decades now, I strongly feel that most companies – irrespective of the sector or country in which they are Mr Parsu: One of my most challenging – as well as most operating – have huge untapped potential for improving fulfilling – consulting assignments was some work I did both their operational efficiencies and their revenues for Corning, a manufacturing conglomerate consisting through delivering superior customer service. While of multiple lines of business. This assignment was there are some rare pockets of service excellence in simultaneously challenging and fulfilling because my every sector, by and large the status of customer role was to assist in (a) communicating the relevance service is mediocre at best. Therefore, my paramount – and importance of customer service across disparate even if somewhat unorthodox – piece of advice for units within a highly product- and manufacturingbudding managers like you is to make a concerted effort focused company; and (b) demonstrating how the to focus on customer service when you begin (or various units could restart) your careers as systematically assess executives in Advice for budding managers like you is to and improve the established firms or, make a concerted effort to focus on service they provided better still, as to their customers. entrepreneurs customer service when you begin (or Despite the challenge launching new firms. I restart) your careers as executives in of trying to infuse am saying “better still” established firms or, better still, as service thinking into a because launching manufacturing your own business that entrepreneurs launching new firms corporate mindset, this is truly focused on assignment was truly customer service from exhilarating because a couple of units with whom I the outset – such as, for instance, Amazon.com – might worked initially internalized and quickly implemented be somewhat easier than trying to infuse a service my messages about customer service; in turn, they orientation into an established firm with its own became internal “case studies” that I was able to entrenched corporate culture. Despite some initial incorporate into my subsequent work with other units. challenges you may have to face and overcome in This had a salutary catalytic effect that I hadn’t implementing a service culture, your persistence in this anticipated at the outset. regard will pay off handsomely down the road. Jeff One general theme across several of my consulting Bezos, founder and current CEO of Amazon, insisted on assignments is that the initial excitement within creating a great customer experience right from the companies about the importance of customer service start and made substantial investments into laying the and the potential benefits it can offer doesn’t always technical and other infrastructures necessary to ensure get followed up with appropriate action plans. That that experience so much so that Amazon did not make said, a common ingredient in cases where effective any profit in the initial six years of its existence and implementation did occur (e.g., in Corning) was business pundits predicted that its demise was unwavering and highly visible commitment from top imminent. Today Amazon is a leading online retailer management for improving customer service. In my and one of most successful companies in the world.
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war zone | eye 2 eye
markathon | december 2012
The conjoined Tata Starbucks may confuse new customers about the brand’s offering which is premium coffee.
Asif Iqbal | XLRI, Jamshedpur Tata Starbucks Ltd., a joint venture between Tata Global Beverages and Starbucks Corporation, opened three stores in Mumbai in October. The outlets have been branded as “Starbucks Coffee- a Tata Alliance” and are at posh locations in Mumbai. The brand “Starbucks” is associated with premium coffee in 60 countries and is targeted at individuals with a higher disposable income who are seeking a unique experience. Tata in India is a 100 year old brand which stands for ethics and quality. The Tata group has used its brand name strategically till now. This is evident from the fact that the acquisition of Jaguar Land Rover did not bear the Tata name anywhere as the group wanted to retain the initial luxury equity of the acquisition.
Deepak | XIM, BHUBANESWAR Brand TATA - One that is more than 100 years old and one that was rated as the second most trusted brand in India and among the top 50 firms according to brand equity by global consultancy firm ‘Brand Finance’. Considering such numbers, has Starbucks missed a trick or two by not branding their Indian version as just Starbucks and not TATA Starbucks? It definitely seems so.
Using the name “Tata Starbucks” would definitely exhibit the alignment which the two brands have on the lines of quality and customer experience. The synergy of the two brands would reflect a combination of high quality coffee drinking experience clubbed with the reliability and real value offered by Tata. However, Tata does not have enough presence in the Indian coffee market which is dominated by Nestlé’s Nescafe and HUL’s Bru. Tata in India is associated more with tea rather than coffee. Tata tea is one of the oldest and most widely consumed teas in the country. Hence the conjoined Tata Starbucks may confuse new customers about the brand’s offering which is premium coffee. Starbucks on the other hand is a global coffee company with a unique panache of its own among coffee sippers. The average Indian consumer would like to visit a Starbucks outlet more for feeling foreign and upper class than for enjoying the best coffee in town. Hence the name “Starbucks” makes more sense than “Tata Starbucks”.
Starbucks as a brand is known for delivering superior products and services. The image of Starbucks is that of a premium brand that offers high quality service at a higher price, of course. While this joint venture of TATA with Starbucks gives TATA the much needed global leverage, it gives Starbucks entry into the huge Indian coffee market.
Tata as a coffee brand is the single largest corporate player in the Indian coffee market and has played a major role in freeing the coffee economy from the shackles that had limited its growth since 1952. Also it is the world’s largest integrated coffee plantation company in the world.
Considering these facts, including the brand TATA in the name of the venture makes a lot of sense. This is because only the people who keenly follow the world of business would be aware that TATA is behind the presence of Starbucks in India. The others would be in the dark about this important fact and thus the huge opportunity due to brand TATA is lost.
Also, presence of the word ‘TATA’ in the brand name brings that warmth to the whole franchise and makes it so much more closer to the thousands of middle class households that look upon TATA as one of the most reputed brands in the country . Has Starbucks just missed the opportunity to make its coffee Topic for the next issue’s Eye to Eye: “Religion based marketing – A marketing Bliss or a Social Bane?” smoking hot? Your opinion (view/counterview) is invited. Word limit is 250-300. Last date of sending entries is 18th December, 2012. Include your picture (JPEG format) with the entry.
While this venture gives TATA a global leverage, it gives Starbucks entry into the huge Indian coffee market.
“Should Tatas have used the name ‘Tata Starbucks’ instead of ‘Starbucks’ in order to leverage the Tata coffee brand?”
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markathon | december 2012
war zone | silent voice
Silent Voice
LAST MONTH’S RESULTS Theme: “Launch of Starbucks in India”
WINNER: MANDAR SONAVANE | GREAT LAKES INSTITUTE OF MANAGEMENT Congratulations!!! Mandar receives a cash prize of Rs 500!
HONORARY MENTION
Subadesh Kanna | IIM Rohtak
NEXT THEME FOR SILENT VOICE: “Old Monk Reloaded (Fictional)” LAST DATE OF SENDING THE PRINT AD: 18th December, 2012 EMAIL ID: markathon.iims@gmail.com Send your entry in JPEG format named as SilentVoice_<Your Name>_<Institute>only.
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markathon | december 2012
specials | ADdicted
Ad-dicted Umang Kulshrestha | IIM S
GSN Aditya | iim s
PRODUCT: Godrej Hair Crème Expert
PRODUCT: Mahindra & Mahindra Ltd.
POSITIONING: Quick, easy hair color
POSITIONING: “Live Young, Live Free”
AD AGENCY: Creativeland Asia, India
CREATIVE AGENCY: Interface Communications
YouTube Link
YouTube Link
https://www.youtube.com/watch?v=W_at3i5hYtY
http://www.youtube.com/watch?v=Ez2IbQULlzk
CONCEPT:
CONCEPT:
An excited girl entering the room draws her mother’s attention towards her dull, old hair convincing her in that same jovial, super excited tone of coloring her hair with Godrej Hair Crème, which was so easy to apply without any mistake. Soon after the application, the TVC is all “Oh My God, Oh My God” with the girl and Mom shouting aloud owing to the young look Mom had now, with the newly found shiny, soft hair. When Dad enters, astonished to see his glowing wife with changed look, he too breaks out shouting “Oh My God Oh My God” more amused to realise that it just happened in ` 30 sitting back at home, leaving the whole family happy and shouting the TVC ends!
For years, Mahindra has been a leader in the Utility Vehicle Segment. In this Ad movie, Mahindra & Mahindra brings all of its utility vehicle brands under one common positioning “Live Young, Live Free”. The campaign focuses on “Freedom” and how fear holds us back from claiming our freedom. The Ad showcases Mahindra’s utility vehicles simplifying our tasks in all walks of life. The Ad portrays Mahindra & Mahindra as a young and exciting brand that helps you break free from the shackles of life and claim the thrill of your life.
VERDICT:
Catch/Miss- Catch
Catch/Miss- Miss
At some point, every one of us have dreamt of taking an off-road trip into the wild, but have never really pursued it due to various reasons. The Ad plays on this very emotion. To begin with, the Ad is beautifully shot with some stunning visuals. The vehicles are shown in all of their mettle. The Ad brings out the character of each vehicle and helps build a distinctive image of the brand that is unparalleled in the Indian Auto Industry. The Ad is complemented by a slick soundtrack that enhances the already perfect visuals by leaps and bounds.
The TVC certainly began at a note to target the audience on an emotional bond of daughter – mother where she tries to take care of her mother’s growing age but the way it has been depicted and executed takes away all the charm of basic concept of positive emotional approach of an advertisement, applied. The overacting and excess enthusiasm is not so well perceived by the audience. Lesser “Oh My God” could have rather saved the life!
VERDICT:
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specials | bookmark
markathon | december 2012
Click
Unexpected Insights for business and life
- Bill Tancer
Review by SOWMYA R Price Rs.833
“When you look into the World Wide Web, the Web also looks into you!” Bill Tancer loves data and through this book he explains why it is important for all of us to embrace data. What millions of people are doing online and why it matters? The book is an attempt to interpret puzzling and often irrational consumer behaviour and stresses on Web mining as the way forward in today’s digitized world.
Summary When was the last time you willingly gave in to a market researcher or a telemarketer and revealed your personal preferences? Probably never! And yet isn’t the first step in marketing “identifying needs”? This is what makes Web mining a tool of competitiveintelligence in today’s wired word. Through intriguing and interesting examples, Bill takes the reader through a fascinating journey that reveals the changing paradigms and helps decode significant cues that an individual is likely to reveal through his online activity. Just like how news sites are replacing newsprint, online searches and activity leave behind a trail that can reveal cultures and strongly rooted preferences which can be used to gain business insights as well as understand our lives itself. After all “We are what we click!”
Organization The book is broadly organized into two main parts viz. i) Understanding Ourselves ii) What’s possible with what we know?
The first part is the essence of the book, and analyses the new generation of consumerism. Through topics ranging from picking prom dresses to celebrity worship and even to the extent of facing or hiding behind our fears, the web and its interactive side, web 2.0 seem to be a non-judgemental confidant to whom we share our deepest secrets! This part of the book essentially aims at sensitizing the reader to the vastness of data available on the net and how it mirrors an individual’s choices. The second part delves a little deeper into the data that has been gathered and addresses the question of how best it can be mined to extract useful insights. It deals with topics such as the closing television-internet gap, predictive mining to decide who the winner of a reality show would be and essentially the time advantage that the web provides an analyst with! It talks about the diffusion of innovation and the important contribution of early adopters in the success of any invention. Case in point here would be YouTube’s rise to stardom within just 35 days of its launch!
Verdict: 4.5/5 “My name is Bill and I love data” was the line Bill used to introduce himself. The book shows the power of this statement and at the same time the simplicity of it, through our everyday actions on the web. It is not just data that you uncover, but the human psyche itself!
Bottom-line Malcolm Gladwell in his book, “The tipping point” says that there are a maximum of only “six degrees of separation” between any 2 people in this world. Social media and web have reduced this distance even further, to just a CLICK. A page turner and a must read book if you wish to understand consumer behaviour or more importantly yourself.
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markathon | december markathon | march 2012
specials||updates updates specials
BRAND LAUNCH
Espirit to shut India operations by the year end
Bajaj Electricals to launch rural India specific brand
At the time when government is fighting for the FDI in retail bill to be passed in parliament, conversely global retail giant Espirit will exit India due to annual accumulated losses. Eventually the distribution deal with Madura Fashions, Aditya Birla Group’s lifestyle retailer will come to an end which was established when Espirit entered India in 2005.
To change the nature of consumer electronics business in rural India by providing much lower priced products with specialised design and finish, Bajaj is set to launch the rural brand. The biggest challenge for the company is to create the demand in regions where power supply is only for few hours in a day. However the well-known brand image of the company will overcome the competitive threat from already established unorganised player in the region.
Dabur chyawanprash launched immune India school challenge Dabur has launched a pan India contest where instead of students; schools will compete with each other. The best school will be judged in two stages based on parameters such as hygiene, average attendance of students, students’ academic record, Sports record etc.
BMW launched its face lifted sports activity vehicle X6 The model which was shown in this year New York auto show has been launched with few extra features but majorly with a cosmic upgrade. The vehicle has come out in both petrol and diesel version with an initial price tag of INR 78.9 lakhs and 93.4 Lakhs respectively.
Colors TV Channel buys the rights of TV Series ‘24’ Anil Kapoor, who once acted in the American TV series ‘24’, had bought the broadcast rights from Fox TV more than 1 year ago. Now Colors channel has acquired the broadcast right for the Indian version of this very famous action thriller from the actor in the deal pegged at around INR 150 Crore. The Indian actor will feature in the Indian version which is produced under his own production house.
Britannia to change positioning of its ‘Tiger’ biscuits With the launch of new campaign, Britannia is repositioning Tiger which came to compete with the Parle-G biscuits under the glucose segment. Earlier the TV commercials were focused on instant energy whereas in the recently launched TVC in which Salman Khan is the brand ambassador, the focus is on the growth of the child.
Volkswagen enters used car business in India Under the brand name “Das WeltAuto”, Volkswagen has launched its used car business with first dealership in Mumbai. Company will deal with multi brand pre owned cars in India which will give tough competition to the only major organized player, Mahindra First Choice Wheels in this segment. The high growth rate as compared to new car sales forced Volkswagen to enter this newly emerging used car business.
BRAND WATCH Pepsi makes its biggest investment in cricket PepsiCo has bagged the title sponsorship for Indian Premier League for a period of five years through a winning bid of INR 396.8 Crore. This is the largest investment company has ever made on the game of cricket which will allow it rebrand the much awaited tournament as Pepsi- IPL.
MEDIA Yamaha India on the door to door campaign Yamaha India Motor has come up with a unique 9 days campaign during the festive period to promote its new scooter, Ray. The cavalcade of scooters driven by girls started from a dealership to travel entire day and stop at key locations like markets, colleges etc. to finally finish the journey at another dealership in the city. The buzz is being created to attract its niche target segment of young urban women.
Tata Nano to reinforce buyer’s purchase decision Tata Motors has launched a comprehensive campaign including TVC and OOH advertising to give a sense of pride to the existing users of the Nano. The TVC highlights the emotional connect with the ownership of the car along with the conative aspects like best in class
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markathon | december markathon | march 2012
specials||updates updates specials mileage, best Air Conditioner, Extra space through captions on the screen. IN OOH campaign, the hoardings are put where each one highlights a special feature with a specific tagline. Click here to watch
StrawberryFrog appoints Raj Kamble as managing partner The movement marketing agency is setting a shop in India for which Raj Kamble has been roped in as Managing Director to handle Indian operation. Owing to high growth opportunities in India for global companies, it was imperative business sense for StrawberryFrog to set up Indian operations.
AD Watch Time to Khisko with Maruti’s New Alto 800 Turn on the ignition and the Car is ready to “Khisko” as showed in the TV commercial which clearly resonates with the youthful and trendy appeal of the car. The tagline “It’s the time to Khisko” and the background song are well received by the consumers as they appear very catchy. Although it’s an entry level car but unmistakably, The Market Leader, Maruti Suzuki is promoting the car as aspirational, high class and stylish car. Click here to watch
“Sath khao Khusiyaan badhao” By Coca-Cola Taking its “open happiness” positioning further, CocaCola is trying to build the world of happiness around the dining table shared by the whole family through its new TV commercial. In a move which seems quite strategic, the carbonated soft drink major seems to enter the general meal course in the households through such kind of promotion. Click here to watch
Yebhi.com to promote differentiation In the recently developing, highly competitive online retail business, Yebhi.com is trying to differentiate itself by highlighting the knowledge of its delivery men regarding the product to be sold. Coming aggressively to compete with its competitors, the Ad showcases other companies’ deliveryman as donkeys which are perceived as fool in general. Click here to watch
Sony BRAVIA: Now More Vivid and Brighter In order to highlight its high end technological abilities of providing extremely vivid and bright pictures, Sony has come up with its new BRAVIA. The fantastic TV commercial is showing the vibrancy of the magic created through the colours to fill the life with joy. Click here to watch
Articles are invited “Best Article”: ROHIT TIWARI | WeLINGKAR INSTITUTE He/She receives a cash prize of Rs.1000 & a letter of appreciation We are inviting articles from all the B-schools of India. The articles can be specific to the regular sections of Markathon which includes: Perspective: Articles related to development of latest trends in marketing arena. Productolysis: Analysis of a product from the point of view of marketing. Strategic Analysis: A complete analysis of the marketing strategy of any company or an event. Apart from above, out of the box views related to marketing are also welcome. The best entry will receive a letter of appreciation and a cash prize of Rs 1000/-. The format of the file should be MS Word doc/docx. We’re inviting photographs of interesting promotional events/advertisements/hoardings/banners etc. you might have come across in your daily life for our new section “The 4th P”. Send your self-clicked photographs in JPEG format only. The last date of receiving all entries is 18th December 2012. Please send your entries marked as <ARTICLE NAME>_<SENDERS’ NAMES>_<INSTITUTE> to markathon.iims@gmail.com. 31
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Š Team Markathon, IIM Shillong