Monday, March 15, 2010

Total Recall

Team Markathon | IIM S

As Markathon celebrates one year of existence, we thought it would be fitting for us to come out with a “Roll of Honour” for the world of marketing in the past year. For this we identified 6 fields which we thought were significant and listed out the Top 3 in that particular field. So, here we go…

2009 – The year after recession! The word which spells doom for an industry like Advertising. Predictably the first half of 2009 saw tight ad budgets, since most of the companies were still reeling from the after effects of the recession and were cautious and watchful of their ad spends. But as time wore on, and the latter half of 2009 descended on us, companies were much more liberal with their spending and we got to see a number of path breaking & innovative ads. Let’s have a look at the 3 most popular ads of the year according to the experts:
1. vodafone zoo zoos
The very mention of the name lights up a smile on your face and brings to your mind the image of extremely cute egg shaped creatures goofing around, talking funnily and constantly driving home the message of Vodafone’s various value added services. Undoubtedly, these set of commercials have been the most popular and successful series of ads, helping Vodafone climb the charts like never before.
2. idea’s walk when you talk
This is next in Idea’s series of socially relevant ads. Here it drives home the message of being hale and hearty. Abhishek Bachchan plays the role of a doctor and is asked whether technology is the cause of all health problems. And then he comes up with the answer no its not. He asks people to walk when they talk on the phone. It has a dedicated website, a Facebook application called “Walk when you talk” and a virtual character Zac portrayed as young , cool and lethargic person who chats on his mobile and wants to stay fit.
3. Jaago re–aaj se khilana bandh, pilana shuru
Everyone is more than aware of Tata Tea’s Jaago Re campaign and this time they’ve come up with the message of removing corruption from the system. They go about conveying the message that people take bribes because we give them in the first place. And this TVC ends with the tagline - AAJ SE KHILANA BANDH, PILANA SHURU. This ad was extremely popular and successful since 2009 was the year of elections.

Green Marketing
With the market just recovering from the turbulent recessionary times, 2009 gave marketers a lot to experiment with innovative green campaigns. Changing consumer preferences have definitely compelled industry leaders to relook their marketing strategies and offer unique solutions. Some of the success stories of green marketing in 2009 are described below.

1.Frito Lay’s Sun Chips
Frito Lay’s Sun Chips was one of the efficiently managed sustainable brands of 2009. Launched in 1991, Sun Chips is a healthy snacks brand composed of mainly whole grains and fiber. Their marketing campaigns highlight the green practices throughout the value chain of the product. It uses solar energy instead of fossil fuels for production. Even their packages use renewable materials and are compostable. They have a website called that encourages consumers to share ideas to save the planet. This way the marketing strategy emphasizes on the green aspect of the product possessed throughout its lifecycle.

2. Clorox’s Greenworks
Clorox’s Greenworks provides a diverse portfolio of natural cleaners made with natural plant and mineral-based biodegradable cleaning ingredients. It reinforces credibility through labeling and third party seals which includes EPA’s Energy Star, Design for Environment and the Sierra club. In spite of proprietary considerations, it has all the ingredients listed in the website; this ensured transparency. Other than this, Green Works involves in cause-marketing relationships. Its association with the Sierra club gives a common ground for corporations and environmental organizations to work towards protecting the planet and communities.

3. Kaiser Permanente
Even service sector have realized importance of green marketing. Kaiser Permanente is one of the leading managed health care providers in US. It is taking its “health” mission seriously by eliminating mercury and other toxic products in hospitals. In 2009 its ad campaigns focused on its paperless procedures and online systems and wellness-based green building designs.
All the above examples show the need of a holistic application of green branding. Only when the entire value chain is involved in the strategy, green marketing gives the maximum payoffs.

Event Marketing
When everyone keeps talking about how the Television and Internet have revolutionized the way we communicate, it is easy to underestimate the importance of direct contact in marketing. Event marketing is one of the oldest forms of marketing and still continues to be in vogue.
1. International Trade Fair
When talking about event marketing it is hard to miss out The India international trade fair, which has only become bigger and better since its inception in 1980? The fair attracts general and business visitors along with delegations from over 50 countries. With hundreds of stalls displaying a wide range of products, the trade opportunities in this fair are immense. The platform it gives to new and established marketers to interact with potential customers is hard to match with other conventional forms of marketing.
2. Auto Expo
The one event which invariably becomes the focal point for automobile industry is the Auto Expo held at New Delhi. The significance of the event is reinforced when almost every automaker tries to come up with the next big thing during the Expo. New players in the automobile industry use this event to gain maximum exposure while entering the Indian market. The presence of Movie stars like Shahrukh Khan and john Abraham in the expo points to how companies are using an integrating marketing strategy of which event marketing is an indispensable part.
3. India Fashion Week
When talking about movie stars its fashion that crosses all of our minds. The India Fashion Week is the biggest fashion event of the country with creations from more than 100 designers. The five day event is the dream platform for Indian designers to market themselves to the world. A large number of business deals are made during the event which is an ideal setting for designers, fashion houses and vendors to meet.
Event marketing is increasingly becoming a prominent component in the overall marketing strategy of most companies. The field has ample room for creativity, which can be leveraged by companies to differentiate themselves in a rather competitive marketplace.
Product Launches
Product has always been at the heart of marketing across various sectors. Excellence of product and its ability to meet consumer expectations was all the more important in last year when consumers were thinking twice before spending owing to economic slowdown. This led to higher degree of differentiation and innovation in the product and services.
1. TATA Nano
No product was more awaited by millions of Indians than Tata Nano. Termed as the People’s car, Nano was commercially launched on 23rd March 2009. The excitement and eagerness of Indian public to own a Nano can be imagined by the fact that it recorded 200,000 bookings in just twenty –five days. The fulfilment of Mr Ratan Tata’s promise to deliver a car at one lakh rupees initiated the race for small car launches by many foreign players in India.
2. TATA Docomo
With its pay-per-use per second concept, the launch of Tata Docomo - second large scale CDMA service – created rip ples in the Indian Telecomm space. It not only captured the attention of half a billion mobile subscribers but also forced major players like Airtel and Vodafone to re-design their tariff plans. Huge investments in marketing coupled with deep penetration through sound distribution channels have increased its total subscriber base to 60 million. Today, in less than a year from its launch, Tata Docomo is country’s fifth largest telecomm brand.
3. Microsoft Bing
Considered to be one of the most potential attacks by Microsoft on Google in recent years, Bing captured 9.3% US search engine market share in less than six months of its launch in June 2009. The attractive background and better image search helped Bing gain popularity among net users. Microsoft tie up with Yahoo is already positioned to gain around 30% market share. But what remains to be seen is that whether Bing eats up into Google’s 63% share or it leads to cannibalization by capturing on Yahoo’s share.

Consumer Trends
In this very special edition of Markathon, the lists we are compiling for you would be incomplete without the mention of what the consumer was thinking about in the year that has gone by. It was a year that started off in the worst manner possible with much of the world reeling from the impact of what was perhaps the worst financial crisis to hit us since the Great Depression but the underlying message of this year was not of despair but of hope and the choices made by the consumers reflected this. We have attempted to capture a snippet of this.
1.Movies and Entertainment
By all conventional marketing wisdom, in times of crisis industries like this suffer the most as consumers cut their discretionary spending. But this year turned all this on its head as the box office set record numbers all over the world as people turned up in droves to escape the despair that was prevailing in the world. For example the US Box office totaled more than $11 billion in receipts and the biggest movie ever made in Hollywood released this year. Even Bollywood had its biggest blockbuster in the form of 3 Idiots this year.

2.Go Green GO!
The recession was supposed to take away the focus from the environment but this year defied that. Even as the world leaders shied away from taking big decisions, this year will always be remembered as a year in which the consumer realized that Green does matter.

3.The Twitterati
This year gave rise to a new term for the lexicon, the Twitterati. They were inescapable and simply everywhere. The first place to get the news was no longer Google or facebook but its cousin that had everyone and his uncle tweeting about matters that ranged from the mundane to the earth shaking. And for this phenomenon the Twitter and its millions of users are the biggest trend that we have observed in the world today.

1. Coca-Cola
Green is the new “black” in packaging!! Coca-Cola, whose stint with pesticides has still not faded from consumers mind, took a major step in their “sustainable packaging journey” with selective global roll-out of its new PET bottle which is made from up to 30% plant materials such as sugar and molasses. The container is believed to be 100% recyclable and has a smaller carbon foot print than conventional PET bottles. Coca-cola is now looking ahead to spearhead global strategy with packaging. In an attempt to consolidate its position in juice segment, worldwide rebranding is being undertaken - beginning the process with homogeneous packing design for their ‘extensive’ family of fruit beverage. The new look planned is based on the logo and colour scheme of the Coke’s flagship juice brand Minute Maid - would include the black rectangle and white background logotype.
2. Absolut Vodka
On the contrary to this, the impact of absence of packaging was very well demonstrated by the Absolut Company which believes that ‘in an absolute world there are no labels’. Absolut Vodka with its Absolut No Label limited edition launched on May 22, 2009 created ripples in the market. The bottle sports a removable sticker with website address for more information and feedback.
3. Kissan Jam
Recession did not have much effect on packaging sector as industry segments like FMCG, Food & Beverages and Pharma were also not adversely affected. With packaging becoming a new differentiating factor for FMCG, the sector looks forward to brighter times. For instance, Kissan Jams, used tube packages with catchy graphics to appeal to the kids & BRU Coffee's aroma-lock packaging was designed to appeal to staunch coffee lovers.
With increasing popularity of the Ready to Eat products, innovation in food packaging was witnessed. This section will now see the use of microwaveable steel.
With the India Packaging Show 2010 coming up, one can expect to see more of such efforts!!

Bingo with an Unconventional Attitude

Pranab talukdar | iim s

Scientists at Bingo Mad Labs have come up with a simple substitute for the conventional clinical preg-check card. All you have to do is nibble at a Bingo Mad Angle Achaari Masti snack to find if your tummy is going to bulge more. According to David Ogilvy, the new Bingo Mad Angle Achaari Masti ad both entertains and true to its spirit. It is "no confusion," only "great combination" of taste and fun.

I hope this reminds you the famous bingo ad that was screened during the 2007 world cup.
The Bingo brand of chips was launched by ITC on 14th March 2007. During the time, the market was dominated by the Frito Lay group (owned by Pepsi Co) with a slew of brands like Lays, Kurkure and Uncle Chipps holding 50 per cent of the market share. The other was the Haldiram group with 25 percent of the market share.

Snacks category is divided into the Traditional segment (Bhujia, Chana etc) and the Western segment (potato chips, cheese balls, puffs etc) and the Finger snacks segment dominated by the Frito Lay group. The total market size could be to the tune of Rs 4,000 crore, of which Rs 2,000 would be organised, growing at 25 percent per annum. The unorganised sector could be growing faster than the organised sector. You can always see a chaat-papriwala doing brisk business every time you walk down the road.

ITC spent nearly 40% of their media budget on digital media, because they felt this would be the best way to connect with the market. Bingo brand building was through the digital media, something unheard of, for Indian companies. According to Ravi Naware, divisional chief executive (foods), ITC, two things were important. First was consumer insight and for that ITC invested heavily finding out what tickled the Indian consumer’s taste bud, what turned him on. ITC put a whole team of chefs in place to craft new flavours for this category. Idea was to tempt the consumer with flavours that are exotic, but not strange, somewhat different from what is available in the market. The second is the manner in which you launch your product, the communication/execution part and the distribution strategy. ITC evolved a completely new and modern merchandising solution for the launch which included attractive stands and other display material for Bingo at the retailer ends. The communication strategy with a heavy dose of humour has also been different and daring.

Bingo launch was around the 07 World Cup. “A Happy Coincidence”, according to Mr. Naware. The innovative ad was telecasted on almost all channels- national, regional, sports, news and kids’ channel. The sudden media blitzkrieg left a mark on the audience mind. The objective was achieved as Bingo was in the pure impulse purchase category. In certain areas market share touched 50% and not less than 15% in other areas. ITC launched website to target the youth and then for its “Bingo mad Angles- Aachari Masti”. Viral marketing was used to create brand awareness. It also sponsored various events at colleges and a lot of happenings of channel V- targeting the youth. On the negative side, some reaction to the Bingo advertisements has not been very encouraging. The advertisements are sometimes classified as ‘irritatingly humorous’.

Customization and SKUs
Bingo has 16 variants (priced at Rs 5, Rs 10 and Rs 20 a pack). A good majority of these are region-inspired. Like the mustard for eastern parts and paneer tikka for North Indian market. But there are some generic national flavours, such as premium salt, tomato and chilly formats. The potato chips are available in many flavours Masala Chaas, Chatpata Nimbu and Paneer Tikka. In addition to these 4 flavours, the classic flavours of Masala, Tomato and Salted are also available. In the finger snacks segment pakoda inspired chips like Live Wires, Khakra inspired Mad Angles, and corn based chips like Tedhe Medhe.

On the other hand, several SKUs caused problems in forecasting and stocking. Retailers were taking a small variety of each variant leading to frequent stock out situation for popular ones.

Packaging and Production
The packaging of the product has been slick and eye catching. Bingo is available in packets in myriad colours like orange, blue, red, yellow, green and purple. Not only do bright colours attract the attention of little children but also of adults. Snack food is an impulse buy. The bright coloured stands with the Bingo label on top make it more visible in a shop. Bingo is the most seen brand in snacks and thus increasing its chances of being bought.

On the production front, the strong farm linkages of ITC (e-Choupal) ensure that only the selected grades of raw materials are used for Bingo.

The large, country wide distribution network of ITC built up over the years was a key factor in Bingo’s ubiquitous availability. In small town’s villages, one won’t find a Lays or a Haldiram but a Bingo along with the local unbranded snacks. It has also entered into an agreement with the Food Bazaar chain of outlets for retailing of Bingo which is not there for Frito Lays and Haldiram. Bingo was also offering a 4% to 5% higher margin than that of for Frito Lays. Overall, ITC is fast catching up Frito Lays’ national reach of 8 lacs outlets.

Bingo learnt from a failed pricing strategy of Frito Lays. Lays increased its price from Rs 10 for 35 grams to Rs 15 for 45 grams. This affected the sales of Lays and it finally went back to the Rs 10 formula. Bingo priced its 16 SKUs at Rs 5, Rs 10 and Rs 20 a pack and had a consistent pricing strategy. Combing this pricing with the innovation of the product won the heart of the Indian consumer and also higher margin for channel members made them happy.

Having written all this, I would like to mention a quote of Mr Ravi Naware during an interview with Financial Express, “With Bingo nothing was planned, we went wherever and whenever there was a good opportunity”.

Prof Jagmohan S. Raju, Marketing Department Chairperson, Wharton Business School

The Price is Right

An interview with the renowned Marketing professor Jagmohan S. Raju

Professor Jagmohan S. Raju is the Joseph J. Aresty Professor; Marketing Department Chairperson, Wharton, University of Pennsylvania & Executive Director, Wharton Co-Sponsorship of Indian School of Business. Besides being a wonderful teacher, he is a renowned researcher as well. His research interests include issues regarding pricing, retailing, sales, promotions and coupons, private labels, optimizing channel contracts & competitive strategy.

Markathon: Engineering from IITD, MBA from IIMA, Ph.D. from Stanford University, Assistant Professor at UCLA and now the Chairperson of the Marketing Department at Wharton, University of Pennsylvania. This journey would be the ultimate dream of many youngsters of today. Please share with us the experience of this wonderful journey.

Prof. Raju: My father was a professor and my mother taught in a school. We were not rich but my parents gave me values that were priceless – the importance of education, working hard, and helping others who were not as fortunate. I left home to study in a boarding school, Punjab Public School Nabha, at the age of 10, from there to IITD, IIMA, and Stanford. At each of these institutions, I formed friendships that have lasted a life time. Even today, I am in close touch with friends from my boarding school and we are like brothers.

Markathon: The cost pressures are very high in emerging markets like India and there is increasing pressure to compete on cost. Companies have garnered market share by pursuing a low pricing. Do you think such pricing methods are sustainable in the long run?

Prof. Raju: Independent of what prices you charge, it is extremely important to be cost competitive. Some companies use their lower costs to charge a lower price, and others use the extra margins that lower costs give to build a brand and build market share. Hero Honda is a good example of this.

Markathon: With the booming middle class in India, purchasing power has been increasing manifold. What do you think will be the most important factor in capturing maximum market share: Advertising, competitive pricing or quality?

Prof. Raju: Despite the rise in incomes, the Indian middle class consumer is extremely value conscious and is one of the best at making price-quality trade-offs. To some extent, the consumer has no choice. We spend more on food as a percentage of our income than say a consumer in the US. Therefore the Indian consumer spends more time in making decisions and evaluates products carefully. When buying a consumer durable such as a TV, the Indian middle-class consumer thinks of it as a purchase for a lifetime. But the consumer also has limited income. Therefore, the need for being value conscious.

Markathon: With the rise of the Internet, there is no information arbitrage for companies to leverage. In this context how difficult do you think it is to pursue pricing of products and services?

Prof. Raju: Actually, one could argue exactly the opposite. With the ability to disseminate information inexpensively, companies that truly have a better product or service can communicate the benefits more easily to the customer; the customer can compare one product with the, and be willing to pay a higher price for a better product. You are right - it is now harder to fool the customer, but then it never paid to do that any way in the long run.

Markathon: With your extensive experience in both industry and academia, do you perceive any gaps between the marketing course curriculum and the corporate world?

Prof. Raju: There are a few areas where the academic curriculums lag practice, and there are some areas where the practice is far behind. However, the good news is that at least at Wharton, there is a very close interaction between the two. We learn from each other. Formal mechanisms have been put in place for the two to interact and we do interact sincerely. I work

with many companies to improve their pricing decisions, and during that process, learn what their challenges are. Then we develop models and methods to help them make better decisions.

Markathon: Finally, what are the most important skill sets and qualities that management graduates need to develop which will prove critical to their success in global business environment?

Prof. Raju: I would list the following:

· Use your MBA course time as a gift to learn but do not assume that the learning process will be over when you graduate. It has just begun. One of the roles of good education is to give people the power and aptitude the teach themselves.

· Maintain the friendships that you build at your school. These friends will be your best guides as you all grow together.

· Think of life as a marathon and not a sprint. Most of you will work for over 50 years after you graduate – think of what the world was like 50 years ago. The world in 50 years will see more change than what we saw in the last 50 years. These changes will bring opportunities that we cannot even visualize today. To take advantage of this:

o Be there. Take care of your health. Have a happy family life.

o Be open to change – adapt and develop new skills

o Hire people who are better than you and learn from them.

o Maintain a positive attitude

o Try to help one person every day.