Brand Story - Parle G || Daksh Bhagat || IIM Shillong || February 2016 edition

Certain brands truly live up to the age old saying ‘Old is Gold’ owing to their wide popularity amongst the masses. While travelling in a Mumbai local train enroute Andheri and further north, one might encounter the warm aroma of fresh baking. This comes across as a result of the busy ovens at the first factory of Parle Products baking a batch of the world's largest biscuit brand, Parle G. Ever thought of the fact, how is it, that, generation after generation the biscuit that dips in your tea every morning only to give you a refreshing start to the day, has been able to maintain the same standards? Let’s dig a bit deeper into the matter.

Born in 1939, as Parle Gluco and covered with a cream-coloured, yellow stripped, wax-paper wrapper with the photo of a cute girl on it, it was launched as an affordable source of nourishment to counter expensive, imported biscuits in the British Raj such as Jacob’s and Huntly & Palmers. Britannia, based out of Calcutta emerged as a market leader in the East, while, Glaxo glucose biscuits dominated the market in the South. The war between the brands began only in 1960, when, Britannia launched its first Glucose biscuit brand, Glucose D, which was later endorsed by Amjad Khan’s Sholay Avatar Gabbar Singh in the 1970’s.

Similarly, smaller players began to enter the market by just imitating the pack and adding the suffix ‘Glucose’ to their name. Thus, the positioning as a Glucose biscuit started to put Parle in trouble, because the majority would just ask for Glucose biscuits and many businesses began eating into Parle’s market share, using the product’s name. This was the time when people started getting confused by similar brand names, each with its own set of promotional strategies. Glucose biscuits no longer remained an exclusive offering of Parle in the market. It was high time for Parle to differentiate itself from the competitors and rise above all. Hence, in 1982 Parle Gluco was repackaged as Parle G. The plump girl on the packet appropriately clicked with the target audience, kids and their mothers.

In order to create a large potential market, Parle employed mass marketing for Parle G. Mass-production, mass-distribution and mass-promotion allowed Parle to maintain low-price for Parle G, while targeting all segments of the market. Owing to its nutrition-rich and value-for-money positioning, it has been able to generate large volume-sales. Parle G faced severe competition from Hide & Seek, which came out of the same company many years after Parle G, and employed niche marketing strategy to sell its premium biscuits. Other competitors such as Tiger, and Sunfeast also employed the mass marketing technique.

Since the Glucose-biscuit market has reached its maturity stage, Parle changes its conventional marketing strategies and now uses penetrative strategy to cater to this market. It provides low-price and high-quality Parle-G to its price-sensitive customers, using value pricing method. Whereas for Hide & Seek, a premium chocolate-cream biscuit, it follows a market premium strategy and charges high price for its high innovative and quality biscuits. Parle-G, being the flagship product of Parle, is meant for all markets whereas other premium sweet-savoury biscuits, such as Monaco and Hide & Seek, are targeted at specific markets and market segments, especially the price-insensitive high-income class.

Parle is one brand that has always believed in branding. In times of trouble, Parle-G came up with the tagline, ‘Often imitated, never equalled’, to create a difference in the minds of the customers and claim its superiority over its competitors. It brought about a revolution in the advertising industry in trying to get the first mover advantage. With this ideology, Parle partnered with the Indian Railways and painted Mumbai’s train compartments with Parle Gluco ads, becoming the first brand to do so after the Indian government allowed it. It was only the belief in branding that made Parle G’s makers self-reliant, build scale and maintain pricing.

Parle G has always kept pricing in check. Even when the prices of the key ingredients (Vanaspati, sugar and wheat) went up, its price hovered at around Rs 4 for a pack. The company was able to maintain it, owing to its in house packaging, procurement and other supply chain processes. Thus, it has been able to retain its position as the market leader in the Glucose biscuit industry. Glucose is now 22 per cent of Rs 24,000 crore and Parle G is around 80 per cent of it, reaching 6 million outlets. 

With the advent of the new decade, the company now faces a different concern. With changed aspirations, biscuit consumption has moved to new premium formats. Even with increased penetration, Glucose market’s share has declined. Parle Products revamped Parle G with the help of O&M, positioning it as a supplement to the curiosity, which is characteristic of the new generation kids, with the tagline, G for Genius. But it is more important to rejuvenate Parle G to appeal to the new generation. The newer generation needs to be told about the stories that the brand has been able to create with the older generations by including newer perspectives into their stride including their motto: ‘Old is not always Gold’. 

Jab They Failed- McDonald's Arch Deluxe || Daksh Bhagat || IIM Shillong || January 2016 edition

McDonald’s is known in every nook and corner of the World for offering hot, tasty hamburgers to the masses. Being masters of the “Dollar Menu”, they own the fast food industry by providing their food at a significant value. Then why are we discussing the brand under this section of the magazine today? Any guesses? When a brand fails to recognize the need of the hour, it begins facing some conventional marketing problems, which also happened with McDonald’s when it launched its new burger, Arch Deluxe, which failed to inspire consumers. 

In 1996, the Arch Deluxe debuted as a large hamburger patty on a soft potato-flour roll, with lettuce, tomato and a fancy mustard/mayo combo sauce. Marketed as the ‘Burger with the Grown-up Taste’, the idea was to have a burger which would shift the focus away from children. Indeed, the advertising campaign for the Arch Deluxe sent across the message of a sophisticated alternative of McDonald’s regular offerings with images of kids shying away from the ‘sophisticated’ product. With a $100 million advertising budget, the burger became successful in creating a huge build-up to the release. However, it never caught on with McDonald’s throngs of hungry fans. Reason sighted against the same were many. Some argued that it was overpriced. Others believed that the target market was inappropriately identified. Many people also speculated that the budget was misused and the burger in itself didn’t taste that great. 

Let’s try to understand what actually happened. The value propositions that McDonald’s has set for itself are friendliness, cleanliness, consistency and convenience, which fortunately its competitors have neglected to capture. The first consideration is that a regular customer never goes to McDonald’s for sophistication, rather goes for the convenience offered. On entering a McDonald’s restaurant, a customer gets the convenience of knowing what to expect. He does not want to be bombarded with a million and one different variations of essentially the same product- a hamburger. McDonald’s has never competed on taste, yet everybody comes back. 

Another trouble with Arch Deluxe was regarding the strategy of the burger to be sold on taste. This may have been the wrong approach to draw in consumers because it was seen as McDonald’s trying to be something it’s not: a culinary luxury that appeals to food connoisseurs. That may not have been the intent, but that became the perception that led to a major break down. Another ironical aspect of the Arch Deluxe failure is that the product was well researched. It was only after an extensive market research involving different demographic segments, it was concluded that people would love to eat a hamburger specially designed for adults. However, the target market that was supposed to be catered never turned up, thus proving Arch Deluxe to be an embarrassing flop. Last but not the least, McDonald’s is heavily centralized. Most of the marketing decisions need to pass through the company’s headquarters in Oak Brook, Illinois. In contrast to major product successes such as the Big Mac, the Hot Apple Pie, the Egg McMuffin and the Filet o’ Fish, which were all invented in operators’ kitchens out in the field, the recipe for Arch Deluxe came from the Oak Brook’s kitchen which is infamous for launching many such product failures. Have a look at one of the TVC's of the Arch Deluxe: https://www.youtube.com/watch?v=wE4JrM8OFts

 

However, the problems encountered with the Arch Deluxe are symptomatic of an even bigger problem. McDonald’s in the recent years has been accused of losing connect with the customers who never find it difficult to give up loyalty and hence has been rendered far behind in the market in terms of brand value. Indeed, this is a problem acknowledged by the company’s CEO, Jack Greenberg, who arrived in 1998. Quoting Jack, ‘we have been taking much too long to develop an idea and get it to the market, then too long to decide whether we want to do it or not’.

Finally let us look at the lessons we have learnt from the failure of Arch Deluxe: 
1. Go for what you know: Part of McDonald’s brand identity lies in its simplicity. Another part is defined by its children-friendly approach. A ‘sophisticated’ burger ignoring children was therefore destined to misfire. 
2. Avoid customer confusion: McDonald’s is not cognitive, it is reflexive. By extending its range with products such as the Arch Deluxe, Bratwursts, McTacos and McMussels, McDonald’s was creating a need for its customers to think and get confused. 
3. Be sceptical of research: Market research holds a special place when carefully conducted, but it should never be taken as gospel truth. Perception of the brand/product should always be taken care of, even if the research shows results in the opposite direction.

Brand Story - Zara || Daksh Bhagat || IIM Shillong || December 2015 edition

It comes as no surprise that Zara has become the world’s largest retailer and its founder, Amancio Ortega, has become the 4^th richest man in the world. The brand started off as a small dress-making factory in Spain in the year 1963. 10 years later, Ortega opened a small store named as Zorba in La Coruna, Spain with a budget of a just 30 Euros. The store was later named – “Zara”. By 1989, more than one hundred Zara outlets had opened up in Spain, all of which became renowned for the choice of their location.

Imagine yourself in an apparel store with an entirely new collection, matching the latest fashion trends and completely different from what was on the racks when you visited the store two weeks back! Seems possible in a utopian world? Zara has turned it into a reality.

When Zara entered the midrange clothing market, the market was already dominated by players such as Corte Inglés and Cortefiel. In this scenario, Zara’s positioning of quality with affordability worked well, as neither of the two existing players appealed to youthful fashion sense. The company's first annual report, which was produced in 1999, outlined Ortega's goal, stating, "Zara's aim was to democratize fashion. In contrast to the idea of fashion as a privilege, we offer accessible fashion that reaches the high street, inspired by the taste, desires, and lifestyle of modern men and women". To realize this goal, the company followed the fast-fashion model, which involved bringing clothes from design stage to stores in a matter of few weeks where most other fashion brands would take a whole six months to get their new designs into the market.

Zara has a unique policy of “Zero investment in marketing”. Instead, the money saved here is used to open new stores. The striking feature about Zara is that it has noticed differences that matter to the consumers and used them to differentiate itself from the rest of the competitors. In other words, its key marketing strategy is based on exclusivity, experience, differentiation and affordability. In essence, the company relies heavily on the word of mouth advertising. The products’ target population lies in the age group 18-40 years and lives in the urban areas. Specifically, the market segment comprises of women (65%), men (25%) and children (15%) all of them being fashion conscious and falling in the educated middle class category.

Zara’s branding strategies were executed keeping in consideration the fact that clothes are a perishable commodity that people love to use and throw away. The designs were mostly spotted in fashion shows and then copied by in-house designers. The strategy was to ship fewer pieces, in greater variety, while trying to avoid high inventory costs and the frequent clearance sales common amongst most fashion retailers. The company produced only what would sell in its shops.

One of the things that make it a stand out brand is the fact that it is a vertically integrated retailer. From designing to manufacturing and distributing the products, it does everything by itself. This approach seems to be working for it because it has managed to establish itself as one of the leading Spanish fashion stores globally.  90% of Zara stores are owned by the company and the rest are joint ventures of several franchises. This means that customers experience the same environment when entering one of the Zara stores be it in London, New York, Paris, Rio de Janeiro, New Delhi etc.: the stores are spacious, well-lit, modern and walled with mirrors.

Zara has an official IPhone APP. This application is designed to have the ability to let browsers search through the latest information regarding new collections. In 2010, there was a lot of negative feedback regarding the functionality of the application. Zara has taken all of the negative review in consideration and immediately improved. The application now includes prices, locations, GPS map, and contacts to the specific shops you select to browse in.

One of the things that speaks volumes about Zara’s strong culture is the fact that it that it hires young designers and trains them to make quick decisions. In other words, while good decisions are encouraged, bad decisions are not severely punished. Facing several problems related to rent space, every mall owner in the World is ready to provide free space to Zara, owing to the popularity of this brand in urban areas and the long way it has traveled.

The culture of an organization like Zara takes years to hone and requires leaders with more than an understanding of numbers-they need to have a feel for the human component. It’s a classic example of a successful supply chain network and a learning for many budding entrepreneurs venture in the domain of merchandising.

Eye2Eye - Should Microsoft make its email free || Daksh Bhagat & Chahat Shah || IIM Shillong || September October 2015 edition

Microsoft should make its e-mail (Outlook) free - Daksh Bhagat, IIM Shillong

It was only last year that Microsoft started charging its users for the outlook facility, if they wanted free custom email domain support. That effectively meant that the freedom that Microsoft gave to the users to manage a personal non-Microsoft email domain for free was taken back. While this happened, the existing custom email domain users were taken care of. Microsoft going ahead with its culture, decided to provide an indefinite support to such customers which provided for lifetime functionality of such accounts with no provision for adding new accounts. It also gave the customers an opportunity to migrate to Office 365 with a free-three month subscription to Office 365 Small Business Premium. 

The earlier versions of the website helped people in managing different mailboxes under the same roof which was probably more convenient to use. Though the “management” was limited to adding and removing up to 50 individual email accounts using the specialized domain, yet, it was a great, free feature for personal use and small businesses. Whenever customers look at online services, they expect their experience to be convenient and of low cost. When one uses multiple email ids to communicate with separate entities, it becomes all the more difficult to manage all of them at the same time. Going by the mindset of the end consumer, opening mails in separate tabs and viewing and replying to each one of them can be cumbersome as well as can lead to reduced speed and performance of the desktop. 

Microsoft positions itself as a fast paced and a challenging corporate house, but the image it presented in front of its loyalists through this move wasn’t very pleasant. Emails are a part of the daily routine of customers and they wouldn’t be really willing to pay for using the same in any way, already keeping the increased costs of internet usage in mind.

Microsoft should NOT make its e-mail (Outlook) free - Chahat Shah, IIM Shillong

Microsoft, following the footsteps of Google made its email facility popularly known as Outlook,

paid, for the users who wanted to access accounts other than Microsoft’s own accounts on it. Microsoft has always remained in monopoly in the operating software market, always coming out with innovations that are just better than its own previous versions. So, it took a step ahead by offering premium services. As can be seen from the chart, outlook commands a large market share in the email user population. 

There is always a loyal segment available in all types of markets that will never break the vow. In such cases, the targeting is only on the niche segment and as for a matter of fact, identifying the right target is probably the best thing a marketer can do and hence charging for the e-mail service is fair enough to survive in today’s competitive market. Whenever something is charged, customers start associating quality with it, if at all they buy

it. There should be no doubt about the delivery of quality from the side of Microsoft. Hence, if the

company, because of its large market share, is able to reap profits, owing to the fact that it already is the market leader, a premium service should not create a havoc. 

Although even if Microsoft didn’t do this, it could have gone beyond limits, as on a usual basis people wouldn’t want to switch to Gmail or any other mail server unless they are getting everything in the same window frame. There is a continuous competition amongst these service providers which for the end users can be majorly differentiated on the basis of the experience they get which includes but is not limited to speed, security concerns, etc.