The Rebranding Dilemma

Gaurav Ralhan, Kaustubh Rawool, Sria Majumdar, IIM S

The Rebranding Dilemma

‘’Whatever you do, be careful not to undermine the fundamental values and strengths of your brand and ensure that whatever you do is in sync with your business rationale and aims.” - Richard Duncan
While this may sound painfully obvious, there are enough examples of rebranding disasters to prove that common sense may indeed be, uncommon.
Books like ‘Who moved my Cheese?’ prove time and again that change is almost never well received. Brands, like people, are scared of change, of growing old and losing their market position. Products as well as corporate brands begin to panic when they have been in the maturity stage for too long. This is where rebranding comes to the rescue with glamorous creatives and brilliant strategies. One of the most common ways of delaying the ageing process, rebranding, includes changing the name, changing the logo, modification of the overall look and sometimes overhauling the entire brand philosophy.
Rebranding is the flavour of the season in the backdrop of Airtel’s rebranding campaign which was launched on the 18th of this month. As in Airtel’s case, rebranding may be spurred by sudden growth or the need to fit into a global identity. Rebranding is no child’s play, and as many disasters have shown us, must be dealt with very cautiously. Many a times, decisions have been reversed. A classic example of this is the failure of the new sweeter Coke that was introduced in the 1980s. Coca Cola finally had to bring back its original brand and formula. Although the risks are great, rebranding remains more popular than ever. The need to stay ahead makes companies gamble their heritage for the promise of better profits in the future. While it is too early to comment on the success or failure of Airtel’s rebranding strategy, in this issue we deal with some major rebranding successes and failures of the past.
The Tropicana Episode
A recent example of a rebranding exercise that fell flat was PepsiCo’s Tropicana juice brand. In early 2009, Pepsi relaunched Tropicana with new packaging and created a new advertisement to promote it. Tropicana’s whole packaging was overhauled and a rebranding campaign termed as the “Squeeze Campaign” was launched. The old design of an orange with a straw in it was replaced with a glass of orange juice. Also, the normal screw cap was replaced with a squeezable cap which had the appearance of half an orange.
As Tropicana’s case reinforces, relaunch of a trusted and well established brand can be tricky. The redesign was done to have a better connect with the customers and to present a clearer image of what the brand meant to customers. This is where the problem begins. Understanding consumer perceptions is no mean task.
When the new packaging was introduced, consumers were quick to register their displeasure. They did not like the new packaging and were quite vocal about it. It was all over the internet and PepsiCo was bombarded with emails, letters and phone calls of complaints. People went to the extent of commenting that the new packaging was too ‘generic’ and resembled a store brand. The packaging which made Tropicana stand out on the shelf was lost. In addition, there was criticism over the fact that the same glass of juice imagery was displayed on all of Tropicana juice varieties. The previous design had more obvious colour differentiation for each variety.
PepsiCo was forced to respond to the heavy criticism and reinstated the old packaging imagery, as a means of placating consumers and creating positive public relations. This case spotlights the importance of assessing the realities of the marketplace and recognizing what is important in rebranding a product. At the end of the day, nothing is more important than consumer insights.
Tropicana’s packaging story was interesting on many fronts. It was one of the most blogged topics in February 2009. The consumer’s reaction and the publicity it generated definitely had one positive for Brand Tropicana. It was proved beyond doubt that the consumers were attached to the brand, and Tropicana could not rebrand without the consumer’s approval.
Tommy Hilfiger’s Fiasco
Tommy Hilfiger’s logo has always been its key branding strength. Customers would associate the logo with the symbol of the US flag and could relate to it as US citizens. However in 1999, Tommy Hilfiger suggested that the logo be changed to give it a trendier feel. He believed that the customers wanted rebranding. There was an overhaul in the brand philosophy and the Tommy Hilfiger tried to become trendier and competed with chic brands such as Gucci and Prada. The company launched ‘Red Label’, a sub brand without the Tommy Hilfiger logo, which targeted the upper segment of the society.
Unfortunately, the strategy backfired as the average customer could not afford this range. Customers could not relate with this new range as it lacked the very logo responsible for Hilfiger’s success. The company’s share price fell from US $40 per share in 1999 to US $22.62 in 2000 which further reduced to half by the end of 2000. Sales reduced drastically and several showrooms were shut down. Also, location strategy of the company was flawed. Brand Hilfiger was associated with the youth and in locations such as Rodeo drive where stores were set up, the average age in the neighbourhood was about 50 years. Obviously, the response was poor.
The solution in this case too was no different from Tropicana. Tommy Hilfiger reverted back to its original classic and preppy feel which the customers could relate to. However, Tommy Hilfiger took a significant hit because of its rebranding campaign. The company lost a lot of customers and it cost Hilfiger a lot of time and resources to win the customers back. The lesson to be learnt from this case is that sometimes it is best to let things be as they like. Maybe that’s the way they are meant to be.
The Godrej Magic
By this point in the story, we are sure that most of the readers have become cynics. It seems like the most of the rebranding campaigns are nothing but a waste of resources in retrospect. However, the case of Godrej reinforces our faith in the concept and its success.
A 110 year old iconic brand went for a makeover. Godrej, the behemoth present in around 27 product categories with close to 100 products ranging from locks to homes, soaps to animal feeds to mission critical rocket engines got a new look. The famous Godrej logo which was actually founder Ardeshir Godrej’s signature was infused with animation and colours to give it a more contemporary look. Rather than completely changing the image of the brand—and thus alienating its loyal customer base built over time—Godrej decided to simply change the colour of its logo to the vibrant hues of green, blue and ruby.
The company’s old logo which represented the virtues of quality and trust were given a fresh contemporary look to reflect the new positioning of “Brighter Living”. Youngsters perceived the company as belonging to their grandparents’ generation- manufacturing locks and almirahs, but with the increase in the product portfolio the company needed to create a refreshed image. Hence this campaign was well placed to convey this message of change and renewed vitality.
The logo with the jazz and vibrant colours has worked wonders in establishing a better connect with the younger consumers and yet retain its loyal customer base. The new logo also helps to address the issue of Godrej being perceived as a company lacking innovation. The corporate rebranding strategy adequately portrays the new product development taking place in Godrej.
In situations similar to Godrej’s where firmly established brands become out dated, rebranding resembles identity makeovers. Godrej’s rebranding campaign is proof that we don’t have to lose out the old, in order to gain the new. For brands like Godrej heritage is important and it would be foolish to get rid of it, in order to stay relevant with the times.
With majority of the India’s population under 35 years of age, the company has timely recognized the need for generating a younger customer base for staying in the competition. If the brand represents an interface, through which the consumer interacts with the organization, then the logo is a useful touch point. However, the rebranding strategy should not be limited to the mere change of the logo; the change should be inculcated within the function of the whole organization. Godrej is strengthening its brand by leveraging its aerospace expertise through advertising to enhance the ‘advanced technology' perception among consumers. Through Godrej Eon in refrigerators, air conditioners, washing machines, DVD players, microwave ovens and colour televisions, Godrej is talking technology which will help it gaining market shares in various sectors where its new products are being launched. The company has proved it can understand consumer India well and cater to its needs by its successful rebranding campaign.
The CCD Story
Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL) was a name unheard of till 1996 when the first Café Coffee Day outlet was inaugurated in Bangalore. Boasting of more than 1000 cafes in 141 cities, CCD, as it is called, is proof of the increasing purchasing power of today’s youth.
The company was initially perceived as a South Indian coffee joint where serious business discussions could be carried out. It was CCD’s belief that there was a latent market segment in teenagers which the company could target. Realising this fact, the company went for a complete brand overhaul in 2002. CCD’s earlier logo was quite simple with a simple red square having white streak and ‘Coffee day’ written at the bottom. The new logo incorporated red, white and green colours with emphasis on the word ‘Café’. The colour red signified passion while the colours green and white signified the long heritage of CCD and its purity. CCD had put an emphasis on the word ‘Café’. It was a place where one could go with a whole bunch of friends at any time of the day and have a good time, over coffee.
After a successful rebranding campaign, the company is currently in the midst of another rebranding propaganda. The new logo is a ‘Dialogue Box’, with the words Café Coffee Day written in a distinct, specially created font, which symbolizes the company’s motto of providing a perfect place for relaxation and conversation. 180 new retails outlets will be rolled out by 2015. Out of the 180 outlets, 65 would be new lounge format. Also other features such as new smart menu, take away dining, and comfortable dining would be part of the rebranding.
CCD has proved yet again that it understands the youth. The youth tend to get bored with similar decorations and ambience after a few visits. Keeping these useful insights in mind, a fresh rebranding campaign was launched. The earlier rebranding in 2002 proved to be very successful for the company considering the growth from 14 cafés in 6 cities to around 1000 cafes in 2010. While the full impact of the current rebranding is yet to be seen as implementation has not been completed, initial consumer reactions are very positive.
The Moral of the Story
Rebranding is a double edged sword. Used wisely, it could rejuvenate the brand and widen consumer base. However, there are too many rebranding mishaps in the history of marketing. Rebranding must be an absolute necessity; else it ends up diluting the brand equity. The importance of market research in a rebranding strategy cannot be overemphasized. At the end of the day, the customer is the king. When he accepts the rebrand and deems it necessary, it is a success, else a failure.

Horlicks- The Great Family Nourisher

Winner: Prerna Sharma, KJSIMSR, MUMBAI

Honorary Mention: Varun Vasudevan, IIFT

Will Mahindra and Mahindra's foray in bikes segment lead to the dilution of its brand equity?

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“Will Mahindra and Mahindra's foray in bikes segment lead to the dilution of its brand equity?”

The same question was raised when the company decided to invest heavily in its SUV/MUV manufacturing business. Mahindra & Mahindra was always more known for its farm equipment and tractors but with the advent of Mahindra in SUV/MUV, perceptions have changed. They lead this category with 55% market share with brands like Scorpio, Bolero & Xylo. This success has given enough confidence to the company that the consumers appreciate the products of Mahindra.
The company has acquired all the competence to enter this category and has a good control of the value chain. Talking about the brand equity, I don’t think that this move can dilute the brand equity because they have not only succeeded in the SUV/MUV category but have also been doing good in the scooterette category for last two years. Theoretically also, consumer imagery extends beyond the perceived price and the store image to the producers themselves. Manufacturers who enjoy a favorable image generally find that their new products are more readily acceptable. Mahindra & Mahindra has a very strong brand equity in rural India because of its success in farm equipment and SUV’s like Bolero which are extensively used in rural areas. Hence Mahindra already has an advantage in entering the rural markets.
M&M entered the two-wheeler segment by acquiring Firodias-promoted Kinetic Motors two years ago and currently sells three models of scooterettes. It has sold 1.5-million scooters in the 12 months. The company was not present in the bikes segment so far which has been witnessing good growth. Since the image of the parent brand is one of quality and bikes can be logically linked to the brand, consumers are more likely to have positive associations to the new offerings introduced.
Since all the synergies are favorable for Mahindra, I believe that their entry into the bike segment won’t affect the brand equity of the company.


Counter-view

Ragini Iyer, IIM S

Mahindra & Mahindra has forayed into the motorcycle segments with two of its products, the 110 cc Stallio and the 300cc Mojo. While Stallio in the entry level segment is being positioned as stylish and reliable, Mojo is all set to carry the tag of being the fastest bike. Being a new entrant in one of the most competitive markets, the onus is on Mahindra to prove its competency and not let its brand equity dilute. Unless the product is highly innovative, it is too risky to venture into a new market. The same seems to be happening in the case of Stallio and Mojo. Both the products are not really differentiated from the existing brands and do not possess any of the ‘extraordinary features’ required to crack the market share. It is also a well-known fact that 80% of the motorcycle market is captured by giants like Bajaj and Hero Honda and TVS.
Talking about the company’s brand equity, it has never been a very big name in the two-wheeler sector and it is trying to leverage the brand image of the parent group. The failure of these brand extensions is bound to jeopardize the overall brand image. Though it has been the largest tractor producer in the rural market, one should not forget the stronghold of Hero Honda in rural India. It already has almost 50% market share in the motorcycle segment, 40% of which is from sales in rural India. Every other motorcycle producer has been eyeing for its share of pie in the rural market. Also, the well-established brands have an edge over Mahindra to influence a potential customer’s purchase decision. Being a late entrant, the scenario would be even more competitive for Mahindra to boost up its top line.
Mahindra’s core competency in tractors and expertise in the utility vehicles have resulted from a continuous learning process over a period of time. The same may not be true for the new 2- wheeler vertical of the company which started just two years ago. Mahindra has seen failures in joint venture operations with Ford and Renault. Despite the synergies like market growth being robust, sales promotion being aggressive, one cannot be absolutely sure about the success of these newcomers. Another product failure may either project a negative or a new image, thereby diluting its brand equity.

Mr. Kiran Khalap, Brand consultant, author and co-founder of Chlorophyll

An Interview with Mr. Kiran Khalap
Brand consultant, author and co-founder of Chlorophyll


In this month's Vartalaap , we have with us Mr Kiran Khalap, co-founder of Chlorophyll which is India's first end-to-end brand consultancy firm. Mr Kiran Khalap started off his career in Lintas as a trainee copywriter before moving on to Clarion advertising where he eventually became the company's first CEO and CCO (Chief Creative Officer). He has been the recipient of the prestigious Ashok Jain Award for Public Service advertising and also is a published author. In January 2010,Mr Khalap was chosen as the Chairman of the Brand & Marketing Advisory Council to the prestigious and challenging Nandan Nilekani-led Unique ID Project of the Government of India. He shares with us his unique perspective about the world of branding.


Q1. You juggle three passions and one career. Did these three diverse passions of yours play a role in motivating you to start out your own venture?
The venture started as a reaction to all that seemed not right (a very naive
view perhaps!). With advertising as a profession, where I had spent 16 years
of my working life (1983 to 1999), I needed a new way to utilise all that I had learnt-a way that was less self-obsessed, less ego-driven, more objectives-obsessed, more results-driven. That’s how we started chlorophyll, India’s first brand consultancy. There were design shops before chlorophyll, but no brand consultancy.

Q2. If you were asked to choose one defining moment of your life what would that be?
It was a very unusual setting. A local train running on the delta of steel
tracks in Mumbai. I was reading a book called Talks and Dialogues by J
Krishnamurti. I had read it twice before. But that day, in that dimly lit second class compartment, there was a white light inside my head: I saw how
our thoughts and memories create a division inside us and outside us, and
how one can discover an awareness that is untouched by our thoughts.
Nothing in life was the same after that.

Q3. ‘ideantity’ & ‘litmosi’ are two of chlorophyll’s newest and path breaking offerings. What was the thought process and reasoning that went into the creation of these two tools?
Good question! Thanks.
As the phrase goes, chlorophyll came from “the wrong side of the tracks”:
We were not set up by sexy, award-winning designers, but by a band of
holistic thinkers who were committed to an idea of what brands meant.
So we created chloropathy: a way of looking at brands (nouns) and branding
(verb) that we believed was uniquely ours. That is why on chlorophyll’s 10th birthday, we decided to go public with our beliefs and recorded our perspectives on the difference between the complexity of the design world and the simplicity of communication. For example, there is a lot of technical explanation about the use of colours in logos (Wipro is one of the most amazing in this regard), that taken out of context, makes no sense. ideantity attempts to clear the air using data rather than emotion. litmosi™ is the result of our consistent work with 50 corporate brands (asopposed to product or service brands) since 1999.
It is focussed on CEOs of SMEs who are
a.committed to growth
b.have realised that the organisation has grown beyond their ‘human
footprint’
c.need to substitute themselves with a set of values
We believe it’s the world’s first corporate brand alignment tool.

Q3. Branding is considered to be the most effective way for a company to differentiate itself from the crowded market place and off late the branding bug has caught on. Using terms such as brand or brand consulting seems to be the in thing and one gets the feeling it is being overused and misplaced at times. What’s your take on this?
I agree with you 100% that the word brand is being abused and misused.
Everybody from signboard printers and logo designers to advertising and
PR agencies offer branding. Closer investigation reveals that 99% of the
time they refer to some form of communication, whether a logo or a mass
media ad. Branding is about making hard sacrifices so that the business is aligned to an unchanging direction, not about spouting philosophy through clever brand lines or about creating a spiffy logo.

Q4. Brand voice - the written content used across all stages in the branding exercise is an important cog in the whole process of branding as such. For example it is said that McKinsey has an authoritative tone, Southwest Airlines’ is friendly, Virgin’s being tongue-in-cheek and so on. But these examples are few and far between. More often than not this important aspect is overlooked by major companies. Why do you think companies miss out on this aspect?
Even before brand voice (guided by brand personality) comes the definition
of who the brand is, what we refer to as the Brand Core, defined as an
unchanging idea. You can have a Mahatma Gandhi and Nelson Mandela with
the same unchanging core (belief in satyagraha) but with dramatically
different personalities.
Virgin’s cocking-a-snook is a personality trait, what drives the business is
the belief in contrariness: zig when the world of business zags.
Why do companies miss out on these aspects? Because they believe
business is only about tangible assets and EBITDA, while if you look at the
data in books like The Living Company by Arie de Geus, you quickly realise
that a company is a community of human beings held together by defined
values.

Q5. Rebranding efforts sometimes end up alienating the existing loyal customer base and confusing other stakeholders such as the employees, owners themselves, suppliers etc. What do you think is the reason for this and what could possibly be done to ensure such a thing does not happen?
The confusion in the heads and hearts of brand owners reflects in the heads
and hearts of stakeholders.
Vodafone is the only worldwide example I know of a service that has
changed brand names three times, Maxtouch to Orange to Hutch to
Vodafone, without losing customer loyalty.
This is an amazing example (you might say most of it is driven by lack of
number portability, but this argument does not work as well with other
brands) of a brand not changing despite its name changing.
Stakeholders need to experience what has changed and they should
understand why the brand has changed, only then will they not be confused
and stay with the brand.
When Bank of Baroda changed its logo, it changed its offerings by adding
new-age services. Did Union Bank do the same?

Q6. How important do you think is Brand valuation as a service going to be, considering the fact that IFRS will come into force in India in 2011 and brands’ value has to be shown on the companies’ balance sheet?
Yes, brand valuation as a service will be important.
But the one myth one must not be seduced by about brand valuation is
that it is a static number.
GAP lost $ 4357 million in brand value between 2008 and 2007 (20%) due to
child labour issues in India.
Pepsi lost brand value when the Surgeon General USA attributed junk food
as the chief contributor to obesity, and obesity closing in on as the No 1
killer (after smoking).
Nokia was punished for ignoring the clam-shell model.
A brand needs to remain vigilant and vibrant; its goodwill value in the
minds of the consumers and its value in the balance sheet can change
dramatically even due to unforeseen circumstances.

Q7. One of your many passions is spiritual evolution. If you were asked to give one piece of advice to today’s youth and more specifically to the B-school students based on your wide ranging experiences, what would that be?
I guess every individual follows a path of evolution dictated mainly by their
psychosomatic constitution. Some students will be driven by their heart,
some by their brains. Some will have a higher musical IQ, some verbal.
Therefore, one simple suggestion is ‘avoid comparisons’.
Secondly, while education attempts to reward those who give the right
answers in classrooms, in real life there is no one right answer. So look for
the second or third answer in every situation.
Lastly, accept that you have a larger responsibility as a human being,
beyond your role as student, brother, sister, teacher, manager-define that
responsibility and see if everything you do is aligned with that truth.

Building the Brand- Foodles

Sunil Mishra, IIM S

FOODLES – BUILDING THE BRAND

Introduction

GlaxoSmithKline’s (GSK) newest product Foodles has hit the markets about a month back in the instant noodle category. GSK, which is world’s fourth largest pharmaceutical, research-based company with a wide portfolio^[1] of pharmaceutical products covering anti-infectives, central nervous system, respiratory, gastro-intestinal/metabolic, oncology, and vaccines products and is known in India for its healthcare products and nutritional drinks, the most popular being Horlicks. The company generates a good revenue from the nutritional drinks division in India (in the range of Rs. 1,500 crore^[2]) and now wishes to diversify its product range. But it remains to be seen if it can compete with Nestle’s Maggi, the most dominant product in the said category with an unbelievable market share of 91 % in an industry which is worth nearly Rs. 1200 crore and growing at 20 percent per annum [2].

History of the Instant Noodles Category

Maggi was launched by Nestle in 1984 and been the market leader ever since. Other major products which have come into this category over the past 25 years have been Top Ramen Smoodles and Cup Noodles manufactured by Indo-Nissin Ltd. Some other players in this market also include Capital Foods (Ching’s Secret and Smith & Jones), Future Group (Tasty Treat) and CG Foods (Wai Wai). But in all these years, no product has ever even come close to beating Maggi in its market share. All others that came into the market either suffered due to their product quality, marketing strategies or the brand loyalty of Maggi customers. Only Top Ramen’s Smoodles came close to competing with Maggi in the last 1990s with its varying flavours and curry noodles. Maggi during this time had also changed its taste which did not go well with its customers. But when Maggi switched back to its original Masala flavour again, Top Ramen was left far behind and had to be content with being second with a very small share in the market. But lately, the growth rate and the revenue being generated from the industry has attracted the attention of a lot of players and the giants of the consumer goods like HUL which previously have kept away from the category. With the launch of HUL’s Knorr noodles and GSK’s Foodles, we can hope for some competition in the market which may at the end of the day gain the maximum advantage to the consumers.

Foodles – The Brand

GSK launched Foodles under the name of Horlicks Foodles( 2 b chked) with two variants of noodles. - Regular and Multi-grain. It was first launched in south India which currently is the stronghold of GSK through the Horlicks brand. It is to go national within a span of 6 months. The company aims to gain a higher single digit market share within a year or two and establish itself as a player in the salty confectionary foods division.

Foodles- What has been done

The problem with instant noodles has always been the fact that it is not very healthy. Keeping that in mind, Maggi few years ago came out with the tag of –“taste bhi , health bhi” which has helped it in maintaining sales. Foodles has taken this one step ahead and tried to create an USP out of the health factor associated with noodles. It has made TV advertisements which highlight the fact that even though it is an instant noodle, it is healthy and thus should be the consumer’s choice. Foodles also provides an "Health Maker" sachet which comes along with the noodles pack which contains the essentials of 5 vitamins^[3]. Foodles has tried to create a product category for itself by differentiating itself from instant noodles. Also, Foodles is currently trying to appeal to the upper middle class in the urban areas and placed the product at a premium price with Its multigrain variant costing Rs 15 for 80 gm compared to Maggi’s Rs 10 for 80 gm^[2]. Also, to use the distribution channel of Horlicks, initially single packs of Foodles were given for free. So far, the start of Foodles marketing strategy has been good, but is it enough to take on the leader of the market of 25 years? The past is not in favor of Foodles and it has also got to compete with brand like HUL along with Maggi. Let us examine what more strategies can they can adopt to appeal to the market.

Foodles- What next?

For one, the name Foodles is a bit confusing because Disney already has a product named Foodles , although Disney’s Foodles is available only via Disney’s outlets and thus problem of same names wouldn’t arise. Looking at the strategies Foodles has adopted and some of the more successful marketing campaigns of the same kind, some of the strategies Foodles may adopt are:

· PRESENCE IN THE WEB WORLD: Web publicity doesn’t take much of an investment and has been proven to give great ROI. Even for FMCGs, it has been proved that internet advertising has great paybacks [4] [5].The target segment of Foodles is Indian women and kids and latest market research have proved that increasing number no. of Indian women are becoming internet savvy and relying on it for their household decisions [6]. A website specifically for Foodles like one which exists for Amul products should also be designed. It can include information regarding its nutrient constituent for the mothers to read and some games for kids to enjoy. The games may be designed to relate it to the product in a way that makes kids want to buy the product may serve as a key marketing strategy as more and more kids are now- a- days spending time on the web.

· POSITIVE BRANDING: The current advertisement which is on air by Foodles shows that generally instant noodles are bad for health and Horlicks Foodles is an exception. This is an aggressive form of marketing and puts it in direct competition with Maggi. Rather than adopting this form of advertising, Foodles should concentrate on its own USP without attacking other brands. Currently it is new to the market and this form of marketing may put negative thought in the minds of the customers.

· MORNING SNACK: To further promote itself as an healthy snack, Foodles should elevate itself from the 4 o’clock food category and establish itself as a non lunch non dinner food. This can bring in Foodles as a breakfast option too and thus increase probability of people buying it.

· BRAND AMBASSADORS : To promote its brand as a healthy food even more, Foodles can bring in well known cooks of the country like Sanjeev Gupta or Tarla Dalal who are known for their health conscious food recipes and promote the brand through them in their media advertisements. Indian women connect greatly to these cooks and thus this can increase the brand’s value in their minds.

· FOOD RECIPES: Only promoting itself as an healthy food may not get Foodles the market shares it aspires for as other of products like Maggi have already switched to Atta Noodles to get into the healthy food category. Foodles has to come up with some innovative recipes (maybe an alternative way of cooking Foodles) with it to appeal to both kids and their mothers to buy the product.

· GIFT ITEMS: Though gift items aren’t a permanent market strategy, Foodles can give them out to attract kids so as to penetrate the market at the beginning even with its premium price. This strategy has worked wonders for McDonalds and Foodles can tie up with some firms like Hot wheels to initially provide some gift items.

Ameet Pal Singh Sandy, IIM I

Brands & Rural Marketing

“Corporate India has finally realised the worth of rural markets but the real challenge is how to sustain this geographically fragmented market.”

Rural India: Why Brands cannot ignore them anymore

Rural India consists of about 6.27 lakh villages and is home to around 70% of country’s population. It constitutes a market where life has evolved through deep rooted community values, social rituals, joint families and age old customs and traditions. The rural market is heterogeneous, fragmented, complex and remains largely untapped.

However, the statistics show a different picture altogether. The number of middle-class households in rural India is 1.56 Cr which is comparable to the 1.64 Cr middle-class households of urban India (NCAER Estimate, 2006). However, the per capita annual income in rural India is Rs 9,481, much less than its urban counterpart with Rs 19,407, but at the same time rural India doesn’t pay for rent or education as urban India does, making rural disposable incomes almost as high as urban ones. With growth in urban markets becoming stagnant, rural markets offer an exciting new blue ocean for brands to explore. After all, rural India contributes 50% to the country’s GDP and rural markets are growing at 25% annually.

The Rural Demand for Brands: Why Brands are a Reality now

The dynamics of rural marketing has changed over the years and so has the perception about brands rural India. This has been through media exposure via television, radio and print, increased literacy levels, and the mobile youth.

The rural youth generally move out of villages to nearby towns and cities for education and work. Due to this increased exposure of brands and products, the rural youth have evolved as influencers in the purchase decisions of households and they are gradually replacing the elders as decision makers. This mobile working youth has, in a way, created an indirect increase in disposable incomes and a surge in demand for consumer goods. The rural consumer is shifting to toothpaste and toilet soaps, to motorbikes and consumer durables and this transition is fuelled by factors like awareness, affordability, availability and acceptability. Therefore, today it is comparatively easier for brands to get noticed and accepted in the rural markets than before

How Products turned into Brands in Rural India:

The marketers of successful brands realized that the five major factors in creating brand awareness among rural consumers are communication through mass media, publicity through word-of-mouth & opinion leaders, experiential education, price sensitivity & value for money proposition and distribution reach & overcoming language barriers. Therefore, the brands that are doing well in the rural markets and have become a household name followed unique ways of communication and experiential education(also called as edutainment), apart from leveraging the best known broad casting medium, the TV.

For example, tooth paste brand Colgate-Palmolive entered the rural market at a time when Neem twigs and non-dentifrice products like ash, charcoal, or salt were the norm for brushing teeth. Colgate-Palmolive launched Operation Jagruti to educate villagers about oral hygiene and its benefits vis-à-vis traditional products like Neem. Through product trials and free samples, the company was able to generate awareness in this new market. Similarly, when Chik, a CavinKare shampoo brand, entered the rural areas in South India, people used to wash their hair with soap. CavinKare launched an aggressive campaign to educate people on how to use shampoo through live ‘touch and feel’ demonstrations and also distributed free sachets at fairs and community gatherings. Chik sachets, priced at Rs 0.50 were perceived as value for money. This strategy worked wonders in the rural areas of Tamil Nadu and Andhra Pradesh and Chik eventually became the 2^nd largest selling brand of shampoos. FMCG major HUL used a van laden with LCDs to educate rural housewives by giving demos on the ‘germ kill’ proposition of Lifebuoy to the grease cutting technology behind its dish wash brand of Vim.

Not just the communication style, but the language in which it is addressed has been customized to the local flavours, for example Dabur’s Lal Dant Manjan (Hindi) was rechristened as Dabur’s Sivappu Pal Podi (Tamil) for the Tamil Nadu market. Coca-Cola sensed the price sensitivity of rural consumers and introduced bottles of 200 ml priced at Rs 5 and targeted them through commercials shot in rural settings with tag lines like Thanda matlab Coca-Cola.

As of today, distribution and reach is arguably the most important yardstick in creating brands for rural markets. Even expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution. Many brands are doing well without much advertising support — Ghari, a big detergent brand in North India, is an example.

The Challenges to Building Brands in Rural India & the Road Ahead:

The biggest hurdle is low penetration rates. Distribution and not advertising is the key to generate sales. Brand builders acknowledge that income levels are going up, infrastructure is slowly improving and lifestyles are changing, but the pace of this change is slow. Hence, long term gains become more prominent but the golden rule to sell in villages remains the same: products must be priced low, profit margins must be kept to the minimum and the marketing message must be kept simple. Brands in rural India have a place in the consumer’s mind but they face real challenges as brands have to be profitable to sustain in this fragmented market.

Gender Sensitivity & Indian Advertising

Amartya Singh, Jagadeesh R, Ram Sevak | IIM B

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Gender Sensitivity & Indian Advertising: A Reality Check

Ethics is a relativistic term and most often is influenced by perceptions of the people involved. In the present age of rapid information dissemination and integrated business environment, the pace of change in societal mores and ethical values has only accelerated. The focus of this article is to discuss gender sensitivity in Indian advertising industry. It deals with the increasing infringement on the sensibilities of the society in the name of creativity in product promotion by the advertisers, laws and regulatory bodies governing the advertising industry and measures through which companies can wade through the complexities in such scenarios.

Business environment cannot be immune to the changes in the society in which it operates. Some of the changes in ethical norms in the society that have happened over a few decades are substantial. It is interesting to note that advertising industry has broadly recognized and aligned with these changes.

Difference between Old and New Ethics

The old ethic favors…	The new ethic favors…
Work	Leisure
Absolutism	Situationalism
Efficiency/Productivity	Quality of Life
Sex roles	Unisexism

Table 1

The change towards Unisexism is now well recognized in formal business writing in particular and English language in general. Even in the developed economies, where Institutional mechanisms are well-defined, codified and enforced; it is difficult to segregate right of employer to freely conduct his business in a free-market environment and fully complying with broadly agreed societal norms. For example, recently Citibank was in controversy regarding their justification of the dismissal of a female employee in New York

The Indian Perspective

The Indian marketing industry has been found wanting in the area of gender sensitivity in many instances due to its inappropriate and sometimes patronizing portrayal of women in advertisements. It would be careless on executives’ part to turn a blind eye to the damage that inappropriate brand communication can cause to the company and potentially to the society itself.

The Indian advertising industry’s gender insensitivity is proliferated through the gender stereotyping and the objectification of women. Gender stereotyping is subtle in advertising activities due to the lack of awareness, fatalism towards women’s condition in the society, lack of easily accessible redressal mechanisms and sometimes plain indifference on the society’s part.

Going by its track record, Indian advertising industry has rarely shied away from straight-jacketing gender roles. Numerous advertisements have portrayed women as hollow beings who measure their worth through their skin tone, body weight, beauty quotient and the likes. Scores of advertisements of brands including Axe, Close up, Fair and Lovely, Tuffs shoes, Lux Innerwear have blatantly resorted to showing women in poor light - pushing the image of women to the brink. Advertising visuals have objectified women to the extent of portraying women as a mere sum of their body parts, denigrating their intelligence and individuality. The advertisements make girls and women feel inadequate if they do not conform to the image projected in the advertisements. Stereotyping of women is a widespread phenomenon in the Indian media extending beyond the realm of marketing. The typical stereotypes include the naive/dependant housewife whose sole purpose is to keep her husband/kids/in-laws happy, the unmarried girl whose existence can only be validated by a suitable marriage and the village belle who has no means of livelihood and is a burden on her family.

There are a few product categories which frequently use taboo subjects as an advertising strategy e.g. perfumes, chocolates, cars and trendy clothing. In most of these cases, oblique references to eroticism and sex are perhaps one of the most common strategies used. Here lies the danger of crossing the fine line between utilizing artistic freedom of the advertiser for making an impact over the audience and honouring sensibilities of the society. Importantly the correlation between the use of sexual innuendos in the advertising and its impact on the sales isn’t clearly established. Most often, audience buys the ad not the product! If we are asked to name one advertisement in India which has created controversy, Amul Macho’s is one of the most easily recalled but how many of the customers have consequently bought the product and the impact of the advertisement on the buying decision is ambiguous. Executives must keep in mind the fact that advertisements with veiled suggestions, sexual innuendos and stereotyping fit the fantasy of a wide target audience with divergent interpretations. This might lead to interpretations of the advertisement which the advertiser might not have intended! Any consequent litigation in such matters can be very distracting, long-drawn and might fetch bad publicity for the company at the least.

Regulatory Framework and Industry Norms

Government of India has enacted the Indecent Representation of Women (Prohibition) Act, 1986 to prohibit indecent representation of women through advertisements. The National Commission of Women (NCW) has suggested amendments to the 24 year old act, to tackle cases where the act has not been able to guarantee justice. One of them is the imposition of penalty under the Prohibition of Indecent Representation of Women and Children Act, 2008. The NCW has suggested imposing fines of Rs. 10,000 for first conviction and Rs. 50,000 to Rs.10,00,000 for second conviction.

The sole Industry body responsible for imposing regulations in advertising is the Advertising Standards Council of India (ASCI). It is concerned with safeguarding the interests of the customers through monitoring and guiding the advertisements; and by disallowing advertisements which are deemed as indecent, vulgar and repulsive based on the accepted standards of decency. However, the intended self-regulation has been ineffective due to the lack of enthusiasm amongst advertisers towards regulation. More than 100 major advertisers are still not a part of ASCI, a careful measure to escape censorship.

In spite of the apparent lack of teeth, ASCI, has been able to uphold the notion of gender sensitivity in certain cases. For instance, in August 2009, ASCI considered an advertisement for The Times of India’s “Best Bottom Pincher Award” as derogatory and offensive to womanhood. The advertisement was subsequently withdrawn by The Times of India.

Though steps have been taken to uphold the rights of gender equality in the advertising context; the laws and the regulatory bodies have not been able to enforce the rights in an effective and concerted manner. Major reason for the failure is the lack of initiatives from the authorities, the industry regulatory bodies and the corporate at large.

The way forward for Organizations

Companies have responsibilities in performing social contracts in the markets they serve. So they must try to avoid stereotyping not only in the gender context but also any other demographic factor including race, colour, religion and language. Any digression in this regard ultimately damages the brand along with the risk of potential criminal and civil liabilities for the executives. Companies should also be quick in accurately sensing their market, failing to do so not only results in discomforting communication but can also result in recalling of the product.

Given the lack of clarity in regulatory guidelines, Indian companies can take a cue from the developments in the Nordic and North American countries. MNC subsidiaries in India which are headquartered in such countries have clear regulations and boundaries mandated by their head offices and hence are better suited for developing codes for rest of their industry peers.

An important role in raising awareness can be played by feminist organizations, industry bodies and the media. Nordic countries - Norway and Denmark have strict limits over the use of sexist images for commercial gains. In such cases an ombudsman similar to Denmark's to oversee advertisements might be an effective checkpoint.

Another alternative is to soften the degree of offence of the message itself. There are many ways of accomplishing it. For example visual advertisements can be softened by either developing pictorial metaphors or using animals or animated characters to lessen the offence. Visual, audio and music elements can be combined in a way which gives the advertisement a different meaning from the one in static isolated form of these elements.

An advertisement can also be softened through the use of textual form in the place of visual/audio element. This would be effective since customers can interpret a piece of text in different ways based on their predispositions, leading to a more dispersed impact of the transgression. A rather extreme example is the advertisement strategy adopted by apparel brand FCUK (abbreviation for French Connection UK).

As a conscious corporate citizen, companies should recognise the equitable role of women in society. They should avoid stereotyping which might perpetuate the gender biases in our society. Instead, the companies can positively contribute to women empowerment by emphasizing and catalysing positive developments of women. In the near future, this might become a necessity as companies would be hard-pressed to connect and understand their significant and rapidly increasing women employee base.

ONLINE MUSIC RETAILING IN INDIA

Pankaj Singh | IIM A

A. BACKGROUND: A CASE FOR ONLINE MUSIC RETAILING IN INDIA

When Apple passed Wal-Mart to become the biggest music retailer in the US, it gave a clear signal of the future supremacy of digital downloads. The fact that a digital-only retailer has ascended to the top of the sales charts was not unexpected, but it did demonstrated just how much the music landscape has changed since the beginning of the decade. The music industry in India is still largely untouched by this trend in the sense that online retailing for music has not yet started on a large scale in India. Music companies still market the music albums through the traditional ways of packaging in cassettes and CDs. There is no room for upcoming bright artistes who lack the funds required for launching an album. Online music retailing will give an option to such young and budding artistes to publish their albums as a significant investment is required to sell an album online. The primary cost of packaging the albums in CDs/Cassettes and their distribution and marketing effort can be done away with. Even the advertising costs involved on the internet are very low as compared to television and print media advertising. Also, it gives the option to artists to target a niche market which listens to a particular genre of music. For e.g. metallic rock music is preferred by a niche segment of people who would be eager to listen to new bands and internet gives them the option to search for new artiste based on recommendation by other listeners.

The most preferred platform for online music downloads is nimbit.com, which provides customized pages for artists and allows them to sell online. Along with their music, they also sell event tickets, merchandise etc. It basically offers direct-to-fan sales, marketing, and career management solutions for independent artists and music labels through Web-based services. .

This article focuses on exploring the pricing for online music retail in India. The work is based on secondary research for US market and primary research done in Mumbai, London, Ahmedabad, Delhi and Lucknow.

B. OBJECTIVE

The pricing strategy will alter significantly with the various possible objectives like:

· Maximizing number of copies sold, maximize the sales and profit and to get customers to buy online and decrease their resistance to the idea of online purchase of music

· The paper provides a range for pricing which will be subject to revision based on demand and the factors mentioned above.

C. INCREMENTAL VALUE OF SELLING MUSIC ONLINE

For the seller:

· Investment is significantly reduced as the cost of physical distribution is avoided.

· Far easier and cheaper to reach customers and target niche customers ("long tail" concept)

· Upcoming musicians can be saved from the monopolistic bargaining power of music companies and get far greater interaction with fan base and possibility of feedback. Also, the creative freedom is enhanced

· Market response and customer information allows for dynamic pricing

· Dynamic/ variable pricing allows for capture of consumer surplus

For the buyer:

· Ease of buying from home, ubiquitous availability, unbundling option, variety, niche feel, better sound quality, ease of use and transfer on various music hardware

D. SUBSCRIPTION BASED MODEL

Here the consumer can purchase music base on his subscription with a restricted listening or playing time. “Napster music store, offers a subscription-based approach to DRM alongside permanent purchases. Users of the subscription service can download and stream an unlimited amount of music trans-coded to Windows Media Audio while subscribed to the service. But when the subscription period lapses, all of the downloaded music is unplayable until the user renews his or her subscription” (Wikipedia, 2010).

E. GLOBAL LICENSE MODEL

An alternate option could be to have an option of statutory licensing. “A “global license” would be used to compensate the copyright holders: it would be paid by the Internet Service providers (ISP) based on the amount of music file traffic. They would then charge their customers a very low fee. The main problem with this scheme is that the technology is not available to identify the music downloaded, hence the copyright holders. (Jouranal for economic and business research, 2007)”

F. REFERENCE PRICE

People often compare a product’s price to a “reference price” that they maintain in their minds for the product or product category in question. A “reference price” is the price that people expect or deem to be reasonable for a certain type of product. Several factors affect reference prices:

· Past prices, Frame of reference. Creating the most advantageous (and believable) competitive frame of reference is essential to achieving a price premium.

· Framing of price: The way the price is presented – for instance, absolute number versus per quart, per pound, per hour of use, per application, for the result achieved, etc.; also four simple payments of $69.95 versus $279.80; for automobiles: total purchase price versus monthly loan payment versus monthly lease payment.

· Latitude of Price Acceptance: The range of product/service prices over which the customer buys the product.

· Value based pricing: Pricing based on the value derived by the customer

G. ISSUES RELATED TO SELLING ONLINE:

The biggest challenge to the entertainment industry today is piracy of creative work. Specifically pertaining to the online music industry, the availability of music as free downloads online hampers the revenue collection for music companies and online sellers. It’s commonly known as piracy, but it’s a too benign term that doesn’t even begin to adequately describe the toll that music theft takes on the many artists, songwriters, musicians, record label employees and others whose hard work and great talent make music possible. In response, RIAA has employed a multi-faceted approach to combat this piracy, combining education, innovation, and enforcement:

· With investigators deployed in cities across the USA, the RIAA is working closely with law enforcement to pull pirate products off the street and to demonstrate that the consequences for this illegal activity are real.

· Educate Fans, licensing

Poor legal framework in India: The cyber laws and legal framework in India is much weaker as compared to US and it will be much more difficult to prevent piracy in India.

Competition from brick and mortar stores and the benefit of owning tangible product

As the music business is not a commodity business, price discovery for each new song has to be done separately to maximize profits. The demand for a new song depends on a host of factors like musician's reputation, publicity, quality of songs, genre etc. Therefore, a set price for songs online is difficult.

H. KEY INSIGHTS FROM PRIMARY AND SECONDARY RESEARCH

The customers can be segmented into:

1. Music Lovers: These are the passionate music lovers who have very high emotional quotient associated with their music. They are the opinion leaders and are generally the first ones to listen and purchase music. They can be assumed to have low price elasticity. The customers belonging to this segment mostly belong to the age group 15-30 years.

2. Music enjoyers: These customers enjoy their music, but they are not involved in their music as the music lovers. Music enjoyers enjoy their music and keep themselves updated with latest music. However, their price elasticity is higher and they have lesser tendency towards impulse purchase as compared to music lovers.

3. Casual Listeners: They are not too fussy about music. They enjoy occasional music but their emotional association with music is low. Their price elasticity is high and they generally buy music less frequently.

I. PRICING OPTIONS / RECOMMENDATIONS

Though the customers can be segmented, and internet provides scope for differential pricing, it should not be done. This is because there is little element of service involved and the product is not differentiated as such. Thus, it will be very difficult to justify the differentiated prices and there will be customer resentment and alienation.

Based on the primary and secondary research, following methods can be used

§ Value based pricing through Bidding: Clips of songs will be available online prior to the launch of the songs. Users can listen to the clips and then fill a survey. The survey will be a direct price response survey which will also ask them to rate the song. Let the user bid for the songs for a limited period say one week. The release date of the songs will be announced beforehand. This will just be an expression of interest and the offer will not be binding on the user. The data from the interested customers can be used to estimate the reference price, latitude of price acceptance and willingness to pay for the customers, hence leading to price discovery.

§ Set-Price method: The price for each music file will be determined using:

§ Value based pricing

The incremental value to the buyer comes from the following:

· Availability and variety

· Option to buy unbundled songs separately

· Ease of download and usage on various forms of hardware (phone, i-pod, computer)

· Interaction with the musician

The estimate of the value of these advantages to the buyers can be used to price the songs and albums online. We will ask people to fill up a questionnaire where they will be asked their willingness to pay for songs of an upcoming artist, and come up with latitude of price acceptance/range for possible launch prices.

§ Based on competition from retail stores:

A typical album of a new artist is priced around Rs. 100 and has about 8-10 songs. Thus, the reference price per song in the minds of the customer can be assumed to be Rs. 9. Also, each song can be sold separately. This unbundling will give an advantage of applying differential pricing for each type of song, like title song will be priced higher. This will give us a price band say of 8-20 for title song and say Rs. 8-12 for other songs, depending on the popularity of the artist and the initial interest shown by the customers.