CASE – 1
OLD SPICE COSMETICS FOR MEN
Old Spice has been a global brand of cosmetics for men. Their range includes, after-shave lotion, lather shaving cream, talcum powder, shampoos and hair cream. In India the first and most successful product launched was after-shave lotion.
In the year 1986 the market share of Old Spice products in India was as follows:
- After-shave lotion 65 per cent
- Lather shaving cream 9 per cent
- Talcum powder 1 per cent
- Shampoo — trace
- Hair cream — trace
Colfax Laboratory Ltd., the manufacturers had been marketing the products in the west through departmental stores. They planned strategy to boost their products sales in India in 1987. They decided to reduce reliance on after shave lotion and promote other products as well, as they had found there was good market for other products too.
- Shampoo — As Colfax had only one type of shampoo, whereas competitors had several types, they decided to lie low on this product.
- Talcum powder — As talcum powder was purchased mostly by women, and Old Spice was a brand for men the sale were restricted.
Hence, it was decided to promote lather shaving cream along with aftershave lotion as the two products complemented each other.
Market survey gave the following figures of use of cosmetics by men:
- Shaving cream is used by 94 per cent men
Table : Success of Campaign
The market share also improved as can be seen from the Table above (given in percentage).
Table : Market Share
Old Spice brand has remained one of the most respected brands worldwide. In 1988, lather shaving cream advertisement was among top ten advertisements in the world.
a) Make an alternative advertising plans for Old Spice. Has the advertising helped the brand to gain grounds in India? Please give your comments.
Before Kinetic Honda 100 cc scooter was introduced in the Indian market, all the other scooters looked almost alike. Kinetic was a differentiated scooter, because of its sleek looks, aerodynamic styling and it manufacturers felt these attributes were enough to outsell other scooters in the market like Bajaj, and LML. However, the scooter sales did not pick up the envisaged volumes in the market. In April 1986, the position was as follows:
- Kinetic Honda had sold 11,000 scooters with 2.1 per cent of market share.
- Bajaj Auto lead with 3,80,000 scooters sold with 73 per cent market share.
- LML sold 1,09,000 scooters with market share of 21 per cent.
Kinetic had launched their scooter with unique features, electronic start, automatic gear shift, automatic choke, built-in turning indicators, wind tested streamlines design, and plastic bright colours.
The market survey conducted by the marketeers indicated that the reasons for poor market acceptance were as given:
- Unfamiliar design
- Was considered lightweight and therefore flimsy
- Power of the scooter at 100 cc was considered less strong than Bajaj’s 150 cc scooter
- Electronic was also looked at with suspicion as it was taken only as a ladies scooter.
Hence the firm’s objective was to correct the misconceptions. For this purpose the marketeers had to physically demonstrate that the scooters body was metallic and not made of plastic and then had to advertise the same for wider acceptance from the buyer group of their product. In 1988, several scooters including, Bajaj Super 150 cc, LML, Kinetic Honda and Vespa 150 were put on a grueling 20,000 km test run.
Kinetic Honda was adjudged the best scooter in that test. Massive advertising campaign was launched with facts of the test and sales increased. Kinetic Honda won three more raffles and reached the high Khardungla pass.
Kinetic Honda got established as a premium product for a customer who is a social somebody with age group between 25—40 years, and income of Rs 15,000 pm. Customers of Kinetic Honda are different than the customers of Bajaj and LML as they are upward mobile, quality conscious not willing to settle for less then the best. Market share has improved to 11 per cent and according to them ‘future belongs to us’.
a) Please attempt restructure the firm’s brand objective and then build their marketing strategy with focus on their brand.
LA BELLE COSMETICS
Sri Krishna Sarin walked out of his office into the production area, which only twenty months back he had set up with the active help and support of his wife Rani. He saw his wife helping the worker with his task and called her out.
‘It seems we really have a winner. We started with no business experience, only our determination and technology with us, my dear.’ The couple was sure that the success is the outcome of their quality policy If not 100 per cent perfect, the product is sent to the research and development laboratory. The key was the quality check of the raw materials they used and stored in totally hygienic conditions. Since the output was small all their customers were from the town and they believed they could not face them if any one complained of bad product.
The Sarin couple had used only herbal ingredients, safe for the skin. This meant higher cost of raw materials and fewer suppliers. They had, therefore, priced their products slightly higher than their national brand rivals. They also had a lot of pride in the cleanliness and upkeep of their factory. They were fond of saying that both the product and their factory represent their own selves. The marketing of the products had been carried out through local retailers and word of mouth publicity.
There are five products produced by the Sarins: lipstick, gloss, eyeliner, eye shadow and blush-on. Since their production line was not very big they took manufacture one by one, but each month all the products were made in various proportions as per their demand. Since the couple met their customers socially also they were able to get instant feedback from them. They had kept a lean set-up and each person had to work hard. Lot was done on the basis of personal relationship with the employees.
As is normal, the new factory made a loss in the first year of operation. Although the loss was expected, Sarins were worried as they had put their entire savings in the venture. They felt that perhaps, two-shift operation with bigger sales would take them out of the woods. They were, however, apprehensive if increasing production would lead to lowering of quality, their main weapon against the national brands. The discussion now boiled down to the fact that they could perhaps reduce the number of products and then with no time lost in changing product in the production line, they could increase production to an extent. Table 11.5 gives the cosmetic line.
Table: Cosmetic Line, May 2005
|Item||Unit Price (Rs)||Material Cost||Margin (Rs)||Sales (Kg)|
The couple felt that while they will have to trim the product line, they were afraid of losing customers who were keen to buy the whole range from them. The case is a hypothetical one, and yet it is close to reality in the corporate world.
Looking at the case, what advise would you offer to the Sarins on the following points:
- Have Sarins taken care to use the brand value in their sales efforts?
- Should they trim the product range?
- Should they increase production by adding more people and if yes, where and how will they sell the additional production?
- Are they missing out on any of the marketing mix factors? Please explain how they can improve their operations.
- Plan an advertising campaign for the range of products, assuming the benefits they would provide to the users.
CASE – 4
BRANDING A CAR CITI MOBILES LTD (CML)
MARKETING RESEARCH FOR INTRODUCING AN INNOVATIVE PRODUCT
CML have been in the business of manufacturing and marketing two-wheelers both scooters and motorcycles since 1970 and enjoyed leadership in the market with 34 per cent share. They are also in to exports to Europe, Middle East, South America and Australia. They export 30 per cent of their production. In 1991, CML planned to diversify in to cars. They had been trying for the past few years to gauge the market for cars and had discovered that in case they can come up with a small car they could convert their two-wheeler customers in to four wheel car buying. The price could normally be twice that of the mobike, double the number of wheels and it doubles the price. The mobike was selling at Rs 35,000; hence car ex-factory price was pegged at Rs 75,000. CML had in 1991, the following marketing department structure.
CML Marketing Department Structure
CML hopes to retrain their selected personnel in sales and service of cars. Likewise they would upgrade the able and willing dealers for selling cars.
CML signed an agreement with Renault of France for their sub-compact 500 cc car which could be sold in India at ex-factory price of Rs 75,000. The subcompact car Silky was liked by a small group of mobike owners as possible replacement for their bikes as they were under extreme pressure from their parents for going in for a car, at present prices of cars they could iii afford the same. CML decided to arrange a market survey for Silky:
- Research problem — Unknown buying process, and factors influencing buying decisions for a new innovative subcompact car
Objectives of the research:
- Factors influencing buyers
- Stages of buying decisions
- Occupation, income levels and vehicle ownership at present
- Attitude towards the subcompact car, the Silky
Information needed from the research was as follows:
- Is there a need for subcompact cars in India?
- Will it be a first car, a substitute for mobike or will, it be second or third car in affluent homes?
- How the buyers get information about cars?
- Who initiates the buying process?
- Who is the decision maker?
- What interests the buyers most, in order of their priority – economy in running the car, styling, comfort, price, brand, service availability in the country, durability of the car, easy availability of genuine spares in the country, luggage compartment size, ease of getting loans.
Further information required is as follows:
- Buyers view on dealership — dealer’s location, reputation, availability of service facility, quality of service
- Role of the dealer in the buying process
- Role of credit and guarantee
- Post-purchase opinion
Research methodology is using the Primary Research technique. Sample size 3,500 — stratified random technique for selecting the sample (rich and upper middle, middle class segments).
Findings of the research:
- Need was felt @ 44 per cent by housewives, 36 per cent by teenagers
- The need was influenced by increasing levels of pollution on the roads of Delhi, increasing number of bad accidents involving mobikes and household income.
Table : Research Findings
|Total Response (%)||Total Response|
|Family member, mother, wife||36||1,300|
|Peer groups of teens and young adults||14||500|
Factors influencing purchase are given as under:
- Status symbol 58 per cent — The mobike owners felt they would notch up a few rungs in the status ladder.
- Economy 80 per cent, with fuel prices always on the rise the subcompact was advertised as giving huge fuel economy.
- Safety 100 per cent — The subcompact was sure to give much higher levels of safety than the mobike.
- Comfort 70 per cent — Driving a car in all weathers on a comfortable seat was definitely more comfortable than riding a bike, especially when distances in Delhi were generally greater than other metros of India.
CML had advertised in the newspapers, magazines, that. they had set up hoardings and shown the advertisement on the TV network, besides they had used some other media like pamphlets.
The respondents were asked as to how they got to know about Silky, 52 per cent saw the advertisements and 48 per cent had not seen it. The advertisements were seen on the following lines:
- Newspapers 55 per cent
- Magazines — 22 per cent
- Hoardings — 10 per cent
- TV — 30 per cent
- Others — 10 per cent
The respondents were asked the reasons why they remembered the advertisements and they gave the following reasons.
Table : Research Analysis
|Impressive||Saw it Many||Appeared in||Appeared in||Total|
Therefore, it can be concluded that TV and newspaper are the appropriate media for the product. Later on the response needed more information and they got it from the following sources.
Table : Detailed Research Result
|Table :||Research Result|
As can be seen the respondents considered the brand reputation the most important information. Second was the price of the product. While making decisions for purchase, the ranking of preference was as follows:
- After sales service
- Guarantee period offered
- Credit offered/credit terms
- Possibility of putting air conditioner in the small car
Decision to buy was taken by the following persons jointly:
- Head of the family — 50 per cent
- The other spouse — 12 per cent
- Teenage children — 38 per cent
Number of cars in income groups was as follows: < 20,000 rupees a month = one car 20,000—50,000 rupees a month = two cars >50,000 rupees a month = two or more cars
Decision time for making the purchase was given as under: <2 months — 45 per cent
2 months to four months — 35 per cent > Four months — 20 per cent
Among the buyers of Silky, during test marketing period who had purchased the car six months back, 70 per cent were satisfied with the car. To sum up the buying process:
- Feel the need
- Become aware of the product, the Silky subcompact
- Search for information
- Share the product knowledge with the family
- Accept the impact of family and friends influence
- Decide to buy
- Post-purchase behaviour
The buyers could have one of the following status:
Options for the buyers are:
Brand __________ Maruti or Silky
Capacity for seating, luggage
Number of cars the customer has or wants to own
When to buy the subcompact
Where to buy it
When to buy
How to pay — cash, instalments, leasing
1. Select the market segment; build the buyer’s profile and process of purchase decision, actual purchase action. Plan out advertising media, promotional plans for Silky. How should Silky go about building its brand identity and brand equity? Where should it be positioned the market place and why? Do you think the brand name is right for the product? Discuss and suggest alternate brand names wit our reasons for the same?
2. Ana1yse the market research presented in the case to determine if the research was conducted with right objectives in mind. Should they have arranged for more than one research with separate objectives to make them exhaustive, to the point and useful?
Umasons P Ltd had spare capacity for manufacturing Teflon because of change in government’s policy. They decided to coat aluminum pans and introduce Non-Stick Cooking Pans in the market. Non-stick quality would help the housewives in preparing food with less oil preferable for the cholesterol patients. For others also food with less oil would be more healthy. There will be less consumption of gas and electricity and benefits housewife groups in clubs, at kitty parties and at retail shops.
A big change in consumer behavior and attitude towards the product was needed as unless the customers were fully convinced about the benefits of the product, it was doomed for failure. The firms were faced with other problems as well:
- It was a small firm with limited advertising budget
- As there was no competitive product the entire burden of concept selling fell on their shoulders, Later firms benefited from their efforts
- Frying pan was not a popular cooking vessel in the country
- Maidservants often rubbed the Teflon coating considering it as burnt and accumulated dirt
The road to business success was finally found in exporting the pans. In 1970 Nirlep exported 70 per cent of its production to Britain, Poland and Malaysia. In 1974, they got an award for exporting from the Engineering Export Promotion Council.
In the domestic market the firms patience paid as in about eight years the product got established.
The change in attitude was the result of firms communications which targeted towards the working women who were growing in number and it was found to be a convenient product by the housewives.
In 1986, the housewives realised the following about the product:
- Nirlep cooking was healthy with less oil
- It was of low cost with less oil and gas consumption
- It was a convenient and versatile product
The perception of the pan as a western cooking vessel had been gradually altered. With the metropolitan lifestyle it was best received in Mumbai and Kolkata first. Later on some dissatisfaction remained as the coating had low durability and pan’s handle was weak. The firm changed the design and built its brand equity with heavy advertising campaigns, which laid stress on health foods, ease of cooking and economy and the durability aspect of the pan. The Nirlep pan had arrived! They now claim that it is the ‘first non-stick frying pan’.
1) Discuss if the company has done enough to build its brand name. If it has not, then suggest ways of building brand image?
2) Describe the Maslow’s hierarchy of needs. How can you relate the needs with consumer behaviour?
3) Is it necessary to segment the market? If yes, then give four important criteria with which the segmentation is done?
4) Discuss the user based segmentation with examples?
5) How does the innovative product penetration take place in the market? What pitfalls it has to surmount?
6) ‘It is important to understand the socio-cultural ethos of your market segment.’ Discuss?
CASE – 6
COMPUTERS LTD (CL)
PRICING IN AN EXPLOSIVE MARKET
In November 1976, HCL announced a dramatic reduction in prices of their Personal Computers (PCs), the prices came down from Rs 60,000 to Rs 30,000 per PC. At that time CL wanted to introduce their PCs in the Indian market. Other players, like Wipro, DCM Data, PCL, were trying to match the HCL prices. The market had just about started picking up and the growth rate was 6 per cent per annum likely to go up to 20 per cent as per marketing gurus who had been watching the international market of PCs for a while.
CL is a wholly owned subsidiary of Telecom and Electronics Ltd (TEL). TEL is a major firm dealing in electrical and electronic goods since 1960. They have been dealing in motors, generators, process control instruments, tape recorders and domestic appliances.
TEL exports motors to Australia, Asia and Africa, besides having 15 per cent share in the domestic market. They have built brand equity in India and hope to make full use of it in the area of computers as a spin off.
Threat of new entrants is quite real as the world players including IBM, Compaq are eyeing the Indian market as it gives the impression of almost a virgin market. With government of India’s support the MNCs will have easy entry and with their brand name alone take over a big chunk of the market.
Bargaining power of buyers is increasing with new players and local assemblers offering their product with marginal cost only. Local assemblers have low overheads and compete on price and personalised services. Buyers are at an advantage as they get the best deals at low prices.
Bargaining power of suppliers is weak, as they want to sell in large volumes, which is possible only if they can cut down their prices of chips, motherboards connectors and other components.
Rivalry amongst existing players is increasing by the day as the business growth has yet to reach the expected levels and the players have already set up manufacturing facilities. The known brands get an advantage with large firms, but the smaller buyers and individual buyers look for the latest product at downsized prices, which the assemblers are able to provide. They also resort to bundling the PC with software of the customers’ choice, mostly pirated versions and offer site maintenance for the product.
As the average price of a branded product was Rs 30,000, local, brands and assemblers were selling the product about 15—20 per cent cheaper. With the local brand the customer was usually in danger of loss of technical support, as many players would close shop after they have made a profit and start again, perhaps at a new location with a new name to avoid problems with the pirated software. The assemblers could further reduce the price as they were getting components from overseas through dubious means.
CL wants to market their branded product at Rs 26,000 and keep dealers margin at Rs 3,000. They are able to get a gross margin of Rs 4,000. However should the necessity arise they can sell it even at Rs 23,000.
CL believes that’s since HCL has just reduced the prices drastically no further price cut would be possible by branded products. CL has to decide on its pricing strategy. It can go for penetrating prices at Rs 18,000 also if they want to capture a large share of the market, or keep to skimming price at Rs 26,000. They can follow the medium pricing at Rs 22,000. Depending on the market growth the profit level for CL will be as shown in Table.
Table: Profit Level for CL
The firm has to decide about the strategy taking the optimum scenario or most likely future demand seeing the environment factors of today In case of skimming prices the firm can keep the option of heavy investment in brand building and other marketing inputs and still get a good market share.
Discuss if the company could have avoided the price war by promoting its brand?