How promotions help in range management issues?

Product Range Management

A product range is the total product offering expressed in terms of width and depth. The width of a product range depends on the variety or number of types in a product category. The depth of a product range refers to the amount of choice offered in terms of product and brand variation within a product category.  A product range with a lot of depth allows you to cover a range of price points. Similarly, the width allows providing a great variety and choices to the consumer with line extensions.

Brand Extension: The brand Rasna extended into another category like packaged juices.

Line Extension: The brand Maggi launched new flavours of Maggi. Here Maggi is still in the same category, but the variation comes within the offering. Line extensions are not necessarily in flavours, but happen in any of the product attributes.

Grammage Range Extension: When Surf Excel extends its Grammage range. Earlier it used to launch 50 gm and 100gm, and now it launched a 20gm and 250gm. Also, remember most Grammage extensions are considered as line extension.

How promotions help?

For example, let us suppose there is a biscuit company XYZ in India which is a very big brand. XYZ currently offers its packs in 90 and 150 gm packs. The challenge it faces in North India is from local competition. There are a few strong local players who offer more volumes at low price points. The local companies offer very large pack sizes and doing very well. The consumer behaviour in the North India shows that people tend to buy large packs, and generally don’t prefer to buy small packs.

Challenge1: The Company XYZ doesn’t have production capacity for large packs.

Challenge2: It is very difficult to create trials when consumers tend to buy large packs.

So, the company decides to have a two-pronged approach:

  1. Give a rider promo (give your small pack biscuit free with another category) to induce trials.
  2. Introduce large combo-packs to attract the large-pack buyers

To give a rider-promo, is to give a product with another popular product based on the target consumers you want to reach. Marketers ask the question: Which is the product in my existing portfolio that reaches the maximum target group of the new biscuit product? This will help them leverage the existing distribution. If there is no product that is present in your existing portfolio then you may negotiate with other companies who operate in similar categories.  Though there are other considerations, leveraging the distribution is one of the most crucial factors in a promotion, if the intention of the promotion is to induce trials. Because one of the most important factors to create trials is that the product should be present in the stores.

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The Global, National, and Regional strategy


Consumers come from different cultures, demographics, psychographics, and are at different evolutionary stages. Different markets have different advantages and disadvantages. The majority of the largest companies in the world produce and distribute products across national borders. Most companies have different products in different continents at an instant of time. Also, based on the different consumer markets and the consumer evolutionary stage the product offerings change.

Companies have directional global, continental, national, and regional strategies. So, every global strategy should have the flexibility to be interpreted at a regional level and the regional strategy should align with the global strategy. Sometimes a regional strategy may evolve slowly into a global strategy. For example, the Shakti Amma programme for HUL is now taken globally to other markets such as Africa and China. Integrating the global, national, and regional strategies across different verticals to deliver the business value  and international competitiveness is one of the most challenging aspects for any organization today.

Myntra.com

Myntra.com is currently among the top e-commerce companies in India. Recently, they started above the line (ATL) advertising with the television commercial(TVC) below. As most of us know, if you have the pockets, a TVC is probably the best way to create awareness of your brand in India.

Myntra.com TVC on air

Going on TV is a very big investment for any brand. A lot of strategic thought has to go behind such move. Most of the e-commerce websites in India lack awareness. There are a few successes like Flipkart, which got people’s trust with time and which initially sold only books – considered to be a safe category to buy online.

For people to buy you, they should know you first. So, Myntra.com might have thought that trying to increase awareness through word of mouth(WOM) or through some BTL promos will take a lot of time and may never happen. This gives a chance for competition at any time in future. So, the awareness also helps them strategically in avoiding a ‘deep pocket’ competitor in future.

One of the biggest problems to buy online is ‘trust’. Lot of research proved that people generally trust a brand that comes on TV. So, Myntra.com achieved both awareness and trust with this TVC, which I think is an initial success. I am very sure that Myntra must have received an exponential increase in the number of hits, and registered users. But, people will forget things very quickly in this cluttered world. Myntra has to follow-up the consumers with banner ads, direct marketing, etc. to be in the consumer’s mind. This helps them to achieve the first target – getting established in the consumer’s mind. But, the bigger question is – how to make users buy stuff online?.

Beginning to be looked as a brand, Myntra could afford to give heavy promos without letting the consumer doubt Myntra. They only hope that with such heavy promos, and cash back guarantees people will start buying online. I think Myntra should look at their promotions more strategically. Instead of providing promos to buy online, it would be good to direct the promos towards letting the consumer experience buying online. In India, most consumers still haven’t experienced buying online. So, if one needs to be successful, one needs to attack this area.

Promotions should have a strategic direction

Myntra should direct their promotions activity more towards categories that will help consumers make choices easily. Some of the categories may be: track pants, shorts, simple backpacks, slip-on’s, flip flops, etc. This will make the consumer go and buy categories which are relatively easy to decide and not so high-involving category as apparel. Once consumers buy low-involving categories like above, you begin to take their trust to the next level. They trust you as a brand, and they trust you to buy online. Once you’ve achieved this stage, if consumers are still wary to buy apparel online, strategic directed promotions should be set up to help consumers first experience buying apparel online. For example, you may give a t-shirt free if consumers buy above 2500 rupees. Give some online promotions for any in-shop purchases. This will make consumers take that risk of choosing apparel online as it is for free. If you deliver as promised to the consumer, you will be embraced by him.

I believe it is only time this happens in India. With India being a relatively young country, I think e-commerce boom is just a few years away. It is time that we take this business very seriously.

Related Posts: Behavioral to Attitude Marketing – https://brandalyzer.wordpress.com/2011/07/31/a-to-b-and-b-to-a-marketing/

 

 

A to B and B to A marketing

In marketing, there are two fundamental principles called Attitude to Behaviour (A to B) and Behaviour to Attitude (B to A) marketing.

In A to B marketing, you target and change the attitude of the consumer first, so that the change in the attitude may result in a desired change in the behaviour. For example, you tell the consumer the toothpaste whitens your teeth, so that this attitude may result in the change in behaviour of buying the product. This is what most ATL activities do.

In B to A marketing, you target and change the behaviour of the consumer first, so that the change in the behaviour may result in a desired change in the attitude. For example, the whitening toothpaste gives a promotion of 1+1 free that makes you buy the product. After using the product (behavioural change), you liked it (favourable attitude) and you changed your earlier inimical attitude towards the product. This is what most BTL activities do.

What’s happening in Online India?

The Nielsen Global Online Shopping Report looks at how consumers shop online: what they intend to buy, how they use various sites, the impact of social media and other factors that come into play when they are trying to decide how to spend their money.

  • More than eight out of ten Indian online consumers plan to shop online in the next twelve months
  • More than a quarter indicate they spend upwards of 11 percent of their monthly shopping expenditure on online purchases
  • 71 percent Indians trust recommendations from family when making an online purchase decision, followed by recommendations from friends at 64 percent and online product reviews at 29 percent
  • Half the Indian consumers (50%) use social media sites to help them make online purchase decisions.
  • Online reviews and opinions are most important for Indians when buying Consumer Electronics (57%), Software (50%), and a Car (47%).
  • More than four in ten Indians are more likely to share (post a review/ Tweet/ review) a negative product or service experience online than they were to share a positive experience
  • In the next six months Indians are most likely to buy Books (41%), Airline ticket/reservations (40%), and Electronic equipment like TV, Camera, etc. (36%) online
  • When shopping online, one third of Indians (33%) purchase most frequently from websites which allow them to select products from many different stores.
Google India‘s Managing Director – Rajan Anandan gave a keynote speech at NASSCOM Social Media Summit in Delhi on 29th April, 2011. Following are some of the videos from the summit:

Strategy – Mission & Vision

People say organizations should have Mission statement, Vision Statement, etc. I say everything boils down to only one word – Purpose.

To better understand these things, I took a small example of a person who wants to shift his career from IT to Marketing. Let us see these things from his perspective:

MISSIONWhy does the student wants to go from IT into Marketing?

VISIONWhat does he want to become in Marketing?

STRATEGYHow does he want to become what he wants to become in Marketing?

STRATEGIC OBJECTIVESHow does he break his strategy into different objectives?

SUCCESS/FAILURE INDICATORSHow does he know whether he succeeded or not? What are the performance indicators?

This sort of strategic thinking is the same even for an organization or an individual. Of course, with changing situations, environment, operational, financial, competitive, etc. you actually change your strategies. So, strategy is all about Purpose and Future Thinking.

It is about where are you now, where do you want to go and why, and how do you want to go and why?

Customer Perceived Value – The base for your pricing strategy

Pricing is one of the linchpins of marketing strategy and success. Marketer’s need to get their pricing strategy right and it is always a big challenge to understand which price is the right for both my customer and me. Marketeers should understand how customers perceive value, because it is the value that is the ultimate arbiter of pricing.Robert Delan used true economic value(TEV) as a conceptual yardstick to measure how customers calculate what they are willing to pay. TEV is calculated as follows:

TEV = Cost of best alternative + Value of performance differential

TEV represents what a customer will actually pay for a product that delivers values in excess of its closest competition.

A pricing strategy is usually motivated by specific objectives of your strategy like gaining market share, skimming, maximizing unit sales, etc. There are many different pricing strategies like: Cost-plus pricing, Price skimming, Predator pricing, Prestige pricing, Bait and Hook pricing, Pricing promotions, and pricing based on CPV.

The most reliable method of pricing is to into the head of your consumer, and find out how your customers value your product against those of competitors and substitutes. Also, it is very important to ask the question whether this strategy is appropriate for the current phase of the product life-cycle (PLC).