Marvel comics was acquired by Walt Disney for $4 billion in 2009. marvel is an extreme case where brands are distinct from products. Marvels product lines are comics, toys, movie licensing and other licensing whereas its brands are their characters like Spiderman, Hulk, Daredevil, Thor, etc.
This examples helps us differentiate between what is involved in product management and what goes into brand management. Brand management may work for strategic decisions but day to day affairs are better handled at the product (or product line) level.
Tuesday, September 20, 2011
Tuesday, December 21, 2010
Marketing books: Must read for MBAs
The books are not ranked or in any particular order
1. Duct Tape Marketing: The World's Most Practical Small Business Marketing Guide by John Jantsch
2. Guerrilla Marketing, 4th edition: Easy and Inexpensive Strategies for Making Big Profits from Your Small Business by Jay Conrad Levinson
3. Permission Marketing : Turning Strangers Into Friends And Friends Into Customers by Seth Godin
4. How Customers Think by Gerald Zaltman
5. Marketing Metaphoria by Geral Zaltman and Lindsay Zaltman
6. Groundswell by Charlene Li and Josh Bernoff
7. Competing on Analytics by Thomas Davenport
8. The Art of Choosing by Sheena Iyengar
1. Duct Tape Marketing: The World's Most Practical Small Business Marketing Guide by John Jantsch
2. Guerrilla Marketing, 4th edition: Easy and Inexpensive Strategies for Making Big Profits from Your Small Business by Jay Conrad Levinson
3. Permission Marketing : Turning Strangers Into Friends And Friends Into Customers by Seth Godin
4. How Customers Think by Gerald Zaltman
5. Marketing Metaphoria by Geral Zaltman and Lindsay Zaltman
6. Groundswell by Charlene Li and Josh Bernoff
7. Competing on Analytics by Thomas Davenport
8. The Art of Choosing by Sheena Iyengar
Wednesday, December 15, 2010
Tuesday, November 9, 2010
Sunday, November 7, 2010
Saturday, November 6, 2010
Traditional Media
Traditional media has been getting a bad rap for the past few years. There has been a movement towards online and mobile media and marketers are not very enthusiastic about print and TV. Recently, some brands have shown marketing success resulting from judicious use of print and TV advertising.
For several years, Amul Butter has been running a legendary "utterly butterly" outdoor campaign. When they started losing market share in the past few years, they realized that for maintaining a market share of about 70%, concentrating largely on a single media was not wise. They rolled out a TV campaign with a new tagline, nice ads and they sponsored some relevant high-TRP TV programmes. As a result, they have been able to get back their stratospheric market share, increasing by 15% in a very short time.
Royal Hygiene is a start-up in a very difficult FMCG product category. Their brand, Shecomfort, just pipped the MNC, Kimberly-Clark, to become the 3rd largest selling sanitary napkin in India. One of the ways they achieved this was by concentrating on print media when all the others were stuck on TV. So, they were able to stand out in a media largely uncluttered by their competition.
Futurebazaar was able to build up its customers base by running a TV campaign promoting its website. It was a very good example of an Integrated Marketing Communication (IMC), as it was combined very well with a email campaign to promote their 'sale' days.
For several years, Amul Butter has been running a legendary "utterly butterly" outdoor campaign. When they started losing market share in the past few years, they realized that for maintaining a market share of about 70%, concentrating largely on a single media was not wise. They rolled out a TV campaign with a new tagline, nice ads and they sponsored some relevant high-TRP TV programmes. As a result, they have been able to get back their stratospheric market share, increasing by 15% in a very short time.
Royal Hygiene is a start-up in a very difficult FMCG product category. Their brand, Shecomfort, just pipped the MNC, Kimberly-Clark, to become the 3rd largest selling sanitary napkin in India. One of the ways they achieved this was by concentrating on print media when all the others were stuck on TV. So, they were able to stand out in a media largely uncluttered by their competition.
Futurebazaar was able to build up its customers base by running a TV campaign promoting its website. It was a very good example of an Integrated Marketing Communication (IMC), as it was combined very well with a email campaign to promote their 'sale' days.
Saturday, September 25, 2010
Productization and Servitization
Products and services are all part of the same continium and that becomes even more apparent when ones looks at the attempts of service and product companies to come closer to each other.
Productization efforts are visible when service companies try to standardize their offerings by neatly packaging and labeling their offerings. For example, Infosys developed acore banking solution, Finacle. Similarly, Thomas Cook, Cox and Kings and several other travel agencies are currently getting a large portion of their turnover from packaged vacations.
On the other hand, product companies too are busy value adding by integrating services. Rolls Royce sells aircraft engines by including all operations and maintenance functions as a package. Chevrolet is trying to increase their car sales in India by guaranteeing an upper limit on the maintenance spend on a car for the first three years. Asian Paints offers services relating to selection, estimation and even application of their product. Lafarge and ACC Cements are offering civil engineering advice to customers of their high-end cements.
In such a scenario, it is increasingly becoming difficult or maybe even unnecessary to classify sellers as product or service companies
Product Line
Conventional wisdom says that most important decisions should be taken at the product line level rather than at the level of an individual product. This is because products in a company's product line have a lot of impact on each other. For example, any change in the positioning , promotion or pricing of Surf can mipact the sales and positioning of Unilever's other detergent brands like Surf Excel, Rin and Wheel.
Going by the same logic, even profitability should be measured at the level of a product line but more often, the profitability is measured at the level of each individual brand. There is a lot of merit in this approach but it does take away from the strategic role a brand may play in a product line. A brand like Wheel plays a tremendous role by ensuring that Surf does not dilute itself by competing directly against Nirma or Fena. Unilever itself regularly prunes its product lines and the prime considerations are present and future profitability and market share.
Another important thing to look out for is that with closely related product lines, cannibalization is also likely from other product lines within the company. In such cases decisions will have to be taken at a product mix level. For example, the ipad, iphone and ipod are part of distinct product lines but there is a distinct possibility of cannibalization amongst them.
Sunday, December 27, 2009
Brand Inoculation
Brand Inoculation is one of the new concepts making its rounds in the corporate world right now. It refers to all the things the company does right now to protect the brand from future shocks. It is usually in the form of activities aimed at building the brand's cache amongst consumers and the community in general.
For example, McDonald's was a favourite target for several environmental groups. So, for the past 15 years, the company has partnered with several NGos, including Conservation International, to develop processes to reduce its impact on the environment. Once the NGOs partner with McDonald's and guide its policies, it becomes difficult for them to criticize the company later.
Brand inoculation really works. When Exxon Valdez spilled oil in Alaska, it was not spared by environmental activists and protests led to severe penalties. Exxon has already paid $12 billion in damages, penalties and expenses.
For example, McDonald's was a favourite target for several environmental groups. So, for the past 15 years, the company has partnered with several NGos, including Conservation International, to develop processes to reduce its impact on the environment. Once the NGOs partner with McDonald's and guide its policies, it becomes difficult for them to criticize the company later.
Brand inoculation really works. When Exxon Valdez spilled oil in Alaska, it was not spared by environmental activists and protests led to severe penalties. Exxon has already paid $12 billion in damages, penalties and expenses.
British Petroleum on the other hand, is an company which has sincerely tried to establish its environmental credentials. So, in 2005, when its tanker spilled oil in Alaska, the environmentalists gave it a lot of leeway and did not go for the jugular like they did with Exxon. Interestingly, the same year, it also had multiple expolsions in a refinery in Texas and that too was largely ignored by the environmental interest groups.
Wednesday, August 19, 2009
Thursday, August 13, 2009
Trademarks
The most common trademarks are brand names and logos. That does not mean that trademarks are restricted to that. Some companies have registered sounds: MGM has registered the roar of the lion, Airtel's familiar jingle is also registered, Tarzan's holler is registered to Edgar Rice Burroughs Corporation. One of the strangest registered trademarks is the smell of roses on Sumitomo truck tyres.
Logos are extremely important to the image of the company. Several times logos have been changed to keep pace with the change in the brand's image.
Some are quite drastic changes:
Logos are extremely important to the image of the company. Several times logos have been changed to keep pace with the change in the brand's image.
Some are quite drastic changes:
Whereas other changes are quite subtle:
Often, trademarks carry much more meaning than is evident to the casual observer:
Try to notice the arrow formed between the 'e' and the 'x' in Fedex.
Tobletone is based in Bern in Switzerland. Literally 'Bern' translates to 'Bear'. There is an image of a bear in the Alp peaks that are the logo of Toblerone.
One of the better known of such logos is that of Amazon. It has an arrow denoting 'A' to 'Z'
Thursday, August 6, 2009
Wednesday, July 22, 2009
Niche Leadership...What Next??
Some companies have achieved a very high dominance in their niches but in spite of those examples, it will not be unfair to say that there is a limit to how much you can succeed in a niche. At the least, the gap between the marginal cost of gaining market share and the marginal benefit will become far less attractive after having achieved a high market share in their defined niches.
Several companies have followed different strategies to grow their business after they have reached their maximum potential in their niches:
Expand geographically
Niche players tend to dominate in a small region. With international tariff, non-tariff and cultural barriers coming down, it is easy to access similar niches in other countries and regions. Hohner in harmonicas, Tetra in tropical fish feed, Steiner in military binoculars have all achieved a worldwide market share of over 50% in their defined niche.
Expand the niche
Many niches marketers cater to aspirational groups. There would be a number of individuals want to be part of the group but cannot be because they lack certain key abilities or are not sufficiently motivated. Several companies have come up with ideas to grow their niches. Honda plans to introduce two models, CBR1000 and VR800, to tap the nascent superbike segment in India. In order to grow the market, Honda intends to include riding lessons as well, for those with no experience of riding a superbike. Other such examples are the Nikon school and the BMW performance driving school
Up-sell and cross-sell
Once a company has acquired the loyalty of customers in a niche, it can leverage its goodwill to sell other products to its customers. Harley Davidson has been doing that by selling biking accessories jackets, saddlebags, etc. Even Royal Enfield has now started drawing significant revenues from its line of add on kits.
From niche to differentiated product
Several companies have made the transition from being a niche player to being a company with a differentiated product serving the general market.
Micromax succeeded in becoming the market leader in the rural mobile phone market in India. Now, they are trying to sell to the rest of the Indian market. The clothing and sorts good industry has several examples like North Face, Underarmour and Billabong, who started off as niche marketers but now cater to the general market. Some of these have made the transition smoothly but some others have had a rough time. HTC withdrew several models which affected its image of a seller of high end, touch screen based smart phones. Several sellers of high end products tried to expand their market by introducing low priced products. Notably, fashion brands like Gucci and Burberry have suffered heavily because of this strategy.
Multi-niche
Sometimes a company may decide that it is very well configured to cater to a niche. Rather than expand by catering to the whole market, the company may prefer to concentrate on another niche in addition to the one currently being served. Over time, the company would hope to acquire the reputation of a marketer proficient in handling niches. Infomedia 18 has six special interest magazines like AV Max, Better Photography and T3 but its publishing arm has resisted coming out with a general interest magazine like Newsweek or India Today.
Saturday, July 11, 2009
Maslow's Hierarchy
Maslow's hierarchy of needs places all human needs in a five layered hierarchy. He proposed that humans will seek to fulfill higher order needs only after their lower order needs are sufficiently met.
The hierarchy of needs, according to Maslow (in order);
Physiological needs - Breathing, Homeostasis, Thirst, Sleep, Hunger, Sex, Protection (clothes and shelter)
Safety needs - Personal security, Financial security, Health and well-being, Safety net against accidents/illness
Social needs – Friendship and Intimacy
Esteem – Need to be respected
Self actualization – Need to realize ones maximum potential and possibilities
This order is taught in basic courses in marketing as it forms one of the important frameworks to understand consumer motives. There are several examples of products being successful in the market after it was repositioned to meet a different class of needs, either higher or lower.
By its Iron Shakti campaign, Kellogg’s is trying to tap safety needs by raising concerns relating to iron deficiency in children.Mercedes Benz has really fin tuned its ability to appeal to the esteem needs of its customers. In India, Mercedes discovered that large family businesses were an important segment for them. So they are selling multiple units to them by trying to sell the S-class to head of the family, the E-class to other important members and the C-class to the junior members of the family.
Marketers have not found it sustainable to try to sell products by overtly positioning to satisfy physiological needs. Most physiological needs like hunger and thirst are very easy to satisfy and thus, such positioning will not give any long term advantage to the marketer. On the other hand, a physiological need like sex has several complex sociological connotations and most marketers would have a nightmare dealing with it.
The main criticisms to Maslow's theory:
The hierarchy of needs, according to Maslow (in order);
Physiological needs - Breathing, Homeostasis, Thirst, Sleep, Hunger, Sex, Protection (clothes and shelter)
Safety needs - Personal security, Financial security, Health and well-being, Safety net against accidents/illness
Social needs – Friendship and Intimacy
Esteem – Need to be respected
Self actualization – Need to realize ones maximum potential and possibilities
This order is taught in basic courses in marketing as it forms one of the important frameworks to understand consumer motives. There are several examples of products being successful in the market after it was repositioned to meet a different class of needs, either higher or lower.
By its Iron Shakti campaign, Kellogg’s is trying to tap safety needs by raising concerns relating to iron deficiency in children.Mercedes Benz has really fin tuned its ability to appeal to the esteem needs of its customers. In India, Mercedes discovered that large family businesses were an important segment for them. So they are selling multiple units to them by trying to sell the S-class to head of the family, the E-class to other important members and the C-class to the junior members of the family.
Marketers have not found it sustainable to try to sell products by overtly positioning to satisfy physiological needs. Most physiological needs like hunger and thirst are very easy to satisfy and thus, such positioning will not give any long term advantage to the marketer. On the other hand, a physiological need like sex has several complex sociological connotations and most marketers would have a nightmare dealing with it.
The main criticisms to Maslow's theory:
- It does not sufficiently account for taste or aesthetics. If taste is clubbed with self actualization it weakens the whole model. But how else would you explain the idiosyncratic preference for a red t-shirt over a green one.
- The model has been developed after observing exemplary people like Einstein and Eleanor Roosevelt. Generalization to common people may be unjustified.
Thursday, July 2, 2009
CLTV
The customer lifetime value (CLTV) is a metric that is used by a number of companies to direct their marketing investments. BMW, the high end carmaker, uses the general formula of CLTV to direct their customer acquisition costs. Walmart.com leverages its customer data to accurately work out the value of its customer base.
These examples of companies using CLTV are few and certainly fewer in the Asian context. The main reason for that is that companies treat their marketing investments as short term investments. There are certain marketing investments which have an impact over a long period of time. Unfortunately, general accounting principles allow marketing investments to be treated as a short term expense, so there is a focus on their immediate payoffs.
There needs to be better communication between the finance and marketing departments to enable a long term view of such investments. Another important measure would be to quantify and express customer equity (the sum of the CLTVs of all the firm's customers) as an important intangible asset of the firm
Also it is important to note that all revenues because of the customer will not come from the customer. There will be other revenues because of word of mouth publicity, network effects, collateral advertising, etc. For example, an additional customer in Ebay does not pay Ebay directly but results in indirect revenues like commissions from sellers, ads, etc.
Using the CLTV concept, Pepsico recently concluded that Diet Pepsi, rather than regular Pepsi, is its number one soft drink.
Recently, mergers & acquisition dealmakers have relied on extending the concept of CLTV to value a customer base. It is rumored that CLTV based recalculations pushed Vodafone's valuation of Hutchison Essar from $10 billion to over $20 billion within a period of 6 months.
Working out multi-year impacts of marketing investments will not lead to an increase in marketing budgets but will lead to re-allocation of marketing expenditure based on the true value of the investments.
These examples of companies using CLTV are few and certainly fewer in the Asian context. The main reason for that is that companies treat their marketing investments as short term investments. There are certain marketing investments which have an impact over a long period of time. Unfortunately, general accounting principles allow marketing investments to be treated as a short term expense, so there is a focus on their immediate payoffs.
There needs to be better communication between the finance and marketing departments to enable a long term view of such investments. Another important measure would be to quantify and express customer equity (the sum of the CLTVs of all the firm's customers) as an important intangible asset of the firm
Also it is important to note that all revenues because of the customer will not come from the customer. There will be other revenues because of word of mouth publicity, network effects, collateral advertising, etc. For example, an additional customer in Ebay does not pay Ebay directly but results in indirect revenues like commissions from sellers, ads, etc.
Using the CLTV concept, Pepsico recently concluded that Diet Pepsi, rather than regular Pepsi, is its number one soft drink.
Recently, mergers & acquisition dealmakers have relied on extending the concept of CLTV to value a customer base. It is rumored that CLTV based recalculations pushed Vodafone's valuation of Hutchison Essar from $10 billion to over $20 billion within a period of 6 months.
Working out multi-year impacts of marketing investments will not lead to an increase in marketing budgets but will lead to re-allocation of marketing expenditure based on the true value of the investments.
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