Much
of our marketing know-how has revolved around placing the right product at the
right place at the right price by using the right promotion techniques. We have
laden our notebooks with a plethora of numerics involving the cost benefit
analysis or in simple words how much profit if at all will all the expenditures
incurred result in.
Starting
from the promotion debacle of “nirdosh” we have in the initial parts of our MBA
lives come to the marketing of “water chromatography”. Somewhere in between we
learnt about how we need to position the product, whom should we target and the
various pricing options that are available to us. There were many other things
too that we failed to notice or if we did, we did not really pay enough attention
to them. We built brands but we did not realize what these were made of; was
this a single product or a gamut of them, how close did we bring our product to
the customer, that entering into a price war wasn’t the only solution and
sometimes charging high worked in our favour; and last but not the least, when
the product was launched, did the firm go to sleep or was it then that the
marketing actually began.
We
do not position ourselves above Jerome McCarthy but we definitely can question
the relevance of the 4Ps he gave in 1960 in the present world. With India
counting among the youngest nations of the world the consumer behaviour is
experiencing drastic changes. The Gen-next does not believe in the
stereotypical branding and is out to explore while simultaneously maintaining
an eye for the brands. The buying power has increased but the economy is still
not very stable and so people still prefer durability over luxury. In such a
market full of parallel contradictions, there is a need to improvise on the 4Ps.
The new 4Ps can be Portfolio, Positioning,
Proximity and Public Relations with the ever changing demands of the
Millennials; the reasons for the same are explained further.
PORTFOLIO
Portfolio
for us replaces the traditional Kotler defined first P denoting Product. Why
portfolio? The simple answer is that some things everywhere beat everything
somewhere. Before going into the nitty-gritty of why Portfolio Management:
A
product is any offering that can satisfy a need or want, such as one of
the 10 basic offerings of goods, services, experiences, events, persons,
places, properties, organizations, information, and ideas.
In
short, a product satisfies the consumer’s needs. Needs are varied and they keep
changing over time. Many times there is a latent need which is pricked out from
its slumber and results in high market potential. Now, since the needs are
varied, a successful product should satisfy all of them ideally. However, since
ideal does not exist, there will always be something that a product will lack
and hence pave way for a new product in the market.
A
new product from a new firm would eat into the former’s market share and result
in reduced price margin. It might also be a possibility that the customer who
has switched to the new product/brand never returns to the previous product and
hence the latter loses it completely.
How
to retain such customers? The most common answer would be to vary the pricing
strategy or innovate. Sadly though, innovation comes with a price attached to
it and any change in production method would only result in additional costs.
Many
managers are of the view that a cost benefit analysis of the same would give us
the best possible solution; however this marketing myopia is precisely the
reason why wrong decisions are taken.
Let
us have a look on some examples:
·
Ever wondered why P&G launched Tide as
a detergent specifically for white clothes while it already had Ariel as a top
brand in the segment?
·
Why did L’Oreal launch Garnier brand of
products targeting the comparatively lower salary segments when it was doing
well enough?
·
HUL is in literal sense a house of
brands where it has multiple brands for a single line e.g. Lux, Liril, Hamam
etc.
The
answer to all of the above without any exception is to capture additional
market and to churn extra revenues. But what is the need to capture additional
markets when a suitable pricing strategy can get the additional revenue for us.
Well,
like it was mentioned before, the ideal does not exist and there will always be
some need or want that will be left unsatisfied. It is to enter into these new
markets does a brand expands.
Portfolio
extension definitely needs a huge capital investment but sticking to a single
product ultimately leads to stagnation of market for the company.
It
is thus advisable that the firms should after setting up their brand invest in
the image/portfolio expansion.
An
expansion in the portfolio will be easier compared to the initial brand launch
because it will have an established name attached to it and hence people will
be able to relate to it better. Also, new market will also be exploited for
opportunities and if the brand lives up to the standards, it can own a
considerable market share in whichever target audience it chooses.
PROXIMITY
When
we talk about proximity in terms of marketing, it goes without saying that in
today’s world internet is the nearest market place available to the customers. ‘Place’
in old 4Ps of marketing has been replaced with ‘Proximity’ with the advent of
internet. Internet has made it possible for the customers to access the market
which is just a click or a touch away from them. It’s all about Proximity now!
How can a brand at the precise moment cater to the needs or wants of the
customers is something that the companies have to ensure to stay at par with
the competitors. Needless to say that Flipkart, Amazon, Snapdeal, Myntra and
many such e-commerce websites are thriving on this need that was once latent-the
need to get everything on a click. Think of the supreme ecstasy many of us feel
when we find an online store which promises home delivery as well. “Ekstop”
filled this gap of going to the market and buying basic home requirements and
the growth in its consumer base has been no prizes for guessing, exemplary.
The
young generation has money in its hands. This generation lives in the present
unlike their parents who had the onus of building the future for them. So,
people like you and me do not really think before spending, if there is
something they like and it is well within the reach, why wait for someone else
to go and pick it up; let it be ours. What we want is least of the movement and
most of the work and online orders and deliveries are doing just that for us.
Let
us discuss the case of food outlets like McDonald’s, Dominos and Pizza Hut. All
the three food outlets have a very good presence in almost every city which
seemed to be a potential target segment. Their food joints are always brimming
with customers enjoying inside and waiting outside in queues but still they had
to venture online. The reason is simple, who would not want to add more to its
customer base. And plus, when you do not want to get ready to go out and do not
want to cook either, ordering online is the best option. And not only these big
food giants, various sites such as “food panda” have also emerged which provide
a multitude of options to chose from on the same page. What more could a person
ask for?
An
average Internet user spends around 5 hours a day on internet, a well
strategically placed content can thus increase the visibility to the potential
clients. This is precisely the reason why Facebook started the “Facebook ads”
business. Many small and medium enterprises have benefitted from it by reaching
out to the customers far and wide.
POSITIONING
The
biggest war between brands that the market has ever seen is the price war! The
pricing strategies aimed at gaining market share by reducing that of the
competitor’s has worked but only in the short run; in the long run the profits
of all have suffered. The almost defunct Spicejet, the already shut Kingfisher and
the loss making others are the best examples to quote.
Reducing
prices has been the traditional way of market capturing and it seems so obvious
to all that even the initial marketing lectures have the prospective managers
vouching for a price reduction. Southwest Airlines when faced such a threat
from Brainiff International and Trans Texas Airways who reduced their flight
ticket to $13 did not really go for a price cut. It instead offered a regular
$26 flight laden with goodies and a cheaper $13 one. Contrary to what we might
expect, 80% of the people went for $26 flight. This clearly states the fact
that the people who are ready to pay would prefer better services rather than
saving money.
Thus
it is clear that if a brand positions itself well and earns the trust of its
customers, prices would never be an issue for it and its profitability will
never be affected in the long run. If we consider the luxury clothing brands
like Diesel and Armani; they don’t have to worry about the pricing of their
products. Customers are willing to pay premium prices for their products
without doing any cost benefit analysis.
Levi’s
launched brands like Dockers, Sykes and Levi’s Signature in the Indian market to
cater to the different income groups but all of them failed because Levi’s had
already been positioned as a premium brand and the price cut brought the image
of reduced quality for the Indian masses who generally relate price and quality
proportionally. If we consider an automobile brand like Audi then the image that
comes to our mind is that even the cheapest car would not cost less than 20
lacs. So, even if they come up with a new model which can be sold for around 15
lacs they would not do it to keep up with their image.
Moreover,
since the generation is becoming more brand centric and is willing to pay for the
brands, the main strategy for a firm should be to decide on the segment which
it needs to target and then position itself in that segment followed by zeroing
on the right pricing instead of doing it the other way around.
PUBLIC RELATIONS
Many
of us must have read the Harrah’s Case. The key idea of the case was how
Customer Relationship Management is integral to a firm’s growth. In the case,
we saw that how by knowing their customers Harrah’s could overturn its business
into a profit making venture. The casino chain came up with the idea of “luck
fairies” that would go to the customers who were losing repeatedly and gift
them holiday or dinner packages. In a nutshell Harrah’s made appoint to know
their customer just like a family and then follow this strategy religiously.
We
are usually found recommending Dell to our friends who want to buy new laptops.
There are other players like SONY, HP, HCL etc. who have technologies at par but
what gives DELL an edge is the after sales service that it provides. No matter
what technical issue you have, you can always and at any point of time get your
warranty extended (terms and conditions applied) or ask for direct technical
help. A DELL serviceman never takes more than 3-4 business days to get your
issue corrected and that too if the issue has not been already corrected
online.
Except
for the manufacturing sector, CRM installation growth has been meteoric in all
the other sectors. This is because in a B2C environment, the end customer is
the primary customer as well. How will the market react to a product depends on
the level of trust the customers show in the brand image. Any negativity in the
market may reflect poorly in the sales. If we have a look at the Piggly Wiggly
stores’ history then we would be able to understand even better that how public
relation management can work wonders as well as spell disaster. The stores
founded in 1916 by Clarence Saunders were the reason behind the last great
corner. Saunders showed exemplary public relations handling and mobilized the
people of his native Memphis to work for him. However, the disaster occurred
when even though the people were working for him, he started spending on
building a palace for him.
The
difference might not be very stark in the FMCG sector when we look at the end
consumer but a very critical application of public relations management lies in
the supply chain itself. The firms provide the retailers and/or distributors
with periodic discounts, free gifts or provide packages to them so as to
maintain good relations with them. Not only this, the retailers are also
involved in demand analysis either directly or indirectly which gives the
latter a sense of importance and provides a feel good factor.
David
Oglivy rightly said, “The customer is not a moron, she is your wife” and we all
know that an angry wife spells doom. Your customer will always be ready to buy
your product if he is satisfied with the after sales service that you offer. It
is a no brainer that you have a deliver a good product but then the story
doesn’t end there. This is where exactly the things start and whether this
newly found relationship will continue or not depends on how you treat them.
As
Peter Drucker said, “The aim of marketing is to understand the
customer so well the product or service fits him and sells itself”. Beyond this nothing needs to be said.
(This piece wasn't my work alone. Thanks ! Varun Bhargava for collaborating on the same.)
