How are big brands made on small budgets?

Unilever spent Rs 800 crores in 2007 on advertising and marketing. Reliance ADAG spent Rs 600 crores.

It's a daunting task to break through the clutter of brands without advertising budgets like these to lean on! But it doesn't always take big bucks to make an impact.

So what's the magic formula to do that you would ask?

Rupin Jayal said, "Find other ways to communicate to your self, to your people and to your audience. Don’t use the tried and tested, because sometimes that is the most expensive way to go about it and does not give the required return."

R Balakrishnan, National Creative Director, Lowe India said, “When you're small and you want to be big, don't follow the rules of the big. Even if I take mass media advertising, when you have less money lot of small people make that mistake.

But often a successful marketing strategy is about not having any campaign at all.

Perfect positioning is, quite literally, all it takes.

Take for example, the case of Jumbo King Wada Pav. What started as one Vada Pav store in suburban Mumbai 7 years ago with a 1000 rupees marketing budget is now a 45 store network across Maharshtra & Gujarat.

Stores that compete with cheaper hawkers on one side and large food chains like McDonalds on the other.

It has taken the dependability of hygiene and quality of McDonalds and offered it in a product that many others can enjoy and that is the humble wada pav.

What have they done? Perfect locations! They have located their shops bang outside railway stations.

Dheeraj Gupta, Managing Director,Jumbo King Wada Pav said that after understanding the railway commuter’s needs , he realized that he does not want air-conditoning, he wants a hygienic wada pav, which is what we want to deliver to him consistently. So ‘it’s not what we wanted to give to the customer. It is what the customer wanted out of that product.’

And it seems that this strategy works just as well for high end products.

Take for example the case of Delhi-based herbal product brand Biotique.

It's now a household name in upper middle class India. 16 years ago it was just another cosmetic brand launched by aspiring entrepreneur and housewife Vineeta Jain.

A small brand that carried a hefty price tag. And so it was made available only in up market stores across the country and in luxury hotels. Today the company has a turnover of about 500 crore rupees without any designated advertising or marketing budget.

Vinita Jain, MD,Biotique said “I wanted to put the products where consumers could use them and see their benefits.”

There are many such examples across products and services. And standing out in an over crowded marketplace with little money means starting out by asking yourself the some basic questions like -

Do I really have anything different to offer?

Who am I talking to?

How am I going to position my product?

And how different is my positioning strategy?

112 year old Godrej logo gets a make over

The 112- year old Godrej brand has finally unveiled its revamped logo with new colours, featuring red, blue and green. Aiding the re-branding exercise were U.S based inter-brand, Indian agency JWT. Godrej says the re-branding exercise was undertaken as it felt the old brand was not as relevant to young India.-->

Adi Godrej, Chairman Godrej Industries said that the brand repositioning will help them grow the topline very considerably and grow the bottomline. If the topline grows the bottomline will grow despite the additional expenditure.

Tanya Dubash, ED & President Marketing, Godrej Industries said that it had essentially started about a year ago when they decided, that they want to strategically manage the Godrej brand as an asset more effectively than they had been doing in the past because they saw a big opportunity there.

The group has set aside Rs 100 crores to communicate the new look. To spearhead the repositioning the group has also launched a new business called "Hero" that with include grooming, property, furniture and home appliances.

Contributed by -
Mohit

Adidas, Reebok kickstart integration

Global sports goods companies, Adidas and Reebok, have kickstarted the process of integrating their resources in India, with Adidas’ $3.8 billion acquisition of Reebok in 2005 beginning to pay off. All back-end functions such as sourcing, transportation, information technology, human resources, warehousing, as well as managing and setting up factory outlets, are in the process of being integrated. At the front end, however, both brands will remain independent and will be distributed and marketed separately. Adidas will continue concentrating on high-performance footwear, and Reebok’s focus will remain on lifestyle sports goods. The integration process is expected to take a total of three-four years. Anne Putz, team leader, Corporate PR, Adidas AG, Germany, told ET: “We will generate synergies in areas such as sourcing, transportation costs, warehousing, back office functions and other similar areas. This also takes place on a global basis.” Putz added that both Adidas and Reebok will maintain separate brand identities, with independent marketing strategies and products all over the world. Meanwhile, speculation is rife that Adidas is keen to acquire the roughly 7% stake Phoenix India, a distribution and trading firm, has in Reebok India. When contacted Putz said: “We do not comment on market rumours.” Sources at Phoenix maintained it would not sell the stake, and that there were no active discussions on with Adidas on the matter. Though India remains a small market for Adidas globally, with its share at under 1%, it has chalked out an aggressive expansion plan for this market. The sports goods company, which has 200 single-brand franchisee stores, plans to take up that number to 900 by year 2010. “Our revenues are balanced between footwear and apparel, and we have plans to be the No 1 player in India,” Hartwin Feddersen, director, marketing, said. Reebok, which leads the Indian premium sports goods market with a 51% share, plans to add close to 150 new stores by end of this year, up from the existing 400 franchisee-owned stores. It has recently released its global Go Run Easy campaign across television and print, and is bolstering the campaign with below-the-line marketing efforts. Globally, while Nike is the world’s largest sports goods maker, in India it trails behind Reebok and Adidas. Adidas AG, which reported a 3% rise in Q1 sales to, 2.538 billion euros ($3.46 billion), last month, said it has begun realising the revenue and cost synergies of the acquisition, with the quarter seeing Reebok’s sales surge 15%. Analysts say that Adidas’ acquisition of Reebok has helped the German sportsmaker consolidate its position in key markets such as the US, since Reebok enjoys strong brand equity through its lifestyle and fashion positioning, a slot which Adidas’ German rival Puma has occupied successfully.

Is a CMO a Temp Job?

As has been discussed far and wide, the average tenure of a CMO is somewhere around 21 months. Rarely is it the incompetence of the CMO. Most of them are bright, accomplished people. In most cases, it is because the CMO was set up to fail with unreasonable revenue expectations or asked to market a bad product. What is interesting is that this trend doesn’t seem vary much with great companies v. poorly run companies or good products v. bad products. It appears that the modern CMO may be the most transitional executive position. Why is this?
Effective CMOs are typically big idea people. They tend to be strategic marketers not tactical marketers. Rare is the person who can excel at both the big idea and in the minutia of the execution. As such, the execution of the tactics is handled by Brand Managers, Marketing Managers, etc. - in essence, the “assembly line supervisors” of the marketing system.
Speaking of “system”, the execution of marketing is a commodity. Once the idea is created and the execution system is in place, it is natural to drive costs out of the system. In short, it is cheaper to pay several tactical people than to pay one CMO.
If the big idea and strategic marketing are successful, what does a CMO do? After the launch, most of the details will be handled by managers. Unless the company has other initiatives, there are really only a couple of places to go - out or up; either leave the company or get promoted to CEO. The latter is actually occurring more frequently.
CMOs typically get one shot to be right. If they are brought in and their strategic marketing/branding plan doesn’t work, they are typically shown the door. It is a bit like being a football coach at a big time college - win now or die. There is not a lot of patience to build a brand internally by focusing on quality control, creating employee evangelists, opening up the marketing to allow customers to participate, etc. Most Boards and CEOs want results NOW. Unfortunately, sometimes greatness takes time.
The biggest issue that creates the “temp” feeling of the CMO role is that the marketing rules have changed. When done properly, modern marketing is about creating a large enough customer base to reach word-of-mouth critical mass. This means an initial outlay of external marketing dollars, but only to reach the point where your customers become your primary marketing driver. At this point, almost all marketing should turn inward. As such, the CMO must evolve to a role of something more like “Chief Branding Officer” or “Chief Experience Officer” (CXO?) - someone who obsesses about the customer experience, customer feedback, product quality, etc. Unfortunately, in most corporate hierarchies, these are Department Head-type roles, not executives.
In light of all this, it is no coincidence that the CMOs with the longest tenure, that have overcome the “temp” curse, are in innovative, forward-thinking organizations. In fact, they may not even be called “CMOs”. It is likely that they started with a strategic marketing role, but because of their own flexibility and the innovative culture of their organizations they have continued to evolve their role to provide value to the over-all brand. This follows the “Good to Great” philosophy of the “right people on the bus, in the right seats”. Who says they can’t change seats?

Ads of FMCG firms under ASCI’s scanner

Advertisements from FMCG companies were in the limelight as complaints against them were upheld by the Advertising Standard Council of India (ASCI) for the period between July and September.
HUL, Henkel and P&G had their respective dishwash and detergents ads under the scanner. For HUL, its Vim dishwash liquid’s claim of “Just one drop is enough, New Vim drop has 10 times more lime power than the bar, even the grease you cannot see, it gets out”, needed proof and was not adequately substantiated, according to ASCI. HUL has been asked to modify its ad.
In the case of Henkel, its Pril dishwash liquid’s claim of “Each drop of Pril has active ingredients which removes grease better than the bar”, lacked proof and needed to be substantiated, felt ASCI. The advertiser has subsequently conducted the cleaning efficiency test with an independent lab, for which it has provided a copy of the report.
For P&G’s Tide detergent powder, ASCI felt the advertiser has contradicted its own statement in its television commercial (TVC). It mentions one spoon being required to clean clothes, when actually it is one scoop that is required as mentioned on its pack, leading to misinterpretation by its consumers.
The advertiser has assured ASCI appropriate modification of the claim in its TVC.
For Coca Cola India, its Thums Up TVC which showed an actor flicking a bottle from a speeding truck was not approved by ASCI as it would encourage youngsters to emulate criminal and dangerous acts. The company has since modified its ad.
Perfetti Van Melle and its Alpenliebe ad which shows a celebrity feeding a crocodile the chocolate was found to be violation of the Wildlife Protection Act. The TVC has now been modified by the company.
Liquor brands from United Spirits were also asked by ASCI to withdraw or modify its ads. For instance, its Royal Mist brand which claimed that “100 per cent premium grain means 100 per cent smoothness” appeared to be surrogate in nature. The advertiser has assured appropriate modification of the ad.
Again its Mc Dowell Signature brand which stated ``Success is very demanding, Success is good fun,” was found by ASCI to be misleading due to its ambiguity and was suggestive of a liquor brand. The ad has been subsequently withdrawn by the company.

Will P&G go ‘Olay’?

This could be just the break that Procter & Gamble (P&G) India is seeking. For years now, the fast moving consumer goods company - the largest in the world—has trailed rivals such as Hindustan Unilever Limited (HUL) in terms of market share in critical categories such as detergents. But this has hardly prevented the FMCG major from trying to improve its position in the country. Emerging Markets are crucial for the FMCG player, with more than a fourth of its global sales coming from these areas.
Unilever, however, has almost half of its global sales coming from emerging countries, which means that P&G still has some catching up to do in these Markets. This is why the company continues to keep its focus on countries such as India, where it has just launched Olay—one of the largest brands in its international portfolio.
“P&G has had a strategy of launching products every year in the country,” says Abhijeet Virmani, director of Delhi-based consultancy Positron Advisory. Kids’ diaper brand New Pampers, for instance, was launched by P&G in December ‘06. Rejoice shampoo was launched in January ‘04. The gap between these two key launches was filled with the unveiling of a number of variants for existing brands such as Pantene and Head & Shoulders.
On Olay, which has worldwide sales of $2 billion, there is much riding though. It marks the foray of the company into the skincare segment—something it has been intending to do for a while now. Olay has been available through the import route in India, but it is now officially part of the P&G portfolio in the country.
Four products have been launched including an anti-aging moisturiser, cleanser, radiance cream and lotion in India. “The focus, with the launch of Olay here,” says Sumeet Vohra, marketing director, P&G India, “is on the anti-aging segment.” At about three per cent of the Rs 2,100-crore branded skincare products market in India, the anti-aging segment is small.
But it is also a segment that is growing fast, fitting in well with P&G’s overall scheme of things. Says Jagdeep Kapoor, chairman & managing director of the Mumbai-based Samsika Marketing, “I think it’s a good move to have launched a product in that segment. It is growing, which means that the company could gain from the growth coming from there.”

Over the years, some diversity did creep in with the entry of players such as L’Oreal. HUL, the leader in the skin care space, did respond to this diversity with product extensions and variants of its existing brands. For instance, it launched the Ponds Age Miracle some time ago preempting the entry of Olay. It now has the Ponds White Radiance range, which again competes with Olay. All of this will actually help grow the skincare market.”
Costing Rs 599 for a 50-gram, anti-aging moisturiser, Olay is a premium product. The foaming cleanser, which goes with the moisturiser, costs an additional Rs 125.
Rivals such as the Ponds’ Age Miracle lotion costs about Rs 450 for a 50-ml bottle, while Garnier’s and Zydus Cadilla’s anti-aging creams, available in 50-gram packs, are cheaper still at Rs 179 and Rs 150 respectively. Clearly, P&G has no intentions to dilute the brand equity of Olay by reducing its price despite pressure from competitive brands.
The company has launched its Olay products, especially, the anti-aging moisturiser, in the top six metros only, marking its presence in major departmental stores and retail outlets with display counters, beauty consultants, et al.
This strategy of being premium in its approach to consumers is nothing unusual with the company. Most of its brands have traditionally targeted a slightly upscale audience, which, in turn, has determined their price. In recent years, though, P&G has looked to address the last mile—something that archrival HUL has done successfully across categories—by adopting a dual pricing strategy. This is most obvious in the detergents segment, where it has waged a protracted battle with HUL for a while now.
In March 2004, it triggered a price war with HUL, when it dropped prices of Ariel and Tide substantially. At the current point, however, both players are almost neck-and-neck when it comes to the pricing of their detergent brands. A one-kg pack of Tide, for instance, costs roughly Rs 53 to HUL’s Rin, which is about Rs 52 per kilo. Ariel costs about Rs 108-110 per kilo to HUL’s Surf Excel, which is about Rs 116 per kilo.
“The dual pricing strategy can be seen in other categories too,” says Ranjit Kapadia, head of research at Mumbai- based brokerage firm Prabhudas Liladhar. In the men’s shaving products category, for instance.

With an overall market share of about 75-77%, Gillette is the clear leader in the men’s shaving products segment straddling the space with mass-market brands such as Sensor Excel and Vector Plus and premium products such as Gillette Mach 3 and Mach 3 Turbo.
Vector Plus, launched in October 2003, actually marked the foray of the company into the mass-market space, helping it graduate consumers from a regular shaving-blade experience to a twin-blade one. In the process, it has helped the company garner significant market share, as Kapoor of Samsika Marketing explains, “If you have a larger base of consumers at the lower end, it means you have more people at your disposal to help graduate them to better offerings in your portfolio.”
Gillette has been doing precisely this, which makes it a key element in P&G India’s arsenal. Other important constituents include Vicks and Whisper - category leaders - where the company continues to raise the bar as far as product innovation and pricing goes. Whisper, in particular, has been crucial for the company even as sales of Vicks have hit a plateau in recent months. For the first nine months of the latest accounting year of July’06-June’07, Whisper had a sales growth of 22% to Vicks’s 8%. In the last accounting year of July ’05-June ’06, however, both brands were evenly placed at a 20% average growth rate in sales.
“What is working for Whisper is the ability it has to fill need gaps. In the last few years, it has launched a number of variants that address precise needs of women,” says an FMCG analyst based in Mumbai. Here too the company has gone for a dual pricing strategy with Whisper Choice available at an affordable price to the regular Whisper products, which cost Rs 60 for a pack of about seven to ten napkins.

Marketing Club Highlight of the Week

Hindustan Unilever (HUL) has surprised the industry by dropping prices of three of its soap brands—Lux, Hamam and Rexona—at a time when there is high inflationary pressure.
The industry was actually expecting the FMCG major to hike prices so that they could follow suit. Holding on to the price line by sacrificing margins is becoming difficult for most fast-moving consumer goods (FMCG) companies reeling under rising input costs.
The price reduction by HUL is being termed as a postbudget measure to please consumers. The excise duty on soaps was reduced by a margin of 2-14% in the union budget for 2008-09.
The industry had, however, ruled out price cut and had termed the excise relief as miniscule.
But, HUL, being the market leader in toilet soaps, has decided to pass on the excise benefits to consumers by reducing prices of Lux, Hamam and Rexona.
The price of Lux (100gm) has come down from Rs 17 to Rs 16 and that of Lux’s 45gm SKU (stock keeping unit) is down from Rs 6 to Rs 5. In the case of Hamam and Rexona, price change has taken place in the 100gm SKU.
“The price changes were made effective from early March 2008. This is consequent to the excise duty reduction announced in the union budget for home & personal care products from 16% to 14%, along with changes in abatements. Since the benefit is small at a unit level for each SKU in the HPC portfolio, the overall benefit is being passed through price reductions on select popular SKUs in the skin cleansing category as mentioned above,’’ said an HUL spokesman.
However, in the backdrop of escalating input costs, traders are not sure how long HUL will be able to hold the prices of the three soap brands at current reduced levels. In the previous calendar year, HUL had introduced judicious price increases on its various products.
With a share of 54.3%, HUL leads the toilet soap market. The closest rival is Godrej Consumer Products (GCPL), with a share of around 9.7%.

Marketing Club
Contributed by-Ruchi