Saturday, October 24, 2009

Lux- the ‘not-so-premium’ brand:

Brand building happens over a period of time. It takes even more time if it is a premium brand. For a brand to scale up is desirable but it isn’t easy, for a brand to scale down isn’t a very good strategy unless the product has become obsolete due to technology or any other factor beyond the control of the brand manager. Scaling down is much more undesirable if it is a premium brand.

Aspirational aspect of the human psyche gives the brand the ‘premium’ effect. Till the time this aspiration to own the brand holds good; the brand retains its premium positioning in the mind of the consumer. A classic case of scaling down resulting in disaster is the Daewoo Cielo car brand in late 1990s. Sudden reduction in price made the car positioning from luxury segment to mid-level segment. The result was complete hara-kiri.

Similar is the case happening with Lux, Hindustan Unilever’s premium soap. Lux has been going through a tough time with many competitors in the same segment. Peers and Dove (cannibalization), Fiama Di Willis et al. Lux’ market share has taken a beating. Lux celebrated its 75 years in 2005 with a special ad featuring Shah Rukh Khan and 4 Bollywood actresses, Hema Malini, Sridevi, Juhi Chawla and Kareena Kapoor who have endorsed the brand at some point of time. This shows the power of Lux to get such star power in the ad. No other brand can boast of such lineage of endorsers. Lux is considered such as premium brand that a Bollywood actress is assumed to have arrived on stage when she endorses Lux.

The latest endorses is former Miss World Ms. Priyanka Chopra. Like they say a ‘Bond girl’, we can say ‘Lux girl’ for all these ladies. With this new ad, Lux has scaled down with a soap for Rs. 10/-. Thus immediately the premium positioning is lost when you can get a Lux for such a low cost. The aspiration for the middle and lower class of the populace is realized resulting in increased sales in the short term but in the long term, the affluent ladies would resist from using it.

The ad itself is pale in comparison to the sophisticated ads done earlier. The first thing that strikes you is the song used in the background. It’s a copy of the ‘Dus Bahane’ number from the Bollywood movie ‘Dus’. For a brand as renowned as Lux and its parent company being Hindustan Unilever, we expect an original sound track, not a straight rip-off. Priyanka Chopra could have been sued in a much better way.

A loser ad and loser strategy with nothing to gain but everything to lose.

Saturday, October 17, 2009

End of the 'devil' for Onida?

Onida has been aggressively marketing its consumer durables on Television since last couple of months. These include TV set, Washing Machine, Microwave oven and home theatre. But there is one thing missing in the TVC. Well, no point for guessing since it is so simple. The bald devil with horns, the most important ingredient which separated other consumer durable company ads from Onida’s. The present “Tumko dekha toh yeh Design aaya” ad is usual run-of-the-mill ad devoid of any clutter breaking copy. We will discuss the ad later but before that, why did Onida do away with the devil from its ads?

The devil was so impregnated in the minds of consumers that it reminded them of Onida. That devil stood as the Onida mascot. This unique identity separated Onida from the other ‘me-too’ products. That identity has been lost now. The devil had a top-of-the-mind recall.

The rationale given for doing away with the devil was that the emotional appeal of the ‘neighbour’s envy’ isn’t applicable in the present environment. Nothing can be further from the truth. When Onida had come with that concept, it was initial years of opening up the economy where Onida stood for class and only the rich people could afford it.

Post 2000, all MNCs have taken over that space. With increase in number of salaries, people buy these foreign brands and Onida was left no positioning. Onida could not sustain its premium positioning. Sony has taken over that premiumness which is used to impress their neighbours. Thus Onida has failed in its attempt to sustain the original ‘envy’ factor.

Now to talk about the new ad, it shows a young couple (seemingly newly wed) talking about the various products of Onida in its different ads. Thus the target market seems (intentionally or unintentionally, I am not sure) to be young newly married couples without children. Had they shown a middle aged couple with one or two children in the ad, this anomaly or doubt would not have cropped up. Apart from this, young couples nowadays are well aware of the various brands and they know the attributes and benefits of all. So technologically they know the quality of foreign brands is much better than Indian. It is a very mediocre ad with no creativity.

Onida needs to rethink its promotional message and go for a much more precise and focused outlook.

Monday, October 12, 2009

Mobile Number Portability- is it the game changer?

The current market scenario in the telecom industry is bubbling with activity with new players entering an already congested market. The telecom industry is in the ‘growth’ stage of its life cycle. Thus the only objective for the companies is adding new customers and increasing its customer base. Retention of the existing customers, atleast the post-paid whose Average revenue per user (ARPU) is almost three times the ARPU of pre-paid customers, isn’t on the agenda of the telecom players. But it could soon change post the implementation of Mobilenumber portability. Some of the post-paid customers especially the corporate ones are high value customers with billing in the range of Rs. 20000-40000 per month. There is hardly any differentiation in service for the post-paid customer vis-à-vis the pre-paid ones.

Mobile number portability could alter the scenario especially for these high value customers. A churn of pre-paid customers won’t hurt the players much but post-paid customer churn would certainly hit the revenues in the immediate time past MNP implementation. These high value customers indirectly subsidise the pre-paid customers in the urban and rural areas.

India has one of the lowest tariffs and it is further going to go down with the increasing cut throat competition. The pre-paid customers do not add much value in terms of revenues although it gives the company a better reach. It is the post-paid customers who need to be taken care of. Price wars have already been started by Aircel (after 3 minutes, call STD at local rates), Tata DoCoMo with per second billing and Tata Indicom with billing based on number of calls as against the number of minutes you speak, to gain a larger share of the market. If Vodafone-Essar, Bharti Airtel and ADAG group’s flagship RCom join the price war, prices could reach unsustainable levels with a blood bath in the industry and only the big players surviving through consolidation being the only mode of survival.

MNP thus is surely going to give sleepless nights to the top management of the big players. Brand building would give way to building brand equity through better service and customer loyalty. Differentiation of services would be the order of the day in the not-so-distant future for these players. Keeping the post-paid customers happy with customised offerings would have to be the way forward. Happy customers rather than ‘just’ more customers would have to be the motto, just like in any other service industry.

As tariffs go down, pre-paid customer would find post-paid options much better which would not only increase usage for the customer but also make complete utilisation of the infrastructure for the telecom company. Only Vodafone seems to have understood the future. It is leading the pack towards changing the way people use phones. It launched with much fanfare and effectiveness its Value-added services campaign with the adorable Zoozoos. This means that they are targeting the post-paid customer who uses the VAS. This would mean more revenues. Pre-paid customers just use the caller back tune VAS. Thus Vodafone is looking at the future 5 years down the line where it wants to be ‘different’ from the ‘me-too’ players.

Sunday, October 11, 2009

Relevance of colours in our lives:

Do you remember the days around two decades back when we had just black & white televisions? Colour TVs had to be imported and were a status symbol in the drawing room. Don’t we reminisce when we see our black & white photographs? It was until Kodak entered India that we got colour photographs. When we buy a consumer durable such as TV, refrigerator, washing machine, don’t we fret over the colour of it? Many a times women change the brand for want of a specific colour. Why do you think women take such a long time to chop for clothes? Colour forms the most integral part of the attire apart from the design. Don’t you take days to decide the colour for our abode? Colour denotes our personality and our style and way of thinking.

Each colour has a peculiar function to when we go socialising or even for a business meet. There goes a saying “when in doubt, wear black”. We do not want colourful attire at an inappropriate place or an inappropriate time. Black solves the problem of a faux pas.

Colours add vibrancy to our lives. It acts as a differentiator for each and every materialistic need or rather ‘want’ of ours. This ‘want’ for appropriate colour has been used by marketers since time in memorial and will continue to be used.

The ads for apparel, show fabulously dressed models with an aura of confidence to get that aspirational feeling to the customer. Currently Videocon and Sony Bravia TV ad shows colours in its ads. The Bravia ad has colour as its theme with the tagline “See more colours”. It shows colours formation in a breathtakingly beautiful way. The non-stop paint company ads lead by the India paint giants Asian Paints and Kansai Nerolac followed closely by Berger and ICI paints talk about colour.

Corel Draw software in computer for creative drawing in ad agencies and Adobe Photoshop has millions of colour combination. The vignette effect and the shine visible for the print in 2D format are exciting to say the least.

This liking for colour has been manifested in humans time and again. Colours truly enlighten our lives and make them vibrant and exciting.

Friday, October 2, 2009

Targeting of Unit-linked Insurance plans (ULIPs):

The biggest innovation for the insurance industry over the past couple of years has been the Unit-linked Insurance plans (ULIPs). It was fuelled by a booming stock market. It is seen as a direct competitor to the Mutual fund industry with value addition of insurance as well. However the downward spiral of the markets after the recent crisis has directly affected the ULIPs where the majority is invested in the Equity markets.

To be different from competition and get people to buy ULIP products, two things can be done:

1. Understand consumer behaviour and appropriate targeting-

There are 3 types of customers for ULIPs- General public accounting for almost 90% of the buyers who are unaware of the intricacies of this financial product and are conned by salespeople. These people are influenced by peers and hearsay. These are the type of people who have stayed away from ULIPS recently resulting in the dip in sales.

Second type is the informed public who account fro about 5-7%. These people have become conservative in investing in ULIP and are very circumspect and waiting for equity markets to resurrect.

Third type is the High-net worth individuals (HNIs) who account for just 1-2%. The next point will elaborate on the same.

2. Sectoral choice availability-

Presently a customer doesn’t know which sector his investment is done. He just gets daily updates in the Net Asset Value (NAV). For making ULIPs attractive for HNIs, three things can be done- give option of sector such as infrastructure, banking, PSU, FMCG or telecom or commodity markets. They can be divided according to growth fund where there are high returns but commensurately high risk too. Then their can be safe and fixed returns funds with minimum risk. And finally exotic funds with exponential growth options where the money would be exposed to high risk and complex financial products such as Credit Default Swaps (CDS), commodities, bonds, currencies among others.

Both these methods are possible. Only appropriate data needs to be collated.

Lastly Perceptual Mapping also can be done but it is from marketing point of view only and has to be done every 3-5 years or if you have changed your value proposition. Just like what Bajaj Allianz did with its digression to emotional appeal from a practical one.