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Being First can be a differentiating Idea February 16, 2011

Filed under: Uncategorized — priyasurendran @ 6:31 pm

In the book , ‘differentiate or die’, the author points out being first to the market can be a differentiating idea. This was proven very well by Fevicol,  a white glue company who had the additional task of making the white glue acceptable before making their own product accepted by the rural consumers. Here is the success story of Tata Ace who used the principles of preference, being first in the market and their strong heritage of the parent company to differentiate the product and thereby sow and reap success in the rural market. They also owned the attribute of the product ie 4 wheeled commercial vehicle to differentiate the product.

Till the launch of TATA ACE, LCV (Light Commercial Vehicles)segment was mainly dominated by 3 wheelers. The players in this segment were very complacent. They were mainly playing on volume, and demand had risen at the annual rate for more than 7% between 1994 and 2005. There was no innovation in the segment. The 3 wheelers wore a rustic look, was uncomfortable and not very safe for carrying load at high speed. Though the price was less, ranging from INR 1.2 Lakhs to INR 1.8 Lakhs, the operating cost was very high.

Before the launch of its LCV, TATA motors conducted market research to identify the customer needs. Customers were asked about the basic attributes which they seek in an LCV. Some of the findings of this exercise were related to basic needs of transporters, while some were completely surprising for TATA motors team. The market research team realized that the customers in rural areas attached prestige to their transport vehicles. People in rural areas told the research team that people who drive 3 wheelers are not held in high regard in their social circles. They expressed a desire that if they can afford to drive a 4 wheeler LCV, they will gain prestige in their social circle. The other attributes desired by the users were safety, comfort to the driver, speed, ability to drive in the narrow lanes of urban areas, and uneven terrain of villages and low operating costs.

Most of the customers inputs went into the design of LCV, which TATA motors was planning to introduce in the market. Major revolutionary change was shift from the 3 wheeler to a 4 wheeler for a LCV. This was done to meet the basic demands of customers, such as the prestige aspect which customers attribute to their LCV and the safety desired in an LCV.  Thus Tata Ace used the urban principles of product differentiation and successfully won the rustic indian market.

 

Differentiation takes place in the mind February 7, 2011

Filed under: Uncategorized — priyasurendran @ 7:06 pm

Differentiation takes place in the mind of the consumer. But a mind has many limitations. It cannot bear over communication/information bombardment, confusion and conflicts. Mind looks out for simplicity, security and is highly resistant to change and can lose focus immediately. These factors are extremely important in the case of a rural consumer and hence the companies are spending a lot of time on doing in depth analysis of the rural mind set and the consumer buying behavior of the rural population.

Rural consumers tend to follow suit by buying what others buy. This is mainly attributed to the efforts to avoid perceived risk which involves

  1. Monetary risk: There is a chance I could lose money on this
  2. Functional risk: May be it would not work, nor do what it is supposed to do.
  3. Physical risk: It looks a little dangerous. I could get hurt
  4. Social risk: I wonder what my fellow villagers will think if I buy this
  5. Psychological risk: I might feel guilty or irresponsible if I buy this

All this explains why people tend to love underdogs but buy from the perceived leaders. Rural consumers also tend to be more loyal as brand switching has greater perceived risk.

The disturbing question that a marketer need to face in such a scenario is how to differentiate and position their product to grab the attention of the rural consumer who has an extremely insecure mind and highly resistant to change.

In such a scenario, differentiating factors can be ‘being first’ or ‘attribute ownership’. Getting into the mind a new idea or product or benefit is an enormous advantage. The bottom line is people tend to stick with what they have got. And if someone is the first, when the competitor tries to copy, all they do is reinforcing the idea of the leader. This has been the strategy of Fevicol, the company with one of the most successful ad campaigns.

Fevicol, the leader in the while glue segment had to fight their way through the ‘sticky’ market to emerge as the pioneers. When Fevicol came into business, the while glue was not famous among the carpenters. Initially, selling white glue was more like concept selling because the trade was used to glues based on natural products. Any concept selling like this is a difficult proposition and required patient working with the end users. For the first 5-7 years the challenge before the company was to make white glue the most preferred glue for making furniture. Thereafter, the journey has been guided by Pidilite’s desire to make the brand close to the customer. All the marketing activities for the brand, either at trade level or at carpenter level, or through the media, have been directed towards this objective..  Beginning with the Haisha campaign and graduating to the ‘huddle image’ of the Indian cricket team, humorous advertising has been playing a key role in building the Fevicol brand.

One interesting ad of Fevicol set in the rural backdrop

 

The big idea about how ‘some bonds are as unbreakable as the ‘Fevicol bond’ have paid dividends for Pidilite over the years in the rural market giving high brand recall for a low involvement product. The Indian rusticity is what stands out in all the Fevisol ads most of them being set in a rural backdrop involving carpenters, Melas, and Chaaywalas. Infact through their advertisements, the company made the name Fevicol generic to white glue though it is against the rules of differentiation. But discussing about the achievements, Fevicol succeeded through leadership and attribute ownership with the jingle ringing in everyone’s mind ‘Ye Fevicol ka jod hain; toottega nahin’. Here starts the success story of one Indian product differentiation.

 

 

Difference in Differentiation ( A comparison between urban and rural market) January 31, 2011

Filed under: Uncategorized — priyasurendran @ 7:14 pm

In the book .’Differentiate or Die’, the author claims that gone are the days when quality, price and creativity were differentiating ideas.  Now the era has come when the preference, leadership, hotness(newness to market) etc have become the watch words for differentiation. Without a fit between the product and the consumer preference, the brand is doomed to fail.  This article tries to find out how preference can be used as a differentiating factor in a rural market in comparison to an urban market.

The values of the product

Most of the times, in the urban market, the products are offered at the augmented value level which is the preference there. But in the rural markets of India, the population still believe in utility rather than the extended values. So in the rural markets the product are still offered at the preferred basic or the expected level rather than the augmented level.

For e.g.Hair products were introduced to rural India in an attempt to capitalize on a culture where hair grooming is taken extremely seriously by women.While rural women may wear faded saris and little jewelry, few step out without ensuring that their hair is in place. Consumer goods companies introduced a transplanted product from developed markets, the 2-in-1 shampoo/conditioner. But the product doomed because the companies failed to understand that the rural consumers did not prefer shampoos instead used soap to wash their hair. However, several years back, Hindustan Lever focused on product development strategies for rural consumers who still did not use shampoo in India. Rather than try to change instilled consumer behavior, product developers focused on creating an opportunity which offered convenience at low cost. The result was a new 2-in-1 soap, a product that cleans the hair and body, and is targeted towards consumers in rural areas.

These are the examples of products which were introduced into rural markets after successful or near successful run in the urban markets with slight modifications.  But what are the modifications which needs to be done when we take a product successful in the rural market to the urban market?  Medimix soap is an epitome where a brand which had modest beginnings in the rural market made it big in the urban market by trying to differentiate the product with the preference of  the consumers. As a user of this brand since childhood, I have been a witness of the transformation of this brand, from a rural market, to grab the share of heart and mind of urban consumer. In 1969 , the brand was lauched in the market with its basic and the expected value in the rural market. It was positioned as a dual purpose soap for both hair and body with ayurvedic components. Inside the carton of soap there used to be a note which described the usage method i.e to apply to hair and body and leave for 3 minutes and so. Thus the brand gave more importance to the utility side of  the product which goes without saying is the preference of  a rural mind.

The old pack of Medimix soap

Few years back, Medimix was launched as a national brand. Then the company revamped the packaging and positioned it as an Ayurvedic product leveraging on the augmented value rather than the core value. The hair cleansing usage of the soap was completely removed from the positioning. The company brilliantly launched the new promotional campaign in line with the preference of the urban consumers for ayurvedic products to get closer to nature. The company also came up with new variants like Medimix Glycerine and sandal considering the preference of the urban population.

The new pack of Medimix soap which clearly positions it as a medicinal soap with the goodness of Ayurveda

Supplying ‘what the other people think is correct’ is what using ‘preference’ is all about. When these preferences get build into a product, it becomes successful.

 

Reinventing the USP January 21, 2011

Filed under: Uncategorized — priyasurendran @ 5:57 pm

In 1960, Rosser Reeves, a highly successful American advertising executive, published one of the most popular book in advertising named ’Reality in Advertising’ .  In this book, he introduced and defined the concept called Unique Selling Propositions or USP for short. In ‘Differentiate or Die’, the author Jack Trout illustrates how the concept of Reeves’ USP has changed over the years from tangible differences between products to reinventing themselves every day by the corporates. From products, the focus of USP has shifted to creating new usage experiences as done by Gillette by reinventing shaving itself through their twin blade, shock absorbent razors.

Rural market offers even more potentials for USP generation. Till some years back the companies were carried away by the fact that pricing is the only unique selling proposition for the rural masses. Many companies initially made a whopping profit from the bottom of the pyramid by introducing scaled down low cost versions of the urban products. But with rising income levels and education, price no longer remains as a USP in rural India for the cos. Hence the MNCs are coming up with new products which give better benefits in the form of experience rather than price. For example, Hindustan Lever introduced “Brooke Bond Sehatmand” a tea with vitamins whose launch comes in the face of critical challenges that India faces, in eradicating micronutrient deficiency. Using a breakthrough coating technology, this new product of HUL guarantees vitamins in each cup that would help combat micro nutrient deficiency and in turn provide affordable option to better health for families.  At the same time compliance is also easy since they fit into daily lifestyles of communities in rural India.

Nokia who once became the biggest player in the rural mobile segment owing to its affordable mobiles no has started facing troubles due to the increased competition from the local players. Now the company has devised new strategies to improve their share by giving better customer support and not just low cost mobiles. This strategy has helped the mobile major to maintain dominance in the rural market in India and stay ahead of its competitors. All these examples cement the fact that even in rural market, the USP has shifted from pricing to usage experiences.

 

 

Rural Market:An Overview January 14, 2011

Filed under: Uncategorized — priyasurendran @ 7:05 am

Before we start on with rural marketing and the application of the concepts of management on rural market, it is quintessential that we understand the definitions of what a ‘Rural Market’ in India is. This has often been a platform for heated debate since the definition of rural by government and the corporates vary.

Typically, from an Indian census point of view, rural has been defined with a ‘deprivation’ orientation, rural being a landmass without access to continuous electricity, water, the stock market. But the corporaes define it as ‘Rural India comprises all places that are not urban.’ As per the Indian census, the urban India is (a) All statutory places with a municipality, corporation, cantonment board or notified town area committee, etc. (b) A place satisfying the following three criteria simultaneously:

i) a minimum population of 5,000;

ii) at least 75 per cent of male working population engaged in non-agricultural pursuits; and

iii) a density of population of at least 400 per sq. km. (1,000 per sq. mile).

Initially the companies had a step child approach to a rural market with them launching only scaled down low cost version of products compared to the respective urban counterparts. But the saturation of the urban markets with competition has made the cos to sit up and think about the rural markets which has 72.2% of the total population as well contributing 43% of the total national income.

With the increase in competition, the importance for differentiating in the market gains significance. This hold good for a rural market as well. This blog tries to apply the principles stated in the book ‘Differentiate or Die‘ by Jack Trout as a strategy to survive the killer competition in the market with special reference to the rural market.