Branding losing its relevance?

Throughout the second half of the last century, Branding was used as the product differentiator. Most of the products were manufactured in house, with very limited outsourcing. This ensured that the Firms could tweak the product features to match the Brand perception. Thus Merc was known for its style and engineering perfection, Nikon for its unmatched quality of the Camera, and Sony for its vivid picture quality.

But with increase in competition leading to thinner margins, Organizations took the easier route of outsourcing to keep the price tag competitive. This resulted in many leading brands becoming marketing organizations rather than manufacturing organizations. The products were manufactured in remote China or Vietnam or Korea to leverage the cost advantage. The joke is that a IBM Laptop is made 100% in China and the only thing American about IBM is its brand name on the Laptop. Well! even that embedded logo is made in China!! This is true of all the other Computer manufacturers and products manufactured by organizations in other sectors.

The brands started losing control over their product features and process advantage, leading to them being forced to market the product based on Product features than on Brand equity, built over a period of time. Thus we have a scenario where consumers buy a laptop based on the product features like RAM, HDD capacity, Processor, Screen Resolution etc than on whether it is manufactured by HP, IBM, Compaq or Dell. Their refrain was "Well, it doesnt make any difference what the brand is, as all of them are manufactured by the Chinese".

The same is true of the Automobile industry. Toyota lost its competitive advantage of producing cars of quality, when they failed to control the quality at their outsourcing units forcing them to recall millions of vehicles and plunging the company into deep trouble. Many of the leading car manufacturers have a history of vehicle recall to replace defective parts, all of them outsourced.

The move to outsource non critical component manufacturing has started to bite the leading brands, as consumers are quite unwilling to pay a premium for a differentiation that actually do not exist.

So we are back to the pre branding era, where all products were commodities.

Product Strategy for the second decade of the millenium

Prior to the Japanese flooding the market with electronic goods in the 1970's and 1980's, consumers world over looked for durability and value for money while making purchases, of electronic goods in particular and other products in general. The marketing mantra was to provide technically durable products that were durable, relatively expensive, once or twice in a life time purchase (a radio was expected to last a life time, ditto a watch. Father bought a HMT watch for my brother, who is 8 years elder to me, in 1971 on his passing the 10th standard. This was passed down to me, and I wore it till mid 1990's!!!) and more important repairable. It was sufficient for the product to perform adequately.

The Japanese changed all these. It was also partly due to technological advances in the field of electronics and later on digitalization. Masters in the art of miniaturizing, the Japanese went ahead with the concept of focusing on high performance, quality, and less and less on durability. This had its roots in their culture and the terrain they live in, which is seismologically extremely unstable. The Japanese never wants anything to last a life time, for they are not sure when the next earth quake will strike. What they want is to enjoy high performance while it lasts, before the next quake hits them. But their emphasis on quality and performance meant that the products were technologically and performance wise far superior to those of the Western Competitors', albeit expensive. The product life cycles were also much shorter. More importantly, they were more keen on the customer replacing the product with a new one, than getting it repaired in the event of a malfunction. But these products were at least repairable.  Most products lasted 3-4 years at best. Thus, the products did not just have the high initial cost, but also had high usage per day cost, for it depreciated very fast. This was not a sustainable model, as the Japanese found out soon.

While Japanese focused on the differentiation strategy, the Chinese quickly found the achilles heel of the Japanese - the customers seething dissatisfaction as to having to pay a high usage per day cost. Using their competitive advantage of cheap labour and government controlled capital, the Chinese flooded the market with products that does work adequately, but is ridiculously cheap. They took away the concept of repair and mainternance totally out of the equation, and encouraged customers to go in for newer, cheaper, not necessarily better products every 6 months or one year, and discard it once it is used. Customer's fed up with having to pay a high price for the Japanese products, found the low usage cost per day concept very appealing, which led to high levels of initial purchase. But what about repeat purchase? This is one area which the Chinese ignored, much to their peril. Most customers of the Chinese products were one time customers, who never returned to make the repurchase, forcing them to seek out new customers as a strategy, which is very expensive as compared to retention of customers. Add to this the cost of customer dissatisfaction, and we are reaching an era of customers totally shunning chinese products. And as Nirma found out in their battle with Surf, once  you get the tag of a low priced, low quality product, it is extremely difficult to change the perception even if you come out with a high quality version. Chinese will struggle in this decade to maintain their market share, as customers will turn their face away from them.

So what is the alternative? It could be a combination of good quality, reasonable price, slightly longer product life cycle and less rapid technological changes. I suspect customers are getting tired of adjustments they have to make with rapid technological changes that lead to newer gadgets at very frequent intervals. What they would like is for a relatively frill-less product, sans unwanted features (most gadgets have features which one never uses! just go to the menu of your mobile, list down all the features you see there in a piece of paper, tick all those you have used during the past one month. I just did, and the % was less than 10!!!) which will bring the cost down, but retains the quality of the main features. Better,efficient functioning of the core functions at affordable prices with the manufacturer taking a reasonable margin will be the way forward. The add ons can be made optional and at a price.

Still skeptical? Type http://www.google.com/ and see what I mean. The home page is totally uncluttered, and it does its core function - searching - very very efficiently. Ditto with gmail or gtalk or for that matter most google products. And no one can deny that Google is very successful, both technically and commercially!

Predictably unpredictable

Many things we foresee in market place dont happen when we think it ought to.

I had predicted to my Cable TV operator in India, way back in 1995, that Cable TV (by which I dont mean satellite TV, but the business model in which a Cable operator supplies to multiple houses) will be a thing of the past by the millineum - to be replaced by Direct To Home television (DTH). The exhorbitant cost of owning a DTH delayed its oncoming by a decade. With Cable operators getting greedy and increasing the monthly rates and with DTH prices coming down drastically, the demise I predicted is finally about to happen.

One of my students did a project on M-Commerce in 2004. We were gung-ho about the prospects of mobile commerce then and predicted that it will revolutionize the way we purchase things. We had predicted then that in a few years we will be ordering through mobile, making payments through it and all we have to do is collect the product. We had also envisaged mobile as a E-wallet, replacing the credit cards. But six years on there is no sign of M-Commerce picking up and the product is nearly dead.

Segway, the personal transporter, was another product that was expected to alter the mobility landscape. Technical and reliability problems, and a high price tag killed the product.

Electric cars replacing Petrol driven vehicles have been talked about since I was doing my MBA. Quarter of a century later, we are still only talking about it, and nothing else.

Video telephony is another concept that was expected to make a significant breakthrough during the last decade. We are still quite far away from making that a commodity product.

Teacher less global education through web - still a long way off. The good old teacher, with all his/her limitations giving lecture is still quite popular. Concepts like E-tuition all died a quiet death after a brief flaring.

Demise of Radio was another prediction that has gone awry. The FM revolution has revived Radio like nothing else. The popularity of local FM stations in rural india needs to be seen to be believed.

Only thing predictable about Market place is that it is unpredictable.

Indian market as waterloo

Indian market has been the waterloo for many of the MNC's who tried to cash in on the post reform boom. Most of them misread the market potential and the cultural under currents. The myth of 1.1 billion indians eager to swallow 'phirangi' products and the burgeoning middle class with purportedly unlimited purchasing power and pent up demand made these companies enter the market without adequate research. This resulted in them having to incur losses and reorient after licking their wounds. Let us look at some classic cases.

Citibank targetted only the high income earners as an entry strategy, but to their horror realized that they had to take the mass banking route if they were to succeed in India.

Coca Cola reentered the soft drinks market more than 2 years after Pepsi. Instead of setting up their own bottlers and network, Coca Cola acquired Parle Soft Drinks which was holding nearly 60% of the market share through Thumbs up, Limca and Gold Spot brands. The idea was to phase out the Parle brands through cannibalizing them with Coca cola brands. But they were in for a surprise. Customers refused to swichover from Thumbs up to Coke. And for a soft drinks manufacturer, Cola is the segment to win or lose. It took considerable effort, time and money for Coke to overtake its own brank Thumbs up. A case of being too clever by half.

Whirlpool did not try to understand the indian middle class psyche and launched their bigger capacity refridgerators with much fanfare, only to see to their horror that Indians were not keen on buying anything that had a higher capacity than 165 Litres.

Many US brands mistakenly thought that the American tastes were universal. Domino's pizza found this out the hard way. They started replicating American offerings to the Indian market and that too only in metros. When the sales refused to pick up, they were forced to localize the offerings through 'panneer' and 'chettinadu chicken' toppings. The moral of the story - it is tough to change the taste buds that were developed over a period of few centuries.

Mercedes Benz, in 1995 set up a plant in India to manufacture E class sedan. The target market was the upper upper class. But the market just refused to pay a premium for what they considered was an outdated model. In a couple of years the plant was running at about 10% of the capacity and were looking at export market to break even.

Business loss due to poor service

Remember my earlier post on Indians not bothering to do the last 5%. Now here is a survey that shows the impact of what I blogged,

Business in India lose up to Rs11,640 crore in revenue every year due to poor service as customers abandon transactions or end relationships when companies do not meet their expectations, a survey says. "India loses Rs11,640 crore ($2.46 billion) due to poor customer service every year in revenue due to inability to meet customer expectations," a survey conducted by Greenfield Online said.India pays a higher cost of poor customer service compared to other countries. Businesses in India suffer significant losses every year due to poor customer service over the web, in the contact centre, or via mobile devices as consumers abandon transactions or end relationships when companies do not meet their expectations. The bigggest complaint was about trying to reach through to the call centre. 56% consumers admitted to having ended a relationship due to poor customer service, while 50% had an experience that made them more likely to do so in the past year. Indian customers felt annoyed by the inability to reach a human agent to answer a query or agents being poorly trained. Having to repeat information every time their call was forwarded to another department, long wait times to talk to a customer service executive and working with agents who were not authorised to make decisions also annoyed them the most. For transactions abandoned due to poor customer service, an identical number (62%) turned into business for a competitor, and 38% of transactions were completely abandoned and lost to all companies.

I dread to think what the survey will show if conducted in Middle East

Floating Triveni!!

How is this for innovation?

Kerala recently saw the launch of a floating super market on the Vembanad Lake—to cater to the needs of those living on the Kuttanad backwaters in south Kerala's Alappuzha district. The state-owned, red-and-white-painted supermarket, called the Floating Triveni, has stationery, toiletries and provisions stacked on its shelves. Open from 8 am to 6 pm, it is manned by a staff of eight people

The floating supermarket stops by various boat jetties in the area (where transport by boat is a norm than an exception) and has been widely accepted by the consumers and caters to nearly a million people in Kuttanad. The mall will soon deliver home appliances like washing machines for those who place an order. It will also have a computer room, for children to play computer games. Customers have been given a mobile number, using which they can contact Triveni and book items in advance. The supermarket will announce its monthly schedule in advance to enable customers to be ready when it eventually visits the backwater near their houses.

The Kerala State Cooperative Consumers Federation Ltd (Consumerfed), the apex body of consumer cooperatives, which owns the Rs 50-lakh mall, sells at less than market prices. The Floating Triveni offers an additional discount of 2% to promote sales. Scheduled castes and tribal customers can avail of a further 3% discount. Twenty people can come on board to do business at a time. At the click of a button, the inventory and sales positions are accessible to Consumerfed officials.

Considering the novelty of the backwater-cruising, island-hopping supermarket, Consumerfed has written to the Guinness Book of World Records, seeking its imprimatur that would float Triveni before the world's eyes. – (Source & Pictures – Courtesy Outlook Magazine)

I remember something similar to it being tried out by the Co-operative outlet in Coimbatore, Chinthamani, in early 1990's. Of course, Coimbatore being a land locked ares, Chinthamani couldn't use boats, but rather remodelled a Bus and stacked it with provisions. The bus used to follow a specific timetable and be at different housing colonies once a week at a specified time slot. Chinthamani those days had a great reputation for quality and affordable pricing. I have no idea whether this system exists even now, I guess not.

The bus concept can be a great one to do some rural marketing for our Retail marketers.

SONY WALKMAN Saga

SONY WALKMAN is 30 years old. This was a path breaking product that brought the concept of mobile music to the market place. Akio Morita, the then CEO of SONY, in his book 'Made in Japan' tells us how the project was pursued single mindedly despite every one scoffing at the idea of a miniature, portable music system. This is also a classic example for explaining the Product Life Cycle. Music lovers of this genre who use iPod and MP3's may recoil at horror having to use the bulkier Walkman, but to us owning a Walkman when we were in the college was the ultimate. There is nice report on Walkman which I read recently. It is worth excerpting salient parts of it for your sake. It is interesting to note the way products were designed those days, the slow market penetration, the reason for branding, how technological changes have led to obsolescence and a how a company's fortunes rose and fell with the success of a single product.

Thirty years ago Sony launched the Walkman, a gadget which revolutionised the way people around the world listened to music but has since been overtaken by an icon of the digital age – the iPod.

The July 1, 1979 rollout of the portable cassette player helped transform the Japanese company into a global electronics powerhouse. Sony sold 30,000 Walkmans in the first two months after its launch, and 50 million within a decade. Three decades on, however, Sony is struggling against rivals such as Apple, which has enjoyed immense success with its iPod music player. Times have changed since Sony engineer Nobutoshi Kihara sketched out designs for the Walkman by hand. "Back in my days, we had to draw product designs on paper," Kihara told in an interview in 2006 after his retirement. "I would close my eyes and imagine our products. I would imagine joggers with Walkmans to see how the hinges should move or how the products fit into the lives of the users." Sony co-founder Masaru Ibuka came up with the idea for the gadget on one of his overseas trips, during which he used to listen to music on existing tape recorders that were too heavy to be considered truly portable. The initial reaction to the Walkman was poor. Many retailers thought that a cassette player without a recording mechanism had little chance of success. That changed, and today total sales of the Walkman have reached 385 million around the world, including newer digital models that use flash memory.

Sony says it chose the name "Walkman" partly because of the popularity of Superman at the time and the fact it was based on an existing audio recorder called the "Pressman." It initially planned to call the machine "Soundabout" in the United States and "Stowaway" in Britain, but changed its mind after hearing that children in Europe were already asking their parents for a "Walkman". The name stuck, and in 1986 it was included in the Oxford English Dictionary. For people who have grown up with iPods, Sony's original gadget can leave something to be desired. They include 13-year-old Scott Campbell who was asked by the BBC to swap his Apple gadget for a vintage Walkman for a week. His friends, he said, "couldn't imagine their parents using this monstrous box." It also took him three days "to figure out that there was another side to the tape." "I mistook the metal/normal switch on the Walkman for a genre-specific equaliser, but later I discovered that it was in fact used to switch between two different types of cassette," he added. Sony has tried to repackage the Walkman in recent years with new versions, including one that looked like a jelly bean, with some success. It sold seven million Walkmans in the year to March, up from 5.8 million the previous business year, a company spokeswoman said. But it has failed to pose a serious challenge to Apple, which sold 100 million iPods in less than six years after its launch in 2001, making it the fastest selling music player in history. Sales have since topped 200 million. Sony is hoping its new touch-screen X-series Walkman will revive sales of the gadget. For many observers, the success of the iPod illustrates the way Sony has lost its golden touch in recent years, failing fully to exploit the opportunities of the Internet and the digital age. As well as losing its lead in portable music players, Sony's PlayStation 3 has been trumped by Nintendo's Wii as the top-selling home video game console. Sony announced in May its first annual loss in 14 years and warned it would stay in the red this year. Chief executive Howard Stringer has vowed to meld the company's strength in electronics with its games and movies. He is also slashing 16,000 jobs and axing about 10 percent of Sony's manufacturing plants.

Marketing bloomers

I have come across funny advertisements at local level in India. I have a good collection and shall post it one of these days.



But one would expect top companies, especially trans-naitonals, who spent millions of Rupees on Marketing Research not to goof up!

Cadburys created a majore gaffe in 2002. It compared a brand of chocolate to the disputed territory of Kashmir and describing both as "too good to share".The blunder occurred in an advertisement to promote Cadbury's Temptations brand on India's independence day. The newspaper campaign featured a map of India showing the war-torn area of Jammu and Kashmir shaded over. Written in bold across the shaded area was the message "Too good to share" - the advertising slogan for Cadbury's Temptations brand of chocolates. "I'm good. I'm tempting. I'm too good to share. What am I? Cadbury's Temptations or Kashmir?" ran the catchline. There was a big hue and cry with readers blasting Cadbury for insensitivity. Cadbury's had to do a hasty retreat and apologize. Needless to say, the ad was pulled out.

McDonald's came up with a brochure that showed turbaned Indians, purportedly the Sikhs, in its promotional literature. But unfortunately, someone had taken the picture from National Geographic and did not notice that the original picture had Pakistani men.

Organized Retail in India -RIP?

FDI in retail was considered to be a landmark change in Indian market structure. The idea was that creating an organized retail infrastructure, by allowing FDI as well as huge Indian Corporate Investments, will result in a win-win-win situation for the Customers, Retailers and the Producers. The trickle down effect of this was expected to benefit the agricultural sector in the long run, for the retailers would have locked up agricultural produce well in advance.

We saw retail chains coming up in many parts of India. True, they were no patch for what exists overseas. Space limitations, cramped layouts, limited choice, dubious quality of products and hazardous billing procedure turned away the consumers. Our organized retail forgot the cardinal principle of Super market buying. Shopping has to be an experience in a Super Market and not an ordeal, as is the case in many Indian Super Markets.

The Super Market concept thrives on high volumes. It also meant that in a Country like India, so used to the mom and pop shops, there has to be a Consumer Behaviour Change for the concept to become successful. The volume has to come from the middle class, who wont mind buying for Rs 200 per day, for a month but would shrink at spending Rs 5000 for the same goods once in a month, the latter the bread and butter of Supermarkets. Any behavioural change has to be over a minimum 5-7 years span. The super market chains that started initially just did not have the staying power. The overheads were high, mainly electricity charges and rent, making the concept unsustainable. Added to this is the fact that the business model that exists today is a low asset based one. The space is rented, the inventory in the super markets not paid for in advance. The finanical institutions who funded the project initially are fighting shy of this sector once it became clear that the model is not a profit making one and the risk for them is high in view of the lack of asset coverage. Big Bazar started closing shops and now Subhiksha, one of the pioneers and better run super market chains enjoying good brand equity, is on the verge of liquidation after incurring a loss of Rs 800 crores. Even Reliance has not been doing well. The root cause lies in that these so called Super Markets are more like mini markets. The future lies in 2 or at the most 3 major hyper markets per major town. But considering the time it takes to move from one end of a city to another (even in C class cities) due to heavy traffic, I am not sure even this will be a good idea.

So is it back to the neighbourhood shop? Only time will tell.

Pay for using the Loo in an Aircraft

Marketing has been a boon to consumers. It has given them more choices, better quality at lesser prices. However, with hardly any real new products coming up, most of the innovations have been not at the Core Product level, but at the Augmented Product level. Add ons are made to the existing product which gives additional features to the customers. For example, the mobile phone started as a way to make a voice call while on the move. As the product evolved, companies started augmenting the product by adding functional capabilities - SMS, MMS, Camera, Video Camera, Blue Tooth, Touch Screen, Organizer ........................ the list is endless.

The is fine. But the trouble is each value addition adds to the ultimate cost. The customer in the end pays much more than what he wants to pay. Most of the customers dont use majority of the add on functions, but have to pay for it neverthless. A basic phone costs KD 10 but an augmented phone costs KD 150. In effect customers pay KD 140 for features they dont use.

Ditto with Airlines. They have made so much value additions that the airfares have become exhorbitant. The core product is still flying people from one airport to another. Now you have as add ons - 'Free' Airport pick up and drop, Executive lounges, 45 kg baggage, 4 star food (most airlines compete with each other to find out how they can make the food lousier), in flight entertainment, pretty (and not so pretty) air hostesses and stewards (who rarely comes to your aid when you need them, and whose only job appears to be checking whether you have worn the seat belt).........................................................

Same is the story with 5 star hotels, high end restaurants, motor cars, computers, televisions (why the hell do we need Picture in Picture TVs is something I cannot understand) and so on.

This has resulted in many products being priced out of the market, leading to smart companies reverting back to the core product at must lesser prices to attract the customers. Thus we have the return of the Budget hotels, stripped down version of the cars, ASUS EEE PC and of course the low cost Airline.

I was watching an interview with the maverick CEO of Ryan Air, Michael O'Leary yesterday on BBC TV. He was looking at the Global Financial Crisis as an opportunity for his Airline to beat the high priced conventional Airlines like BA, Lufthansa and Air France. He feels people have become cost conscious, wants to reduce waste (meaning they dont want to pay for things that they dont use anyway) and would hence prefer good low cost carriers over expensive ones. Ryan Air is going great guns. Michael was telling that as a rule passengers should have the option of choosing what additonal service they want and then pay for it. Hence in his ideal world, no check in counters, no seat choices, no food, no check in baggage, no air hostesses and no loo. The aircraft will have a loo but you have to pay 1 pound to use it every single time. Though this sounded strange to me, I was taken in by his logic that we anyway have use and pay toilets all over the world, then why not in Aircraft too. This way, customers can choose and pay for the services they want. Makes sense.

You can watch his interview in this link provided you have a reasonably high speed connection
http://news.bbc.co.uk/2/hi/business/7914193.stm

Product Disasters

Even great Companies, despite their marketing savyy and research capabilities make himalayan blunders,

Coca Cola came up with New Coke. The idea was to position it as a replacement for what they called the 'old coke' that was in existence for decades. Coca Cola launched it as only they could but had to beat a hasty retreat when its loyal customers revolted and virtually demanded the old product back. Having lost millions, with tail firmly tucked between their legs, Coca Cola bit the bullet, withdrew New Coke and continued with Old Coke. The moral of the story is that 'Dont tinker with a hugely successful product if you can help it'.

The product that is synonumous with marketing failure is the Edsel Car from Ford. Launched in 1958, the Car bombed in the market as none before and none after. Reasons are aplenty. Poor designing, poor branding, poor quality, wrong product at the wrong time, poor styling, misreading the market sentiments - you name the problem and you can stick it to Edsel. How an automobile giant like Ford ever conceived a marketing disaster like Edsel is a mystery still. If you want to learn by looking at how things should not be done, then read the Case history of Ford Edsel.

Every marketer tries to differentiate. But too much of differentiation can lead you into trouble. Polaroid Instant Camera and Instant film is a case in point. Created as a highly differentiated product as compared to comparative film based camera that needs a visit to the studio to get the print, Polaroid came up with the instant film that just needs exposure to sunlight for the picture to be clear. The problem was 1) the Camera was very bulky 2) There was no consistency in the quality of the picture 3) the Picture clarity was hopess and 4) The exposed films deteriorated in quality over a period of time. Of course, there was this small issue of not being able to make multiple prints. The whole package was NOT what the consumer wanted. Anyway technological advances in the Digital photography field killed it once for all.

Buy for more and sell for less

There was a famous merchant known for his ethics and riches. He had a son helping him in his business and a grand son. Suddenly the son meets his end and the old man is in a dilemma – whether to burden his young grandson with business or carry on with the business himself for some more time allowing the young boy to enjoy his child hood till he has grown out of it. He decides on the later course , but as fate would have it ,suddenly took ill and is in the last stage of his life.

He calls his grand son and tells him,

“ I don’t have the time to train you. Let me give our success formula in short for you……….buy for more ……and sell for less………”

So saying , he breathes his last.

The boy truly takes the advice to heart and implements it to find him-self running into losses very soon. He can’t believe it or understand . So he decides to consult an old friend of his grandpa .

The old man smiled on hearing the story and told the boy “ you combined the 2 split sentences and ran into losses. Split them….buy good quality goods paying a little more than your competitors…thereby , you will have committed suppliers ,quality and availability……same way…..sell good quality goods at a price little less than your competitors …..there by you will have an assured market and profit too due to higher TURNOVER….that is the key.

The boy understood and prospered earning as good a reputation as his ancestors.

The above is a story that I read sometime back.

Come to think of it. Is it not what the big retail chains are doing. This also explains the importance of economies of scale. Stories are a great way of conveying a theory.

Lessons from the past

Some lessons from Marketing Disasters,

Starbucks do not rely on traditional television and print ads for their marketing. Instead, they gain mindshare by having their coffee shops every street corner. They also fill the shelves of stores with their bottled drinks and ground coffee. Beyond that, they allowed licensed stores to be opened in seemingly every grocery store, office building, and airport. Great idea, you would say as it gives lot of exposure to the brand. But the result is not so good. The Starbucks brand has become watered down to the point that it doesn’t represent quality coffee and great customer service anymore. Also, the very purpose for which it was established, to provide a comfortable place for people to sit and discuss business, was defeated. In short, Starbucks became fat and greedy, and they bit off more than they could chew.

Moral: Allow your brand to have an organic growth. Do not accelarate the pace of growth artificially. Then, your brand will become watered down, and eventually, mismatch between expectations and delivery will come to the surface.

All of you know about Titanic. The Titanic was a massive ship that was touted as being unsinkable. The boat captured the attention of the public, and it was to be the most luxurious vessel ever to grace the sea. Then, April 14, 1912 happened. During the Titanic’s maiden voyage, the boat struck an iceberg and sank a few hours later. No one could believe that after such hype, the vessel was destroyed on its first journey. One of the main reason for the disaster was the overconfidence of the Crew, who believed the marketing hype, and did not take precautions when Ice bergs were in the vicinity. You can say that Titanic was a victim of its own vanity.

Moral: Don’t make claims you can’t live up to. Only make guarantees if you plan on fulfilling them.

Brand Building

There is considerable advantage in Brand Building. In fact I have emphasised that Brand Building and developing an appropriate Organization Culture as the two Critical Success Factors for any organization, and more so for a start up company.

Contrary to popular belief, Brands are not developed through advertising, but through brand experience. Everytime a customer comes in contact with a brand, there is a learning for him. It moulds his attitude towards the brand.

An leading organization in Kuwait changed the corporate colours to Red a few years back and claimed that it denotes all customers getting red carpet welcome. But the experience is different. Every single time a customer walks into their offices or calls them up for some service, the experience is so painful that the customer has to be thick skinned to ever use the brand again. Instead of the red carpet welcome the colour was supposed to denote, the customer now associates the colour with a danger signal warning him not to go anywhere near the brand.

Brand building is a conscious effort. Apart from consistency in product/service offerings, one should also carefully plan to improve the positive disposition of the target market towards the brand.

A decade ago, when I was an entrepreneur running a NIIT education centre in Thanjavur, we used to spend money on developing and augmenting the brand image. Our target market was essentially students (and their parents) who has completed 12th standard and missed out on an Engineering/Medical Seat. Every year, Engineering exams were held in 3 colleges which are situated in the outskirts of the town and in the month of May/June, when the temparatures are in the high 40's. Exams are held in two sessions for 2 days, morning and afternoon with a 2 hour gap n between. Parents drop their children in the morning, wait under trees so that they can give food in the afternoon and then pick the kids up in the evening.

We set up a temporary stall in front of these colleges and distributed cool Water packets (250 ml in Polyethelene pouches) free of cost. Trust me, if we had charged a 100% premium, we would have still sold off everything in no time and still got the goodwill and a tidy profit. But we gave it away free of cost. The whole excercise cost us nearly Rs 10,000 and the logistics involved in getting the water packets to the stalls were phenomenal. But the goodwill we got was unbeleivable. We came across as good people, not money minded but genuinely understanding and caring for the students. The parents were extremely grateful to us for arranging water free of cost, that too mineral water in sealed packets that posed no health hazards to their children.

Something to remember by.......................................

10 Principles of Good Design - Braun

Have you not had the feeling of instantly liking something the moment you have seen the product? This has more to do with good designing skills than anything else.

Braun is world famous for some of the finest products. Their 10 principles on designing listed below can be used as a guideline whenever you design anything in life,

Good design is innovative
Good design enhances the usefulness of a product
Good design is aesthetic
Good design displays the logical structure of a product; its form follows its function
Good design is unobtrusive
Good design is honest
Good design is enduring
Good design is consistent right to the details
Good design is ecologically conscious
Good design is minimal design

Come to think of it. You can use the above principles in anything you do, even writing a nice report.

The Edsel Disaster

Marketing Disasters and the 'Edsel' Model from Ford is synonymous. So why was Edsel such a failure?. When the car was launched, it was supposed to change the way people looked at cars. But in the end it was destined to be doomed. Murphy's law worked overtime. 'Anything can go wrong will' and it did. Wrong concept, poor quality, disastrous marketing, wrong timing - you name it and Edsel had it.

Ford Edsel was supposed to be the 'car of the decade' when launched in 1957.

But half of the models sold proved spectacularly defective. If lucky, one could have got a car with any or all of the following features: doors that wouldn't close, bonnets and boots that wouldn't open, batteries that went flat, hooters that stuck, hubcaps that dropped off, paint that peeled, transmissions that seized up, brakes that failed and push buttons that couldn't be pushed even with three of you trying.

In a stroke of marketing genius, the Edsel, one of the biggest and most lavish cars ever built, coincided with a phase when people increasingly wanted economy cars. 'It was a classic case of the wrong car for the wrong market at the wrong time.'

Unpopular to begin with, the car's popularity declined. One business writer at the time likened the Edsel's sales graph to an extremely dangerous ski-slope. He added that, so far as he knew, there was only one case of an Edsel ever being stolen.

The saddest part was that US Automakers never learned the lessons from the Edsel disasters. They continued to make large, fuel inefficient, poor quality cars throughout 60's and 70's leading to the Auto Industry being taken over by the compact, efficient, sleek small car manufacturers from Japan.

What is that again?

In the era of Globalization, more and more companies create a standard slogan and translate them to the local language when they plan to geographically expand. This can lead to hilarious situations. Read on,

Pepsi's "Come alive with the Pepsi Generation" translated into "Pepsi brings your ancestors back from the grave", in Chinese

An American T-shirt maker in Miami printed shirts for the Spanish market which promoted the Pope's visit. Instead of "I saw the Pope" (el papa), the shirts read "I saw the potato" (la papa).

Scandinavian vacuum manufacturer Electrolux used the following in an American campaign: "Nothing sucks like an Electrolux."

The Coca-Cola name in China was first read as "Ke-kou-ke-la", meaning "Bite the wax tadpole" or "female horse stuffed with wax", depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent "ko-kou-ko-le", translating into "happiness in the mouth."

When Parker Pen marketed a ball-point pen in Mexico, its ads were supposed to have read, "It won't leak in your pocket and embarrass you." Instead, the company thought that the word "embarazar" (to impregnate) meant to embarrass, so the ad read: "It won't leak in your pocket and make you pregnant."

Advertisements not getting you results?

Some reasons why the money you have spent on Advertisement goes down the drain,

Confusing content and trying to convey too much - Successful ads don't try to tell everything the advertiser knows in one ad. The best ads are focused around one or two main ideas.

Too much emphasis on price - Most ads are written as if price were the only variable. Consumers always want a good, fair price but have no way of knowing if they got the best price. Consumers don't respond to ads because of price alone. It is the intrinsic value that they look at.

Unrealistic expectations-Most marketers expect the advertisements to produce instant result. This is unrealistic. Ad is only one the elements of the promotion mix, albeit a powerful one. Do not expect miracles in a time frame that's too short with a budget that's too small. Make sure expectations match up with budget and timing.

Too little frequency, repetition, consistency-Most advertisers stop short because they run out of patience and/or money just at the time when the campaign is about to start working. If you have a good ad, keep using it.

Too much about the product, not enough about the consumer- The most successful ads are about the consumer...why they should buy the product and how they benefit from using the product. Most ads waste too much time and space talking about the product and not enough about the consumer and their needs.

Not memorable. Not meaningful. Not sticky- Consumers can act only on the ads they remember. Most ads we encounter are irrelevant. They don't stand out. The best ads break through the mental filters by talking our language, touching our emotions and creating imagery that resonates with the consumer.

Failure to understand and focus on the consumer- Consumers don't have a lot of patience for ads that talk only about the business or the product. No one's listening. No one cares. Speak to consumers about what they're interested in and they will respond. You need to tell a story through the advertisement - courtesy www

Do you listen enough!!

The pressure on the Front office sales people for getting prospective customers to register for Computer programs was tremendous during June-September every year. The process was as follows, the customer walks in, he is greeted by the Counsellor (essentially a sales person), given a cup of water, his or her details are collected and written down in the enquiry form, he is then asked to take a 30 minutes aptitude test. On completion of the test, the prospective customer is given a brain washing (hard selling) for a good 30 minutes, at the end of which his head is spinning and he enrols. Not the best of methods, but at the height of parallel computer education when competition was at its peak, this worked.

One day at around 11.30 am, a young boy of 19 (our ideal target customer) walked in and addressed my Academic Counsellor

" Madam..........................".

He was never allowed to complete the sentence.

The Counsellor pounced on him and started her practiced routine,

"Good morning, welcome. please have a cup of water, how are you, blah, blah, blah.......................................".

The poor guy was trying to get a word in, but to no avail. Within 5 minutes, he was swept of his feet, she had collected all his details and was thrusting the 30 minutes Aptitude Test on him.

He said, " But Madam........................................"

" No , no...............you don't worry about the test. It is simple and routine. Everyone is reluctant first time", so saying, she led him by the hand and put him on a students chair next room and made him take the test.

Resigned to his fate, the poor guy took the test. On completion, she collected the test booklet, answer sheet, valued it in a flash and sat with it to give her high pressure sales pitch.

The boy by now had become totally quiet and listened to her rambling regarding the benefits of a NIIT computer training program for 30 minutes. When she was about to finish, the students who were in the class till then filed out on completion of the session. One of the current students walked up to the boy who was sitting in front of my Counsellor and asked " What the hell are YOU doing here and you better have a good explanation for taking my motorcycle without permission today morning.And why the hell did you not go to the college today?"

My counsellor asked him, "Do you know him?" thinking that now the deed is closed as she has a good reference.

The student said, "this idiot is my brother" and turning to him scolded him "why are you wasting madams time?"

The poor boy finally finally was able to get a word in "Listen. I came here to leave the bike here and hand over the key to you. I came nearly 90 minutes ago, thought I will leave the key with madam to tell her to handover to you and then go to college. But she did not allow me to say one word and worse I was made to write a test and sit through her counselling"

"But why didn't you tell that you were Saravanan's brother? You could have told me in the first place", accused a flabbergasted Counsellor

"Madam, where did you give me a chance to say one word. You really bulldozed me into doing all these things. I had always envied my brother that he was studying at NIIT while I am struggling in a Government College. Not anymore. God help him!"

With a great effort he got up and walked away, never to come back again anywhere near NIIT, leaving a thoroughly chastened Counsellor behind.

This is not an isolated case, most of the sales people do not allow their customers to talk and are very poor listeners. They are proud of their Verbal Diarrhoea.

Listen to your customers. Remember, you need to do TWICE as much Listening as Talking. Even God wanted you to do that. That is why he has given TWO EARS and only ONE MOUTH

Commodity to Branding - Is it beneficial?

Till mid 1980's, the process of grocery purchase for the house was different. Father, on consultation with the mother, will say out aloud the items and quantity to be purchased and it was my duty to write it down as a list dutifully. The list was then taken to the regular grocery shop and left with him. It takes an hour for him to pack the items we required and keep it ready. Remember, in those days, everything was a commodity and the grocer has to physically weigh the quantity required, then pack it in a newspaper as a bundle (recycling of used paper, very Eco friendly) and tie it with a string. We had to give him some vessels for him to measure out the quantity of oil which came to him in bulk quantity packed in tins. The bread was purchased fresh from the bakery and was packed in paper in front of our eyes. No one even worried about adulteration (though it was prevalent) or quality. But if you buy from a reputed grocery shop, you were assured of the quality. Branding was unheard of. The rice went by the generic name of Ponni boiled, Ponni raw, Matta boiled etc.

First sign that things were changing came in mid 1980's. The salt was sold as a commodity and cost about Rs 0.25 per kg. Tata came out with their iodized salt and advertised heavily. My father, who was always a sucker for any advertised products (he was a marketing man's dream), was on of the early adopters. I, who was just out of MBA, argued vehemently against paying 10 times for an item as common as common salt, for the cost of 1kg of Tata iodised salt was Rs 2.50. By any stretch of imagination or marketing logic, the product should have failed as there was no value addition, other than being iodized whereby preventing Goitre (not that people had a ghost of a chance of getting it), that justified a 10 fold increase. But, Tata being Tata, got away with it. To me, that was the beginning of popularising branding in grocery products. Till then, the branding was aimed at wholesalers and retailers but never towards the end users.

In two decades, the market has undergone a sea change. Today, we hardly see a commodity being sold. The layouts of the grocery shops have changed. Every single item is packaged and branded. The last bastion fell when the Rice, which was always sold as a commodity, started to be branded. I visited a rice merchant during my last visit to my native place and was surprised to see that he did not have a single unbranded rice in his shop, and he has been in existence for 50 years. I saw different brands, in different package sizes and in different colours. Same is true of oil, bread, jagiri, pappad, sugar, salt, pulses. Milk which was a commodity (remember the milkman who came in a cycle or better still the lady who came with a herd of buffaloes and milked in front of your eyes in Hyderabad?) had long since become a brand with the introduction of packet milk.

On looking around, the only things that remains a commodity are Vegetables, Fruits, Coconut and jasmine flower. Even drinking water is branded. How long will these remain a commodity?

This is not a trip down the memory lane. My point is that we need to evaluate whether this change has resulted in a positive fallout for the customer. Are we assured of the quality? I do not frankly think so. Adulteration is still prevalent. Many argue that there is a consistency in quality. That may be true. But in olden days, when we were buying from the same shop, we were assured of the same consistency. Maybe there is an advantage that we can buy the same brand in most parts of the world. However, one need to understand that packaging and branding has pushed the prices up considerably. Are we getting the value for the additional money paid?

And of course, my old grouse remains. Advent of supermarkets have ensured that we do additional work of picking, carrying and billing which was done earlier by the sales boy. This cost needs to be incorporated. And, finally, there was a personal relationship between the grocer and our family. We used to get good tips on products, their quality and price. There was a transfer of knowledge. All these are gone forever.

Do I have regrets? Maybe. But life moves on and I am not one to carry baggage from the past. Still it pays to critically evaluate the benefits of change