Tuesday, January 11, 2011
Wednesday, December 29, 2010
Marketing & Life-cycle of Hi-Tech Products
There are two versions of the technology adoption lifecycle model. The original version (introduced in 1957 at Iowa State College) describes the market acceptance of new products in terms of innovators, early adopters, early majority, late majority, and laggards. The process of adoption over time is illustrated as a classic normal distribution or "bell curve."
The second version is an adaptation of the original that includes a gap in the bell curve, between early adopters and the early majority. This essentially splits the adoption process into three distinct phases, an early market and a mainstream market, separated by a period of time called the valley of death.
Both versions of the technology adoption lifecycle are useful tools for understanding the way markets unfold and mature. However the second (valley of death) version typically applies to discontinuous innovations, meaning the product forces the user to change behavior.
This is an area of great confusion because not all high-tech products are discontinuous, in which case the original technology adoption lifecycle applies more than its successor.
Another misinterpretation occurs when marketing folks refer to a market as characterized by "all late adopters." Because both technology adoption models are expressed in terms of a standard bell curve, it means statistically, a random sample of any given market or population must contain: 2.5% innovators, 13.5% early adopters, 33.4% early majority, 33.4% late majority, and 16.0% laggards. So even if an industry is conservative by nature, there will always be a sequence of adoption by different types of buyers.
In either case, the technology adoption model is like Chinese food--you'll be hungry for more guidance in a very short period of time.
The second version is an adaptation of the original that includes a gap in the bell curve, between early adopters and the early majority. This essentially splits the adoption process into three distinct phases, an early market and a mainstream market, separated by a period of time called the valley of death.
Both versions of the technology adoption lifecycle are useful tools for understanding the way markets unfold and mature. However the second (valley of death) version typically applies to discontinuous innovations, meaning the product forces the user to change behavior.
This is an area of great confusion because not all high-tech products are discontinuous, in which case the original technology adoption lifecycle applies more than its successor.
Another misinterpretation occurs when marketing folks refer to a market as characterized by "all late adopters." Because both technology adoption models are expressed in terms of a standard bell curve, it means statistically, a random sample of any given market or population must contain: 2.5% innovators, 13.5% early adopters, 33.4% early majority, 33.4% late majority, and 16.0% laggards. So even if an industry is conservative by nature, there will always be a sequence of adoption by different types of buyers.
In either case, the technology adoption model is like Chinese food--you'll be hungry for more guidance in a very short period of time.
Tuesday, December 28, 2010
Time to help each other....
Please check your mails and contribute:
https://spreadsheets.google.com/ccc?key=tTGebFHBQuVbGRXasfkslGw&hl=en&pli=1#gid=0
https://spreadsheets.google.com/ccc?key=tTGebFHBQuVbGRXasfkslGw&hl=en&pli=1#gid=0
Monday, December 27, 2010
Marketting mantras
The Value of Face-to-Face Marketing in a Virtual Age
An MPI survey found 40 percent of prospects converted to new customers through face-to-face meetings.
By Rob Murphy, Chief Marketing Officer, MC2
There are specific benefits to both face-to-face marketing and virtual communication. Face-to-face interaction will help form the strong bonds that lead to long-lasting business relationships, while virtual communication will keep dialogue going with prospects and customers fresh and lively year-round.
The popularity of communicating virtually—whether through e-mail, instant messaging, LinkedIn, Twitter, or other social media channels—has had a significant impact on the speed at which information can be obtained.
Making the Case for Face-to-Face
Whether considering a trade show, private event, or a mobile tour, face-to-face interactions provide some significant business benefits.
At its core, face-to-face engagement creates a personal connection and builds trust between a company and its target audience. A warm handshake, engaging conversation and getting to know customers and prospects on an individual level can play an important role in forming stronger, more meaningful and profitable business relationships.
The Virtues of Virtual
With all that being said, there is still a place in a company’s sales and marketing strategy for virtual interaction. The secret lies in knowing when tactics such as Webinars, virtual events, and social networking have the most value. Disseminating data, maintaining existing relationships, and connecting a global audience, even at the last minute, are just a few of the strategic ways virtual communication can be leveraged.
Smart Marketers Choose Both
Now that you’re sold on the benefits of both face-to-face and virtual strategies, here’s the good news: You don’t have to exclusively use one over the other. Savvy marketers are building integrated communications plans that marry the benefits of both approaches.
Pre-Show
Pre-show marketing plays an essential role in the success of any trade show program as it helps drive booth traffic and generate quality leads. Virtual communication is a natural fit here, as it lets companies connect with existing customers while also exposing them to prospective customers in a cost-effective manner. For example:
• Promote the event on your Website and in online advertising.
• Use direct e-mail to alert customers and prospects about your presence at a show and set appointments in advance.
• Seek out forums and groups on LinkedIn and participate in the discussion about the show and industry in general. Twitter offers similar opportunities. Be sure to use relevant hashtags so your tweets become part of the thread.
On-Site
While most communication at trade shows will be of the face-to-face variety, there are some interactive tools that can be leveraged to extend the experience virtually. For example:
• Share news with attendees—and those who couldn’t be there—using Twitter, Facebook, LinkedIn, and other social media.
• Publish blog posts each night to recap the day’s events and share interesting observations from the show floor.
• Stream a press conference that will announce important news on your Website.
Post-Show
Virtual communication tools are ideal for all post-event follow-up. They also provide an opportunity to keep customers and prospects engaged long after the show doors have closed.
• Add show photos to your Website or Flickr account, and don’t forget to tag.
• Post a virtual demonstration of new products launched at the show on a special page of your Website. Share the URL with customers and prospects you weren’t able to connect with on-site.
• Secure the final attendee database from show management and use direct e-mail to reach qualified prospects you did not meet at the show.
The Last Word
Clearly, there are specific benefits to both face-to-face marketing and virtual communication. Face-to-face interaction will help form the strong bonds that lead to long-lasting business relationships, while virtual communication will keep dialogue going with prospects and customers fresh and lively year-round.
Before embarking on any marketing program, take the time to carefully evaluate underlying business objectives, outline clear goals and metrics, and proceed with the strategy that will help you get the job done. We bet it will involve some quality face time, along with digital communication.
An MPI survey found 40 percent of prospects converted to new customers through face-to-face meetings.
By Rob Murphy, Chief Marketing Officer, MC2
There are specific benefits to both face-to-face marketing and virtual communication. Face-to-face interaction will help form the strong bonds that lead to long-lasting business relationships, while virtual communication will keep dialogue going with prospects and customers fresh and lively year-round.
The popularity of communicating virtually—whether through e-mail, instant messaging, LinkedIn, Twitter, or other social media channels—has had a significant impact on the speed at which information can be obtained.
Making the Case for Face-to-Face
Whether considering a trade show, private event, or a mobile tour, face-to-face interactions provide some significant business benefits.
At its core, face-to-face engagement creates a personal connection and builds trust between a company and its target audience. A warm handshake, engaging conversation and getting to know customers and prospects on an individual level can play an important role in forming stronger, more meaningful and profitable business relationships.
The Virtues of Virtual
With all that being said, there is still a place in a company’s sales and marketing strategy for virtual interaction. The secret lies in knowing when tactics such as Webinars, virtual events, and social networking have the most value. Disseminating data, maintaining existing relationships, and connecting a global audience, even at the last minute, are just a few of the strategic ways virtual communication can be leveraged.
Smart Marketers Choose Both
Now that you’re sold on the benefits of both face-to-face and virtual strategies, here’s the good news: You don’t have to exclusively use one over the other. Savvy marketers are building integrated communications plans that marry the benefits of both approaches.
Pre-Show
Pre-show marketing plays an essential role in the success of any trade show program as it helps drive booth traffic and generate quality leads. Virtual communication is a natural fit here, as it lets companies connect with existing customers while also exposing them to prospective customers in a cost-effective manner. For example:
• Promote the event on your Website and in online advertising.
• Use direct e-mail to alert customers and prospects about your presence at a show and set appointments in advance.
• Seek out forums and groups on LinkedIn and participate in the discussion about the show and industry in general. Twitter offers similar opportunities. Be sure to use relevant hashtags so your tweets become part of the thread.
On-Site
While most communication at trade shows will be of the face-to-face variety, there are some interactive tools that can be leveraged to extend the experience virtually. For example:
• Share news with attendees—and those who couldn’t be there—using Twitter, Facebook, LinkedIn, and other social media.
• Publish blog posts each night to recap the day’s events and share interesting observations from the show floor.
• Stream a press conference that will announce important news on your Website.
Post-Show
Virtual communication tools are ideal for all post-event follow-up. They also provide an opportunity to keep customers and prospects engaged long after the show doors have closed.
• Add show photos to your Website or Flickr account, and don’t forget to tag.
• Post a virtual demonstration of new products launched at the show on a special page of your Website. Share the URL with customers and prospects you weren’t able to connect with on-site.
• Secure the final attendee database from show management and use direct e-mail to reach qualified prospects you did not meet at the show.
The Last Word
Clearly, there are specific benefits to both face-to-face marketing and virtual communication. Face-to-face interaction will help form the strong bonds that lead to long-lasting business relationships, while virtual communication will keep dialogue going with prospects and customers fresh and lively year-round.
Before embarking on any marketing program, take the time to carefully evaluate underlying business objectives, outline clear goals and metrics, and proceed with the strategy that will help you get the job done. We bet it will involve some quality face time, along with digital communication.
Rob Murphy is the chief marketing officer of MC2,a leader in the exhibit and event marketing industry. Located in the Chestnut Ridge, NY
Saturday, December 4, 2010
Analysis of Reckitt Benckiser.
Going Down the Pyramid
CONCEPT OF THE COMPANY
1800 STARTS!!!
RECKITT COLMAN
Reckitt Benckiser is No. 1 worldwide in its fabric care,
surface care and automatic dishwashing divisions, which
comprise, respectively, 24 percent, 19 percent and 12
percent of its revenue. In the fabric care segment, Reckitt's
brands include stain remover Spray 'n Wash, Woolite fabric
wash for delicate clothing and with America's bubble bath
but rather a solution for limescale buildup in both washing
machines and laundry. Reckitt's surface care leaders include
Lysol, America's No. 1 disinfectant, and Neutra Air,
introduced in 2003, which provides the pleasant scent of an
air freshener as well as acting as a disinfectant--it
purportedly kills odor-causing airborne germs, thereby
freshening a room. The company's washing products are
marketed as Calgonit in most of Europe, and as Vanish in
India.
RECKITT BENCKISER
INDIA LTD.
Reckitt Benckiser India Ltd appointmented Mr. Stefan Gaa
as the Regional Marketing Director, South Asia.
Mr. Gaa, who is replacing Ms Anne Engerant, will be
responsible for the marketing functions in South Asia, which
includes India, Sri-Lanka, Bangladesh and Indonesia. India
is the headquarters for Reckitt Benckiser's South Asia
business and Mr Gaa will be based in the corporate head
office at Gurgaon.
"India is a key market for Reckitt Benckiser and has been
doing well, with double digit growth for the past couple of
years. I am looking forward to this assignment and aim to
drive Reckitt Benckiser India and South Asia to greater
heights," said Mr Stefan Gaa.
Mr Gaa joined Reckitt Benckiser Germany in October 2000
in the marketing team, where he initially worked on Airwick
(a leading air care brand internationally). He then moved on
to working on products such as the automatic dish washing
(ADWD) brand, Calgonit (Finish in India), then to the UK as
Global Brand Manager responsible for ADWD for North
America and developing markets. In April 2005, he moved
as Global Brand Manager, Innovation, before moving to join
the Indian team in September 2006.
SECTORAL SYNOPSIS:-
Fast Moving Consumer Goods
(FMCG)
FMCG IN INDIA
India's rural markets have seen a lot of activity in the last few years.
Since penetration levels are pretty high in most categories, future
growth can come only from deeper rural penetration. FMCG majors
are aggressively looking at rural India since it accounts for 70% of the
total Indian households Despite the strong presence of MNC players,
the unorganized sector has a significant presence in this industry. In
most categories, unorganized sector is almost as big as the organized
sector, if not bigger.
Penetration level as well as per capita consumption in most product
categories like toothpaste, air spray, shoe polish, skin care, hand wash
etc in India is low indicating the untapped market potential.
Around 70 per cent of the total households in India (188 million) reside
in the rural areas. The total number of rural households is expected to
rise from 135 million in 2001-02 to 153 million in 2009-10. This presents
the largest potential market in the world. The annual size of the rural
FMCG market was estimated at around US$ 10.5 billion in 2001-02.
With growing incomes at both the rural and the urban level, the market
potential is expected to expand further.
CLASSIFICATION OF FMCG PRODUCTS IN INDIA
1.Household Care Products
Fabric wash (laundry soaps and synthetic detergents); household
cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air
fresheners, insecticides and mosquito repellents, metal polish and
furniture polish).
2.Personal Care ProductsSkin care, personal wash (soaps); and toiletries; hygiene; paper floor
wash ; shoe polish ; hand wash products.
OVERVIEW
The consumer product sector mainly consists of personal care, and
home products segments. The sector can be further sub-divided into
soaps, detergents, surface cleaning products, skin care, hand care, and
toilet care products.
The sector is divided into two distinct segments - the premium segment
catering mostly to urban higher/upper middle class and the popular
segment with prices as low as 25%-30% of the premium segment,
catering to mass segments in urban and rural markets. The premium
segment is fewer prices sensitive and more brands conscious.
The industry is volume driven and is characterized by low margins. The
products are branded and backed by marketing, heavy advertising,
slick packaging and strong distribution networks. Also, raw material
prices play an important role in determining the pricing of the final
product.
Brand building and extensive distribution network is a key factor. A
successful brand is a precious asset, which could fetch a price many
times the cost of assets required to make the product
MAJOR COMPETITORS TO THE COMPANY:
Colgate-Palmolive India
Colgate Palmolive India is a 51 per cent subsidiary of Colgate Palmolive
Company, USA. It is the market leader in the Indian oral care market,
with a 51 per cent market share in the toothpaste segment, 48 per cent
market share in the toothpowder market and a 30 per cent share in the
toothbrush market. The company also has a presence in the premium
toilet soap segment and in shaving products, which are sold under the
Palmolive brand. Other well-known consumer brands include Charmis
skin cream and Axion dish wash. The company reported sales of US$
226 million in 2003-04. The company’s strategy is to focus on growing
volumes by improving penetration through aggressive campaigning and
consumer promotions. The company plans to launch new products in
oral and personal care segments and is prepared to continue spending
on advertising and marketing to gain market share. Margin gains are
being targeted through efficient supply chain management and bringing
down cost of operations.
Hindustan Lever Ltd (HLL)
Hindustan Lever Ltd is a 51 per cent owned subsidiary of the Anglo-
Dutch giant Unilever, which has been expanding the scope of its
operations in India since 1888. It is the country’s biggest consumer
goods company with net sales of US$ 2.4 billion in 2003. HLL is
amongst the top five exporters of the country and also the biggest
exporter of tea and castor oil. The product portfolio of the company
includes household and personal care products like soaps, detergents,
shampoos, skin care products, colour cosmetics, deodorants and
fragrances. It is also the market leader in tea, processed coffee, branded
wheat flour, tomato products, ice cream, jams and squashes. HLL
enjoys a formidable distribution network covering over 3,400
distributors and 16 million outlets. In the future, the company plans to
concentrate on its herbal health care portfolio (Ayush) and
confectionary business (Max). Its strategy to grow includes focusing on
the power brands’ growth through consumer relevant information,
cross category extensions, leveraging channel opportunities and
increased focus on rural growth.
Procter & Gamble Hygiene and Health Care Limited
Richardson Hindustan Limited (RHL), manufacturer of the Vicks
range of products, was rechristened ‘Procter & Gamble India’ in
October 1985, following its affiliation to the ‘Procter & Gamble
Company’, USA. Procter & Gamble Hygiene and Health Care Limited
(PGHHCL) acquired its current name in 1998, reflecting the two key
segments of its business. P&G, USA has a 65 per cent stake in
PGHHCL. The parent also has a 100 per cent subsidiary, Procter &
Gamble Home Products (PGHP). The overall portfolio of the company
includes healthcare; feminine-care; hair care and fabric care businesses.
PGHH operates in just two business segments - Vicks range of cough &
cold remedies and Whisper range of feminine hygiene. The detergent
and shampoo business has been relocated globally to Vietnam. The
company imports and markets most of the products from South East
Asian countries and China, while manufacturing, marketing and export
of Vicks and sanitary napkins has been retained in India. The company
reported sales of US$ 91 million in 2002-03. The parent company has
announced its plan to explore further external collaborations in India to
meet its global innovation and knowledge needs.
Nirma Limited
Nirma Ltd, promoted by Karsanbhai Patel, is a homegrown FMCG
major with a presence in the detergent and soap markets. It was
incorporated in 1980 as a private company and was listed in fiscal 1994.
Associate companies’ Nirma Detergents, Shiva Soaps and Detergents,
Nirma Soaps and Detergents and Nilnita Chemicals were merged with
Nirma in 1996-1997. The company has also set up a wholly owned
subsidiary Nirma Consumer Care Ltd, which is the sole marketing
licensee of the Nirma brand in India. Nirma also makes alfa olefin, fatty
acid and glycerin. Nirma is one of the most successful brands in the
rural markets with extremely low priced offerings. Nirma has plants
located in Gujarat, Madhya Pradesh and Uttar Pradesh. Its new LAB
plant is located in Baroda and the soda ash complex is located in
Gujarat. Nirma has strong distributor strength of 400 and a retail reach
of over 1 million outlets. The company reported gross sales of US$ 561
million in 2003-04. It plans to continue to target the mid and mass
segments for future growth.
PRODUCT OFFERING :
This is a list of the brands owned by Reckitt Benckiser. Not all brands
are sold in every country, and the same product may be sold under
different brands in different countries. In INDIA the products are
LIZOL
LIZOL is dish washing liquid which was introduced to India in 1998. it
was the first product which was in liquid format. Lizol in 2007 has a
25% market share and it’s a middle class oriented product.
MORTEIN
Mortein was introduced in India in 1999. it was a anti mosquito
Liquid vaporizer, which gave a big competition to the other products
like jet and all-out. It started getting the market share and achieved
45% out of total market share in India.
DETTOL
Dettol is a very famous product in India. Total market share of dettol is
86%. This product has a monopoly in the market , instead of having
competetors
AIRWICK
It is a latest product of the company. which was launched in India in
2006. it’s a freshener used cars and room. It’s a world famous product
and having 70 % of market share in America and 66 % in uk.
CLEARSIL
Clearasil is a world famous product of the company and having 56%
market share in India. It is one of its kind and very famous in uk.
DIP IT
It’s a stain washer, and highly use full product steal and other antiques.
DISPRIN
It’s a medical product and very famous in people for headache. It’s a
pain reliever and having 40 % market share in India according to latest
reports.
HARPIC
Harpic is a disinfectant and a toilet cleaner. Having 67%
market share in India, it’s a very famous product which
is consistently grabbing the trust of the market.
STREPSILS
Strepsils sore throat lozenges.
VANISH
Vanish is a product which already famous in the world and introduced
in India at the time when the economy is booming in India. The market
of VANISH is not very much in India but the company is still hoping
that the market will grow in the next 4-5 years.
EASY OFF
EASY OFF BANG is a stain remover. It is meant for middle and higher
level families. It has a 41% of market share in its category.
VEET
Veet is a latest product of the company which was introduced in India
in 2001 and in 2003 this product was re-launched after some correction
in the product’s quality. Right now the product is having 39% of the
total market share.
Cherry
It’s a shoe polish and was introduced in Indian market in 1988. The
market share of the product is 44% in liquid format and 65% in paste
format.
STRATEGY OF THE COMPANY
Our strategy for profitable growth involves:
1.Focusing on our strong brands in the categories with highest growth
potential.
2.Innovative product and brand development.
3.Geographic roll out of our key brands and categories.
4.Above-average investment in brand building.
5.Tight cost control to fund reinvestment in core brands and grow
shareholder returns.
6.Selective add-on acquisitions.
FUTURE PLANS
FUTURE: GURGAON: The Rs 1,200-crore Reckitt Benckiser, maker of
brands such as Dettol, Lizol, Cherry Blossom and Disprin, has kicked
off an aggressive strategy aimed at safeguarding the germ protection
positioning its flagship Dettol soap and liquid antiseptic brand has ruled
over for years.
Though the Rs 400-crore Dettol continues to lead the antiseptic liquid
handwash market with over 50% share, rival Hindustan Unilever’s
(HUL) mass-priced soap brand Lifebuoy has begun taking away share
from Dettol in recent months, even though marginally. HUL has been
pushing Lifebuoy on the same hygiene and germ protection platform
that Dettol is synonymous with.
Reckitt Benckiser has decided to reposition Dettol — its highest selling
brand — from just premium to address the mass segment as well. Dettol
liquid handwash is in the process of being rolled out in 135-ml packs
priced at Rs 38 across all three variants — original, skincare and
sensitive. Dettol soap, too, has been introduced in a smaller SKU of 35
gm priced at Rs 6.
When contacted by ET, Reckitt Benckiser India MD Chander Sethi
said: “It’s the first time we have introduced Dettol in small packs such
as these. The move is part of our overall strategy to address diverse
consumer needs.”
While the Rs 1,200-crore Reckitt has had small SKUs for other brands
in its portfolio such as disinfectants Harpic and Lizol and mosquito
repellent Mortein, it’s the first time that Dettol’s soap variants are being
introduced in small packs.
Prices of other Dettol variants remain unchanged as of now. The 250-ml
handwash continues to be priced at Rs 55, the 1-litre pack is priced at
Rs 150 while the 100-ml refill pouch is priced at Rs 30. Rival Lifebuoy
handwash soap is currently available in three SKUs: Rs 40 for 200-ml,
Rs 70 for 540 ml, and at Rs 150 for 900 ml. Its refill pack is priced at Rs
25 for 180 ml.
Dettol is poised for a spate of brand extensions in the personal care
space including gels, sanitisers and beauty products. While declining to
divulge specific future plans, Mr Sethi indicated:
“We are planning to roll out many variants of Dettol, but each of these
will continue to occupy the brand’s core germ protection positioning.”
Reckitt Benckiser has set a sales target of Rs 1,000 crore for its Dettol
brand by year 2010. The company recently concluded a Rs 125-crore
capacity expansion exercise with two new plants in Jammu and
Sitargunj in Uttaranchal.
Reckitt Benckiser in India
Against all odds
“Challenge in business is continuous and is accompanied by continuous innovation and rejuvenation,” states Chander Mohan Sethi, Managing Director, Reckitt Benckiser India, while expressing the core philosophy that guides his business. Adhering to this belief, Chander, with his complete passion to drive the cause of business excellence with the support of his people, wants to make Reckitt Benckiser one of the most trusted names in Indian households. In an era of intense cut throat competition and turbulent markets, with so many FMCG companies venturing into the Indian landscape, Reckitt Benckiser India surely has the right ideas flowing from the top; considering Chander’s incessant resolve to take every adversity head on, combined with undying passion for the company where he’s been around for over 23 years.
Chander Mohan Sethi holds an MBA from the Motilal Institute of Business Management, Allahabad University. His exceptionally long association with Reckitt Benckiser can be traced back to the year 1984, where he started his career as the Branch Manager- Eastern Region. He then moved on to become National Sales Manager in 1987 and in the next three years, his huge contribution to the company was given its due and he was promoted as the Head of Marketing and Sales. Charting a continuously ascending career path, Chander now holds the position of Managing Director, Reckitt Benckiser (India) and Regional Director, Reckitt Benckiser, South Asia, since January 2002.
According to Chander, the M&A with Benckiser proved to be phenomenal for Reckitt & Colman. Chander states, “It showed clear support of the people and the clear support of the brands”. Reckitt Benckiser is one of the very few FMCG companies, which has been listed on London Stock Exchange. It has been one of the leading consumer goods companies in South Asian markets with a host of successful household brands like Dettol, Harpic, Mortein, Lizol, Cherry Blossom, Vanish, Easy Off Bang, Veet, Colin, Disprin, Strepsils, Clearsil and others, which have shown tremendous growth rate in terms of brand recall and recognition. Dettol, whose mention was made by Chander quite frequently in the interview is easily the star product, a leader in the hand wash segment and antiseptic segments. Reckitt Benckiser, headquartered in Slough just outside London is aiming to grow and enhance its business operations tremendously, as the £1.92 billion Boots acquisition has shown. Already, the company has presence in more than 100 countries and around 22,000 employees around the world.
Reckitt follows its global business strategy of becoming the number one FMCG company in manufacturing personal care, health care and household care products in each of its market countries in the world. Chander proudly reiterates how, in 2 years time, “Reckitt Benckiser is the number one emerging modern brand in metros, and has experienced a rise in growth levels from 10% to 12%.” AC Nielsen has also reported a 40% growth in the company without any major investments. Regarding a foray in the food segment, Chander does not reveal any specific plans, but neither does he deny a possibility in the future.
Reckitt’s global brands have maintained a consistent reputation of understanding and meeting the needs of consumers of their respective markets and on the basis of the insights derived from the understanding of the consumer wants, Reckitt has been able to satisfy those consumer needs, and in turn, has created a strong shareholder value for itself. Chander cites the instance of the Mortein brand, which he says, “is the ultimate name for household pest control.” The product has been customised to consumer’s needs.
Reckitt’s brand ambassador strategy has played an integral role in its communication with Indian customers, who could relate to the faces adorning the company’s various products. For instance, Harpic was an instant hit amongst the house-wives after popular TV stars Aman Verma and Roshan Abbas were brought in as the new faces for the product. On the other hand, the Veet hair removal system did wonders with Katrina Kaif endorsing it. Chander elaborates, “Through these brand ambassadors, people see and believe in what you stand for, then only they would internalize that.”
As a leader, Chander appears to be quite calm and composed as opposed to his highly aggressive stance as an entrepreneur, a man who walks the talk. When we broach upon the topic of leadership, Chander strongly advocates that HR pundits are the best people to talk about leadership traits. In his view, “A leader should be a simple person. He needs to have a vision which is very imperative. The vision has to be clear, challenging and should be communicated so that it is bought by people. The leader should reflect transparency, fairness, objectivity, honesty and commitment. A leader should create and celebrate success!”
With its undeterred focus on its international portfolio along with Chander’s prudent guidance, the company is well poised for breakneck growth. Simultaneously, in line with Chander’s views, Reckitt Benckiser would want to continue building upon its legacy of trust.
“Challenge in business is continuous and is accompanied by continuous innovation and rejuvenation,” states Chander Mohan Sethi, Managing Director, Reckitt Benckiser India, while expressing the core philosophy that guides his business. Adhering to this belief, Chander, with his complete passion to drive the cause of business excellence with the support of his people, wants to make Reckitt Benckiser one of the most trusted names in Indian households. In an era of intense cut throat competition and turbulent markets, with so many FMCG companies venturing into the Indian landscape, Reckitt Benckiser India surely has the right ideas flowing from the top; considering Chander’s incessant resolve to take every adversity head on, combined with undying passion for the company where he’s been around for over 23 years.
Chander Mohan Sethi holds an MBA from the Motilal Institute of Business Management, Allahabad University. His exceptionally long association with Reckitt Benckiser can be traced back to the year 1984, where he started his career as the Branch Manager- Eastern Region. He then moved on to become National Sales Manager in 1987 and in the next three years, his huge contribution to the company was given its due and he was promoted as the Head of Marketing and Sales. Charting a continuously ascending career path, Chander now holds the position of Managing Director, Reckitt Benckiser (India) and Regional Director, Reckitt Benckiser, South Asia, since January 2002.
According to Chander, the M&A with Benckiser proved to be phenomenal for Reckitt & Colman. Chander states, “It showed clear support of the people and the clear support of the brands”. Reckitt Benckiser is one of the very few FMCG companies, which has been listed on London Stock Exchange. It has been one of the leading consumer goods companies in South Asian markets with a host of successful household brands like Dettol, Harpic, Mortein, Lizol, Cherry Blossom, Vanish, Easy Off Bang, Veet, Colin, Disprin, Strepsils, Clearsil and others, which have shown tremendous growth rate in terms of brand recall and recognition. Dettol, whose mention was made by Chander quite frequently in the interview is easily the star product, a leader in the hand wash segment and antiseptic segments. Reckitt Benckiser, headquartered in Slough just outside London is aiming to grow and enhance its business operations tremendously, as the £1.92 billion Boots acquisition has shown. Already, the company has presence in more than 100 countries and around 22,000 employees around the world.
Reckitt follows its global business strategy of becoming the number one FMCG company in manufacturing personal care, health care and household care products in each of its market countries in the world. Chander proudly reiterates how, in 2 years time, “Reckitt Benckiser is the number one emerging modern brand in metros, and has experienced a rise in growth levels from 10% to 12%.” AC Nielsen has also reported a 40% growth in the company without any major investments. Regarding a foray in the food segment, Chander does not reveal any specific plans, but neither does he deny a possibility in the future.
Reckitt’s global brands have maintained a consistent reputation of understanding and meeting the needs of consumers of their respective markets and on the basis of the insights derived from the understanding of the consumer wants, Reckitt has been able to satisfy those consumer needs, and in turn, has created a strong shareholder value for itself. Chander cites the instance of the Mortein brand, which he says, “is the ultimate name for household pest control.” The product has been customised to consumer’s needs.
Reckitt’s brand ambassador strategy has played an integral role in its communication with Indian customers, who could relate to the faces adorning the company’s various products. For instance, Harpic was an instant hit amongst the house-wives after popular TV stars Aman Verma and Roshan Abbas were brought in as the new faces for the product. On the other hand, the Veet hair removal system did wonders with Katrina Kaif endorsing it. Chander elaborates, “Through these brand ambassadors, people see and believe in what you stand for, then only they would internalize that.”
As a leader, Chander appears to be quite calm and composed as opposed to his highly aggressive stance as an entrepreneur, a man who walks the talk. When we broach upon the topic of leadership, Chander strongly advocates that HR pundits are the best people to talk about leadership traits. In his view, “A leader should be a simple person. He needs to have a vision which is very imperative. The vision has to be clear, challenging and should be communicated so that it is bought by people. The leader should reflect transparency, fairness, objectivity, honesty and commitment. A leader should create and celebrate success!”
With its undeterred focus on its international portfolio along with Chander’s prudent guidance, the company is well poised for breakneck growth. Simultaneously, in line with Chander’s views, Reckitt Benckiser would want to continue building upon its legacy of trust.
Wednesday, December 1, 2010
Recap of 1st Dec Session.
Brand Positioning -Definition and Concept
Definition of Positioning:-
" Positioning can be defined as an act of designing the company's offering and image to occupy a distinctive place in mind of target market."
Brand positioning refers to “target consumer’s” reason to buy your brand in preference to others. It ensures that all brand activity has a common aim; is guided, directed and delivered by the brand’s benefits/reasons to buy; and it focuses at all points of contact with the consumer.
Brand positioning must make sure that:
* Is it unique/distinctive vs. competitors ?
* Is it significant and encouraging to the niche market ?
* Is it appropriate to all major geographic markets and businesses ?
* Is the proposition validated with unique, appropriate and original products ?
* Is it sustainable - can it be delivered constantly across all points of contact with the consumer ?
* Is it helpful for organization to achieve its financial goals ?
* Is it able to support and boost up the organization ?
In order to create a distinctive place in the market, a niche market has to be carefully chosen and a differential advantage must be created in their mind. Brand positioning is a medium through which an organization can portray it’s customers what it wants to achieve for them and what it wants to mean to them. Brand positioning forms customer’s views and opinions.
Brand Positioning can be defined as an activity of creating a brand offer in such a manner that it occupies a distinctive place and value in the target customer’s mind. For instance-Kotak Mahindra positions itself in the customer’s mind as one entity- “Kotak ”- which can provide customized and one-stop solution for all their financial services needs. It has an unaided top of mind recall. It intends to stay with the proposition of “Think Investments, Think Kotak”. The positioning you choose for your brand will be influenced by the competitive stance you want to adopt.
Brand Positioning involves identifying and determining points of similarity and difference to ascertain the right brand identity and to create a proper brand image. Brand Positioning is the key of marketing strategy. A strong brand positioning directs marketing strategy by explaining the brand details, the uniqueness of brand and it’s similarity with the competitive brands, as well as the reasons for buying and using that specific brand. Positioning is the base for developing and increasing the required knowledge and perceptions of the customers. It is the single feature that sets your service apart from your competitors. For instance- Kingfisher stands for youth and excitement. It represents brand in full flight.
There are various positioning errors, such as-
1. Under positioning- This is a scenario in which the customer’s have a blurred and unclear idea of the brand.
2. Over positioning- This is a scenario in which the customers have too limited a awareness of the brand.
3. Confused positioning- This is a scenario in which the customers have a confused opinion of the brand.
4. Double Positioning- This is a scenario in which customers do not accept the claims of a brand.
Positioning is a deadly word, it is the battle of brain.If segmentation strategy is right but customers are not conceiving the same image,positioning goes wrong.Moreover it is not very easy to get the image,distinctive place and target market.It is the entire effort of marketers,considering each and every single factor for creating the image of the product or service.Its an effort of entire brand building.It requires holistic approach of entire organisation.
Eg: Lifebuoy- It was positioned as a toilet soap & hence it has been very difficult to change its image in customers mind to be a bath soap. Although it can be differentiated on the basis of health related issues but its positioning is difficult to change.
-Impression of PSU banks.
-Subway in Kharghar: Right place and well accepted/responded by foreigners,other mkt segments but is not doing great business in such locality.
-HSBC The Worlds Local Bank: Introduced the first ATM machine in India, but now the scene has changed.
-DHL: After 40 years of its business, Is it the same message in its vision and mission statement being followed and implemented???
-Education Domain: Institutions, if these service providers consider students as customers their positioning will decline & may go out of the mkt.
-Banks/Consulting firms are large in number today, they are unaware of their target mkts.
-Crafting the brand positioning by respective bride/groom sides.
Value Proposition: Eg: M&M's Scorpio(SUV), Domino's Pizza- The Pizza delivery experts(30 mins delivery) both provide unique offering.
How as a Brand Manager you are crafting the Positioning?
The significance of use of touchpoints is relevant in this context and hence every single touchpoint is important for the marketer.
For instance: Delay in communication with the customer care executives, Meru Cabs, Sim services.
-Maggi,Domino's to retain their brand.
-Sony: Connotation of price and quality(The best feature observed in India, thats unique positioning)
Image: What you create?
Positioning: What customers feel?
If both, the image and positioning are same/right and occupy the same place in customers mind, the positioning of that brand strucks the right chord.If the image,distinctive place and target mkt goes into the right direction you can very well craft the positioning.But the loyalty of customer to a brand should also be considered, as in case of Indian consumers who think differently at different point of time loyalty for a specific brand goes for a toss while other consumers like in US, people are more loyal towards the brand they prefer.Hence the effect of positioning varies according to the consumer behavior.
Brand Positioning Guru's: Jack Trout and Al Ries.(Read Brand Positioning by Jack Trout and Al Ries, and some more literature on Positioning).
Definition of Positioning:-
" Positioning can be defined as an act of designing the company's offering and image to occupy a distinctive place in mind of target market."
Brand positioning refers to “target consumer’s” reason to buy your brand in preference to others. It ensures that all brand activity has a common aim; is guided, directed and delivered by the brand’s benefits/reasons to buy; and it focuses at all points of contact with the consumer.
Brand positioning must make sure that:
* Is it unique/distinctive vs. competitors ?
* Is it significant and encouraging to the niche market ?
* Is it appropriate to all major geographic markets and businesses ?
* Is the proposition validated with unique, appropriate and original products ?
* Is it sustainable - can it be delivered constantly across all points of contact with the consumer ?
* Is it helpful for organization to achieve its financial goals ?
* Is it able to support and boost up the organization ?
In order to create a distinctive place in the market, a niche market has to be carefully chosen and a differential advantage must be created in their mind. Brand positioning is a medium through which an organization can portray it’s customers what it wants to achieve for them and what it wants to mean to them. Brand positioning forms customer’s views and opinions.
Brand Positioning can be defined as an activity of creating a brand offer in such a manner that it occupies a distinctive place and value in the target customer’s mind. For instance-Kotak Mahindra positions itself in the customer’s mind as one entity- “Kotak ”- which can provide customized and one-stop solution for all their financial services needs. It has an unaided top of mind recall. It intends to stay with the proposition of “Think Investments, Think Kotak”. The positioning you choose for your brand will be influenced by the competitive stance you want to adopt.
Brand Positioning involves identifying and determining points of similarity and difference to ascertain the right brand identity and to create a proper brand image. Brand Positioning is the key of marketing strategy. A strong brand positioning directs marketing strategy by explaining the brand details, the uniqueness of brand and it’s similarity with the competitive brands, as well as the reasons for buying and using that specific brand. Positioning is the base for developing and increasing the required knowledge and perceptions of the customers. It is the single feature that sets your service apart from your competitors. For instance- Kingfisher stands for youth and excitement. It represents brand in full flight.
There are various positioning errors, such as-
1. Under positioning- This is a scenario in which the customer’s have a blurred and unclear idea of the brand.
2. Over positioning- This is a scenario in which the customers have too limited a awareness of the brand.
3. Confused positioning- This is a scenario in which the customers have a confused opinion of the brand.
4. Double Positioning- This is a scenario in which customers do not accept the claims of a brand.
Positioning is a deadly word, it is the battle of brain.If segmentation strategy is right but customers are not conceiving the same image,positioning goes wrong.Moreover it is not very easy to get the image,distinctive place and target market.It is the entire effort of marketers,considering each and every single factor for creating the image of the product or service.Its an effort of entire brand building.It requires holistic approach of entire organisation.
Eg: Lifebuoy- It was positioned as a toilet soap & hence it has been very difficult to change its image in customers mind to be a bath soap. Although it can be differentiated on the basis of health related issues but its positioning is difficult to change.
-Impression of PSU banks.
-Subway in Kharghar: Right place and well accepted/responded by foreigners,other mkt segments but is not doing great business in such locality.
-HSBC The Worlds Local Bank: Introduced the first ATM machine in India, but now the scene has changed.
-DHL: After 40 years of its business, Is it the same message in its vision and mission statement being followed and implemented???
-Education Domain: Institutions, if these service providers consider students as customers their positioning will decline & may go out of the mkt.
-Banks/Consulting firms are large in number today, they are unaware of their target mkts.
-Crafting the brand positioning by respective bride/groom sides.
Value Proposition: Eg: M&M's Scorpio(SUV), Domino's Pizza- The Pizza delivery experts(30 mins delivery) both provide unique offering.
How as a Brand Manager you are crafting the Positioning?
The significance of use of touchpoints is relevant in this context and hence every single touchpoint is important for the marketer.
For instance: Delay in communication with the customer care executives, Meru Cabs, Sim services.
-Maggi,Domino's to retain their brand.
-Sony: Connotation of price and quality(The best feature observed in India, thats unique positioning)
Image: What you create?
Positioning: What customers feel?
If both, the image and positioning are same/right and occupy the same place in customers mind, the positioning of that brand strucks the right chord.If the image,distinctive place and target mkt goes into the right direction you can very well craft the positioning.But the loyalty of customer to a brand should also be considered, as in case of Indian consumers who think differently at different point of time loyalty for a specific brand goes for a toss while other consumers like in US, people are more loyal towards the brand they prefer.Hence the effect of positioning varies according to the consumer behavior.
Brand Positioning Guru's: Jack Trout and Al Ries.(Read Brand Positioning by Jack Trout and Al Ries, and some more literature on Positioning).
One down ....... Nine more to go
From the list (Bucket list)of 10 books which we have to read before may 2011, yestrday i completed one of them.
"Stay hungy Stay foolish" by Rashmi Bansal.
Stay Hungry Stay Foolish is the story of 25 graduates of IIM Ahmedabad (IIM-A), who chose to become entrepreneurs, shunning the more conventional and comfortable option of high-paying corporate jobs.
All this 25 person can devided in broadly in two categories.
1)People who knew entrepreneurship was the Chosen Path. They took the plunge straight after their MBA or after working barely a few years. And they persevered until theymade it big!
2)These entrepreneurs did not plan to take this path but when opportunity knocked they seized it. Their stories go to show that you don't have to be 'born with it', you can develop an entrepreneurial bent of mind at any age.
Almost all of these story starts from their IIMA days and go till their success point. Many of them start a business and failed in their first “Trial” and got succeed in their second or third venture.
Stay Hungry Stay Foolish Covers the following entrepreneurs :
1) Sanjeev bikhchandani- Naurkri.com
2) Shantanu Prakash -Educomp
3) Vinayak Chatterjee - Feedback Ventures
4) Ashank Desai-Mastek
5) R Subramanian - Subhiksha
6) Narendra Murkumbi-Shree Renuka Sugars
7) Chender Baljee-Royal Orchid hotels
8) Madan Mohanka - Teja Industries
9) Sunil Handa- Eklaya Education Foundation
10) Vardan Kabra -Fountainhead School
11) Deep Kaira -makemytrip.com
12) Rashesh Shah-Edelweiss Capital
13) Nirmal Jain-India Infoline
14) Vikran Talwar - EXL Service
15) K Raghavendra Rao-Orchid Pharma
16) Jerry Rao- Mphasis
17) Shivraman Dugal- Institute Of Clinical Research In India
18) Shankar Maruwada-Marketics
19) Ruby Ashraf-Precious Formals
20) Deepta Rangarajan-IRIS
21) Cyrus Driver-Calorie Care
22) Venkat Krishnana-GiveIndia
23) Anand Halve-chlorophyll
24) S B Dangayach -Sintex
25) Vijay Mahanjab ,Basix.
You always run a risk, its game of probabilities. You have to be sporting………..
However good you are you may get out for a duck.
(Quote from Nirmal Jain-India nfoline)
"Stay hungy Stay foolish" by Rashmi Bansal.
Stay Hungry Stay Foolish is the story of 25 graduates of IIM Ahmedabad (IIM-A), who chose to become entrepreneurs, shunning the more conventional and comfortable option of high-paying corporate jobs.
All this 25 person can devided in broadly in two categories.
1)People who knew entrepreneurship was the Chosen Path. They took the plunge straight after their MBA or after working barely a few years. And they persevered until theymade it big!
2)These entrepreneurs did not plan to take this path but when opportunity knocked they seized it. Their stories go to show that you don't have to be 'born with it', you can develop an entrepreneurial bent of mind at any age.
Almost all of these story starts from their IIMA days and go till their success point. Many of them start a business and failed in their first “Trial” and got succeed in their second or third venture.
Stay Hungry Stay Foolish Covers the following entrepreneurs :
1) Sanjeev bikhchandani- Naurkri.com
2) Shantanu Prakash -Educomp
3) Vinayak Chatterjee - Feedback Ventures
4) Ashank Desai-Mastek
5) R Subramanian - Subhiksha
6) Narendra Murkumbi-Shree Renuka Sugars
7) Chender Baljee-Royal Orchid hotels
8) Madan Mohanka - Teja Industries
9) Sunil Handa- Eklaya Education Foundation
10) Vardan Kabra -Fountainhead School
11) Deep Kaira -makemytrip.com
12) Rashesh Shah-Edelweiss Capital
13) Nirmal Jain-India Infoline
14) Vikran Talwar - EXL Service
15) K Raghavendra Rao-Orchid Pharma
16) Jerry Rao- Mphasis
17) Shivraman Dugal- Institute Of Clinical Research In India
18) Shankar Maruwada-Marketics
19) Ruby Ashraf-Precious Formals
20) Deepta Rangarajan-IRIS
21) Cyrus Driver-Calorie Care
22) Venkat Krishnana-GiveIndia
23) Anand Halve-chlorophyll
24) S B Dangayach -Sintex
25) Vijay Mahanjab ,Basix.
You always run a risk, its game of probabilities. You have to be sporting………..
However good you are you may get out for a duck.
(Quote from Nirmal Jain-India nfoline)
Tuesday, November 30, 2010
Recap of 29th Nov Session.
Positioning:-
How it shud be done?
Based on- a)Key differentiating factors?
b)How to deal with competitors?
An effort should be made to critically analyse the various factors affecting positioning.
Generic Strategies:-
By Michael Porter (The Guru of Defining/Designing Mktg Strategy)
5 Force Model
Five forces determining segment structural attractiveness:-
Porter's five forces is a framework for the industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero.
Three of Porter's five forces refer to competition from external sources. The remainder are internal threats.
Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.
Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.
This five forces analysis, is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.
Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis, which he found rigorous and ad hoc.
Porters fives forces model is an excellent model to use to analyse a particular environment of an industry. So for example, if we were entering the PC industry, we would use porters model to help us find out about:
1) Competitive Rivalry
2) Power of suppliers
3) Power of buyers
4) Threats of substitutes
5) Threat of new entrants.
The above five main factors are key factors that influence industry performance, hence it is common sense and practical to find out about these factors before you enter the industry. Lets look at them below.
Competitive rivalry
Segment Rivalry- The competitors will try to convince the target audience through mktg mix,brand positioning,dealer networks etc.Dealing with the competitors includes study of questions like: Who are your rivals? Define your competitors??
Competition is the thing that can move the entire base of customers.
A starting point to analysing the industry is to look at competitive rivalry. If entry to an industry is easy then competitive rivalry will likely to be high. If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high. Generally competitive rivalry will be high if:
• There is little differentiation between the products sold between customers.
• Competitors are approximately the same size of each other.
• If the competitors all have similar strategies.
• It is costly to leave the industry hence they fight to just stay in ( exit barriers).
Eg:ISB Vs IIM case.
-Micromax Vs Nokia.
-Maggi Vs Top Ramen.
-Starbucks Vs CCD.
-NTT docomo one of the most successful mobile in Japan.
Docomo entering India through a collaboration with TATA(using 1 paisa/sec plan).
If the leaders in their respective business(in India) like IIM,Nokia,Maggi,CCD respond to the new entrants ultimately the Goodwill of the new entrant increases.
Filmy Example:-In Dulhe Raja movie Govinda runs a dhaba just opposite to a 5 star hotel owned by Kadar Khan.
Power of suppliers
Suppliers are also essential for the success of an organisation. Raw materials are needed to complete the finish product of the organisation. Suppliers do have power. This power comes from:
• If they are the only supplier or one of few suppliers who supply that particular raw material.
• If it costly for the organisation to move from one supplier to another (known also as switching cost)
• If there is no other substitute for their product.
Eg:Automobile-Bajaj Scooter of past Vs Bike manufacturers of recent market like Honda,TVS,M&M.
Electronics- Suppliers of electronic goods like Chroma,VSP,Next.
Power of buyers
Buyers or customers can exert influence and control over an industry in certain circumstances. This happens when:
• There is little differentiation over the product and substitutes can be found easily.
• Customers are sensitive to price.
• Switching to another product is not costly.
Eg:Real estate sector before recession and after it.
Changes in the Real Estate scenario of Kharghar to be observed after the news of Navi Mumbai International Airport.
Bias Mkt: Customer is the king in bias mkt although CRM practices are not much developed and lot of improvement is expected.
Indian mkts are not customer driven, there are at times issues regarding legal aspects,consumption etc.
Buyer power can be seen in services provided by McD-Free coke for 1 min delay.
Domino's-Free delivery if delayed than 30 mins.
Threat of substitutes
Are there alternative products that customers can purchase over your product that offer the same benefit for the same or less price? The threat of substitute is high when:
• Price of that substitute product falls.
• It is easy for consumers to switch from one substitute product to another.
• Buyers are willing to substitute.
Eg: GSM Vs CDMA, LCD Vs LED.
Bulky TV's, monitors being replaced by sleek design.
Pager Vs Mobile,VCR Vs CD players, Xerox m/c Vs All in 1 OneStopSoln.
Threat of new entrant
The threat of a new organisation entering the industry is high when it is easy for an organisation to enter the industry i.e. entry barriers are low.
An organisation will look at how loyal customers are to existing products, how quickly they can achieve economy of scales, would they have access to suppliers, would government legislation prevent them or encourage them to enter the industry.
Eg:Walmart,Starbucks to enter in Indian mkt.
Walmart has only cash n carry ie wholesale mkt yet they can be a big player in their core business.
Generic Strategies to counter the 5 forces:
Strategy can be formulated on 3 levels like
1)Corporate level 2) Business unit level 3) Functional or Departmental level
The Business unit level is the primary context of industry rivalry.Michael Porter identified 3 generic strategies(Cost leadership,differentiation and focus)that can be implemented at the business unit level to create competitive advantage.The proper generic strategy will position the firm to leverage its strength and defend against the adverse effects of 5 forces.
Entering into 2011:- This would be the most challenging decade for service providers as mkt will grow n mature and hence Changing with the Change is important.
"Change is the only Constant"
How it shud be done?
Based on- a)Key differentiating factors?
b)How to deal with competitors?
An effort should be made to critically analyse the various factors affecting positioning.
Generic Strategies:-
By Michael Porter (The Guru of Defining/Designing Mktg Strategy)
5 Force Model
Five forces determining segment structural attractiveness:-
Porter's five forces is a framework for the industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero.
Three of Porter's five forces refer to competition from external sources. The remainder are internal threats.
Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.
Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.
This five forces analysis, is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.
Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis, which he found rigorous and ad hoc.
Porters fives forces model is an excellent model to use to analyse a particular environment of an industry. So for example, if we were entering the PC industry, we would use porters model to help us find out about:
1) Competitive Rivalry
2) Power of suppliers
3) Power of buyers
4) Threats of substitutes
5) Threat of new entrants.
The above five main factors are key factors that influence industry performance, hence it is common sense and practical to find out about these factors before you enter the industry. Lets look at them below.
Competitive rivalry
Segment Rivalry- The competitors will try to convince the target audience through mktg mix,brand positioning,dealer networks etc.Dealing with the competitors includes study of questions like: Who are your rivals? Define your competitors??
Competition is the thing that can move the entire base of customers.
A starting point to analysing the industry is to look at competitive rivalry. If entry to an industry is easy then competitive rivalry will likely to be high. If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high. Generally competitive rivalry will be high if:
• There is little differentiation between the products sold between customers.
• Competitors are approximately the same size of each other.
• If the competitors all have similar strategies.
• It is costly to leave the industry hence they fight to just stay in ( exit barriers).
Eg:ISB Vs IIM case.
-Micromax Vs Nokia.
-Maggi Vs Top Ramen.
-Starbucks Vs CCD.
-NTT docomo one of the most successful mobile in Japan.
Docomo entering India through a collaboration with TATA(using 1 paisa/sec plan).
If the leaders in their respective business(in India) like IIM,Nokia,Maggi,CCD respond to the new entrants ultimately the Goodwill of the new entrant increases.
Filmy Example:-In Dulhe Raja movie Govinda runs a dhaba just opposite to a 5 star hotel owned by Kadar Khan.
Power of suppliers
Suppliers are also essential for the success of an organisation. Raw materials are needed to complete the finish product of the organisation. Suppliers do have power. This power comes from:
• If they are the only supplier or one of few suppliers who supply that particular raw material.
• If it costly for the organisation to move from one supplier to another (known also as switching cost)
• If there is no other substitute for their product.
Eg:Automobile-Bajaj Scooter of past Vs Bike manufacturers of recent market like Honda,TVS,M&M.
Electronics- Suppliers of electronic goods like Chroma,VSP,Next.
Power of buyers
Buyers or customers can exert influence and control over an industry in certain circumstances. This happens when:
• There is little differentiation over the product and substitutes can be found easily.
• Customers are sensitive to price.
• Switching to another product is not costly.
Eg:Real estate sector before recession and after it.
Changes in the Real Estate scenario of Kharghar to be observed after the news of Navi Mumbai International Airport.
Bias Mkt: Customer is the king in bias mkt although CRM practices are not much developed and lot of improvement is expected.
Indian mkts are not customer driven, there are at times issues regarding legal aspects,consumption etc.
Buyer power can be seen in services provided by McD-Free coke for 1 min delay.
Domino's-Free delivery if delayed than 30 mins.
Threat of substitutes
Are there alternative products that customers can purchase over your product that offer the same benefit for the same or less price? The threat of substitute is high when:
• Price of that substitute product falls.
• It is easy for consumers to switch from one substitute product to another.
• Buyers are willing to substitute.
Eg: GSM Vs CDMA, LCD Vs LED.
Bulky TV's, monitors being replaced by sleek design.
Pager Vs Mobile,VCR Vs CD players, Xerox m/c Vs All in 1 OneStopSoln.
Threat of new entrant
The threat of a new organisation entering the industry is high when it is easy for an organisation to enter the industry i.e. entry barriers are low.
An organisation will look at how loyal customers are to existing products, how quickly they can achieve economy of scales, would they have access to suppliers, would government legislation prevent them or encourage them to enter the industry.
Eg:Walmart,Starbucks to enter in Indian mkt.
Walmart has only cash n carry ie wholesale mkt yet they can be a big player in their core business.
Generic Strategies to counter the 5 forces:
Strategy can be formulated on 3 levels like
1)Corporate level 2) Business unit level 3) Functional or Departmental level
The Business unit level is the primary context of industry rivalry.Michael Porter identified 3 generic strategies(Cost leadership,differentiation and focus)that can be implemented at the business unit level to create competitive advantage.The proper generic strategy will position the firm to leverage its strength and defend against the adverse effects of 5 forces.
Entering into 2011:- This would be the most challenging decade for service providers as mkt will grow n mature and hence Changing with the Change is important.
"Change is the only Constant"
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