product management

PRODUCT AGEMENT

s. A. CHUNAWALLA B.Com. (Hons.), D.Pharma, M.B.A.

Communication Consultant, Benzer, Borivali (W), Mumbai - 400 103.

[email protected]

I Revised Edition: 2009

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MUMBAI NEW DELHI NAGPUR BANGALORE HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM

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CONTENTS I. Product: Basic Concepts 1 - 17

2. Marketing Environment for Product and Brand Management 18 - 29 3. Product Planning 30 - 51 4. Product Market Strategies for Leaders, Challengers, Followers 52 - 60 5. Product Life Cycle and Market Evolution 61- 88 6. New Products: Planning and Development 89 - 124 7. The Creative Spark 125 - 140 8. Designing the Offer 141- 156 9. Pricing the Offer 157 - 167

10. Concept and Product Testing 168 -178 1I. Test Marketing 179 - 189 12. Budgeting for Products 190 - 193 13. Branding Decisions 194 - 200 14. The Anatomy of a Brand 201- 204 15. Brand Culture and Brand Retuals 205 - 208 16. Leveraging Brands 209 - 211 17. Brand Equity 212 - 229 18. Brand Building 230 - 242 19. Product and Brand Failures 243 - 250 20. Marketing Organisation 251- 258 2l. Packaging 259 - 265 22. Consumer Protection 266 - 267 23. Case Studies 268 - 338

Bibliography 339

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PRODUCT: BASIC CONCEPTS

What is a Product? A product is any want -satisfying attribute a consumer receives in exchange. The product benefits could

be physical as weI! as psychological. Formerly, products were whatthe factories made. These days products are what the consumer wants. The definition of product is constantly expanding. It includes more than a mere bundle of benefits.

Let us consider one simple example. A consumer buys a CD player. Does he buy justa plastic box with an electronic circuitry? The answer is an emphatic 'no.' He is, in fact, buying a means to his recreation. Just a want satisfying attribute! There are other benefits our buyer is seeking from the CD player.

Special functions like access from any point on CD, auto-start, auto-stop, an FM radio, karaoke, etc.

Brand name like Philips or Sony, and a retail outlet like Rhythm House or Akbqrallys. Guaranteeandlorwarranty. Salesman's explanation, installation service, acceptance of credit cards or tie-up with a financial

institution for easy credit, say with Countrywide. Image of the manufacturer and brand, reputation of the retailer .. After-sale-service back-up.

The amount of importance attached to the above aspects make a consumer view each product offering differently. Though the same product may be offered by an ordinary retailer and a reputed store like Akbarallys, the attributes of a product changes critically for the consumer. The following figure illustrates what a product is made up of:

2 Product Management

PHYSICAL ATTRIBUTES SPECIAL FEATURES ~ BRAND

BRAND IMAGE -----: ff GUARANTEElWARRANTY INTANGIBLE OR / t ~ PSYCHOLOGICAL BENEFITS I

PRODUCT SERVICES AND AFTER-SALES-SERVICE SAFETY

Fig. 1.1 Components of a Product The concept of the product becomes very simple to understand in terms of what the buyers buy. Perhaps

there is a difference between what the marketers sell and what the buyers buy. The marketers are engineering-oriented and neglect the psychological benefits the product offers.

One thing more. Products can both be goods and services, or any combination of the two. Services are intangible, and have no physical attributes, e.g., hair-dressing, solicitor's counselling, medical assistance. Need Satisfaction

There lived a king once who preferred carpets to walk on. Several employees just rolled and unrolled carpets wherever the king went walking. This was tedious as well as expensive. One day, a young gentleman walked into the palace with just two pieces of carpet, each measuring 10 x 4 inches. He requested the king to extend his leg. He tied one piece of carpetto each leg foot. Now the king had a carpet under his feet wherever he went. This bypassed the tedious and costly carpet laying activity followed earlier. This man was creative. He identified a need, and satisfied it by a suitable product. He thus invented shoes. Creative traits can be learnt by suitable training. Product Classification

Products are classified on the basis of consumer buying behaviour and their attitudes. Products are classified just like markets. Product marketing is facilitated when products are kept in homogeneous groups. One way to classify products is to group them based on ultimate users. We thus have consumer products purchased for use by households and the ultimate users. On the other hand, we have industrial products which help in producing other products or in rendering services. Office chair is a consumer product when you buy it for using at home. It is an industrial product when used in a cinema hall. Product classification help us in developing suitable marketing programmes. Each category is further classified, e.g., fast moving consumer goods (FMCG) and consumer durables. Classification of Consumer Products

Logically, classification of consumer products should be based upon their behaviour. However, all consumers do not behave the same way. For instance, one consumer needs instant lights to be used in emergencies of power failure. He immediately rushes to Akbarallys and gets one for him. There is another consumer who takes a long time to take this decision. He visits Crawford Market, Heera Panna, Asiatic, In Orbit mall and such other shopping areas to select the right product. He evaluates the available set of products, and then buys one which gives him the greatest value. Thus it is obvious that a product can be slotted' so easily on the basis of buyer behaviour. This makes it necessary to develop suitable marketing programmes for different segments of the market.

Traditionally, consumer products are put into three categories - convenience products, s{lopping products and speciality products. Convenience products are bought with ease, and without consuming any

Product: Basic Concepts 3

time. A person purchasing instant lights immediately from Akbarallys is an example of convenience goods. Milk and vegetables are examples of convenience goods. Food products and newspapers also belong to this class. We put Coke and Pepsi and ice-creams in this category. The point is that we spend just a pittance to have these products. Therefore, no extensive shopping is needed. Besides, most of the consumers have high knowledge aboutthese products. Therefore, hunting for them is not necessary. Convenience goods are just commodities for the consumer, and he does not show a very high amount of brand loyalty. He substitutes one product for another, if the former is not available. Distribution is, therefore, the critical element in the marketing of convenience products. The product must be available locally whenever it is needed. Otherwise, the sale is lost. This means thatthese product need intensive distribution. We know Pepsi is available in India at paan shops. grocery shops, general stores, departmental stores, super-bazars, petrol pumps,.restaurants, hotels, stadium of sports, vending machines andjust at an unimaginable number of outlets everywhere. The onus of promoting convenience products lies on the manufacturer. The retailer carries so many competitive brands, and is not interested in pushing just a particular product. He is, in fact, indifferent to the brand the consumer buys.

Shoppingproducts are purchased only when the consumer considers factors like price, quality and style and visits several outlets before deciding to buy. The consumer seeks information because he does not know much about the product. These products are not purchased regularly. They are priced higher than the convenience products. Though visibility is high, there is minimum brand loyalty. Clothing, furniture, household appliances, motor-cars, home repair items are familiar examples of shopping goods. A consumer who moves around searching for instant lights is buying a shopping good.

It is not necessary to have intensive distribution for shopping products. Here the consumer is prepared to move around. The only point is that the product'inust be available at one outlet out of several to be visited by the consumer.

Promotion plays a vital role since the consumer seeks extensive information about the product. Price is critical specially for close competitive products. The consumer may substitute a higher-priced product with a lower-priced one if other things remain equal.

Speciality products are those products for which there are no reasonable substitutes. These have unique. characteristics or strong brand identification. Consumers take lot of pain to buy these products. Expensive music systems, expensive cameras, designer clothes, fashionable restaurants, prestigious cars are examples of speciality products. The brand loyalty is high. The consumers are willing to pay a high price.

As consumers demand a product by brand name, distribution is less important than itis for convenience and shopping goods. The product is available ata few select outlets. Advertising informs the consumer about the availability of the product. The promotional budget is shared by the manufacturer and the retailer. Product Management: Meaning and Definition

Product, place, promotion and price are the four 'P's of marketing. Product management encompasses the whole range of activities pertaining to product planning and management. In product planning. we include the basic corporate plan and marketing plan from which the product plan emerges. In the product plan, we consider product strategies like product line length, product line depth, line stretching, both upwards and downwards. Product plan not only considers the existing products, but also considers the introduction of new products right from concept to commissioning. Product management also considers product life cycle, and strategies followed at each stage of the life cycle. Product plan is implemented through a marketing or product organisation, and is supported by a suitable budget. Product planning's new product management covers the entire spectrum of marketing management like pricing, promotion, distribution of new products. Slowly products are raised from the commodity status to brand status, which are then built over a period of time so as estabiish a bond with the consumer.


Product management is thus that part of marketing management which concerns with product planning and development and is now extended to brand building and management. Objectives of Product Management

Products are the bed -rock of any organisation. Sales are realised through sales of the products. Thus the overall success of the organisation is dependent upon the planning and development of products. Product management thus tries to achieve the following objectives:

PRODUCT LIFE CYCLE

Fig. 1.2 Scope of Product Management (i) To design product strategies with respect to customer, industry and competition analysis.

(ii) To spot marketing opportunities, and to see whether they are exploitable. (iii) To seek growth through new product development. (iv) To plan strategies for each stage of product life cycle. (v) To generate new product ideas, and develop them further. (vi) To consolidate existing product profile. To do portfolio analysis. To improve and modify existing

products. To introduce brand extensions and line extensions. (vii) To identify the brand identity, build a brand image, position a brand, build a brand, to develop

brand equity and measure it. All the above objectives are made consistent with the overall marketing and corporate objectives of the

organisation. Product Line and Product Mix

We use the term product line andproduct mix while describing the product offerings of an organisation. A product line is a group of closely related products offered by an organisation. Thus washing machines is a product line of Videocon. TVs form another product line for Videocon. Product mix consists of all the


individual products available through the organisation. Product mix may have several product lines, and each product line several product models, styles, sizes.

Breadth of product mix is given by a number of product lines it markets. Some companies market just one or two product lines, and hence their product mix is narrow. A company like General Electric operates in diverse fields, and has broad product mix. Each product mix has a depth, which is given by models, colours, sizes available in each individual product lines. A pharmaceutical company has a product line of antibiotics. It has several dosage forms - capsules, dispersible tablets for children, vaginal suppositories, injections, ear drops, eye drops and syrups under the dosage form. It has several package sizes. The company has several brands of antibiotics, and each brand has several dosage forms and sizes. We can say that its product mix has depth. On the contrary, a few products, in one size only as one brand is an example of a shallow product depth.

The product lines offered are related to company's strategic plan and marketing plan. It considers the segmentation of the market and targeting. If an organisation wishes to target young children, it can add a whole new product line for it. New product lines are either a matter of internal development or can be acquired. Each product line also can be expanded. This has been discussed in the text thatfollows. The important idea is that the product line of a company reflects the objectives of the organisation, the targeting decided upon and the buyer behaviour in a given market. Modifying Existing Product Lines

We have a number of reasons to alter either an existing product or a product line. The reasons could be to support the marketing strategy, to improve sales, to improve profits, to expand market share. We can also consider what the product as such contributes to the product portfolio. We can modify a product line by altering either one or more than one of the following attributes:

(1) Composition of the product line (2) Expansion or contraction of product line (3) Value addition process (4) Brand (5) Packaging (6) Physical characteristics (7) Positioning The first two attributes are relevant to a set of products in the product line. The rest are relevantto either

individual products or product lines. Composition of the Product Line

We can change the composition by altering individual products in a product line. Individual products can be offered in different styles. The characteristics of the individual products can be changed. The accessories or options can be changed. The price may be revised. A garment manufacturer can change the composition of its product line by switching emphasis from the ethnic wear to western outfits. A car manufacturer can make certain features like auto operation of doors and AC optional instead of a standardised product for all. A trouser shop might alter the composition of its product line by emphasising Rs. 400 and Rs. 300 trousers, instead of Rs. 200 and Rs. 100 trousers. Expanding and Reducing the Product Line

There are many models of TV available. There is a large variety of radio sets from Philips. Lovable bras are available in a number of styles. Syrups and crushes are available in many flavours, e.g., Rasna concentrates and Mala's crushes. There are technical products with higher and lesser sophistication. We find many product categories where consumers prefer to have a great variety for their satisfaction.


Marketers adopt here a strategy of adding new versions with new specifications , while retaining the old versions for the less sophisticated consumers. Sometimes this addition of new products to existing line is done to include complementary products, e.g., a tooth-paste marketer may add toothbrushes to the product line. Camel may introduce paint -brushes which go well with its water-colours.

Sometimes, there are occasions to delete a product/products from the line. A product which shows decline in terms of sales may be abandoned. Non-contributing products may be eliminated. While doing so, it should be seen that other products in the product line are not affected. Value Addition

An organisation converts raw materials into finished products, and this conversion process is a process of adding value to the products. A food processor who sells simply flour may start selling a ready-mix of idlis and dhoklas. It is an instance of value addition. Bombay Dyeing starts ready-to-wear shirts instead of plain textiles. Many companies make their products more convenient to use. They thus add value forme consumer. A phone manufacturer starts with corded phone, adds cordless phones to its line, and finally puts cellular phones in the market.

Mere sales promotion is not helpful in retaining customers. What is needed is the addition of value on a continuous basis. Subroto Sengupta, lIM, Calcutta recognises four routes to value addition. The first is to add functional value, for example, photo cards, picture cards, and global cards have added functional value to StanChart's credit card business. Secondly, we have to reward the frequent users. Thus Amex has membership rewards programme and Shoppers' Stop gives FCC points to its regular customers. Even gifts of buckets to regular Surf users is a reward. The third route to value addition is personalised marketing through database information. Lastly, service can be added to the brand. Itpersonalises the brand for the customer. Human touch is an important element of any service. Brand

A company puts its products under a specific brand name, say Bata. While putting the same products through retail network not owned by it, it puts another brand name BSC. Similarly, we have Carona shoes and CSC shoes. Packaging

Package can be changed functionally, e.g., Pepsi is now available in cans and PET bottles. Packaging communication can be changed. Red Hit and Black Hit packages are meant for different insects, are for cockroaches and for flies and other insects. Sachets have revolutionized shampoo marketing. They are convenient single-dose products available at low prices. Detergents are now available in sachets. Physical Characteristics

Hair oils which are greasy generally can be made non-greasy like Hair & Care. Surf has moved forward by introduCing Surf Ultra with enzymes and Surf Excel. Fashion designers introduce their fall (autumm) collection and summer collection. Positioning

This is an important way to change a product line. Here the positioning of one or more products forming that product line is changed. Marlboro cigarettes is a classic example. It was an effeminate product but was converted into a macho product. Baby shampoo can be positioned for adults too. Copper deo-spray from Baccarose is positioned for men. Cadbury chocolates are not just for kids. They have been positioned for grown-ups too. A change in positioning is brought about mostly by a change in communication strategy. Sometimes distribution too is changed, but real positioning means change in the product and its packaging too.


Product Line Length What should be the optimum length of a product line? A line is too long if after eliminating a product,

it results into increased profits. A line is too' short when any addition to it results into increased profits. Company's overall objectives do affect the length ofits product line. For instance, a company may have

the objective of expanding its market share. It will then have a longer product line. Contribution of individual products to profits may be ignored. However, a company whose objective is to have larger profits will have a shorter product line consisting of those items which contribute to profits substantially.

Product lines have a tendency to lengthen over a period of time. Many a time, a firm may have extra capacity which is used for developing new items. Sales people and trade put pressure on management to keep on


Two-Way Stretch Several companies serve the middle-end market. They can stretch their product line in both the

directions. A hotel company operating hotels in the comfort category where each room has a tariff of Rs. 2000-3000 a day might decide to have elite upper-end hotels with' tariffs ofRs. 5000-7000 a day and lower-end budget hotels with tariffs of Rs. 600-1500 a day. Ashoka group of ITC has thus elite 5-Star hotels, at the upper-end comfort hotels atthe middle-end and budget hotels like Ashoka Yatri Niwas atthe lower-end.

Caselet Till the eighties, marketing specialists believed that it was easier for a brand to forge at top end first.

P & G did so when it introduced Ariel detergent at twice the price of HLL's Surf. Once the brand name was established, economical products like green Ariel and the washing bar were introduced in the market.

But in the nineties, a new theory challenged the downward stretch in brand building. After several decades of being low-priced brand Lifebuoy soap moved upwards by becoming Lifebuoy Gold and Lifebuoy liquid soap.

Managing New Product Opportunities We classify the opportunities to develop new products in terms of product categories and brand names.

What matters is whether the product falls within an existing category or in a new category. Similarly, it is important to know whether its brand name is old or new. The following matrix shows four possible alternatives.

PRODUCT CATEGORY

NEW EXISTING

w

~ NEW NEW FLANKER z PRODUCT BRAND Cl

~ gj EXISTING FRANCHISE LINE

EXTENSION EXTENSION

Fig. 1.3 Classification of Opportunities When both the product category and the brand name are new, it is treated as a new product. Children's

disposable diapers came as new category. The brand name chosen by P & G was Pampers. Thus it became a new product. Sometimes, the product assumes a new brand name but falls within an existing product category. It is called a flanker brand. Line extensions use an existing brand name and a product that is changed for the better, say, flavour, or size or model. Titan watches are a good example of line extensions. The product line of Titan is continuously expanded by introducing new models. Franchise 'extension is introduction of an existing brand name in a new product category. Thus IBM associated with computer enters the photocopierfield. The use of a familiar brand name reduces the amount of investment in the new category for promotion and marketing. However, the new item must be perceived just like the perception of the existing brand.

A marketing plan determines how the organisation and its product -mix can advance from its present position to a desired position in future, and describes the strategies to facilitate this journey and spells out the deployment of resources for the desired results. Diagrammatically, a marketing plan is:


Present Situation, Brand, Competitiveness 1-___ S_t_ra_t_e_g_ie_s ____ ~.1 Future Position I Trends, Opportunities, Resource Allocation I Brand Objectives

Threats

Fig. 1.4 Marketing Plan

A market plan influences product offer which creates value and marketing support needed to deliver the created value. Value Creation

While buying a product, a consumer wants value for his money (VFM). The concept of value is fundamental to the product and brand management. Value is the worth of the product in the mind of the consumer. The consumer considers the net value which is the excess of total customer value given by a product over the total customer cost. The consumer compares the net values of different competitive products.

Value is created by combining several elements. To illustrate, product value is given by its performance, reliability, longevity and special characteristics. Service value represents a beauty treatment unavailable elsewhere, lower interest rates, express sanctioning of loans for credit card-holders. Personal values like the speed with which a response is given also count. The image value associates a product with symbols and facilitators that surround a product. A Yamaha mobike is a powerful, glamourous machine for the stylish youngman.

Value is what the buyers are willing to pay for. The price paid by the buyer, the time cost, the energy cost which may result into economy in use and the psychic cost constitute the total customer cost. Philip Kotler calls the value over cost a derived customer value.

I Product value: I Service Value I Total Customer Value I Personal value: I Image Value I ! Customer Derived value! l Monetary Price I I Time Cost I Total Customer Cost I Energy Cost I

PsychiC Cost!

Fig. 1.5 Customer Derived Value

If the products or brands offer a bundle of benefits from which customers derive far greater value than the total cost they incur to receive those benefits, we say products or brands have created value for the customer. Benefits can be tangible or non-tangible, emotional or rational. Brands or products which have derived customer value.create value for the company too.

Moore and Pessemier consider value creation as a four-step process where (1) The value opportunity is identified. (2) The value opportunity is developed by engineering, technical, R&D, marketing and


managerial personnel. (3) The value is produced and (4) The value is added by marketing support. The first I two steps are conceptual and managerial and the last two are executional. The efficiency with which these

steps are carried out will determine the value retention to the stakeholders.

Fig. 1.6 Value Creation Bruce D. Henderson, the founder of BeG feels that strategy in essence means a big idea that allows

a company to differentiate its offering from those of the competitors so as to deliver superior value to the customer.

Core Values It is difficult to identify core values of a brand out of several values it possesses. This is so because a

brand does not remain static, but evolves over a period of time. Is it correct to view a brand as if it has frozen in time? To identify the core values, we have to consider the several different dimensions of the brand. To illustrate, we can consider brand associations-what comes to our mind when we think of the brand. Further we can consider brand's performance, the occasions and situations when it is used, and its logical extensions etc. What runs as a common thread through all these dimensions is the core value of that brand. It is an area of data intersection. If we identify these values correctly, they travel with the brand even if it is placed in a different product category. Nirma cleans and is strong enough detergent. These values are, however, not core values. Nirma's core value is reasonable quality at affordable price.

Brand Values We have to define our brand values accurately. Candies are sold on fun value, but they should

precisely know what kind of fun they espouse. It could be cerebral fun (Polo) or slapstick variety of humour (Googly) or blunt humour (Mint-O) or active humour of a sports person (Centre Fresh). Enduring brand values are unique to the brand. Thus all food products hover around taste. Then it is a matter of communication. Ufe-style brands find it difficult to define their brand values. Between smoothness and strength, with price variable intervening, there are several cigarette brands. Premium cigarettes are further sold on various degrees of sophistication. A brand may intersect several values. Nestle now wants to make Nescafe more than mere coffee; to make it a life-style product that creates "social openness, tolerance and receptivity to new kinds of experiences."

Value of a Brand An authentic brand, according to Kotler, marries a value proposition to a value delivery system. This

is in essence brand value. Nestle in Europe runs Nes Stops on highways. Here one can give a baby a nappy change, a wash and a feed. It is Nestle's way of delivering value. Its message is we want to help you use what you buy from us.

Core Value Core value is a brand's way of telling us 'why buy me.' In other words, it amounts to stating t:1e brand

proposition - the key benefit the brand delivers to the customer. This brings clarity and focus to the brand. Core value is the driving force of the brand. We can call it the value driver. Biotique's driver is rejuvenation. After articulating this value driver, Biotique can go beyond skin care, and can diversify into weight reduction, health ... every area that benefits from rejuvenation. Value driver is an over-riding value that will extend to every product a company makes, every action of that company and its every communication. But it does not mean that just because a value driver suggests its extendability, a company should diversify necessarily. According to Rama Bijapurkar, it is like climbing a mountain because it is there. We have to consider while diversifying factors such as market attractiveness and our ability to compete. Britannia has not articulated its value driver, but has unwittingly chosen health as its value driver. They are delivering health through their biscuits - though it is an unspoken commitment. But people sense it. They, therefore, accept its cheese,

t:)

Product: Basic Concepts

butter and milk. Value drivers make us think beyond the woolly descriptions of the brand. Subroto Sengupta calls us to distinguish between 'the fluff and functionality of brands.' Brand personality is just the wrapping it has around it, but its core value driver is the benefit inside the wrapping.

Universal Terminal Values Milton Rokeach, a psyhologist, has identified 18 terminal values or desired end-states that determine

how people like to live their lives. These include leading an exciting life, a sense of accomplishment, freedom, happiness, inner harmony and social recognition. Brands use these values to further consumer's life-goals. Brands shift focus from being product-centric to goal - or value-centric. Though consumers change over a period of time, the goals endure. It is, therefore, smarter to appropriate these universal terminal values.

Industrialisation of Personalized Service

11

Booze, Allen and Hamiton's journal carries an article by Kolesar, Ryzin and Cutler where they suggest seven principles of creating customer value:

Principle 1: Know your customer. Tailor your service. Foresee his needs. Simplify the processes. PrinCiple 2: Eliminate or minimise the number of hands required to complete a transaction. Principle 3: Promote value enhancing self-servicing. Principle 4: Offer a service package. Principle 5: Let the customers design the product. Principle 6: Deliver the service competently. Principle 7: Build long-term customer relationship. A brand may have a hierarchy of attributes, benefits and values. Thus what a brand stands for is stated

by the attribute (I ama floor cleaner). It then attempts rationalisation by giving rational benefits - I kill germs in nooks, and corners. It can evolve further and provide emotional benefit - With me, your family is safe from diseases. Ultimately, a brand puts itself on a high pedestal- I care and protect you. Thus from concrete attributes and benefits, the brand has evolved into an abstraction - it has become exalted. We have to understand at what stage the core value of the brand in question right now is to work for a sustainable value forthe consumer.

Competitive advantage grows out of product value created for buyers which is above the organisation's cost to create it. Core values do give competitive advantage but does it contribute to hold in the face of changed marketing environment? Similarly, as markets develop and consumers evolve, what was considered unique till yesterday may become commonplace today. Even cultural shifts do change the core values.

Which items offer superior value? They offer the same value as competitive items at lower prices. Or they provide unique benefits that more than offset a higher price or premium. Sometimes these premiums go beyond their intrinsic worth, say consumers pay a higher price for a Van Heusen shirt than any other ready made shirt. We can also consider the premium products of Johnson and Johnson.

Once brand values are created, we can save on marketing expenditure. Though advertising support to products like Aspro and Anacin is practically zero, the brands still survive.

Brand becomes a cash generating asset when endowed with values. It wards off competition by creating brand loyalty based on strong emotions. A switch-over then leaves scars on the consumer psyche, which he wants to avoid. Is it easy to snatch a bottle-feeding mother away from Amul formula milk? Orfor that matter, a new mother from the Johnson's product range?

Core values of the brand and the relationship it builds with the consumer are easy to defend. Competition finds it difficult to reach this level, it takes a long time. The more unique a brand is in terms of its soul, the better it is protected from the onslaught of competition.


Products and brands have core values and other values and both must complement and supplement each other. Moreover, value creation must be delivered to the customer by a suitable business system. Distinctive Competence

How a firm can provide superior value on a continuous basis? It is because of the firm's unique capability which is difficult to copy - such a capability is called distinctive competence. A firm has to set a strategic goal that it will develop a capability that enables itto provide superior value on a continuous basis.

Why do values of productlbrands differ? Different organisations have different manpower profile in terms of skills. Besides, the resources of different firms also are not the same. As we have observed, the values created must be delivered to the customers by a business system. Such business systems and their management create a crucial difference. The overall marketing orientation of the firm and its technological capability may also differ.

What makes a business system? The system groups all those activities which are carried out to produce, sell and service what it makes. The activities are converted into meaningful tasks like R&D, human resource management, marketing, finance etc. The follOWing diagram gives a typical business system.

Suppliers

Suppliers

Operations

New Product Development

Distribution

Sales and Promotion

Service

Operations I---........ ~ Sales, Distribution EJ. and Promotion ---. ervlces Fig. 1.7 A Typical Business System

Are our sources of raw materials. We must have a plan of vendor selection, vendor development and vendor evaluation. It is also an important decision what we shall make and what we shall buy from outside. Process the raw materials into finished products. The facilities, location, planning, scale differfrom firm to firm. Operations are integrated to quality. They can be automated.

Here there is interface of technical, marketing and finance people with a view to developing new products. The interaction amongst the team, the degree of innovativeness and the emphasis on pure or applied research differ from firm to firm.

Takes the products and services through a channel to the final consumers. The channel may have several intermediaries. Facilitate the whole process. There are differences in the promotion mix and the promotion budget amongst firms.

Covers applications, installation and maintenance. Some services are offered prior to sale and some post sale. The availability and the level and the efficiency to services differ from firm to firm.

The business system can be represented as a value chain: The traditional physical process sequence follows the following stages:

Product: Basic Concepts

Design

Fig. 1.B Business System as a Value Chain

Sales, Use and Services

Sell the Product

13

At any stage in the business system we can create value. McKinsey and Co. has developed the Total Value Proposition. In the Value Delivery Sequence, the marketers first identify the value they can deliver, and then proceed to provide that value through product and service development, sourcing and manufacturing, distribution and servicing and by pricing the products/services rightly. Lastly, the total value is communicated by the sales force, sales promotions and advertising. The following diagram illustrates this value chain: CHOOSE THE VALUE PROVIDE THE VALUE COMMUNICATE THE VALUE

Customer Marke Value Product Service Pricing Sourcing Distribution Sales Sales Adver-Segmen- t Sele- t Propo- t Develop- t Develop- t and and tFOrce Promo- t lising talion ction sition ment ment t Manufa- t Servicing t lion Focus cturing

The Pysical Process Sequence is thus modified to the Value Delivery Sequence to ensure maximum value addition. This approach is vastly different from positioning and USP which are just one dimension of the total value, especially at communication stage. The above value chain is the traditional design-to-end-user chain. It may break up in future. Each link may grow into a self-contained value chain. These chains will grow new industries around themselves. In computer industry, we have two distinct chains -the software chain and the hardware chain. These are two distinct industries. The critical element in the software chain is the operating system module, dominated by Microsoft, the corresponding critical element in the hardware chain is the IC, dominated by Intel (I, Celeron, II, III and IV). These two busi-nesses have little in common, apart from perhaps a common customer in the form of a computer manufacturer. In future, both Microsoft and Intel may find their own activities becoming a complete value chain, rather than just a link of their respective industries. Industry must try to identify the most profitable part of the value chain so as to pioneer it into a new sub-value chain.

Videocon washing machines add value to their products by providing prompt and efficient after-sales repair service. Value creation can happen at any stage. Bajaj Electrical gets its products manufactured at other plants, but still it is one of the most reliable marketers of electrical products. Computer firms like Microsoft ofthe legendary Bill Gates provide value that lies in computing power by bridging the gap between its software and the available hardware. We have to study our business system to identify those sections which can add most value and those that incur heaviest costs. It is wrong to believe that most value is added by manufacturing operations. Right Value Proposition

Value proposition has three dimensions - product leadership, operational excellence and customer intimacy. According to Philip Kotler, these three lead to different customer advantages - best product, best total cost and best total solutions, respectively. The focus on anyone dimension out of these three depends on the customer category. GE's aerospace engineering division focuses on product leadership, large appliances division on operational excellence and plastics division on customer intimacy. Though a company chooses to be the best on one dimension, it has to be adequate in the rest and keep improving on the best, and be more adequate at the rest.

Pursuing these dimensions may not lead to contradications. The future is for prod ucts that will resolve these contradictions. Product offering should not be this or that, but this and that. Gortex is a fabric that has the comfort and breatheability of cotton, but is waterproof.


Classical marketing advocated brand building, with a USP added, and fortifying this by having a good marketing mix. Kotler feels this is now under attack. A brand has now an extended identity that goes beyond its core identity. It should capture a value proposition, and be a basis of relationship. A brand must be supported by a value delivery system.

Value-oriented marketing is all about your brands delivering what they promise, nothing short, whatever they promise.

A brand is not just a name. It is a bundle of values, which it has to deliver. Merely an image of a slogan may not capture the whole brand. What remained central to the brand is its value management for the customer. A brand is a promise built around some capabilities an organisation has. The values we offershould be stronger and superior to those by the competitors.

Brands are not built only by advertising, though advertising goes a long way in communicating what the brand stands for. It makes no sense to over-depend on advertising to build a brand.

Instead of one single benefit which the USP captures, the tendency today is to work out a value proposition encompassing a set of benefits. -

Value in the ultimate analysis is a ratio between what the consumer receives and what he gives up. It is in a nut-shell a cost-benefit analysis for a product.

Positioning today is reduced to mere sloganising or inventing words to describe our brand. We tend to forget the large value proposition. This proposition is to be delivered. It needs sl!itable organisational architecture.

According to Kotler, value propositions a.re built on three value disciplines for the company - product leadership, operational excellence and customer intimacy. Product leadership leads to best product value proposition. Here performance or experience with the product matters a lot. Operational excellence leads to the best total cost proposition. Perhaps our services, prices and product reliability are unsurpassable. Customer intimacy discipline leads to the total best solution. Here the specific problem of the customers is identified and its best solution is offered, which then can be implemented. GEshows product leadership in aerospace engineering, operational excellence in large appliances and customer intimacy in plastics.

A brand is so builtthat it commands a premium, which could be between 30-70 per cent, but can come down to 15-20 per cent in a highly competitive environment. A brand that commands no premium is likely to fall into the commodity trap.

These days some brands are just owned, and marketed, but are not manufactured. They are manufactured by the organisations who have the spare capacity. In future, such separation between owning the brands and manufacturing facilities is likely to increase. Traditional Manufacturing-Selling Sequence

Manufacture Selling Product -+ Procure---.. Produce ~ Price -. Sell -. Promote --.- Distribute----+- Provide Design Raw the it it it Services

Materials Produce

In the above model, a product is produced on the basis of its design by procuring raw materials, which are processed using labour, machines so as to produce an output. The output so produced is sold by pricing, selling, promoting, distributing and offering post-sale services. The value delivery model replaces this traditional model.


Identify the Value Create the Value Communicate the Value

Segment Target a Value Product Pricing Distribution Personal Advertising Sales Customers Selected Position and Service Including Selling Promotion

Segment the Product Development Make or Buy Decisions

In the value-delivery model, values are chosen, created and communicated. Entertainment as Customer Value

We are aware that the functional benefits alone are not adequate to differentiate the products, and so companies go beyond them and provide differentiation in terms of efficient business processes, convenience, higher interactivity, custom-made offerings, creation of imagery and so on. Thus a brand's core values are woven around both the tangible and intangible features. This is done in a way better than our competitors. But even here the same set of tangible and intangible features get duplicated over a period of time by all the competitors. Most of the offerings then provide 'nothing special'. They are banal. We have to excite our customers by creating unique brand experience, in the absence of which there would be just price competition.

A customer today wants recreation, amusement, surprise, indulgence and entertainment. An offering with the existing bundle of features is OK; but over and above that a customers wants entertainment as an additional value.

There is a realisation that the process of acquisition of the product has the potential to create value, and hence his shopping experience matters as much as the consumption experience. Retail stores are therefore, designed as theme parks. More product categories would take this route. An academcian will have to mind his theoretical rigour, but at the same time this does not obviate the need to put his students in a right frame of mind while doing so. Entertainment content is becoming a key differentiatorfor many sectors such as banking, fast food, media, books, supermarkets, travel and so on. Entertainment must be accounted for at the product design stage itself. We have to consider the points of customer interface such as service centres, helplines, communications, distribution outlets, websites and so on. Our attempt should be to invest the communication with entertainment and extend itto the process of acquisition. Agreed, a lot of research will be necessary to decide the course to be taken. We can learn from entertainment industry itself quite a few lessons. Innovativeness: To What Degree?

If we construct a scale of innovativeness, at one end we can put an existing product which we just emulate, making it a me-too product and atthe other end a complete technological breakthrough which did not exist so far, e.g., a transistor, nylon, teflon, TV etc. In between these two extremes, there are a number of innovations consisting of incremental changes in product or service or in the way it is produced. It means these are either product innovations or process innovations. Large number of innovations are incremental, and the overall impact of them put together is much more than a technological breakthrough. However, such incremental innovations on a continuous basis are punctuated by occasional revolutionary products or major innovations. A major innovation creates an altogether new industry or a new market. They also change the way the things are done so far. Manual composing in days prior to DTP took a long time but book publishing took a quantum jump as soon as computer composing came on the scene. It is, however, necessary to continue minor improvements even on a major innovation to ensure continued success.


Bell Labs When, in 1947, Bell Labs invented the transistor, they started a revolution that would completly

transform the information and communication world. Their other innovations are the Laser, the Communications Satellite, Touch-tone dialling and Lightwave Communication Systems. They have now put Inferno, a new network operating system; Elemedia software delivering high quality speech, music and video via Internet and Truewave, a high quality fibre. They are currently working on Digital Signal Processing, Lightwave Photonics, Next Generation Silicon chips and Wireless Communications. These revolutionary products of Bell Labs are brought to the world by Lucent Technologies, earlier known as AT & T.

US, National Science Foundation (NSF) study on technological growth of Asian nations infers that India is technologically uncompetitive. Asian high-tech nations are grouped in three classes-

(1) Industrially advanced Japan. (2) Newly Industralised Economies (NIEs) like Hong Kong, Singapore, South Korea and Taiwan. (3) Emerging Asian Economies (EAEs) like China, India, Indonesia and Malaysia. An indicator of nation's innovativeness is patenting. Domestic inventors patent, and this shows

productivity in science and technology. Patenting by outsiders show attractiveness of nation's market for innovations. Patenting activity is lowest in India. As compared to 2500 patents awarded in Taiwan in 1990 India awarded about 2000 patents only. It has now increased to about 4000 patents. NIEs showed a healthy patent growth. Amongst EAEs, China is the leader in patents. Managerial Challenge

To introduce new products on a continuous basis is a challenging task. There is an inherent resistance to change, and organisations tend to maintain status quo, and are indifferent to fresh ideas. The more successful amongst them are more reluctant to pay attention to new ideas. A shock that shakes a person or a sense of dissatisfaction with what exists makes a person sensitive to new ideas. The environmental change that threatens might make us open to new ways of doing things. Minor changes, however, do not wake us from our slumber. Well-placed individuals with stable jobs, and insulated nature of jobs also make us pay less attention to new ideas. When a person faces problem customers and problem situations he is compelled to shake off his stupor, and pay attention. Of course, he needs time to do so. In the absence of time, he Just develops stress.

Viable new ideas must be put into circulation. This is facilitated by properfunding and a team. Team members must be responsible for the whole innovation, rather than their own specialised task. The team should have good awareness of the environment. It is necessary not only to innovate but also to convert that innovation into a competitive advantage. Business history is replete with examples of organisations which innovated but failed to convert these innovations into a sustainable competitive advantage. This is valid especially with reference to European business history. EMI (UK) pioneered advances in TV and computers, but remained restricted to music business only. Philips pioneered so many innovations in consumer electronics, say the audio cassette, the CD and VCRs. But it lagged behind. Perhaps, innovations by their very nature are costly and uncertain. They may not be profitable despite being technically feasible. It is difficult to manage the process of innovation. Lastly, the rewards of innnovation are difficult to appropriate. It requires managerial strategy to convert an innovation into a competitive advantage.

Dr. Hamel who is considered to be the most influential business thinker according to Wall StreetJoumal contends in his latest book that long term success for the companies stems more from the way they are managed than from their strategy or products.

3M's axiom is 'products belong to the division, but technologies belong to the company.'


Internal Marketing We promise so many things to our consumers through marketing communications. But do our

employees understand what we are communicating? Are they supporting these? Or are they working at cross-purposes? Our employees should connect emotionally to the products and services. They should understand the power of the brand. HR may not be best equipped to communicate internally. Marketing might be involved once in a while. Butthe emphasis is on what we are doing. They should be sold ideas. Principles of advertising are equally applicable to internal communications. Employees should better understand the brand vision. When a company seizes opportunity to market internally in the context of challenges it is facing, it channelizes people in the desired direction. A petroleum company can reposition it as energy company. It has to do internal branding first. Change in leadership also provides an opportunity for internal re-branding. But this should not be overdone, or else the employees feel they are flooded with communications unrelated to their departments. There should be a consistency between messages sent across externally and messages directed inwards. Mostly these are unmatched. It becomes so confusing. Sometimes, advertising is created to cater to both the external and internal audiences. Yes, the external message can be a step ahead of the internal reality. It acts as an incentive for the employees.

+++

MARKETINGENWRONMENTFOR PRODUCT AND BRAND MANAGEMENT

India is on the threshold of a new millennium. India chose to integrate her to global economy exposing herselfto winds of change in the marketplace, which has expanded vastly and become fiercely competitive. In the changed environment, decision makers view the marketing concept as the key to success. Marketing in practice has to manage products, pricing, promotion and distribution. Product management covers the whole gamut of product planning and product development by itself covers new product development, right from concept to commissioning. These products are branded to raise them from commodity status to a distinct identity. The brands are positioned along key attributes. Brands have an image and a personality. Managers must build these brands over a period of time to develop brand equity. Brand equity can be evaluated.

Thus the entire area of product management is a fascinating one in the overall marketing management function. In the basic marketing paper in the foundation courses, we study how marketing decisions are taken in marketing environment consisting of several factors like demographic, technological, economic, legal, social and cultural. We shall not discuss these in the present text, but would like to make you familiar with some aspects of the overall environment that have bearing on product management.

India is a part of the Asian consumer market. Let us, therefore, first discuss the broad profile of this market.

Asia Pacific - a Region in Transition The 19th century belonged to the U.K., and the 20th century to the US. But this century is unlikely to

be ruled by a single dominant power. Britain owed its dominant position to the Industrial Revolution. In the last century , the first half had three major players - the US, West Germany and the UK. In the second

Marketing Environment for Product and Brand Management 19

half, the US had the economic field all to herself because of the destruction caused by World War II. In this century, we have three contenders for leadership - Japan, Europe and the US.

After the World War, Asian countries have received greater importance -Japan, South Korea, Hong Kong, Singapore, Taiwan followed by Malaysia, Thailand and Indonesia. They are allleading exporters. The Republic of China has also taken a quantum jump after introducing economic reforms. The Pacific has thus become the world's leading trading zone. Asia is the mega-market of this century.

There is a sweeping transformation of the economic environment. There is no longer any Iron Curtain. The Western Europe has integrated. NAFfA is in place between the US, Canada and Mexico. All this has brought two continental economies closer. There is borderless movement of goods, persons, services and capital. China and India - two large markets- have begun their march towards liberalization. They are expected to achieve the status of superpowers in the near future.

India started her reform process in 1991. This covers industrial, trade and financial sectors. Indian business hos been mostly delicensed. Directforeign investment is encouraged up to 51 per cent. State sector has started shrinking. The process of disinvestment has begun. Trade is market-oriented. Currency is partially convertible. Several items have been decanalised. Financial sectorreforms have allowed private banks and insurance companies. Price control has been lifted from sugar and petroleum products. Interest rates are being slashed. Private capital is welcome even in infrastructure sector. Far-reaching changes are taking place in China too. IT has become a system of worldw.ide network. Technological changes are fast occurring. But social changes must keep pace with these. A radical change in work ethos and management culture is called for. Companies must profeSSionalize. Organisations must change to adapt to the changing environment.

A unified Asia Pacific region can be fashioned out of all Asian countries. It is just a matter of time. Asian Consumer Market

When we use the word Asian consumer, we use it as a shorthand. The fact is that Asia is too diverse a collection of countries where commonalities are very little. Geographically, the positioning is the Chinese countries and the South-east Asian countries. The demographic and psychographic characteristics of the population are very different. In this part of the world, on one hand we have giant countries like China and small city states like Singapore. When we compare and contrast these countries, we get a better understanding of them. The Chinese-dominated countries such as Singapore, Taiwan, Thailand have many commonalities. There are some striking contradictions. The size does not indicate the consumer power in Asia. The mosaic of composite culture is crucial to understand Asia.

China is the most populous, over a billion, and India is close to a billion mark. Singapore's population is just 30 lacs, and Hong Kong's 60 lacs. Malaysia is predominantly Muslim, and Philippines Roman Catholic. Thailand is Buddhist. China has a variety of religions, some very old, and some modem. Its socialist ethos has given it an atheist bias.

Urbanisation in China is less than 30 per cent whereas in Vietnam it is 70 per cent rural. Singapore, Hong Kong and Taiwan are urban societies. Thailand is 80 per cent rural, and Philippines 69 per cent. Rural countries are poorer, and some like Malaysia are relatively rich with 51 per cent rural population.

China is a communist economy, which is opening up its market. Taiwan and Singapore are democracies. Vietnam is also communist. Indonesia is in turmoil and shows a pro-democracy movement. South Korea is in turmoil, and is going liberal. Hong Kong was handed over to China in 1997. Macao will be freed at the end of this century, thus ending European colonisation in Asia.

Hong Kong and Singapore, income wise compare favourably with the western nations. An average Singaporean earns US $ 24000 and an average American US $ 26000. South Korea has per capita average income of US $ 11000. China is, however, poor and the average earnings are US $ 530.


In countries like China, Indonesia, the Philippines and Vietnam, a large population survives on just US $ 2 per day.

All these countries have a middle-class which shows healthy growth. But what constitutes a middle class depends upon the nation. Besides, sometimes it is difficult to draw lines constituting middle-class. There is no common middle class. Their characteristics are unique for each country.

The economic bases are also diverse. Hong Kong and Singapore are financial and services-based economies. Indonesia is rich in minerals. The engine of growth in many countries is the industrial sector, but this sector differs in each country. Malaysia has good IT industry, whereas South Korea is in steel population and shipping.

China has attracted the highest investment of multi-nationals. Specialised industries are penetrating different countries, e.g., Scotch whisky has entered Taiwan.

Asia can be studied in components, and each of these components requires a specific marketing programme.

China is following one economy, two systems principle. She has to cope with pro-democracy movement. The Tibet issue also surfaces time and again. China has travelled from the Mao's Revolutionary days to the dignity Deng accorded to richness. China has to resolve the rift between the rural poor and the urban rich. Indonesia has seen ethnic violence recently. Burma is a dictatorship. There are several border disputes in Indo-China. Narcotics trade and rampant plagiarism affect the bilateral and multi-lateral agreements.

Consumer market has begun to emerge. Economies are opening up. Trade wars are hotting up. Consumer markets are becoming increasingly competitive. Credit facilities have catalysed the consumer market. There is greater access to goods and services. Credit cards have given a boost to consumerspending.

It is essential to understand the characteristics of these markets before venturing out here for marketing. We shall now consider the tremendous potential of the Asian market.

Tremendous Potential of the Asian Market Growth rates across South Asia average 6 per cent per annum, way ahead of the West. China in fact

continues to grow at 9 per cent per year. This growth has spawned a huge middle class with high disposable incomes ready to be spent on almost

every category of consumer goods. Hong Kong, Taiwan, Singapore, Thailand and Indonesia have become large markets for every kind

of product - from Mercedes cars to Rolex watches and from Channel suits to Louis Vuition luggage. There are many more millions who follow these in China, Korea and India. The number of households

earning over $ 18000 per annum will double between now and 2000 ($ 18000 is the average European income). These numbers exclude Japan.

This represents a tremendous marketing opportunity for strong brands to emerge winners. Brands will have to be built regionally.

If you consider the Asia Pacific Market excluding Japan, the total ad spend is around $ 34 billion, of which India contributes $ 1.5 billion according to figures from 2,000. By 2020, the industry will be valued at $ 204 billion. The main growth markets will be India and China.


Media Scheme Satellite TV and domestic TV have proliferated. Cross-regional advertising is a natural consequence.

Satellite is unlikely to exceed 1 per cent of media expenditure in Europe, but it may make up as much as 10 per cent in Asia. Its effectiveness and sheer ability to reach the vast audiences make it a potent tool.

Agencies have to adapt to local regional needs, but while doing so, they have to keep the international perspectives.

Leap-Froggig Asia has been able to leap frog the West in many areas, e.g., telecom where Asia has built digital systems

right from the beginning.

Chinese Market It is a stable market. To have an ad budget of $1 million just a couple of years ago was considered

huge. Today $ 10 million is not considered unusual. 0 & M Beijing doubled its billing through new business. Greater China includes Hong Kong and Taiwan. It can be treated as a unified region. Product development, branding and promotion can be considered for this entire region.

Sub-Regions (i) Indo-China: Bangkok as its heart. (ii) Malaysia-Singapore: Media sharing now. Management structures common.

Creative Work Western advertising discipline has merged in Thailand with the local cultural insight to create a

fascinating advertising market. Ad standards are improving across the region. The ad industry is grooming at the rate of 20 per cent or more per year. There is, therefore, shortage of manpower - finding, retaining and developing the local talents . Importing the manpower is not the solution. We may import the professionals, but they may lack the sensitivity to culture and language and willingness to learn and lead in different ways.

AgenCies with Strong Presence in Asia (i) 0 & M.

(ii) J W T. (iii) Backer Spielvogel Bates. (iv) Leo Burnett. (v) Mc Cann-Erickson. (vi) Lintas.

Moral Asia is the biggest potential market of the next 50 years. After discussing the potential of Asian market, we shall .examine the importance of Innovation Skill in

such competitive environment.

Innovation Skill in Competitive Environment Pradip N. Khandwalla, lIMA says , "following liberalisation and globalisation, we are entering a phase

of hyper competition. This competition will be particularly severe during recessions." In such situations, "me


too' responses do not give a competitive edge. Innovation solutions alone make or mar corporate success. Innovations are to be mastered through creativity. Creative organisations keep inventing new options in strategies, systems, structures, products and processes. As compared to conventional organisations, creative organisations perform better. Pradip Khandwalla feels that creativity is not God-given as popularly believed. It can be developed to a considerable extent. Creativity is a mind-set of exploration end looking for novel but useful options. It is an optimistic, resourceful mind-set that greatly strengthens the 'can-do' attitude. Creativity is an extremely important strategic resource of an organisation. It is liberated when the policies, strategies, practices, structures and systems in the organisation are conducive. Once liberated, it leads to a succ;essful stream of innovations.

Fig. 2.1 A Thrlvlg Taiwan Market

In the international markets, we shall have to consider first the image of India. A positive image of the country of origin of the products and brands makes a world of difference in the marketing of the individual brands of different corporate organisations. We will, therefore, first consider India as the Brand.

India, the Brand India conjures up strange feelings elsewhere. She has her own mystique. She has a spiritual heritage.

She is poor, and belongs to the so-called 'third-world. 'O&M India recently conducted India Brand Audit. It assesses what other consumers elsewhere think about India. The perceptions about India are different in the East and the West. In the East, countries like China and Hong Kong are cautious about India. The West is more positive.

In the UK, India is considered a synthesis of the real and harsh world. There is sublimation in the form .. of spirituality. It is a unique world. There is the rich-poor contrast. However, India's ethos touches you.


/

Fig. 2 .2 Hong Kong: Potential Centre for Global Advertising in the 21st Century


In the US, India is respected for her humanitarian values. India is an exploration, a bold one at that. While exploring India , our soul is elevated. India's infrastructure and hygiene leave much to be desired. In India, we travel back to our childhood, and wonder standing in front of a toy stc!"e.

Sri Lanka thinks India accommodates extremities. Hong Kong thinks India illogical. China thinks India lazes around, and is a bundle of contradictions.

This Brand Audit will be a great help in projecting the right image of India abroad. India as a brand has the potential. We should build on our strengths. India is to be explored. The journey never ends. The individual brands can get a boost ifIndia as a brand is built up rightly. India as a brand needs country-specific handling. India's image needs correction. When individual brands and country as a brand synergize, it facilitates global marketing. For instance, India as a lazy country would not be conducive to Indian companies marketing their brands. India's passion for human values and intellect makes her suitable for marketing software and handicraft.

A1yaque Padamsee recommends Image India campaign. This campaign should build on impressive facts and figures covered in emotional equity. India's brain-power is formidable . People in the USA know about it. We can talk about our democracy, ancient culture and civilization, millions of consumers, the English comprehensive ability, films and software expertise. .

Case: The India Brand Equity Fund (IBEF) This fund has been set up in 1996. The GOI is its founder trustee. It has put in a seed money of Rs.

1 crore. The total corpus of the fund is expected to be Rs. 500 crore. However, it has now been limited to Rs . 50 crore to be contributed by Indian trade and industry.

F1CCI recommends a two-pronged approach - build up Indian goods as generically good and then build up a productlbrand or company. The brand-specific equity could be built up using soft loans from a venture capital fund to be to set up later. 'Made in India' first must have equity. Then there should be product promotion. There is a provision for the promotion of individual brand provided that:

(i) it offers a comparative advantage and is of strategic interest. (ii) meets international quality levels, e.g., ISO 9000 certification.

We generally associate several traits to geographical areas, which are rubbed off to the brands originating from those areas. Thus Coke, Levi's and McDonald have American heritage. 'Made in India should be associated with positive traits. Though Indian rum is an excellent product, it is not acceptable in the US. It is, however, possible to create brand equity for India as a whole. Some companies may adopt a strategy of creating brand equity for their own brands, which takes precedence over the country-specific equity, e.g., Titan. Brand equity of a country depends to a large extent on the product quality. India lost on this count because of the protected market so far. India was not open to MNCs, and so did not face international competition. Indian goods have a low quality image even domestically. Even foreign brands made in India lose out to those made abroad. However, in the globalised economy, the purchase decision is not affected much by the country of origin. Over a period of time, some foreign brands are considered home-grown, e.g. , Sony is considered a home brand in Korea and Malaysia. Thus IBEF should promote the 'India' label in the beginning, but has to trade off between India-label and brand-promotion later. We can also think of specific places like Darjeeling for Darjeeling tea, instead of the entire country.

Consumers are now fed up with the usual youth brands from the US, technology brands from Japan, sexy brands from Italy, chic brands from France, heritage brands from Britain, engineering brands from Germany and so on. All this is predictable, and repetitive. Consumers search for newer options and hence the rise of world music, world theatre, alternative medicine, fusion cuisine, ethnic fashion and so on. India can capitalise on this new trend by powerfully highlighting her own brand essence. A piecemeal approach would not work. It has to be a major nation-wide initiative. The whole machinery must be geared to sell Brand India. The government can set up, ideally, a Brand India department. All communication must be consistent

Marketing Enuironment for Product and Brand Management 25

and based on some common themes. It should be simple, compelling and creative. Though brands make the reputation of a country, the country also helps the image of a brand.

Branding strategy can be used to position nations. Anholt in his book Brand New Justice writes 'a national brand strategy determines the most realistic, most competitive and most compelling strategic vision for the country and ensures that this vision is supported, reinforced and enriched by every act of communication between the country and the rest of the world.'

Brand India Suhel Seth posed the question whether we have failed in building Brand India in Business Today

Crossfire (2003) at Delhi. A1yque Padamsee felt it is so. According to Padamsee, France is globally known for 'love', Italy for 'design', America for 'Hollywood', Great Britain for 'royal family' and Brazil for 'football.' Brand India is associated with IT and cricket but the association is not strong. Our brand image is not worth talking about. According to Padamsee, at least Nehruvian India was strongly associated with Non-Aligned Movement (NAM). Our original image was Gandhian % tolerance and non-violence. But recent events have shattered this image. India has to project an image, an for this ideas should be discussed.

According to N.K.Singh of the Planning Commission, we should not be led by fantasies. Uril girl under waterfall is no good without water supply and Kamsutra's pleasure principle is useless without bed-room privacy. India has positioned itself every decade since 1947 % in terms of values, systems and the national psyche. From a poor starving nation, India has become a nuclear power. It is emerging as an IT hub, and a centre for knowledge economy. Branding of coutnries is complex. Brand India is an amalgam of a kaleidoscopic images. India exists at several different planes. Just one dimension cannot fully caputre Brand India. It conveys a multiplicity of images. According to brand guru, Bernd H. Schmitt, India has three advantages - acceptance of English as a universal language, democracy and its strong legal system.

According to Ami1ava Chattopadhyay, Professor of Marketing, INSEAD, brand India has taken off, but it hasn't arrived as yet. It wtll take some time. Korean brands Samsung and LG started in 70s and have become big in this millennium. India is considered to have the potential of a superpower. So, Indian brands will take less time to establish than the Korean and Japanese brands. India and China are spoken of collectively. Though China is much ahead, the association rubs off the positive qualities on India; though it also affects adversely, e.g., when Chinese milk affects the health of kids.

According to brand guru, Bernd H. Schmitt, India has three advantages - acceptance of English as a universal language, democracy and its strong legal system.

Brand India A rising rupee, a pounding sensex, a sustaining GDP and ashining India Inc. - thatis the brand India

for you! The government has launched two brand Indiacampaigns-IndiaNow and India at60 campaigns. The government is marketing Brand India like never before with investments growing from Rs. 20 crore to Rs. 150 crore.

Narayan Murthy ofInfosys quotes Professor Michael Porter who says that it is the individual firms that compete, not nations. But his contextis the developed world. For developing countries, according to Murthy, there is a need for branding the country in addition to the individual firms competing or indiviudal firms branding.

Brand India has to be worked out. A brand is a trust mark. It is something that raises your confidence. A person visiting India must have positive experiences right from the time he arrives here to the time of his departure. Such experiences should make them commit to India. They should express their satisfaction when asked about India. There are minor irritants here and there, and they should be fixed up. The foreigners must have a positive emotional stake in India and Indians. Airports are the first impressions. They should be world-class.


According to Murthy, branding is about doing unusual things. It makes people take notice of you. A brand is created first by doing unusual things. It is then sustained by advertising. India as a brand must be built on trustworthiness and courtesy.

Infosys was founded with an objective that it would be the most respected company. Each branding exercise has to start with some clear objective. This goal is to be put into action. The leaders should set the exmaple. The mindset must be changed. There are constraints, but a leader sees them as opportunities. Economic reforms brought revolutionary changes since 1991 butthese were thought about in just a week by a handful of people including Narsimha Rao, Manmohan Singh, P. Chidambaram, Montek Singh Ahluwalia, N.K. Singh and Jairam Ramesh.

According to Murthy, if you want to create trust, make trustworthy, respected people say good things about your product.

Strategic place marketing enhances the country's position in the global market place. We have to understand the environmental forces such as the strengths and weaknesses ofIndia to compete with others, the education of the population, tax incentives, skilled labour and its cost. Environment must be monitored to assess the opportunities and threats.

A country must manage its image strategically among its audiences. It must segment its audiences. It has to position itself. It must communicate this position to its target audience. It requires special efforts to confront a negative image, at times due to factors beyond its control. It is easier to create new positive associations than to ward off the old ones. A country should attract tourists and industry. Philip Kotler recommends that countries must embark on conscious country branding.

Though a country may not deliberately create a country brand, people still carry images that get triggered just by pronouncing the country's name. Country image is the sum total of beliefs and impressions people hold about places. Images simplify a complex of large number of associations and pieces of information. A country acquires image due to its culture, heritage, geography, history and other features. Media plays an important role in shaping these images. Certain products are associated with certain places. There are negative as well as positive associations. Some images over a period of time become stereotyped; but these may not be accurate. Country images are a short -cutto information processing. These images can be managed and influenced.

Country of origin (COO) has become an important cue in product evaluation. This can be further divided into country-of-design, country-of-assembly etc. COO may not be as important when other indicators of quality exist. COO may affect consumers negatively if they are hostile to the country. e.g., Jewish consumers avoid German products. It is to be researched how consumers choose between own country's product and foreign products. Country's reputation is an important asset to be managed.

What makes a country competitive? Let us now concentrate on this. Why some nations are competitive and others are not? Some assumptions we make and explanations

we tender are not true. India could also build its brand through its strong lineage of culture, e.g. yoga, wellness and spiritualism.

Marketing India To market our products abroad, we must first market India. Japan has marketed her successfully,

though there is little they have contributed to space technology, nuclear science or medical science. Theirfone is a few cars and consumer electronics. Even then Japan's image is of a technologically superior country.


India has so much to be proud of; and it should be projected. India is the fifth largest economy in the world. It is a huge consumer goods market. It is the second largest milk producer after the US. Our products like Lifebouy and Fair and Lovely command the highest sales in the world, our technical manpower is the third largest in the world, after America and Japan. Our software specialists constitute 10% of Silicon Valley scientists. India is the largest producer of films (1000 films a year as against Hollywood's 300). We produce second largest number of music cassettes after the US. Most important of all-India is the second largest English-speaking nation in the world.

Indian authors, novelists, musicians, sportsmen have left an indeliable imprint on international canvas. India has world's best marketing brains. Padamsee has built up mega-brands like Dalda, Liril, Wheel,

Surf and Fair and Lovely. Onida as a brand has gone international. Indian advertisers have added value to many Indian brands.

Padamsee advocates a team of the creative, research, presentation talents to project India outside. We should think in terms of a trading bloc, say economic community of South Asia. We should build bridges with ourneighbours.

Global brands have national identities, e.g., Coke has an American identity; BMW has a German identity. India can build a global brand by giving it an Indian identity identity consistent with the image of India around the world. India can develop global brands in textiles, crafts, jewellery, computer software etc.

Explanation for Competitiveness Why not Sustainable?

Macro-economic phenomenon driven by exchange- Rising standard of living despite budget deficits (Japan, rates, interest rates, and govt. deficits. Italy, Korea).

Function of cheap and abundant labour.

Beautiful natural resources

Appreciating currencies and yet rise in standard of living (Germany, Switzerland). High interest rates and yet rising standard of living (Italy, Korea).

Despite high wages and prolonged labour shortages, Germany, Switzerland and Sweden have prospered. Automation of labour content in Japan and their firms have succeeded internationally.

The most successful trading nations have limited natural resources. They import the raw materials. Examples: Germany, Japan, Switzerland, Italy, Korea. Resource poor regions within Korea, England, and Germany are prospering.

Influenced by govt. policy. Italy's govt. policies have been ineffectual but she has Targeting certain industries for development, protec seen a rise in world export share, second only to Japan. tion, export promotion and subsidies. Also a rising standard of living. Examples: high visible industries such as automobiles, shipping, steel and semi conductors. Differences in management practices including IR, e.g., Different industries require different approaches to American management of 1950s and 1960s and management. What is celebrated as good management Japanese management of 1980s. practice in one industry would be disastrous in another.


What Holds India Back? Indian brands must get adequate investmentsupport abroad. The investment must be commensurate

with the business plans of the company. Distribution is one area that requires utmost attention. The company has to establish a distribution network and provide advertising support to it, and point -of-sales material. We require finance for warehousing, rentals and salaries. Brand promotions are expensive.

Indian Brands Abroad Infosys, Wipro and TCS are well-known brands abroad. Indian cuisine is beginning to become

accepted. Kingfisher beer is making investments to compete with mainstream brands. Indian garment manufacturers are the suppliers to the world's leading Western brands. They should now make an attempt to market their own brands. In industries like bicycles, we have a cost advantage. Atlas cycles have been sold in many countries. Titan penetrated markets abroad by targeting NRI or India-friendly population. Later, it set a foot in Europe. Each market must be studied in detail before marketing an Indian brand.

Last, we shall now come to the important concept of value migration. Organisations represent certain values and so do products. These values are to be created and then maintained. Value Migration

Value provides sustenance to an organisation. Values, however, do not stay permanently with an organisation. Like migrating birds, values do tend to seek shelter in the most conducive climate. Values tend to favour pro-active and productive organisations, with strategic vision. The flow of values ultimately is a function of customer choices. A company that has a business design which best satisfies customer priorities attracts value inflow. This inflow is maintained either because there is no better alternative or the business design remains powerful over a period of time. Value outflow results if the business design is not capable to meetthe customerpriorities.lt, therefore, is imperative for the organisation to assess and anticipate the ever-changing customer priorities. Value migration concept has been pioneered by Adrain J. Slywotzky in 1996. Value is retained by the company's ability to earn more profits. This ability to retain value is called strategic architecture. Those organisations which lack this architecture tend to send away the values which migrate to ones with such an architecture.

In the Slywotzky model, the ratio of market value to sales indicates how powerful the organisation's strategic architecture is. An upward trend is a positive indication, whereas a downward trend calls for reworking of strategies. In today's environment, a value flow is seen from traditional sectors to sun-rise industries like information technology and pharmaceuticals. The whole complexion of value chain is changing. The highest values are retained by consumer goods industries. The intermediaries are rated poorly on value scale. Service industry's value share has increased. Values are migrating from mature markets to sunrise markets. Focused companies have more inflow of values, as compared to diversified companies. Professionally managed companies attract values more than the family-owned businesses. Values tend to migrate towards customer-friendly businesses.

THE TOP SIX GROWTH FIELDS' In the coming century, the following six fields have the potential of maximum growth.

Computer Graphics Computer Aided Design (CAD) and Computer Aided Imagery (CAl). This will revolutionize operations management, electronic media and movies.

In/ormation Technology (IT) Maximum growth area due to technologies in telecom, fibre optics, mergers of communication companies and Internet.

Marketing Environment for Product and Brand Management

Robotics Robots in future will be able to see, hear, feel and obey. This field will have scope for technicians,

engineers, installers and maintenance engineers.

Health Care New breakthroughs in medicine and surgery, and consequently new opportunitities.

Biotechnology This technology will solve many medical problems.

Lasers Laser application will extend to many areas of medicine, communication and manufacturing.

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