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Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
Value brands by Raj Nair (Avalon Consulting)
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Value brands by Raj Nair (Avalon Consulting)

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This slide deck was shared by Raj Nair at the TiE Institute Knowledge Series in Mumbai in July2010. …

This slide deck was shared by Raj Nair at the TiE Institute Knowledge Series in Mumbai in July2010.
The deck covers the concept of Value Brands.


[Related Videos may be available at http://Youtube.com/EnterprisingINDIA ]

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  • 1. Value brands : growth unlimited<br />Presentation: July 17, 2010<br />TIE, Mumbai<br />
  • 2. Roadmap<br />What are Value Brands ?<br />What does it take to build Value brands?<br />Can we penetrate International markets with Value Brands?<br />
  • 3. Value Brands are Value for Money<br />The seller’s mindset seeks big volume, low price, decent quality to feed aspirations of consumers <br />Buyer’s mindset: maximise value without compromising on benefits<br />Benefit Price Chart<br />100<br />Value Brands Territory<br />Positive value<br />“Line of indifference”<br />Benefit Index<br />50<br />Negative value<br />0<br />100<br />50<br />Perceived price index<br />
  • 4. Micro max-the story<br />The situation in the mobile phone business<br /><ul><li>Multi Nationals unbeatable . Nokia, Samsung, Motorola, etc. Too deeply entrenched not just in India
  • 5. Prices are dropping with each new model launch
  • 6. People looking for fancy phones with many features
  • 7. Cheap Chinese phones of doubtful quality
  • 8. Enter Micromax in 2008. Nobody gives them a ghost of a chance</li></ul>09/07/10 – ND/pr<br />
  • 9. There is nothing Micro about Micromax<br /><ul><li>Multi Nationals unbeatable . Now Micromax has beaten Motorola and is expected to be the No 2 after Nokia by the year end!!</li></ul>How? Aggressive cricket focused marketing with a budget of Rs.100 crore and smart distribution channel management (90,000 outlets in B&amp;C Class town in 500 districts) to support a Value for Money product proposition<br /><ul><li>Prices are dropping with each new model launch. They launched phones across the price range up to Rs15000 but each model at much lower than the MNCs
  • 10. People looking for fancier phones with many features. Give high end features in low priced phones. Imagine QWERTY phones below Rs.5000! Now selling 1 million phones a month!!
  • 11. Cheap Chinese phones of doubtful quality. Focus on acceptable quality</li></ul>09/07/10 – ND/pr<br />
  • 12. <ul><li>#1 in India
  • 13. 34% market share</li></ul>The Amul Ice Cream Story<br /><ul><li>Launched in 1996 – Kwality Walls market leader 40% share. Its predecessor Kwality, well entrenched
  • 14. Aggressive Pricing
  • 15. 25% to 40% lower than Kwality Walls
  • 16. Built market shares through point-of-sale promotion, product promotions and low mass media
  • 17. Leveraged the strong Amul brand association with the integrated milk business
  • 18. Many others have failed, before and after Amul</li></ul>09/07/10 – ND/pr<br />
  • 19. Premium<br />Middle-of-the-Road<br />Value Brands<br />Time<br />Value Brands normally drive out the middle-of-the-road segment in most categories over time<br />Why &amp; How?<br /><ul><li>Category and Market Share growth because
  • 20. Value brands address aspiration needs of the masses
  • 21. Value brands are “good enough”…and more attractive than private label
  • 22. Made possible through
  • 23. Proliferation of low priced channels
  • 24. “Insurgent” business models</li></ul>PricePoints<br />
  • 25. <ul><li>#1 in China
  • 26. 24% market share</li></ul>Chinese detergents– The Diao Story<br /><ul><li>Originally produced using excess capacity in P&amp;G, Henkel factories, etc.
  • 27. Now produced in 5 ‘close to consumer’ factories
  • 28. Extensive distribution with substantial intermediary incentives / trade marketing
  • 29. Priced &gt; 30% less than major brands</li></ul>09/07/10 – ND/pr<br />
  • 30. Chinese Detergents<br />Diao rapidly ate up everybody else’s lunch to become the leader<br />Diao Market Share, 1992-2003<br />% Market Share<br />Relative Share by Value, 2003<br />% Market Share<br />Diao BrandLaunched<br />DejaVous?<br />09/07/10 – ND/pr<br />
  • 31. A number of other examples…….<br /><ul><li>Nirma (the ‘original’ value brand) ,Ghadiand Fena in the detergents market
  • 32. Ujalafabric whitener – 65% market share, displaced Robin Blue
  • 33. A number of global examples…….</li></ul>Procter &amp; Gamble is expanding their portfolio into the value-priced segment. The successful launches of <br /><ul><li>Mach3 disposable razors in the U.S.
  • 34. Pampers Simply Dry diapers in Germany
  • 35. Naturella feminine care pads in the Arabian Peninsula </li></ul>are three recent examples of products in this category. <br />L’Oreal ventured into the value products segment via its high-end brand The Body Shop. They launched a new line of cosmetics called The Original Collection, which includes 11 iconic Body Shop products sold at attractive prices.<br />09/07/10 – ND/pr<br />
  • 36. Roadmap<br />What are Value Brands?<br />What does it take to build Value brands?<br />Issues involved in penetrating International markets<br />
  • 37. Primary condition<br /><ul><li>Big market in the chosen category
  • 38. Value Brands strategy is not about winning a small prize at a low price
  • 39. Nano is a Value Brand. Addresses a huge 2 wheeler market which has millions of car aspirants
  • 40. Mayonnaise is not a category in India for a Value Brand. Niche market best addressed by a Store Label</li></ul>9650_India<br />09/07/10 – ND/pr<br />
  • 41. Build low-cost <br />Business <br />model<br />Grow volumes <br />1 <br />4<br />2 <br />3<br />Increase <br />distribution<br />Pass margins on to retailers<br />Value Brands Virtuous Circle is not just about branding<br />How are Value Brands created?<br />Isn’t it what Micromax, Amul and Diao did?<br />09/07/10 – ND/pr<br />
  • 42. Characteristics of markets that provide opportunity for Value Brands<br /><ul><li>Large gap between Entry and Premium prices…. mobile phones, cars, garments , footwear, fashion accessories, etc.
  • 43. Mid-market brands have weak Brand Utility
  • 44. Population pregnant with aspiration….’climbers’
  • 45. Access to retail space possible
  • 46. Independent distribution
  • 47. “Direct to Retailer” selling</li></ul>09/07/10 – ND/pr<br />
  • 48. Is India ripe for Value brands?…….1<br /><ul><li>Large ‘bottom of the pyramid’ market
  • 49. ‘Value Seeking’ customers
  • 50. Large ‘Value Opportunity’ for new entrants</li></ul>McDonalds – The ‘Rs. 20 menu’<br />Pizza Hut – ‘Rs. 75 per head treat’<br />Reebok shoes priced at &lt;Rs. 1000 for India<br /><ul><li>Lower cost structure compared to the Western economies</li></ul>09/07/10 – ND/pr<br />
  • 51. Roadmap<br />What are Value Brands ?<br />What does it take to build Value brands?<br />Can we penetrate International markets with Value Brands?<br />
  • 52. Is there an opportunity for Indian brands in global markets?<br /><ul><li>The market exists in several categories
  • 53. The recession has set off down-trading
  • 54. China is creating some global brands in consumer durables – Haier, TCL, Lenovo….
  • 55. Consumers have started trusting Chinese products because many famous global brands are sourcing from China
  • 56. Why not Indian Products?</li></ul>9650_India<br />09/07/10 – ND/pr<br />
  • 57. Issues involved in penetrating developed markets are not trivial<br />Issues<br /><ul><li>Branding challenge
  • 58. Managing the channels
  • 59. Establishing after sales service</li></ul>“You don’t get a Coke by putting four quarters in four machines. <br />Think big.”<br />09/07/10 – ND/pr<br />
  • 60. Can we be an insurgent in export markets?<br /><ul><li>Indian business plagued with the ‘Small is good enough’ mind set. Only a few like Mittals, Ambanis, Tatas, Infosys, Mahindras etc. and now young fighters like Micromax have broken away from it
  • 61. Branding is so different from producing as a sub contractor
  • 62. Creating global capacities starts with creating big capacity for the Indian market in most cases
  • 63. Flawless execution and sustained effort.</li></ul>9650_India<br />09/07/10 – ND/pr<br />
  • 64. Issues involved in penetrating developed markets are not trivial<br />Issues<br />Options<br /><ul><li>Branding challenge
  • 65. Managing the channels
  • 66. Establishing after sales
  • 67. Grass-root
  • 68. M&amp;A
  • 69. OEM route</li></ul>Think big, think smart<br />09/07/10 – ND/pr<br />
  • 70. Thank You<br /> For comments, views and suggestions contact me at<br />raj.nair@consultavalon.com<br />Avalon Consulting<br /> Casa Avalon, <br /> 61 Dr.SS Rao Rd,<br />Parel, Mumbai 400 012<br />09/07/10 – ND/pr<br />

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