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Iimb rev-new prod Iimb rev-new prod Document Transcript

  • 1New product Launches and ConsumerInsights-Application of Behavioural Insights in theMarketplace (by S L Rao for IIMB Review)ABSTRACT: In this paper I describe some experiences in launching new productsand some insights into consumer behaviour that drove them or arose from them. Iam describing events that took place in the period from 1957 to 1976. Productlaunches in those years were centred round manufacturing capability. Theconsumer had limited choice. So did the manufacturer who had limited optionsin features that he could offer in the product. But most did consider what theconsumer wanted, her considerations in taking the purchase decision, and ways inwhich it could be in favour of a particular product. The consumer’s attitudes, habitsand preferences were relevant and were studied. Today of course this is much morethe case. Production capacities, packaging, pricing, use instructions, distribution,advertising and promotion, should usually have resulted from the understandingand interpretation of these consumer attributes. Many products succeeded despitethe lack of such preparatory studies because of the monopoly that was conferred byproduction and import licensing and the copying of products that had succeeded inoverseas markets. In the illustrations that I give, consciously and in a plannedmanner or intuitively, consumer behaviour was at the core of all decisions that hadto do with the product. Over time, the consumer’s concerns began to be integratedinto all decisions relating to new products, and marketing strategy became businessstrategy. I have some examples of the early application of this development.Many products and brands that dominated consumer franchise for many years andothers that were successfully launched, have declined or disappeared now aftermany years. The reasons have been varied: changing economic situation; newconsumer contexts, behaviours and preferences; competing products offering bettervalue choices to the consumer; lack of nimbleness of the company in adapting tochanging markets; and inability to change product images and product forms tomeet new directions in consumer behaviour. While product and brand lives havebeen extended in some cases, there are many instances when life extension has notworked. Even the most dominating brands seem to have limits to their lives. For anychance of success, careful risk-taking, determination and courage are essential______________________________________________________________________A BACKGROUND:From 1951 to 1985 India was an economy that discouraged consumption inpreference to saving and investment. Any kind of consumption, especially ofmanufactured consumer products, was subjected to severe restrictions on: • Factory location, • Production capacity, • Equipment that could be imported, • Raw materials that could be used, • Labour intensity (which had to be high), • Pricing that was administered or controlled or subject to government regulation, • Line extensions,
  • 2 • Expenditures on advertising and promotion, • penal taxation of incomes as well as on the end products available for purchase by the consumer, • And severely restricted disposable incomes with consumers.Imported products were illegally available in limited quantities through smugglers.Local quality of manufactured goods did not match the best in the world and evenmulti national companies trying to standardize their product offerings globally,found their Indian offerings inferior to what they would have preferred because thedesired ingredients, materials, packaging, equipment, etc had to be procured onlyindigenously or from countries specified by government. The incidence of newproduct launches and even upgradation or revamping of existing products wasinfrequent. This was because of the requirement to get an industrial license fromgovernment for any addition to capacity, expansion or extension. These weredifficult to get, especially for foreign companies or those belonging to ‘large’ Indiangroups. Volumes were also limited by the absence of television as an advertisingmedium. Available media were press, magazines, cinema; outdoor, merchandisingand display using point of purchase materials and these had less immediacy andlimited reach. When television advertising did commence in the 1970’s it was formany years available only in black and white; television sets were not freelyavailable and programming was poor in content and scheduling. There was limitedinformation on reach and readership of media and about multiple media exposures.However new product launches and relaunches of existing ones did take place.Companies sought to hold on to their customer bases, add new products to expandtheir business, introduce line extensions, reduce costs and bring some excitementinto their products. New product plans of competitors were never a surprise becauseeveryone needed to submit detailed information to government to get industrial andimport licenses. This information was easily available to anyone for a price.It was in this background that the product launches and the marketing methodsthat are described in this paper, took place. Despite the restricted purchasing powerand choice, understanding consumer behaviour yielded good dividends tocompanies in terms of sales volumes, market shares and profits.There were conceptions about Indian consumer attitudes and behaviours that wererelated to this context. Indians were considered to be uninterested in consumption.Therefore it was thought that unlike in other developed markets, there was littlescope for the variety of manufactured consumer products for different uses and themany brands between each of them. The Indian was believed to distrust the Indianmanufacturer and to prefer only the foreign one. This was proven by theobservation that a true or apparent ‘foreign’ label commanded premium prices.Since production and sales volumes could never reach high levels because ofrestrictions on production capacity, low purchasing power, and inadequate reach ofadvertising, manufacturers were more likely to aim for high margins even ifvolumes were low, to maximize profits.PRODUCTS FOR THEIR TIMES:When I started work as a management trainee in Hindustan Lever Ltd. in 1957, Ispent the first few months as a salesman selling soaps in the vicinity of Pune in smalltowns and rural markets. It was a very educative experience. The product for which
  • 3one did not have to do any selling was the ubiquitous ‘Sunlight’ soap. It had anapparently solid customer base. Dealer loyalty was amazing. The retailers made asmall profit margin but were more than content because the volume was large. Forthe wholesalers it was a loss leader. Retail customers would come from the remotestvillages to buy Sunlight and then go on to buy from him all their other requirementsincluding kirana items like grains, oil, etc, on which the wholesaler made goodmargins. The retailer invariably reserved a large part of his shelf space for Sunlightsoap. The consumer was habituated to using Sunlight and trusted it. It was the firstpackaged and branded washing tablet in India. It was good quality and the size andprice gave her good value for money. It had been in the market since the late 19thcentury. Unlike later arrivals it guaranteed that it used only vegetable oils, thoughanimal fats were not in fact used by anyone in making soaps.The label was apparently designed in the mid-nineteenth century in England and itslack of modernity and contemporariness was striking. The name was quitemeaningless to a largely illiterate Indian population and for the many among thelow- income groups in small towns and villages who were its users. But theconsumer recognized it by its distinctive old-world wrapper and shape. Theconsumer was just about anybody who had graduated to using washing soaps toclean his clothes. I doubt if there was a defined “target consumer”.When a relaunch did take place it was restricted to small changes in typeface andsoftening of the edges of the soap. Even these changes were introduced after muchresearch and soul-searching. The company did not want to take any chances with asuccessful formula; not knowing which part of it was responsible for its astonishingconsumer loyalty and success. For the consumer, using Sunlight for all the clotheswashing was a tradition. In parts of India, especially in the North, it was an all-purpose soap, used even for the body.The main competition was the 501 bar soap from TATA, a very different soap insophistication and appearance. It was a bar, not a cake, and had no wrapper. Therewere also cottage washing soaps made in small quantities and very local in sale.From the 1960’s, many varieties and brands of soap powders followed by detergentpowders, then detergent cakes, washing up liquids, many types of toilet soaps(colours, perfumes, deodorants, etc), shampoos for different specialized uses, andwashing products designed for use in washing machines began to enter the market.Sunlight began to lose users to these new product forms that were also easier to useand more effective. It saw attempts at revival, soon forgotten, through offering thenew product forms like a washing powder under the same name. Today Sunlight isa fast fading memory for most consumers except in Kerala and West Bengal.Products have relevance within a socio-economic context. To prolong their life whenthis context has radically changed is extremely challenging and I know of fewsuccessful attempts at doing so. We might wonder why Lever did not at anappropriate time add a synthetic detergent bar to Sunlight soap. Instead theylaunched a soap powder, ‘Rinso’, followed by a synthetic detergent powder ‘Surf’which they backed heavily with advertising, promotion and massive house-to-housedemonstrations and sampling. They launched a synthetic detergent cake ‘Rin’ onlymuch after Swastik Oil Mills were wildly successful with ‘Det, a blue detergentcake, the first in India. One can speculate that Sunlight might have survived longer
  • 4if it had a synthetic detergent based companion. But hindsight is easy. Sunlight wasa very large volume product and contributed much to Lever profits. Its consumerbase was very wide. Any innovation might disturb some part of it and drive awaymany consumers. Lever was caught in a success trap. They launched other brandsthat became very successful, Surf and Rin. But perhaps they created the conditionsfor the inevitable decline and death of Sunlight. Risk-taking after careful evaluationand preparation and courage are essential ingredients for extending product lives.There are other examples of such products. There was a time when record playersand changers and complicated spool tape recorders were the only way to listen tomusic. Cassettes have made them redundant and exploded the market because ofthe ease of use, portability and lower cost. Few of the dominant names in the earlierforms now survive. Slide rules are now of antique value. So also are typewriters,even the electric and electronic ones that substituted for them for a while only a fewyears ago. Others have replaced teleprinters, telex machines and a host of suchproducts. Few of the original brands of such products that were popular in theirheyday have made a successful transition to new product forms. The best example ofsuccess came out of an apparent failure when ‘Coke’ relaunched a tried and testedpopular product with a new flavour. There was overwhelming consumer resistanceand the old product was brought back. But strangely, the new flavour also showedsome consumer preference and was retained, adding overall to Coke’s sales andmarket shares.THE POOR AS MASS MARKETIn 1959 I was Sales Manager in Andhra. Lever was the first company to organizeitself for rural markets. I managed 17 salesmen, 2 supervisors, four sales vans andtwo cinema vans. Levers were the pioneers in organized rural marketing and were amodel for many who followed them into rural markets. The vans were forredistributing products from redistribution stockists to villages still being developedas markets. The cinema vans were to advertise, sample and sell to consumers so asto build these undeveloped markets that would in due course have their ownredistribution stockists to develop more remote village markets. The washing habitwas to use bar soaps with serrations for being cut at home into twelve smaller piecesfor use, as well as washing cakes, cottage soaps made into round balls and soapliquids.The washing bar soap that was commonly in use in Andhra was TATA’s ‘501’ barsoap, an unwrapped washing soap that was very popular. Lever had a relativelyunknown and poor selling bar soap with a distinctive green colour as against thecreamy brown of 501. But retailers were not interested in buying ‘Wheel’ bar soapbecause the consumer asked for 501. Going to villages and small towns I could seethat there were very many poor consumers who could not find at one time theamount of money needed to buy a full bar of 501. Many however, did use locallymade cottage soap of indifferent quality and might be persuaded to switch to goodquality soap, at least for their treasured finery. They were poor, mostly on dailywages and in casual employment. And they could find the cash at any one time, foronly a portion and not for the full bar. However, wholesalers would not sell the barin smaller cut pieces to retailers. Retailers had to buy full bars and cut them into
  • 5smaller pieces to enable the soap to be priced at amounts that poor consumers couldfind at one time. I saw this as an opportunity for Wheel to bypass the competition(501 bar) and reach out to a new underclass of potential retailers and theirconsumers among the rural and small town poor. I started to have it sold by oursalesmen through the wholesalers in half and quarter bar pieces after prior cutting.The retailers were the bottom stratums themselves with poor resources to purchaseand hold stocks, located in small roadside outlets in small towns and village shandy(market) outlets. As we covered these poor retailers in many small markets with cutWheel bar soap, we soon built sales to some volume. These retailers reached thislower income stratum of consumers. Soon those retailers who bought less than a fullbar began buying more than one. The retailer and the consumer asked for Wheel asthe “green” soap. There was no other of that colour in the market. Wheel bar beganto reach respectable volumes.Years later in the 1980’s when Rajiv Gandhi had started the opening up of Indianmarkets by “broad-banding” industrial licensing, a Tamilnadu medical practitionerexploded the shampoo market. He did a “Wheel bar” by packing a good qualityshampoo in sachets that retailed for one rupee each, branded as “Velvette”.Consumers who could not dream of finding an outlay of Rupees 30 and much morefor a full bottle of shampoo, the only packaging till then available, could now buyand use shampoo. A change in pack size had opened the gates to a huge and hiddenunderclass of consumers, the poor. Since then shampoos have become a majorproduct category whose usage has penetrated deep into low-income households andrural India as NCAER surveys every year through the 1990’s have shown.From 1991 I pointed out the lessons from the “Velvette” experience in articles andbooks explaining the NCAER consumer market demographic data. I pointed out theexistence of a large consuming class if the products were priced at levels for whichconsumers could find the funds at one time. Perhaps this even caused somemisunderstanding among foreign companies who took these low-income buyers asthe Indian “middle class”. But the lesson was clear. Even the poorest and illiterateIndian family was interested in using manufactured products, if they were offered ina form that the family could pay for without difficulty. “No frills” products thatoffered more function than form, smaller sizes, cheaper packaging, definitelybranded and possibly also advertised, aiming at large volumes and low margins perunit for the manufacturers, these were what aiming at the Indian mass marketrequired. This was a lesson that I had learnt from “Wheel” bar and that manymanufacturers learnt from the NCAER data and analysis. Supporting this was someresearch I did at NCAER for the Indian Society of Advertisers that showeddecisively that the urban (and somewhat more) the rural consumer trustedadvertised products and associated them with quality. Branding a good product andoffering it at an affordable price even in a special small pack size was the ‘Velvette’lesson to manufacturers of fast moving consumer goods as well as consumer durableproducts.Today we do not see “Wheel” bar in the market but Lever used the same brand tosuccessfully counter the low price competition to their “Surf” detergent powderfrom “Nirma” in the late 1970’s. “Nirma” at that time had pushed Lever’s “Surf” tothe wall. The same old bar soap strategy worked again in weaning consumers back
  • 6to a Lever brand. A few years later Lever introduced a Wheel detergent bar as ashorter bar soap that had a bright wrapper, and did very well with it. The name“Wheel retained an association with clothes-washing using a product that was goodvalue at a low price.THE END OF DOMINANCEIn 1963 I was for a while the Product Manager for Lifebuoy, already the largestselling toilet soap in the world. My predecessor who had come from the U.K. hadpersuaded the company that we must launch a line extension to the popularLifebuoy with its strong medicinal carbolic smell Special’. Lifebuoy at this time wasthe most popular body soap in India and a major contributor to company profits. Aline extension tom it would have merited more research insights into the consumer’sattitudes and perceptions to the regular Lifebuoy. The new soap was to be called‘Lifebuoy Special’ and would be more of mainstream toilet soap with a perfumethat would convey its deodorant properties. It would also be different from theregular Lifebuoy soap by being machined so that it had the rounded edges and thesmooth feel of any other toilet soap. It would not have the large brick shape, extralarge size and somewhat rough feel of the traditional Lifebuoy. It would be wrappedin a more colourful wrapper like any other toilet soap, not the wax paper in whichLifebuoy was wrapped. I took over after these decisions had been taken. I planned atest market in Lucknow.The product was not a success. Partly this was due to the inability to use a reallygood deodorant perfume, a glossy wrapper and a better shape because of the thenrestrictions on imports of materials and equipment.But I always thought that the consumer at that time was happy with the powerfulsmell, the economy because of the large size and the confidence that the originalLifebuoy soap gave him in using it. He was not ready to change. We had not thoughtthrough whom were the people buying Lifebuoy and how they regarded it. Thatwould be learnt in later years when Lever identified them as blue-collar workersand other “active” people and aimed the soap at them, thus building the soap intogreater sales volumes. It was originally an adult soap but tried to expand its usageby targeting children as well, but never women. It probably did not have any limitson income levels of its users, the only consumer characteristics that mattered beingtheir consciousness and need for health and fitness, and the rough or ‘dirty’ work inwhich they were engaged. For this type of consumer group to have been offered thesame name in an entirely different form at the same time was confusing. Thankfullyfor Levers the consumer decisively rejected Lifebuoy Special. The problems forLifebuoy were to come later when TATA with ‘Nahan’ for a while managed to takesome market share. Lever fought back by improving Lifebuoy, expanding itsconsumer reach as described earlier and with greater and better advertising. It wasthe entrance of ‘Nirma’ in this category that gave a real fright to the Lever productin the market.I notice that in the years since, the original Lifebuoy lost sales and market share. Ithas (in 2002) been reintroduced after a major makeover. Perhaps this should havebeen done earlier. It is easy to say this but difficult to decide to do when the productis a long time favourite, bestseller and major contributor to profits. Thereintroduction came when the old Lifebuoy was in a ‘do or die’ situation. It has
  • 7replaced the old Lifebuoy and the change seems to have worked in the market.Perhaps now the consumer was looking for change.PRODUCTS BEFORE THEIR TIME: THE HIMA EXPERIENCE:By 1963 I had already spent six years in Hindustan Lever in India and the UK invarious sales and product management assignments. That year Unilever came outwith a document called the “Unilever Plan For Good Advertising” (UPGA) thatsought to codify the process for developing marketing strategies to create goodadvertising. It started with preparing a document called the “ Brand MarketingStrategy”. This had to cover many aspects that were quantitative and qualitative,fact and market research based as well as some opinion and argument. Thedocument would go to the advertising agency that would then prepare an “AgencyBrief” that incorporated their understanding of the strategy. In turn this would leadto the “Advertising strategy” and then to documents setting out the “Creative” and“Media” strategies. In retrospect the focus of brand marketing strategies at thistime was on creating advertising that would result in a desired image for the brand.I think I prepared the first of these documents in India, for a range of ‘instant’dehydrated food products under the brand name “HIMA”. The Brand MarketingStrategy document discussed the future development of the brand includingextensions, pack sizes, distribution strategy and objectives, etc. At the time I wrotethe strategy document we had done some developmental work to market adehydrated pea that when reconstituted would be a perfect sweet pea. It had beentested at different prices in the market and consumers seemed to like it. Thecompany had a strong agricultural research and extension programme (the firstcorporate “agribusiness” initiative in India apart from tobacco for cigarettes). Thisinitiative was intended to ensure that the quality of the peas that were grown andused for processing was perfect, based on carefully selected seeds, predetermineddoses of chosen fertilizers and pesticides, frequent inspections and monitoring ofweather conditions before the peas were plucked and rushed to the factory forprocessing.I decided that as the Product Manager, I was responsible for what went to theconsumer and insisted that I personally saw and tasted samples from each batchbefore it was processed. I ate a lot of peas! But I was sure that the product that wewere offering was of a standard quality and met our high specifications for size,tenderness, taste and flavour when reconstituted.We charted the wide variation in the prices of fresh peas in the Delhi wholesale andretail markets over the year, in the winter when it was in season and low in price,and in summer when it was out of season and came from distant hilly tracts, withthe price shooting to 20 to 25 times the low prices in winter. We determined throughresearch that the consumer would buy fresh peas if they were available through theyear. There were few other vegetables of this nature that the consumer would likefresh and tender through the year and at affordable prices. We determined thatthese included potatoes, bhindis, cauliflower, and onions. Exotic vegetables likesarson-ka-saag (the stem of the mustard plant and the spinach leaves) that thePunjabi peasant ate in winter would have a local ethnic niche in urban Indiawherever the Punjabi lived, even out of winter season. Rich and heavy after
  • 8cooking, it perhaps brought back memories of a lost pastoral life to sedentary urbanlivers. The characteristic of almost all these vegetables was that they were in glut forpart of the year when prices were very low and in extreme shortage for the restwhen prices went to levels unaffordable by most families.HIMA peas and other vegetables could expect maximum sales in the off-season forthe fresh version and when the fresh version was expensive and not as good as thebest available in season. Our pricing aimed at levels somewhere between the peakand the trough for the retail prices of the fresh vegetable. We realized that marketresearch was not very reliable when asking consumers as to how much they wouldpay. We found that they invariably under estimated what they would pay. They alsorecalled the prices that they actually paid as being much higher than they had paidin fact. So we had to arrive at an end price through logic and our need to cover costand make a profit. Having determined an end price, and estimated volumes weworked backwards. After allowing for profit margins, advertising, distribution,processing, etc, we arrived at the prices at which we could afford to contract acreagewith farmers. Our limit on acreage was the availability of suitable land and willingfarmers who we could trust to honour their contracts to supply us. In the event thefarmers let us down by selling at high prices in the market when the crop was poorand offering huge quantities to us when the wholesale market was depressed andmarket prices for fresh peas had gone down.In this way we arrived at the product proposition that HIMA vegetables would offerthe consumer. It was to offer a quality that on rehydration would be a tender pea, asgood as the best in season, at a price that would be far lower than the ruling pricesout of season. At the same time we had to ensure that our processed vegetableswould ensure that this quality was retained over much handling and a reasonablelength of stay on the shelf. During this period the product had to match its promise.The packaging had to withstand the handling over long distance transportation andthe flies, mice, ants and other insects that infested a typical kirana retail shelf. Thedirt and the flies sitting on the packets must not detract from its appearance. Thepackage had to be striking enough in its appearance that it would attract consumerattention, interest and a desire to buy.The production capacity that had been already decided upon by the productionmanagement was many times larger than our demand forecasts of how much peaswe could sell in the market. This was due to minimum plant size conditions laiddown by the technology. There would be a considerable unused capacity outside thepeas season. We had to plan for it to be utilized quickly. The Brand MarketingStrategy therefore had to deal with this problem as well and propose a range of lineextensions that would fall into the same category of promises. After some marketresearch we focused on a range of vegetables (as mentioned earlier), ready mixes fora variety of soups (tomato, French onion, and others), mixes for savouries (idli, dosa,sambar, etc), and sweet mixes (gulab jamun, kheer and others).The determining factor was that the product had to be of mass appeal, consumedoften and not easy to make in a consistent quality at home. With more women goingto work we expected that there would be growing demand. However we alsoinnovated in market research by devising and conducting ‘product concept’ tests.
  • 9We wrote detailed descriptions of what we would offer the consumer, how it was tobe used and the nature of the end product after cooking (consistent quality, timetaken, etc). These concept tests enabled us to give a research brief to the laboratorythat specified the essential features of the product and also the number of helpings(for example, how many idlis or gulab jamuns could be made out of a packet ofready-mix) that could come out of a packet. This would determine the size of thepackage. After our research laboratory had developed the formulae we conductedrepeated end product tests in the company kitchen, then market researched theproducts with consumers.We hypothesized that the consumer would be a salaried professional and fromhouseholds with two income families in which the woman went out to work. Thiswas for the vegetables, though the ‘exotic’ ones would largely be confined to peoplefrom one background like the Punjabis for sarson-ka-saag. The market would beurban and in metropolitan cities and other large cities and towns. For soup mixeswe were more selective within the same consumer group. We targeted householdsthat spoke English, were College educated and the heavy users would be those withsome strong Western influence in eating habits like the Parsis and the Anglo-Indians. The sweet mixes and savouries were all India in potential because of theincreasing homogenization in food habits around India. Butter chicken and masaladosas were eaten all over India and so we thought that our idli and dosa mixes orvada and sambar mixes would be nationally popular. To make it possible toconsistently make these savouries at home using ready mixes that were easy to usewould create a large national consumer base over the years.The products in the range conformed to some common characteristics. One was thedifficulty in making them because of the skill, labour and time required, essentialexpertise or because raw materials were not always available. The other was thatthey had to be in demand through the year and be reasonably known and demandedproducts over the country. The third was that the process had to deliver aconsistently good product each time to the consumer after she cooked it at home byreconstituting it. Instructions for use had to be simple enough so that anyone couldeasily understand and follow them. The price had to be between the prices of theready product in restaurants and those made at home from fresh ingredients. Thepromise of course was that the housewife could get a consistently good result eachtime that she bought a packet and used it. The taste had to be acceptable toconsumers everywhere in India and this required considerable product testing. Toensure consistent quality we sampled each batch and developed a ‘taste panel’ ofconsumers so that we had a uniform taste standard to apply to each batch.Thus consumer behaviour for HIMA had to be seen in many different dimensions,not merely in relation to the product that resulted from it, but the many stagesbefore purchase.In retrospect it perhaps was unwise to have set up a large plant for peas withouthaving worked out plans for utilizing the capacity. We should have found a way toensure that our contracts with farmers would be honoured in any season. Thecompany later integrated the sales forces so that the same sales force that used high-pressure salesmanship to sell talcum powders was now also selling food products.Food products required a more methodical approach since they had limited shelf
  • 10life. Blocking the retailer’s shelf space with more stocks than he could sell toconsumers in a given period would result in the products becoming sub-standard.In product accounting the Hima products were loaded with full overheads evenbefore they had reached acceptable sales levels, leading to their becoming apparentloss-makers. Consumer needs and preferences could have been studied in advanceand plant capacity related to the best forecasts of future sales. Any product launchin a market that is not fully ready for it requires readiness to invest in marketdevelopment for many years. Unless the company is ready to do so, it might becreating a recipe for failure.Today HIMA is a memory for some ageing consumers and those who marketed it.Other manufacturers have entered and there is a wide range of ready mixes. Thereare many other frozen foods as well. Ready to eat meals have begun to take off inthe market. HIMA was the first national brand, of first-rate consistency in quality,formulated after high quality scientific and consumer research and development. Ittook account of demographic and socio-economic trends that were yet to becomedominant-a large youthful working population, urbanization and increasingnumber of nuclear families, a growing educated female work force, more disposableincome because of two income families and lower direct taxation, time pressures onmatching the meals that mothers had produced for their sons who were nowhusbands, and the need for speed, convenience and consistency in each dish that wasprepared. HIMA was the right set of products for this new and emerging consumerclass but it was before its time.THE DECLINE OF THE ROCK SOLID BRAND:Dalda vanaspati (a hydrogenated cooking fat) was introduced in 1936 as a cheapsubstitute for ghee. Prakash Tandon describes its early marketing vividly in his“Punjab Trilogy” (Viking). Until Dalda was introduced, the hard fat used forcooking all over India in addition to various edible oils was ‘ghee’, clarified butterfrom cow and buffalo milk whose graininess, colour, odour, were preferred indifferent ways over the country. Ghee was the traditional fat. Originally based oncow’s milk it had been substituted in many places by the more easily available andcheaper buffalo milk. Ghee was the traditional formula for good health and hadreligious connotations for the Hindu. It was a blessing for any Hindu to be eatingfood cooked in ghee. It was thought to ensure health, vigour and longevity as well asbeing the food of the Gods. Government would not permit Dalda to be coloured andflavoured to more closely resemble ghee as was margarine permitted in the West tolook and smell like butter.The target consumer population was everyone in all socio-economic classes. Butgiven that usage depended on styles of cooking, it was in North India that there wasthe largest potential because they deep fried much of their food and so used muchmore hard fat in their cooking. The challenge was to persuade Indian mothers thatthey were not sacrificing their family’s health but in fact enhancing it by not usingghee but using the cheaper substitute, Dalda. Dalda was of course much cheaperthan the milk based fat and so made it possible for many who had moved away fromghee or had reduced its use to increase it with Dalda. The other challenge was topersuade consumers that in terms of cooking characteristics, taste and flavour of thefood, Dalda would perform as well as ghee.
  • 11 Its marketing had some distinctive features. It was perhaps the first consumerproduct in India to be introduced with countrywide demonstrations of use alongwith sampling of products cooked in it. Demonstrations were needed to show that itcould be used exactly like ghee and that its texture, graininess and melting points onheating during cooking were the same. The sampling of items cooked in the presenceof prospective customers showed them that this was indeed the case. It wassupported by national distribution and display of the product so that customerscould not pass a shop without seeing Dalda tins. The tins were kept clean and wipedevery time by the salespersons of the company and the distributors so thatcustomers were reminded of the clean kitchens of their mothers. The advertisingreinforced this theme. It was to the effect that using Dalda was an expression of amother’s love for her family and for her children.For over half a century Dalda dominated Indian markets and was possibly the firstexample of an Indian brand that became a major product in India and manyoverseas markets. But Dalda could not extend its appeal to line extensions. Cookingoils that were added under the same name did not have similar success. As far asDalda vanaspati was concerned, price control by government, governmentregulations on which oils could be used in making hydrogenated fats and to whatextent, continuing restrictions on adding any colours or flavours to vanaspati, manyregional competitors, all had an adverse effect on consistent product quality,margins and also restricted marketing expenditures. The brand began to decline.Today there are newspaper reports that Lever is trying to sell Dalda to anothercompany. It contributed a great deal to Lever’s profits for many years, to Lever’simportance in the Indian market and to its significance as a food products company.Consumer behaviour has changed to the extent that there is greater emphasis oncheaper refined edible oils and healthy low cholesterol oils. Hydrogenated fats stillhave a place in deep-frying but it is not as it used to be. The company was unable toleverage the strength of Dalda into other products.TRANSPLANTING PRODUCT HABITS:‘Chiclets’ (from Warner Hindustan) was the first chewing gum to be made tointernational standards and marketed in India. It was a sugarcoated gum. Otherforms were stick and ball gums and bubble gums. Till its entry in 1970 there weresome poorly marketed locally manufactured chewing gums of indifferent quality,selling small volumes. There were also imported smuggled products selling mainlyin port cities. The introduction of Chiclets into the Indian markets was also perhapsthe first time that consumer and marketing considerations determined plant size,package size, pricing, and other decisions.The American owners of the brand (Warner-Lambert) advised us that the principalconsuming group in North America, the largest market, was aged in its 30’s.However the habit was almost a century old in those countries (much longer inMexico) and I felt that possibly it had grown with the same users as they grew older.India had a paan chewing habit that was national in scope but not that of chewinggum. Paan had mild addictive alkaloids in the betel nut and the paan leaves, and asugarcoated chewing gum could not substitute for it. If we had developed a goodpaan substitute we could have aimed at an adult consumer target group. We did
  • 12initiate a programme to develop a paan-flavoured chewing gum. Some othercompany later introduced it, but with little market success possibly because it hadthe flavour but not the addictive properties of paan and betel nut.I felt intuitively and observing my then six-year old son and his friends that theprimary target consumer would be the five to ten year olds. The secondary targetgroup would be from among teenagers in schools and colleges. This was not basedon any research but merely from analysis and observation. The marketingprogramme was designed to go after this primary target population. We establishedthat for children, the most common and easily available coin in those years in almostany income group in urban India (around 1970) was likely to be a 10 paise coin. Wedecided that we must have a package that offered the gum at a price to theconsumer anywhere in India of 10 paise. With varying sales taxes and octroi inmany major cities, this meant that we had to have a range of invoice prices tailoredfor different markets that would offer the trade an adequate margin to stock andpush the product. We had to innovate packaging that would protect the product fora desired shelf life of six months from manufacture, but cheap enough to allow us aprofit. The size of the pellets and their number in the package also had to meet ourcost targets for the desired end price and a margin for the company. For the olderchildren for whom the same funds constraints did not apply, we could go for theinternational carton package and price it accordingly. We offered 10 pellets to acarton for an end price of 50 paise, another round coin.Our American principals gave us literature to show that chewing gum is relaxing,aids concentration, etc. However we were clear that rational considerations couldnot appeal to the children who were our target. We decided to offer them thepromise that chewing of gum was ‘fun’. We developed the idea of associatingChiclets with a recognizable circus clown, a figure that all children would associatewith, but which would also not put off older children and adults because it was‘childish’. We neither wanted to lose any possible sales to the older population norto lose user children as they grew up and then sought to get away from what was a‘childish’ habit. The clown was a figure that would bring a smile to the face ofanyone and could bridge age groups.We knew that the small child that was our target group had to be able to see theproduct at his height and at the front of the shop. We designed special glass jarswith the clown featured on it that were traditionally kept with other jars containingconfectionary in the front of most shops and so easily visible to the child. The childdid not have to read the name. The clown was distinctive and we wanted it tosymbolize the product. We developed point of sale material including life sizecutouts of the clown, again to attract the attention of the target child. We alsoorganized massive sampling programmes in schools with the help of schoolPrincipals who were happy that we told the children of civil chewing habits and howto dispose off the residues after chewing. Chiclets was a major success from itslaunch and reached target volumes while attracting many other new entrants.Chiclets understood its market and target consumers. But it was a product in apharmaceutical company. It required high advertising and promotionalexpenditures without the high profit margins that pharmaceutical products couldgive the company. The company duly discarded the strategies underlying the
  • 13product’s approach to the consumer like price strategies, the ‘fun’ image, etc. As itslashed marketing expenditures, new entrants built on the Chiclets strategy toachieve substantial volumes and profits. Its owners, Warner-Lambert, apharmaceutical company with many over-the-counter and consumer products, werebought by Pfizer who sold the confectionary and candy businesses to anotherconfectionary company. CHANGING PERCEPTIONS ABOUT A TRADITIONAL PRODUCT HABIT:‘Halls Mentholyptus’ (from Warner Hindustan) was another major new productlaunched in the Indian market in 1972. Its immediate competitor was Vicks coughlozenges (by Richardson Hindustan, now P & G), which had been in the Indianmarket for almost as long as Sunlight soap. There were other such products butthey were of minor importance. Halls unlike Vicks was shaped and twist wrappedlike any other candy. Unlike ordinary sugar candy it had enough eucalyptus andmenthol in it to be very soothing to the throat and to relieve sore throats. We couldhave launched it directly to face Vicks in the market on the same platform. ButVicks was well established for years and had a strong trade and customer franchise.We thought we could encash on the similarity of Halls to other candy. Somepsychologists advised us that adults consume a great many more cough drops thanwas warranted by the need to soothe sore throats. They suggested that this might bebecause adults liked to suck candy but saw it as a childish habit. Perhaps they alsohad some other Freudian satisfactions from the act of sucking candy. Our firstadvertising campaign therefore focused on a typical boy-girl situation and broughtHalls in to it as a way for each to get closer to the other. In a society that had notreached the state of permissiveness that it has today, this was a bold move. Theadvertising film was considered by the censors initially for an‘adults only’certificate, and if it had been given that, would have been the first advertising filmin India to have got it!It was soon realized that this did not give consumers sufficient reason to purchaseHalls. It perhaps placed too much reliance on the Freudian motivation for adults tobuy and suck more candy than their sore throats warranted. They would do so inany case, but had to have a throat problem to start with. Hence the appeal had to bethat Halls was a good throat soother and leaves it to the user to use more than heneeded. The theme was changed to focus on the ‘vapour action’ of Halls as a reasonwhy it would give fast soothing relief because of the menthol and eucalytptus in it.Thus we moved from a psychological approach to a rational one, showing a definiteproblem, a solution and the reason why the solution would work. Halls is now astrong competitor to Vicks and marketed as an over-the –counter pharmaceuticalproduct. The candy shape and packing must be helping adult purchase and overuse.But I do not have research data for this. Interestingly, Warner-Lambert, the ownersof the brand, has now sold it to a pure confectionary company.OTHER NEW PRODUCT LAUNCHES AND CONSUMER REPONSES:‘Saxon’ (Beardsell Ltd) was a new brand of men’s undergarments introduced in1976. The name was carefully chosen to take advantage of the Indian consumers’preference in those days for foreign brands. The name was shown by research asconveying durability. The label was unlike other Indian undergarments at the time,printed clearly, in bold type and with long lasting ink. The main competitor was
  • 14“Tantex” and a new brand introduced a little while earlier called “VIP”. We couldnot see how this new brand with such a vulgar name could succeed. For a while‘Saxon” sold well. However, third-party manufacturing, somewhat variable qualityand frequent increases in costs and hence in prices, made the product unviable.‘VIP’ is today a dominant brand all over India. Consumers were interested in aproduct that gave consistent quality and at a steady price. The name was somethingthey could get used to. We have seen this in recent days. Unpronounceable nameslike ‘Hyundai’ and initials with no significance like consumers have accepted ‘L.G.’.Similar was the reason for ‘Sunlight’ or ‘Lifebuoy” to have been accepted by theconsumer, not because of the suitability or otherwise of the name but because ofwhat they offered the consumer.Another example of consumer perceptions was in the case of baby foods. For a longtime, ‘Glaxo’ and ‘Ostermilk’ were the leading brands. Generations of mothers hadused one or the other for their babies. When one was not available in the marketand the mother had to use the other brand, there would be complaints that the babywas not tolerating the changed brand. Yet the two were the same products, merelyfed from the same line during production into different tins.END WORD:This narration of some old marketing experiences appears to lead us to somedirections. • Test marketing may not be feasible in today’s world, though there is ample data and many techniques to simulate consumer reaction to new ideas and products without having to actually go to market. • Quantitative data and market research are important but being “in touch” with the consumer through personal observation is even more so, to identify new product opportunities. • Observation, being “in touch” and research are vital to identify the prospective consumer for a new product and to evaluate the market size and how it might develop. • It is no longer as important to be first in the market as it is to have the right mix at the right time. • The ‘right’ marketing mix must be accompanied by risk evaluation and risk taking. This calls for management courage. • There is a right time for a new product or idea. If introduced before its time, it will require the company to support it till the market is fully ready for it. Companies must have the determination and the financial muscle to do so. • Companies must periodically review the stage at which the product is placed in its life cycle. They must be ready to implement life extension plans even when the product is apparently doing well in the market. • The poor constitute a huge mass market but the product must be tailored to suit their disposable funds.Test markets today are difficult to mount because of the speed with whichcompetitors are able to react and either spoil the test market or learn their ownlessons from it. But there are many market research techniques available today thatpermit simulating consumer behaviour without going to market with the product.
  • 15There is also a great deal of reliable socio-economic, behavioural, psychographicand other information available about consumers. Speed from product concept tonational market is important. Companies have to find organizational systems andprocesses to harness ideas and then have the determination to put resources behindthem in the market.But the “first mover advantage” is not as useful today. Before liberalization in 1985and the opening of the economy in 1991, being first could mean preempting anothernew entry. The restrictions imposed by government licensing meant that being firstconferred a quasi-monopoly status. At a time when the consumer was denied choiceand was starved of additional product features and quality, the consumer welcomedany innovation. The consumer identified foreign products with quality andpreferred them to domestically made ones. The possible sales volumes were limitedbecause of limited reach of advertising and less numbers that could buymanufactured products. Few manufacturers aimed to reach mass markets andinstead tried to get into premium niche areas. These conditions no longer apply.Determining who will be your consumers is a delicate task that combines intuitionand observation with meticulous market research. Demographics and sociology aregood guides as is an understanding of the directions of the economy and itsconsequent impact on consumer attitudes and behaviour. I am reminded of AkioMorita’s description of how he got the idea for the hugely successful ‘Walkman’ forSony by noticing how his usually affectionate daughter dashed in to the house aftera short trip away from home, went up to switch on her blaring rock music, and thencame to hug her parents. Morita thought loud rock music was a waste of acousticenergy and also forced unwilling listening on others who were not interested inhearing rock music. His solution was to design a personal tape player, theWalkman, one of the most successful consumer products in the world. The idea wasbased on observation on top of much hoarded information on the developing socio-economic changes.There is a correct time in the development of markets when a product is acceptableto the consumer and will give the desired volume. What is correct at one time maynot remain so after some time, and vice versa. Extending product lives can be donein many ways. Redesign, extending the name and logo and image to other uses,changing to a different target consumer group are some of them. But they must fitwith the consumer’s mental image of the product and the brand. Constant attentionmust be paid to keep products up to date with changing consumer contexts,attitudes, needs and behaviours. Product forms must alter to meet consumer needs.Introducing innovative products into markets is tricky. It becomes risky andexpensive when the consumers are not yet ready for it and the sales volumes remainlow while they are being made ready by advertising and promotion. The companymust have a commitment to support the product through these years, as appears tohave been the case when Dalda was introduced. Chiclets and Hima were exampleswhere the determination to succeed and hence the needed support were lacking.‘Kellog’s’ corn flakes were placed in a similar situation but over time, with
  • 16determination to succeed and changing product design and marketing, theysucceeded in becoming viable.Products and Brands do not have a permanent life. They can take some lifeextension but it is unlikely to be forever. Life extension will be determined by thenature and extent of change in the social, cultural and economic environment of theconsumer. But this is not easy to do. It must be done at an early enough stage. Thecorrect time is many times when the product is still doing well. But no one likes totake risks with a profitable and successful product. At the same time, to do it whenthe purpose for the product’s existence is already on the wane might be too late. Thetrick is to recognize the correct moment. After all is said about marketing tools andtechniques, the ability to evaluate and take risks requires courage anddetermination.NCAER surveys and other subsequent studies including the Census have shown ahuge mass market among the very poor. But these are high-risk markets. Theydemand special techniques to be reached. The sales volumes, required productioncapacities and the consequent investments in plant and machinery, are likely to belarge. The costs of failure will be high. But they can give dominant market positionson which premium niches can be built. (8873)