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Marketing Roundtable: How Smart Marketing & Branding can Help    Innovative Entrepreneurs          October 9, 2012        ...
Branding through Innovation:Learning from the new GlobalBrands from Emerging Markets                    Rajeev Batra      ...
Background and Motivation: “EMNCs”                    © Rajeev Batra
Special Challenges: How Overcome? • Smaller size, weaker financial resources     –   Whirlpool $19b, Arcelik all $5b; VW $...
Despite such Challenges, Look at Performance                       Revenue (US$ Bn)    16    14    12    10     8     6   ...
39 Companies Interviewed•    India                                         •        China/Taiwan      –      Asian Paints ...
Four Types of Strategies                   Go to Similar   Go to Different                   Markets         Markets      ...
Four Strategies: Niche Customizer • Knowledge of/capability to understand segmented consumer needs   and identify groups i...
Four Types of Strategies                   Go to Similar   Go to Different                   Markets         Markets      ...
Four Strategies: Global Brand Builder • Natura: exploits advantage that 22% of world’s bio diversity is   in the Amazon: s...
Lessons aboutTactics       © Rajeev Batra
Awareness-Building Tactics  1. Go for multiplier effects  2. Laser-focus for efficiencies  3. Lower-cost, variable-cost me...
© Rajeev Batra
Ways to Build Quality/Leadership Perceptions(Crucial!!)1. Real Quality Gains2. Real + Communicated innovation,   leveragin...
Lessons for all Challenger Businesses   Don’t Over Reach        Don’t Stay Still                Take a Long View  Deepen a...
Questions, Comments, Suggestions?                                  Rajeev Batra                              rajeevba@umic...
Two Myths About Innovations and Success       AA Spark Marketing Roundtable              October 9, 2012                Pr...
Myth 1: A “Good” Innovation will Naturally Lead to Success      • Typically, a “good” innovation offers some combination o...
Why is a “Good” Innovation not Sufficient for Success?   When Kraft launched EasyMac, a line of microwaveable macaroni   a...
Myth 2: An Inferior Product Cannot Displace a Superior One        • This is an example of what Clay Christensen labels as ...
Other Examples       Disruptive innovations might never be as good as sustaining innovations, but       who cares?        ...
To Summarize …      • A “good” innovation does not necessarily imply that it will automatically        succeed            ...
Thank You!© 2012 S Sriram, All Rights Reserved
Next Marketing Roundtable:SoLoMo: Social, Local, Mobile        November 13, 2012                                © Ann Arbo...
Marketing Roundtable - October 9, 2012
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Marketing Roundtable - October 9, 2012

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In today’s competitive environment, innovation—in its many forms—is more important than ever. How have many small, under-resourced businesses come so far so quickly, and what can you learn from their strategies and tactics? Renowned experts in global branding and marketing explore innovation and the role it plays in a company’s success. Rajeev Batra, the S.S. Kresge Professor of Marketing at the U of M’s Ross School of Business, moderates. He leads Professor Srinivasaraghavan Sriram and other panelists in discussing how to innovate with your brand, how to bypass key bottlenecks when initiating innovation and how to use disruptive innovation to gain competitive advantage. Professor Batra will also share insights from his recently published (May 2012 McGraw Hill) book that outlines disruptive ‘compete from below’ strategies used by low resourced companies to gain competitive advantage.

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Marketing Roundtable - October 9, 2012

  1. 1. Marketing Roundtable: How Smart Marketing & Branding can Help Innovative Entrepreneurs October 9, 2012 © Ann Arbor SPARK
  2. 2. Branding through Innovation:Learning from the new GlobalBrands from Emerging Markets Rajeev Batra Ross School of Business University of Michigan Amitava Chattopadhyay INSEAD, Singapore Aysegul Ozsomer Koc University, Turkey © Rajeev Batra
  3. 3. Background and Motivation: “EMNCs” © Rajeev Batra
  4. 4. Special Challenges: How Overcome? • Smaller size, weaker financial resources – Whirlpool $19b, Arcelik all $5b; VW $140b, Mahindra all $7b – To build brand awareness and associations – To gain distribution access • More negative initial quality and trust associations – ―Made in China,‖ ―Made in India‖ • Smaller global organizations than incumbent ―TMNCs‖ – Thinner global organizations – Less customer insight and knowledge • Learn about successful EMNC strategies + tactics; TMNC responses; “Challenger, compete-from-below strategies” © Rajeev Batra
  5. 5. Despite such Challenges, Look at Performance Revenue (US$ Bn) 16 14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 2010 2011 (but 2012 problems!) © Rajeev Batra
  6. 6. 39 Companies Interviewed• India • China/Taiwan – Asian Paints – Lenovo (2) – Apollo Tyres – HTC – Bajaj Automotive – Midea – Dabur – Haeir (USA) – Godrej – Chigo – Infosys – Mitac – Mahindra and Mahindra • S. Korea Auto/Tractors – LG Electronics – Marico • South and South East Asia – Taj Hotels – Asia Pacific Breweries (Tiger Beer) – Tata Tea – Jim Thompson (Clothing, Food) – Tata Motors – Varafoods (Beverages) – Titan Watches – Dilmah (S.L., tea) – Wipro • Turkey• Latin America – Arcelik – Natura – Mavi – Modelo – Eyvap – Café Britt – Ulker• Middle East – Vitra – Aramex (Jordan, Courier) – TEMSA – Savola (Saudi, Oil + Sugar) – Turkish Airlines• Russia Phone & personal interviews – MTS (Telecom) with CEOs, COOs, CMOs, e © Rajeev Batra
  7. 7. Four Types of Strategies Go to Similar Go to Different Markets Markets Use Existing “KNOWLEDGE “COST Competencies LEVERAGER” LEADER” “NICHE “GLOBAL Build New BRAND-BUILDER” Competencies CUSTOMIZER” In R&D, Innovation, -- THROUGH “Insight” FOCUSED LOW-COST INNOVATION -- THROUGH BRAND ACQUISITION/JV (SOFT TOUCH)
  8. 8. Four Strategies: Niche Customizer • Knowledge of/capability to understand segmented consumer needs and identify groups ignored by TMNCs • Low-cost ―frugal innovation‖ R&D abilities to create customized new offerings • Self-owned and flexible manufacturing facilities to produce a bigger range of SKUs at a low cost—plays to the weakness of TMNCs • Capable of dealing with emerging market and other environments • Acquire capabilities and scale to jump to the next level… © Rajeev Batra
  9. 9. Four Types of Strategies Go to Similar Go to Different Markets Markets Use Existing “KNOWLEDGE “COST Competencies LEVERAGER” LEADER” “NICHE “GLOBAL Build New BRAND-BUILDER” Competencies CUSTOMIZER‖ In R&D, Innovation, -- THROUGH “Insight” FOCUSED LOW-COST INNOVATION -- THROUGH BRAND ACQUISITION/JV (SOFT TOUCH)
  10. 10. Four Strategies: Global Brand Builder • Natura: exploits advantage that 22% of world’s bio diversity is in the Amazon: sustainable capability to identify and extract active ingredients from Amazon flora used by indigenous people • Expanded to France – International headquarters created in New York city • Amazing new product development capability, creating very fast cycle times — a new product every 3 days and 65% of revenues coming from products developed in last three years • Most productive direct sales force--superior to Avon or Amway • Spend 3-4% of sales on R&D, less than competitors; but have lower cost R&D capability, leveraging university affiliations – Like Apple (vs. Microsoft), even small R&D/Sales % can have huge impact, bolstered by much lower cost of EM- R&D © Rajeev Batra
  11. 11. Lessons aboutTactics © Rajeev Batra
  12. 12. Awareness-Building Tactics 1. Go for multiplier effects 2. Laser-focus for efficiencies 3. Lower-cost, variable-cost media… 4. Attention-getting messages (MPR) 5. Long-term Investment: Spend big money 6. Acquire/license brands with high awareness © Rajeev Batra
  13. 13. © Rajeev Batra
  14. 14. Ways to Build Quality/Leadership Perceptions(Crucial!!)1. Real Quality Gains2. Real + Communicated innovation, leveraging MPR for credibility3. Real niche-area leadership incl. technology, VFM, Service4. Q Signals: Co-branding, awards, design, tests, ratings, reviews5. Change perceived Country of Origin6. Acquire high-perceived quality brands © Rajeev Batra
  15. 15. Lessons for all Challenger Businesses Don’t Over Reach Don’t Stay Still Take a Long View Deepen and leverage Invest behind Develop a long-term initial capabilities innovation mindset Focus, focus, focus Execute on Achieve the “core on customers, innovation cycles quality” of the offer customer needs, visibly faster than the first similar to those you category norm know Remain under the Innovate beyond Invest systematically radar of TMNCs and products to create behind brand avoid head-to-head novel customer building competition experiences Avoid over reaching Move carefully but Create, embed, and in terms of customer systematically, using a transition to a central acquisition (go test and learn strategy brand marketing team wholesale) © Rajeev Batra
  16. 16. Questions, Comments, Suggestions? Rajeev Batra rajeevba@umich.eduwww.EMNCStrategies.com © Rajeev Batra
  17. 17. Two Myths About Innovations and Success AA Spark Marketing Roundtable October 9, 2012 Prof. S Sriram Ross School of Business
  18. 18. Myth 1: A “Good” Innovation will Naturally Lead to Success • Typically, a “good” innovation offers some combination of the following ~ A few innovative features ~ Better value for $ Does anyone really care ~ Better quality for these? ~ Convenience • R.J. Reynolds (RJR Nabisco Inc., subsidiary) spent over $300 million to market its Premier Smokeless Cigarettes, which were priced at a 25% premium to other cigarettes© 2012 S Sriram, All Rights Reserved
  19. 19. Why is a “Good” Innovation not Sufficient for Success? When Kraft launched EasyMac, a line of microwaveable macaroni and cheese, sales were disappointing • The added convenience that even kids could prepare it without compromising on taste should have made it an instant success • What went wrong? A • Awareness A • Availability T • Trial R • Repurchase A good innovation is necessary but not sufficient for success • The way it is taken to market is very important© 2012 S Sriram, All Rights Reserved
  20. 20. Myth 2: An Inferior Product Cannot Displace a Superior One • This is an example of what Clay Christensen labels as Disruptive Innovations • Disruptive innovations start out as inferior to existing technology but eventually catch up with what the market wants • In contrast, Sustaining Innovations involve incumbents focusing on the most profitable customers and producing innovations that overshoot the mass market© 2012 S Sriram, All Rights Reserved
  21. 21. Other Examples Disruptive innovations might never be as good as sustaining innovations, but who cares? Cell phone cameras can take pictures of acceptable quality such that they can replace digital cameras GE V Scan is a portable ultrasound device. Like other portable GE products, it was developed for poorer countries where there is limited access to healthcare© 2012 S Sriram, All Rights Reserved
  22. 22. To Summarize … • A “good” innovation does not necessarily imply that it will automatically succeed ~ It will succeed if the awareness, availability, and trial components are met ~ A good innovation is necessary but not sufficient for success • An innovation that looks less attractive today compared to an incumbent technology can displace it in the future ~ Disruption is more common than we can imagine© 2012 S Sriram, All Rights Reserved
  23. 23. Thank You!© 2012 S Sriram, All Rights Reserved
  24. 24. Next Marketing Roundtable:SoLoMo: Social, Local, Mobile November 13, 2012 © Ann Arbor SPARK

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