It is a marketing strategy under which two or more similar products of a firm are marketed under different brand names. Many a times, these products are competing ones and are marketed under brand names which are completely unrelated.
1984:- NV Dhoot with 3 sons:- Venugopal, Rajkumar & Pradeep founded VI Earlier, they started a business of sugar mills and some other low profile industrial interests in the region of Maharashtra Establishment of VI surprised the Industry Watchers . 1987:- Manufacturing and Marketing the Videocon Range of B&W AND Color Televisions, launched washing machines. 1989:-Home Entertainment Systems and Air Conditioners 1991:- Refrigerators and Coolers.
Early 90s :- After the failure of VI to diversify into Real Estate, Crucial decision Was made to manufacture CRT glass shells. Set up a world class manufacturing facility at BHARUCH, GUJRAT. 1996:-Entering Energy Sector. Investments into Rava Oil Fields gave it a regular flow of cash. 1998:- Bought a TV manufacturing facility of PHILIPS in WB. 1999:- Took the services of McKinsey & Co. to draw the plan for restructuring the company. Company established 8 SBUs headed by independent chief operating officers These were:- MANUFACTURING,AFTER SALES , THE AKAI BRAND, THE SANSUI BRAND % VIDEOCON BRAND Others were Product Specific:- TVs, Refrigerators and Washing Machines
7TH JULY,05:- Acquisition of ABE in EKL. Focus was on Multi Branding Strategy. Agreement with HUNDAI ELECTRONICS LTD . Licensing Agreement with Toshiba & Sansui WHY? Was unable to face the immense competition Market Share % Market Growth were the major factors. Large Sales Volume with Cost Effectiveness VI :- Profitable Company & Had resources( man power, Financial,Technical etc ) to sustain a Multi Branding Strategy. Focus was on Long term Goal.
• Videocon entered the consumer durables sector in mid 1980‟s• VI marketed its products under the Videocon brand and was positioned and perceived as a mid segment brand.• Competed directly with BPL and Onida.• But the entry of LG and Samsung disturbed its market share.• To counter attack- VI adopted multi-brand strategy and to boost brand image came up with a high-decibel ad campaign in 2001.• Immediate result was increase in sales by 30% but market share declined in 2002.
• In 1980‟s, VI went into an agreement with the Japanese company, Toshiba, to manufacture its range of colour televisions.• In 1998, VI launched Toshiba brand projection TV‟s. They competed directly with Samsung‟s range of projection TV‟s.• In 2001,in order to increase its focus on marketing Toshiba‟s high- end products, VI created a a wholly owned subsidiary called Kentosh Electronics India Ltd.(KEIL)• KEIL was also to market Kenwood branded Hi-Fi audio products.• In 2002, Kenwood and VI parted ways. Till 2005, KEIl sold DVD players, TV‟s, flat TV‟s, Projection TV‟s under the Toshiba brand.
• In March 1999, VI entered into a join venture with Akai Electric Co. Ltd.(AECL), to form a new a entity called Akai India Ltd., in which VI had 70% share.• VI followed a two-pronged strategy for the Akai brand. It continued to sell low price models but made efforts to emphasize quality and technology in the communication.• Over the years, Akai was projected as a price warrior. Hence, it became a player in the lower end of the market.
• Sansui came into VI‟s fold in 1990‟s• Initially, the products under the brand were priced on the higher side and competed with brands like Philips.• But gradually, prices were slashed• Sansui also launched exchange schemes for its CTV‟s• The brand heavily depended on promotional offers and discounts. But inspite of the promotions Sansui couldn‟t gain a significant market share.
KAIL launched KENSTAR in 1996. Introduced with microwave ovens and then followed by coolers, mixers and grinders, toaster, juicers and refrigerators. KENSTAR was positioned as premium segment and entered in to agreements with Yugoslavia and an Algeria based firm to manufacture and supply KENSTAR branded CTV‟s
2004-05 LG and SAMSUNG spoiled the party of VIDEOCON and subsequently LG acquired 40% of market share in ovens
2004: VIDEOCON(VI) licensed HYUNDAI brand from „HEI‟ South Korean co for 5% royalty on sales. 2005: VI made HE INDIA a wholly owned subsidiary. HYUNDAI was positioned at the upper end market. Company had planned to spend heavily for advertising and R&D.
• 2005: VI took over EKL. It brought the Indian rights of ELECTROLUX for 5 years and 25 years for KELVINATOR. ALLWYN brand also came under the VI fold subsequently.• 2006: VI announced it will stick its KELVINATOR brand with Refrigerators and its tagline will also remain same “the coolest one”.• VI expanded its dealer and showroom network to increase its reach.
Prior to liberalization, Indian durables industry was dominated by Indian brands. By the end of 1990s, the share of Videocon steadily declined. In order to onslaught from the competition, VI adopted the multi branding strategy by acquiring Toshiba, Sansui and Akai. The strategy was meant to fend off attacks on core brand from rivals.
TOSHIBA HYUNDAI ALLWYN SANSUI VIDEOCONKELVINATOR KENSTAR AKAI ELECTROLUX In 2000, VI launched several products under its core brand, Sansui and Akai and VI was positioned as a Value brand.
Positioning and targeting has to be distinct, or else the brands tend to cannibalize each others share. In 1999, VI had market share 10.5% which fell to 7.3% in 2002, whereas Sansui increased its market share from 4.6% to 6.7%. Having several brands, unless backed by constant upgradation in technology and design would prove to be burden to the company.
Inexperience in managing premium brands. For instance, Kenwood which was a premium brand couldn‟t make a dent in the marketing arrangement. Multi-branding strategy requires deep pockets who can allocate high marketing budgets for each brands.
2005 – LG & Samsung lion‟s share of T.V. & home appliances market. Philips rejuvenating business in India, Haeir & TCL planning to establish themselves. Videocon not doing well in all product categories.
Market Shares in Indian Washing Machines Market in 2004 4% 24% 34% LG Whirlpool IFB 13% Samsung 14% 11% Videocon Others Market Shares in IndianRefrigerators Market in 2005 9% 11% 10% Videocon 23% Godrej 17% Samsung LG 30% Whirlpool Others
VI will have to manage its existing brands as well as EKL‟s brands. Indian white goods industry very competitive. VI capable of investment in building brand equity. VI should not use price plank for core & premium brands. VI needs to invest in technology. VI may be able to pose a challenge for Korean brands because of its multi-branding strategy.
Q1.Considering the fact that marketingcosts are escalating, how prudent, inyour view, is VI‟s strategy of havingseveral brands?
Good strategy when faced by heavy competition. Protection of core brand. Increases shelf space. Keeping firm‟s managers on toes by generating internal competition. Company can fill up price & quality gaps, & saturate the market. Company can serve effectively to brand switchers.
Cannibalization May cause operational confusion. Heavy budgets needed. Videocon a mid-segment brand, inexperienced in handling premium brands (poor management).
Do you think that VI adopted the multi-branding strategy because it failed tocounter competition with a singlebrand?
Prior to liberalization of the Indian Economy, the Indian Consumer Durables Industry was dominated by Indian Brands like BPL, Onida and Videocon. By the end of 1990‟s, Korean brands like LG and Samsung had established a strong foundation in the country by expanding their dealer networks. As a result, VI‟s share declined. In order to onslaught the competition, VI acquired Indian Rights for brands like Toshiba, Sansui and Akai.
Though the share of Videocon fell, the other brands were able to corner market share, thereby giving VI a respectable combined market share. Multi-Branding strategy was akin to warfare. Just as a king is flanked by several soldiers in a battle, the multi-branding strategy allowed VI to protect its core brand Videocon. So the strategy was meant to fend off attacks on the core brand from rivals.
With the Korean brands, especiallyLG, entering rural India in a bigway, what in your view are VI‟s chanceof becoming the No1. consumerdurables company in near future?Justify you‟re answer