SUCESIÓN ECOLÓGICA (SE) (Adaptado de Deregibus, 1988)

awareness among the consumers, killing it abruptly could prove disadvantageous for the company. Ayurvedic Concepts had become synonymous with the Ayurvedic healthcare market in India, unlike the brand name “Himalaya” which did not convey anything about the products it was selling. In the face of increasing competition in the herbal healthcare market with players like HLL, Shahnaz Hussain, Dabur, Baidyanath trying to increase their presence, the absence of Ayurvedic Concepts and ‘Dadima’ from advertisements could prove disadvantageous for the company in the long run. Caselet 23

1. The following developments generally prompt companies to redefine their

orientation towards the market place — decline in growth rate, increased competition, decline in sales, and change in consumer buying patterns. These developments impact the company sales and profits which in turn make the company to analyze the reasons for this and take corrective actions.

In this case, there were three developments that prompted Voltas to rethink its strategy. With the entry of MNC’s, the competition had increased which impacted the company sales. The sales had been declining; its market share had gone down from 40% (1987) to 6% (1999). Consumer preferences had changed in the past few years. They were now giving more importance to convenience and better service aspects which were not recognized by Voltas. This led to consumers viewing Voltas as a “tired brand”.

In the changed business environment, consumers no longer look at goods like A/Cs and refrigerators as sophisticated functional goods; they consider them as consumer goods. However, Voltas failed to identify this shift in consumer behavior and promoted their products by highlighting factors such as reliability and tradition which failed to make any impact in the minds of the consumers.

This made Voltas, a company that believed in production-based orientation towards the market, espouse the marketing concept.

2. Marketing concept refers to the philosophy of a company which makes the

customer, and the satisfaction of his or her needs, the focal point of all its business activities. Companies adopting this concept focus on delivering value to their target

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customers better than its competitors, and at the same time striving to achieve its organizational goals. Customer centric strategy is the key to adopting a marketing concept. The marketing concept is based on four key components, target market, customer needs, integrated marketing and profitability. Let us examine these four components in the Voltas case.

Target market: The Company realized that the commercial segment has stagnated

and the domestic A/C segment which is growing at a compound rate of 15-18% is the growth area. Thus, the company has decided to focus its efforts on fulfilling the needs of this target segment i.e., the domestic A/C segment.

Customer needs: Voltas has identified that its product quality is on par with that of

its competitors. However, there are other attributes that consumers look for while buying a product. They prefer products that are easily available and provide good service. Thus the company has revamped its distribution network so that its products are made available through 700 retail outlets. The company has also opened call centers to provide better customer service.

Integrated marketing: Integrated marketing is achieved by making the entire

organization work together towards satisfying customer needs. Voltas has tried to achieve this by implementing the ERP package across the organization so that the coordination between various departments can be improved. The company has also linked call centers with dealer networks to provide better customer service. It also included a customer service policy that makes it mandatory for every employee to attend customer calls within a short span of time.

Profitability: The main reason for adopting the marketing concept is to help the

company achieve its goals of making Voltas one of the top three brands in the A/C market.

Caselet 24

1. After 9/11, major airlines focused on survival rather than growth. They cut seat

capacities and started operating in limited routes with smaller fleets. At the same time low-cost airlines increased their market share. They launched services in major routes in direct competition with the mainline airlines. They also increased their seat capacity to fill the gap created by major airlines. Thus, they increased their market share from 10% in 1995 to nearly 20% by 2003.

The conservative approach adopted during the recession by major airlines has given them the financial strength and the lean organizational structure to take on the competition. Companies undertook various cost-cutting measures. They cut back the seat capacity by as much as 20% to adjust to the declining demand. To cut fuel cost they disposed of or canceled the leases for less fuel-efficient older planes. Companies cut back their workforce to reduce personnel costs and make the organization leaner. They implemented electronic-ticketing systems to reduce transaction costs.

The economy has grown by 2.4% during the second half of 2003 and the unemployment rate reduced to 6.2% in July 2003. Corporate investment have picked up. As a result, the demand for air travel started returning to pre 9/11 levels.

The economic recovery and cost-cutting measures during the recession have provided the much needed stability and financial strength to major airlines. Major airlines feel that it is the right time to fight back and regain the lost market share.

2. Major Airlines are mainly adopting two key strategies to contain the low-cost

airlines. The first move was to modify their pricing structure to attract the price sensitive travelers. The second measure taken by the major airlines is to launch similar services to enter into direct attack with the low-cost airlines.

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The first strategy is aimed at getting back the consumers who have switched to the low-cost airlines during the recession. For example, Delta airlines made heavy price cuts and increased the capacity at the Los Angeles airport by 50% in the Atlanta Long Beach route to woo back customers from JetBlue. JetBlue has retreated from this route after only seven months in operation. The aggressiveness of the Delta Airlines action can be made out from the statement by JetBlue's vice-President (planning) "It was definitely a violent reaction. We decided to use our resources best elsewhere." American Airlines increased its presence in the Dallas and Chicago hubs that it had previously cut back due to decrease in demand.

The second major strategy adopted by the major airlines is to directly attack the discount airliners in their territory by launching similar low-cost airline services. United Airlines plans to launch its low-cost service called "Ted" to attack Frontier Airlines. Ted is planned to operate in the markets like Reno, Nevada, Las-Vegas and Tampa. These markets have a large population of leisure travelers who are the key segment for the low-cost services. Delta Airlines is expanding its 36-plane, low-cost service "Song". This service is aimed at capturing JetBlue's market share. American Airlines also plans to compete with the discount carriers by launching its discount service "Derby".

Announcing discounts on the existing services might attract customers back to the major airlines like Delta, but this strategy may not be viable in the long run as the costs may not allow services at discounted rates. This will also lead to confusion in differentiating the services to premium and economy travelers. This strategy may also affect the bottom line of the airlines just recovering from recession.

Launching separate discount service airlines like Ted and Song will help the major players to fight the discount players without harming their own original service offering. This allows major players to design similar low cost business models and engage competitors like JetBlue. This will help the parent airlines concentrate on their business customers in the major markets. This strategy requires lot of investment to maintain a different fleet for low cost operations.

Caselet 25

1. With the increasing competition in the retail sector, retailers need to differentiate

their store offerings from that of the competitors in order to attract customers and increase their market share. Differentiation can be done by providing services and features which are unique to the stores. Creating specific private brands is one such initiative aimed at differentiation.

Another reason for increasing popularity of the private brands is the perception of the customers towards these brands. There is a marked trend of declining product innovations by established manufacturers which has made consumers view competing products as close substitutes rather than as brands. This has led to a decrease in brand differentiation. Because of this consumers believe that accepting an in-store brand against an established brand will not make much difference in terms of quality. And as the private brand is priced lower than the established brand, the consumer perceives the brand as a “value for money” product.

FoodWorld as a brand has gained popularity and consumers are relating the brand to attributes of hygiene, quality, range and most importantly, trust. So FoodWorld wants to cash in on the brand that has been built and extend it to the products.

Apart from FoodWorld’s strong brand equity, the sales volumes it generates might have also made it feel that it is viable to manufacture and market its own private brands. Besides offering a better value proposition to FoodWorld’s customers, private brands also leave the company with higher profit margins.

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2. If managed properly, private brands can bring in substantial benefits and profits to

the company. Globally, Marks & Spencer’s, Sears, and Home Depot have benefited from private branding strategy. But there are some challenges associated with the private branding initiative. The retailer needs to be on good terms with the manufacturers for mutual benefit. By launching private brands, the relations between the manufacturer and the retailer may become strained which may not augur well for the retailer. Manufacturing and marketing the products requires a different kind of knowledge and set of skills compared to merchandising activities. Managing private brands also requires substantial investments. FoodWorld may also run the risk of depleting its store image if a private brand, which is closely associated with the store, fails to meet customer expectation.

Caselet 26

1. Any market research process begins with a definition of the problem and a

statement of the research objectives. The research objectives of this initiative are to • analyze the customer’s response to the product price of $44

• evaluate consumer purchasing trends

• identify the promotional campaign that needs to be devised

After deciding upon the objectives, the company drew up a research plan. As the company wanted to conduct a concept test, it decided to collect primary data. The company selected the survey research approach and the experimental approach to collect the primary data. The survey research approach is used for descriptive research. In this approach, companies undertake surveys regarding the customer’s needs, preferences, etc. Since P&G wanted to evaluate the customer purchase trends and the customer response to the product, it structured the survey on these lines. Experimental research involves selecting a group of customers and exposing them to various experiments in a controlled environment so that marketing managers can identify the cause and effect relationships. P&G has offered its product for sale on an experimental basis on its newly-created website, www.whitestrips.com and evaluated the customer response to its product and the price at which it is being sold.

After deciding on the research approaches the company had to decide upon the contact method. There were various contact methods available such as mail questionnaire, personal interviews, on-line interviews and automated telephone surveys. P&G chose the online medium through its newly-created website, www.whitestrips.com.

The next step was to collect information. To do this, the company advertised about the website and the product, in the print and electronic media and encouraged consumers to visit the website. The company also sent emails containing information about the product to consumers. The campaign was run for a duration of eight months.

The company was able to sell an estimated 1,44,000 Crest White Strips in those eight months.

The next step in the market research process was to analyze the information which was collected. P&G analyzed the sales and survey data. It found that 20 percent of the consumers who had sought information on the product also purchased it. Regarding the purchasing trends, women accounted for 80 percent of the purchases; 50 percent of the women who purchased the product were aged between 35 and 54.

Based on these findings, P&G devised advertising campaigns for the product. The Crest White Strips was officially launched in May 2001 and turned out to be a successful product.

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2. Online market research is fast catching up with the marketing managers. Online

market research has many benefits.

• Online MR is cheaper than traditional methods.

• Online research can be conducted in a shorter period of time.

• The sample size can be kept large and it is easy to obtain participants.

• Geographic obstacles can be removed. Thus online MR can be helpful for research projects that require sample size consisting of diverse groups spread across multiple locations.

• The company can reach their target customers more effectively than through traditional means.

But there are certain limitations in conducting marketing research online.

• Online MR requires the participants to have access to a PC and the Internet. Thus the company cannot reach that section of the population which doesn't have Internet access.

• This type of research is not suitable in cases where the touch and feel of the product is required i.e., the research require close interaction with the customers. Examples include cars, garments and food products.

• The conduct of online research requires the company to acquire special software and hardware infrastructure.

Caselet 27

1. GCMMF’s diversification into the ice-cream, curd, paneer, cheese, and condensed

milk segments was mainly due to the following reasons:

To take advantage of the changes brought about by liberalization

In the early 1990s, with the opening up of the Indian economy and with many multinationals entering the country, the life-styles and food habits of the people underwent a major change. Hoping to take advantage of this change, GCMMF diversified into foodstuffs like cheese, confectioneries, chocolate, etc.

To make use of the large quantities of milk produced in Gujarat

The increased production of milk in Gujarat forced GCMMF to introduce more milk- based products, as it had to make use of the extra milk. To expand the consumption base of milk products, it planned to make products like butter and cheese, which are a part of the regular diet in most Indian homes.

To increase the demand for basic milk products

GCMMF wanted to see an increase in the demand for basic milk products like cheese. As cheese is a major ingredient for pizzas, its entry into the pizza market was likely to push up the demand for cheese. GCMMF’s entry into confectioneries was expected to increase the demand for milk.

To widen its appeal

GCMMF had an edge over its competitors so far as pricing was concerned. Its products were almost 20-40% cheaper than the products of its competitors. This helped the company broaden its appeal across all the segments.

To leverage its distribution set-up

As the demand for fast food products was expected to grow rapidly, Amul wanted to utilize its cold chain distribution set-up for a new range of products like frozen pizzas.

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To create synergies in the value chain

GCMMF was a major player in the cheese market. With the launch of pizzas, there would be a captive market for cheese. Amul also planned to enter the chocolate market in a big way. It decided that if it was unable to compete with major players, the chocolate could be used in its ice creams.

2. There could be two reasons for launching the pizzas under the SnowCap brand.

Consumers have long associated the Amul brand with milk products and chocolates. So GCMMF may have felt that extending the same brand to pizzas may not be the right approach as consumers may not link the product with the Amul brand. Thus, by launching the pizzas under a different brand name, could make the product more appealing to customers. Second, Amul wanted to enter the ready-to eat food market in a big way. Using the Snowcap as an umbrella brand, the company wanted to launch various products like sauce, ketchup, parathas. If the company achieved success in the pizza business, it could extend the brand to other products. Thus it wanted to develop a successful brand in the ready-to-eat food market, like Amul in milk products and chocolates.

3. Amul has adopted a penetrative pricing strategy to sell its pizzas. The penetrative

pricing strategy aims at reaching a larger customer base than the competitors by undercutting prices. Such a strategy is well suited for new products. This strategy can be implemented only when it results in necessary volumes being sold to the company to justify such pricing.

Yes, penetration strategy is the right approach for the launch of pizzas by Amul. There are organized and unorganized segments that sell pizzas in India. The organized segment is mainly dominated by international chains like Pizza Hut and Dominos. The unorganized segment consists of smaller regional chains and neighborhood bakeries. Customers perceive that chains like Pizza Hut and Dominos provide good quality products and higher customer service. This perception enables the organized players to command higher prices. Amul cannot match such quality and service, as it is a relatively new entrant. Apart from that, the volumes in the organized sector are a small percent of the overall market for pizzas. Thus Amul has decided to initially take on the unorganized market, where there is a huge potential. In order to tap the unorganized market, the pricing needs to be kept low so that it can match the neighborhood bakery prices and capture a market share.

Caselet 28

1. Product decisions are generally classified into three categories: changes in the

product types offered, changes in the tangible physical product, and the changes in the intangible/augmented product.

Changes in the product types offered: This involves changes in the product line.

While product-mix refers to the number of product-lines that a company manufacturers or markets, product line refers to the set of related products that satisfy a class of need or used together or sold to the same customer groups. Henkel Spic’s product mix consists of five product lines. There is no change in the company's