genuinely trying to protect the people from the social evil of alcohol consumption. If an advertisement initiates or popularizes the use of products that are not good for health, it is the government’s duty to protect the citizens from getting attracted toward such products.
The direct advertisements of liquor products portrayed the products as glamorous drinks consumed in an attractive environment. They also used popular celebrities (who are idolized by youth) to endorse the drinks. It is the society’s and government’s duty to ensure that the country’s youth do not get addicted to bad habits.
International research on advertising, with special reference to alcohol products has revealed that neither direct nor surrogate advertising in any way leads to an increase in alcohol consumption. In India also, many brands that advertised heavily failed to garner marketshare or increase volumes. Therefore, a ban on advertising might not affect the liquor companies in a major way.
For I
BS U
se O
nly C
lass o
f 201
0
Surrogate advertising is essentially a means to bypass the law and therefore strict action needs to be taken against it. According to some analysts, when a consumer knows that the advertised product is a surrogate, he is aware of the original brand and is recalling the original product. Therefore, surrogate advertisements need to be banned.
2. Surrogate advertisements by liquor companies generated a lot of criticism from
various sections of society. As direct advertising was banned, liquor companies began showing advertisements that showed the original product, but called it apple juice or some other beverage. Some of these were highly objectionable and also, in some cases, sexually provocative. Reportedly, some of the surrogates shown in the advertisements were not even available in the market. These advertisements not only promoted the concerned company’s new products (like water or sports accessories), but also the liquor alternative. They thus helped in brand building and brand recall. Surrogate advertisements bring many advantages to the concerned brand. Research has shown that such advertisements are more effective than the ‘hammer on the nail’ kind of advertisements. Analysts said that direct advertisements sometimes evoked a negative response, as they were presumptive. For instance, advertisements for washing soaps stated that they ‘washed the whitest.’ They seemed to restrict the consumer’s freedom of choice. Therefore, marketers in the US had started using ‘metaphor’ and ‘hyperbole (exaggeration or distortion)’ ads, like showing a floating cloud to depict the softness of line of shoes. Prudential Insurance Co. uses the ‘Rock of Gibraltar’ to show its stability. Researchers said that there was some amount of surrogation in these advertisements also.
However, since surrogate advertisements did not show the original product, they could not be used effectively for new product launches and for building new brands. They can only be used to strengthen existing and widely-known brand. Some researchers were of the opinion that surrogate advertisements did not help increase sales of the original products. In fact, they claimed that such advertisements might even erode the established brand’s equity.
3. To overcome the ban on direct as well as surrogate advertisements, the marketing
team of a liquor company brand can focus on various other alternatives to build the brand. For instance, the company can promote sports events or sponsor some fun- filled, up-market events to market the brand (E.g. a tie-up with the film industry to sponsor movie releases and awards functions).
The Internet could be used to advertise liquor products. As the target consumers for most of these products are middle and high level executives, companies can easily reach them through the Internet. The Internet has proved to be an effective medium for advertising other products and services and would definitely help promote liquor products. Leading brand Bacardi has already entered into an agreement with rediff.com.
Liquor companies can also develop socially responsible advertisements. These advertisements could help the company in increasing the brand recall. In addition, such advertisements could also be used to introduce a new brand and build the brand. Even though socially responsible advertisements did not show any alcoholic product, consumers, more often than not, knew about the original product involved.
Caselet 45
1. The product needs to be positioned as a product with nutritional values and at the
same time as a fun filled product. Some features can be added to the product, rather than just offering a basic product such as “honey enriched with extra vitamins and minerals”. Such positioning broadens the product appeal not just to the kids or the mothers but also to other segments who view nutrition as an important attribute. Apart from targeting kids, the company should also target the youth and working professionals.
For I
BS U
se O
nly C
lass o
f 201
0
Product packaging need to be trendy so as to represent fun aspect. The nutritional values have to be prominently displayed on the pack.
The perceived-value pricing strategy need to be adopted where the product need to be priced on the consumer’s perceived value towards the product rather than just based on the seller’s cost. As the product is perceived to be having nutritional values, company may charge a premium to cash on the positioning made by the company. The product should be made available at the prominent super markets, and grocery stores. It should also be made available at the medical stores.
2. Following are some of the sales promotion tools that company can use to improve
the sales of Dabur Honey.
Consumer promotion tools:
• It can use price discounts to attract the customers. It can also offer extra quantity for the same price.
• It can offer reduced price packs i.e., two different products in one pack priced at discounted price. Thus Dabur can combine its Dabur Honey with other food products which Dabur is selling.
• It can give coupons which entitle discount on the future purchases.
• It can run contests and games to keep up the excitement in the product. It can run contests and games targeting kids, as they are more attracted towards such activities.
• It can tie up with other non-competing companies such as Britannia, or HLL to offer both of its products either free or at a reduced price.
• It can offer utility items like glasses, plastic containers with the product, or items that attract kids like toys, watches etc.
Trade promotion tools:
• Another way to increase the sales is to push the sales. Since the product is more of commodity, pushing the sales can even be more effective. Following are some of the trade promotion tools the company can adopt:
• Company can offer quantity discounts, i.e., price decreases as the quantity ordered increases. This will encourage the retailers to order higher quantities to obtain lesser price.
• Company can offer advertising allowance to the retailer to display the company products and point of purchase (POP) material in his stores. By this company can promote its products in a more cost effective way.
• Company can offer certain number of units free if the retailer orders higher than particular quantity.
• Company can also run sales contests to motivate the dealers to sell more units of the product. It can award attractive prizes to the dealer who topped the sales. Caselet 46
1. ICICI Bank with an asset base of Rs.112, 024 crores is the second largest bank in
India next only the State Bank of India. Having got a universal bank status and having a good financial background, the bank is in a formidable position. Though the Indian market is still largely untapped, growth for ICICI Bank in the domestic market has slowed down. This is because of increased competition from private sector banks and public sector banks that are adopting an aggressive strategy. Moreover, interest rates have fallen, putting pressure on margins for the bank. Another reason for stagnation in the domestic banking sector is that the slump in the industrial sector in India. This has
For I
BS U
se O
nly C
lass o
f 201
0
lead to decrease in industrial credit segment, which is a profitable segment for banks. ICICI Bank’s search for growth opportunities led to the decision to enter the global markets.
By diversifying into other markets, bank can reduce the risks arising in one particular market. As a financial institution, ICICI Bank can take advantage of varied economic environments in the markets that it is operating. By moving into global markets, the bank can also improve its brand image. Any consumer making a deal with a financial institution evaluates the reliability and trust that the financial institution enjoys. By expanding into global markets, the image of the bank as a reliable and trusted organization can be further enhanced in the minds of the consumer.
2. With the Bank's board signaling a go ahead for the management to tap the global
markets, ICICI has set up an international banking division under the leadership of Bhargava Das Gupta. Das Gupta's task was to develop the entry strategy for the bank in the global markets. Four options have been widely used by banks to enter global markets. One option is to enter markets that are similar to the market it is operating in. Such a strategy is beneficial, as entry into such markets is easier for the bank. This is because bank needs to put in less effort in changing its operations or the product offerings. Thus, the bank could extend its operations to neighboring countries like Sri Lanka and Bangladesh. However, the market potential is not good in these markets. The second option is to enter growth markets by making acquisitions and entering the market on those acquisitions. Such a strategy was adopted by Standard Chartered Bank, which entered the growing Asian and Latin America markets through acquisitions. However, such a strategy needs good financial backing to make and manage acquisitions. The risk is also higher in such strategy as huge capital and effort is involved in it. ICICI Bank is a relatively new entrant in the global market and thus has little experience and knowledge about the global banking scenario. Moreover, it does not have such financial strength.
The third option is to use a successful product or its core competence as a lever to enter new markets. American Express used its traveler cheque and credit card business as a tool to enter new markets. Organizations ride on brand familiarity and the success of its product to expand operations in the market that it entered. ICICI Bank doesn't have any such core competence or a flagship product to take advantage of.
The fourth option is the "follow the customer" approach. In such strategy an organization uses the customer base that consists of individuals who have emigrated from the domestic country and domestic companies that have set up shop in foreign markets. Spanish Banks used this strategy to enter the Latin American markets. As the banks are targeting a familiar target segment the success rate can be high. This is because the customers want to do business with companies they are familiar with. This is more so in the financial services sector. ICICI Bank has decided to adopt this strategy. With a growing NRI population, this strategy can bring in good revenues. The Middle East, the USA and the UK have a large chunk of the NRI population. Many Indian companies are opening branches and manufacturing facilities in various foreign markets. China is the prime destination for many companies. The Bank can get business from this segment also.
Caselet 47
1. Dealers and their staff are the point of contact with the company’s customers. Until
recently, they were operating in a protected environment and being more concerned with the volumes they sold, were performing their jobs in a routine manner. The petroleum retailing sector is undergoing rapid changes. The industry is drifting towards an open environment from the government protected environment that existed a few years ago. Competition, not just from domestic players but from multinationals
For I
BS U
se O
nly C
lass o
f 201
0
like Shell is increasing, and the pricing is decided by the market, and not the government. This may affect the margins of the company. In such a highly competitive environment, a high degree of customer service can help HPCL to differentiate its products in the market place. With the deregulation of the petroleum sector, it is essential for the company to ensure that their dealers are customer service oriented. The dealers need to manage the outlet independently, and in a more professional way, and their staff should adopt the role of a sales person rather than just providing what customers need. Proper training of the sales force would enable the dealers to become more customer-centric.
Need for proper sales force training also stems from the fact that value added service provides higher margins. While the margin in sale of petrol and diesel is just 1-3%, the margins from value added services such as sale of consumer goods and lubricants are much higher. Thus, through proper training, the dealer’s staff will be in a position to sell such value added services to customers.
2. There are five key elements to be considered for the successful conduct of any sales
force training program.
Defining the aim of the sales training program: The company has to first decide
upon the need for the training program and what it expects to achieve from it. The company should also identify which segments of employees require training. In the case of HPCL, the training of the dealers and their personnel was undertaken to improve customer service, thereby increasing sales and differentiating itself from competition. The company wants to train the dealers and their staff at all its outlets to make them more customer service oriented and to equip them to sell non-fuel products such as packed food items, oil checks etc.
The content of the program: The next step is to decide upon the content of the
program. The content varies from company to company, depending upon the needs and abilities of the employees participating in the training program. HPCL wants to impart management skills to its dealers so that they can function more effectively and with little dependence on the company. The company also wants to impart soft skills to the staff working under each dealer to enable them to provide a high level of customer service and to be able to sell value added services to the customers. For this, Metric (who is conducting the sales force training) devised a training program using its "five point delivery" system. This system is based on Esso's 360 degree check.
Training methods: Next, the company has to choose the appropriate training
methods. There are various training methods that are widely used. These include, lecture method, personal conference, role playing, case discussion, on the job training and correspondence training. HPCL used both classroom training methods and video conferencing in its program.
Execution of training program: Finally, the company has to select the prospective
trainees, identify who will conduct the training and where it will take place.
HPCL entrusted the task of dealer training to a third party, Metric Consultancy. The firm has to train the dealers and their staff. In the first phase, 1,500 of its 4,729 dealers and 6,000 of the 20,000 staff were trained. HPCL selected eight centers to train the dealers and 20 centers to train the staff.
Evaluation of training program: There should be an evaluation to analyze the
results of the training program and its impact on the trainees. Such an analysis would provide useful inputs for training programs conducted in future. HPCL has a separate agency to evaluate the results of the training program. The agency has conducted audits at the outlets to measure the impact of the training on the employees.
For I
BS U
se O
nly C
lass o
f 201
0
Caselet 48
1. During the 1990's, national players like Onida and Videocon opened exclusive
outlets, but the outlets had to be closed down due to poor response from consumers. There were various reasons for their failure at that time. The concept of exclusive outlets was ahead of its times. Since there were only a few players in the consumer durable market and just a limited number of models, multibrand stores were able to stock all the models available in the market. Thus these exclusive outlets failed to attract the customers.
Consumers too had less awareness about different products. They were more concerned about getting value for their money. Their expectations in terms of service and quality of the product was low and so, they showed little preference for particular brands or service. Multi-brand outlets, therefore became the preferred destinations for these customers even though the service was not up to the mark.
Consumers’ perception of the brands was another factor that led to the failure of these exclusive outlets. Due to the low awareness among consumers and the poor marketing efforts of the manufacturers, consumers related BPL and Onida with only televisions and Singer with sewing machines, even though they had other ranges of products. This perception led consumers to believe that these outlets would have only a limited range of products.
2. The popularity of exclusive outlets now is due to a change in customer preferences
and market conditions. There has been marked change in customer preferences as compared to the 1990's. Customers’ expectations have increased substantially. They are also more aware about products and more concerned about the quality and brand of a product. They expect good service while they make a purchase. Such changes have made these exclusive outlets popular. These outlets provide a good ambience, a wide range of products of a single brand, and well-trained salespersons who are able to demonstrate product features more clearly.
Market conditions have also been responsible for the comeback of exclusive outlets. Consumer durable companies now have a wider product portfolio to display and multi-brand stores may not able to exhibit the entire range. Company outlets on the other hand could show the full range. Moreover, with the increase in the number of players in the market, many companies felt that their products were getting lost in the clutter of a multi-brand showroom. Also, the companies were launching high-end products such as home theater systems and high-end refrigerators. These required proper demonstration by a well-trained salesperson and a good in-store ambience, factors that would convince the customers to buy the product. Since these may not be possible in multi-brand stores, manufacturers decided to open exclusive outlets.
3. Single brand outlets have many benefits. Companies can increase brand awareness
of their products among customers. With the clutter in the market due to a large number of players, consumers may not be aware about the product range of the