KB’s Fair Price Shop

Pantaloon Retail India Ltd is moving into the smaller retail store format through their launch of the KB’s fair price shop. It is going to be a no-frills, fair price shops chain; with a tag line of “Saare Jahan se Sasta” the new retail chain would alter a few rules of the game in India. Subhiksha is "Bachat Mera Adhikar", while KB's (Kharido Becho) fair price shop wants to be "Saare Jahan Se Sasta" retailer in India. KBFP’s target should be to provide essential items cheaper than the market price and to look at a 20% to 30% market share of the neighbourhood retail market.

With each shop measuring an average of 2,000 square feet retail space, it will be based on neighbourhood, convenience, stores concept. Stocking only a limited variety of items required to meet daily needs of its customers, the chain proposes to offer merchandise at 10% lower prices than market for national brands and up to 20% lower than market prices for local brands. ¨

KB’s fair price shop needs to differentiate itself from Competition and then maintain a sustainable competitive advantage by offering consistency in service efficiency and product quality. ¨

These are the two areas in which Subhiksha will be lagging behind and hence it is essential to make it an immediate Point-of-Difference. ¨ Subhiksha is positioned as “Lower Priced” store as seen from the results of the primary research in the following sections. ¨

The Indian consumer however wants “Value for Money” and not “cheap” products/brands. Hence this is how KBFP should position itself against the Kiranas and organized players like Subhiksha

Fiama Di Wills: ITC Shampoos

Ad-Analysis:
ITC has prided itself on breaking the clutter with its different approaches towards advertising in Sunfeast and then Bingo. But it has gone for a safe bet on Fiama Di Wills.
The advertisement looks more like a Pantene TV ad rather than a new entrant.

Description:

Cigarette and FMCG major, ITC has launched its first mass personal care offering, a high-end shampoo. After a year of speculation, ITC has launched its first mass market personal care product. ITC 's shampoo brand, Fiama di Wills is in the premium segment, that’s growing faster at 44%, compared to 21% for the overall market.

Interestingly, ITC didn’t introduce a new brand name for its shampoo. Instead it has opted for a brand extension of its two year old, super premium range of personal care products, Essenza di Wills. But unlike Essenza that was available at ITC hotels and Wills Lifestyle stores, Fiama di Wills shampoos will be stocked at retail stores across India. The product will be available at Rs 99 for a 200 ml bottle.

On the pricing front, ITC is taking established players like HUL and P&G head on.

Expanding its range of personal care products, and following the successful launch of Fiama Di Wills Shampoos, ITC presented yet another world class range of products for the Indian consumer through its new range of Fiama Di Wills Shower Gels.

Fiama Di Wills’ new premium range offers three transparent shower gels with suspended beads. Each variant provides a specific benefit to the consumer:

Shampoo Variants: Silky Strong,Everyday Mild, Aqua Balance, and Volume Boost.

Continuing with its tradition of offering a superior product and brand experience to the modern Indian consumer, ITC also launched today the Superia range of soaps and shampoos in select markets .

Superia offers a range of four soap variants and two shampoo variants with a range benefit of Glowing skin and Shiny hair. Each of the variants have been designed to deliver specific benefits to the various consumer needs.

SOAPS: For Glowing Skin
1. Fragrant Flower with the fragrance of Rose & Lavender Oil
2. Soft Sandal with the fragrance of Sandal & Almond Oil
3. Natural Glow with Neem & Coconut Oils
4. Healthy Glow with Orange Oil

SHAMPOOS: For Shiny Hair
1. Shiny Black with Triple Conditioners and the natural goodness of Hibiscus & Brahmi extracts
2. Vibrant Green with Triple Conditioners and the natural goodness of Amla &
Arnica extracts

Superia soaps will be available in sizes ranging from 50g to 125g, and the shampoos in 125 ml and 55 ml.

Co-branding

Co-branding is a marketing arrangement that associates a single product or service with more than one brand name, or otherwise associates a product with someone other than the principal producer. The typical co-branding agreement involves two or more companies acting in cooperation to associate any of various logos, color schemes, or brand identifiers to a specific product that is contractually designated for this purpose. The object for this is to combine the strength of two brands.

The marketing of Gillette M3 Power shaving equipment with Duracell batteries (both brands owned by Procter & Gamble).

Many online companies think they are pursuing co-branding when in fact they are pursuing strategic partnerships. Partnerships, which have different goals than co-brands, are a way of leveraging a corporation’s own strengths and softening its weaknesses via a joint effort with another firm.

Umbrella Branding

As with all effective brand strategy, umbrella brands require a single message, an expression of a commonsense benefit grounded in human emotion that opens the way to own the conversation within a business category.

Umbrella brands abound in business; examples include Virgin, Kellogg’s, Sony, and location brands such as Japan, Manitoba, and St. Louis.

With an umbrella brand, the number of interactions the consumer has with the brand increase significantly, thereby reinforcing the brand values, and it helps transfer the goodwill to new products and categories. But the umbrella brand needs to be focused: It must stand for the same values across the category or range of products, and have the same emotional link.

Generally, consumer durables and services brands have used umbrella branding, while FMCGs have not, but even they have resorted to brand extensions rather than new launches.

Independent brands only make sense when the product clearly has a different proposition from the company brand; like Lexus from Toyota and Swatch from Omega.

In the case of Asian Paints, there were so many sub-brands, there was a reduction of media weights for advertising each entity. Then, the company shifted to a brand-centric portfolio, which involved a change of logo, product names, packaging and advertising. But the response from the trade and consumers has been positive, overall brand synergy and shop presence have increased, and the advertising is more effective, he added.

So unless the product is clearly different in the mind of the consumer, umbrella branding is the way to go. NIVEA is a great international example of an Umbrella Brand

Flanker Brands

A flanker brand is a Line extension by the company. HUL having different varieties of washing powder detergent, e.g. Surf Excel for the Premium segment, RIN for the middle segment and Wheel for the lower segment.
P&G having Ariel for the premium segment and Tide for the middle segment.

A flanker brand is a new brand introduced into the market by a company that already has an established brand in the same product category. The new brand is designed to compete in the category without damaging the existing item’s market share by targeting a different group of consumers. This strategy, also called fighter branding or multibranding, is used to achieve a larger total market share than one product could garner alone. Companies with multiple brands in a single product category generally have the following types of products in their portfolios:

• A premium brand that offers high quality at a higher price.
• One or more “value” brands offering a slightly lower quality or a different set of benefits for a lower price.

Why is flanker branding important?

Flanker branding is important because it allows a company to attract new customers from various market segments. The main brand of a company’s portfolio should target the market segment containing the most consumers. Another brand can then be positioned to convert users from other market segments by using a different set of benefits or product characteristics. For example, Proctor and Gamble’s (P&G) (worldwide) Tide is an extremely successful laundry detergent. In order to appeal to consumers who desired a lower-cost detergent, P&G introduced Cheer, which is a slightly lower quality product offered at a value price. While Tide’s sales dropped slightly with the introduction of the new brand, the combined sales of Cheer and Tide were higher than Tide’s original sales alone, allowing P&G to gain a greater market share. A company’s brands should attract customers from competing brands and not each other.

There are a number of advantages to developing a flanker brand:

• Gain more shelf space for the company, which increases retailer dependence on the company’s brands.
• Capture “brand switchers” by offering several brands.
• Develop excitement within the company by monitoring sales figures of the different brands.
• Protect the company – giving a product its own unique name means it will not be readily associated with the existing brand. This reduces risk to the existing brand and/or company if the product fails.
• Companies with a high-quality existing product can introduce lower-quality brands without diluting their high-quality brand names.
  

Developing flanker brands does present challenges. Introducing a new brand is quite costly. Creating another independent brand requires name research and substantial advertising expenditures to create name recognition and preference for the new brand.

Will Flanker Branding Work for You?

Flanker branding is not for everyone. There are a number of questions that must be answered in order to make the best decision for your situation. The most basic questions include:

• Can my existing brand be changed enough that a new brand will have unique qualities that will appeal to a separate group of consumers?
• Are these new qualities believable?
• How will the new brand impact my existing brand(s)?
• How will the new brand impact competitors’ brands?
• Will the cost of product development and promotion be covered by the sales of the new brand?

NIVEA: Brand Study

"In many countries, consumers are convinced that Nivea is a local brand, a mistake which Beiersdorf, the German makers, take as a compliment."
www.wolff-olins.com.

"The concept is one that spans a great many categories. Coca-Cola as a brand does not have a lot of extendability. Whereas Coke means Coca-Cola, Nivea is not Beiersdorf."

History
The legacy skincare brand Nivea can be easily found in 150 countries around the world. Approaching its 100th birthday, "Nivea" derives from the Latin word "nivius," meaning "snow-white." The first brand to bring skincare products from the privileged elite to the mass market, its initial product offering, Nivea Crème, was created by a team of dermatologists in 1911 who claimed it was "the world's first long-lasting skin cream."

By 1924, Nivea initiated the use of its blue and white tins, still in use today. A brand born of dermatological expertise, consumers continue to associate Nivea with trust, reliability and accessibility. Owned by Beiersdorf AG, an international branded goods company in Germany,

Nivea has grown from one signature product to over 300, encompassing fourteen product categories, which include a vast expanse of sub-brands such as Body, Visage, Beauté, Sun, For Men, Hair Care, and Baby. Through the years, Nivea has found success with new product rollouts by maintaining a rock solid consistency in its brand messaging, both visually and verbally.

Promotions
With its special quality and skincare expertise, NIVEA was bound to become a successful worldwide brand name. Beiersdorf supported the progress of this great brand through the power of innovation and by successfully building up and expanding the brand’s personality.

An important element of NIVEA’s visual identity is the NIVEA colour scheme. In every visual communication the NIVEA brand appears in its world-famous blue and white colour combination. The NIVEA blue surrounding the brand logo is not just any old blue, but a special colour mixed exclusively for NIVEA in a complex development process. More accurately called “Ivocart NIVEA Blue B 65711”, NIVEA blue has depth on the one hand, but on the other looks fresh and gleaming, not drab thus perfectly suiting the NIVEA image.

Brand Values
Over the years, NIVEA - primarily through NIVEA Creme - has acquired a unique, universal brand identity as a caretaker of skin. NIVEA is synonymous with protection and caring for the skin. “Mildness,” “reliability,” “gentleness,” “protection,” “high quality,” and “value for money” are all strongly associated with the NIVEA name.

http://www.beiersdorf.com/controller.aspx?n=55&l=2
http://www.superbrands-brands.com/volII/brand_nivea.htm
http://www.brandchannel.com/features_webwatch.asp?ww_id=219
http://www.icmrindia.org/casestudies/catalogue/Marketing/MKTG087.htm

Pricing Strategies

Premium Pricing.

Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.

Penetration Pricing.

The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom in order to

Economy Pricing.

This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Price Skimming.

Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.

Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.

Psychological Pricing.

This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar.

Product Line Pricing.

Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.

Optional Product Pricing.

Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

Captive Product Pricing

Where products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.

Product Bundle Pricing.

Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.

Promotional Pricing.

Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).

Geographical Pricing.

Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price.

Value Pricing.

This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.

Predatory pricing
(also known as destroyer pricing) is the practice of a firm selling a product at very low price with the intent of driving competitors out of the market, or create a barrier to entry into the market for potential new competitors. If the other firms cannot sustain equal or lower prices without losing money, they go out of business. The predatory pricer then has fewer competitors or even a monopoly, allowing it to raise prices above what the market would otherwise bear.
In many countries, including the United States, predatory pricing is considered anti-competitive and is illegal under antitrust laws. However, it is usually difficult to prove that a drop in prices is due to predatory pricing rather than normal competition, and predatory pricing claims are difficult to prove due to high legal hurdles designed to protect legitimate price competition.

Limit Pricing
A Limit Price is the price set by a monopolist to discourage economic entry into a market, and is illegal in many countries. The limit price is the price that the entrant would face upon entering as long as the incumbent firm did not decrease output. The limit price is often lower than the average cost of production or just low enough to make entering not profitable.

Loss Leader
In marketing, a loss leader (also called a key value item in the United Kingdom) is a type of pricing strategy where an item is sold below cost in an effort to stimulate other, profitable sales. It is a kind of sales promotion.