New blog post: Indian Startup in the Retail FMCG (CPG) Sector, which Product Category has Biggest Opportunity

This is a question I encountered at Quora. The question asked, among snacks, confectionary, breakfast cereals, ready to eat, which category "is the best to start operations with"?

Assuming shoe-string budget, the best way is to go through process of elimination to find the most suitable one.

1. Snacks: We love our snacks. Unfortunately the market place is full. Two things win in this market:

A. Huge Media, and

B. Great distribution. 

Big brands have both of these. Other successful brands have the distribution set-up. It is extremely hard to gain distribution in India for two reasons: 1. Fragmented market ( one literally negotiates at shopkeeper-level) and 2. Limited space ( groceries are already choke-a-bloke, they don't want to stock a new product which is not being heavily advertised or already have proven demand). So tough game here.

2. Confectionery: Does it mean candy? In that case, please refer to my note for Snacks. If this category meant to include bakery products, then there is some opportunity. Indians have the sweet tooth and are now aiming for western sweets. Very few quality brands exist, mostly due to the perishable nature of the products. But definitely a space if you could provide a quality. If your products are interesting enough, you will get some local distribution ( I am not assuming you are looking for national distribution for such perishable product at start-up stage). 

3. Breakfast cereals: Kellogg has burnt its finger. We like our milk hot. Breakfast cereals become soggy in hot milk. If one can crack this code, he will come out winner. Else, I do not see a quality product here.

4. Ready-to-eat: People would love it if one can provide quality at a reasonable price ( reasonable price= less than half of it'd cost in restaurant). I see some good R&D investment here.

Finally among the four choices, IMHO,  it looks like Confectionery has the  highest opportunity at the local level.

Coca Cola Happiness Campaign: The OFW Project

Talking about ads and campaigns, 2011 has been a very good year. There are quite a few campaigns that will make us sit back and notice. Outstanding among those were the Volkswagen Darth Vader ad or the Nissan Leaf one. Interesting part is that some US companies have made great campaign overseas, which were beyond the radar of US audience.

One such campaign was from Coca Cola's Where The Happiness Will Strike Next: OFW ( Overseas Filipino Workers version).  Although the project was done at Philippines, but the appeal  goes beyond any national boundaries. Here is the video:

  
This one touches several humane relationships from diverser perspectives while capturing the universal pangs of affection .  A son missing a father, a mother missing her kids, a father missing his son, A man missing his wife--> the campaign will "personally" touch every viewer beyond boundaries.

It'll be great if Coke decides to replicate the campaign world over, since the emotions portrayed are shared by individuals beyond  political borders.

Three Basic Skills of a Successful Marketer

Someone asked this interesting question in Quora! There were several equally interesting and enlightening answers. Replies rightly pointed out skills such as business acumen, creativity, result orientation etc.

IMO, they are all right skills to be a successful marketer, or a consultant or a banker or a saleperson! Which business profession does not demand "business acumen" or "creativity"? So, which are the basic skills specific to marketers? Here is my take.

I have just started my marketing career! But here is what I have seen common traits among the most successful marketers I have interacted with.

Appreciation of the brand: Even when buried in piles of data, copies, market research report and proposals, they can very quickly identify the stuffs that aligns with the brand and those that do not. As a result, they are quicker in taking action and frequently those actions that are relevant to brands.

An ear to the consumer side: What the consumers will need next? - Make that product. Where they will make the next purchasing decision?- be there!

Nice yet tough: Unlike successful bankers ( or successful persons from most of the well known business careers), successful marketers are usually very nice to talk to. I believe this is because of the nature of the job. As a brander, you are working with finance, trade, sales, market research, creatives, manufacturing plants and what not. But interesting part is that, you do not have formal control over the people in the other divisions ( although the ultimate responsibility of the P&L depends on you). As a result one is successful only when one is successful in getting all those various divisions work for her.

Also successful marketers are tough. They are not satisfied with any work that is even a bit short of perfect. Because I do not think in any other job, where you need to be so careful about every word, font, color etc. For example, a simple change in the curvature of a font can make your label less spot-able in supermarket shelf. Successful marketers have eye for these kind of details and they are ready to return work any number of time rather than making compromise

[Cartoon from Dilbert.com]

Social Media Marketing II: Success Stories from Not-So-Cool CPG Products

There is a thought among branders that only cool brands get traction in social media. In my last post in this series, I mentioned that traction does not depend on a cool brand but on a cool strategy.

In this post, we will see three successful examples of social media campaign from consumer product world. I have excluded the obvious brands, which are typically regarded as “cool”.

The examples are: 1. Marmite, a spread from Unilever, UK, 2. Steaz, a little known organic tea brand and 3. The Being Girl campaign from P&G

Marmite


Marmite is a spread popular in UK. The area over the bread is one of the most competitive spaces in the world. Jams, butter, marmalade, various chutneys, other spreads- there are so many claimants for that space.  To make matters worse, Marmite is a pretty local brand and there is a significant size of consumers who just hate the taste.

First, the brand demonstrated how to leverage polarized opinion on a brand  and piggyback on a national event through their "Love/Hate" campaign during  British election (Here is the website: http://www.marmitenewsnetwork.com/).  

Next came the Marmarati campaign during the launch of a new variant. The Marmarati campaign from Marmite will become a classic case study for “how to use social media  while launching a new product". Here is the detail of the campaign.  Marmite created an exclusive club of social media influencers and proven marmite crazies, who had a chance to be involved at the product development stage. The club was invitation only, and the fans had to show their love for marmite to join the club. These chosen members were treated lavishly and were encouraged to spread the word about the club and the new product in social media. These members created a huge “want” among regular consumers to become part of the exclusive club and  also piqued the curiosity on the new product.

Steaz

Steaz is an almost unknown organic tea brand. The brand doubled their sales within two months by orchestrating a social media campaign by targeting a select group of influential moms at the time of coupon drop. The campaign generated ~250,000 coupon dwonloads and ~6,000 blog mentions.

Steaz's case is all the more interesting because they did not have any traditional media presence, afaik, and the total budget was only ~$100K. The campaign shows that social media can really impact bottomline of brands with very limited budget. Here is the detail of the Steaz campaign.

Being Girl

Being Girl is a cohort site under Tampax and Always, feminine care brands from P&G. Cohort sites are additional websites ( not company websites) targeting a specific consumer segment.  A cohort site does not typically come across as a sales channel for the brand. Homemade Simple  is another example of a cohort sites from utensil cleaning brands of P&G.

P&G launched being Girl way back in 2000, much before social media came to be a hot channel.  The idea was to create a web forum for girls who are turning into women and seeking information on feminine care on a safe and friendly environment.  The first two years of the site was a bit rocky, but then it  got the traction.   Being Girl became a trusted source on feminine care under the guidance of Dr. Iris Prager PhD, who leads a team that writes responses to member questions.

The site went beyond just being n feminine care information provider.  It started leveraging outside partnership to build brand relevance: for example, the site created partnerships with SONY for teen artists, with Cathy’s Books , UNA-USA for sponsoring team of girls performing public service.  Being Girl daily posts became 100% community generated and at its peak the site received more than one million registrants! P&G’s proprietary marketing mix modeling revealed Being Girl to be significantly more effective on sales of Tampax and Always than TV ad![2]

The current challenge for cohort sites is to keep the relationships tied, when increasing number of consumers are reluctant to go beyond one or two prevailing networks to maintain their social activity.  The key is to transfer the relationship from the website to Facebook.  We can see palpable activities at beinggirl.com also to continue the same relationship over Facebook, when there will be less number of visitors in the site[3].

In next post of the series, I will deep dive into social media marketing strategies for different CPG products.

[1] http://marketingchops.blogspot.com/2011/03/social-media-marketing-i-quick.html

[2] http://www.dewittedigital.com/fileadmin/pdfs/strategy/2_1_Forrester_PG_s_Beinggirl__builds_lasting_brand_loyalty.pdf

[3] According to Compete, traffic has dropped by ~40% in Feb’11 alone: http://siteanalytics.compete.com/beinggirl.com/

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Free Shipping: Is It Effective

Short answer:

"Free Shipping" works in certain cases and has potential to become gamechanger in online retailing.

Long Answer:

Free shipping is a Marketing Expense . Retailers pass on the money to customers instead of buying billboards/ ad spots with that. So, the real profitability does not just depend on the additional purchases by a customer due to free shipping, but also whether that additional purchases are more than the additional sales the traditional marketing effort would have generated.



A sales promotion can bring most profit only if there is a way to discriminate between high price sensitive and low price sensitive customers (Ref: Farris and Quelch, In Defence of Sales Promotion, Sloan Management Review,1987)[1]. Free shipping to everyone will only bleed money. So, the right thing to do is to find out the right segment of customers who are more sensitive to such offer.



Amazon Prime has managed to create the discrimination wall in two ways. First, the persons who paid money upfront for prime are the ones who really value the money spent on shipping. Now they will make far more purchases than they used to do. Second, they have given Prime free to students. For that students had to register their ".edu" email id. They perfected discrimination between people who are sensitive and people who are not.



Walmart.com followed suite, but they discriminated price through a different filter. They made shipping on several items free to all customers from mid-November to 31st December. In this case, they used the specific items and date to discriminate between Christmas deal seekers and other regular purchasers.


Why Free Shipping Will be a Gamechanger in Online Retail

Now, at retailing and ecommerce industry, what Wal-Mart and Amazon do, does not only affect their own companies but also become an industry expectation. Many of the smaller competitors could not match the free shipping offer. So Amazon and WalMart.com did not really poach each other’s customers, but customers from small no-name ecommerce players. In academic world, this strategy is called limiting competitive encroachment as explained in the paper “Price Promotions: Limiting Competitive Encroachment” by Rajiv Lal[2]. As a result of this free shipping onslaught, we will see death of many small etailers ( similar to the death of many Mom and Pops' stores during the advent of Wal*Mart).

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[1] Farris and Quelch: Sloan Management Review: Fall 1987 ( could not find link to the original article online, lots of references in net)

[2] Rajiv Lal: Price Promotions: Limiting Competitive Encroachment: Marketing Science: 1990: http://www.jstor.org/pss/183781

Social Media Marketing I: Quick & Compelling Reasons for Branding in Social Media

Why a post on social media marketing?

There are millions of articles on the importance of marketing on social media. I read plenty of them last summer, when I developed the social media strategy for a couple of consumer brands.  During my research I always felt it’d be useful to capture the importance of social media for branders in a quick and compelling post.  So, here is why social media is important for branders:

Because your customers are in social media

According to an eMarketer study, more than 164 million people in US have social media profile[1]. To put the number in context, the total circulation of top 100 newspapers in US is 5.34 million[2]. Even assuming a single copy of newspaper is read by 5 persons, that takes the combined reach of top 100 newspapers to 27 million, which is only 16% of the US people in social media.

Because your customers want to promote your brand in social media

In social media people are talking brands. According to a study by ExactTarget[3], 39% people follow a brand just to let their friends know of their support to the brand!  Now, that is a lot of free goodwill! There are customers who are ready to promote you.  

Let me address one common misconception here. Many branders think people only promote cool brands in social media. Nothing can be farther from truth. Success on social media does not depend on a cool brand, but on a cool strategy. How else can you one explain the successful campaign of Duct tape (an adhesive tape, hardly a cool brand or product) in Facebook, where they acquired more than three and half million followers! In subsequent posts, we will see several other success stories of regular brands.

These customer driven promotions in social media influence further purchases

You may be saying, "OK! I got it. There is a lot of customers. Plenty of them even ready to be my advocate. But tell me, all these chatter, reviews, opinions, do they really bring the money in?"

A thumping YES! People trust online opinions as much as newspaper editorials.  According to a Nielsen company study[4], 70% of the responders trust anonymous online reviews (as against 69% for editorials and 33% for online banner ads). You know, few brands will ever be on the editorial of a newspaper for a positive reason! It looks like that this trust sways purchasing decision. Bazaarvoice has compiled useful stats on social media impact, where we see that 74% consumers use social network for a purchasing decision[5].

Social media presents an unforeseen opportunity to marketers to use every satisfied customer as a brand promoter. In subsequent posts in this series, I will address strategies to leverage this opportunity and case studies from regular brands, who have been successful.

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[1] http://www.emarketer.com/%28S%28zirsohyg43qcsoncdweyveyu%29%29/Article.aspx?R=1008247&AspxAutoDetectCookieSupport=1

[2] http://abcas3.accessabc.com/ecirc/newstitlesearchus.asp

[3] http://mashable.com/2010/09/16/facebook-users-interact-brands/

[4] http://blog.nielsen.com/nielsenwire/consumer/global-advertising-consumers-trust-real-friends-and-virtual-strangers-the-most/

[5] http://www.bazaarvoice.com/resources/stats

 

Parent Company's Dilemma: Associating a new brand with an established one

While coming up with a new product, parent companies of successful brands often face a common dilemma- How to associate the new brand ( let us say, B) with the established strong brand ( let us say, A) even while keeping the strong brand separate from the new one?  

Essentially what the company wants is to associate the new product with the established one, without modifying the branding of the latter. What parent company is trying to achieve is to position product B as a product extension of A (most common example of product extension: Coke and Diet Coke. The latter takes the branding of the former, without changing former's brand equity).

To make this association, first the brand manager must look at the points-of-parity and points-of-differentiation between A and B. The manager probably will be able to identify one of the following three relationships between products A and B.

1.   Product B can either be marketed as one, which complements usage of A for specific purposes. Example: Colgate toothpastes (Product A) and Colgate Peroxyls ( cleans canker sores) or other Colgate OTCs ( these are products B). They complete the suite of oral care.

2.   Product B can act as a substitute for same usage occasion, but for different tiers of customers. Example: Jet Lite (budget airlines owned by Jet airways India) and Jet airways. Jet has an amazing reputation as a full service airline at domestic Indian market and they share the stardust with JetLite (though different website and all).

3.   The value of product A can easily get transferred to B. That is, customers feel whoever does a good job of making product A should be doing a good job of making product B.  Example: Samsung does a good job of making cellphone; hence Samsung will do a good job of making tablets.