Archive for the ‘Business’ Category
Choice based Conjoint
Choice based Conjoint (CBC) is a research technique based on the observation that consumers always choose products among a set of products in the marketplace, and a simulation of it is the closest to the real consumer behaviour. CBC is a technique wherein the respondent is shown a set of concepts (with specifications) and is asked for his/her preferences. This technique hopes to simulate the tradeoffs that consumers make in their daily buying experiences; the tradeoffs could be among the attributes of the product or among the products and brands listed. This technique is generally used to understand the interaction among the attributes, and for pricing studies.
One needs to list down the attributes and the levels for each of the attribute. For example, to conduct a CBC to understand the importance of the features of a smartphone; an example of an attribute could be “RAM Size” and the levels could be 512MB, 1GB, 2GB or whatever options you would like to present to your consumers. The options should be as close to the actual product as possible and the attributes and the levels should be given an extra-ordinary amount of thought. CBC should ideally be done on a sample of around 300-600 respondents who are aware of the products and the category.
One of the issues I faced while deciding on the attributes and the levels is that it is a little on the easier side for a very functional product like a smartphone or a car, where you can easily distinguish between different engines or processors, (different features like power steering, windows, etc…). The features and levels in functional products are easily distinguishable and conceivable. On the other hand, for products such as biscuits, toothpastes, sanitary napkins, etc. I am not sure how well people can distinguish and conceive different product benefits in such categories where you know the product only by experiencing it.
History of CBC
Limitations of CBC
- Not all brands are equally known to the consumers, and there is a risk of popular brands mostly being preferred in a CBC study.
- CBC doesn’t take promotions and distribution into consideration, and it assumes that all brands are available and have enough media spends.
- It assumes that the consumer has the ability to buy the product.
- The number of questions involving different choice sets could easily increase, causing respondent fatigue.
Brand Price Trade Off
BPTO is a simpler version of a conjoint analysis where a set of brand/price combinations are shown to the respondent. As the respondent choses a particular brand, the price of that particular brand is increased and the consumer is again asked to choose among the new set of brand/price combinations. This technique helps us understand how the consumer trades off the brand and price, and what is the best price point or price band for your product.
The one biggest advantage of this method is its simplicity, while it has quite a few critics in the market. One of the disadvantages of BPTO is that consumers may become conscious and may start playing around with the lowest price, or consumers may be protective of their brand and may always prefer a brand and take it to unrealistic pricing levels.
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With increased exposure to global brands, latest internet communications, and desire for better lifestyle, the consumers today are looking to use the global, trendy, life-style oriented products and are demanding more in terms of the shopping experience, simplicity, quality products, and value.
The evolution of Modern Trade is just meeting the demands of these consumers and together causing rapid growth in modern retail. With increased exposure to Modern Trade, the consumer today is becoming more and more comfortable and loyal with Modern Trade. Nielsen says that a fifth of the Urban India Shoppers now regularly shop at Modern Trade stores. (refer http://www.indiaretailing.com/upload/ContentImage/Market_Research_pdf/NielsenShopperTrends110912.pdf)
Technopak forecasts that the penetration of Modern Trade in India will triple to about 15-20% in the nextfive years by 2018.
From the consumer point of view, modern trade results in:
- Consumers feel that they are smart buyers
- Increased availability of choice in brands and categories
- Promises better prices and value to the consumers
- Better quality products
- Enjoyable shopping experience with product and brand voyeurism
- Perceptual benefits of improved standard of living
Consumers feel smart as they have more control in Modern Trade
With increased brand choice, freedom to browse the products, and the visibility of deals and promotions, the modern trade consumer perceives his buying experience as a smarter way of buying things. It also leads to the consumer willing to experiment more, buying new brands and categories in the modern trade store. It is observed that the modern trade consumers look to buy large packs and aggressively look for promotions, trying to get more value out of every buy.
A family shopping experience with enjoyable product and brand voyeurism
The modern trade consumer is most likely to be accompanied by family and friends, and is not so likely to shop alone. It is increasingly seen that kids sit in the shopping cart, and the mother and father discussing about the product. This increases the fun in the buying experience and provides more opportunity for the retailers to increase the basket size and increase interaction with wide array of brands.
Moreover, the large displays, islands, and the strict arrangement of brands always make the consumers be voyeuristic of the brands and products. This makes them checkout products that were never in their consideration and drop it in the basket. Modern Trade consumers’ willingness to buy new products and niche variants is making manufacturers add high-end variants to upgrade the consumers.
The rise of mini-modern stores to meet the “modern consumer” needs
The Sarvodaya supermarket in Mumbai is an example of a growing trend of traditional stores adopting modern practices to meet changing consumer needs. There are about 100 such stores in Mumbai, and this trend is soon catching up in smaller towns too.
The future implications of Modern trade evolution are obvious as more and more consumers flock to the modern trade stores, and as more global retailers look to enter India after the FDI approval.
Wholesale market in India
Posted on: January 1, 2013
- In: Business | Channel Management | FMCG | Marketing | Supply Chain Management | wholesale
- 1 Comment
Wholesellers are none but middlemen who buy products from distributors (wholesale/retail) and sell them to retailers. In most cases, the retailers come to the wholesellers to buy products to replenish their stock. However, wholesellers may also sell to end consumers, but such sales are minimal.
In the Indian FMCG market, we have broadly two types of wholesellers:
1. Modern Wholesale stores such as Metro, Wal-Mart BestPrice, etc.
2. The neighbourhood wholesellers around the streets in India
Wholesale distributors buy in bulk (high volumes) bargaining low prices from manufacturers. Wholesellers in turn buy products in demand (what retailers ask for?) at low prices from wholesale distributors. Because of this reason that wholesale distributors are bulk buyers, it is generally seen that wholesale is cheaper than retail. But, it also depends on how many middlemen it passes through, as each middleman adds his margin to the selling price.
What’s in it for the retailer?
Few reasons why retailers buy from the wholesellers:
- No direct distribution of a brand to their stores
- Low margins by distributors
- Direct distributors dictating terms
- Better deals at wholesale
- To be aware of the high selling products and brands
Retailers also face some disadvantages in buying from wholesellers:
- Buying goods on immediate cash
- Transportation costs of the goods
- Wholesellers may not take back the unsold inventory/stock
What’s in it for the manufacturer?
The wholesale channel helps the manufacturers achieve sales from markets where they are not directly able to handle retail sales and their shipments. In a country like India, where 95% of the retail environment is unorganized, and spanning across millions of small stores, it is impossible to reach all the stores directly through your distributors.
Most companies will have strong direct distribution in cities like Mumbai, but as you go deep into India, the dependence on wholesale indirect channels increases. Most top selling brands and categories have a good amount of wholesale component. For example, a brand which is selling in Pan-India (across the regions in India) may have a wholesale component ranging from 20% to as high as 50-70% depending on the category/brand’s dependence on Rural India. It is obvious that most of the sales in Rural India happen through wholesellers. In Rural India, you will have strong wholesellers for every group of villages or in the nearby town, where retailers go and replenish their stocks.
Manufacturers would always like to have a higher contribution of retail sales to their overall shipments, as this helps them directly to control the nuts and bolts in the operations such as trade promotions and schemes, in-store visibility, relationship with retailers, pushing and increasing their assortment within the stores, maximising profitability, increased visibility of their sales, etc. The top FMCG companies are driving their direct distribution in Rural India as they mine the Gold at the Bottom of the Pyramid.
CENTURYPLY is undoubtedly one of the major furniture brands in India. Century Plyboard stayed away from TV advertising from the last four years, before it came back on TV with its new TVC on the World Anger Day – 28th Aug, 2012.
In this blog post, we shall evaluate this TVC from Century Plyboard and understand if it met its objectives. Please watch the TVC below.
TVC
Objectives:
Though Century Plyboard is a major brand in India and consumers trusted the brand, research suggested that it is not an aspirational brand in the eyes of the consumers. So, Century Plyboard wanted to build a campaign that brings out the brand as a “lifestyle brand” and truly make it aspirational. As we all know, for any brand, the ultimate apex in brand hierarchy is to be aspirational for its target group.
However, in process of making it a lifestyle/aspirational brand, Century Plyboard also wanted to communicate a key functional aspect – “durability of the furniture“.
Let us check the TVC on some of the key parameters.
1. Does it command the attention of the recipient? √
No doubt that the thrown car and the angry gorilla at the beginning of TVC attracts your attention, and is clutter-breaking among any group of advertisements. I would say 100 out of 100 for the Bates team for such a clearly clutter-breaking start for the TVC.
Great! Now that it got the attention of the consumer, it would have to be relevant and communicate the message.
2. Communication of Durability √
As the consumer watches attentively, the next scene that attracts attention is that the gorilla is not able to break the door and it enters the house breaking through the roof. As the gorilla lands on a dining-table, the dining table doesn’t break and the gorilla chases the person in the scene to the cupboard. Until this point, the consumer is still attentively wondering “what is the gorilla upto?”.
Now, as it turns out that the gorilla is the husband’s imagination of his wife’s anger, it brings out an element of empathy and fun making the whole commercial very enjoyable. The message in the background also re-emphasizes on the visual communication.
It is a great story with an element of suspense, and clearly communicating the durability of the furniture. I give 100/100 in the communication of the functional aspect “durability”.
3. Does it bring the Lifestyle/Aspirational element? Χ
Though the advertisement communicates the durability aspect, it communicates it in a raw manner and definitely doesn’t communicate it creating an aspiration for the brand. The point of concern is: is “durability” a differentiated factor among branded furniture or is it a hygiene factor where the consumer is looking for more than durability. This is why Century Plyboard as a brand should become a lifestyle brand and be more aspirational in the consumer’s mind. This helps to enhance the product portfolio and target the up-class consumers, together bringing in the brand aspiration.
The TVC clearly falls short in the aspect of creating aspiration. The commercial is definitely enjoyable and it has the brand recall with “CENTURY PLY” cards at the end of the ad. The advertisement would have been perfect, had the situation been that people don’t have much trust in its durability. However, the situation here is to somehow create an element of aspiration for the brand.
On the whole, it definitely does well on breaking the clutter, consumers will enjoy the ad, communicates the aspect of durability and increases the awareness of “CENTURYPLY”. However it falls short in creating aspiration.
For years, Cadbury Dairy Milk (CDM), India’s favorite chocolate brand, has been trying to be the symbol of celebration and expression of every sweet moment in your lives. In continuation of its pursuit, Cadbury Dairy Milk celebrates the beginning of new friendships with its latest TVC, ‘nayi dosti ka shubh aarambh’. The TVC showcases the first magical moments of a blossoming friendship between a young girl and boy on the sidelines of a wedding, an occasion that in itself connotes new relationships.
watch?v=s2jsCGLO56g&feature=player_embedded
The new commercial plays out at a traditional wedding ceremony. A teenage girl and boy exchange notes on how every family has a “dancing uncle/aunty” and an “allergy aunty/uncle”. They quickly realize that the two families have much more in common than they thought. When the girl excitedly asks, “Tumhaari family mein mere jaisa kaun hai?” the boy smiles and replies ”Main”. A piece of Cadbury Dairy Milk is exchanged to celebrate their new found friendship and the closing VO states, ”Nayi Dosti Ka Shubh Aarambh. Also, the commercial plays the same jingle which would help establish a strong brand recall.
On Air on July 21
It is set to hit TV screens nationwide on July 21, 2012 and is expected to have a presence in over 70 television channels. To further
strengthen the brand’s digital presence, the TVC was released online on YouTube and Facebook on July 13.
Ad Timing: Friendship Day and College Re-opening
The campaign is perfectly timed to be on-air two weeks before the Friendship Day on 5th August. Also, with most colleges opening in June of the year, it also has good timing with students just starting to make new friends in colleges. CDM wants to be the chocolate through which the students express their emotions of the ‘friendship moments’.
The TVC will be supported by a robust integrated marketing campaign, including on-ground activations in 80 colleges, creative print placements, interesting radio capsules in leading radio stations across many cities and outdoor, to urge people to make new friends and celebrate special “friendship moments”.
Symbol of different things in different contextual situations
Cadbury Dairy Milk is trying to own every sweet moment of celebration and expression in your lives. This is part of the long-term brand building campaign ‘Shubh Aarambh‘. CDM has taken a very difficult challenge and it has done a decent job by partly owning the festival and family celebrations with its product line ‘Cadbury Celebrations’. It later built on the valentine moment between a boy and a girl.
It now comes up with this intelligent TVC trying to own the moment of ‘friendship’ with the message and building on its earlier moments – valentine, family, and celebration – with the background of marriage. This is intelligent, as CDM is trying to become the message itself within different contexts, and bringing all the moments together.
It is very encouraging to see Kraft Foods continuing its strong brand-building activities, despite the inflationary times. With the consumers feeling the price increases on all products, consumers are already decreasing their discretionary spends such as chocolates. So, it is very interesting to see whether this will translate into sales in the short-term or not, but it definitely is going to help the brand in the long-term. This is a classic example of a strong campaign with a long-term vision for the brand.
The press release for this advertisement has been shared by the strategic communications agency, The PRactice (www.the-practice.net).
AdStock GRPs
Posted on: June 30, 2012
AdStock is a simple mathematical model of how advertising builds and decays. It is invented by Simon Broadbent as he studied Milward Brown’s ad awareness data.
AdStock helps to:
- Optimize your advertisement scheduling
- Used in marketing-mix modelling to come up with advertising ROIs, etc.
- Helps you decide when to be off-air and when to be on-air
- Helps you understand the advertising decay behaviour
How advertising builds and decays?
Let us take awareness as a parameter to understand the concept of AdStock. As a consumer watches an advertisement for the first time, let us assume that consumer gains certain awareness of the brand, category, etc. Now, when the same consumer watches the advertisement for the second time, the advertisement builds on the awareness. The advertisement hopefully will strengthen the awareness, recall, preferences, etc. So, advertising builds on itself and that is why we call it as a campaign building.
Similar to the way it builds, an advertisement also decays in similar fashion. If a consumer has seen an advertisement A1 10 times in a week and the same consumer has seen an advertisement A2 only once in a week, then the way the consumer forgets the advertisements is very different. The decay rate of an advertisement depends on various parameters such as: the strength of the advertisement itself, media plan, media vehicles chosen, category involvement of the consumer, etc.
The normal GRP data doesn’t take into account the build and decay rates. So it doesn’t take into account the residual effect of advertising, though a company doesn’t advertise in a specific period. AdStock is nothing but the GRP data taking into account of the build and decay of advertising, which is more sensible in marketing applications.
Optimize your advertisement scheduling
As explained, the AdStock GRPs are the GRPs weighted for the advertising build and decay rates.
Let us look at case to optimize the scheduling strategy for an advertisement. For this case, the advertisement is assumed to have a half-life of 6 weeks (hypothetical). This will come out for a decay rate of 12.24% as shown in the table below.
We have four options of scheduling, each using roughly the same (1200-1500 GRPs) amount of GRPs. Once we translate these raw GRPs into AdStock GRPs, it will help us decide which scheduling strategy is the most optimum as explained below.
The AdStock GRPs are adjusted based on the decay rate. For example, the number 469 in Wk 2 is arrived by: (250 of Wk2) plus (250*87.8) (decayed GRPs of Week 1) = 469.
Similarly, 662 in Week 3 is arrived by: (250 of Wk 3) + (250*87.8) (decay of Wk 2) +(250*77.0)(decay of Wk 1)= 469
From the above, it is clear that Option 1 gives the maximum ROI. The other parameter important for selection of an option is the off-air time. Which of the above options gives me the maximum off-air time (when you don’t air the advertisement)?
From the above table, it is clear that Option 1 gives the maximum off-air time for the advertisement by still maintaining more than 500 GRPs. In the above example, 500 GRPs is considered as the threshold and if it goes below, then the advertisement has to come on-air.
To sum it up, AdStock helps marketers understand ‘When to advertise‘? AdStock is commonly used in scheduling, marketing-mix modelling, etc.
Any comments on this regard are most welcome.
Thank you.
Lucky Goldstar (LG) India
Posted on: June 28, 2012
LG stands for Lucky Goldstar – the product of a merger of two South Korean commodities businesses – but over the decades with a steady stream of innovative consumer electronics and home appliances, consumers concurred with the conglomerate’s backronym that Life is Good.
LG Home Appliances (HA), the arm of the Korean giant, which makes refrigerators, washing machines and vacuum cleaners amongst other such appliances, clocked a turnover of Rs 6,500 crore in 2011, and expects to close the current year with a 30% increase, taking the top line in the region of Rs 8,500 crore.
Market Leader in Refrigerators and Washing Machines
LG is currently the market leader in both washing machines and refrigerators as per Gfk-Nielsen. For 2012-13, LG is targeting a turnover of Rs. 5000 crore in refrigerator segment. LG will launch flagship products across the home appliances category which will help in strengthening its product leadership.
LG has launched 33 new models in refrigerators. In televisions too, it is targeting the No 1 position in the Flat Panel TV segment with a 30% market share.
Samsung – a concern for LG
In India, Samsung has been flexing its muscle locally and capturing more of consumer mind share – riding on its successes in the mobile space – and with it a bit of market share, too. Samsung’s aggression in the mobile space has rubbed off on its appliances, although LG’s strong equity in home appliances holds it in good stead.
LG’s dependence on white goods is also a cause of concern for the brand, unlike Samsung which has managed to earn its spurs as an as an innovative and bestselling mobile phone brand. Recently Samsung overtook Nokia as the world’s highest selling mobile maker.
In the last few years, Samsung is catching up with LG especially in refrigerators. The Indian appliance space is synonymous with LG and Samsung. Some brands manage to represent the category and that is the case with these two.
It is definitive that we shall see some price wars in the coming years in these categories. It is to be seen how they will continue to maintain the value and market share growth.
Scheduling deals with the question, ‘When should we advertise the product?’ The answer depends on many factors such as the marketing objective, product sales trend, competition, budget, etc. as we will see in the article.
Types of scheduling patterns:
There are three types of scheduling patterns broadly:
- Continuity – Advertise throughout the year and evenly throughout the year.
- Flighting – Advertise only during some months of the year
- Pulsing – It is a mix of both continuity and flighting, where you have a base amount of activity and you increase the media activity during some periods.
With significant amount of money being spent on media activities and increasing quarterly pressures, it becomes very important to get the best out of every rupee. It is important to understand how to schedule the advertisements for a brand or product. Some of the key factors that influence the scheduling pattern for a brand are as below.
Marketing Objective
The scheduling of an advertisement for a brand is most heavily influenced by what exactly is the marketing objective. For example, a brand launch (on its first year), the objective is to increase the awareness than to increase sales. So, the advertisement scheduling will be tuned towards increasing reach. For example, a typical target could be to reach 75% of the max TG through the vehicle. Similarly, if the objective is to increase sales through some consumer promotions, then the scheduling has to be planned in synch with the promotion time.
TG Viewership
The scheduling strategy of when to advertise your product also gets impacted majorly by the target group (TG) you’re targeting and their viewership habits. For example, if your target group is male 25-40 years, then you may push more advertising on the weekends as the male viewership increases across specific channels on the weekend. So, a good understanding of how the TG consumes the media is very important to set the right scheduling strategy for the brand.
Sales Trend
For most FMCG products, sales happen throughout the year, but some periods show significant increase in sales (blip in sales). For example, a brand like Pears gets sold more in the winter months of the year. In such brands and categories, you see an increase in advertisements during the respective seasons.
Purchase Cycle
Besides looking at the sales trend of the brand, it is important to understand the purchase cycle of the brand. Is the brand bought at the end of the month as a monthly grocery purchase, or is the brand bought throughout the month or at the beginning of the month. It also depends on what pack-sizes are sold, for example, if larger packs are sold in Metros and smaller packs are sold in lower towns, and then your scheduling of advertisements should differ for the smaller towns and metros appropriately.
Product Availability
It is important to advertise at the time when your product has the highest chance of being sold. If you advertise your product, it is important to be present in the store. It is important for the marketer to work on the advertisement scheduling in accord with the distribution plan.
Markets
Another typical question could be: Should I advertise more in the stronger markets and leverage more? or Should I advertise less in the stronger markets and advertise more in the weaker markets?
Typically for any product or brand, some markets are more important than the other markets. So, typically your advertisement budgets are skewed towards some markets, which will affect the scheduling patterns for the brand.
Competition
It is important to closely understand the sales trend, media activity, and past scheduling patterns of the competitor. Another key question for the marketer is: Should I closely mimic the competitor scheduling pattern or Should I take a different approach?. For example, if you observe GSK’s Sensodyne and Colgate-Palmolive’s Colgate Sensitive Pro-Relief advertise mostly at the same time following a similar advertisement scheduling pattern.
Budget
If budgets are low for a brand, then the brand may prefer to drop the media activity for a couple of weeks and then be present with the threshold weights for some specific periods. As one understands, budget is an important parameter influencing any decision.
The above discussed parameters are some of the most common major factors that influence the scheduling strategy for a brand. Any comments from the media or non-media professionals on this regard are most welcome.
Thank you.
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