• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

S. Ramesh Kumar

The strategy for the low-end of the market is to use low price, an adequate offering, brand building and `locality-specific' media.

THE typical approach followed by national brands to attack the lower end of the market is to introduce an offering, which is priced just above the unorganised market's offering. The idea is to upgrade the consumer from that to the branded one. A-1 in tea, Britannia's Tiger brand of biscuits (introduced by Britannia) and the Nirma brand of detergent are some examples of success with regard to the approach.

But companies which target huge volumes through this strategy may face two risks: the volumes may not be adequate given the cost of building the brand and the brand so developed may make a dent in the other brands (offerings) of the company, adversely affecting product-line profitability.

Aim was a toothpaste introduced by Hindustan Lever in the lower end of the market and the brand is not found in most retail outlets. The same company introduced a tea brand, Tiger (the formula was a unique one in which tea was blended with tapioca for the first time in the world to reduce costs). This brand is also not found with most retailers who handle other HLL brands. The Tiger brand of biscuit introduced by Britannia has been a major success at the lower end of the market with the company launching several variants of the brand within a short span of five years. India is a market of diversity - diverse with regard to incomes, price points of products, culture and preferences and marketers would have to get used to these diverse characteristics of the market.

The unorganised sector

Apart from national brands and unorganised offerings, there are also regional brands in certain product categories at the lower end of the market. The regional brands may be present in a geographical area which covers several markets of the unbranded offerings (normally present within a State which may typically comprise 8-10 town markets). Apparel, edible oil, dish-washing powders, ice-creams, detergents, tea and fans are some categories in which regional brands are present. These brands advertise in cost-effective local media (regional newspapers, cable TV options, radios and wall-painting). Cable TV options consist of several local cable TV operators who may be running local channels which are viewed in a specific town/locality. This kind of media is very effective for regional brands. Sabena and Shineit dish-washing powders (regional brands) have forced Vim (a national HLL brand) to revamp its marketing mix in the recent times.

The marketing strategy for the lower end of the market could be a combination of low price, an offering with adequate efficacy, high brand-building efforts across the country, developing a distribution network which would go beyond cities and using `locality-specific' media. Hindustan Lever uses video vans in certain rural areas to create awareness about its brands. The video van screens movies which may be of interest to the consumers of the locality and in between, the commercial breaks advertise the company's brands to create awareness.

Durable products in diverse markets

There are around five million colour television sets sold in India and there is a great demand for used colour television sets. It is also interesting to note that 50 per cent of the colour television sets belong to the replacement market. Akai entered India and institutionalised the second-hand market. It introduced a promotional exchange scheme by which a consumer could exchange his/her old colour television for a new 29 inch-colour TV set by paying almost half the cost of a new colour TV set. This strategy, besides opening up the 29-inch TV market which was almost non-existent, also ensured retailers in rural areas made margins by transporting used sets from urban areas. The rural consumers also benefited by getting a colour television set (though a used one) at an unimaginable price. A number of brands have introduced exchange schemes in several categories (though not as attractive as Akai's) after the success of Akai's scheme.

LG, another TV brand, has been able to effectively tap a niche TV market in rural areas (though the brand markets TVs above mid-price range) by introducing TV models with a programming menu in regional languages. These models are of the sub-brand, Sampoorna. BPL, another well-known brand, markets several models (mostly over the mid-price range) in urban and rural markets with a retail distribution chain of around 4,000 outlets. The colour TV market is shared between major brands BPL, Onida and Videocon.

Fifty per cent of the total market for CTVs is accounted for by the semi-urban/rural markets. The brands of yesteryear, such as Beltek, Salora and Crown, are concentrating on such regional markets with models at lower price points and they account for about 20 per cent of the total market.

Consumables and diversity of markets

Managing diversity in consumables is accomplished by brands using price points and packaging. Around 60 per cent of the shampoo consumption in the country is attributed to sachets (8-10 ml packs). Almost all well-known brands have 50 gm soap packs distributed almost by all well-known brands both in urban and rural areas. Tea packs are also sold in sachets more in the rural areas. Toothpastes and beauty creams are also sold in sachets. Both Nestle and Cadbury recently introduced a form of liquid chocolate bars priced at Rs 2 (the lowest price point for chocolate bars).

Incidentally, in a topical country like India, liquid chocolates do not require refrigeration. Cadbury has a number of price points for its variants in the product line. This has resulted in millions of consumers trying out these low-priced variants. About 95 per cent of retail outlets are small shops (kirana shops) and most retailers would readily stock product units of a low price. Economy packs across almost every category are also being marketed by leading brands through supermarkets and larger retail outlets in urban markets. Small unit packs also enable the retailer to rotate his capital faster, especially given the fact that most of these retailers cannot afford to invest in huge stocks.

Packaging at a low unit cost is extremely advantageous for a brand in any product category. Edible oil, cigarettes, biscuits and chocolates are distributed in small quantities by retailers who buy large packs. This practice is followed both in urban and rural areas. This is because given the frequency of income (apart from the income being low), there are several consumers who are paid on a weekly or even daily basis. Hence there is very strong generic competition among several consumable brands across categories. The "small" purchasing power with the masses could provide several options to them in terms of what they would like to buy at a given point of time. Traditional snacks could compete with ice-creams or a cola drink (both Pepsi and Coke have introduced 200 ml bottles in several markets in India). Besides, there may be special occasions during which a toothpaste may be used (the penetration of toothpaste is quite low and a number of consumers at the lower end of the market either use toothpowder or traditional herbs and neem sticks).

Low unit packs enable consumers in the lower segment to choose and buy different product categories. Even in higher-end detergents like compact detergents (Surf Excel and Ariel), a significant portion of sales is from sachets (small packs which could be used twice only). In cassettes, the T-Series brand was extremely successful with its low pricing and value (providing more songs per pre-recorded cassette). There are around two hundred brands of mineral water in the country, most of them in the unorganised sector. National brands including Aquafina from Pepsi and Kinley from Coca-Cola target urban consumers with their retail network.

Diversity and marketing communication

Most brands (durable and consumables) which have an urban orientation carry Western appeals in their advertisements which are formulated in English. There are around 100 regional language TV channels and these brands also have advertisements in regional languages.

There may also be cosmetic variations of these advertisements when they are launched across the country. Regional celebrities who appeal to consumers may also be used in advertisements intended for various regions. Coca-Cola is currently following this approach. Soaps, personal care products and household appliances are some of the categories where this approach may be observed. Regional dailies and magazines (in various languages) are also important media vehicles for both regional and national brands. National brands in consumables categories normally advertise on TV networks in important channels but they made use of regional dailies when they hold region-specific or market-specific sales promotion. Hoardings are used by regional brands. Wall paintings, as stated earlier, are popular as a medium in semi-urban and rural areas for local offerings in the unorganised sector (a few of them advertise in local markets as `brands' in certain categories). Regional dailies and magazines across languages and geographical areas along with the retail store names in almost all markets are very popular for durables categories.

While national brands in consumables categories and durable categories make use of TV channels to advertise, they are selective about the channels depending on the target segments. Zee, Sony and ESPN are channels used for consumable brands which address national markets. (Zee and Sony are Hindi channels. Hindi is the national language and these channels have a huge following across different social economic strata.)

Star Plus and Star News channels are most suitable for consumables and durable product categories which are urban-centric - like cars, toys and TVs, washing machines and refrigerators. National brands may use both national and regional channels for consumable categories depending upon the target segment and the demand for the product in specific regional areas.

Findings of NRS 2002

Stories in this Section
Are you market-driven or product-driven?

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line