The Hindu Business Line : Variety is a mixed blessing

The greater the choice offered a consumer by a company in a given product line, the greater the complexity associated with its management. The concept of power brands, currently a hot topic of discussion among marketers, is closely linked to the management of a company’s product lines. Product line differentiation has important implications for managing brands in a specific category.

The following situation reflects the reality: In the category of branded tea, packs of Brand A and Brand B from the same company offer the same proposition but Brand A is priced Rs 3 more for a particular quantity. This example raises a host of questions on product line management:

Are the brands meant for the same geographical market? If so, why are they found together on the shelves of a modern retail outlet (and perhaps in kirana stores too)?

Is the offering the same though the brands are different? If so, how would the consumers differentiate between them? If not, why is there a lack of differentiation?

Are both the brands so powerful that each will have its own loyal target segment though the offering is the same and the proposition is also the same?

What would be the implications on the consumer’s psyche if he/she recognises the fact that the offering is the same from both these brands but one is priced higher?

How would the retailer handle a consumer who raises this query of the same proposition at different prices?

How should both the brands be promoted? Or should one only be actively promoted?

If one or both the brands have developed their unique brand association over a period of time (assuming both consumers are familiar with both or one of the brands), how should the brand manage its past brand association and imagery?

What would be the implications for the company’s product line with regard to the category when it offers several brands (other than the two brands mentioned) in terms of consumer choice and product line profitability?

Product line differentiation has important implications for managing brands in a specific category. The major issues include target segment selection, brand associations, retail interface (stock-keeping units and demand management), profitability associated, extending existing brands and introducing new brands and re-launching brands. Managing consumer choice and differentiating the offerings are the inherent challenges. All the associated issues stem from this challenge.

Product category and evolution of variety

In almost any category variety evolves over a period of time when the basic product is well accepted by consumers (including niche offerings which are of premium quality). This is to a great extent true both of fast moving consumer goods and durables. After digital watches were introduced almost three decades ago, there is so much variety today. For a company like Titan which has an extensive product line, the challenge is to not only introduce various models in line with changing consumer preferences, but to also manage its supply chain and distribution and ensure optimum profitability at all times. Britannia’s success was based on variety in SKUs (stock keeping units) and managing several variants in its product line. In cars too, initially there was just the basic segment (the ‘mini’ of today) and over a period of time compact, semi-luxury and luxury segments have emerged, with variants in each.

Lifebuoy and Pears soap after several decades decided to launch variants to adapt to consumer preferences. Portable music systems that had a few models of two-in-one (transistors-cum-tape recorders) before two decades have fragmented into Walkman, iPod and Discman portables. Nokia, which has a commanding share in the Indian market, has a wide variety of offerings from the lower end to a few models costing more than a lakh of rupees.

As reflected in some examples, a company has to necessarily introduce new offerings to stay in business whenever technology changes. A company has to monitor both technology and trends in consumer preferences to introduce variety. Sometimes technological advancement can lead to opening up of variety that leads to market expansion. The varieties of shampoo that can be sampled (including some higher-end variants) in sachets today is an example of how market size expands when the offerings are brought within the affordability limits of a larger target segment.

Importance of differentiation

When a company is interested in many segments and multiple offerings, a clear differentiation is required. There has to be a clear focus on marketing mix elements. This is essential as a product line addresses different wants of different segments that have the same need.

Colgate addresses the same need of “brushing/cleaning” the teeth but wants are expressed by different target segments differently and hence a variety of offerings like Total, Herbal and other variants. This is one of the reasons why brands are created in the product line.

The following are certain fundamental decisions that need to be taken when offerings in a product line are addressed:

Is the product benefit different and do consumers understand the brands’ proposition towards the respective segment? For example, Colgate Total has several benefits as compared to Colgate Herbal in terms of differentiation. Parac hute’s Sampoorna (herbal) coconut oil is different from its jasmine variant and the differentiation is obvious.

There may be a few categories such as soft drinks and beer where the differentiation is largely driven by imagery created by advertising, though the taste may also be used as a strong differentiator. But besides these categories, a brand should ensure strong functional or benefit differentiation wherever possible as it provides clarity to consumers. For instance, the whitening proposition of a detergent brand (Rin) is differentiated from the stain-removing proposition of another brand of the company (Surf). Lux soap has a contemporary image and functional differentiation has been achieved with several variants (fragrances) of the brand.

Can distribution make a difference with regard to consumer’s perception? Retail outlets like brands have image associations and differentiation with regard to a product line that can be achieved through distribution strategies. F or example, if a brand that is into soaps launches an expensive gel variant, exclusive distribution of the variant may add to the aura of premium-ness that the brand is attempting to create. World Space, which provides continuous music service in different languages, is not distributed in all retail outlets that deal with CDs. The same brand can perhaps have a different mass market brand that can be sold in regular retail outlets. Raymond, the brand of fabric, is available in many multi-brand outlets but the exclusive outlets, replete with higher-end offerings, provide and sustain the image of the brand. Peter England and Louis Philippe brands from Madura Coats have clear-cut channel arrangements (including exclusive shops for each of these brands) to signal differentiation.

Clarity in positioning

Hero Honda entered the Indian context about two decades back with its four-stroke engines in bikes and still has a commanding market share in the category. Its initial positioning on fuel economy - ‘Fill it. Shut it. Forget it” - conveyed the positioning when it introduced its CD 100 model. The brand since then has used “functional feature-sub-branding - focused positioning combination” effectively to convey the differentiation of its varied offerings in the product line. ITC used a film celebrity to develop Sunfeast biscuits imagery and for its Fitkit, it chose a cricket celebrity as the offering was launched on the health platform. Hindustan Unilever has clearly used positioning strategies to differentiate between its variants in Clinic as well as other brands in its product line of shampoo, Sunsilk, Lakme and Dove. Positioning clarity is required either through functional benefits or psychological benefits.

Complexities of consumer choice and variety will continue to haunt marketers who need to avoid dilemma and confusion on every aspect of product line management.

(S. Ramesh Kumar is Professor of Marketing, IIM-Bangalore.)

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