A spirit of selflessness, among other things, goes into the making of a new market segment.

L UV is landing soon! Are you ready for LUV?

Sounds rather corny? Well, that's Maruti Suzuki's new attention-grabbing teaser campaign for its Ertiga, launching today.

The auto major claims it is creating a new category with this Lifestyle Utility Vehicle – yes, that's what LUV stands for – which straddles a space between the sedan and the multi-utility vehicle.

And when you pioneer a new category, the advertising has to be disruptive. “Through the use of double meaning, we have tried to arouse curiosity,” says Shashank Srivastava, Chief General Manager-Marketing, Maruti Suzuki.

“When building a new category, the advertising communication also has to be clear, more than clever,” says K. V. Sridhar, National Creative Director of Leo Burnett, who has just spearheaded two new category-creating campaigns for Tata Chemicals.

In the space of a fortnight, Tata Salts not only launched flavoured salts, but also double-fortified salt.

Both are completely new consumer categories – for which the communication needed to create awareness about the generic. So, the communication for the iron-fortified salt focuses on the harm that not having adequate iron will do.

First-movers may grab the advantage when they spot a niche and march in. But category-building also has to have an element of selflessness to it, says Sridhar, pointing to Air Deccan, which pioneered low-cost flying in India, got middle-class India to think about air as an alternative to train travel, but yet, ended up getting gobbled eventually. It did all the hard work to create the category, though it did not itself survive.

Today, literally every other day, in every sector – be it telecom, auto, FMCG, consumer appliances or IT gadgets and gizmos, a new category is being created. Air care, face sprays, coffee machines, new forms of computing and mobile devices, accessories to go with them (just imagine, we now have albums to hold memory cards) – there is the birth of some new product niche taking place ever so often. Why are we seeing this explosion of new categories?

Blue Ocean Strategy

According to Ashvini Hiran, Chief Operating Officer, Consumer Products Business, Tata Chemicals, the rising disposable income among the emerging middle and upper middle class has led marketers to experiment with innovations across categories.

Maruti's Srivastava says that in today's India smaller niche segments are yielding enough volumes to be attractive enough for marketers to move into sub-sects rather than the main category.

This explains the birth of sub-categories such as flavoured salts within the mother category of salt, or compacts within the detergent sector, and so on. The numbers in India make it a less riskier gamble for marketers looking at the ‘blue ocean' (the unknown market place untainted by competition) rather than the already charted and crowded ‘red ocean'.

He points to A-Star, the car that Maruti created for a new category of car-buyers – younger, urban couples with high incomes who cared about sharp design. Although the category has not gone down as well as Maruti expected, the A-Star still logs sales of 36,000 units a year – which is not too bad. “Maybe it was before its time – I still have hopes the category it is aimed at will pick up and the audience targeted will show greater interest,” says Srivastava wistfully.

Timing is the other crucial thing in category creation. D. Rajappa, President, Rediffusion Y&R, points how dishwasher brands have come in and gone out of Indian markets and failed. Indeed, for every new category that has been created, there have been as many failures.

“The new category has to be relevant to the consumer. Relevance drives adoption,” says Rajappa.

He points to a brand like Symphony, which came in with indoor coolers and made the product stylish. “Suddenly it became an important buy for people – almost a showpiece,” he says. It had a value proposition too.

He says new categories are born out of consumer insights and then it is up to the marketer and advertiser to join hands and get the positioning and message right, so that a need and demand is created.

Maruti's Srivastava says savvy marketers will spot user needs even before it is actually articulated by the customer. “Take this LUV – it's not that customers asked for it, but we heard all the negatives that people used to tell us about MUVs - that they are bulky, difficult to manoeuvre, fuel-guzzlers, and so on. It gave us the idea to go and create a new product,” he says.

Deep pockets and patience

Spotting the need is one thing - but to actually go in and build a new product and create demand needs big investments. “You need deep pockets,” says Leo Burnett's Sridhar.

Apart from the investments that go into making the product, advertising costs are higher too. “When you create a category, it's a given that advertising spends will be higher than normal,” says Maruti's Srivastava. He says you have to spend to achieve two objectives - to establish the new category, and to show that your product is the one that fulfils the need.

It also requires a huge amount of patience. New categories tend to be slow-growing in the first few years.

Take probiotics – it's taken Japanese brand Yakult quite a while to make the category known here. Things get easier when two or three players enter the picture, the adoption is faster – but the brand has to accept that it has to last it out.

As Tata Salt's Hiran says, “Our experience is that it takes 2-3 years till the product is perfected. Normally it takes 3-5 years to generate returns on the product based on pricing strategy and proactive marketing investments ploughed into a new extension or new category.”

Leo Burnett's Sridhar says that in today's context, creating a category has become easier from the advertising point of view because of the availability of multiple media. With digital media, regional channels opening up, you can do targeted advertising to reach the niche segment you are reaching out to - so success rates of categories are probably higher now.

Finally, category-building is not the only important thing that brands have to do. Category maintenance is very important too - otherwise the second and third movers will come in, edge past you, or sometimes even buy you out.

(With additional reporting by Purvita Chatterjee)

(This article was published in the Business Line print edition dated April 12, 2012)
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