Category Archives: Jargon Demystified

Marketing Jargons explained

ATL v BTL Marketing

The presence of a vast and diverse consumer market – with different aspirations, needs, methods, preferences, etc. – necessitates a vast portfolio of products that can cater to specific segments. A consequence of this is that as each segment behaves and responds differently to marketing, there has to be a different set of tactics for each product in the market. These tactics have been clubbed into three different buckets, on the basis of how the information is disseminated to the customer.

As a marketer, this poses a huge dilemma because there now exists three varying sets of tactics for my plan. The important questions are – How does one make the split between the three sets of tactics? What underlying factors contribute to the split and why?

To understand this better, let us take the example of a Hindustan Unilever’s (HUL) promotional strategies for three brands of the same product line – Surf, Rin& Wheel.

Each of these products represents a different segment and consequently have warranted a different promotional strategy.

Analysis of these strategies give us some insights on the key factors influencing the split of the marketing tactics:

  • Decision Influencers – For the higher segment of customers, the decision influencers have now turned to the internet while the rural market is heavily influenced by word-of-mouth publicity. This difference in decision influencing processes implies that there is a need for a larger mass reach with ATL marketing for some brands (Surf), as opposed to a larger need for personalized selling with BTL marketing in others (Wheel)
  • Access to mass media – The target customer’s access to mass media is a key factor. Marketers realized that since a large portion of their target customers do not have frequent access to mass media, they have a larger portion of their campaign with BTL tactics. A prime example of this is a missed-call campaign floated for Wheel in 2011 which became a roaring success for the brand in UP and Bihar.2On the contrary, Surf enjoys the maximum amount of airtime amongst the three brands.
  • Product Positioning–The positioning of the product plays a large role in determining how your promotional tactics will shape up. In this example, Surf was positioned for the urbane customers who were looking for top-of-the-line products. Consequently, their innovative campaigns such as “DaagAccheHain” and “ZiddiDaag Removal” warranted a mass reach.
  • Price sensitivity – Price sensitivity is another critical consideration. In a highly cross-elastic market, there is a need to undercut on expenses at every level to stay competitive. BTL marketing typically costs lower than ATL and therefore is preferred by marketers in extremely competitive scenarios.

Rin v. Tide and Wheel v. Nirma typically sees lower ATL marketing than Surf because of the price sensitive nature of their markets

  • Stage in Life-cycle – Typically, marketers focus on ATL marketing at the nascent stages of the product life-cycle. There is a tapering off of ATL as the product matures.
  • Knowledge Disseminated to Customer– Typically, ATL marketing is required when the customer is to be educated in a new feature. An example is when Surf launched their “Bucket Wash”, a move away from the traditional scrub wash. This required a dedicated campaign to educate the customer on the benefits of this new feature.

While all these factors influence one set of tactics over another, it is important to note that simply using one set of tactics will be detrimental to the entire campaign. In our example too, Wheel has had Salman Khan as an ambassador while Surf has been creative with its roadshows. Thus, an ideal marketing decision should weigh these factors and come up with the right balance (TTL) campaign to maximise the success of the campaign.

References

[1]:http://theadvertisingclub.net/index.php?option=com_content&view=article&id=3256:difference-between-above-the-line-and-below-the-line-advertising&Itemid=175

[2]:http://www.hul.co.in/brands-in-action/detail/Active-Wheel-s-Mobile-Campaign-a-huge-success-in-U-P–and-Bihar/301896/

They were here!

“What if I fall?”, Tim cried.

Maerlyn laughed. “Sooner or later, we all do.”

  • Stephen King, The Wind Through the Keyhole

These are one of those bitter-truth phrases, that fall is inevitable. And there have been some falls in the last couple of months, which serve as interesting examples of products and brands in marketing case studies in the decline phase of the Product Life Cycle.

This brand was the trigger for this article – HMT Watches. As the government decided to bring down curtains on one of India’s iconic brands, the HMT brand of watches met with its “death”. The “time keeper to the nation” was anyway not doing much of business and the Gen Ys and the Millennials may not have even heard of it. Bureaucratic interference, stiff competition, technological changes in the market, an outdated positioning and failure to rebrand and reinvent itself cumulatively took a toll on this brand of watches, which was at one point of time a near monopoly in the Indian watches market.

Remember those cathode ray TVs (CRTs)? The heavy, box-like things with an ugly-looking projection at its rear, the top of the TV being used by the innovative Indian mind to keep photo frames or a trophy won by a kid or a plastic flower vase? Yes, those CRTs are going to become museum pieces soon. With more and more customers opting for the sleek, flat LCD, LED and smart TVs, the CRTs do not find many takers these days. And as price differentials between the LCD and cathode ray TVs narrow faster, industry experts feel that the CRTs are hurtling down the PLC curve in the decline phase and might become extinct in two years or so.

Telegram – a word that was almost a synonym for bad news than good about 30 years ago became history in July 2013. Another government operated communications technology, the telegram outlived its utility as emails and mobile phones became ubiquitous. The telegram had its own codes for some of the most commonly used messages and played an important role during the days of British rule and thereafter till about early 90s when telephones became more commonplace. A nostalgic article in one of the newspapers highlighted that the charges for telegrams were revised by the government in May 2011 after 60 years!!!

Going back a decade, another electronic communication gadget that had a very short product life cycle was the pager. Pagers started in India in 1995, peaked by 1998 and by 2002 they were nearly wiped out of existence. The pager was perhaps the first wireless communication technology. Paging was one-way communication and obviously did not stand chance when mobile phones became more common and cheaper to use.

We might witness obituaries of some or the other product, brand or technology in the coming days, sooner than later. Times, they are changing fast!

Aashish Argade | FPM 2 | Niche 2014

The Institutional Angle in Marketing

A lot has been written, read, discussed and debated about how companies like CavinKare created an entire segment of consumers at the Bottom of the Pyramid (BoP), with innovations in product, packaging, promotion and pricing, especially in the FMCG sector. Several MNCs like Hindustan Unilever and established players tried to do the catching up game, but have not been very successful, or are forced to cater to the BoP segment at a loss simply to maintain a presence in the segment.

A paper by Angeli and Jaiswal (2013) analyses the reasons behind the not-so-successful attempts by the FMCG MNCs and interprets the findings based on institutional theory. MNCs are typically considered to have a competitive advantage by means of their presence and experience across various geographies. At the same time, MNCs also have to contend with their “foreignness” since quite often the corporate headquarters are situated in countries that are far from the markets where the game unfolds. MNCs are affected by “institutional dualism” as they try to gain internal as well as external legitimacy. Internal legitimacy refers to the company’s subunits conforming to the rules and regulations laid down by the parent company. External legitimacy refers to the responsibility of the company towards the society in which it operates.

Citing an example, the paper quotes a senior official of an MNC, stating that the MNC had to adhere to certain norms in manufacturing shampoos. While the domestic company used some cheap compounds for fragrances, to keep costs low, the MNC could not use the same since the corporate policy prohibited the use of those compounds for environmental reasons. As a consequence, the MNC could not come out with shampoos of the preferred fragrance and lost market share to the domestic company.

The paper is an engrossing and thought-provoking read. It highlights several interesting examples and focusses on the impact of the institutional paradigm on a company’s performance in the market, particularly the BoP segment. However, for this article we restrict to the internal legitimacy angle.

The dichotomy in this case is very clear. When a company’s subunit is adhering to its internal policies and being internally legitimate, it loses out on market share. The options that a marketer has in such situations are clear – lose market share or lose internal legitimacy.

Let us assume that the MNC’s subunit tries to breakaway with internal norms and, to continue with the cited example, starts using the banned compounds for achieving the required fragrances in the shampoos. It might so happen that the cheap compounds result in profitability and the subunit finds it tempting to use the same compound for shampoos meant for other segments. Soon, the compounds banned by the parent company, may be used across the shampoos category which could add a little to the profitability and also to market share.

It’s quite possible that media and social activism might one day bring out the fact the company is using harmful compounds in its products. Even as the company might then try to fight negative publicity, it would not have any logic to counter the fact. This would severely hurt its brand image, and might also give rise to suspicion about its brands in other categories. There is a strong possibility that consumers might switch to other brands and the company in question will lose market share. The loss in market share in segments where the company had a strong presence and image, would result in higher losses than a smaller dent in profitability that would arise by cross-subsidizing the brands in BoP segment.

Marketers are fully aware of the costs associated with attempts at short-term gains that might be detrimental in the long run. And it is precisely for resisting the gains-at-any-cost that institutions are put in place. While marketers ought to appreciate the limits imposed by institutional postures of internal and external legitimacy, evaluating a company purely in terms of profitability and market share might not always be right.

The writer of this article wishes to thank Prof. Anand Kumar Jaiswal, Professor in Marketing area at Indian Institute of Management, Ahmedabad for encouragement. The research paper referred to in this article:

Angeli, F., Jaiswal, A.K., Competitive Dynamics between MNCs and Domestic Companies at the Base of the Pyramid: An Institutional Perspective, Long Range Planning (2013), http://dx.doi.org/10.1016/j.lrp.2013.08.010

Channel Conflict

Channel conflict arises when two different distribution channels of the same manufacturer find themselves competing for the same set of customers. 

Since manufacturers sell their products through a variety of channels from online stores to super markets, these conflicts are bound to arise. 

 

Possible effects:

 

  • At times it could be a necessity of a normal competitive business environment , leading to increased efficiency in the supply chain forcing out-of-date players to adapt or perish.
  • It has a negative effect when the overlap of consumers is big and one channel has significant advantage over the other. Sometimes the threatened channel retaliates of stops stocking the products. Ultimately the manufacturer suffers.

 

Example:

This is quite easy to relate to the Bharti-Walmart case. If Unilever’s products are stocked in a Bharti-Walmart store as well as in the near-by mom -and-pop store, the smaller local store is bound to feel threatened.