Marketing Assignment 1

Convenience item and capital items can be sen as two ends of the ʻProduct continuumʼ. Convenience items are purchased frequently, immediately and with minimum of effort. Capital goods are those items that last a long period of time and purchased infrequently by consumers. Students can select a convenience and capital good of their choice and compare and contrast the consumer value hierarchy and userʼs total consumption system for each item. Convenience goods

They are fairly Inexpensive Goods that consumers buy frequently, quickly and with minimum of effort. These goods are further classified into staples, impulse goods and emergency goods. Staples

These include goods that consumers buy on a regular basis Examples would be bread, rice, flour, toothpaste, soap and so on In this case marketers/ shopkeepers consider distribution as their strength. Sales promos and advertising is considered important too. Impulse goods

These are Goods that consumers pick up without planning or on a sudden urge. Example chocolates, candies etc In this case too availability is an important factor. The more visible and available it is the more there are chances of consumers buying it on an impulse. Thus in stores chocolates are placed in front shelves. Packaging is also considered a vital feature in impulse goods. Marketers believe that an attractive package lures the consumer to such goods. For instance a Sexy model on the cover of magazines or building hedonic nature of product through advertising helps too Emergency goods

These are Goods that are bought by consumers only when needed or in an emergency. For example an umbrella is bought when the consumer foresees rain, or woollens are bought when winters approach or medicines are bought only when one is unwell and so on.

Marketers can pre-empt such needs in this case and charge premiums on umbrellas during the monsoons or give discounts on woollens during summers etc.

The convenience goods are also made available to the buyers most 'conveniently' at their own place or the consumer has complete knowledge of the particular product and its substitutes before he decides to buy. Most of these goods are non-durables, that is, relatively easy for the consumers to arrive at buying decisions. In buying cigarettes and petrol, for example, the consumer knows which brands he prefers, and he knows the retail outlets where he generally buys them. Little or no conscious deliberation is required in making such buying decisions.

Convenience goods have a low unit price and are generally not bulky. They are not affected by fad and fashion because brand preferences are more stable. But, if the price or

quality of convenience goods, for example soap, powders, etc., gets too far out of line with competing brands, many consumers would revise their buying decisions.

Now the convenience good we chose was Bathing Soap. Soap industry Soaps form the largest pie of the FMCG Market with bathing & toilet soaps contributing around 30% of soap market. Bathing / Toilet Soap Market (Per Annum 2004-05)

 

Lac Meters

Organized Unorganized Total

Dispersion 8

69.6%

3.5

30.4%

11.5

(Approx Rs110bn)

As of today the Per Capita Consumption of toilet/ bathing soap in India is 800g whereas it is 6.5kg in the US, 4kg in China and 2.5kg in Indonesia. At present the soap industry is mainly divided into the Premium, Popular and Economy/ Sub popular segments. We have identified the popular segment as the target retail segment. The personal wash can be segregated into: •

Premium- Lux, Dove

•

Economy- Nirma Bath, Lifebuoy

•

Popular- Nirma, Cinthol

  The price of the premium segment products is twice that of economy segment products. The economy and popular segments are 4/5ths of the entire soaps market. The penetration level of toilet soaps is 88.6%. However, the per capita consumption of soap in India is at 460 gms per annum, while in Brazil it is at 1,100 gms per annum.  Growth With increase in disposable incomes, growth in rural demand is expected to increase because consumers are moving up towards premium products. However, in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps, because increase in prices has led some consumers to look for cheaper substitutes.     The major players in personal wash (Soap) market are HLL, Nirma and P&G. Market survey There are a variety of brands offering bathing soaps. Some of the brands available in the market as we found on surveying Reliance Fresh & Birla More it was found that the soaps available for sale were Lux, Lifebuoy, Vivel, Godrej, Dove, Liril, Shikakai, Fiana De Wills, Nivea, Cinthol & Pears. Shikakai soaps are sold under the godrej label & are bought by those who still believe in the value of the natural elements. Other brands such as Lux, vivel, fiana de wills soaps are available in various forms of fragrances and colors. The brand lux offers maximum range.

They can find either deo soaps,fairness soaps, moisturizers etc as per the preference of the consumers. Also it was observed that the shelf presence of lux was the most. They would particularly be found in the centre & very easily visible to customers as they walk into the bathing soap section. The latest addition to the soaps is Lux Festive available in a red colored packing. They also place the newest additions to their already existing range in the front so that people easily come to know about it. They have unique varieties such as chocolate flavored soaps etc. Dove is a major competitor of lux. Consumers prefer dove to its high moisturizer content though it is observed that they are a little skeptical about the price. In the urban market In the soap segment as told to us by the shop keepers consumers choice was not based on price as much as on the features of a particular soap to satisfy their particular need such as glowing skin, moisturizing, fragrance, fresh feel etc. some were observed to be brand loyal to their choice of soap & were less likely to shift here were quite a few people who did not mind experimenting with the new brands and the variants of the old brands.   on the other hand, in the rural market, certain known names and the price were the key ingredients of the consumerʼs buying decision. It was also found that consumers posses high awareness regarding Lux, dettol, hamam and nirma and it is moderate in case of breeze, pears and rexona as far as bathing bars are concerned. But regarding usage Lux and nirma followed by lifebuoy are the most favorable. Brand name

Awareness (in percentage)

Usage (in percentage)

Lux

82.7

57.1

Lifebuoy

80.7

24.6

Cinthol

38.8

4.1

Dettol

67.2

5.3

Breeze

42.6

1.9

Nirma

45.5

1.0

Godrej no. 1

22.2

1.9

Medimix

6.9

1.0

Hamam

53.3

0

Pears

20.9

0

Rexona

16.7

1.2

Dove

6.0

0

Santoor

14.6

0

Palmolive

2.2

0

Neem

6.0

0

Any other

--

--

Non users

--

1.9

total

--

100.0

Percentage of awareness is more than the actual due to multiple responses. In order to find information to construct the consumer value hierarchy with respect to bathing soap we collected information through various sources, such as, reliance fresh and birla more, local shops in Anekal, departmental store within alliance campus and

interviewed close to 50 people from various locations to get a fair idea as to what is the consumer decision making pattern with respect to soap. CONSUMER VALUE HIERARCHY 

Core Benefit  The fundamental level is the core benefit: the service or benefit the customer is really buying. In case of bathing soap the core benefit is cleansing action. Basic Product  At the second level, the marketers must turn the core benefit into a basic product. For instance the cleansing action is provided to the customer by a bathing soap bar. Thus the basic product is soap bar. Expected Product  At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product. In relation to soap the expected features usually are fragrance, freshness and gentle to the skin. Augmented Product  At the fourth level, the marketer prepares an augmented product that exceeds customer expectations. It is at this level that consumers distinguish one brand from another. These additional features in the soap are flavors such as chocolate, peach milk soap,(lux) ¼ th cup moisturizer (dove), fairness soap, lime fresh (liril), deodorant soaps (cinthol), Indian essence soaps (santoor, breeze, nima) Potential Product  At the fifth level stands the potential product, which encompasses all the possible augmentations and transformations the product or offering might undergo in the future.

Offers such as combos, shampoo sachets free, dryness or face wash creams free with the soap purchased, gold coin offers, scratch cards presented with various schemes like Rs. 10 off on purchase of 3 soaps or 1 soap free on purchase of 3 etc. these are new ways to lure the customer.

Apart from these features the potential product is also the novel, upcoming features which are still under research. For instance (as told to us by one of the consumers we interviewed) that a hair removal soap would be something he would be looking forward to in the near future.

Apart from these features a consumer also wishes to find value for his money. Thus when choosing a soap, he looks for the one with maximum features thereby giving him value for his money.  

Capital Goods

Capital goods are goods that are purchased infrequently. They are classified into two groups; Installments and Equipments.

Installations include fixed assets like buildings and heavy machinery. Installations are major purchases for a concern. These are generally bought directly from the producer. Engineering the installations to suit the needs of the buyer is a component of installation. After-sales services is of essence in case of installations.

Equipment comprises portable equipment, tools and office equipment. These goods are not a part of the finished goods. The market for equipment is widely dispersed and hence marketing intermediaries are used to sell these products. Typical examples of equipment include machine tools, fork lift, office equipment etc.

The product we are looking into is Hand-drills. Hand-drills classify as a equipment and is extensively used in many industries. The most prominently available products are from Bosch machine tools, Electrex, Hitachi, Eastman, Black and decker. However, the market also is swarmed by cheaper chinese and korean alternatives like Akari and Maxx. Hand-drills are extensively used by carpenters, electricians, auto-workshops, and construction related concerns. There are two main classification of hand drills; one for concrete and other hard surfaces and the other for metal and carpentry. However, products are available with an option of using for both these purposes. There is a lever which can be shifted to change the hand drill from a hard surface driller to a metal driller. A hard surface driller is used on concrete walls and other hard surfaces like rocks and tiles. These equipment come with hammering attributes. These attributes are however not required in case of metal drillers and wood drillers. Bosch is the widely preferred product as they are very reliable, have a long life and are competitively priced. Bosch has products that can run wirelessly with the help of a battery pack. This makes it easier in the prevalent condition as most homes do no have the requisite plug-in sockets.

At Bosch India, products are classified into many categories. They include:

Rotary Drills- The rotary drills have a wide range of applications in masonry, wood, metal and tiles: for drilling, drilling with core cutters and stirring.

Impact Drills- Bosch is also a brand of convenience for impact drills: All Bosch Impact Drills offer a great deal more work comfort thanks to lightening-fast tool changes without keys. All tools also have Electronic, speed preselection with setting wheel and right-left operation. The top model, the GSB 20-2, is additionally equipped with 2-speed gearing, Constant Electronic and Torque Control. Rotary Hammers- The rotary hammers from Bosch meet all requirements and can cope with any situation, no matter how tough the material. Even the hardest marble does not have a chance against them. From 2 to 11 kg rotary hammers, everything is represented in this range. Extremely long service life, top quality and impressive power characterize these tools and guarantee that you achieve the breakthrough. Cordless Tools- Bosch Cordless tools. Completely without power supply and cables, every tool is designed to cope with the infinite challenges of the workplace and giving the professional complete confidence. Source: http://www.boschindia.com/content/language1/html/6149.htm A major player in the machine tools industry is Electrex owned by Anant Hegde who was earlier the marketing manager at Kulkarni Black and Decker. It is widely used across industries for its value for money and dependence. Since June, 1996, the company has been selling part of its production under the Hitachi name. While Hegde supplies components to quite a few Hitachi subsidiaries including Hitachi Koki India, he now plans to sell Electrex-branded tools in the Middle East and Far East Asia. Says Hitachi's Kishi: "We have faith in Electrex's manufacturing abilities. Quality has never been a problem." However, Hegde feels that having dual brands provides his company with the flexibility to target different segments of consumers, both in terms of price and quality. Not only is that true, riding piggy-back on Hitachi may enable Hegde to translate his dream of becoming a world-class vendor into reality. With powerful motors, Electrex drills range from light weight and compact body to heavy duty D type drills. Main applications are for drilling holes in wood, metal, bricks, marbles, tiles etc. and for civic construction work. Electrex Impact Drills are the first choice for all types of civil, construction, electrical and other general works. The features of Electrical Impact drills are powerful motor with high torque, double insulation for shock proof, heat treated gears for long life. Impact drills are widely used for drilling in concrete, marble, granite, tiles, bricks, metal, wood and such other materials. Source: http://www.india-today.com/btoday/22121998/cf6.html

http://www.uniqueenterprises.net/electrex.htm

In a study done at a workshop near Anekal, the people there used a driller branded Tiger which costs Rs. 1500/-. Other brands used were Boxer and Atlas. These devices are purchased only once and only repairs are done if required i.e either the armature is changed or the shaft is changed. In the case of cheap alternatives, the equipment overheats and hence damages the armature. Small workshops make the purchase based on cost, armature and holler size.

However in the Alliance campus, the drills extensively used were Electrex. In a study at various granite and stone selling area near Adugodi and bannerghatta Rd, it was seen that the tools used included Bosch and Electrex. The Customer Value Hierarchy

Core benefit

It refers to the service or benefit the customer is really buying. As the hand driller is mainly used to make holes, the core benefit derived from a hand drill is holes. So, a buyer of a driller is buying ʻholesʼ. Basic product

The core benefit of making holes is converted into a form of basic product. This is exemplified in the form of a hand tool used along with a hammer to make holes. This involves manual exertion of energy. Another example of a basic product is that of a hand run driller. This driller is used widely in case of carpentry; this product has a a lever on the side by rotating which the Bit moves and thereby helps in making holes. This however is limited to soft surfaces like wood. Expected product

This relates to the set of attributes and conditions the buyer normally expects when they purchase this product. A user of a hand driller expects that the product is automated and involves minimum physical effort. Also it is expected that the product is easy to use and handle. Augmented product

An augmented product exceeds customer expectations. A Bosch hand driller can be used without wires. It comes with a battery option where the driller can be run by the battery. Another added value is multiple size of holes and screwdriver. A black and decker driller comes with automatic speed increasing option and lock so that the user does not have to hold on to the drill button. Differentiation is done on the basis of product augmentation. This leads marketers to look at userʼs total consumption system.

As it has been seen it is not just the product by itself that drives the purchases but the additional aspects such as packaging, services, advertising, customer advise, financing, delivery arrangements and such other elements that users value. A Bosch 2 in 1 driller comes with a toolbox option which is a small briefcase which can hold the driller and many other essential tools. Packaging is an important aspect and one of the more popular items is from Bosch which is in the form of a toolkit. Drills from powertex sell mainly due to its packaging. Moreover, Bosch scores over its competitors for its after sales services which come with a ʻ5 Day Repair Promiseʼ. Potential product

A potential product encompasses all possible augmentations and transformations that the product may undergo in the future. Usage of Hand drills include a risk of injury and in future we can expect products which can be modified to warn when there is possibility of risk. Presently, the drill bits have to be procured separately which may be combined to make a potential product. Additionally, Bosch is aiming to integrate many tools into one equipment. Many similar tool require a motor and by changing the head and the bit, these drill can be used to perform other activities like polishing and cutting.

Most of the hand drills are not highly priced and can be procured without the aid of finance. However, Bosch tools come with a warranty of 3 years. The direct and convenient Bosch Repair Service provides warranty repairs and chargeable repairs to Bosch products. As a service promise to you Bosch customers, the company has developed the ʻ5 Day Repair Promiseʼ, where they aim to complete all warranty repairs within 5 working days. The 13 mm versions of Electrex, Bosch, and Eastman were priced at Rs. 2150/-, Rs. 3600/- and Rs. 1850/- respectively. Electrex was preferred by small time workshops and many medium size concerns. The main reason being its value for money. Even the sellers claim that Electrex is more popular and has low maintenance costs, while drills from Bosch have higher maintenance costs and the spares are costlier. Eastman, however, is considered as a product of inferior quality and limited life. Other substitutes which are popular include powertex and Akari which are priced at Rs. 2800/- and Rs. 2300/respectively. The main driver of sale in their case is their drills is the packaging which is very similar to that of Boschʼs. Methodology:

In order to learn about the given topic, we have divided the part of our work into 2 parts; convenience items and capital items. We have chosen soaps as the convenience item and hand drill as the capital item. Data with regard to soaps was collected from various students at Alliance. Additionally, we had contacted the local vendors to understand the usage pattern of soaps.

Data regarding the hand drills was primarily collected from SJP Road in bangalore which has a concentration of sellers and users of Hand drills. Additionally, we have contacted workshops in Anekal and Adugodi.

Capital versus Convenience items

Both capital and convenience items are different in many ways. Convenience goods are extensively distributed. They are available in most stores and move off the shelves very fast. On the other hand capital goods are not available as extensively as convenience goods. Purchase of capital goods involve more complexity as they are priced higher than most convenience goods.

Most convenience items face stiff competition from other producers. Margins in these products are often wafer thin and business is very competitive. In case of capital goods, competition is prevalent but the players in the industry are limited. Quality is of essence and people are ready to pay a premium for better quality and life of the product.

Packaging plays an important part in the convenience item market as buyers have a lot of choice. On the other hand, capital goods purchases are not driven by packaging alone. The product per se is of highest importance. That is the reason Bosch and Electrex has been doing well in the Indian market.

In a market where there is very high competition, communication is of supreme importance. The reason a Dove soap is more popular than a Nivea soap is because of the value that is communicated. Dove is promoted through various channels effectively, whereas the same cannot be seen in Nivea although they have the same attributes. On the other hand a capital goods are purchases more based on their merit and word of mouth advertising. A high level of personal selling can be seen in case of capital goods.

The convenience items are targeted at the mass consumer market while capital goods like Hand drills have a smaller niche market. Hand drills are mainly used by workshops and engineering concerns.

References 1. Marketing management by Kotler, Keller, Koshy and Jha 2. International Marketing Strategy By Hans Birger Thorelli, Helmut Becker 3. The Portable MBA in Entrepreneurship By William D. Bygrave, Andrew Zacharakis 4. Making Marketing Happen By Brian Smith 5. http://nptel.iitm.ac.in/courses/IIT-MADRAS/Management_Science_II/Pdf/1_2.pdf 6. http://www.freemba.in/articlesread.php?artcode=2150&stcode=1&substcode=93 7. http://www.hinduonnet.com/businessline/iw/2001/07/29/stories/0229b052.htm 8. http://www.ibef.org/download/Consumption.pdf 9. http://dspace.iimk.ac.in/bitstream/2259/427/1/RM60-03-016.pdf 10. http://www.india-today.com/btoday/22121998/cf6.html 11. http://www.uniqueenterprises.net/electrex.htm 12. http://www.boschindia.com/content/language1/html/6149.htm