Strategies For Marketing Success

www.jagooindia.com Executive Summary The thrust of marketing and of branding strategies for products and services has shifted from being 'market-driven' to 'market-driving'. However, this is not a new phenomenon and the companies that have been able to capture this through their marketing strategies have set examples for a lot more to follow. Marketing theory suggests the routes to success for firms within the framework of the marketing mix or 4 P's. However, this has been extended to 7 P's to incorporate the other important aspects that went beyond product, price, place and promotion. We have explored the branding strategies of some of the most successful brands in the marketing world, who have risen to the top by providing value to their customers by following the path 'less traveled'. Brands such as Starbucks, IKEA, Sony, Dell and others have identified innate and unexpressed customer needs to enhance the value provided and in return garner commitment from their loyal customers. We have realized that although differentiation is the difference between life and death of brands, this differentiation has to stem from forces that do not always have a theoretical explanation. At times it is wiser to rely on non-text-book ideologies such as intuition, gut-feeling, and vision. Legendary brands such as Virgin & Dell were built on the strong gut-feeling and the conviction they had in their belief and offerings. Such brands have breakthrough success as a result of radical innovation, a strong business system and a leap in their value propositions. Dell broke the traditional value chain to sell PCs to the consumer via direct channels. Avis, the car rental company communicated its No. 2 position in its advertising copies, again a non-traditional practice. There are many successful firms that have found success in moving beyond the thinkable into the realm of creativity, innovation and prudent marketing insights. An emerging paradigm - the Four A's has the potential for explaining success of these maverick brands. Strategies That Have Re-written Marketing Books The fundamental principle in marketing is "know your consumer and cater to his needs by aligning the elements of the marketing mix - product, pricing, distribution and promotion in a profitable manner". Such a principle is restrictive as it is founded on the assumption that the consumer is able to discern and articulate his needs in a manner that is useful to the marketer. A consumer, one must remember, is a person or representative of an actionable aggregate (target segment). As he is the origin and destination of all marketing actions, brands get locked into a "comfort zone" and innovation gets reduced to "incremental changes". Such a position, however, is characteristic of brands that lack innovation, brands that lack that extra, the disruption which is vital to escape the ills of this stagnating cycle, the ability to break out of the mould and create a splash in today's ocean of brands. However, few brands have had the wherewithal to re-define marketing principles. We will examine them in light of a few traditional principles of marketing literature that are depicted in the figure below. These are arranged in a rough sequence of marketing activities to be performed for any brand.

Traditional Marketing Activities Target New Customers Marketing theory has taught managers to increase the customer base to the maximum possible. However, some brands have chosen to focus on existing customers. Harley-Davidson is one of them. On the brink of bankruptcy in 1985, Harley pulled out to become one of the world's most admired companies. The secret of this success was the strong passion attached to the product and the company began promoting its dedication to individualism, adventure and fulfillment to its employees, dealers and customers around the world. It re-invigorated the HOG's (Harley Owner Groups) and used those beliefs as the basis for extending its products and services beyond the bike. The creation of the Harley community made the owners fiercely proud of owning the brand and they wanted to be associated with it for life, and even paid an annual fee for that. So whereas competition churned out new models and engines yearly in a bid to gain new customers, Harley celebrated their anniversaries, raised money for charity and differentiated by going to the extent of not showing their motorcycles in their advertisements. THE HOG's are bound by a common passion of "Making the Harley-Davidson dream a way of life". The philosophy was that of including people in the family and growing the family more by word-of-mouth and sharing a common consciousness for the passion of owning a Harley. In effect, Harley didn't have to select target consumers, they chose themselves. Use Market Research for Decision Making

Marketing theory lays emphasis on market research to identify consumer needs, perceptions, beliefs and preferences. These are considered necessary inputs to key marketing decisions related to product planning, targeting, positioning, brand extensions, promotion and channel planning among others. In theory, the idea has a sound logical base. On the flipside, market research does not help in a firm's efforts to challenge status quo. Also when all firms in an industry rely on research, they end up with very similar data and this collective wisdom rarely serves as a basis for competitive advantage. We have numerous instances in which the absence of market research has led to brand success or its presence has led to a failure. Sony has been a powerhouse in developing and launching innovative products, which have created new markets and businesses, such as the transistor, radio, walkman, 3.5 inch diskette, and audio compact attest. 'New products create new markets' is a guiding credo at Sony. This is in contrast with the concept of tailoring products for markets. Sony believes that a great product has the potential to sell itself. Therefore, market research is superfluous as consumers would never be able to come up with the product themselves. Sony's product development process is unique in the terms of the faith it puts in its employees to generate breakthroughs, and at the same time tolerate their failures. Sony has become a strong mega corporate brand with a dream delivery concept since the eighties that says, "You dreamt it, Sony made it." Market Research is useful for incremental innovations, yet radical business ideas are seldom borne out of research. The vision of Richard Branson can never be attributed to market research. If Branson had seen his business through the blinkers of his consumers, he would have never been able to build the empire he owns today. Would the idea of using the Virgin Brand in diverse sectors from airlines to music ever occur to consumers? The ability to see things differently and the importance of gut feel are concepts that are still alien to marketing textbooks. Market research is often looked upon as a problem-solving device. One only needs to take a look at the New Coke example to realize how market research could be a problem creating tool. Blind taste tests favored the new formula, but post-launch it turned out to be one of the biggest marketing disasters ever. An intuitive judgment could have perhaps averted this mishap. Improve on Existing Product Platforms The first P of the marketing mix - Product - is the physical product or service delivered to the consumer. It also includes decisions such as packaging, function, appearance, servicing, warranty, etc. Usually, products have been conceived in terms of altering products that already exist in the product category. But some brands have made it big treading on the path of radical product changes that led to concepts that satisfied a consumer need that no one knew of in a manner which defies conventional marketing theories. Starbucks is a brand that has created a sub-culture on the basis of its product, that of simple coffee Americans have always loved. All it did was present the traditional coffee in a way that consumers had not experienced before - Cold and Iced - and also at a fairly cheap price. The unassuming beverage was turned into an icon of sophistication and taste and the product became trendy, fashionable and universally appealing. Starbucks created a place for itself in people's minds by filling an inert need of experiencing the environment while sipping great coffee. The leap from "coffee" to "coffee experience" revolutionized marketer's perspective of the product category. IKEA is another brand that re-defined the entire concept of purchasing furniture. IKEA's strategy is to offer basic, relatively inexpensive home furnishings to consumers around the world, which

represent quality and value for little money. IKEA consumers know exactly what they're getting as part of the IKEA brand experience - self-service, good quality, KD furniture, good prices. This was a dramatically different value proposition from the traditional, full-service, expensive, high street furniture store. Body Shop of UK has looked at the product not only in terms of the physical output but the product development process itself. This has provided it with a USP of cosmetic products developed without testing them on animals. These along with other values have been the pillars on which their success rests today. Set Price Based on Industry Standard There is a general tendency among firms to look at pricing in terms of industry standard. They more often then not stick to the norm with minor variations. The profit margin is fixed based on financial estimates and assumptions. Wal-Mart changed that. Wal-Mart aimed to provide goods at prices that the consumer was willing to buy them. Thus, the consumer became the price setter instead of the price getter. It pioneered the concept of everyday low pricing and focused on generating volumes. The discount store concept was borne out of such radical thinking. Another brand that is synonymous with low pricing is Southwest Airlines which sets prices that are 60-75% below its closest rival when it enters a new city. On the other end of the spectrum are brands like Starbucks and FedEx which charges consumers prices that are higher than industry standard. Choose Relevant Brand Names One of the basic tenets of brand management is for companies to develop the most 'appropriate' and 'relevant' brand name that provides a platform for the customer to connect with the company and the product. Conventionally, a brand name is supposed to indicate the product's benefits, be memorable and help in reinforcing the belief in the consumer's psyche. The name has to be unique to rise above the clutter. However, when unique names become run-of-the-mill, then a simple name immediately grabs your attention. We know of companies that have carried out extensive surveys, consumer panel tests to be absolutely sure before christening their product creation. But we also know of products that have gone beyond rationality to strike an emotional chord that make them successful brands rather than products. An Apple Computer with its simple brand name and logo, which is totally unrepresentative of its high technology product offering, has managed to create a strong band of loyal consumers, which is fondly referred to as "Mac Village". Writer Naomi Klein, a leading critic of branding and author of No Logo, argues that companies like Apple are no longer selling products, they are selling brands, which evoke a subtle mix of people's hopes, dreams and aspirations. The company has a unique visual and verbal vocabulary, expressed in product design, advertising and the logo itself. Another prominent example is that of Kodak, a brand name that means nothing literally but over the years has built such strong associations with its product range that now has become generic to photography and digital imaging products. The concept of "building a brand from scratch" can be attributed to Kodak. Role of Distribution - Increasing Availability Through Outlet Penetration

The traditional approach to distribution has used the market reach concept where presence in outlets is the key. Having a wide network of distributors and ensuring product availability is seen as a great way to generate sales. This approach assumes that individual channel units operate within a well delineated boundary, and hence each additional unit provides incremental sales. The success of Dell lampoons the above-mentioned approach. Dell's direct distribution approach in contrast with the linear approach of its competitors, IBM and Compaq, is a case in point for a new approach to distribution. The idea of using a limitless channel - the Internet - as opposed to traditional outlets worked in favor of Dell by giving it a strategic advantage. Thus, availability was gained without actual product placement. Most marketers look at distribution solely in terms of product availability. HLL went a step further. It recognized distribution not just as a means to gain reach, but as a key customer contact point. This approach laid emphasis on touching consumers with a 3-way convergence of product availability, brand communication and brand experience. The Lifebuoy Swastha Chetna Yojana (which involved channel partners like Star Sellers) and the concept of Lakme Salons were borne out of such thinking. By re-inventing distribution, HLL inspired other companies to reexamine their approaches and also expanded the scope of activities for any brand manager. Gross Rating Points as Basis for Communication Strategy The fourth P of marketing - Promotion - has for generations been synonymous with mass media advertising. Marketers have poured tonnes of money into print and television to achieve objectives like brand awareness, trial, attitude change, preference and intention to buy. The traditional measures for evaluating options have been in terms of reach - frequency / GRPs. The adherence to the 'Share of Voice - Share of Market' approach is indeed widespread. Starbucks sticks out like a sore thumb. The company has spent little money on advertising, preferring instead to build the brand cup by cup with customers, and depends on word-of-mouth and the appeal of its store-fronts. Starbucks management looked upon each store as a billboard for the company and as a contributor to building the company's brand and image. Each detail was scrutinized to enhance the mood and ambience of the store, to make sure everything signaled "best of class", and that it reflected the personality of the community and the neighborhood. The thesis was 'Everything matters'. Indian coffee bars like Coffee Day and Barista have latched onto Starbucks strategy. "Buzz marketing" is the new mantra and it involves getting the trend-setters in any community to carry the brand's message, thus creating interest in and demand for the brand with no overt advertising. When Virgin's eccentric CEO Richard Branson takes off on his hot air balloon trips, he generates publicity equivalent to a few 1000 GRPs. Even controversial messages can help create the "buzz" with Benetton (See Exhibit 1) being a classic example. In the Indian context, the Tuff Shoes (Milind Soman) campaign seems to ring a bell as it generated a fair deal of awareness for the brand at that time. However, sustaining the "buzz" is as important as creating it. Ad Execution Extolling Product Virtues Creative copy, however innovative, has mainly focused on extolling product virtues either in terms of benefits or attributes using metaphors, symbols, visuals and words. Every client wants his agency to produce advertisements that portray his brand as the most desirable in the marketplace.

Or so it was until Volkswagen unleashed its 1960 path breaking campaign (See Exhibit 2) that actually made fun of the product by calling it names like "Lemon" and "Ugly". The blunt honesty in the ad made it irreverent, and Volkswagen was smiling at itself alright, but was doing so all the way to the bank. Ads proclaiming leadership are commonplace and many brands follow this strategy to demonstrate superiority and create preference. Avis, a car rental service chose the road less traveled. Its ads (See Exhibit 3) contained a simple, no-frills, honest message "We are No 2, but we try harder". The ad was given a green signal despite poor ratings in consumer panel testing. In two years, Avis increased its share of the market by 28 percent. The New Paradigm The success stories mentioned in this paper provide support for a re-look at existing marketing theory. This is not to say that they are wrong but there is a strong case for a change in perspective. Some of these brands have re-written marketing books, but what we need is a comprehensive framework that can explain their success. The traditional 4 P's approach needs to be overthrown, and there have been many contenders. In our search for a better theory, we came across the Four A's approach by Jagdish Sheth. The elements - Acceptance, Affordability, Accessibility and Awareness have the wherewithal to partially address the success of these brands. Acceptance is more than just the product as it looks at it from the consumer's eyes. Starbucks, IKEA, Body Shop and Sony were intuitively practicing this concept while designing their offerings. Affordability accounts for Wal-Mart, Southwest, Starbuck and Ikea's pricing strategy by focusing on what the consumer is willing to pay. Accessibility is a broader term than mere product availability and best describes Dell's innovation in distribution. The term Awareness, unlike its predecessor Promotion, does not carry a mass media connotation and encompasses concepts like buzz marketing (followed by Starbucks, Benetton and Virgin). But there is one additional 'A' that is common to all these brands and is the single most important reason for their success - Affect. The brands mentioned have all been able to strike an emotional chord in the heart of the consumer. That has been their single guiding light and bear testimony to the fact that 'Man is more emotional than rational'. In the words of Nirmalya Kumar, these brands were market drivers not market driven.

Exhibit 1: Benetton's Controversial Advertising

Exhibit 2: Volkswagen's Memorable Ad

Exhibit 3: Avis "No. 2" Ad