FIGHTER BRANDS

SHOULD YOU LAUNCH THEM?

- MARK RITSON

BY:
ARVINTH G (19)
RANJIT PISHARODY (75)
TIMI CHHABRA (109)
 ECONOMIC RECESSION AND ECONOMIC STRAINS

MID-TIER AND PREMIUM BRANDS LOSE SHARE TO

LOW-PRICE RIVALS.

WHAT SHOULD AN ORGANISATION DO?

“SHOULD THEY TACKLE THE THREAT HEAD-ON BY

REDUCING PRICES?”
“SHOULD THEY HOLD THE LINE, HOPE FOR BETTER
TIMES TO RETURN?”

OR

SHOULD THEY LAUNCH A FIGHTER BRAND?

 FIGHTER BRANDS
MULTI- BRANDS
FLANKER BRANDS
“A FIGHTER BRAND IS DESIGNED TO COMBAT, AND IDEALLY ELIMINATE,
LOW-PRICE COMPETITORS WHILE PROTECTING AN ORGANIZATION’S
PREMIUM-PRICE OFFERINGS”
- MARK RITSON
 Flanker Brand - Advantages

•ELIMINATES COMPETITORS

•OPENS UP A NEW LOWER-END MARKET FOR THE ORGANIZATION

•GAIN MORE SHELF SPACE FOR THE COMPANY, WHICH INCREASES

RETAILER DEPENDENCE ON THE COMPANY’S BRANDS.

•CAPTURE “BRAND SWITCHERS” BY OFFERING SEVERAL BRANDS.

•PROTECT THE COMPANY BECAUSE IT HAS A UNIQUE NAME -

COMPANIES WITH A HIGH-QUALITY EXISTING PRODUCT CAN
INTRODUCE LOWER-QUALITY BRANDS WITHOUT DILUTING THEIR
HIGH-QUALITY BRAND NAMES.
 SUCH TRIUMPHS ARE EXCEPTION

THE HISTORY OF FIGHTER BRANDS IS DISCOURAGING

LITTLE DAMAGE ON THE TARGETED COMPETITORS

COLLATERAL DAMAGE FOR THE COMPANIES

THERE ARE FIVE MAJOR STRATEGIC HAZARDS

HAZARD ONE - Cannibalization
 KODAK : GOLD PLUS
COMPETITOR- FUJI -FUJICOLOR SUPER G FILM
KODAK’S FIGHTER BRAND : FUNTIME

 Should appeal to the price-conscious segment while it falls short for

current consumers of the premium brand.
 fighter brand’s low price should match a equally low perceived quality

 P&G : PAMPERS
COMPETITOR: Private Labels
FIGHTER BRAND: LUVS
 Cut back on R&D and product innovation on Luvs
 Cut back on TV advertising and promotional support.
 Cut back on Existing features: like handles on Luvs’ packaging

 Final step : P&G focused greater managerial and financial resources on

marketing and improving the features of Pampers.
 HAZARD TWO- Failure to
Bury the Competition
 “Organizations overprotect their premium brands from cannibalization
at the expense of the combative potential of their fighter brand.” – MARK
RITSON

 MERCK : ZOCOR (GERMANY)

COMPETITION: Generic drugs
FIGHTER BRAND : Zocor MSD
 Priced just slightly less than the original premium brand.
 Once generics entered the market, the new brand’s price dropped to 90% of Zocor’s.
 Desire to protect its profits for as long as possible led to a failure to launch a
competitive brand.

 INTEL: PENTIUM PROCESSOR

COMPETITION: AMD K6 PROCESSOR CHIP
FIGHTER BRAND: CELERON ; CELERON A.
 Underprice
 Make sure the quality matches the satisfaction of the buyers.
 FIX HAZARD ONE AND HAZARD TWO

FIX HAZARD ONE:

MARKET-TEST FIGHTER BRAND

FIX HAZARD TWO:

PREPARE TO RECALIBRATE THE FIGHTER’S PRICE TO AVOID
CANNIBALIZING OVERPERFORMANCE AND UNCOMPETITIVE
UNDERPERFORMANCE.

MERCK: Blue-chip multinational. Lacked price-war competencies .

INTEL: History of frequent product launches, upgrades, and deletions. Better

equipped for price-changes.
 THE ONE TO BEAT
ANHEUSER-BUSCH – NATIONAL BREWER

REGIONAL BREWERS GAINED STRONG HOLD – AFFECTING

BUSCH’S MARKET SHARE

BUSCH BAVARIAN : “YOURS AT POPULAR

PRICES”

•PRICED AT THE SAME LEVEL AS REGIONAL COMPETITORS

•ALMOST HALF THE WHOLESALEPRICE OF ITS SISTER BRANDS-
BUDWEISER AND MICHELOB

TO DISTANCE IT FROM THE OTHER TWO BRANDS AND REDUCE

POTENTIAL CANNIBALIZATION:

•ADVERTISING SUPPORT,
•A SEPARATE SALES FORCE
•DISTINCT DISTRIBUTION TRUCKS
 HAZARD Three- Financial losses

Fighter brands may lead to disastrous financial loss for the company
though it achieves brand success.

Saturn was a financial disaster

ro fit ity is
P abil nt
n a
• High factory set up cost stai port
su y im
• High employee head count ver
• High cost of production due to no shared GM
parts and separate marketing and distribution

Shared platforms, rebadged models, and GM promotions spelled the

end of Saturn’s differentiation and led to increasing cannibalization of
sister brands like Pontiac and Chevy
HAZARD Four- Missing the Mark with Customers
The DNA of a fighter brand is potentially flawed from the very outset
because it is derived from company deficiencies and competitor strengths,
not a focus on consumers.

The fighter brand’s focus should immediately switch to the consumer

segments that the new brand is targeting.

Only then will it achieve the kind of consumer orientation necessary to avoid a
potentially fatal focus on competitors.

Notting Hill - Popular price segment but failed to focus on customer. It opened
shops in metro cities instead of tier 2 and 3 cities
 Notting Hill
2007-Popular price segment from raymonds

2009-“Notting Hill does not have any turnover at present” Mr. Deepak
Khetrapal, Chief Operating Office

• Inefficient customer focus-Corporate customers

• Focused metros

• Cannibalization-Now they are sold through the Raymond shops in

the Tier-IV and V cities
Hazard Five - Management Distraction
 The fighter brand may render the
company bankrupt
 Opportunity costs of launching,
managing and then withdrawing can
have higher financial implications
 Fighter brands do nothing to abate
other competitive threats
 The greatest cost of a fighter brand
is propensity to cause managers to
delay essential strategic decisions
 GM $15 billion on Saturn
 Delta spent around $65 mn for the
launch of song and then a big
amount for decommissioning
 Pampers lost considerable market
share to Huggies., when P&G was
busy with Luvs
 GM’s late realization that Saturn is
not the answer to Japanese
Challenge.
 Thus , the strategic implications of
dividing organization’s resources,
should be considered
 How Qantas Launched the Perfect Fighter Brand
 Determine whether another brand is truly necessary?
 Exhaustive strategic sessions confirmed Qantas brand was simply not in a position to combat Virgin
Blue’s explosive growth

 Run the numbers

 The detailed projections showed that by offering no frills, its new airline could achieve a 20% cost
advantage over its rival

 Listen to customers, early and often

 Secret focus groups across Australia – a crucial step to avoiding excessive internal benchmarking or
competitor orientation

 Move fast
 The speed at which Jetstar attacked took Virgin Blue by surprise and knocked it
off balance

 Control for cannibalization

 It took over the tourist routes that Qantas had lost money , thus it cannibalized only revenues, not profi ts .
It also opted for a shadow endorsement from Qantas

 Reinvest in your premium offering and calibrate between the two brands
 Qantas was able to refocus on its more profitable business routes
How HLL launched the perfect Fighter Brand
 Surf Rs.21/kilo and Nirma Rs 7/kilo

 The low cost detergents had grown rapidly enough to account for 80% of
volumes

 The birth of Operation S.T.I.N.G. — STRATEGY TO INHIBIT NIRMA’S

GROWTH.

 Big challenge was a low cost product conforming to the HLL quality standards

 All together different H.Q at Chandigarh

 For the first time, it opted for third party manufacturers and for dynamic pricing
model
How HLL launched the perfect Fighter Brand

 Invested heavily in creating door-to-door programs for driving sales ,by

tapping into the networks of local rural women

 It came up with the classic ‘Dekho Dekho Dekho’ jingle, which was a
big hit

 “Maine maangi thi safaai, aur tune di haathon ki jalan”

 Today with sales of over Rs 2,000 crore, Wheel is ‘Brand No 1’ in the

HUL portfolio not to mention the world’s largest selling detergent in
volume terms