Case Study 1

Brand ambassador: employing real customers to get the word around.

People love talking about things that make them happy - including their favorite products and
brands. For example, if you really like an airline - they fly with flair and get you there at a
reasonable price or you just love your recently acquired Sony camera - it is too good to keep
the knowledge of the experience to yourself. In the old days, you would have chatted up
these brands with a few friends and family members, but these days technology allows you
to spread the word about products and brands experiences to thousands of other
consumers.

In response, Marketers are now working to harness the new found communications power of
their everyday customers by turning them into influential brand ambassadors. Companies
like Sony, Microsoft and McDonald's are now developing a new breed of brand ambassador
programs that organize and multiply consumer to consumer interactions about their brands.
These programs employ everyday consumers who are passionate about their products to
act as part PR agents and part sales reps.

Marketers select their brand ambassadors very carefully, based on customers' devotion to a
brand and the size of their social circles. Once selected, the ambassadors are trained with
real brand knowledge to go along with their passion for the brand. The ambassadors then
tap into friends, family groups and wider audience through personal conversations, blogs,
and online social media. For the ambassador, rewards include product samples, gifts,
discounts and token cash payments. Perhaps most important to many brand enthusiasts,
they get inside access to company's information about new products and services about to
be launched.

Brand ambassador programs leverage the power of peer to peer communication.

Consumers hear about products and brand experiences from others just like themselves -
people they trust - rather than from commercial marketing sources. Sony used brand
ambassadors to jumpstart the launch of its new GPS camera, a high tech device that draws
on satellite tracking technology to let you record the exact location of every picture you take
and later map them out using Google maps. Sony selected customer ambassadors who like
to travel, take pictures and use online communications. "This is a product with emerging
technology and we really need to let consumers see people using it' says Sony's director of
digital imaging.

Out of 2000 or more online applicants, Sony picked only 25 brand ambassadors. The
ambassadors were given a free camera and other equipment along with lessons on how to
use them. They were encouraged to show the camera to friends, associates, and anyone
else who asked; handout discount coupons and blog weekly about their travel and picture
taking adventures on a dedicated Sony micro site. College campuses are traditional fertile
ground for ambassadors. Marketing companies identify and manage college student
ambassadors for diverse products and services.
The brand ambassador approach has its critics. For example, some view the practice as

Underhanded or deceptive, most firms advise their ambassadors to openly reveal that they
are representatives. Others worry that brand ambassadors may be perceived as pressure
agents who promote products because they get free stuff - or worse, as annoying interfering
people best avoided. The best ambassadors, however, it has been

found, are people who are seen as friendly, everyday brand loyalists for love to talk to
people about their own experiences.

Questions:

(a) Based on your own understanding of reference groups, how effective would brand
ambassadors be as reference groups for relatively expensive, infrequently bought
products and services? How would your answer change if the product in question
was detergent or cooking oil?

(b) In your view, in the Indian marketing context, is the concept of brand ambassadors
likely to succeed? Justify your answer.

(c) Comment upon Sony's strategy of using brand ambassadors to launch its cameras.
What can be the possible dangers of using this approach?
Case Study 2
In June 2010, C.K. Ranganathan, 50, founder of CavinKare, suffered a drug allergy. The
enforced six-month break gave him much needed time to reflect on the business he
founded as a partnership firm back in 1983.

On the face of it, Ranganathan had reasons to feel satisfied. In business circles,
CavinKare is a legend - the David of the fast moving consumer goods, or FMCG, sector,
which successfully took on Goliaths like HUL, and P&G. CavinKare's first and most
memorable innovation, in 1983, was the sachet: it sold shampoo in tiny, low-priced
sachets at a time when the big players only marketed it in high-priced bottles. By doing
so it discovered a vast, untapped market and forced its big rivals to follow suit.Today 87
per cent of shampoos sold in India are in sachets, of which CavinKare has a 30 per cent
share.

Yet Ranganathan was worried. He was concerned that around seven of every 10
innovations presented to him were aimed at the relatively low-end segment of
consumers. No doubt it was this segment that brought CavinKare its initial success, and
still provided about 60 per cent of the company's revenues, but Ranganathan wanted to
target the premium segments, where margins were much higher.

He also felt that CavinKare had become a somewhat reactive organisation and his
people were not learning enough. "Innovation is important but without the right culture, it
cannot be sustained."

Ranganathan got back to work in December 2010 with definite ideas about how he
wanted CavinKare to change... His first task was to get the employees to become more
achievement oriented. He introduced a new working system for better and faster product
development, shifted CavinKare's marketing office from Chennai to Mumbai and began
looking around for acquisitions and tie-ups to bring premium products under his
company's umbrella. The workforce was divided into creators (research and
development, or R&D, marketing and sales), enhancers (production, purchase, logistics
and supply chain) and protectors (accounts, finance and management information
system). "Creators are the key group. Their performance is critical. The bulk of the
resources are targeted at them," says Ranganathan. Brainstorming meetings on Monday
were also started. "These meetings speeded up the process of product development as
decisions were taken on the spot," says T.D. Mohan, Joint Managing Director.

Ranganathan also got the team to start anticipating the competition's moves and prepare
to counter them early. This helped when, earlier this year; rival Pantene slashed its
shampoo sachet price from Rs 1.50 to Rs 1 to match CavinKare's Chik. "We had the
response - a better formulation of shampoo - ready and launched it in less than a month.
It was an improved product at the same price," says T. Mukhopadhyay, Executive Vice
President, and R&D. Profitable growth was chosen as the theme for the company's
annual conference in April 2011.

The 'creators' were asked to come up with innovations that targeted the high end of the
market. "We want 60 per cent of our revenues to come from the premium segment,"
says Ranganathan. CavinKare has also embraced the 'Blue Ocean Strategy' to identify
uncontested market spaces and create products to fill them. For instance, it launched
Indica 10, a hair dye which can be washed off within 10 minutes of applying it. Rival hair
dye brands require at least 30 to 45 minutes to take effect. The company has set itself a
revenue target of Rs 5,200 crore by 2017/18.

Ranganathan's reforms have already started yielding results. The product development
time has shrunk to 11 months from 12 months earlier. CavinKare is also making a
conscious effort to expand its pan-Indian presence. Pursuing Ranganathan's new thrust
towards tie-ups, as well as towards improving premium market presence, the company
has entered into a strategic alliance with Coty Inc. - the world's largest fragrance
company.

Questions:

1) Can the introduction of sachets by Cavin Kare be classified as a disruptive innovation

in the shampoo market? Why or Why not?

2) Discuss the areas where Mr.Ranganathan focussed to develop an innovative culture

at Cavin Kare.

3) What challenges do you anticipate for Cavin Kare in the coming years?
Case Study 3

From Frivolous to Frugal: Recessionary Trend Forcing Changes in

Consumer Behavior?
The sub-prime crisis that emerged in the US in mid-2007 shook the world economies severely. The
crisis led to a recessionary trend that hit each and every sector of the economy badly, resulting in a
slowdown in the growth of bottom lines of companies. The changed situation sparked the emergence
of a new breed of consumer, according to experts.

The sub-prime crisis led to a decline in employment levels, a huge rise in energy costs, a drastic fall in
the value of real estate, a slump in financial markets, and tighter credit availability. Lack of demand
and the piling up of inventories was taking a toll on the efficiency of businesses. According to experts,
changes in the demographics and growing uncertainty over the future had forced consumers to change
their spending habits from frivolous to frugal and to save more for future expenses like retirement,
children’s education, healthcare, etc. The change in consumer spending habits that occurred during
recession would not change immediately after the official declaration of the end of recession and
would be a long term shift, they added. The conclusions of the experts were based on data collected
during the recessions in the 1980s and the 1990s.

Many experts felt that “consumer spending behavior” had started changing but that the change would
not happen overnight. Consumers had started to cut costs in areas that did not affect their day to day
lifestyles much. Consumer preference for different products too had changed. According to industry
observers, not all product categories had taken a hit during the recession. Retailers reported an
increase in the sales of good quality private label goods which were less expensive than branded
goods.  Commenting on the consumers’ preference shifting toward private labels, Andy Bond, CEO
of UK Retail chain Asda Stores Ltd. (Asda), said, “We can already see how changing attitudes are
affecting customers’ shopping habits...consumers aren’t prepared to pay a premium when they cannot
taste the difference.

Consumers had started buying substitutes which were less preferred during the boom period – like
meat being substituted by poultry, turkey, or pasta; ready to eat foods and fresh foods being
substituted by frozen foods with longer shelf life, bottled water being substituted by freely available
tap water and so on. The growth in compact cars sales vis-à-vis a decline in SUV sales also explained
the shift in consumer preferences. This kind of consumer behavior is called “belt tightening” where
the consumers’ priority, while spending, is to cut down on any waste in their purchases.

The change in consumer behavior had been happening in many ways. The sales of hair dye at Asda
stores, for example, went up by 27% as many of the customers were cutting down on their visits to the
hairdresser. The sales of some products under the Ready Meals segment had gone down by 40% but
there was an equivalent increase in the sales of ingredients like starch, including curries which were
used in preparing those dishes, indicating that consumers preferred to go the healthier way of making
the meals themselves. The sales of high end products like champagne and olives had also gone up,
indicating that consumers were substituting restaurant trips for a nice meal at home.According to
retailers and research firms, the sales of big ticket electronic goods like US$ 1,000 Flat panel TV and
US$ 300 video games were on the rise as people preferred entertaining themselves at home rather
than the whole family making a trip to a movie theater or an amusement park. Consumers were
delaying their expensive vacations and were indulging in outdoor activities instead.

Some analysts believed that the habit of shopping was addictive and that the consumers would not cut
out their shopping entirely; they would rather spend US$ 20 in the place of US$ 200. A famous
example of lipstick sales going up during bear markets could reflect this consumer behavior. Those
consumers whose purchasing power did not decline much would also prefer to cut down on frivolous
spending so that they did not come across as people who were insensitive to the problems faced by
their co-citizens, many of who had lost their sources of income, they said.

Another visible trend during recession was that of consumers favoring larger purchases at larger,
value-oriented hypermarkets over convenience stores and high-end retailers. According to experts in
the retail industry, consumers preferred larger packs at lower price points to smaller packs which
would turn out to be costlier. According to the Nielsen Report, the sales at British hypermarkets had
reported a sales growth of 6% year on year for the 12 weeks ending November 29, 2008, whereas the
grocery stores had reported a decline of 2% for the same period.

Experts pointed out that consumer spending had not gone down in the US during recessions in 2000
and 2001 as consumers had leveraged on their real estate properties to raise mortgage loans to buffer
their consumption. But after the sub-prime crisis where real estate value went down drastically and
mortgage credit dried up, it would be interesting to see how retailers strategized to change consumer
behavior and sustain their profitability, they said.

Questions for Discussion:

1. With frugal consumerism creeping in, what should luxury goods producers do to survive and
sustain themselves?
2. According to you, what strategies should producers of impulse goods adopt when the
consumers begin to go in for belt tightening?

3. Discuss whether the companies should cut down prices or cut down expenditure to maintain a
healthy growth.

 
Case Study 4

Honey, they’ve shrunk the kids chocolate bar.

You may not have noticed it, but you may be getting less bang for your buck. The price
of your favorite brand of noodles or biscuits may have remained constant despite
inflation, but what about the quantity? When Abhishek Mathur, a student, was told by his
friends that the ubiquitous Rs: 10 Maggi pack now had 20% less quantity, he was less
than amused, although he had not noticed the change. Chances are most people are
buying soaps, bread and biscuits thinking companies have not passed on to the
consumer the higher prices in packaged goods, but to protect margins amid rising costs,
food and fast moving consumer goods companies are cutting down on quantity-
grammage in trade parlance.

Cutting Corners

Product Price (Rs) Weight (grams)

Then Now
Lays Chips 20 68 61

Good Day Biscuits 10 100 84.5

Dairy milk chocolate 20 50 38

Britannia Bread 12 400 375

Maggi 10 100 80

Haldiram Snacks 10 52 48

Lux soap 10 75 65

Experts say reducing quantity while maintaining a constant price helps companies
protect their volumes. “The FMCG category is highly price sensitive. Prices of items can
be increased only to some extent. Reducing grammages (quantity) will help these
companies retain their customers as well as their market shares,” said Pratichee Kapoor,
associate director for retail at consulting firm Technopak .For retailers across cities, the
move has hardly spelt a difference over the past 6 months since the trend started. Most
retailers continue to witness significant growth, despite price rises and quantity cuts.
Food and personal care items are rarely potential areas of compromise for consumers,
they reason. “It’s the consumers in the middle of the pyramid that are not much affected
by these cuts in grammages. If the company succeeds in communicating better value
proposition to this section, the strategy is sustainable for them. Impulse items, especially,
can protect their volumes by going for grammage reductions,” said Raj Hosahalli,
executive director, Nielsen India. So, the next time you go shopping, make sure you
don’t end up buying smaller quantities while staying within budget.

Questions:
1. Why has this strategy of grammage reduction by marketers gone unnoticed by the
consumers? Base the answer on your understanding of the consumer behaviour variable
of perception.

2. Will such a strategy be useful in another category of products? Give reasons for your
answer.

3. How will this knowledge of quantity reduction affect the future behaviour of the
consumers of these products?
Case Study 5
Kellogg Company has distribution in over 150 countries and yet is still "unknown to half the
world's population" according to Arnold Langbo, Kellogg's CEO.

Mr. Langbo plans to change that.

Kellogg is building a company-owned cereal plant in Latvia and currently has sales in
Poland, Hungary, and Slovakia. It has also started construction on a plant in India and has
plans to enter China soon. These efforts will greatly expand non-U.S. sales, which in 1991
were 53 % of the total volume and 41 % of total revenue. However, international expansion
and the development of the global brands will not be easy.

To become more international, the firm recently reorganized into four divisions: North
America, Latin America, Europe and Australia.

According to Langbo:

The way we used to be organized we were a US based multinational – a company with a big
domestic business and, by the way, some international business.

That was the way we were thinking; that is the way the organization was structured.

Today, if you talk to customers in the U.K., Canada and Australia, they think of Kellogg as
being based in the U.K. or Canada or Australia. We are global in organizational structure
and business but also multidomestic.

We now have a number of truly global brands {Frosted Flakes and Corn Flakes with Fruit
Loops and Rice Krispies closing on, and Frosted Mini-Wheats and Honey Nut Loops moving
rapidly). There used to be slight variations in our food around the world, but now you will
recognize the product wherever you go.

Advertising for Frosted Flakes is now global and that for other brands may follow. Expanding
into many markets will involve more than trying to gain share from other cereal markers. It
will require altering long-held traditions"

In Eastern Europe it is going to be pretty slow because we are going to literally create the
habit – much as we did in Germany 25 years ago or France 20 years ago. Cereal is a whole
new breakfast concept for these people. However, they do eat breakfast in those countries
and they eat fairly substantial breakfasts.

In Asia, consumers are used to eating something warm, soft and savory for breakfast - and
we are going to sell them something that is cold, crisp, and sweet or bran tasting. That is
quite a difference.

The challenge is made greater by the presence of aggressive competition in many

developed or developing markets. Competition is strong even in some countries where
consumption is low. For eg. In Japan, with consumption at four bowls per year per person
compared to 10 pounds in the United States, there are more than 100 products fighting for
shelf space.
Questions:

a) ln the Indian context, how are consumer attitudes towards breakfast, likely to affect
the consumer acceptance of Kellogg as a breakfast option ? In your view, who
among the following, are likely to be the most attractive consumer segment for the
company :

i. School-going children
ii. Busy professionals
iii. Old customers in the empty nest stage of the family life cycle.

Justify your answer.

b) What, in your view, are the cultural and other group influences that result food
preferences? List the influences.

What advice would you have for Kellogg, lo enable them to popularize their products in India