Fmcg Products

EXECUTIVE SUMMARY

The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.

Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of age and the young population is set to rise further. Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a latent

demand with more money and a new mindset.

The importance of consumer sales promotion in the marketing mix of the fast moving consumer goods (FMCG) category throughout the world has increased. Companies spend considerable time in planning such activities. However, in order to enhance the effectiveness of these activities, manufacturers should understand consumer and retailer interpretations of their promotional activities so that appropriate differentiation can be used.

Retailers stated that role of word of mouth and television advertising was very important in providing information inputs to the consumers regarding sales promotion activities. This perception of retailers was supported by the consumer unaided recall of sales promotion schemes which were widely advertised.

The research concludes with the discussion of the results, managerial implications limitation of the study and future research directions.

CHAPTER 1

INTRODUCTION

I. ABOUT THE DISSERTATION

INTRODUCTION

Advertisements convey brand differentiation and this may be important in several categories, which consist of several brands. In FMCG products like tea, coffee and detergents, “differentiation awareness” can be created by television advertising, but in certain categories there may be a need to demonstrate the effectiveness of brands. Differentiation with which consumers cannot “connect” may have a negative implication and if a brand “connects” consumers with its differentiation, it is likely to also differentiate itself in terms of getting identified with the consumer. A detergent or a washing machine, which claims “low water consumption” has to demonstrate this claim at a retail outlet especially given the fact that the quality of water varies across areas even in a specific geographical region. It is also essential that a good “differentiation proposition” result in a positive word-of-mouth.

In a certain situation, the company may have two offerings in a product-line and there is a need to differentiate them clearly depending on the target segments involved. This is a complex situation where differentiation decides the growth of the brand and the perceived difference between the offerings. An added layer to the complexity is the same brand name being used for the offerings. Fairness cream is a category in which the benefit is the fairness of the complexion. A brand like Fair and Lovely built over the years still has a strong association with the category but under tremendous pressure from competitive brands and the most important criteria which these brands is the herbal touch associated with them. Herbal ingredients are becoming popular with consumers in several categories and personal care in India has a strong tradition of herbal care. Fair and Lovely had to launch its herbal variant (it used the same brand probably because of the brand equity built up over the years). The interesting fact is the differentiation being conveyed by advertising. The original version uses an aspiration route in which the brand's ultimate benefit is success through confidence.

Estimates based on China's current per capita Consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convert

consumers to branded products.

Penetration level in most product categories like jams, toothpaste, skin care, hair wash etc in India is low. The contrast is particularly striking between the rural and urban segments - the average consumption by rural households is much lower than their urban counterparts. Low penetration indicates the existence of unsaturated markets, which are likely to expand as the income levels rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories

(including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer "upgrading", especially in the matured product categories.

CHAPTER 2

I. LITERATURE REVIEW

Impact of Effective Advertisement on Consumer Attitude Dr. F.R. Alexander Pravin Durai

By going through this article I have come across some points which you should look upon. If you want to read the article it is present in the appendix. Following are some points:-

Advertising is the only direct method which helps to reach masses of potential buyers. Advertising, being dynamic, changes with changing methods of distribution and consumption.

In the present era of information explosion and media influence, these advertisements playa major role in changing the settled perception or thinking, which is otherwise called attitude, of the consumer and· also the consumption pattern of the society in general. Thus, the impact leads to cultural and social changes to a great extent.

Why is there a need of advertising? Advertising is a way of communicating information to the consumer which enables him or her to compare and choose from the products and services available. Advertising is the most economical means by which a manufacturer or an Institutional body can communicate to an audience whether to sell a product or promote a cause of social welfare.

Essentials of Effective Advertisement-the writer thinks that there are 4 important things for an advertisement to be effective. They are importance of claim, believable, uniqueness and repetition.

The advertiser must constantly assess the situation to choose the right environment and ideal time for an advertisement to be launched. Some of the situations are as follows:-

· When there is a favorable primary demand of particular product.

· When there is a distinctive product differentiation from other competitive brands.

· When mass market is penetrated.

In order to ensure that the advertisements reach the target consumers in a most effective way and gets right response from them, it has to be ensuring that such advertisements are presented in the right way. The following steps on the part of the consumer may ensure that the advertisements are on the right track.

· Getting attracted towards the advertisements.

· Listening and observing the contents of the advertisements in full.

· Continuous watching of the same over a period.

· Comparing the advertisements of similar products.

· Making a trial purchase as follow up activity.

· Assessing the level of utility of the product individually.

· Ascertaining the level of utility derived with other similar consumers.

In the article Dr. Alexander-- Told about a model which exemplifies the attitude or response of a consumer to an advertisement.

Techniques of advertising for Fast Moving Consumer Goods

Dr. Archi Mathur- Assistant lecturer, Department of Management Studies, National Law University, Jodhpur Dr. HK Bedi- Professor, Dean, Department of Management Studies, National Law University, Jodhpur

This article shows how an advertiser can use different techniques of advertisements to show FMCG products. The techniques are as follows:

Value added ads- In addition to providing information about the product; Value-added advertising transforms a product into something more appealing to consumers than the physical object produced in the factory. Therefore, it is a missing link between brand attributes and the customer perception, between product features and need fulfillment, .between benefits and values.

Comparative ads- the advertiser compares the 2 brands of the same product category. The ad can be copied as the Pepsi and sprite example in the case. They have used the same story but both have them had a different approach.

Informative ads- these ads are used to provide information to the consumer about different products and services.

Health and Hygiene ads- these ads show that the product is taking care of the consumer's health. It is emphasizing of the physical attribute of the product. What does the product do? How does it help you? The ad tells you all. These are some of the techniques.

Lifestyle ads- Another way to. nave an impact on the consumer's mind is portraying the life-style of a successful person.

Humorous ads- Humor in the advertisement is normally kept in order to create a light, jovial and likely kind of an atmosphere

Demographic ads- these ads are meant for different segments based on age, sex etc. Farex Cereal Food for infants is an advertisement targeted directly towards the infants, as it comprises a healthy food for them. It is also targeted indirectly towards the mother.

Packaging ads- Advertisement is trying to lure the customers to buy their products on the basis of the way they are brought in front of the consumer's eyes ie. Packaging. Dabur has brought in different flavors in the market of fruit juice. E.g. Mango, Pineapple, Orange, Mixed Fruit Jete. All these are in different packages, i.e. 50 ml, 1000 ml, etc. They claim that unlike other juices, which have preservatives in them, these products are without preservatives. Hence, the punch line is "Real Fruit Juice".

Price ads- Marketers also lure the customers by showing in an advertisement that a product is available at a lesser price without any compromise on the standard. Cadbury India advertised the 5-Star chocolate by offering 30% more chocolate in its 5-Star bar for the same price.

Celebrity ads- Celebrities are mainly used in the advertisement either to lure the rural people in buying a particular product or in forcing the young generation to buy the products. This is also called endorsement advertising.,{t is also used in portraying that a particular product is best in--qtJality because a person who is also very well known in his/her field endorses it. The impact of these stars in advertisements enables the company to increase its sale.

CHAPTER 3

I. RESEARCH METHODOLOGY

II. RESEARCH OBJECTIVE

The main objectives of the study are:

1. To assess current consumer sales promotion schemes in the market

2. To assess how consumers differentiate the products based on advertisements

3. To get an insight into retailers' views regarding the schemes being offered in toilet soap category, and consumer perceptions

4. To study consumer perceptions regarding various schemes in this category and responses toward them.

5. To study the various methods of differentiation.

6. To analyze the methodology adopted by companies to target end consumers.

7. To address basic business questions like:

§ Do companies have the right product/service to offer?

§ How companies reach their customers?

§ How the buying power can be created?

8. To prepare new business strategies

RESEARCH METHODOLOGY

Methodology:

Technique used for the survey is questionnaires, focus group discussions and interviews. In order to address the above questions an exploratory study was conducted. The idea was to probe and get deeper insight into sales promotion scenario in toilet soap market and to tap perceptions of retailers and consumers. In order to address above mentioned objectives (i) study of secondary sources was carried out, 10(ii) in-depth interview of six retailers was undertaken and 11(iii) structured questionnaire was designed to seek consumer responses. Convenience sampling was used for both retailers as well as consumer studies. Six retailers ranging from small kirana store to supermarket were approached. All the retailers were located in the Noida. The respondents for consumer study were postgraduate students in the age group of 19-24 belonging to middle and upper middle and upper class. The total respondents were 30 in number. They were residing in hostel or as PG hence sole decision-makers for this category. Also this age-group being more experimental and likely to be more deal prone, so their perceptions, preferences would give some insights to companies planning sales promotions targeted at them.

Scope and Limitations:

The geographical scope of the study was restricted to the NOIDA city due to time and resource constraints. The study being exploratory in nature, the sample size was restricted to 30 consumers (student group) and 6 retailers. Focus being mainly on in-depth probing, the generalizations drawn are only indicative and not conclusive.

CHAPTER 3

I. FMCG AN INTRODUCTION

II. INDIAN CONTEXT

III. MARKET OPPORTUNITIES

IV. EVOLUTION AND CHARECTERSTICS

FMCG -FAST MOVING CONSUMER GOODS

BRIEF DECRIPTION OF INDIA FMCG MARKET

MARKET OPPORTUNITIES IN FMCG:

According to Estimates based on China's current per capita Consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convert

consumers to branded products.

Penetration level in most product categories like jams, toothpaste, skin care, hair wash etc in India is low. The contrast is particularly striking between the rural and urban segments - the average consumption by rural households is much lower than their urban counterparts. Low penetration indicates the existence of unsaturated markets, which are likely to expand as the income levels rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories

(including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer "upgrading", especially in the matured product categories

EVOLUTION:

§ 1950's-80's - Low Investment in the sector

* Low purchasing power

* Govt's emphasis on small scale sector

* HLL and other company's urbane focus

§ Post liberalization

* Entry of MNCs

* Focus shifted to getting to rural consumer first

* Others, like Nestle, remained with the urban population

* Latest fad to hit the market is the ‘sachet' bug.

§ Mushrooming of regional brands

* Nirma enters and changes the focus to ‘Value for Money' in the 70's

* Post liberalization, Jyothi Laboratories, ‘Ghari' Detergent and ‘Anchor' toothpaste giving the nation-wide brands a run for their money.

CHARECTERSTICS:

Supply	Abundant supply in metros. Distribution networks are being beefed up to penetrate the rural areas.
Demand	HLL expects the FMCG market to triple in market size by FY10, which highlights the potential.
Barriers to Entry	Huge investments in promoting brands, setting up distribution networks and intense competition, but the sector is not capital intensive.
Bargaining Power of Suppliers	Some of the companies are integrated backwards, which reduces the supplier's clout. Manufacturing is largely outsourced.
Bargaining Power of Customers	In case of branded products, there is little that the consumer can influence, but intense competition within the FMCG companies results in value for money deals for consumers (e.g. buy one, get one free concept).
Competition	Competition is faced from both domestic, MNCs and also from cheaper imports, which are increasingly visible in urban markets. Price wars are a common phenomenon.

FORECAST 2010:

§ Rural and semi-urban

§ 128 million population thrice the urban

§ Market size growth from 48k to 100k Crores (Growth of 50% at 10%CAGR)

§ Increase penetration from the current less than 1%

§ Problems in the rural sector

* Low per capita disposable incomes

* Large number of daily wage earners

* Acute dependence on vagaries of monsoon

* Seasonal consumption

* Poor infrastructure - roads and power supply

§ Urban

§ Market 16.5k to 35k Crores (Growth of 100% at 20%CAGR)

§ Intense competition - severe pressure on margins - Focus on newer products, such as fruit juices

§

Source: Assocham Report ‘Future Prospects of FMCG'

CHAPTER 5

I. UNDERSTANDING DIFFRENTIATION

II. TYPES OF DIFFRENTIATION

III. THE INDIAN CONTEXT

I.

II. UNDERSTANDING DIFFERENTIATION:

Differentiation is the process of adding a set of meaningful and valued differences that distinguish a company's offering from those of its competitors. Differentiation is strongest when it satisfies all of the following criteria:

1. Important: the difference delivers a highly valued benefit to a sufficient number of buyers

2. Distinctive: the difference can be delivered in a clear way

3. Superior: the difference is a better way of obtaining a benefit

4. Pre-emptive: the difference cannot be easily copied

5. Affordable: the buyer can afford to pay for the difference

6. Profitable: the company will earn a return by maintaining the difference

BRAND loyalty in fast moving consumer goods categories is a topical issue, with several brands resorting to price cuts across categories. More importantly, price cuts or sales promotion by themselves do not seem to have done much for brands in terms of sustaining brand loyalty. They may attract consumers in the short run: consumers may stock the brands and consumers new to the brand may try it. But over a period of time, a brand's value may get diluted in consumers' psyche, and will eventually lose a strong base of consumers. The following are some aspects of marketing mix elements and consumer behavior which could contribute to brand loyalty.

Product differentiation

If the products are differentiated in their characteristics and this difference is perceivable, there are chances of brand loyalty being formed based on satisfaction with greater performance or fit of product with needs. In this case, loyalty is driven by functional or symbolic benefits. Functional benefits would be specific tangible features of the product whereas symbolic benefits would be intangibles such as brand personality and `hedonistic' value of purchase.

Price differentiation

If the price differentiation in the market is perceivable, price-led loyalty might exist in the market. Price-led loyalty is practised by supermarkets, airline companies and FMCG brands, which come out with frequent sales promotions based on freebies. Alternatively, price might be taken as an indicator of brand quality, and the customer might go in for higher priced options. Price-led loyalty has to be carefully considered with other marketing mix elements and the consumer should never perceive dilution, especially in low-priced bands. Hence, lower prices should create a sense of value through the product offerings as well as through communication.

Branding activity

If the category is organized and there is branding activity, there will be greater loyalty than there would have been if the category were unorganized. Branding activities can differentiate between brands on name, symbol, images and associations. Branding activity in this context refers to creating strong associations which will influence the consumers not only with regard to functional attributes but also with symbolism. Hamam soap's portrayal of its pure ingredients with the child and mother imagery is a good example of one of these dimensions.

Branding activities in a broad sense could range from advertising to sales promotion and public relations involving several aspects.

III. The Indian context

The following were the observations from the literature survey and the examples chosen from the Indian context.

The factors indicate that there will be a large segment of consumers for whom price-led loyalty will dominate. Hence there will be strong behavioural loyalty in the segment and only weak attitudinal loyalty. There is thus spurious loyalty in this sector.

There is a moderate level of symbolic and functional differentiation which has been exploited by strong brands to build a loyal following. Examples of this include brands such as Dove, Pond's Dreamflower talcum powder, Gold Flake, Will's Navy Cut, Amul and Cadbury. These brands have probably built strong attitudinal loyalty through their brand personality and other brand building efforts.

In the FMCG sector, brand habit is high whereas attitudinal loyalty is low. As creating attitudinal loyalty based on functional differentiation is difficult, symbolic differentiation is the key. Building strong brand personalities and associated symbolic benefits is important for crafting customer loyalty.

The factors discussed cannot be treated in isolation: they are to provide a synergy to result in brand loyalty. The combination of these factors and the timing of the combination is the topical challenge which marketers face in an environment where loyalty is slowly eroding.

Local challengers

Some of the most successful FMCG brands in 2002 came, not from the stables of a Hindustan Lever and a Colgate, but from obscure regional players such as Kaleesuwari Refineries, Parakh Foods, Anchor Switchboards and Kanpur Detergents. Over the past couple of years, brands such as Gold Winner and Gemini in refined oils, Anchor White in toothpastes and Ghari in detergents have managed to sustain double digit growth rates, even as the market leaders have struggled to hold on to single digit growth rates for their brands.

Yes, the comparison is unfair, as the local brands had a minuscule base to start with. But these brands have demonstrated it is not impossible for a new challenger to break into the traditional bastion of one or two large FMCG players. Traditionally, large FMCG categories in India have been dominated by just one or two players, who rule the roost by dint of their sheer financial muscle and distribution reach. But, of late, successful regional brands have been finding chinks in their armour. And how!

Aggressive pricing

In the edible oils market, as national players were forced to hike their selling prices in response to rising commodity prices, both Gemini and Gold Winner have used aggressive pricing to woo consumers away from the national brands. Packed tea too, has seen similar trends. The limited differentiation in grocery and the flexibility offered by a restricted area of operations have stood these companies in good stead. Anchor White, among the few debutants in the toothpaste market to garner a

significant share, first wooed the retail trade with high distribution margins, and then used rock-bottom prices to lure consumers into trying the product. Though none of these companies can match the market leaders in adspend, they have used focused regional and local advertising to draw consumers' attention to their brands.

The mushrooming of local and regional media has undoubtedly helped the local players milk the most from their ad budgets.

Banking on `power' brands

While the local brands have been adding to their brand portfolios, the market leaders have largely stayed off new product launches.

In keeping with its "power" brand strategy, Hindustan Lever's marketing strategies in 2002 revolved around rejigging and relaunching established brands such as Lifebuoy, Rin, Surf and Vim. The company phased out brands such as Sunlight in detergents, and Jai in toilet soaps, so as to focus better on its 30 power brands.

The strategy appears to have worked, as brands such as Lifebuoy and Rin have moved into a higher growth trajectory after the relaunch.

In fact, HLL's "power" brand strategy has found a few followers in the FMCG market, with companies such as Godrej Consumer also announcing plans to focus on a clutch of key brands.

Streamlining and spend

While the "power" brand strategy has helped the leading players put their marketing prowess behind their most important brands, it has not really helped them save on ad spend. For most FMCG companies, advertising and promotion spends in 2002 grew faster than their sales. In high penetration categories such as soaps, detergents and toothpastes, marketing efforts of the players revolved around persuading existing consumers to use more of the product or to upgrade to

a higher-priced brand. The slew of "100 gm free for every 150 gm" offers in toothpastes and the series of promos on the 2 kg packs of premium detergents were both intended to induce existing consumers of a product to pep up their usage of the brand.

Companies operating in relatively low-penetration categories such as chocolates, shampoos and skin creams tailored their marketing strategies to bringing in new users, through scaled-down versions of their brands in affordable pack sizes. The low-priced Chocostik, a liquid chocolate in a small-sized pack, launched by Nestle India, has helped pep up the company's topline and is now a large contributor to the company's revenues. Nestle India is now trying out a similar small-sized Rs 5 pack for Maggi noodles.

Shampoos have been among the few FMCG categories to register a positive growth rate in 2002, and growth in this category has been driven mainly by sachet packs and by scaled-down 50 ml bottles priced at less than Rs 10.

Overall, the FMCG slowdown of the past three years has served a useful purpose. At one level, it has made sure that the dominant players in the market no longer enjoy unlimited pricing power, as they have in the past. There now appears to be a greater effort on the part of the players to hold selling prices and look at their own operations to save on cost. At another level, the emergence of the regional challengers has made sure that consumers of FMCG products have a few more choices in their purchases of essentials. Is selling soap the same as selling a TV?

It isnt. The difference is how the particular product is sold and more importantly, how is it distributed. India is a unique market, where the manufacturers who deliver products at the doorstep, which is the ideal way to deliver anything, spoil our consumers. We have an extremely evolved distribution mechanism for most products. Different products are sent to the consumer differently. Depending on the number, the price of the product and the complexity of the selling process,

they may vary from direct selling to selling through a channel that may have as many as

four levels between the manufacturer and the consumer. A look at a few of them will show what it means to be a sales person of that product.

Most FMCG (fast moving consumer goods) products are not hard-sold to the end consumers. Sales are built up largely by pull - a technique using advertising and consumer promotion. The sell-in happens to the trade i.e. to various members of the distribution channel - the Carrying&Forwarding/Super-stockist, the distributor, the wholesaler and most importantly the retailer, who is the interface with the end-consumer. This chain forms the most important link in getting the product economically to the consumers doorstep.

A large MNC in the FMCG industry may be covering as many as 1 million outlets across the country with the help of thousands of distributors. Even a mid-sized company covers at the least 1 lakh outlets. Factoring in the vagaries of operating in more than 25 different states, each with its own sales tax complexities, different consumer needs, differences in the distribution structure, not forgetting differing octroi structures within a state, distribution is extremely complex in India. If the sell-in does not happen to this channel for whatever reason or is sub- optimal, a product is likely to fail.

CHAPTER 3

I. UNDERSTANDING ADVERTISEMENT

II. UNDERSTANDING SALES- PROMOTION

III. CREATING DIFFRENTIATION THROUGH ADVERTISEMENT

IV. PROBLEMS FACED BY MARKETERS

I. UNDERSTANDING ADVERTISEMENTS

Whether it is a serial in a regional satellite channel or a One Day International cricket match, there is a non-stop stream of advertisements, which clutter the commercial break. Well-established brands attempt to sustain brand recall while new ones try appealing to prospective consumers to get into their `consideration' set. There are ads for children, housewives and youth. With advertising expenditure in the order of Rs. 8000 Crores per annum in the recent times and the proliferation of brands across categories, there is a strong need to consider the effectiveness of these advertisements. The idea is not to cease advertising but to consider how considering decisions would have to be considered with non-advertising alternatives. These non-advertising alternatives may also enable a brand to create and sustain consistent associations, which may be desirable in terms of long-term implications. A contemporary approach that creates a synergy between various aspects of a promotional mix (advertising included) provides a refreshing approach towards marketing communications. There may be several objectives of advertising and a promotional mix could be used in an innovative manner to address each of these objectives depending on the product category and target segment.

Creating-brand-awareness

When a new brand enters a category or creates a “new to the market” offering, it needs to create brand awareness. This would depend on whether the product is a consumable or a durable. The involvement level in a specific category also matters on how a brand would want to create awareness. Itch Guard, a new branded offering for minor skin problems, used a simple humorous TV commercial to convey the concept. While the unit cost of the product may be low, the involvement level of the consumer on the solution offered by the brand could be associated with high involvement. A brand in this situation is likely to also benefit from point of purchase material at pharmacy outlets, departmental stores and even kirana (grocery) type of shops.

The “high-utility” solution has to be conveyed to the target segment, which probably was using traditional substitutes. In this example, a typical brand personality need not be built at least before the benefit is sold to the consumer and hence all promotional efforts should be directed at conveying the benefit and creating a brand association with the category itself (as it is a pioneering brand in the category). This objective would be achieved by advertising, “reminder purchase” posters at the point of sale and perhaps conveying the superiority of the offering through the route of doctors (though it is an OTC offering).

Kissan Bistix in contrast is a unique offering, which is aimed at children who have to initially make a change in their habits regarding the consumption of this offering (should be eaten with a biscuit stick after it is dipped in chocolate/any other side dish flavour which is a part of the package). Moreover the price of the offering is Rs. 5 and this would be associated with low involvement. Moreover, there is strong presence of generic competition and children could buy a number of alternatives and some of them may have price points below the Rs. 5 level. Mass advertising perhaps could create trials but it may be difficult to sustain the purchase only through advertising. Innovative contests built around popular hobbies may enable the brand not only to create excitement but also sustain the interest over a longer period of time. This may create repurchase and probably a cross-section of the segment may make the consumption a part of their snacking habit. Acceptance of an offering like this requires a longer time interval and an innovative approach towards promotion rather than typical sales promotion or mass advertising or display at the counter of retail outlets. Besides, given the price point and the offering there is also a need to be selective in market coverage for the offering.

Creating awareness in a durable category (even if the consumers are familiar with the category) requires a different approach. A strong “feature-back up” in the offering, leading to a possible word-of-mouth from users of the brand, will be effective after the initial advertising awareness created by the brand. LG, Samsung, Santro and Whirlpool are brands that have been successful but less than a decade old in the Indian context.

LG introduced several “new to market” features in its various product categories; Samsung which created brand awareness through its “World Series” ads, also introduced innovative features in its products and Santro's success (in terms of its market share) can be attributed to product design, advertising and launching of variants after brand acceptance. New brands depend on innovative features to create awareness and this happens both by advertising and positive word-of-mouth. Promotional aspects like an event involving the brand formulated to strengthen the word-of-mouth could add to the promotional effect. This approach could be compared with the advertising blitzkreig of several new brands of cars. Skoda, almost an unknown name in India, has been able to meet with considerable success (in its niche) because of word-of-mouth for its Octovia model than through conventional advertising. The brand has also been selective in its market launch and this adds to the “expectation excitement” for prospective consumers in other markets to enhance the impact of word-of-mouth.

Concept--Selling

When an offering is a durable and new to market, it poses a challenge to the company. The product may be a good one but the initial concept selling plays a vital role in the diffusion of the product. Advertising has to be used in conjunction with retail demonstration wherever it is appropriate. TV could be used for creating awareness of the category but print advertisements are required to address the differing perceptions of consumers about the risks and value associated with a new offering. The low penetration of rice-cooker may make an interesting case study. How should the offering be positioned especially when in the urban context gas stoves have a high degree of penetration? Would the device be useful for cooking menu other than rice? What is the perception of the target consumer? Or is it worthwhile to position the offering effectively only as an occasion based household device? How could demonstration be used to change the negative perception of consumers? Should all retail outlets be used or only specific retail outlets in an area be used? How does the usage cost compare with substitutes?

As it can be observed, these dimensions require a mix of promotional decisions.

There is a need to differentiate between primary and secondary advertising while selling product concepts. Primary advertising sells the concept while secondary advertising highlights the features of the brand. It may be difficult to generalise how a firm should link these two kinds of advertising. There is a need to consider the product/market situation before such discussions are taken. When a brand has a competitive advantage in terms of time (first entry) it could sequence the two kinds of advertising effectively. When washing machines were introduced in India (even now the penetration of washing machines is not high) fifteen years back, Videocon used a very effective primary advertising to sell the concept and create awareness about the category. “It washes, rinses and dries” was the message and slowly over a period of time the brand added features that were very specific to the brand. Later competitive brands were launched in the category.

The situation becomes complex when a number of brands start introducing their offerings at the same period of time. The category of quartz watches provides such an example. HMT made an attempt to sell the concept during the initial stages when the category was introduced. Titan, which has a huge chunk of the category, took a major initiative not only to build its brand but also to sell the concept of quartz watches. Besides there were also a number of offerings from the unorganised or assembled sector which offered low-price points at the lower end of the market. In a situation like this, the pioneering brand or any brand, which builds itself quickly stands to gain. This is because consumers become familiar with the category within a short time, especially when prices come down rapidly. Besides, such quick diffusion is also enhanced by the fact that the category is a necessity item rather than a luxury. There is also the element of social visibility associated with the category. Hence for a national brand, mass advertising is a pre-requisite, provided it is supported by the other elements of the marketing mix.

II. UNDERSTANDING SALES PROMOTION

Definition:

For the purpose of this study, following definitions of sales promotion were kept in mind. Kotler defines sales promotion as: “Sales promotion consists of a diverse collection of incentive tools, mostly short-term designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade.”

7Roger Strang has given a more simplistic definition i.e. “sales promotions are short-term incentives to encourage purchase or sales of a product or service.”

Hence, any forms of incentives (price cut or value added nature) offered for short period either to trade or consumers are considered as sales promotion activities.

Following findings and inferences were derived:

1.2 Segment-wise Frequency of Schemes

Thirteen schemes (47%) announced were found to be on popular segment (Rs.8-15 for 75 gms.) of toilet soap brands. This was closely followed by 11 schemes (40%) in premium segment (> Rs.15 for 75 gm.). Thus it could be inferred that companies were trying to upgrade consumers of economy/popular brands to popular/premium soap brands respectively.

1.3 Nature of Schemes

With respect to the nature of the schemes, premium (free gifts) were found to be the most frequently used schemes in both premium and popular segment of toilet soap industry. No such scheme was offered by any brand in the economy segment. It could be inferred that as the price of soap in this segment was less than Rs.8, it might not be possible for the companies to offer this type of premium promotion. Secondly, the consumers in this segment were likely to be price sensitive and such a promotion might not be of value to them compared to price offs.

1.4 Premium (Free Gift) Offers

Six out of 13 premium offers were a part of the companies own portfolio e.g. on buying 2 Dettol soaps, a Dettol Talc, 18 grams worth Rs.25 was given free.

1.5 Underlying Objectives Based on Table-3, a set of underlying objectives behind the various sales promotion schemes were inferred:

1.5.1 Bonus Packs:

• To reward existing loyal customers

• To off-load inventory at factory and distribution level (to attain push)

• Bonus pack schemes (Buy one get one free/more for the same price) were

used to load the consumers so that they would not buy competitive brand at

least for short period.

1.5.2 Premium (Free Gifts):

• To reward and retain existing loyal customers and to enhance brand image

through interactions/associations.

• To act as a constant reminder of the brand.

• To encourage brand switching amongst deal prone consumers through

innovative gifts.

• To induce trial of new products of the company by leveraging on the existing

brand and its equity e.g. giving (new) Mysore Sandal Talc free with the

purchase of 2 Mysore Sandal soaps.

1.5.3 Price-offs:

• Contrary to belief, premium soap brands were giving price offs (3 price off out

of 11 scheme announcements in this category - Table-3). The underlying

objective could be to offload inventory by pulling customers from popular

soap segment, as the size of the premium segment especially the higher end

of the premium segment might be very small e.g. Dove (priced at Rs.45 for

100 gm) Rs.10 off. It could be inferred that frequent use of sales promotion

activities in premium segment might dilute the brand's exclusivity, which

could lead to dissatisfaction and disillusionment among the regular users.

1.6 Incentive Price (outlay) Ratio

The incentive price ratio was calculated by taking the monetary value of the incentive offered to the consumer and dividing it by the amount of money he/she needs to spend in order to avail the offer. The ratio varied from 0.15 to 1.00 among various brands (Table-4). The ratios in premium brands varied from .15 to .71. For example, in case of Mysore Sandal and Palmolive Natural (premium soaps) the incentive ratio was .15 and .17 respectively. With this level of incentive neither regular premium soap users will feel rewarded or get attracted, nor the popular soap users will be motivated to switch.

The highest incentive ratio in case of Fair and Lovely soap was an introductory offer. Such a high incentive again was not likely to generate desired response in terms of trial. Instead the company could have leveraged on its parent brand namely Fair & Lovely Cream which is well entrenched in the market. So with the purchase of Fair & Lovely tube free soap would have given better results in our opinion.

Perceptions about mass media announcements

Five out of six retailers viewed that whenever sales promotion scheme was announced on TV, it created pull and they were more than willing to stock such brands. For example Medimix and Dettol contest was not advertised on TV, hence there was very little awareness leading to unsold stock till 6 months. While Lux Gold Star which was heavily promoted on T.V. is recalled even today.

Post Promotion Behavior

Retailers observed that in most cases sales promotion scheme on a brand might encourage a buyer to switch a brand temporarily but he would revert back to original brand after promotion.

Handling Problems

Many a times retailers had to handle various sales promotion offers simultaneously in a category and also across categories and there was no formal communication planning either from the dealer or the company. Remembering each offer and handling was a problem especially for a small retailer which was often a as one-man show.

Reasons for switching brands:

This could be seen from Tabl below.

As obvious from the above table, sales promotion was not the main reason for switching brand in this category. Need for variety was the predominant reason.

It was found through deeper probing that even though consumers would have switched brands due to sales promotion, there was reluctance about admitting the same and variety was given as a reason for switching.

It was further found that consumers had positive disposition towards promoted brand. As a result when toilet soap brand was changed for variety, the brand which was promoted had higher probability of purchase than non-promoted brands.

Recall of brands being promoted:

It could be seen from Table-7 below.

As seen from above, Lux (Gold Star offer - most promoted and advertised brand) had the maximum recall. This brand used TV advertisement heavily to announce sales promotion offers. Six out of 30 did not recall any sales promotion scheme on any brand. It could be inferred that i) hard core loyals to a particular brand (eg. Hamam) would never (pay attention to any announcements of any other toilet soap brand. ii) Unless sales promotion offers were properly communicated to the target

audience, required impact might not be created and iii) Unless promotional offers were of significant value to a consumer, it was likely to get unnoticed and/or ignored.

3.3 Willingness to buy on sales promotion offer

Sixty-three per cent of the sample did not show willingness to buy a brand due to

promotion while 27% showed willingness and 10% were not sure. This indicates that when 27% showed willingness, and 10% consumers who were not sure, these groups might be lured through innovative and lucrative sales promotion offer.

3.4 Ability to induce tria

Forty per cent of the respondents had said that sales promotion had the ability to induce trial which reinforces the above inference (3.4).

3.5 Long-term impact

In order to understand ability of the promotions to increase long-term sales, respondents were asked about continuity of purchase of a brand after the withdrawal of promotion. Eighty per cent of the respondents indicated that they would not continue. But 20% said they would. Thus, it could be inferred that promotions in this category (low involvement products) might encourage trial and brand switching but not long term loyalty.

3.6 Preference of Schemes:

Price off was the most preferred type of scheme. Sixty-three per cent of the

respondents ranked price-offs as number one or two. This was from an upper income (biased sample, in which 18 out of 30 were from income group category >3,00,000/- p.a.

3.7 Perceived Quality:

Ninety-three per cent of the respondents had a perception that the quality of the

promoted brands remained the same during promotion, while 7% felt that it was inferior than before. It can be inferred that promotions were not leading to negative brand quality perceptions. It was further reinforced when 53% of the respondents said that sales promotion would not weaken their loyalty towards the brand.

3.9 Perceptions regarding underlying company motivations

On tapping perceptions regarding underlying company motivations for sales promotion, “to increase sales” was ranked highest followed by “to attract switchers” and “to sell excess stocks”. While providing value to customers” and “to reinforce company image” were ranked lowest. This indicates that consumers believed that companies were undertaking such activities only for their own benefit and not for the benefit of consumers. Corroborating findings from retailer and consumer perception studies, it is evident that there was a matching of perceptions regarding nature of scheme (price offs as most preferred type of scheme mentioned by consumers and retailers' perceptions about consumer preferences). Since retailers observe consumers instore beahviour were frequently and directly, their perceptions regarding providing consumer behaviour are likely to be accurate. Such inputs from the retailers would be useful to companies. The retailers had the perception that those schemes which were announced through mass media had better response. This was reinforced by the consumer survey which showed thatrecall in case of heavily promoted schemes on TV was found to be very high.

Retailers' prediction of companies' motivation for offering sales promotion were matching with the consumer perception regarding the same. Thus both viewed that companies were using sales promotion activities mainly to increase short term sales or encourage switching or selling excess stock and not really to give value benefit or enhance/reinforce brand/company image.

Implications:

The findings of the empirical study indicate that unless the brand to be promoted is in the consideration set of the consumer, sales promotion by itself is unlikely to have any major impact. Clearly this shows that managers need to invest into brand building exercise so that his/her brand appears in the consideration set of the target consumers. Only after this should he spend time, money and energy on sales promotion activities. Sales promotion should not be used in isolation but need to be integrated with other tools and in line with the overall positioning of the brand. Also the importance of the role of mass media came out clearly in both the studies. Companies need to create sufficient awareness about sales promotion schemes

through mass media in order to create awareness The role of retailer in influencing consumer in brand choice decision in a toilet soap category was found to be insignificant which also supports the above observations. Toilet soaps are low involvement products characterised by switching behaviour. Also the person going to the shop for the purchase of soap is the final decision maker of the brand. Hence it is essential that companies need to design attractive, striking, visible POPs for scheme announcements. With respect to nature of scheme, the finding suggested that premium (free gift) was popular with companies. While both retailers and consumers preferred price offs. So it is necessary that the perceived value of a free gift has to be appealing and high for the target consumers. Repetitive use of the same premium (soap dish) for a prolonged period may have negative 18

effect on the loyal customers. When the company is giving its own product free as premium, it needs to ensure the quality of the product from it as it is likely to jeopardize the image of both its products.

The findings exhibited that both the retailers and consumers perceived that sales promotion activities carried out by the companies for increasing sales in short term and clearing excess stocks. What it implies is that companies need to use sales promotion synergistically and communicate so that they provide value to the target audience and enhance brand quality/image perceptions. Companies need to

systematize information flow regarding sales promotion activities particularly at dealer retailer level. Ensuring proper information flow and devising checks and

measures to reduce misappropriations and implementation flows should be considered critical aspects for the success of sales promotion activities by the companies. As retailing is fragmented, direct reach by companies is next to impossible. Through dealers and proper feedback mechanism, companies keep in touch with the market. From the study it was found that smaller retailers felt neglected and not enthused to implement the schemes, particularly when additional handling, stocking, accounting was required on the part of a retailer without compensatory margins. It can be seen that the retailer and consumer perceptions matched with respect to preferences of schemes, underlying motivations and role of mass media. This implies that the retailer would be a rich source of information about the consumer and the likely response to sales promotion activities. Developing a system to tap such responses from time to time both at retailer and consumer level would be helpful for planning future sales promotion activities. In order to build trust and commitment companies should tap preferences, perceptions of retailers as well as consumers.

III. PROBLEM FACED BY MARKETERS

Fast moving consumer goodsplayers Dabur, HLL are among the major companies found to violate Advertising Standards Council of India code during the first quarter of the current calendar year.

ASCI had taken action against 16 advertising campaigns by different companies, of which seven were asked to withdraw, while nine were asked to modify for violation of the codes.

The council asked Dabur India to discontinue its Red Toothpaste commercial after the company was unable to substantiate claims made in a television commercial, in which it said specific indgredients in the product could give the consumer strong teeth.

Hindustan Lever's Clinic All Clear, which is now being endorsed by Bollywood couple Bipasha Basu and John Abraham, was also on the list of defaulters.

The company was found guilty of 'false and misleading' campaigns in its hoardings and radio commercials. HLL had projected the shampoo as a solution to hair fall through its tag-line baal girney ka sawaal hi nahi (no question of hair fall). ASCI ordered HLL to remove the hoardings and radio commercials.

This time around, several FMCG companies have come under ASCI's (Advertising Standards Council of India) scanner as complaints against their ads have been upheld by the Consumer Complaints Council for the period between January and Marchthis year.

Dabur, Hindustan Lever, Johnson & Johnson and Colgate Palmolive are the few FMCG majors who have had to withdraw their ads during this period.

For Dabur India, it was its Dabur Red Toothpaste; its pack claimed `strong teeth.' The TV commercial claimed `Get strong teeth from Dabur Red Toothpaste which contains laung, pudina and tomar.'

According to the complaint made by a member of the dental profession, the ingredients declared on the pack are not scientifically and clinically proved to provide strong teeth. The claim is false and needs to be validated with clinically proven data, said ASCI. The TV commercial has been discontinued. Assurance is awaited from the advertiser on the modification of the promotion message on the product pack, said the advertising standards watchdog.

In the case of HLL, the radio commercials for Clinic All Clear Hair Defense claim "Baal girne ka sawaal nahi (question of hair fall does not arise)" was looked upon favourably by ASCI. Its hoardings also claim no dandruff and no hair fall. The complaint made is about the gross exaggeration of facts, said ASCI. The radio commercials distort facts and are misleading consumers into believing that Clinic All Clear stops hair fall. The ads from radio and hoardings have thus been withdrawn.

Johnson & Johnson's comparison of its Stayfree Secure Dry sanitary napkin brand to all napkins using a general descriptor of `mehenga napkin' is a gross exaggeration. The claim being `as good as' is vague and ambiguous as it does not specify the parameters on which Stayfree Secure Dry is considered equivalent to expensive napkins. According to the complaint made, by not specifying any particular brand of `expensive napkin' for comparison, the TV commercial is leaving the communication vague and implying `the market leader' position among the premium product segment.

"As the claim relies on a survey conducted by TNS India, one needs to scrutinise the survey design, methodology and questionnaire to check the validity of the survey, study the actual findings and check whether the same reflects in conclusion," ASCI stated. The TV commercial had been discontinued from March this year.

For Colgate Palmolive (India), it was its Colgate Sensitive Toothbrush being positioned as the Dentists' No.1 choice, which ASCI objected to.

"In the absence of a notation in the advertisement on the source supporting this claim, the advertiser is required to substantiate the claim," read the complaint. In this case, the ad has been discontinued and the advertiser has assured appropriate modification in future use.

The study conducted in association with the assistance of Yahoo, MSN, Lycos, and AOL combined a total of 200 FMCG online campaigns executed across Europe. The aim of the study was to quantify the average impact that European ad campaigns have on traditional branding metrics, and create benchmarks for categories such as FMCG which has traditionally not embraced the Internet as a key advertising medium.

The research methodology follows global industry standards set forth by Dynamic Logic (1999) which surveys consumers in two categories; campaign exposed and non-exposed. In total 160,000 individuals were surveyed across Europe representing the two groups. The full 'funnel' of branding metrics was surveyed; brands awareness, ad recall, message association, brand favourability, and purchase intent.

The conclusion of the study found that all 5 branding metrics were positively impacted. Similarly to other categories, FMCG brands which advertised online had the highest impact across brand awareness (both aided and un-aided) and brand favorability in line with market norms and mirroring similar research from the US. Furthermore, it was found that effective frequency across each of the brand metrics was increasing even at 10+ average exposures, building the case against perceived 'ad burnout' which traditionally is thought to be at much lower average exposures levels. Hence FMCG branding metrics continue to increase with additional exposures.

Problems And Issues

It is a known fact that an average consumer is bombarded with so many brands that he/she cannot remember. In order that product should get through the clutter it is believed that a single selling message has to be repeated for a large number of times. Thus the most significant problem with the USP approach to advertising is that it requires a large media budget to repetitively air the advertisements and such ads often annoy consumers. And hence instead of creating a consumer base it may drive away the potential customers as against this, UCP by itself provides solutions to all the marketing problems poised by the widely accepted USP approach. Basically it aims at the core of the problem. It eliminates the problem from the roots rather than periodic trimming of the tree.

Bridge positioning can play a role in bridging the gap between customer perception and product USP by relying more on UCP than USP based positioning statement. Objectives: Objective of the study was to find out finer points of developing bridge positioning statement and how it can bridge the gap between the UCP and USP. The study further focused on how bridge positioning can be validated in terms of sales.

A USP is that distinct and appealing idea that sets your business favorably apart from every other generic competitor. While A UCP is that distinct and appealing idea that is built on customers' perceptions that sets business favorably apart from every other generic competitor. Brands which had high success has USP=UCP. This means positioning statement helps to have better brand recall. Thus, Bridge positioning statement helped to bring brand come nearer to the customers. Application of bridge positioning helped to generate better sales and achieve status of leader brands. UCP and USP matching makes the brand recall better and the positioning statement in these cases can be called Bridge Positioning.

It is quite obvious that only the clear and well-defined USP is not the panacea for all marketing ills. Today's trying economic conditions have forced difficult decisions on companies. Most are making conservative decisions that reflect a survival mode in business operations. During these difficult times, understanding what customers think on continuous basis is critical for survival. Most marketers assume the product USP to stay constant overtime that is contrary to reality. Companies may have to change the USP to stay contemporary and relevant. It is obvious that there has to be another parameter that makes a success of the product. What companies need to understand is product's UCP. UCP by itself provides solutions to all the marketing problems poised by the widely accepted USP approach. Basically it aims at the core of the problem. It eliminates the problem from the roots rather than periodic trimming of the tree.

If an Organization fails to recognize the customers' perception then the initial surge of customers would quickly come to a screeching halt and the brand would fade into obscurity along with the organization. On the other hand, following customer's perception not only offers an emotionally positive solution to their needs but also serves to enhance the current customers' perception of the brand. Following this with an excellent product/service and customer support will leave an indelible mark on the existing customer's memory, which will create brand loyalty. Bridge positioning was validated in studies by Srivastava(2005) and Srivastava (2006) by trying Natrilix-SR and Mountain Dew as a test case.

Selection of the brand: Mountain Dew, a lemon drink, with the USP “The Spirit of Adventure - Do the Dew” is marketed in India. However, this USP failed to position Mountain Dew in the minds of the consumers as an adventure drink. This was reflected by stagnant sales of Mountain Dew in the market.

Similarly, Natrilix-SR a diuretic widely used in India was stagnating and not showing enough growth.

The study was to focus on UCP and USP of this product and how UCP if determined through the study can improve sales through better brand recall and preference of doctors. Antihypertensive brand was selected as this segment is fastest growing segment all over the world including India. Natrilix -SR was selected for this study.

1. Identifying the USP: After selecting brands, the USP was

identified i.e. as promoted by the company from various sources like Advertisement, POP, print ads, Sample catch cover and detailing folder.

2. Identifying the UCP: As the important part of the research was to find out the customer perception of the brands, it was accomplished by using questionnaire approach of Research Methodology.

3. Formulating the UCP:A ranking technique was used to find the most important customer perceptions for the brand. On the basis of these perceptions the UCP was formulated.

4. Test the effectiveness of the UCP:A fresh survey was conducted to validate the formulated UCP. Inferences and conclusions were drawn based on this survey. The study was to focus on UCP and USP of these products and how UCP, if determined through the study, can improve sales through better brand recall.

This is the core subject of the research and to substantiate the same, two surveys were conducted. In Survey 1, the objective was to determine the mind-set of the consumer with regards to relation between the USP of NatriliX-SR/ Mountain Dew, a lemon drink and their perception about the product. So basically the aim is to find how existing USP match consumers' perception about NatriliX-SR/ Mountain Dew, a lemon drink. In the second survey, same consumers were asked about inclination to purchase /prescribe the brand after changing the positioning statement to BRIDGE POSITIONING .

IV. Differentiation Through Advertisement:

Advertisements convey brand differentiation and this may be important in several categories, which consist of several brands. In FMCG products like tea, coffee and detergents, “differentiation awareness” can be created by television advertising, but in certain categories there may be a need to demonstrate the effectiveness of brands. Differentiation with which consumers cannot “connect” may have a negative implication and if a brand “connects” consumers with its differentiation, it is likely to also differentiate itself in terms of getting identified with the consumer. A detergent or a washing machine, which claims “low water consumption” has to demonstrate this claim at a retail outlet especially given the fact that the quality of water varies across areas even in a specific geographical region. It is also essential that a good “differentiation proposition” result in a positive word-of-mouth.

In a certain situation, the company may have two offerings in a product-line and there is a need to differentiate them clearly depending on the target segments involved. This is a complex situation where differentiation decides the growth of the brand and the perceived difference between the offerings. An added layer to the complexity is the same brand name being used for the offerings. Fairness cream is a category in which the benefit is the fairness of the complexion. A brand like Fair and Lovely built over the years still has a strong association with the category but under tremendous pressure from competitive brands and the most important criteria which these brands is the herbal touch associated with them. Herbal ingredients are becoming popular with consumers in several categories and personal care in India has a strong tradition of herbal care. Fair and Lovely had to launch its herbal variant (it used the same brand probably because of the brand equity built up over the years). The interesting fact is the differentiation being conveyed by advertising.

The original version uses an aspiration route in which the brand's ultimate benefit is success through confidence.

The girl in the advertisement becomes a cricket commentator based on the confidence built up by the usage of the product. The herbal variant's advertising has a strong focus on the traditional product benefit - facial complexion that appeals to youth. The nature of the models chosen are different and the ultimate brand benefit is “conveyed' to be different (though any fairness cream is supposed to be associated with fairness). From an explicit benefit associated with the category (fairness) the advertising differentiation carries the variants of the brand to a different plane of differentiation. The differentiation also suggests typical “consumer types” who may be drawn towards the respective variants. Goodlass Nerolac in its recent advertising campaign for decorative paints, which uses Amitabh Bachchan, has a focus on imagery - joggers, housewives and children who have a positive attitude towards the celebrity.

Marketing communication is an area, which offers a high potential to brands to analyze the utility of several promotional inputs.

CHAPTER 7

“An Empirical View of the Different Types of Consumer Promotions in India”

Expenditure on sales promotion by various marketing companies in India is estimated to be Rs. 5,000 crore and is growing at a robust pace every year (Economic Times June 15, 2003). Companies in an attempt to drive sales offer various kinds of consumer promotions from price offs, extra product, freebies, scratch cards. In the year 2001, there were as many as 2,050 promotional schemes of all kinds in the Rs 80,000 crore FMCG industry. In the year 2000, the number stood at 1,954 schemes(Financial Express, 2000).There have been very few discussions in sales promotion literature about how different types of promotions may be classified. One dimension, which has been suggested to classify different promotions, is the price versus non-price nature of the promotion

. Price promotions are defined as ‘promotions such as coupons, cents off, refunds and rebates that temporarily reduce the cost of the goods or service'. These promotions focus on the reduced economic outlay required to obtain a good or service. Non price promotions are defined as ‘promotions such as giveaways or contests in which value is temporarily added to the product at full price'. Studies, which have compared consumer response to different promotions, have followed this classification in differentiating between types of promotion. A list of the different types of price and non price promotions and their definitions is shown in Table 1

Although a wide variety of price and non-price promotions are launched in the market, most of the academic research on promotions has focused on price promotions, namely price offs and coupon offers (Blattberg, Briesch and Fox, 1995). Promotional tools such as free gift offers, extra product offers that are increasingly being used in the market place.

However very little academic theory or research has looked at how consumers perceive and respond to such promotions. In recent years, researchers have started comparing consumer response to different promotions e.g. price promotion versus premium promotion or extra product promotion versus price promotion .

A first step towards researching different promotions is identification of the range of different promotions launched in the market place. It reports the incidence of the different promotions in different sectors e.g. FMCG, Consumer Durables and Services. Finally, details about each type of promotion are noted in order to highlight the different incentives offered by each type of promotion.

The product categories analyzed in the study covered Consumer Durables, Services and Fast Moving Consumer Goods. In total around 54 product categories were covered in the study.

Frequency of Promotions across Product Categories

Before proceeding with the main analysis, the frequency of promotions across different sectors of FMCG, Consumer Durable and Services were noted. The frequency of promotion in these sectors is shown in Table 3.

Frequency of Promotions across FMCG, Consumer Durable and Services

The frequency of occurrence of promotions is similar between FMCG (45%) and Durables (44%) sectors. The Services sector accounts for the lowest number of promotions. Within FMCG, the most frequently promoted product categories are soap, detergent liquid/powder and tea. These are also product categories with the highest level of market penetration (NCAER: Indian Market Demographic Report, 2002). Within Durables the most frequently promoted product categories are colour television and personal computer. The most frequently promoted categories in the Services sector are Fast Food Restaurants and Cellular Phone Service.

Frequency of Different Promotions in Services, Durables and FMCG

The different types of promotions identified in the study include price offs, free gift offers, sweepstakes, extra product offers, contests, exchange offers and buy-more-and- save/get offers. The overall frequency of occurrence of these promotions as well as frequency of occurrence in FMCG, Durables and Services was analyzed as shown in Table

The most popular promotion is the free gift promotion, which constitutes more than half (55 %) of the total number of promotions. This is followed in popularity by the sweepstake promotion (11%), which in turn, followed by the extra product promotion (8%) and the price off promotion (8%) in popularity. In Services, the order of frequency of promotions is the premium promotion followed by the extra product promotion followed by the price off promotion. In case of Durables, the order of frequency of promotions is the premium promotion followed by the sweepstake promotion followed by the price off promotion.

In FMCG, the order of frequency of the promotion is the premium promotion follows by the extra product promotion, followed by the sweepstake promotion. A detailed analysis of each type of promotion is provided in the following section.

Details about Different Types of Promotions

The specific details about the different types of promotions - price offs, free gift offers, sweepstakes, extra product offers, contests, exchange offers and buy-more-and-save/get offers - are discussed in the following section.

1. Exchange Offer

This promotion is seen mainly in the consumer durable product category. This promotion requires the consumer to exchange an old product for a new one and get some benefit, usually a price reduction. For example, in case of cars, the scheme offers the consumer a price reduction of Rs. 10,000 on the new car in exchange for an old car. For pressure cooker, the scheme offers a price reduction of 40% on exchanging an old cooker for a new cooker. In case of household durables, the scheme usually requires the consumer to exchange an old model of a product (e.g. AC, refrigerator, music system, mixer grinder, gas stove) to get a price reduction on the new model. Apart from exchanging an old durable good, the scheme also involves exchanging a small TV for a big TV. Most exchange schemes provide an incentive to purchase in the form of a price reduction. One exchange scheme involved returning an old washing machine for a new one and getting an electric iron as gift.

The purpose of the exchange scheme appears to be upgrade existing users of durable products to newer and larger sized models of a product.

2. Free Gift Offer

This promotion is popular across a range of product categories. It offers the consumer an incentive to purchase in the form of a free product/service. For example, in case of a car purchase, the consumer is offered a free product such as a music system or accessories. The consumer may also be offered a free service such as extended 3-year warranty or free insurance. Often the product offered free is a complement to the original purchase. This is illustrated by instances of the following types of free gift offers:

o free pillows with a mattress purchase

o free toothbrush with toothpaste

o free shaving blade with shaving gel/foam.

At times, the product offered as a free gift constitutes an upgrade to the original purchase. For example in case of Computer Printers, a free Internet connection, Internet telephony kit, software titles and multimedia package is offered along with the printer. Or in case of notebook computer/PC, the consumer is offered a Free Internet upgrade and 20 GB, Web Camera, Printer, Britannica CDs, software. In case of fast food restaurants, the free products are items such as soft drink, bread stick, pineapple fudge, garlic bread, ice cream cookies. Here the free products appear to be ‘use complements' to the original product.

At other times the free product may be a related product or product used in a similar context e.g. cooking or cleaning or personal care or eating. For kitchen products, the free product are items used in the kitchen such as plastic containers, metal spoon, tawa, non stick pan, idli stand, serving bowl, table mat and OTG.

In case of detergent powder/cake the free products are related cleaning products such as bleach, washing soap, washing powder, bucket, bath soap, floor cleaner and utensil cleaner. In the skin care segment, the free products are other personal care items such as soap, body lotion, shampoo sachet, shaving cream and toothpaste. In case of food products, the free product comprises of other edible items such as biscuits, coffee, namkeen, salt, chocolate.

At other time the free product may be totally unrelated to the original purchase. For example the consumer may be offered a free pen with a skin care cream or free batteries with soap. It is possible that, in such, cases, the products through unrelated are targeted to the same segment of consumers. This is particularly seen in free gift promotions targeted at children. For example, in case of health drinks, the free product are items such as cricket bat, zoom ball, story book, pencil box, biscuits, binoculars, toy bike, cricket set, football and trendy wristwatch which are valued by children. Similarly, in case of confectionary products such as chocolates and biscuit, the free products are products relevant to children such as comics, sticker, toy, tattoo, magic paint card and magic candle.

In some cases, the free gift offered along with the purchase is another product variant offered by the company. For example in case of fruit juice the consumer is offered the guava flavor fruit juice when he/she buys 5 packs of orange flavor. In case of spices, the consumer is offered Kashmiri mirch along with purchase of the regular spices. Several free gift offers have a pre commitment of size or value of purchase from the consumer. The consumer has to make a certain value of purchase before he is entitled to the free gift. Often, there are smaller gifts associated with purchase of smaller pack sizes and larger gifts associated with purchase of larger pack sizes of a product. In most cases, the price of the free gift is not mentioned. The brand name of the free product e.g. Timex watch or Motorola handset is mentioned in some cases.

3. Sweepstake offer

The sweepstake offer gives the consumer a chance to win a large prize through luck. It ususaly involves a lucky draw or a scratch card based on which the winners are decided. The prizes offered on this promotion can be broadly classified into two types. The first type of prize is a trip to a foreign location e.g. Paris, London, Thailand, Singapore or Malaysia. Many brands offer a trip to the South Africa World Cup as a promotional attraction. The second type of prize are durable products such as Bike, Car, Watch, Washing Machine, Television, Refrigerator, DVD, Mobile Phone, Cordless phone, PC, Microwave, Camera, Sunglasses, Gold Jewellery, Gold Coin. Gold has a major appeal as a prize on the sweepstake promotion across diverse product categories such as soap and personal computer. In some cases, the details of the prize on the sweepstake promotion is not specified and is stated as ‘prizes worth Rs. 50 crores.'

4. Buy more and savage

This type of promotion requires a consumer to buy two or more products to avail of the promotional advantage. The promotional benefit is usually in the form of money saved as a result of buying two ore more products at the same time. In certain cases, the promotion requires the consumer to buy additional units of the same product to avail of the promotional advantage. For example, in case of bath soaps and detergent cakes, this promotion requires the consumer to buy three bath soaps/detergent cakes and get one soap/detergent cake free. In case of fruit juice the consumer is required to buy 5 packs of

fruit juice and get one pack of fruit juice free. This promotion seems to be popular in categories where the extra units of the product offered on the promotion can be stored for future consumption.

When different products are bundled together on this promotion, there is usually a relationship between the products. For example in case of computer printers, this scheme requires the consumer to buy a printer and scanner together and get a price reduction. In case of consumer durables, this scheme attempts to induce the consumer to buy greater number of products from the same company. For example the scheme requires the consumer to buy AC and refrigerator or AC and microwave of the same brand and avail a price reduction. In FMCG products, this promotion requires the consumer to buy toothpaste and toothbrush together or buy shaving cream and blade together to get a price reduction. This promotion is seen in case of Fast Food Restaurants as well where the consumer is required to buy a pizza, coke mobile and garlic bread and get a saving on the combination purchase. In case of FMCG products, this type of promotion bundles together products that are use complements.

5. Contest offers

Contest offers are seen mostly in products targeted at children. In case of Fast Food restaurant, this promotion requires the consumer to fill up a coupon and get a chance to meet a film star such as Hrithik Roshan. In case of soft drinks, the contest offer requires the consumer to answer a question in an ad and get a chance to meet a movie star. In other product categories, the prizes offered on this promotion are similar to those on the sweepstake promotion. The consumer is offered the chance to win a car or a flat or various household durable appliances.

5. Extra Product Offers

Most of the extra product promotions (65%) are seen in the FMCG category where the extra units of product serve as additional consumption units for the consumer. There are no extra product promotions seen in the durables product category. In FMCG, the specific products on which the extra product promotion is launched include Talcum Powder, Detergent Cake, Soaps, Fruit Juices and Hair Oil. In case of toothpaste the promotion requires the consumer to buy one toothpaste and get the second toothpaste free. In a talcum powder extra product promotion, the consumer is offered 20% extra in the same pack. This promotion is also seen in the Services sector. In case of Internet service provider, this promotion offers extra hours on the Internet and free Internet access on Sunday. In case of fast Food restaurants, the promotion offers a second pizza free along with the original pizza or a slice free along with the original pizza.

Other Offers

A variety of promotions are seen in the ‘Any Other' category. One frequent promotion in the consumer durable category is the 0% finance scheme for purchase of two wheelers, notebook/PCs, refrigerator, music system, television, microwave oven, 2 wheeler.

A different kind of promotion requires the consumer to invest money in order to avail the promotional benefit. In case of fans, this sort of promotion requires the consumer to purchase 3 fans and pay Rs. 90 to get a wristwatch worth Rs. 480. Another such promotion requires the consumer to buy a fan, pay Rs. 40 and get a free camera worth Rs.

300. In case of health drinks, the promotion requires the consumer to pay Rs. 7/- more and get a badminton racket free.

A variant of this promotion is another promotion, which requires an investment of effort rather than money from the consumer. For example, in case of tea, the consumer is required to pay Re. 1 and get a Britannia biscuit pack free along with the tea pack. In case of salt, the consumer is required to collect a newspaper coupon and pay Re. 1 to get a pack of salt.

Yet other types of promotions require an investment of both money and effort from the consumer in order to avail of the promotional benefit. For example, a soft drink promotion requires the consumer to collect crowns and put in some money to get a price discount on the soft drink. In case of ice cream the consumer is required to collect three ice cream wrappers to get a scratch card which gives him the opportunity to win lakhs of prizes. In case of chocolates, the promotion requires a consumer to exchange empty chocolate wrappers to get movie tickets or bunny stickers free.

CHAPTER 8

ANALYSIS AND CONCLUSION

I. RECOMMENDATIONS AND SUGGESTIONS

II. CONCLUSION

I. RECOMMENDATIONS

The word "Recommendation" is self-explanatory. It speaks about the valuable suggestions. For e.g. If it is asked to suggest on what the company should do to improve it frcfm its present position? We find lots of suggestions floating. Some of them make sense and some are to be clipped out.

1. Companies have to increase the awareness level in buyers through TV !

An advertisement since it is one of the main sources of awareness and securing Information.

2: Effective advertising is necessary to confirm the public about the product at the right time through the right medium. Therefore, advertisers for

3. 4. Although product benefits can be shown most effectively by TV. It should not mislead the consumers. The advertisement is judged by its impact, and by its acceptance by the consumers. What it promises must be there in the

4. Identifying the right Celebrities for different products and the degree of influence these celebrities have in different stages of decision making

The ad agencies should use simple ads to convey the message of the brand. It should also be creative and focus on 1 or 2 points. Innovative methods should be used to make advertising effective.

Importance of Claim:

The most important factor determining the effectiveness of an advertisement is the importance / of claim made in it, Many advertisements make important claims. But these claims should be important for the consumer too. If a buyer gives importance for quality, there is no point in speaking about the cheap price, similarly if cheap price is important the advertisement should highlight only that.

Nowadays advertisement agencies concentrate on USP, i.e., unique selling proposition. Each advertisement must make a strong factual claim to pull the consumer into the store to buy.

Believable:

An advertisement must be believable. This can be incorporated in many ways. One way is .to quote facts and figures about tests proving your claim. However, negatively speaking, the advertisements should not mention anything unbelievable. S0Q1etimes advertisement given in prestigious magazines is believed by-the readers.

Uniqueness:

The advertisement' itself must have something unique about it.

Uniqueness draws attention. According to the four fold principle of AIDA (Attention, Interest, Desire and Action-buying), any effective advertisement should draw the attention of the customer. It is a 74

mistake to depend entirely on uniqueness. It should be followed by proper claims, and believability. Typically advertisements whose major objective is to gain brand recognition and acceptance rather than gaining conviction or buying action rely on uniqueness.

Repetition:

Repetition is one of the key concepts of advertising. It is better to have a long series of small advertisement than one extremely long advertisement. Repetition is a basic principle of memory. Naturally, the more times an advertisement is Iun, the more likely it is that any person has seen one of the advertisements recently.

Repetition and regency are usually closely related. In fact, an advertisement is better read upon repeating, certainly repetition lowers advertisement costs.

Companies that are able to spot trends early and those that are committed to continuous innovation and those that Endeavour to delight the consumer by meeting her changing needs will lead and prosper in the future. Product superiority married with a favorable price-value equation will form the basis of winning initiatives in the coming years.

Concentrating spends on a smaller number of brands that are critical to the business and which enjoy considerable consumer advantage.

Consistently supporting those facing highest competitive pressure with above the line spends while sustaining momentum on stable brands with tactical activities in key markets to get incremental sales.

II. CONCLUSION

Advertisement, the foregoing discussion show, is a sharp double edged weapon. When the claims of an advertisement correspond with the features of a product purchased as a consequence of such advertisement, the advertisement is bound to create a positive attitude among the Consumers in the long run. On the other hand, when the features of the product purchased do not corroborate the claims made in advertisement, those advertisements are sure to create a negative attitude among the consumers. It is therefore essentials that an advertisement aims to create faith and goodwill in the minds of consumer about the product featured by conforming to the core principles of believability, uniqueness, reputation and reasonable claims.

This Endeavour of the present survey can thus be concluded on a note that repetition surely has very profound, widespread and long-lasting impact on the emotions and behavior exhibited by the consumers with regard to their purchase decisions. Repetition, therefore, is a solution for many of the problems that marketers face while trying to generate sales and favorable response. But the frequency and various other factors like emotions, clutter, familiarity/unfamiliarity of the brand or the ad prove and determine the very subtle demarcation between an application which improves effectiveness and the same effect considered as a brain wash or damage

Advertising serves many generic purposes, but for specific categories like FMCG, the involvement of all stakeholders is vital to the success of an advertising strategy. Innovation and creativity are pillars of great advertising strategies, but equally important are the content and delivery of the advertisement.

The techniques discussed are not exhaustive. The general awareness of the consumers is on the increase, because of many factors like urbanization, better transportation, developments in information technology, media, etc and the average consumer today is more concerned about the value of his money and time. All compels the advertisers to innovate and develop new techniques to attract the customers. We can say that the advertisers use these different means of advertising in order to lure the customers to buy their products. It is not necessary to use only one aspect of advertising in an advertisement. Instead, multiple aspects of advertising are being used to make sure that the consumers buy the respective company's product.. Briefly, we can say that the different aspects of advertising are quite beneficial for promoting a product.

Every advertisement has some multiplier effect which gives a greater benefit with respect to/ the amount spent. Recall of an advertisement varies from individual to individual, and a company may calculate its advertisement multiplier for measuring its advertisement effectiveness.

An attempt is made to identify the level of awareness among the respondents towards TV advertising. From the study it is inferred that TV commercials have considerable int1uence on the Buying decision as well as Brand preference of the consumers. The celebrity endorsement is also considered to be an important part of advertisements to make them more creative and innovative in their reach to the consumers and their attempt to capture their attention.

Following observations are made after making an analysis of data collected from various respondents and from general discussions with them:

1) TV ads are considered as a most important source of information among the respondents. This highlights the role the TV commercials play in moulding the buyer behavior. Thus, purchase decision of the people is definitely impacted by advertisements.

2) Almost half of the segment of respondents likes to watch ads regularly. This means TV outperforms other Medias as far as effective presentation is concerned. It is capable of attracting attention immediately.

3) A significant portion of the people prefers to watch ads because of the ' informative content. This is because of “evocation of experience" i.e TV advertising easily stimulates the experience of using and owning the product. :

4) Brand preference is considered to be one of the prerequisite for brand :

salience-to create the Top of the Mind Brand Awareness. TV ;

commercials go a long way in achieving this as also indicated by the study. ;

Advertising works by reinforcing Brand preference for mature brands. :

5) A small segment of the respondents think that the advertisements are totally true or reliable. All the rest of them think that they are either sometimes deceptive or mostly deceptive.

6) Major chunk of the respondents feel that celebrities 'presence in the ads is highly required. They feel models are familiar and their presence is reassuring. Moreover, because of the high positive image of the celebrities consumers feel the genuineness of the product/ brand. Celebrity endorsement is generally preferred for such products as soft drinks, cars, suitings, premium range products and luxurious items.

7) More than half of the consumers are not able to relate themselves with the

lifestyle shown in the TV ads. This is because the people are not able to conform the exaggeration shown in the respect of product benefits with their own picture of reality.

8) When asked to recall an advertisement in respect of any Fmcg, almost all the

respondents were able to recall only one or two advertisements or the tag lines of their favorite brands. They could also immediately relate the celebrities they have seen in the respective ads.

9) TV advertising provides a unique blend of sight, colour, movement, sound, repetition and presentation of the products. This helps TV commercials to gain advantage over other medias.

10) Although informative content is more liked by the respondents but with the advent of too many satellite TV channels, the use of celebrities has become an important issue for the advertiser. This is to make the consumer more conscious and attract towards the product.

Today, creating a different differentiation is becoming difficult and problematic. Product differentiation should be strong enough to create a wide gap between two brands. If a differentiation technique does not create a wide gap between the two brands, then the customer is not able to differentiate the same leading to less brand loyalty. This is what is happening in FMGC sector especially in soap industry, where the customer is not able to differentiate between two soaps. Lux, Cinthol appears to be same which was not the case earlier. As the product differentiation technique does not create a wider gap between one brand and the other, customer loyalty is getting eroded.

Can bridge positioning be a tool to solve this problem?

It is possible provided the unique selling point matches unique customer perception or when the customer perception is same as unique selling point, the positioning statement can act as a bridge between communicator (manufacturer) and the user. This `bridge positioning' can lead to long-term relationship with the customer.

Most marketers assume that their product USP stay constant. Companies should change the USP to stay contemporary and relevant. USP based positioning is more effective However in order to have better brand recall, what companies need to understand is product's UCP.

UCP is a culmination of a multitude of information that the consumer receives from various channels. It is the opinion that the customer forms by being exposed to advertising, competitor's claims and advertising, word of mouth, personal likes and dislikes, etc.

UCP is also a result of the ‘product experience'. Customers

association with a particular product may lead to a formation of opinion for the brand that the product belongs to and hence may affect the UCP.

A company can determine its UCP using simple tools like Questionnaire Technique, Focus Group Discussion, Free Association Technique and Value Association Technique.

Customers' interest is focused on what your product or service does for them - the benefits. How using a particular product solves a problem or improves an outcome. The key to unlocking the decision to buy is offering benefits that outweigh what the competition offers. These benefits are also a strong part of the process that leads to formation of the UCP. (Srivastava, 2005)

It is quiet clear that the company should try and get the highest level of fit between the USP and the UCP of the product / brand they are promoting. Therefore the question arises regarding matching the USP with the UCP.

UCP v/s USP-How to bridge the Gap? Bridge Positioning

As already noticed from the conclusions of the research, a fit between the USP and the UCP is desired for the product to ensure a fair chance of success. But what are the options available for the brand manager if there are indeed gaps between the USP and the UCP?

Since UCP is formed over the years and has its roots in factors beyond the immediate control of the company, the company should try and align the USP with the existing UCP.

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