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This is to certify that the report on the Fundamentals of Marketing Management is submitted to Som Lalit Institute of Commerce affiliated to the Gujarat University in partial fulfillment of the requirements for the completion of practical studies at the third year of the B.com programme for the year 2010-11.

I/C Director.

Prof. In. Charge.

Date :

PREFACE Management is most important for the world, today. Marketing management is also an important in our day to day life. Management has today gained an applauding game worldwide today when each and every resource is scare. Management comes to the reseal through. Management no of benefits can be gained its Ground in each and every field. The important of practical studies is to analyses the working of an industry without practical knowledge, and experience no one can be predict in considering the practical aspects so Gujarat university has made the students to participate in making of a project report. So., I got the chance to work on Marketing Management, We come to know differentiate the theoretical and practical aspects.

ACKNOELEDGEMENT I am highly thankful to prof. Sakina Marchant guiding and instructing us for preparing this report at a proper time. I am very grateful the director Prof. Shastri, who gave a chance to visit one of the best beverage company of the India. I would like to give my gracious trucks to our university and college. For providing me such a good opportunity and also I am thankful to Som lalit institute of Commerce and our Mr. Shastri for providing me an opportunity to apply my knowledge through this report. Once again I am very thankful to all of my classmates, my friends who help me one or another way in this report. Thank you.


Product life cycle

Like human beings, products also have life-cycle. From birth to death human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert four things:

that products have a limited life, product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller, profits rise and fall at different stages of product life cycle, and

products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying characteristics are: Stage 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. 5. Characteristics costs are very high slow sales volumes to start little or no competition demand has to be created customers have to be prompted to try the product makes no money at this stage

1. Market introduction stage

2. Growth stage

costs reduced due to economies of scale sales volume increases significantly profitability begins to rise public awareness increases competition begins to increase with a few new players in establishing market 6. increased competition leads to price decreases 1. costs are lowered as a result of production volumes increasing and experience curve effects 2. sales volume peaks and market saturation is reached 3. increase in competitors entering the market 4. prices tend to drop due to the proliferation of competing products 5. brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down 1. 2. 3. 4. costs become counter-optimal sales volume decline or stabilize prices, profitability diminish profit becomes more a challenge of production/distribution efficiency than increased sales

3. Maturity stage

4. Saturation and decline stage


GLAMOUR FACTOR\ We all want to be pampered, to look and feel great, to enjoy that moment when anything seems possible. And that's just what Lux offers you on a daily basis at a price you can afford. Lux is the brand of UNILEVER PAKISTAN LTD. It has been winning hearts of Pakistani consumers for 50 years. Throughout this time, Lux has been closely associated with many of the most glamorous

and sensual women of the age.

Lux had modified their product into:

Orchid touch Almond delight Energising fruit Aqua sparkle

Almond delight: Lux Almond Delight comes with the deep moisturization of exotic Peach, Cream and precious Almond Oil Energizing fruit: Lux Energising Fruit incorporates the beauty secrets of Fruit Extracts, rich Milk Cream and Honey, for a fresh renewed feeling. Aqua sparkle: Lux Aqua sparkle has nourishing oil of Cade and cucumber extracts for a radiant and clear skin


Lux had been launched in Pakistan in 1957. At that time there was only one competitor of Lux, which was LIFEBUOY. In the initial stages Lux was introduced in the major cities of Pakistan like Karachi, Lahore etc. In the initial stages Lux was the market challenger in the field. So the marketing manager came up with different marketing strategies to attract the customers.

The Lux marketing objectives in the initial stage was to create the product awareness and to attract the customers towards the product.

The Lux marketing mix strategies in the initial stages of the product were based on:

They offer only on product in the market. They did not come up with the differentiated product.

In the initial stages of the product, they offer the relatively higher price than their competitor (LIFEBUOY). Because, they want to recover their cost which incurred initially in making the product. Or another reason was that they have segmented the niche market.

In the initial stages, they allocate more advertising budget to advertise the product. So that more and more customers could be attracted towards the product. In ads they targeted the early adopters, who were readiest to buy the product.

Their distribution was selective and only covers the major cities of Pakistan. Because, they initially want to get recognition in the major cities of Pakistan. Their distribution channel was: Manufacturer Retailer Consumer Manufacturer Wholesaler Retailer Consumer

In the growth stage, their sales rapidly started rising. In the growth stage, they have expanded their market to the other cities of Pakistan. The marketing mangers also make changes in the marketing objectives and their marketing strategies.

In the growth stage, the marketing objectives of the Lux were to expand their market to the other cities of Pakistan. Another objective was to maximize more market share.

In the growth stage, company had the following marketing mix strategies:

In the growth stage, the company had offered the same product in the market.

In this stage, the company had changed their price to some extent because of maximizing the market share.

In the growth stage, they had increased their advertising budget as in the initial stages because of attracting the new customers or to retain the existing customers.

In this stage, company had expanded their market to the other cities of Pakistan. Their distribution channel was the same as in the initial stages of the product.

In the growth stage, the company had also used the different promotioning strategies to attract the new and the exisisting customers.

Lux is now in the maturity stage, they modified the product by adding some changes in the product. In this stage, few competitors enter into the market like (SAFEGUARD, CAPRI etc). So the marketing managers make different strategies to handle the competition. The company has expanded their market to almost all the cities of Pakistan.

The marketing objective of Lux is to maximize more profit while defending the market share. And to expand the market to all the cities of Pakistan.

In this stage, Lux marketing mix strategies are based on:

The Lux has made the modification in the product by introducing: Orchid touch Almond delight Energising fruit Aqua sparkle

The Lux products are now available at higher prices in the market, the reason behind is that the companys marketing objectives is to maximize more profit.

Now Lux products are available in almost all the cities of Pakistan. Their distribution channel is same as in the initial stage.

Advertising 18
In this stage Lux advertising has been reduced to some extent because of the more brand awareness in the minds of customers. Recently, they show the ad in which the Pakistani leading television and film actress were shown.

What is Channel Management anyway?

Channel Management. Yet another sales and marketing phrase that is thrown around like everyone knows what it means. But so few companies really comprehend channel management in a way that really helps them. Its really no wonder. Sales channels (being the conduits by which we distribute our products to the end-user) come in many shapesfrom direct, to the web, to the traditional retail environment. And, were just doing whatever we can to get any business from any of them! But is that the most efficient and effective approach? Thats where Channel Management comes in. Channel management, as a process by which a company creates formalized programs for selling and servicing customers within a specific channel, can really impact your businessand in a positive way! To get started, first segment your channels by like characteristics (their needs, buying patterns, success factors, etc.) and then customize a channel management program that includes: 1. Goals. Define the specific goals you have for each channel segment. Consider your goals for the channel as a whole as well as individual accounts. And, remember to consider your goals for both acquisition and retention. 2. Policies. Construct well-defined polices for administering the accounts within this channel. Be sure to keep the unique characteristics of each segment in mind when defining policies for account set up, order management, product fulfillment, etc. 3. Products. Identify which products in your offering are most suited for each segment and create appropriate messaging. Also, determine where your upsell opportunities lie. 4. Sales/Marketing Programs. Design support programs for your channel that meet THEIR needs, not what your idea of their needs are. To do this, you should start by asking your customers within this segment, how can we best support you in the selling and marketing of our products? That being said, the standard considerations are product training, co-op advertising, seasonal promotions, and merchandising. Again, this is not a one-size fits all, so be diligent about addressing this segments SPECIFIC needs in these areas. Defining a channel management strategy for each segment allows you to be more effective within each segment, while gaining efficiency at the same time. Still, maintaining brand

consistency across all channel segments is critical to your long-term success. So find a good balance between customization and brand consistency and youll be on your way to successful channel management.


Goodlass Nerolac Berger Paints ICI Paints Shalimar



Asian Paints (AP) is the market leader in the Indian paint industry, commanding a market share of 38 per cent in decorative paints and 33 per cent overall in the organised sector. Its annual sales turnover exceeds Rs. 1,300 crore, way ahead of all the competitors in the industry. In profits too, AP is far ahead. APs market leadership in the decorative paints segments can be grasped correctly when we take note of the relative position of the various players in the industry. Whereas AP has a market share of 38 per cent, its nearest rival, Goodlass Nerolac, commands a share of just 14 per cent. All others have only less than 10 per cent. Such an achievement by a company that is wholly Indian in capital, management and technology and in an industry historically dominated by multinationals is certainly a commendable feat. A STORY OF DISTRIBUTION EXCELLENCE This case study, in fact, depicts the distribution strategy adopted by AP in the early years of its operations. The interesting point is that this strategy serves AP well even today, when the context has somewhat changed. In the earlier years, in the decorative paint segment, a wide product range in terms of colour and pack size was a crucial factor for success. AP literally leapfrogged and overtook all its competitors, and offered the widest range of products. It also created the distribution outfit that was necessary for reaching the wide range of products to customers in every nook and corner of the country. In later years, technology came to the rescue of the players in this regard. Customers could get the colour of their choice through mixing at the retail outlet. With the help of an automated machine kept at the retail outlet, paint is given the desired colour by mixing different shades and stainers in the required proportion. The paint companies need to maintain only half-a-dozen basic colourants with retailers; mixing can create the other variants. The new arrangement helps the campanies to manage with a narrow range of paints. They can reduce the number of SKUs handled and cut down inventory holding costs.

The above shift has no doubt reduced somewhat the importance of the physical distribution task in the business, compared to the position in the earlier years. At the time AP entered the Indian paint business, the physical distribution and channel management task was the most crucial one in paint marketing. This context is elaborated in one of the sections in this case study. We can appreciate the lessons of the case study better, if we keep in mind this contextual position. Even now, physical distribution and channel management continue to be crucial functions in the business. In the matter of product range too, companies are not able to totally dispense with the need for variety in view of the many practical limitations of mixing at retail outlets. It is no easy task to provide mixing and computers. Before we actually go into APs distribution strategy, let us have brief profiles of the company and that of the paint industry, so that the contextual setting of the case is clear. Let us start with the industry. PERFORMANCE AP has been consistently turning out a good performance over the years. For more than two decades now, it has been the market leader. Besides, the company has also consistently proved its excellence in operating performance. Exhibit 2 gives details of APs sales performance during the last four years. Exhibit 3 gives some other important details of APs performance. AP has set a target of gross sales of Rs 2,100 crore by 2003. It aims to be amongst the top ten decorative paints manufacturers in the world by 2003 and among the top five by 2005. Exhibit 2: Asian Paints-Sales Performance : 1998-2001 1998 1999 2000 2001 Sales Value (Crore) 911 1,033 1,221 1,373 Sales Volume (Tonne) 116,942 132,284 162,110 181,271 Exhibit 3: Asian Paints Select Performance Indicators (FY 2000) APs operating profits stood at Rs 191 crore in FY 2000, an increase of 37.7 percent over the previous year. The net profit stood at Rs 97 crore as compared to Rs 77 crore the previous year, higher by 26.6 per cent. Net

Operating profits have grown at a CAGR of 13 per cent in last five years, much higher than the sales growth of 8.6 per cent profit has grown at a CAGR of 12.7 per cent in last five years. The profit before tax (PBT) stood at Rs 143 crore, an increase of Rs 49 crore over the previous year. PBT has grown at a CAGR of 12.35 per cent in last five years. Return on net worth (RONW) improved from 25.2 per cent in FY 1999 to 27.1 per cent in FY 2000. RONW has remained close to 25-26 per cent in last five years. Return on Capital Employed

(ROCE) improved from 26.6 per cent in FY 1999 to 35.9 per cent in FY 2000. APs sound marketing has earned it strong brand equity. To quote APs managing director: We have been able to build strong brand equity for our products by focusing on features that are appreciated by customers, ensuring that our products are of high and consistent quality, offering a wide range of shades and packs, and ensuring that our products are available wherever and whenever required, by building a strong distribution system. Its brand Tractor, Apcolite, Uttav, Apex and Ace are well entrenched in the market. And APs logo, Gattu, the impish boy, with the paint tin and brush, symbolises one of the most recognised and most prosperous mascots in Indian business! All this has earned the company a place among the worlds leading paint manufacturers. AP is the winner of the 1995 corporate performance award by the Economic Times and Harvard Business School Association of India. It actually received the award twice within a decade. AP STRIKES A NEW PATH IN DISTRIBUTION At the time AP entered the Indian paint business, distribution was the most crucial task for any new entrant. Both physical distribution and channel management posed formidable challenges. The foreign companies and their wholesale distributors dominated the business. The foreign companies appointed a few traders as their wholesale distributors and allowed them to perpetuate a situation of monopoly. Each distributor was assigned a large territory and was given the right to operate as the exclusive channel of the company in the assigned territory. The trade terms were also very liberal. The companies also extended virtually unlimited credit to the distributors. The credit outstandings for the supplies made throughout the year were required to be settled by the wholesale distributors only at the year-end, at Diwali time. These distributors had neither the compulsion nor the motivation to invest in distribution infrastructure. They were not required to move out to semi-urban and rural areas. They concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development. Also, they were shutting the doors on any new paint company seeking an entry into the business. In other words, these distributors controlled the paint business and were making it impossible for a new paint company to enter and establish itself n the business. AP sized up the scenario correctly and formulated a unique distribution strategy. In the normal course, a firm entering the industry in this scenario would have opted for the low risk strategy of gaining a limited access to the wholesale traders and be satisfied with a small share of the existing

business. But AP went in for a strategy that differed totally from the existing pattern. APs strategy in fact, meant the polar opposite of the established/existing pattern. Chart 1: Elements of APs Distribution Strategy AP bypassed the bulk buyer segment and went to individual consumers of paints. AP went slow on urban areas and concentrated on semi-urban and rural areas. AP went retail. AP went in for an open-door dealer policy. AP voted for nationwide marketing / distribution. AP BYPASS THE BULK BUYER SEGMENT AND GOES TO INDIVIDUAL CONSUMERS Bulk buyer segment was the major segment of the paint business in the earlier days and

any paint company needed a share of this major segment for sheer survival. Though, this segment was dominated totally by foreign companies and their wholesale distributors, a new entrant to the business like AP would normally have rushed to this segment and tried to garner a share of it. AP, however, had a totally different game plan. Seeing that this segment was not a growth segment, though it was certainly the major segment at that point of time, AP decided to ignore this segment for the present and go to individual consumers. And that was a crucial decision. It influenced every subsequent decision AP took in the realm of distribution. Over time, AP proved to the paint industry that there existed a large and bottomless segment in the paint business of India, outside the bulk buyer segment, comprising of individual consumers. AP GOES TO SEMI-URBAN AND RURAL AREAS Along with the decision to go to individual consumer segment leaving aside the bulk buyer segment, AP also decided that within the individual consumer segment, semiurban and rural areas would constitute APs priority market. Prior to APs entry, the paint business was by and large concentrated in the urban areas. All the major paint companies and their wholesale distributors were content with the market that was available in the urban areas. In contrast, AP clearly saw that a large market for paints was emerging in the semi-urban and rural areas, and felt it wise to tap this market. AP also understood that a new entrant like AP had also a compulsion to go to the semiurban and rural areas. The major companies and their wholesale distributors were not giving any worthwhile opening in the big cities for new entrants. AP found it difficult to attract the wholesalers in the cities to deal in its products. It had to necessarily turn to the semi-urban and rural areas for support. AP wisely decided against committing all its resources on a head on collision with the foreign companies and their big wholesale distributors in the urban areas. AP GOES RETAIL Going directly to retail dealers was the next major strategic decision of AP in the realm of marketing and distribution. Here too, AP totally broke with the prevailing distribution practice. As mentioned earlier, the foreign companies, who were the main players, were practising a wholesale distributor-dependant marketing system. AP did not see any great merit in the system. It totally bypassed the well-entrenched wholesale distributors and went directly to the retailers. While APs competitors remained content with their linkage with a handful of wholesale distributors, AP preferred direct contact with hundreds of retail dealers.

AP GOES IN FOR AN OPEN-DOOR DEALER POLICY AP followed an open-door policy in the matter of adding retail dealers to its network. The prevailing trend in those days was to limit the number of dealers to the barest minimum. AP broke this trend and chose to use practically everyone in the trade, who was willing to function as its dealer. It was as a combined result of the policy of going directly to retailers and the policy of open door to dealership that APs dealer network swelled rapidly. Even after achieving stability and maturity in distribution, AP continued to follow a policy of continuous expansion of dealer network. By 1990, AP was having a 7,000 strong dealer network. By the year 2000, the number had swelled to 12,000. And even now, on an average, AP is adding 200 to 250 new dealers every year. AP VOTES FOR NATIONWIDE MARKETING/ DISTRIBUTION AP took yet another important and strategic decision in the realm of distribution. Those days nationwide distribution/marketing was not the standard practice in the paint business. On the one side, there were the 1,000 odd small paint companies who, as a class, believed in marketing their paints in limited territories in and around their point of production. On the other side were the big companies, who as a class, believed in

limiting their distribution to the big cities. In contrast to both these existing practices. AP voted for a nationwide distribution/marketing. It wanted to have an active presence throughout the country, in all the geographical zones, states and territories. THE IMPLICATIONS OF APs DISTRIBUTION STRATEGY APs distribution strategy described in the preceding paragraphs had its associated implications. AP had to take due note of them and face them squarely. GOING TO INDIVIDUAL CONSUMERS IMPLIED WIDE PRODUCT RANGE AND COMPLEX DISTRIBUTION Had AP concentrated on the bulk buyer segment, it could have managed with a limited product range, at least, in the initial years. But, APs decision to turn to the individual consumers necessarily meant a wide product range. In the nature of things, the individual consumer segment involves a very wide choice in terms of products, materials, shades and pack sizes. On top of this, AP believed in making products based on the preferences of consumers. It gathered feedback from the consumers and turned out products, shades and pack sizes on the basis of such feedback. This policy resulted in a further burgeoning of the product range. SMALLER PACKS PROLIFERATED THE PRODUICT DEPTH FURTHER At the time of APs entry, paint companies were supplying paints in containers of 500 ml or larger. AP saw that there was a felt need in the market for paints in smaller packs. All end uses did not require a large quantity. Moreover, it was common practice for consumers to buy paint initially in a larger quantity and supplement it with small size purchase to complete the job. AP decided to harness the business opportunity and started supplying it paints in small packs- in 200 ml, 100 ml and 50 ml packs. This proliferation in pack sizes also contributed to APs growing product range. AP was by now manufacturing and marketing as many as 2,000 distinct items of paints, none of which was strictly a substitute for the other. WIDE PRODUCT RANGE IMPLIED EXPENSIVE DISTRIBUTION The policy of having the widest range of products, colours and pack sizes had its implications on APs distribution. When 2,000 different items had to be made available

to the consumers, it automatically meant that the company had to be prepared for high inventory holding in its various depots/retail outlets. Accounting and sales arrangements had also to be provided for on a matching level. Naturally, distribution was becoming more complex and expensive for AP. GOING TO SEMI-URBAN / RURAL MARKETS FURTHER ENLARGED DISTRIBUTION The decision to go to the semi-urban and rural markets instead of confining to the urban markets also meant enlargement of the distribution function. AP had to go in for more dealers in order to serve the scattered semi-urban and rural market. The decision also meant that AP could not opt for a simple, centralised distribution of its products from its factory. It had to go in for a decentralised, field-focussed distribution, with a network of depots located all over the country/marketing territory. Without such extensive and intensive distribution network, it would not have been possible for AP to cover the semiurban and rural markets. Chart 2: Main Steps in the Implementation Process AP created a large network of dealers It successfully resolved the costservice conflict in distribution It established a network of company depots to service the dealers i (i) A strong commitment to ii distribution cost control, without

iii compromising service level It created a marketing organisation that matched its distribution (ii) Effective inventory management (iii) IT initiatives in distribution cost iv control GOING RETAIL IMPLIED DEEP INVOLVEMENT IN CHANNEL MANAGEMENT Through its decision to go retail, AP was getting deeply involved in physical distribution and channel management. In the system chosen by AP, the physical distribution-cumchannel management task was far more demanding, compared to the wholesaleroriented system practised by the other paint companies. While, for companies that embraced the wholesaler-oriented system, it was enough to service a handful of distributors, AP had to service a network of thousands of retail dealers. Having taken the decision to go retail, AP necessarily had to create and service a vast dealer network. It also had to create the physical distribution facilities required for servicing such a large network. National Marketing Necessitated Nationwide Organisation Extent of marketing territory and complexity of distribution organisation are interrelated. The moment AP voted for nationwide marketing, it was getting into intensive as well as extensive physical distribution and channel management. AP thus had to create a nationwide distribution-cum-marketing organisation. DISTRIBUTION BECOMES APS SHOWCASE FUNCTION APs strategies made distribution the most important element of its marketing mix. And, AP gave to distribution all the inputs that were demanded by it. In fact, the rest of this case study is essentially a description of how AP managed its distribution activities how it chalked out its distribution programmes, how it implemented them, what problems

it encountered in this task, how it tackled them and how through distribution success, it achieved marketing and corporate success. THE IMPLEMENTATION PROCESS We shall see how AP went about the actual management of the distribution function. The main steps in APs implementation process are shown in Chart 32.2. Let us see the details. AP Creates a Large Network of Dealers An extensive network of dealers and a matching physical distribution infrastructure play a crucial role in the decorative paints segment. This is essential for ensuring easy accessibility of the product to customers. In this, Asian Paints scored over its competitors with a massive network of 15,000 dealers spread over 3,500 towns across the country. AP has the largest distribution network among all the players. Goodlass has a network of 8,000 dealers. AP Established a Network of Company Depots AP established a large chain of company operated depots/stock points throughout its vast marketing territory, from where the retail dealers could conveniently pick up their requirements. APs basic strategies explained in the earlier sections necessitated a liberal approach in the matter of stock points/depots. It also meant that the depots had to be company operated. After all, AP did not have any wholesale distributors to whom the responsibility for operating the stock points could possibly have been assigned. AP established a network of 30 company-run depots, spread through out the country and serviced its retailers from them. The number of depots varied from city to city. For example, Bangalore had just one depot while Mumbai had four depots. The depots

typically supplied to about 200-300 dealers. AP creates a Marketing Organisation that Matched its Distribution Intensity Effective control of the large number of depots, each having substantial stocks of 2,000 odd distinct items necessitated a matching marketing organisation structure. AP set up a marketing organisation consisting of four regional sales offices, 35 branch sales offices and a large number of sales supervisors and sales representatives spread all over the country. The marketing organisation of the company is presented in Exhibit 4. It can be seen from the chart that a very extensive structure has been created in the consumer division. It is primarily meant for taking care of the massive distribution task involved in this sector. Each branch sales office has its own depots and the various items are stocked in the depots under the control of the concerned branches. The branches service the dealers and customers in their territories. These are supported by six regional distribution centres, which cater to 55 depots. Each depot has a branch manager for supervision of several salespersons who cater to more than 14,500 dealers in the more than 3,500 big and small cities all over the country. AP faced many challenges. Of these, the cost-service dilemma was no doubt, the most important one. And, that is the aspect in which we are mainly interested in this case study. Exhibit 4: APs Marketing Organisation
8 General Manager (Marketing)

AP Successfully Resolves the Cost-Service Conflict in Distribution Managing the cost-service conflict was the main challenge that AP faced in the implementation of its distribution strategy. AP met this challenge successfully. We have seen that AP has over 15,000 dealers in 3,500 towns in India. AP caters to all of them directly. As a result, for AP, the distribution task gets tremendously extended and distribution cost becomes a significant business parameter. Demand for decorative paints is characterised by seasonality. Demand drops during monsoons and picks up around a mouth-and-a-half before the festive season. Major part of the sales take place in the second half of the financial year. Manufacturers have to carry huge inventories during the lean period. As a result, distribution cost becomes all the more significant. Naturally, distribution cost emerged as a major hurdle that AP had to cross. The strategy adopted by AP necessitated expensive distribution. In addition, AP took another basis decision. It went in for a very high service level in distribution. Service level is measured in terms of the number of stock keeping units (SKUs) available in stock as a percentage of the number of SKUs that should have been in stock. APs service level is more than 85 per cent whereas that of other large paint companies falls between 50 and 60 per cent. This meant a further rise in APs physical distribution costs. AP had to resolve this cost-service conflict. In the chapter on Physical Distribution and Logistics Management, we had seen that a cost-service dilemma is inherent in any physical distribution situation. A high service level in physical distribution-in transportation, warehousing, order processing and
9 Sales Manager (Trade) Manager (Export) Sales Manager (Industrial) Regional

(1) (2) Sales (3) Managers (4) Product Manager (1) Product Manager (2) Product Manager Zonal Managers (4) Branch Managers or Depot Executives (35) Product Executives (6) Product Executives (6) Service Representatives (4) Sales Supervisors (13) Sales Representatives (168) Sales Representatives (Industrial Paints) (27)

inventories necessarily means a high level of costs. Every firm has to face this costservice dilemma and work out a compromise. AP voted for a high service level and without compromising this service level, it tried to contain the distribution costs. Interestingly, AP succeeded in this endeavour. When we go in to the details as to how AP actually resolved the cost-service dilemma, four factors stand out: A strong commitment to distribution cost control, without compromising service level Effective inventory management Effective control of credit outstanding IT initiatives in support of distribution cost control Strong Commitment to Distribution Cost Control While following a totally customer-oriented distribution strategy. AP could not afford to ignore the cost angle. AP was in no position to pass on any additional costs to the consumers. APs marketing philosophy demanded that the consumer price of its paints should be on the lower side, so as to suit the pockets of the average Indian. Moreover, APs business growth demanded more and more investment in manufacturing and distribution. AP had to find the resources. This apart, the intensity of competition had also been on the increase. Naturally, profitability was coming under greater strain in these circumstances. AP had to control its distribution costs in order to maintain its profitability and market leadership. The question was how to control the costs without sacrificing the service level. EFFECTIVE INVENTORY MANAGEMENT Effective inventory management is the first major component of APs strategy on distribution cost control. And, AP achieved high efficiency in this regard. Actually, in inventory cost, AP took the lowest position in the industry. APs average inventory level

equals only 28 days sales, while the industry average is 51 days sales. This right away provided a 45 per cent edge in inventory costs to AP compared t its competitors. APs stock of finished goods was just 7 per cent of its net sales while for the others in the industry it was nearly twice that level. What is particularly striking in this achievement is that AP offered customers and dealers a high level of service in product delivery compared to its competitors and yet kept the inventory costs down by 45 per cent compared to the competitors. CONTROL OF CREDIT OUTSTANDINGS Large credit outstandings, running beyond two months or more, was a natural concomitant of the distribution strategy chosen by AP. The dealers are required to maintain stocks of all the SKUs that are on demand in the territory. It pushes up inventory levels at the outlets. They need credit. AP allowed 15-21 days credit for dealers located in the major towns and 22-30 days credit for dealers in upcountry regions. AP had to pull off a smart credit control strategy for survival. It resolved the thorny problem through an innovative dealer incentive scheme. AP stipulated that each of its dealers should pay for the supplies within a specified tme norm and offered them as attractive incentive scheme for doing so. It consisted of two components: (a) A special discount of 3.5 per cent. This was referred to as the discount for perfection in payments. It was passed on at the end of the year, provided each and every payment throughout the year was made within the stipulated time norms.
10 (b) A cash discount of 5 per cent. This was paid for all outright cash purchases. It was

given whenever payments were received within 24 hours of the supply/invoice. In respect of outstation accounts, the payment have been made in advance by draft in order to be eligible for the cash discount. The scheme was a grand success. APs credit outstandings always stood below 25 days, while the outstandings of the other major companies were in the range of 40 days and above. Systematic computerisation also helped AP maintain the credit outstanding within limits. IT INITIATIVES IN DISTRIBUTION COST CONTROL APs IT initiatives in respect of distribution-inventory control and control of credit outstanding, in particular-helped it to control distribution costs without lowering the service level. AP went in for a fully computerised distribution system. AP did this not only with an eye on distribution cost control, but also for the sake of distribution effectiveness per se. But for such an approach, APs distribution management would have gone haywire. Here was a situation where 2,000 different items of paints, manufactured at four different plants, had to be distributed to 15,000 dealers in 35,000 towns spread all over the country, through 55 depots. AP accomplished this, maintaining the average service level at 85 per cent, a clear 25 per cent above that of competition. The IT initiatives also ensured prompt billing, accurate customer accounting and effective control of credit outstanding. Computerisation also enabled AP to process recent sales data for the 100 fastest moving SKUs. This analysis was used to project sales of specific products, which helped plan production and raw material purchases. With computerisation, AP was able to analyse past trends to arrive at a 90 per cent accurate sales forecast. Corrections were made every month between the sales projections and actual sales. Production was thus evened out month-to-month. Sales statistics were maintained, classified by product, month, salesman, branch, region and dealer. Such computerised planning and control of production, sales and inventories helped AP cut distribution costs without compromising on the high level of service sought by it in physical distribution.

AP later hired from the Department of Telecommunications, satellite time and got all its offices in the country networked. They transmit data daily to the corporate head office in Mumbai, which uses it for sales and production planning. AP has consistently improved its IT systems over the years. It has linked al its factories and 55 depots through C-SAT terminals, and derived big benefits in terms of streamlined distribution. More recently, AP has implemented supply chain management software from 12 technologies. AP plans to upgrade its communication infrastructure through VSAT leased lines and ISDN lines all over India. It is also implementing an ERP solution from SAP to be completed in 2001. AP ACQUIRES A COMPETITIVE ADVANTAGE THROUGH ITS INVENTORY MANAGEMENT AND CREDIT CONTROL. One can grasp the full import of APs success in this sphere only when due note is taken of the fact that AP has achieved the lowest distribution cost as well as the highest differentiated position in the industry. APs Apcolite, the largest selling brand of paint in the country, is available in 151 different shades and in eight different pack sizes. Being in the business of colours, AP utilised colour to achieve differentiation, and none of its competitors could match AP in this aspect. Simultaneously, AP also achieved the lowest

cost position in the industry. Normally, when a firm consciously opts for the differentiation route with a wide product line, it automatically points towards higher inventory levels and consequently higher inventory and other costs. But AP, through its effective distribution management, inventory management and control of credit outstandings, in particular, managed to retain its inventory size and inventory costs at the lowest possible level. AP actually saved so much on inventory carrying costs that it almost earned its promotion budget through these savings. This is again praiseworthy because AP spends as much as 10 per cent of its sales on promotion, the highest in the industry. It has to spend so much in order to maintain its differentiation advantage. But strikingly, it has kept its total marketing costs the lowest in the industry. The two factors together-the lowest cost position as well as the highest differentiation position-has conferred a significant competitive advantage on AP. LEADERSHIP THROUGH DISTRIBUTION EXCELLENCE The story of Asian Paints is a story of distribution excellence. AP achieved an enviable leadership position through the distribution route. While AP did not ignore any of the other functions of marketing, it was by mastering the distribution function that APs gained a distinct and powerful competitive advantage. APs distribution strategy was truly innovative; it broke new ground in every aspect of distribution. In the final analysis, excellence in distribution led the company to marketing and corporate excellence.


Web Marketing
A Firms efforts to communicate , promote &

sell its products & services over the internet. Interactive form of marketing The two components of web marketing are : Marketing to Business Buyers Marketing to ultimate consumers
We can view web marketing in four ways : A Business A Medium A Marketing Channel (or tool for channel less marketing) A Complete Market place Elevation of the Web from a medium of communication to a marketing channel to a complete market place. The largest, most dynamic, sleepless, electronic bazaar/mall of goods and services , the world has ever seen!!
Internet marketing is sometimes considered to be broad in scope[citation needed] because it not only refers to marketing on the Internet, but also includes marketing done via e-mail and wireless

media.[citation needed] Management of digital customer data and electronic customer relationship management (ECRM) systems are also often grouped together under internet marketing.[citation

Internet marketing ties together creative and technical aspects of the Internet, including design, development, advertising, and sales. Internet marketing also refers to the placement of media along many different stages of the customer engagement cycle through search engine marketing (SEM), search engine optimization (SEO), banner ads on specific websites, email marketing, and Web 2.0 strategies. In 2008, The New York Timesworking with comScorepublished an initial estimate to quantify the user data collected by large Internet-based companies. Counting four types of interactions with company websites in addition to the hits from advertisements served from advertising networks, the authors found the potential for collecting data upward of 2,500 times on average per user per month.[1]


Internet marketing is inexpensive when compared to the ratio of cost against the reach of the target audience.[citation needed] Companies can reach a wide audience for a small fraction of traditional advertising budgets.[citation needed] The nature of the medium allows consumers to research and to purchase products and services at their own convenience.[citation needed] Therefore, businesses have the advantage of appealing to consumers in a medium that can bring results quickly.[citation needed] The strategy and overall effectiveness of marketing campaigns depend on business goals and cost-volume-profit (CVP) analysis. Internet marketers also have the advantage of measuring statistics easily and inexpensively. Almost all aspects of an Internet marketing campaign can be traced, measured, and tested.[citation needed] The advertisers can use a variety of methods, such as pay per impression, pay per click, pay per play, and pay per action.[citation needed] Therefore, marketers can determine which messages or offerings are more appealing to the audience.[citation needed] The results of campaigns can be measured and tracked immediately because online marketing initiatives usually require users to click on an advertisement, to visit a website, and to perform a targeted action.[citation needed] Such measurement cannot be achieved through billboard advertising, whereby an individual might be interested but then decide to obtain more information at a later time.[citation needed] Because exposure, response, and overall efficiency of Internet media are easier to track than traditional off-line media[citation needed]through the use of web analytics for instance[citation needed] Internet marketing can offer a greater sense of accountability for advertisers.[citation needed] The effects of multichannel marketing can be difficult to determine, but are an important part of ascertaining the value of media campaigns.


From the buyer's perspective, the inability of shoppers to touch, to smell, to taste, and "to try on" tangible goods before making an online purchase can be limiting.[citation needed] However, there is an industry standard for e-commerce vendors to reassure customers by having liberal return policies as well as providing in-store pick-up services.[citation needed] The buyer can also be biased if there is not sufficiently reliable product information available online

All products do not lend equally well for Web marketing Limitation of examining the product Problem of Delivery Problem of confidence Problem of payment Low Density of PCs & internet Legal Problems

Problems Web Marketing faces in India

Legal / Regulatory Problems E-documentation is not yet legally admissible
Absence of Taxation Law

Infrastructural Problems Low density of telephone, PCs & internet access

Infrastructural bottlenecks

Commercial Problems
Problem relating to payment Low density of credit cards Inability to pay foreign suppliers

Other Problems
Confidence in the system is low Problem of Hacking Problem of Illiteracy GROWTH OF WEB MARKETING
The Internet marketing has been increasing around in India since last 5 years. However, e-commerce has picked up only recently and Online Marketing is slowly growing up in India too. Currently, most of the business people were doing their business through online due to more technology development and internet users across the India. Day by day, online shopping is truly catching on in India, traditional brick and mortar stores are also getting the hand of doing business online. The trends demonstrate that traditional stores will keep on doing sufficient business while the online stores increase their virtual presence on the internet. The internet is also proving to a boon in disguise for many small and medium enterprises, which are joining hands with major Indian online portals to display their products and advertise their services. Internet Marketing is one of todays fastest growing marketing opportunities. With the use of todays Internet Marketing medium one can open doors to potential client who will be able to search and seek your website through the use of Search Engines.

Indian Firms taking to Web Marketing

Banking Industry Entertainment Industry Information Service Stock Broking Airways Hotels

There are seven main aspects of a promotional mix.[1] These are:

Advertising - Presentation and promotion of ideas, goods, or services by an identified sponsor. Examples: Print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, motion pictures, Web pages, banner ads, and emails. (Not Always Paid For) Personal selling - A process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation. Examples: Sales presentations, sales meetings, sales training and incentive programs for intermediary salespeople, samples, and telemarketing. Can be face-to-face or via telephone. Sales promotions - Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples: Coupons, sweepstakes, contests, product samples, rebates, tie-ins, self-liquidating premiums, trade shows, trade-ins, and exhibitions. Public relations - Paid intimate stimulation of supply for a product, service, or business unit by planting significant news about it or a favorable presentation of it in the media. Examples: Newspaper and magazine articles/reports, TVs and radio presentations, charitable contributions, speeches, issue advertising, and seminars.

Corporate image - The Image of an organization is a crucial point in marketing. If the reputation of a company is bad, consumers are less willing to buy a product from this company as they would have been, if the company had a good image. Direct Marketing is often listed as a the fifth part of the marketing mix Exhibitions - are try-outs. You make your product, and let potential buyers try the product, this way, you know directly what people see in your product. The downside, your competitor can see exactly what you are doing.

Promotional Mix CASE STUDY: It is surprising that Google has become one of the worlds largest search engines when the promotion strategy of the company relies heavily on viral, or referral, marketing. With its minimalist homepage and knack for gaining consumer trust through a morally superior advertisement policy, Google has gained consumer loyalty and in turn Google customers recommend Google to their friends. Their best reference is a friend with enough friends, they will create a buzz and significant exposure by word of mouth, the ultimate branding technique (The Four Ps). While word of mouth has been Googles predominant form of promotion, the company does use advertising. Most of Googles advertising is done online, with a few exceptions. Google promotes its services and products by purchasing its own AdWords internet ads and through its own Google channel on YouTube. A prime example of Googles minimalist internet advertising strategy was when they released Google Chrome. When the product was released, Google placed a link on its homepage that stayed up there for a very short period of time- a week. This modest advertising strategy truly shows the faith that Google has put in viral marketing. When it comes to Google Apps, the company has gone a little further in their advertising campaign through the use of television ads, the most notable being those for the Android mobile phone platform, sales promotions, and other public installations. In August of 2009, Google used sparse billboard advertisements to increase public awareness about Going Google. These billboards [ran] for a month portraying how and why some 3,000 organizations are signing up to use Google apps each day (Google Adopts New). The billboards, found in New York, Boston, Chicago, and San Francisco, were changed each day to entice commuters through direct marketing to go Google by visiting a special website (google.com/appsatwork) designed specifically to showcase Google applications. Coupled with the Going Google campaign in August, Google used a form of sales promotion (it is noted that since most of Googles services are free to use, these sales promotions can more likely be deemed use promotions) to give away Google fare when users who have Gone Google fill out a Google Doc describing their experience (Google Adopts New). Google does have its own Public relations division that releases and monitors press on product announcements and reviews, furthering the squeaky clean image Google has managed to establish and maintain. It is safe to assume that Google relies heavily on internet advertising and viral marketing. While the company has strayed from its low key promotional strategy at times, Googles reputation and brand has gained clout because of their dedication to simplicity.


Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts.The people in a given segment are supposed to be similar in terms of criteria by which they are segmented and different from other segments in terms of these criteria. These can broadly be viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups. Examples:

Gender Price Interests

Market Segmentation/Share of Wallet

Understanding the characteristics of High-Potential Customers

A Case Study by Harte-Hanks Research & Analytics

Harte-Hanks Research & Analytics San Diego, California 92037 Client Objective Gain an understanding of the companys share of telecommunications dollars spent by customers. Tailor sales and marketing plans toward industry segments, showing maximum revenue growth potential. Broader Audience for Case A share-of-wallet study can be fruitful for virtually any business, whether the client markets to consumers or other businesses, or even in a non-profit development context. It can be particularly relevant if customers frequently buy from multiple vendors, or if you have just grown through merger or acquisition and want to gain a quick handle on your acquired customer base. Its also valuable if your industry is going through rapid growth. If everybody in the sector is growing, youll want to get a handle on whether your own growth is hiding things: For instance, possibly the fact that customer penetration is shallow and that you are actually losing ground to key competitors. Whenever its undertaken, the end resulta marketing strategy focused on the best revenue opportunitiesis always desirable. The Harte-Hanks Solution In order to analyze the clients share of wallet in customer spending, Harte-Hanks first matched the clients customer list to Harte-Hanks Market Intelligences syndicated database (which contains statistics, by site, on long-distance voice expenditures and volumes of data communications product usage, each identified by service provider). For all matched sites, Harte-Hanks coupled average price points for data communications products with reported product usage in a formula that estimated data communications spending. Calculated data communications spending was added to the reported long-distance voice spending to arrive at total spending for each customer. The customers actual client billing data could then be compared with total estimated spending to arrive at the clients share-of-wallet versus the dollars each customer spent with other communications carriers. Once core calculations to determine total spending and share of wallet were completed, cuts of the customer base were made by industry and by three client-spending tiers. Harte-Hanks identified segments offering the most revenue potential in long distance, data communications, and combined overall revenue based upon estimated dollars spent with competitors on communications services. These segments were then analyzed on a time-series basis, viewing customer spending over a four-year history to spot the strongest growth trends.

The analysis identified areas where significant future revenue growth, beyond just that captured in current spending data, might lie. Finally, a cluster analysis identified groupings of customers with internally homogeneous characteristics that distinguished them, in general, from other customers. Clustering, which uses combinations of factors (rather than just single attributes) to formulate distinctions, yields a multi-dimensional picture of the various constituencies within the customer base. Findings Initial analysis showed that the client held its highest share of spending in the lowest targeted customer tier. Share was slightly lower in the highest tier, while the middle spending tier offered the most potential with only a 23% share-of-wallet captured. When these results were further segmented by industry and specific spending categories, pockets of potential emerged in all three tiers of monthly spending. For example, despite the relatively high share of wallet in the lowest spending tier, the Education, Wholesale and Government customers in that category still offered high potential across all three revenue categories (longdistance, data communications and total revenue). Some industries showed potential in specific service lines. For example, Transportation customers in the highest spending tier offered strong long-distance spending potential, while Business Services customers in the lowest tier offered strong data communications potential. Conversely, though they were not highlighted for either specific service, Communications customers in the middle tier presented strong overall spending potential. With historical trend analysis that pinpointed areas of growth, more middle-tier industry segments (where the current customer base was less penetrated) appeared to be good future revenue possibilities. Finally, the cluster analysis showed a new perspective. Rather than being dominated by industry characteristics, clustering factors tended to be size of site or enterprise and use of specific services. Seven clusters were identified:
Mom and Pop ISDN Heavies Voice and Data Heavies Telemarketing Smaller Private Network Average Joe Franchise Locations Client Customers

1. Franchise Locations (small sitelarge enterprise) 2. Mom and Pop (small sitesmall enterprise) 3. Average Joe (medium site with PBX) 4. Smaller Private Network (medium site with data services) 5. Telemarketing (medium-to-large site with high long-distance) 6. Voice and Data Heavies (large site with voice, data and T1) 7. ISDN Heavies (very large sites with very heavy ISDN)

The clients share of wallet was strongest in high-use clusters 6 and 7, and lowest in the small site clusters, 1 and 2. This illustrated that even though the client had a high share-of-wallet overall in the lowest of three spending tiers, there were still significant pockets of opportunity to be realized in targeting services to smaller sites. Results The client used this industry segment information and cluster analysis to design a new marketing strategy. Sales quotas, sales force structure and product pricing were all re-aligned to focus on areas of greatest opportunity based upon these discoveries about revenue potential. Ideas to Consider for Your Business Not every industry will have a syndicated database available for use in estimating customer spending, but that doesnt mean share-of-wallet analysis is impossible. Financial services firms, for example, may be able to estimate household credit usage or mortgage sizes by looking at demographics, psychographics or cluster codes. Other consumer or business-to-business marketers might survey a sampling of customers about stated frequency of purchases in the category, then compare the results to their actual purchase activity with your firm. From the limited sample surveyed, a model can be created based on purchase patterns and demographic or firmographic characteristics to project estimated total spending for non-surveyed customers. Aggregate spending statistics from government sources may also be available that can be used as a reality check on self-reported data, helping to normalize information by geographic areas. When looking at growth potential by customers and segments, incorporating a historical perspective is important, particularly in rapidly changing industries. While a segments current spending level may be modest, knowing that it has doubled in size over the past year suggests a trend to watch. Similarly, its important to consider combining that with a geographic perspective to look at how the territories where you market are changing. Trends of business and consumer populations by area, for instance, might be missed when looking only within your customer database. If a whole population is underrepresented in your customer base but is growing rapidly, reaching out to expand it presents a big opportunity. Cluster analysis to segment by multiple characteristics versus one-at-a-time can add distinct value, particularly with product packaging and promotion strategy. The descriptive pictures for each cluster offer a fertile basis for developing price offers, upgrade deals, or even advertising messages that might appeal to a specific group. Knowing each groups overall size, as well as its opportunity size, helps you know how to prioritize funds. If you elect to drive your marketing through a segmentation scheme, however, its wise to flag segment members at an initial point in time and then reevaluate periodically to track segment growth and inter-segment movement. Different customer life stages usually involve changes affecting the descriptive segment characteristics, and knowing the patterns of movement will give you important insights. Each company, industry and marketing situation offers unique characteristics, of course. These ideas are just suggestions, and we hope youll contact us at Harte-Hanks to discuss solutions for your specific business opportunity.


Brand management is the application of marketing techniques to a specific product, product line, or brand. The discipline of brand management was started at Procter & Gamble as a result of a famous[citation needed] memo by Neil H. McElroy.[1]


Developing a name for your company or product is crucial in brand building. Its not a process to take lightly, nor is it wise to rush to a decision because letterhead needs to be printed or the Web site is ready to launch. Here are 11 ELEMENTS to help successfully develop a brand name:

1 Dont describedistinguish. The biggest mistake companies make is being too descriptive with their names. A name should not attempt to simply describe; it should have the ability to suggest the essencethe unique characteristicsof your company. To be effective, a name must have brand potential. A name that is narrow or too descriptive does not have the depth or dimension to become an effective brand. 2 CEO involvement is key. Because selecting and adopting a new name is a highly emotional and political decision, you will not succeed without support from the top. Be sure that you have buy-in from the C-Suites in the beginning and that you keep them on board throughout the process. 3 Avoid alphabet soup. Names that are comprised of initials are meaningless. They get lost in the marketplace clutter and are extremely costly to support and promote. Jack Trout says in The New Positioning, A no-name name is the corporate equivalent of a disguise. Unless you are a GE or an IBM with millions to spend on advertising, avoid initials. Real or invented words are many times easier for consumers to remember. 4 Research cannot replace decision making. While research is a valuable tool to test for unforeseen red flags in a potential new name, there is a tendency for many to fall back on research to select the name. No one understands your organization and your positioning objectives better than you do. Dont allow popularity to determine the name. The most popular name is not necessarily the strongest name for the long term. 5 If its comfortableforget it. Everyone else will. The most successful names over the long term are often those that are initially the most controversial (think Google, Yahoo!, Chipotle, and Ikea). When you select a name, you are looking for something

to punch through the marketplace clutter, not add to it. Overtly literal meanings can sometimes limit growth and show a lack of company creativity. 6 Keep it brief. One word brands are most effective. Lengthy, multiple word names lead to truncation. When people abbreviate your name, you lose control over your brand. 7 Employee contests dont work. While they are often well-meaning, they do not result in names that are based on the appropriate strategic rationale. 8 Its about strategy, not emotion and politics. Many clients are surprised that selecting a name is such an emotionally charged decision. Naming decisions are fraught with politics, turf issues, and individual preferences. Stick to the strategy and do not allow the lowest common denominator solution. 9 Manage the decision-making process. There is always someone who will try to derail the process. Determine at the outset who the decision-makers will be, and then work diligently to keep the process on track. 10 Always be prepared for leaks. It is very difficult to keep a new name a secret. At the beginning of the naming process, prepare your press release and press kit in the event of a leak. 11 Dont expect unanimity. In the first few weeks following introduction, there is often a lot of discussion and publicity about a new name. Familiarity breeds comfort. As people become more familiar with the name, they will become more comfortable with it.
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randing, under any circumstance, is a tough job for the brand manager and the marketing organization. On the

one hand, the overall marketplace is all about continuously seeking and finding equilibrium: enough supply to meet demand, but not too much to create a glut; optimal distribution in the right markets to fill customer needs at the right time; pricing that provides value for the user, but some level of profit for the seller. In short, market forces are continuously trying to even out and level the system. On the other hand, branding and marketing are all about destabilizing the market: Creating differential advantages for the producing or supplying organization by making the product or service different from competitors. In other words, the brand manager and the marketer are always trying to create some marketplace disturbance that will offset the naturally occurring marketplace equilibriumto the advantage of the marketer and the disadvantage of the competitor. Brand managers and marketers have developed a multitude of marketing concepts over the years to try to create this market destabilization. The challenge, of course, comes when a brand and branding are used to create some type of marketplace disequilibrium. Then, when the brand manager shifts the focus from short-term market destabilizing activities such as price promotions, discounts, rebates and the likenone of which create much long-term marketplace valueto a heavy emphasis on brands and branding as ways of differentiating their products and services, serious issues arise. In too many instances, these issues arent well recognized or adequately dealt with by the brand manager.

So, the brand manager truly lives on a knifes edge. Initially, the goal is to create some type of market destabilization through brand development and/or brand promotional elements. Separate the brand from competing brands by creating some type of consumer brand preference. But once that brand preference is created, the brand managers challenge quickly shifts to some type of market stabilization approach among those converted brand users. The goal? Brand loyalty for that is the ultimate form of market stability, where both the buyer and the seller are satisfied with the status quo and a steady state of equilibrium results. This almost immediate shift from marketplace destabilization through various types of brand differentiation activities to market stabilization through the creation of ongoing brand loyalty is what creates so much difficulty for brand managers today. Its truly a fine line between stability and chaosone that successful brand managers master, but others dont. Be

too different and you move the brand to the outer fringes of the marketplace, into the well-known niche areas that are often hard to escape. Be too undifferentiated and you become a commodity, where price is the only differentiating factor, profits are hard to find and brands are hard to support. Trying to walk this fine line between brand differentiation and brand loyalty is where brand managers are in jeopardy. Break through with brand differentiation, then stabilize customer brand loyalty quickly and effectively using a different set of tools. Drift across the line on either side and trouble quickly develops. Following are some examples that illustrate these two key issues. Burger King, over the last few years, has tried myriad promotional and brand initiativeswithout ever seeming to find the right mix. The swinging door of brand management at Burger King has tried everything from the productdifferentiating flame broiling claim to a scary-looking, nonverbal king character who pops up seemingly without reason, to dancing and talking chickensand many, many others in between. Over the years, it seems the Burger King brand managers have become masters of short-term, market destabilization as testified to by the number of creative awards won. Highly acclaimed, short-term, attention-getting activities that even lead to some short-term sales boosts. But, when it comes to quickly transferring those market destabilizing activities into brand loyalty, everything seems to come apart. So whats the Burger King brand managers apparent solution? More market destabilizing gizmos and gimmicks. In other words, brand managers at Burger King simply cant walk the fine line of moving from using the brand to destabilize the market to creating continuing ongoing customer brand value. McDonalds does it; Burger King hasnt. Alternatively, look at Levis. The darling of the 1970s and 1980s denim-revolution got lost in the shuffle, when designer jeans destabilized the market. They made jeans an up-market fashion item. The logo on the back pocket became the critical consumer decision factor. Levis, with its 1849 gold rush heritage, has tried to fight back, although not very successfully, over the past couple of decades. Being unable or unwilling to create short-term market destabilizing activities, Levis has gone all out with attempts at brand differentiation. The most recent attempt was to relate Levis to the poet Walt Whitmana relationship that seems a stretch too far for even the most jaded Lycra-infused jeans buyers. Walt Whitman just doesnt seem to have the destabilizing power the brand really needs to differentiate Levis from the host of now authentic jeansa position Levis abandoned several years ago. The fine line between market destabilization and brand loyalty is one Levis brand managers simply havent mastered. Today, Toyota is caught on the wrong side of that fine line. The organization did a fabulous job of destabilizing the automobile marketplace by focusing on quality some years agosomething Detroit either ignored or couldnt develop. Toyota quickly converted that brand differentiation into brand loyalty. But all that customer brand loyalty, which was built up over the years, is now under threat. Toyota managers failed to understand the fine line of building a brand on product quality, and then supporting that quality brand position at all costs. Lose your brand quality, which is what seems to have happened to Toyota, and the marketplace will quickly seek equilibrium with buyers shifting to other nameplates. What will happen to the Toyota brand? No one really knows, but, it is clear that brand differentiation based on product quality is a slippery slope. Thats particularly true when managers begin to focus more on gaining or holding market share (i.e., market destabilization), than on maintaining customer loyalty. Branding is a tough job; its tougher than most brand managers really seem to realize. And its certainly tougher than the platform presentations you see at conferences and seminars around the world. The line between destabilizing the market and building brand loyalty is a very thin one. Maybe thats why even great brands are at risk when the brand managers cross or cant cross the line.
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Although there are different definitions of Positioning, probably the most common is: identifying a market niche for a brand, product or service utilizing traditional marketing placement strategies (i.e. price, promotion, distribution, packaging, and competition).

Also positioning is defined as the way by which the marketers creates impression in the customers mind. Positioning is a concept in marketing which was first introduced by Jack Trout ( "Industrial Marketing" Magazine- June/1969) and then popularized by Al Ries and Jack Trout in their bestseller book "Positioning - The Battle for Your Mind." (McGraw-Hill 1981) This differs slightly from the context in which the term was first published in 1969 by Jack Trout in the paper "Positioning" is a game people play in todays me-too market place" in the publication Industrial Marketing, in which the case is made that the typical consumer is overwhelmed with unwanted advertising, and has a natural tendency to discard all information that does not immediately find a comfortable (and empty) slot in the consumers mind. It was then expanded into their ground-breaking first book, "Positioning: The Battle for Your Mind," in which they define Positioning as "an organized system for finding a window in the mind. It is based on the concept that communication can only take place at the right time and under the right circumstances" (p. 19 of 2001 paperback edition). What most will agree on is that Positioning is something (perception) that happens in the minds of the target market. It is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It will happen whether or not a company's management is proactive, reactive or passive about the ongoing process of evolving a position. But a company can positively influence the perceptions through enlightened strategic actions.


A. Characteristics of the Campaign Positioning is the art of creating a brand that can persuade and realistically demonstrate its relevance to a customer's daily life to become his or her regular choice. Positioning is not created by the marketer or the individual brand itself, but by how others perceive it. In fact, Kosgrove says that the brand is not created by the marketer at all, but rather by the customer. Marketers don't create the positioning; rather, they create the strategic and tactical suggestions to encourage the customer to accept a particular positioning in his or her mind. For instance, bread and milk are not branded items, and despite companies' push to try and brand the two products, no company has found much success building brand equity. When customers want either one of those staple items, they usually choose what is on sale or what is available on their local grocer's shelves. Beer and cola, on the other hand, are heavily branded product categories: Consumers have formed a relationship with and will search out their preferred brands. To position your offering properly, you need to identify the key attributes or benefits that represent the value of your product or service. That will, in turn, create trust in your brand. As you begin to understand the relationship that your customers have with your brand, you will be able to more efficiently meet their

needs, wants and desires through your brand. "Positioning is everything," says Dettore. "Positioning studies identify the audience according to their needs, expectations and wants. Those drivers then come into developing products and services that best fit those audiences' needs and wants." While marketers do not literally position brands, they can have a significant influence on how they are positioned. Several characteristics can work in a positioning campaign, such as:

1. Relevance to a customer's lifestyle - The more apparent the connection is between the brand and
the prospect's daily activities, the greater the chances are that the prospect will buy that product. Relevance, or the connection that the prospect has to the brand identity, is how customers ultimately decide which brands to buy and which they will discard. Ask yourself: Is the identity of the brand too young for my target market? Is it too old? Is it too upscale?

2. Promises backed by support - Benefits need to be backed with some sort of persuasive reason to
believe the product's hype. Many times, products or services have some formula or patent that is "unique" from all the other brands out there. Why do we trust Pantene shampoo, for instance? Because we believe in the brand's "revolutionary" Pro-V formula that leaves hairs strong and healthy. Why do we believe Secret antiperspirant will keep women smelling sweet? Because "it's pH balanced for a woman, and not a man." Ask yourself: What promises are you making about your brand? Can my products or services follow through on those promises?

3. Message of the brand Is clear and focused - No matter how brilliant a strategy you have, you
need to be clear about the message. Some examples of crystal clear campaigns include "Gillette - The Best a Man Can Get" or "Choosy Moms Choose Jif." Ask yourself: Are my messages in line with what I want to convey about my products and services? Are there messages that can be misconstrued? If so, how can I change them to be more accurate?

4. Message of the brand Is appropriate - Have you ever seen a commercial on TV that seems to
come from left field? It grabbed your attention, but told you nothing about the product or service, and it seemed inappropriate for what is being sold. For instance, financial institutions can't effectively work humor into their ads because the preconceived notion is that banks are not supposed to be fun or entertaining. The message that you send needs to be appropriate to the product or service you are trying to brand. Ask yourself: Are my advertising messages in line with the image I'm trying to convey about my company, products and services? If not, could they be hurting, rather than helping, the brand?

5. Product Is the genuine article - Many successful companies build customer trust by claiming to be
the real McCoy. For instance, Pace Picante sauce tells you that they are not the brand from New York City. Coke tells you that "It's the Real Thing," "Coke Is It" and "Always Coca-Cola." The copy line helps reinforce that this brand is the genuine article for that category of products. Even service companies can make claims to being the real deal. AT&T's True Voice lets its customers know that they are receiving a level of clarity above what other telecommunication companies carry through their fiber optic lines. Ask yourself: In what ways are my products and services more "genuine" than my competitors'? How can I emphasize those elements to give the brand a competitive advantage? B. Types of Prompts in a Campaign Once you determine the way in which you can reach your market, the next thing to look at is how you are going to lure your customer to try your brand. That method is called the "positioning prompt" of the brand.

A brand can evoke several different types of prompts. Be aware, however, that positioning prompts are not verifiable scientific hypotheses, and there is a great deal of interpretation and high degree of risk that is involved in choosing one positioning over the other. That's why it makes sense to look at alternative positioning types before deciding on which one you will attach to your brand. 1. Quality positioning - Perception of quality is probably one of the most important elements for a brand to have and can be combined with any of the other prompts below. "If you look at the most profitable companies in the country, they have a very high perception of quality, and it may be different than measured quality," says Kosgrove. "Somebody can come in and say, 'My product is better.' Look at the computer industry, for instance. People say that Apple is a better product [than the PC]. But PC manufacturers will say that the PC is better because more people believe in it. You can talk about how your product or service is better, but you have to get people to believe in it." Quality, or the perception of quality, lies in the mind of the buyer. Build a powerful perception of quality, and you will succeed in creating a powerful brand. Al Reis and Laura Reis, authors of "The 22 Immutable Laws of Branding," say the best way to increase perception of quality is to narrow the company's focus. When you narrow a product's focus, they explain, you become a specialist rather than a generalist, and a specialist is perceived to know more, or be of "higher quality" than a generalist. Another way to build the perception of high quality is to simply attach a higher price tag to your brand. Most people think that they know a high quality product from another, but in reality, things are not always as they seem. For example, does a Rolex really keep better time than a Timex? Does a Mont blanc pen write better than a Cross? Do Sony radios get better reception that Sanyo's? Do Calloway Clubs really improve your golf game? Not really, but all of these brands carry a perception of higher quality because of their higher prices. Believe it or not, high price is a benefit to some customers. It allows the affluent consumer to obtain psychological satisfaction from the public purchase and consumption of a high end product. Of course, the product or service does need to have some perk or difference to justify the higher price. For instance, Rolex makes a heavier watch than Timex. Mont blanc has a fatter pen than Cross. Calloway clubs have a bigger head than Titleist. Each of these characteristics gives the perception of quality, but they don't necessarily improve performance.

2. Value positioning -- Although at one time, items that were considered to be a good "value" meant that they were inexpensive, that stigma has fallen by the wayside. Today, brands that are considered a value are rising in popularity amongst consumers. In fact, packaged good brands, especially cereals, experienced a backlash when their prices rose too quickly. Private supermarket labels, as well as smart companies like Quaker, which introduced a breakfast cereal that aims at undercutting brands like Kellogg's or Post, have found a strong market. Southwest Airlines is probably the best example of how a company has been able to offer discount prices and still keep a strong brand identity. In fact, most of the other major airlines have followed Southwest's lead by rolling out value-priced flights under new, cobranded names. 3. Feature-driven prompts -- More marketers rely on product/service features to differentiate their brands than any other method. The advantage is that the message is clear, and the positioning will be credible if you stick to the facts about the product. Unfortunately, feature-orientated stances are often rendered useless if the competition comes out with a faster or more advanced model. 4. Relational prompts -- One of the most effective ways to create interest in a brand is to send out a positioning prompt that resonates well with potential buyers. For instance, Sketchers equates sneakers with cool and that characteristic passes to all who wear them. When Apple was down on its luck in the overall computer marketplace, started asking computer users to liberate themselves from the PC camp

and" Think Different." Jeep has created a car and branded apparel for rugged individualists. These brands have achieved positioning based on who buys what they sell, not solely by what they sell. 5. Aspiration positioning -- These are positioning prompts that offer prospects a place they might like to go, or a person they might like to be, or a state of mind they might like to achieve. The now defunct Joe Camel mascot for Camel cigarettes infuriated parents, anti-smoking lobbyists and the federal government for promoting an identity of cool that young people could aspire to and achieve through smoking their cigarettes. And a new campaign from IBM has random people exclaiming," I am Superman," because they use a new version of the Lotus Notes software program. 6. Problem/solution prompts -- As the name implies, problem/solution prompts show the consumer how a sticky situation can be relieved quickly and easily with the brand or service. What problem/solution campaigns lack in imagination, they usually make up for in directness and credibility. Packaged good brands tend to be the most frequent users of problem/solution prompts. For example, frozen meals cut meal preparation time to minutes. Detergents and cleansers also make good use of these prompts. 7. Rivalry-based positioning -- By definition, positioning deals with how one brand is thought of compared to its obvious competitors. Therefore, the idea of a rivalry-based position might seem redundant but many campaigns take this approach. Laundry detergents, for one, are constantly going head-to-head to prove which one has the most power to lift stains. Other campaigns that challenge consumers to be the judge have cropped up between car companies, garbage bags, even between search engines on the Web. 8. Warm and fuzzy positioning -- Underneath our capitalist driven needs to consume, we are still docile and emotional animals. As such, many marketers play on our feelings. In the book, "Building Brand Identity: A Strategy for Success in a Hostile Marketplace," author Lynn Upshaw writes, "How people feel about a brand is oftentimes need- or desire based, which means that emotional or psychological approaches can oftentimes be very effective as positioning prompts." Need proof? AT&T's commercials are often tearjerkers, asking friends and family to "Reach Out and Touch Someone." Volvo hints that through purchasing their Swedish import cars, you are buying the only real way to "Drive Safely." 9. Benefit-driven positioning -- Other brands base their entire positioning on the fact that they give back to the consumer. Discover credit card, for instance tells customers that "It Pays to Discover." Use the card and get money back. Discover was among the first major credit cards companies to provide its users with a financial incentive for using their card. Now nearly all credit cards offer some type or reward, be it frequent flier miles, discounts on gas or store purchases. C. Determining Which Position Will Work for Your Brand To determine which position will work best for your company, ask yourself what business you are really in. Similarly, determine what the benefits are for your products and services. If you sell computers, for example, you maybe in the business of: Information Speed Convenience Technology

If you sell travel packages, you may be in the business of: Tourism Recreation

Entertainment Stress-reduction

Next, focus on relevant reality-based customer benefits. After completing the necessary research and reviewing the relevant examples of positioning, your marketing team should be able to describe a precise customer benefit that can be addressed in some way by the brand. The team members must be clear on what customer benefits are being offered and how they are based on real life needs and desires. To accomplish this, have them answer the following questions: Who are your competitors and how are they positioning their brands? What can you offer that is different? Who would buy our product or service? What markets should we target with our brand? Do we need to register trademarks for our products or services? Are there extension opportunities for these branded products or services? If so, what are they? How much advertising support are we going to need for the brand and how much will it cost? Does our budget allow for those costs? How descriptive is the brand? Are there ways that it can be improved? Can the brand name be pronounced easily? Does it translate well into other languages?

Are there regulatory issues? If so, how will we overcome them?


The attitudinal and demographic description of the core prospect or customer to whom the brand is intended to appeal, or to whom the marketing plan is directed. Criteria for evaluating the target audience description:

Should balance size and relevance. Your target audience must be large enough for your efforts to be profitable, but not so large that it is generic. Don't make the mistake of trying to appeal to everyone; if you do, you will not be able to effectively differentiate your brand. Be inclusive of users and non-users - What are the opportunities to grow revenue by converting the most likely non-users of your brand into users? Makes it clear who the target is, and who it is not

Reinforces the essence of your brand by ensuring it is consistent with the characteristics of your target audience. For example, if the essence of your food brand is about being natural and 'pure', its unlikely that people who are uninterested in nutritional topics would be a good match for your brand.

Questions to consider as you develop target audience description:

Who is your brand's best customer? How do you describe your best customers?

- Demographic - Psychographic - Technographic

Are there opportunities to divide your target users into groups (segments) that will enable you to make your communications to them more relevant and effective? Using the natural foods brand as an example, dividing your target audience into athletes and moms may permit you to develop communications that are more relevant to each segment, than if you tried to market to the group as a whole. What is the value of each target user group to the company? Does the target user group contribute enough revenue to make it worthwhile to market to them? You may find, for example, that people who make their own soap love your natural food brand, but there aren't enough of them to market to efficiently. Whats the 'pain point' for each target user group? Does your brand solve a specific, important need or problem for the target user? Is it a need or problem that another brand is unable to solve?


1. Sit down with your team and involve everyone in creating "guiding principles" for your office that require everyone to uphold core values of honesty, professionalism, ethics, integrity, caring and health. Work with your people to create additional words and phrases that display caring and professionalism. When everyone in your organisation is involved in creating a service excellence culture, you may find that everyone will tend to promote and adhere to what they have helped to create--provided that YOU walk-the talk. 2. Locate Your Demographic - who buys your products? In order to develop a brand, you must firstly establish your key and satellite demographics, to allow you to tailor your message and corporate image to their needs. Do your homework, and find out who you are likely to involve in your product line.

3. Develop Brand Values - too often, people confusing branding with a merely visual process. Branding is also the creation of associated values with your name, and it is important that you take the time to work out what your brand stands for 4. Understand Your Customer - This goes hand in hand with locating your demographic. You need to understand how your customer thinks and what your customer wants in order to satisfy their demands through your product, both physically and in terms of the brand you portray. 5. Be Consistent - Your brand values, and your product or level of service must be consistent across the board. The brand is the most important asset in your business, and you should work tirelessly to drive your image and values home through your product delivery every single time. One bad experience can ruin your brand for a customer forever. 6. Communicate Your Brand Message - Live and breathe your brand message, and promote it at all times. Through the way you deal with customers, suppliers, your product itself, your premises, your staff - absolutely every part of your organisation, large or small, must convey the message that your company has to offer to the outside world, as well as in your advertising and promotional campaigns.

Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off. Organizations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name). An example of a brand extension is Jello-gelatin creating Jello pudding pops. It increases awareness of the brand name and increases profitability from offerings in more than one product category. A brand's "extendibility" depends on how strong consumer's associations are to the brand's values and goals. Ralph Lauren's Polo brand successfully extended from clothing to home furnishings such as bedding and towels. Both clothing and bedding are made of linen and fulfill a similar consumer function of comfort and hominess. Arm & Hammer leveraged its brand equity from basic baking soda into the oral care and laundry care categories. By emphasizing its key attributes, the cleaning and deodorizing properties of its core product, Arm & Hammer was able to leverage those attributes into new categories with success. Another example is Virgin Group, which was initially a record label that has extended its brand successfully many times; from transportation (aeroplanes, trains) to games stores and video stores such a Virgin Megastores. In the 1990s, 81% of new products used brand extension to introduce new brands and to create sales.[1] Launching a new product, is not only time consuming but also needs a big budget to create awareness and to promote a product's benefits.[2] Brand extension is one of the new product development strategies which can reduce financial risk by using the parent brand name to enhance consumers' perception due to the core brand equity.[3][4]

While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a diluted or severely damaged brand image. Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity.[5][6] Most of the literature focuses on the consumer evaluation and positive impact on parent brand. In practical cases, the failures of brand extension are at higher rate than the successes. Some studies show that negative impact may dilute brand image and equity.[7][8] In spite of the positive impact of brand extension, negative association and wrong communication strategy do harm to the parent brand even brand family.[9] Product extensions are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke in same product category of soft drinks. This tactic is undertaken due to the brand loyalty and brand awareness they enjoy consumers are more likely to buy a new product that has a tried and trusted brand name on it. This means the market is catered for as they are receiving a product from a brand they trust and Coca Cola is catered for as they can increase their product portfolio and they have a larger hold over the market in which they are performing in.

SONY EXTENDS BRAVIA BRAND TO MORE HOME ENTERTAINMENT PRODUCTS Micro-display HDTVs, Front Projectors and Home Theater Systems Have New Names LAS VEGAS, Feb. 27, 2007 Extending the BRAVIA brand that has become synonymous with high performance and striking design, Sony Electronics today announced that its microdisplay televisions, including SXRD models, home theater front projectors and new hometheater-in-a-box products will now carry the popular moniker.

BRAVIA, an acronym for Best Resolution Audio Visual Integrated Architecture, was first introduced in the United States with Sonys flat-panel LCD HDTV line in late 2005. Less that one year later, Sonys LCD market share in this country went from single digits to an industryleading 30 percent and has been one of the industrys strongest success stories. Not only in the States but also internationally, BRAVIA stands for the best in home entertainment, so it makes perfect sense to extend this brand to these additional product

categories, said Randy Waynick, senior vice president of the Home Products Division at Sony Electronics. When you see the BRAVIA brand, you know youre not only getting the exceptional quality, but also the distinctive elegance that Sony is known for delivering.

In conjunction with the brand extension, Sony today announced several new BRAVIA products, including LCD flat-panel and 3LCD micro-display HDTVs, front projectors and home theater-in-a-box products.

New BRAVIA flat-panel LCDs include the full HD 1920 x 1080p resolution V-series, featuring the 46-inch KDL-46V3000 and the 40-inch KDL-40V3000 models. Additionally, there is the new S-series LCD line that offers performance and value with 1366 x 768 progressive resolution, featuring the 46-inch KDL-46S3000, 40-inch KDL-40S3000, 32-inch class (31.5 inches measured diagonally) KDL-32S3000 and 26-inch KDL-26S3000 models (all screens are measured diagonally). Also, the company introduced the 32-inch class (31.5 inches measured diagonally) KDL-32XBR4, which adds the new Motionflow technology that effectively eliminates image blurring and motion artifacts like judder.

In the BRAVIA micro-display product line, Sony introduced three models, including the new slim cabinet (22 percent thinner than last years models) 1920 x 1080p resolution E-series, which features the 46-inch KDF-46E3000 and KDF-50E3000 televisions. Also, the company introduced the 37-inch KDF-37H1000 model with 1280 x 720p resolution and a compact, lightweight cabinet for easy placement in entertainment centers or other tight spaces.

BRAVIA branding will replace the Grand WEGA rear-projection TV line, which has retained leading market share in the micro-display category since its inception five years ago.

In BRAVIA front projection, the 1280 x 720p resolution 3LCD VPL-AW15 unit was introduced. The model features high brightness of 1,100 lumens and dynamic contrast at 12,000:1 (with Advanced Iris 2 operating), offering a viable entry into high-quality front projection home theater. In this category, BRAVIA replaces the Cineza brand previously carried by Sonys front projectors.

The BRAVIA brand will also apply to three new home theater-in-a-box systems, including the DAV-HDX265, DAV-HDX267W and DAV-HDX500 models. Each one features a 5-disc DVD changer, HDMI output, and a digital media port for adding optional accessories to playback audio files stored on compatible Bluetooth-enabled products, WiFi PCs or select Network Walkman and iPod portable audio devices.

All models will be available later this spring and summer direct from Sony at sonystyle.com and Sony Style stores in fashion malls nationwide, as well as at authorized Sony retailers across the country.

Brand proliferation is the opposite of brand extension. While in brand extension, new items are added using an existing brand name and several products are offered under the same brand name, in brand proliferation, more items are brought in with new brand names. In other words, the firm has several brands in the same product/product category. It means that the list of independent brands swells up. For instance, Unilever has more than 25 brands of ice creams and P&G has more than a dozen brands of detergents. Brand proliferation can help expand the market as well as the companys market share in the category. It can also increase the companys clout at the retail level by offering variety. New brands also generate excitement of the sales team of the company at the same time, however,

there are also many pitfalls in brand proliferation. More brands from a companys stable enhance competition in the market. It also paves the way for the companys brands to compete among themselves, a phenomenon known as brand cannibalization. In particular, when a firm introduces a number of brands in the same product line with an amount of parity among them, the danger of cannibalization is high; the share of individual brands can come down. Another disadvantage is that the company may dissipate its resources over several brands, which may not guarantee proportionate returns, nurturing just a few brands to a highly profitable level often proves to be a wiser option. Having brands with distinctive positioning is, strategically, the best way of minimizing cannibalization. If different brands are designed to deliver different benefits to different segments of markets, it can restrict competition among brands. To avoid cannibalization completely is often impossible. It is not essential either, but one has to be sure whether a net incremental benefit that justifies the additional cost and complexity accrues by adding one more brand. A good marketing strategy strikes a fine balance so that too many brands do not result in brand cannibalization and erosion of profits. For instance, HLL manages it well. It enjoys a 70 percent share of the four lakh tons personal wash market, and 30 per cent share of the 20 Lakh tons fabric wash market. It resorts to both brand extensions and brand proliferation in a balanced manner in these categories. HLL finds that both strategies are required to fight competition; they have to be blended appropriately.