b2b marketing - 5. decisions in facing low cost rivals , met institute

7/25/2019 B2B Marketing - 5. Decisions in Facing Low Cost Rivals , MET Institute

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B2B Marketing – Principlesneeded to reach the Indian

consumers

MET Institute – 2010

Ujjwal Phadnis



Principles needed to reach Indianconsumers

Must revamp their corporate structures and havethe autonomy needed for signicant results.

Focus on growth opportunities in urban clusters.

- Products and prices must be tailored to localpreferences.

Finally, they must learn how to market, sell, anddistribute products through a variety of channels andretail formats




um! Brands" #hina success stor$ o% &'# andPi((a )ut*

KF opened its rst restaurant on hina!s mainlandin "#$%, now operates &,'#% in hina compared with

(,&() in *+

arns nearly ) percent of global revenue. /um0!stotal sales there, which soared )" percent last year,

helped the company shrug o1 the *+ recession.

/um0!s business in hina will eventually have morethan &, restaurants in the country.

!




um! Brands" #hina success stor$ o% &'# andPi((a )ut*

- /um0 3rands, has three divisions4 the *nited +tates,hina, and elsewhere

- /um0 3rands! Pi55a 6ut restaurants in hina sell asmuch hinese food as pi55a,

- 7n &' the company launched a new chain, ast2awning, that serves only hinese food.

- KF tailors menus to local palates and launchesnew items every month.

- KF use local designers to reshape a whole productcategory, creating separate premium and low-cost

brands.




#ustomi(e locall$" don+t tweak ,lo-alproducts

+outh Korea!s 89 lectronics struggled when it cameto 7ndia in the "##s

89 invested in local design and manufacturingfacilities.

Many 7ndians use their :;s to listen to music, 89introduced new models with better speakers and, to

keep prices competitive, less costly displays.- ., markets man$ original products made %orIndia"

ppliances with programming menus in local

languages,




#ustomi(e locall$" don+t tweak ,lo-al products89 invested heavily in local <?2 and sta1ed itsoperations with thousands of top-notch 7ndiandesigners and engineers.

89!s product innovation centre in 3angalore is thecompany!s largest outside +outh Korea.

- 89 has shortened order- fullment cycles in sia

from months to @ust weeks. :he company is 7ndia!s market leader in :;s,refrigerators, air conditioners, and washingmachines.




Think cities" not regions or countries

- ompanies do better by focusing on urban clustersthan by

conceiving of an entire country as one market.

- 7n Aapan, more than half of all consumers live in :okyo or Bsaka.

- fth of +outh Korea!s live in +eoul.

7n hina, more than )( million people will leave

the countryside by &&(, creating more than &)megacities with populations upward of ( million.

- 7n 7ndia, more than % million people will leavevillages and migrate to cities by &(, creating as

many as )C megacities.



Principles needed to reach Indianconsumers/

#ustomi(e locall$" don+t tweak ,lo-al products 7n 7ndia , price is a crucial part of customi5ation.

;olume ? not a high prot margin is the key to

sustainable success.

Products in categories are sinking to price pointsthat were unthinkable only a few years ago.

onsumer organi5ations have found thatcompelling entr$leel products and -rands areessential %or attracting consumers to higher

priced ones*




#ustomi(e locall$" don+t tweak ,lo-al products =de-engineering> premium products to focus on thefeatures and attributes that sian customers valuemost.

EampleP?9, for eDample, cut the price of rest toothpastemore than ( percent in hina by reducing the costof packaging, which is less important to consumers

than being able to choose from a variety of Eavours.




#ustomi(e locall$" don+t tweak ,lo-al products Eample

'inancing a consumer product* 8evi +traussrecently announced that it would let customers in

7ndia pay in three monthly instalments for @eanscosting more than <s "(.

Pilot version of the program, in 3angalore, showedthe company that consumers who took advantage of

this option spent an average of ( percent more.7ntroducing it enabled 8evi +trauss to preserve thestatus of its @eans as an upmarket, aspirationalproduct, while bringing them within reach of millions

of less auent young consumers.




.earn to market and sell across a ariet$ o%channels

Penetration rates for traditional and online mediaare lower in developing sia than in developed

markets, so e1orts to inEuence purchase decisionsare more compleD.

onsumer companies must be adept at shaping the

consumers! view of brands across a number ofchannels and through a variety of mediaGnot only

:;, radio, print, and the 7nternet, but also eents"outdoor ads" mo-ile messaging" instorepromotions" and educational campaigns*





Modern retail chains account for only about a fthof all consumer goods sales in 7ndiaH small" %amil$

run shops are much more important* onsumer product companies must somehowinEuence access to shelf space and display, sincepointo%sale factors have an ever greater impact

on purchase decisions.

Many global companies get things wrong becausethey attempt to rel$ on the sales teams o%

thirdpart$ distri-utors and the key-account-management model that worked in developed





- dapting Iuickly to capture growth from directtoconsumer channels will become more important in

7ndia .

- 7n urban clusters, for consumer goods, online salesgrowth is beginning to oertake traditionalchannels.

- 7n Aapan, sales in direct channels hae eceededthose in department stores so far this year.

+ales at :ao3ao, hina!s largest online retailer, have





- 8ancme reports that its partnership with 3aidu,hina!s largest search engine, helped lift online sales

in hina by ) percent.

- mLay has become one of hina!s largestconsumer packaged-goods companies by selling its

products door-to door through a network of ),sales representatives.

b2b marketing - 5. decisions in facing low cost rivals , met institute

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