marketing strategy : marketing mix development example of car accessory maker
TRANSCRIPT
Marketing Mix DevelopmentMarketing Mix DevelopmentApproach for a Car Security Approach for a Car Security SystemSystem
1.1. To propose a marketing mix for XYZ Security To propose a marketing mix for XYZ Security Systems, a sister company of ABCSystems, a sister company of ABC
Marketing Mix SummaryMarketing Mix Summary
ProductProduct Two need segments: security & convenienceTwo need segments: security & convenience Need gap: No products tailor-made for the convenience segmentNeed gap: No products tailor-made for the convenience segment
Gaps to be filled by Model 50 & Model 100Gaps to be filled by Model 50 & Model 100 Performance issues with existing products gives XYZ an edgePerformance issues with existing products gives XYZ an edge Installation critical to performance. InstallerInstallation critical to performance. Installer’’s training s training
levels/willingness uncertainlevels/willingness uncertain
PricePrice Within a given range the buyer price sensitivity is lowWithin a given range the buyer price sensitivity is low Most of the buyers fall in the price segment:Most of the buyers fall in the price segment:‘‘WhateversWhatevers’’ Establishing functionality provides an opportunity to increase Establishing functionality provides an opportunity to increase
brand loyaltybrand loyalty Skimming Pricing : Model 300 & other high end variantsSkimming Pricing : Model 300 & other high end variants
Models build aspiration, become benchmarks of functionalityModels build aspiration, become benchmarks of functionality Penetration pricing for Model 50, 100. Cannibalize on sales of Penetration pricing for Model 50, 100. Cannibalize on sales of
alarm systemsalarm systems Competitive Pricing for Model 200Competitive Pricing for Model 200
Marketing Mix SummaryMarketing Mix Summary PromotionPromotion
Consumer Truth: I yearn for something which is truly secure & reliable Consumer Truth: I yearn for something which is truly secure & reliable in this insecure, unreliable worldin this insecure, unreliable world
Brand Personality: Brand to be embodied as a personal car-guardBrand Personality: Brand to be embodied as a personal car-guard Borrows from the Borrows from the ““BodyguardBodyguard”” platform that epitomizes reliable platform that epitomizes reliable
securitysecurity ‘‘SecuritySecurity’’ platform has not been appropriated by any other brand platform has not been appropriated by any other brand
Platform of security can be extended to home security system etc.Platform of security can be extended to home security system etc. Phase 1 to communication to build awareness, Phase 2 to build brand Phase 1 to communication to build awareness, Phase 2 to build brand
imageimage PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in
communicationcommunication
DistributionDistribution Skeleton of distributor management control system does not exist. Skeleton of distributor management control system does not exist.
Little attempt in rationalizing territories & performance managementLittle attempt in rationalizing territories & performance management Existing distributors unhappy with short term distributor management Existing distributors unhappy with short term distributor management
approachapproach Network of accessory distributors independent to spare parts. Unlike Network of accessory distributors independent to spare parts. Unlike
spare parts, accessory is a spare parts, accessory is a ‘‘PushPush’’ product. product. Recommended Distribution Option : XYZ Exclusive Recommended Distribution Option : XYZ Exclusive
From Products to BrandsFrom Products to Brands
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
AugmentedProduct
AugmentedProductNeed SegmentsNeed Segments
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Need SegmentsNeed Segments
1. Two Segments
2. Current Alignment
3. Need Gaps
4. XYZ Need Alignment
Security Need SegmentSecurity Need Segment
ArticulatingArticulating““Even if my car is robbed, I want to be sure Even if my car is robbed, I want to be sure
that it was not robbed due to my that it was not robbed due to my carelessness or lack of efforts on my partcarelessness or lack of efforts on my part””
““A smart thief can get away with the most A smart thief can get away with the most secure systems. But I have to make it tough secure systems. But I have to make it tough for himfor him””
Actually SayingActually SayingI want a security system that actually I want a security system that actually
worksworks
Convenience Need SegmentConvenience Need Segment
ArticulatingArticulating ““I donI don’’t want to manually lock every door. I t want to manually lock every door. I
just want to do it centrallyjust want to do it centrally”” ““My young brother simply loves pressing My young brother simply loves pressing
the remote buttons.He loves showing off the remote buttons.He loves showing off almost as if he is a James Bond. You almost as if he is a James Bond. You should look at the should look at the tesshantesshan(style)(style)””
Actually SayingActually Saying I donI don’’t want a security system. I only want t want a security system. I only want
central lockingcentral locking Convenience of of central locking, the remote adds an element of style
Convenience of of central locking, the remote adds an element of style
Current Need AlignmentCurrent Need Alignment
Alignment to Security SegmentAlignment to Security Segment Existing products are the alarm system & security system. Products Existing products are the alarm system & security system. Products
target the security need segment customerstarget the security need segment customers No alarm/security system targeted at cars with central locksNo alarm/security system targeted at cars with central locks
““If a guy has central locking, I give him a rebate of 400-500 RsIf a guy has central locking, I give him a rebate of 400-500 Rs””(Prakash (Prakash Motors)Motors)
Consumers belonging to the convenience need segment are Consumers belonging to the convenience need segment are being sold the alarm/security system instead of a central being sold the alarm/security system instead of a central locking systemlocking system
““I donI don’’t have a remote central locking system. So to the customers I sell t have a remote central locking system. So to the customers I sell the alarm systemthe alarm system””(Preet Motors)(Preet Motors)
““I have heard that Silicon has a central locking system that does not I have heard that Silicon has a central locking system that does not have a remote. I sell only Piranhahave a remote. I sell only Piranha””(Classic Motors)(Classic Motors)
““I think a remote central locking will sell. Most of my customers want I think a remote central locking will sell. Most of my customers want thatthat”” (Classic Motors) (Classic Motors)
Need GapsNeed Gaps
Customers What she wants (Usually)
What she gets
(Usually)
I want a key that can lock all my doors
Manual Central Locking
Alarm System
I want a cool remote to lock all my doors
Remote Central Locking
Alarm System
I have a central lock.I want a security system
Alarm System without Actuator
package( worth Rs. 1200)
Alarm System with a discount of Rs 300-
400
I want a security system. Not the hi-fi system
An Alarm System Security System
No products tailor-made for the convenience segment.Customization absent in existing products
No products tailor-made for the convenience segment.Customization absent in existing products
XYZ Core ProductsXYZ Core Products Manual Central Locking System - Model 50Manual Central Locking System - Model 50
Lock/unlock all doors, aligned to status of driverLock/unlock all doors, aligned to status of driver’’s door.s door. Remote Central Locking System – Model 100.Remote Central Locking System – Model 100.
Remote control capability to manual central locking Remote control capability to manual central locking Car Alarm System – Model 200Car Alarm System – Model 200
Special Door, trunk and bonnet switches are connected Special Door, trunk and bonnet switches are connected to the 200 control unit. to the 200 control unit.
Siren sound if the vehicle is tampered with Siren sound if the vehicle is tampered with Car Security System – Model 300Car Security System – Model 300
Immobilizes the vehicle in addition to the siren sounding Immobilizes the vehicle in addition to the siren sounding an alarm in case of intrusion. an alarm in case of intrusion.
XYZ Need AlignmentXYZ Need Alignment
• Convenience Need Segment: Model 50, Model Convenience Need Segment: Model 50, Model 100100
• Security Need Segment:Model 200, Model 300Security Need Segment:Model 200, Model 300
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
AugmentedProductAugmentedProduct
1. Core Product
2. Product Delivery
3. After Sales
4. Augmented Product
Always listen to the market Always listen to the market
Feedback of Existing ProductsFeedback of Existing Products
Accessory Retailer Feedback on Core ProductAccessory Retailer Feedback on Core Product Motor problemsMotor problems
““The motor seems to conk off.This happens in around 5-10% of The motor seems to conk off.This happens in around 5-10% of casescases””(Prakash Motors)(Prakash Motors)
““Most of the complaints that I get are motor relatedMost of the complaints that I get are motor related””(Preet Motors)(Preet Motors)
Remote related problemsRemote related problems ““ I get frequent complaints of remote not working. Sometimes the remote I get frequent complaints of remote not working. Sometimes the remote
range is a problem. One has to go very close to the carrange is a problem. One has to go very close to the car””(Classic Motors )(Classic Motors ) ““Often the remote buttons have to be pressed hard. Sometimes the light Often the remote buttons have to be pressed hard. Sometimes the light
when pressing the button fails to light offwhen pressing the button fails to light off””(Prakash Motors) (Prakash Motors)
Quality is a factorQuality is a factor ““I think Silicon products are better because it is an ISO 9002 I think Silicon products are better because it is an ISO 9002
companycompany””( Prakash Motors)( Prakash Motors)
Performance/Quality problems with existing products.Performance/Quality problems with existing products.
Our Core Product Vs. Our Core Product Vs. CompetitionCompetition
Product : Proven Technology & QualityProduct : Proven Technology & Quality Licensed from Directed, the World Leader in Vehicle Security SystemsLicensed from Directed, the World Leader in Vehicle Security Systems Adapted for Indian conditions by Adapted for Indian conditions by ABC (Parent Company of XYZ)ABC (Parent Company of XYZ)
Engineering TeamEngineering Team Directed designs accepted by GM, Hyundai, Suzuki etc.Directed designs accepted by GM, Hyundai, Suzuki etc. Only product design approved by FCCOnly product design approved by FCC Manufactured by Manufactured by ABC (Parent Company of XYZ)ABC (Parent Company of XYZ) under ISO 9001 AND QS under ISO 9001 AND QS
9000 standards.9000 standards. ABC (Parent Company of XYZ)ABC (Parent Company of XYZ) is an approved vendor to many OE is an approved vendor to many OE
CustomersCustomers
Competition Product: Uncertain QualityCompetition Product: Uncertain Quality Unknown Technology Pirated or Copied.Unknown Technology Pirated or Copied. Key Features Like Shock Sensors not reliableKey Features Like Shock Sensors not reliable Imported from unknown sources or manufactured in plants with lower Imported from unknown sources or manufactured in plants with lower
QC Standards.QC Standards. Limited OE ExperienceLimited OE Experience
Edge: Proven Technology, Quality Edge: Proven Technology, Quality
Feedback on InstallationFeedback on Installation
Accessory retailers perceive installation to be Accessory retailers perceive installation to be very critical to product performancevery critical to product performance
““If you do not install properly, the alarm might not If you do not install properly, the alarm might not activate.One of the doors might not be lockedactivate.One of the doors might not be locked””(Preet (Preet Motors)Motors)
Improper installation related complaintsImproper installation related complaints ““Of the three major complaints: Activation, Motor & Of the three major complaints: Activation, Motor &
Locking problem; activation problems are due to poor Locking problem; activation problems are due to poor installation by usinstallation by us””(Prakash Motors)(Prakash Motors)
Proper installation of product necessary to ensure performanceProper installation of product necessary to ensure performance
The Electrician: UTMThe Electrician: UTM
Not a uniform practice that the installer is trained by the Not a uniform practice that the installer is trained by the security system company in installation of security systemsecurity system company in installation of security system
Most accessory retailers apprehensive whether the UTM Most accessory retailers apprehensive whether the UTM installer would be amenable to the idea of traininginstaller would be amenable to the idea of training
““He has been in the business for 20 years. I do not know whether he He has been in the business for 20 years. I do not know whether he will be keen to learn about installation all over againwill be keen to learn about installation all over again””(Classic Motors)(Classic Motors)
These guys think that they know all. They have big egos. I donThese guys think that they know all. They have big egos. I don’’t think t think that they will welcome any further trainingthat they will welcome any further training””(Distributor A)(Distributor A)
Installers themselves are wary of any further trainingInstallers themselves are wary of any further training ““Unless there is something new. I donUnless there is something new. I don’’t feel the need for trainingt feel the need for training”” ““I have never received a complaint that something went wrong with I have never received a complaint that something went wrong with
the security system that I installedthe security system that I installed””
Installer's current training levels uncertain. Installer not open to further training
Installer's current training levels uncertain. Installer not open to further training
XYZ: Product Delivery XYZ: Product Delivery
XYZ needs to be deeply XYZ needs to be deeply involved in installationinvolved in installation
1.1. By putting up a By putting up a comprehensive training comprehensive training package for installerspackage for installers
2.2. By incentivizing installers to By incentivizing installers to undergo trainingundergo training
3.3. By insisting that accessory By insisting that accessory retailers use certified retailers use certified installers for installationinstallers for installation
After Sales ServiceAfter Sales Service
Besides Margin, After Sales Service is the key factor when a Besides Margin, After Sales Service is the key factor when a retailer recommends a systemretailer recommends a system
Accessory retailer is 1Accessory retailer is 1stst guy to be hassled by the customer guy to be hassled by the customer ““ I receive frequent complaints about the motor and the remote. I receive frequent complaints about the motor and the remote.
Initially we were replacing it ourselves. Now AutoCop does it, so we Initially we were replacing it ourselves. Now AutoCop does it, so we direct the customers to the companydirect the customers to the company””(Classic Motors)(Classic Motors)
““Usually when a customer has a problem, he brings the car to my Usually when a customer has a problem, he brings the car to my shop. I call the Wheels guy to come over & fix itshop. I call the Wheels guy to come over & fix it””(Preet Motors)(Preet Motors)
““My business is car air conditioning. I donMy business is car air conditioning. I don’’t want to spend much time t want to spend much time on security systems that I installon security systems that I install”” ( Hans Air Conditioners) ( Hans Air Conditioners)
Accessory retailer receives flak for poor after sales serviceAccessory retailer receives flak for poor after sales service ““Customers complain about after sales services. The AutoCop guys Customers complain about after sales services. The AutoCop guys
do not arrive on time/day promised. Sometimes they repair the do not arrive on time/day promised. Sometimes they repair the system, and it conks off again latersystem, and it conks off again later”” (Classic Motors) (Classic Motors)
After Sales ServiceAfter Sales Service
Accessory retailer knows that the after sales service of the Accessory retailer knows that the after sales service of the security system will have an impact on customer security system will have an impact on customer relationships. relationships.
In an insecure world,where the customer is being wooed by In an insecure world,where the customer is being wooed by the car dealer, accessory retailer wants to retain his the car dealer, accessory retailer wants to retain his customer desperately. customer desperately.
““Most of customers today buy directly from car dealers.I donMost of customers today buy directly from car dealers.I don’’t want t want my customers to face problems with the stuff they buy from my customers to face problems with the stuff they buy from meme””(Prakash Motors)(Prakash Motors)
A lifetime warranty & an effective after sales network will be mission critical in winning a retailer’s loyalty
A lifetime warranty & an effective after sales network will be mission critical in winning a retailer’s loyalty
Quality of after sales service has an impact on my relationship with a customer. I want to safeguard the relationship. I feel insecure about the growing influence of the car dealer.
Quality of after sales service has an impact on my relationship with a customer. I want to safeguard the relationship. I feel insecure about the growing influence of the car dealer.
Key Retailer InsightKey Retailer Insight
A lifetime warranty & an effective after sales network will be mission critical in winning a retailer’s loyalty
A lifetime warranty & an effective after sales network will be mission critical in winning a retailer’s loyalty
Augmented ProductAugmented Product
Besides core product,the augmented product should ensureBesides core product,the augmented product should ensure1.1. Effective installationEffective installation
2.2. Lifetime warranty and effective after sales networkLifetime warranty and effective after sales network
Effective Installation will build on product reliability and Effective Installation will build on product reliability and perceived qualityperceived quality
Attractive warranty and after sales network will build strong Attractive warranty and after sales network will build strong retailer loyalty and will be a critical factor in the retailer loyalty and will be a critical factor in the ‘‘pushpush’’ strategystrategy
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Summary Two need segments: security & convenience Need gap: No products tailor-made for the convenience segment
Gaps to be filled by Model 50 & Model 100 Performance issues with existing products gives XYZ an edge Installation critical to performance. Installer’s training levels/willingness
uncertain Improved warranty & an effective after sales service :mission critical in
winning a retailer’s loyalty
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Pricing StrategyPricing Strategy
Price SegmentsPrice Segments
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Price SegmentsPrice Segments
1. Price Sensitivity
2. Perceived Value
3. Price Segments
4. Segment Opportunities
Buying Process Buying Process
Step 1 Awareness Word of
mouth, Observation
Step 2 Information Search Hardly any
Step 3 Evaluate AlternativesAdvice from dealer,Threshold of money
Step 4 Purchase Car showroom, Car accessory dealer
Step 5 EvaluatePerformance, Acclimatization /Blind Spots
Buying Process:Threshold of Buying Process:Threshold of MoneyMoney
Evaluate AlternativesEvaluate AlternativesThe buyer has a threshold of The buyer has a threshold of
money to be spent say 5000. money to be spent say 5000.
““We did not want to go for a We did not want to go for a
hi-fi system for Rs 10 000hi-fi system for Rs 10 000””The car/accessory dealer The car/accessory dealer
recommends the model of his recommends the model of his
favoured brand that comes favoured brand that comes
within the thresholdwithin the threshold
The dealer has the final The dealer has the final
wordword
Evaluate AlternativesEvaluate AlternativesThe buyer has a threshold of The buyer has a threshold of
money to be spent say 5000. money to be spent say 5000.
““We did not want to go for a We did not want to go for a
hi-fi system for Rs 10 000hi-fi system for Rs 10 000””The car/accessory dealer The car/accessory dealer
recommends the model of his recommends the model of his
favoured brand that comes favoured brand that comes
within the thresholdwithin the threshold
The dealer has the final The dealer has the final
wordword
Step 1 Awareness Word of
mouth, Observation
Step 2 Information Search Hardly any
Step 3 Evaluate AlternativesAdvice from dealer,Threshold of money
Step 4 Purchase Car showroom, Car accessory dealer
Step 5 EvaluatePerformance,
Acclimatization /Blind Spots
Two price points in buyer’s mind.A hi-fi system @ 8-10 thousand.A normal one @ 3-5 thousand
Two price points in buyer’s mind.A hi-fi system @ 8-10 thousand.A normal one @ 3-5 thousand
Price SensitivityPrice Sensitivity
Price Sensitivity: ConsumerPrice Sensitivity: Consumer’’s Point of Views Point of View ““When buying a car of 3-4 Lakhs, I am not really worried about extra When buying a car of 3-4 Lakhs, I am not really worried about extra
expense of 3-5 thousand. I know that I will have to shell out an extra expense of 3-5 thousand. I know that I will have to shell out an extra 30-40 thousand on accessories /insurance /registration30-40 thousand on accessories /insurance /registration”” (Consumer) (Consumer)
Price Sensitivity: RetailerPrice Sensitivity: Retailer’’s Point of Views Point of View ““ A consumer does not come with a particular model in his mind. I A consumer does not come with a particular model in his mind. I
can recommend the model and the companycan recommend the model and the company”” (Prakash Motors) (Prakash Motors) ““A customer may ask for a certain brand. But I can usually sell him A customer may ask for a certain brand. But I can usually sell him
the system that I keep(i.e Piranha)the system that I keep(i.e Piranha)””( Classic Motors)( Classic Motors)
Within a given range (say 3-5 thousand), the buyer price sensitivity is low.Within a given range (say 3-5 thousand), the buyer price sensitivity is low.
Perceived ValuePerceived Value
Primary Benefit :User Primary Benefit :User A more efficient locking systemA more efficient locking system
““I am assured that all locking is done once I press the remote buttonI am assured that all locking is done once I press the remote button”” ““Even if I am careless, I am still assured that the locking has been been Even if I am careless, I am still assured that the locking has been been
donedone””
Perceived Barrier : Non-UserPerceived Barrier : Non-User Functionality is not fully establishedFunctionality is not fully established
““Security system is for styleSecurity system is for style”” ““I go for functionality….no I go for functionality….no sosha(sosha(show-offshow-off)) ”” ““The only thing it(security system) does is consume batteryThe only thing it(security system) does is consume battery”” ““I have already taken car insurance. I donI have already taken car insurance. I don’’t need a gizmot need a gizmo
Perceived value is not high since the functionality is not established.Primary benefit is central locking, not security
Perceived value is not high since the functionality is not established.Primary benefit is central locking, not security
Perceptual Map Perceptual Map
Security System
Car Graphics
Car Audio
Car MP3/TV
Power Steering
Leather UpholsteryAlloy Wheels
High Functionality
Low Functionality
High Style/Convenience
Low Style/Convenience
Caught in the middle. Not high on functionality.Not high on style/convenience
Caught in the middle. Not high on functionality.Not high on style/convenience
Price SegmentsPrice Segments
Primary Price SegmentPrimary Price Segment
CurrentBuyers
Most of the buyers fall in the segment:‘Whatevers’Most of the buyers fall in the segment:‘Whatevers’
Segment Opportunity 1Segment Opportunity 1
CurrentBuyers
Establishing functionality provides an opportunity to increase brand loyalty by increasing perceived value
Establishing functionality provides an opportunity to increase brand loyalty by increasing perceived value
FutureBuyers
Segment Opportunity 2Segment Opportunity 2
Having a low value product like central locking encourages price sensitive non-users to sample the product
Having a low value product like central locking encourages price sensitive non-users to sample the product
FutureBuyers
NonUsers
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
1. Segmentation on Price
2. Model 300
3. Model 50,100
4. Model 200
Pricing StrategyPricing Strategy
Segmentation on PriceSegmentation on Price
Model 50, Model 100
Model 300
Model 200
Pricing Strategy:Model 300Pricing Strategy:Model 300
Skimming pricing strategy: Skimming pricing strategy: pricing strategy involving pricing strategy involving the use of a high price the use of a high price relative to competitive relative to competitive offeringsofferings Skimming strategies Skimming strategies
used by marketers of used by marketers of high-end goods or high-end goods or servicesservices
Without other cues, price Without other cues, price serves as an important serves as an important indicator of a productindicator of a product’’s s quality to buyersquality to buyers
SkimmingSkimming
Pricing Strategy:Model 300Pricing Strategy:Model 300
High price and performance High price and performance increases the perceived increases the perceived value of the productvalue of the product
Currently, market for high-Currently, market for high-end security system is end security system is limited, the strategy limited, the strategy provides opportunity for provides opportunity for Model 300 and above to Model 300 and above to become the benchmarks of become the benchmarks of qualityquality
SkimmingSkimming
Model 300 & other high end variants become benchmarks of functionality.Model 300 & other high end variants become benchmarks of functionality.
PenetrationPenetration
Pricing Strategy :Model 50, Pricing Strategy :Model 50, Model 100Model 100
Penetration pricing Penetration pricing policy: policy: pricing strategy pricing strategy involving the use of a involving the use of a relatively low entry price as relatively low entry price as compared with competitive compared with competitive offerings; based on the offerings; based on the theory that this initial low theory that this initial low price will help secure price will help secure market acceptancemarket acceptance
Designed to generate many Designed to generate many trial purchasestrial purchases
PenetrationPenetration
Pricing Strategy: Model 50, Pricing Strategy: Model 50, Model 100Model 100
Low price provides an Low price provides an excellent hook to lure price excellent hook to lure price sensitive non-users into sensitive non-users into buying a central buying a central locking/remote lockinglocking/remote locking
Has the potential to Has the potential to cannibalize on sale of cannibalize on sale of higher variantshigher variants
Model 50, 100 increase penetration. Cannibalize on sales of alarm systems.
Model 50, 100 increase penetration. Cannibalize on sales of alarm systems.
CompetitiveCompetitive
Pricing Strategy:Model 200Pricing Strategy:Model 200
Competitive Pricing Strategy:Competitive Pricing Strategy: pricing strategy that de-pricing strategy that de-emphasizes price as a emphasizes price as a competitive variable by pricing competitive variable by pricing goods at the general level of goods at the general level of competitorscompetitorsFirms focus their own Firms focus their own
marketing efforts on the marketing efforts on the product, distribution product, distribution and promotion elements and promotion elements of the marketing mixof the marketing mix
Need to leverage the Need to leverage the augmented product with augmented product with effective installation and effective installation and prompt after salesprompt after sales
Build differentiation through Build differentiation through higher perceived value by higher perceived value by reliable product performance reliable product performance and excellent serviceand excellent service
Build differentiation (higher perceived value)by reliable product performance and excellent service
Build differentiation (higher perceived value)by reliable product performance and excellent service
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Summary Within a given range the buyer price sensitivity is low Most of the buyers fall in the price segment:‘Whatevers’ Establishing functionality provides an opportunity to increase brand
loyalty Skimming Pricing : Model 300 & other high end variants
Models build aspiration, become benchmarks of functionality Penetration pricing for Model 50, 100. Cannibalize on sales of alarm
systems Competitive Pricing for Model 200
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
BrandingStrategyBrandingStrategy
1. Connection Triangle: General
2. Key Consumer Insight
3. Product Connection Triangle
4. Promotion Plan
Product BenefitWhy I like it
Consumer UHTWhy I value it
BrandWhy I trust it
Connection Triangle Connection Triangle
Connection Triangle:FevicolConnection Triangle:Fevicol
Product BenefitQuality adhesive
Consumer UHTBonds of family/
friendship/love usually break
BrandA bond that will not break
User BenefitUser Benefit
Primary Perceived Benefits: UserPrimary Perceived Benefits: User A more efficient locking systemA more efficient locking system
““I am assured that all locking is done once I press the remote buttonI am assured that all locking is done once I press the remote button”” ““Even if I am careless, I am still assured that the locking has been Even if I am careless, I am still assured that the locking has been
donedone A A ‘‘DoneDone’’ thing thing
““I have seen it on many carsI have seen it on many cars”” ““like an audio system, got to have itlike an audio system, got to have it””
The main perceived benefit is a ‘more efficient locking system’ The main perceived benefit is a ‘more efficient locking system’
Non-User BarrierNon-User Barrier
Perceived Benefits : Non User Perceived Benefits : Non User StyleStyle
Perceived Barrier : Functionality is not fully establishedPerceived Barrier : Functionality is not fully established ““Security system is for styleSecurity system is for style”” ““Why spend an extra on an old car. When I buy a new Why spend an extra on an old car. When I buy a new
one, I might considerone, I might consider”” ““I go for functionality….no sosha(show-off)I go for functionality….no sosha(show-off)”” ““The only thing it(security system) does is consume The only thing it(security system) does is consume
batterybattery”” ““I have already taken car insurance. I donI have already taken car insurance. I don’’t need a gizmot need a gizmo””
The effectiveness of security systems is not proven
The effectiveness of security systems is not proven
Key Consumer InsightKey Consumer Insight
Articulating: There is nothing that a thief cannot break. However from my end I know that the theft has not happened because of my carelessness
Articulating: There is nothing that a thief cannot break. However from my end I know that the theft has not happened because of my carelessness
Actually Saying: I yearn for something which is truly secure & reliable in this insecure,unreliable world
Actually Saying: I yearn for something which is truly secure & reliable in this insecure,unreliable world
Product BenefitReliable, secure system
Consumer UHTI yearn for reliability &
security
Brand Personal Car-Guard, always by
your side
Connection Triangle Connection Triangle
Personal Car GuardPersonal Car Guard
Brand to be embodied as a personal car-guardBrand to be embodied as a personal car-guard Borrows from the Borrows from the ““BodyguardBodyguard”” platform that epitomizes platform that epitomizes
reliable security reliable security Is a strong platform that strings the consumer insight Is a strong platform that strings the consumer insight
and product benefit togetherand product benefit together
‘‘SecuritySecurity’’ platform has not been appropriated by any other platform has not been appropriated by any other brandbrand None of the insurance brands, lock brands own securityNone of the insurance brands, lock brands own security
The platform of security can be extended to other security The platform of security can be extended to other security systems like home security system etc.systems like home security system etc.
The 360 Degree Brand The 360 Degree Brand ExperienceExperience
A Brand is not just what you say it is, the brand is the A Brand is not just what you say it is, the brand is the totality of what the consumer experiences totality of what the consumer experiences From quality, to taste, to packaging, to the retail From quality, to taste, to packaging, to the retail
environment, to line extensions, to ergonomics, environment, to line extensions, to ergonomics, design and colour, to sales promotions, to price, to design and colour, to sales promotions, to price, to corporate reputations and public relations, to the corporate reputations and public relations, to the sales force and service experiences, to the delivery sales force and service experiences, to the delivery trucks, to word-of-mouth, to telemarketing scripts trucks, to word-of-mouth, to telemarketing scripts and receptionists style, to the way you answer the and receptionists style, to the way you answer the telephone, to prejudices and attitudes, to collective telephone, to prejudices and attitudes, to collective and individual memories, to history. and individual memories, to history.
Scraps and straws that add up to a companyScraps and straws that add up to a company’’s most s most valuable asset: a 360* Brandvaluable asset: a 360* Brand
-- -- Shelly Lazarus, 1998 Shelly Lazarus, 1998
Consumer
Packaging
New / Emerging media
POP
One - to - One Promotions
PR+Events
The 360 Degree The 360 Degree Communication ExperienceCommunication Experience
Mass Media
Communication TaskCommunication Task
Phase 1Phase 1 To launch the XYZ Brand and build awarenessTo launch the XYZ Brand and build awareness
Phase 2Phase 2 To build brand personality of a To build brand personality of a ““Personal Car GuardPersonal Car Guard””
Media StrategyMedia Strategy Role of Various MediaRole of Various Media
PR PR To build news around the reliability of security systems To build news around the reliability of security systems To exploit the American connection and become a thought leader in To exploit the American connection and become a thought leader in
security systemssecurity systems POPs POPs
To create in-store visibilityTo create in-store visibility To influence the consumerTo influence the consumer
Advertising : Press Ads, OutdoorAdvertising : Press Ads, Outdoor At the launch stage to build excitement around the brand At the launch stage to build excitement around the brand Spread awarenessSpread awareness Motivate tradeMotivate trade
Internet & EventsInternet & Events To create news and information about the productTo create news and information about the product To reach out to the young male adultTo reach out to the young male adult
Mad Ideas!Mad Ideas!
Car insurance and security system was co-branded ?Car insurance and security system was co-branded ?
Mercedes Benz endorsed our security system?Mercedes Benz endorsed our security system?
We reduced the car theft rate in the city we test market in?We reduced the car theft rate in the city we test market in?
The police commissioner used our system in his/her car?The police commissioner used our system in his/her car?
We threw a challenge to car thieves to We threw a challenge to car thieves to ““Dare to Steal the carDare to Steal the car””
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Summary Consumer Truth: I yearn for something which is truly secure & reliable in
this insecure, unreliable world Brand Personality: Brand to be embodied as a personal car-guard
Borrows from the “Bodyguard” platform that epitomizes reliable security ‘Security’ platform has not been appropriated by any other brand
Platform of security can be extended to home security system etc. Phase 1 to communication to build awareness, Phase 2 to build brand
image PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in
communication
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Existing NetworkAudit
Existing NetworkAudit
Existing ABC (Parent Company Existing ABC (Parent Company of XYZ) Distributor MCSof XYZ) Distributor MCS
Forecast Plan Control Report
Manager Retail
Distributor
DSMRetailer / Customer Sales Plan
Route plan
Contact Plan
Customer / Retail Card
DSM Daily Score Card
Territory Sales Target
Retail Manager Contact Plan
Distributor Coverage Target
DSM Target
DSM Weekly Score Card
DSM Monthly Score Card
Distributor Weekly Score Card
Distributor Monthly Score Card
Review
Distributor Sales Target
Market Intelligence Retail Mgr
Segment Manager
Marketing Department
Review
Review
Segment Mgr Monthly Score Card
Retail Mgr Ride with
Segment Mgr Weekly Score Card
Segment Sales Target
Review
Distributor Daily Score Card
Review
Direct Sales input
Retail Mgr Daily Score Card
Review
Review
Review
Review
Segment Mgr Daily Score Card
Review
Review
Review
Distributor Quarterly ROI Analysis
Marketing Ride with
Retail Mgr Weekly Score Card
Retail Mgr Monthly Score Card
Distributor Management Distributor Management Control System (DMCS) Control System (DMCS)
CritiquesCritiques DMCS Audit conducted for West Region Regional OfficeDMCS Audit conducted for West Region Regional Office Important CritiquesImportant Critiques
Daily/weekly/monthly control and reporting absent both Daily/weekly/monthly control and reporting absent both for field sales force as well for the distributorfor field sales force as well for the distributor
Attainment of targets, variance, course corrections Attainment of targets, variance, course corrections absent. Post-mortem reports generated rather than absent. Post-mortem reports generated rather than proactive actionproactive action
No review of performance of distributor and corrective No review of performance of distributor and corrective action plans to improve performanceaction plans to improve performance
No formal feedback loops between the distributor and the No formal feedback loops between the distributor and the field sales/H.O. field sales/H.O.
No system to formally capture market intelligence, No system to formally capture market intelligence, analyze data, formulate responses to competitor/market analyze data, formulate responses to competitor/market activitiesactivities
The skeleton of distributor management control system does not exist. Distributor management personality driven, not system driven.
The skeleton of distributor management control system does not exist. Distributor management personality driven, not system driven.
Sales Distribution on Dealer Sales Distribution on Dealer RankRank
52.5%
19.6%
28.0%
% sales from top 10 % sale from Rank 10-20 % sale from Rank 21-72
Out of 72 distributors in West Zone, 52.5% sales come from top 10. Little attempt in rationalizing territories & performance management
Out of 72 distributors in West Zone, 52.5% sales come from top 10. Little attempt in rationalizing territories & performance management
Distributor Feedback: Distributor Feedback: Relationship ManagementRelationship Management
Feedback from interviews conducted with two distributorsFeedback from interviews conducted with two distributors Distributor A & Distributor B in South West Region and Distributor A & Distributor B in South West Region and
New West Region respectivelyNew West Region respectively
Short term approach to distributors managementShort term approach to distributors management • ““Car companies are trying to help their car dealers by Car companies are trying to help their car dealers by
selling spare parts through them, whereas ABC (Parent selling spare parts through them, whereas ABC (Parent Company of XYZ) is planting more distributors in the Company of XYZ) is planting more distributors in the same territory resulting in price warssame territory resulting in price wars””(Distributor B)(Distributor B)
• ““I get undercut by ABC (Parent Company of XYZ) I get undercut by ABC (Parent Company of XYZ) distributors of other areas who are willing to give any distributors of other areas who are willing to give any terms and conditions in my territory. Ultimately who terms and conditions in my territory. Ultimately who loses in the long run?!loses in the long run?!””( Distributor A)( Distributor A)
Existing distributors unhappy with short term distributor management approachExisting distributors unhappy with short term distributor management approach
Distributor Feedback: Distributor Feedback: Relationship ManagementRelationship Management
No involvement of Senior Company ManagementNo involvement of Senior Company Management• No national company-distributor meet. No No national company-distributor meet. No
dialogue/feedback on productsdialogue/feedback on products ““I want to go and see their Coimbatore plant. But I keep waiting for I want to go and see their Coimbatore plant. But I keep waiting for
opportunityopportunity””( Distributor B)( Distributor B)• ““I have other MDs calling up once in a while, to find out I have other MDs calling up once in a while, to find out
supply position, but not ABC (Parent Company of XYZ) .I supply position, but not ABC (Parent Company of XYZ) .I have seen MD , only as a picturehave seen MD , only as a picture””(Distributor B)(Distributor B)
• No company official from H.O. visits my No company official from H.O. visits my stockists/retailersstockists/retailers
Distributors regret absence of involvement of senior managementDistributors regret absence of involvement of senior management
Distributor Feedback: Market Distributor Feedback: Market IntelligenceIntelligence
Products/marketing not aligned to realities of replacement Products/marketing not aligned to realities of replacement marketmarket
Slow MovingSlow Moving• ““Can easily produce a fast moving , high volume clutch cable, Can easily produce a fast moving , high volume clutch cable,
instead of slow moving, low volume speed o-cablesinstead of slow moving, low volume speed o-cables””(Distributor B)(Distributor B) Product StrategyProduct Strategy
• ““Brakes India released disc brakes in the market as a self sufficient Brakes India released disc brakes in the market as a self sufficient unit. ABC (Parent Company of XYZ)unit. ABC (Parent Company of XYZ)’’s disc brakes was a confusing s disc brakes was a confusing set of different unitsset of different units””(Distributor B)(Distributor B)
Price Insensitive Price Insensitive • ““For truck segments which is very price sensitive ,need to keep For truck segments which is very price sensitive ,need to keep
prices competitiveprices competitive””(Distributor B)(Distributor B) ““Products like cigarette lighters at Rs . 250 on a price list. Can be Products like cigarette lighters at Rs . 250 on a price list. Can be
fitted in accessory market in Rs. 100fitted in accessory market in Rs. 100”” (Distributor B) (Distributor B) Over Engineered Over Engineered
• ““VehicleVehicle’’s life is 5-10 years. ABC (Parent Company of XYZ) s life is 5-10 years. ABC (Parent Company of XYZ) equipment will last for 15 yearsequipment will last for 15 years”” (Mr. Gopal) (Mr. Gopal)
ABC (Parent Company of XYZ) does not capture the changing needs/realities of market place
ABC (Parent Company of XYZ) does not capture the changing needs/realities of market place
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Our RecommendationsOur Recommendations
1. Accessory Vs. Spare Parts Distribution
2. Options before XYZ
3. Evaluation of Options
4. Recommended Option
Distributing Accessories Vs. Distributing Accessories Vs. Spare PartsSpare Parts
Accessories Spare Parts
Independent network of accessory distributors. The accessory distributors do not distribute spare parts.
Independent network of spare parts distributors/stockists. Spare part distributors do not distribute accessories
Target audience is the accessory retailer /installer
Target audience is the workshops and mechanics. Mechanics create a pull for the product
‘Push’ product.Demand for accessories have to be created
‘Pull’ product.
Require competitive selling , “incentives” to induce retailers to sell our brands
Selling by order taking
Typical promotion will be an ad in an auto magazine like Overdrive, with massive POP support(banners, posters, product displays and demo boards etc.)
A typical promotion will be mechanic contact programmes where company MSRs will educate/train/sell to mechanics
Distribution OptionsDistribution Options
1.1. XYZ Exclusive Distribution Network XYZ Exclusive Distribution Network
2.2. ABC (Parent Company of XYZ)ABC (Parent Company of XYZ)’’s Existing + XYZ in some areass Existing + XYZ in some areas
3.3. ABC (Parent Company of XYZ)ABC (Parent Company of XYZ)’’s Existing Distribution s Existing Distribution
Recommended OptionRecommended Option
Recommended: XYZ Exclusive Recommended: XYZ Exclusive ProsPros
High control over distribution process, service , pricing and High control over distribution process, service , pricing and channel costschannel costs
High sales , since only an accessory focused network will High sales , since only an accessory focused network will provide salesprovide sales
ConsCons Low on Flexibility to exit. But XYZ has long term plans .Low on Flexibility to exit. But XYZ has long term plans . To use existing network as a transition optionTo use existing network as a transition option
The existing network will provide some spillover salesThe existing network will provide some spillover sales
Investment : Investment vs. return in an Investment : Investment vs. return in an exclusive accessory network will become very exclusive accessory network will become very attractive once other accessory products are attractive once other accessory products are pushed in the network.pushed in the network.
Marketing Mix DevelopmentMarketing Mix Development
Product
Strategy
Pricing
Strategy
Promotion
Strategy
Distribution
Summary Skeleton of distributor management control system does not exist.
Little attempt in rationalizing territories & performance management Existing distributors unhappy with short term distributor management
approach Network of accessory distributors independent to spare parts. Unlike
spare parts, accessory is a ‘Push’ product. Recommended Distribution Option : XYZ Exclusive Transition: Use ABC (Parent Company of XYZ) existing network while
building XYZ Exclusive network
Finally
• When can we say we have acquired a When can we say we have acquired a competitive distribution capability?competitive distribution capability?
Competitive Distribution Competitive Distribution CapabilityCapability
Top management committed to distribution strategy & Top management committed to distribution strategy & planning.planning.
Senior manager dedicated to distribution planning & Senior manager dedicated to distribution planning & management.management.
Have a disciplined distributor management control systemHave a disciplined distributor management control system Helps identify market size, distributor volume by brand/market segment Helps identify market size, distributor volume by brand/market segment Helps process what-if scenarios with different distributor portfoliosHelps process what-if scenarios with different distributor portfolios Manages performance: tracks, reviews and course correctsManages performance: tracks, reviews and course corrects Manages complex distributor relationshipsManages complex distributor relationships
Understand the concept of distribution intensityUnderstand the concept of distribution intensity Balance distribution mix to cover market segments requiring Balance distribution mix to cover market segments requiring
different intensity different intensity Understand the related concepts of coverage, penetration and Understand the related concepts of coverage, penetration and
market share.market share. Know their strategic moves: Maintain, Penetrate, Grow, Know their strategic moves: Maintain, Penetrate, Grow,
Terminate.Terminate.
Get in TouchGet in Touch
Sarvajeet Chandra Sarvajeet Chandra +91 9920803060+91 9920803060• [email protected]@sapphirez.in• [email protected]@gmail.com
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