Description
This presentation is about Shadow of Obsolescence example Bajaj Chetak, Idea of indispensability Hindustan Motors Ambassador, Planned Obsolescence example Gold spot from Coca Cola, Kelvinator from Electrolux, Dangers of R & D example Dell’s Web PC.
Marketing Myopia: Application in Indian Industries
Group Members: Shyam Kakkad (122) Saloni Masalia (127) Pratik Ravani (139) Harsh Shah (145) Nishant Shah (150)
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Table of Contents
Sr. No. 1 2 3 4 5 6
Topic Introduction Shadow of Obsolescence Idea of indispensability Planned Obsolescence Dangers of R&D References
Page No. 3 5 8 12 17 20
2
Marketing Myopia
1. Introduction
Marketing myopia is a term used in marketing as well as the title of an important marketing paper written by Theodore Levitt. This paper was first published in 1960 in the Harvard Business Review; a journal of which he was an editor. Some commentators have suggested that its publication marked the beginning of the modern marketing movement. Its theme is that the vision of most organizations is too constricted by a narrow understanding of what business they are in. It exhorted CEOs to re-examine their corporate vision; and redefine their markets in terms of wider perspectives. It was successful in its impact because it was, as with all of Levitt's work, essentially practical and pragmatic. Organizations found that they had been missing opportunities which were plain to see once they adopted the wider view. The paper was influential. The oil companies (which represented one of his main examples in the paper) redefined their business as energy rather than just petroleum; although Royal Dutch Shell, which embarked upon an investment program in nuclear power, subsequently regretted this course of action. One reason that short sightedness is so common is that people feel that they cannot accurately predict the future. While this is a legitimate concern, it is also possible to use a whole range of business prediction techniques currently available to estimate future circumstances as best as possible. There is a greater scope of opportunities as the industry changes. It trains managers to look beyond their current business activities and think "outside the box". It can be said that if a buggy whip manufacturer in 1910 defined its business as the "transportation starter business", they might have been able to make the creative leap necessary to move into the automobile business when technological change demanded it. 3
People who focus on marketing strategy, various predictive techniques, and the customer's lifetime value can rise above myopia to a certain extent. This can entail the use of long-term profit objectives (sometimes at the risk of sacrificing short term objectives). Furthermore, the article focuses on customer rather than product. It emphasizes more on satisfying the customer needs. In short, the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it. Levitt throws a sense of light on the following beliefs that the industries have been into over the period of time: Shadow of Obsolescence Idea of indispensability Dangers of R & D Planned Obsolescence Population Myth Production Pressure These are the traditional myths which led the industries to fall into the trap of selfdeceiving cycle. This report gives a detailed study of few of the myths and its implications on the practical application in the industry. It focuses on the failure of few products that has not taken into considerations the learning’s from the HBR article from Levitt.
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2. Shadow of Obsolescence
It is impossible to mention a single major industry that did not at one time qualify for the magic appellation of "growth industry." In each case its assumed strength lay in the apparently unchallenged superiority of its product. There appeared to be no effective substitute for it. It was itself a runaway substitute for the product it so triumphantly replaced. Yet one after another of these celebrated industries has come under a shadow.
2.1. Case: Bajaj Chetak (1972-2005)
Brand: Bajaj Chetak Company: Bajaj Auto Ltd The brand which ruled the Indian roads have been laid to rest. Bajaj has officially stopped the production of Bajaj Chetak from December 2005. The stocks lasted up to March 2006. The company said that the product no longer have any relevance to the customer. To quote Rajiv bajaj “Any one who clings to the past is a failure". The brand which was launched in 1972 virtually owned the two wheeler segment. If reports are to be believed, Chetak was an unavoidable dowry in 1970's and 80's. It had a waiting period of more than 10 year. The brand which was named after the legendary stallion of the Rajput king Maharana Pratap, was known for the reliability and sturdiness. The brand thrived during the license raj with virtually no competition. It was during 1990-91 that the brand began the journey to the end.
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Bajaj Chetak had huge brand equity. The brand had the persona of a “work horse". With reasonable price and the low maintenance cost made this product a huge hit among the middle class Indians. Promoted along the base line "Hamara Bajaj", this was the Indian Family vehicle - a position now owned by Maruti 800. The primary reason for the obsolescence is that the Brand forgot the customers. The company failed to understand the changing perception of the customers towards scooters. Rather than looking at the customers, the company focused on influencing Government to block the opening up of economy. Bajaj never did anything with the product. For 40 years Chetak had the same look, same quality and style. During the mid nineties the company realized lately that the segment has shifted to motorcycles. Scooters were no longer the option. But did the company made a mistake in discarding the scooter segment? Looking at the way the share prices are going, the market thinks that Bajaj Auto made the right decision. Contrary to expectation, the scooter segment has not died. It has only changed. Chetak lost its identity some where during the nineties. What should be the future of the brand: no body knew. It was only in 2004 that company made any change in Chetak. In 1994 Bajaj introduced Classic another scooter with same style as Chetak, but failed. Bajaj never was serious about product development. The R&D spent for a long time was a miniscule 1%. The average cycle time for the new product development was 4-5 years compared to 2-3 years of Japanese competitors. Even after the opening up of economy, the scooter segment did not witness much competition. The players like Vespa did not had much of success in this segment. Kinetic Honda managed to carve a niche with its gearless scooters. Another segment which was growing was the scooterette segment which was dominated by TVS scooty.
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Bajaj never seriously looked at customer perception about Chetak. The product had serious problems like starting trouble and riding comfort. The tilting the chetak to the side for starting was a common joke. The company did not do anything for this. There was nothing wrong with the Promotion. "Hamara Bajaj " and " No one can beat a Bajaj " were famous base lines. There was nothing wrong with distribution and the pricing was very reasonable. The major problem was in the first P
roduct. Bajaj was never a leader in technology. They never bothered and paid the price. Had Chetak pioneered Electric start, had it provided more riding comfort, it could have survived. Somebody have just beat the Bajaj........ the customer! Lessons from Bajaj Chetak A constant scan on the customer requirements always needs to be monitored and the product should be modified according to their needs. Bajaj never worked on the product and thus the demand for its product faded off with changing needs of the consumer.
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3. Idea of indispensability
According to Levitt, the apparent solidarity of growth industries was due to the supposedly unquestionable superiority of their product which would therefore produce unbroken demand. Here, the industry believes that there is no other competitive substitute for the industry’s major product. To elaborate within the Indian context, the report elicits on the “Ambassador” brand in the auto market in India.
3.1. Case: Ambassador: Marketing Myopia Brand: Ambassador Company: Hindustan Motors
Ambassador can be called as the first Indian car. Although the car has a British legacy, it is considered as definitive Indian car. Ambassador was born in 1958. The car owes its design and technology to a British car model - Morris Oxford which was built by Morris Motor Co at Oxford UK. Hindustan Motors launched the Indianised version of Morris Oxford as Ambassador in 1958. From 1958 to 1980's Ambassador ruled the Indian market. Infact there were only two cars in the Indian market - Premier Padmini and Ambassador. The licence raj, lack of capital and the unfriendly Indian economic policies ensured that no automobile manufacturers entered the Indian market. 1983 saw the emergence of a new era in the Indian car market. Maruti Udyog Ltd launched the Maruti 800. Soon Ambassador lost its leadership position to Maruti. The family segment which is the largest segment in the car market embraced Maruti. Ambassador was reduced to a marginal player within no time.
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But Ambassador had some advantages over 800 which made it dearer to certain segments. It was the only Indian car with Diesel option. During those times, there was a significant difference in the prices between Diesel and Petrol. Second advantage was the space and sturdiness of the Amby. These two factors enabled the brand to become popular among big families and more importantly among the Taxi and tour operators. Amby was perceived to be a sturdy car ideal for Indian roads. The brand also had a positive perception of being less expensive to maintain. These two were only perceptions Infact Ambassador was expensive to maintain and even though the car looked sturdy and well built, the car lacked the quality and refinement. Rattling sounds and rusting was common complaints. But consumers bought the car because of the significant economy of diesel cars which made consumers to compromise on other parameters. Another significant market for Ambassador was the Government. Over 16 % of the brand sales came from the Government. Ambassador was the first choice for most bureaucrats. Ambassador used to be the Prime Minister's car till 2002. That status was lost when the PM of that time Mr Atal Bihari Vajpai replaced Ambassador with a BMW Limo. Soon the officials also lost interest in the brand. With the emergence of new and better models from other auto-makers, there was a significant drop in the orders from the Government. The fall of Ambassador from a leadership position to a marginal player is a classic case of marketing myopia. For four decades, the brand has been taking its customers for granted. There are many reasons that can be attributed to this brand's failure. The fundamental issue was with the product and price.
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If we look at the product, Ambassador never changed with times. The brand made many cosmetic changes from 1958-2000 and three upgrades was made which was named as Mark II, Mark III and Mark IV. There was no significant value addition between these upgrades. The look and the built quality remained the same. A major change happened when the brand introduced a 1800 Isuzu engine. The Amby with Isuzu again lifted the sales of the brand. But the euphoria was short lived. The apathy of HM to offer product changes in tune with the times made the brand stale. Second factor that failed Amby was the price. HM never bothered to rationalize the price of the brand. Even now Ambassador costs more than Rs 4,80,000. At that price one could afford a more luxurious Indigo sedan. It was well known that the HM plant had achieved full depreciation in 2000. But the company did not thought of passing on the reduced cost to the consumer. Had the company rationalized the price of Amby in 2000, the brand could have survived the competition. The nail in the coffin came with the launch of Indica. Indica took away the taxi car market from Ambassador. Again the diesel loving individual consumers had a better affordable modern car as compared to the ageing Ambassador. In order to lift the sagging sales of the brand, HM launched a radically designed Ambassador variant Avigo in 2004. Although the styling was radical, the customer response was lukewarm. Indian consumer is now spoilt with choices. The competition is immense and the quality of cars has also gone up. Consumers now have new set of purchase considerations like quality, brand, drivability, luxury, cost of maintenance etc
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In the value proposition domain, Ambassador is never in the radar of the consumers. The narrowing price difference between petrol and diesel also eroded the value in investing in an old dated Ambassador. The company also has never invested in the brand. Without investing in either brand or product, HM had sealed the fate of this brand. The question that arise is could a brand like Ambassador maintain its position Indian market despite all the competition? In the brand management perspective, it’s suicidal not to continuously invest in a brand .Often heritage brands wait till it becomes dated. Once the brand becomes dated, it’s virtually impossible to rejuvenate the brand. The task is to prevent the brand to become dated. For that the brand has to go to the consumer for ideas. Changes in product or promotions can sustain the brand even in the light of emerging competition. Brands like Lux, lifebuoy, Surf has been successful because of continuous investment in branding and product development. Ambassador should have learned from Maruti 800. The brand is still surviving because it made changes along with the changing consumer values. Also the brand rationalized its price in the light of emerging competition which made Maruti 800 relevant even in the current market. Lessons from Ambassador Constant evolution of a brand is necessary as the needs of the customer are evolved. Ambassador tried to maintain its top position in the auto market with a product which did not have any significant changes over a period of time. Consequently, the brand had to come up with new ideas to overcome the redundant looks and features of the product. This is where Ambassador failed to reshape the product and offer something new which has a significant difference and also the pick of the consumer.
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4. Planned Obsolescence
Planned Obsolescence is a strategy use to ride the production scale of economies and the experience curve cost efficiencies. In other words, it is a strategy applied by an organization where it takes over a brand with an intention to kill the brand or phase off the brand over a period of time. The famous example of Gold Spot can be considered into planned obsolescence as it was taken over by Coca Cola in order to make way for its other products to enter the market. 4.1. Gold Spot : The Zing Thing (1977-1993) Brand: Gold Spot Company: Coca Cola Gold Spot is a sad story in the Indian Branding world. This iconic brand was killed for paving way for Coke's brands in India. Every one knows the story but still... Gold Spot was one among the three major soft drinks brand that ruled Indian market along with Thumbs Up and Limca. The brand was built by Ramesh Chauhan of Parle after the exit of Coca Cola from India during born. 1977. Chauhan spoted the opportunity and three mega brands were
When Coca Cola came back to India in 1993, it bought out the three mega brands from Chauhan for a consideration of $10 mn. These three brands had a huge 12
market share (combined) of over 69 % of India's SDC market. Then came the expected move. Coke slowly began killing the Parle brands to make way for its own brands. Thumbs Up was sidelined in flavor of Coca Cola. Limca was sidelined and Gold spot was killed to make way for Fanta. Gold Spot was the orange drink with a Zingy taste. This iconic youth brand was positioned as “Zing Thing" and was promoted heavily through all media. The jingle “Gold Spot.. The Zing Thing" was one of the most memorable jingle at that time. Gold Spot was positioned as the youth brand and the ads talked about being crazy about the brand. But the brand was killed. Fanta was launched but till now the brand has not being able to take the position of Gold Spot. Coke was not able to clearly focus on the segmentation of Fanta. Fanta is never perceived as a youth brand. Fanta is not viewed or targeted at college students/youth. This confused targeting may have crippled the growth of Fanta and still it couldn't reach the status of Gold Spot. Coke expected that the users of Gold Spot will migrate to Fanta but it did not happened.
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Another case which has been a part of planned obsolescence is the refrigerator maker Kelvinator.
4.2. Case: Kelvinator
Brand: Kelvinator Company: Electrolux Kelvinator which ruled Indian
refrigerator industry is no more. The brand did not die on its own. This heritage brand was killed by sheer negligence and marketing myopia. Any marketer with common sense would not have done this to a brand like Kelvinator. Kelvinator came to India in 1963. The brand along with Godrej, Allwyn has ruled the market for decades. A global brand, Kelvinator has its origin dated back to 1914.The brand changed hands so many times and came to the fold of Electrolux in 1985. In India, the brand's disaster started in 1996 when Whirlpool acquired this brand globally. Whirlpool wanted to sacrifice Kelvinator for its own brand. The entire episode of the change of ownership of this brand will make any Hindi serial sops look like a kid's story. According to Business World, When Electrolux bought the company White Consolidated which owned the brand globally, In India during 1996 Kelvinator's Indian licensee sold the license to market Kelvinator to Whirlpool. So Electrolux became a contract manufacturer of its own brand which was being marketed by its competitor. Whirlpool had the license to market Kelvinator brand in India till 1997. Because of this Electrolux entered Indian
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market with its own parent brand. The fate of Electrolux in India was also not good since it ran into huge loses. You can see that Kelvinator brand lost its place because it fell into a cobweb of ownership issues. Whirlpool did not invest in Kelvinator since it had the rights to the brand only till 1997. So why invest in some other's baby. So during these years, Whirlpool harvested Kelvinator while developing its own brand. When the brand came back to its original owner, Electrolux did not have the money to build this baby. In 2005, Kelvinator was killed. When the brand was taken off, it had a market share of over 14%. A look at the brand assets of Kelvinator will make every marketer drool. An International pedigree and a whopping market share together with two great brand elements: Mascot Penguin Tagline : Its the coolest one. During its peak years, the brand was heavily built. During 2000, the Australian circket team endorsed Kelvinator and Adam Gilchrist was the main character in the TVC ran during that time. Kelvinator's main positioning was based on its cooling power. The tagline aptly captures the USP of the brand. Kelvinator's compressor was one of the best available globally. Besides that, the brand was considered to be a tough and reliable one. One of the best and most apt tagline for any refrigerator brand “Coolest one”, this tagline is still in the mind of many Indian consumers. The brand equity was so powerful that even without much promotion; the brand had two digit market share during early 2000.
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The reason for the death of this brand is its owners Electrolux. In 2005, when Electrolux decided to go for the parent brand, Kelvinator still had a life left. It could have been a wonderful entry level brand for Electrolux. A brand with so many heritages could have easily created volumes for this company. But alas. According to reports, Electrolux is set to come back to Indian market in a new avatar. “Do not go expanding your market, target on your objective customers. Don’t narrow, don’t expand, just focus on what business you are in.”
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5. Dangers of R & D
Another big danger to a firms continued growth arises when top management is wholly transfixed by the profit possibilities of technical research and development. Their expansion has been almost totally devoid of any marketing effort. In contrast there are companies that have leveraged their R & D abilities and have become very successful through strong marketing activities and brand building. Apple with its traditional ipods can be a perfect example to the above connotation. However, the Web PC introduced by Dell proves to be a victim of excessive R & D where the brand did not focus on the customer needs but relied more on the complex feature that it provided. Case: Dell’s Web PC In late 1999, computer manufacturer Dell launched the Web PC. The computer was small (a mere ten inches in height) and came in five different colours. The aim of the computer was to simplify the experience of surfing the Internet, while at the same time being attractive. ‘The quality of the customer’s experience will be the defining source of loyalty in the Internet era,’ Michael Dell told the press at the time. ‘The Web PC is breaking new ground for our industry as we take our one-on-one relationships with customers to a new level of helpfulness.’ One of the key features of the product was an ‘e-support button’ that instantly launched a self-diagnostic program. The button could also connect users directly to Dell’s award-winning online technical support team. The PC also included a ‘sleep mode’ designed to eliminate the time spent booting up the computer for Internet access. Users could simply push a button to instantly ‘wake up’ the computer. ‘Many of these benefits are made possible by the ‘legacy-free’ design of the Web PC,’ explained John Medica, the vice president and general manager of Dell’s Web Products Group. ‘We hand picked 17
every piece of technology that went into the Web PC without carrying over any technology from previous PC designs that doesn’t contribute to a pure Internet experience.’ The product centred around the slogan ‘Born to Web’, which drove customers to a Web PC Web site and free phone number, both of which acted as direct sales channels. In addition, Dell offered different peripheral products for the Internet and new technology failures 243 Web PC, including such devices as a digital scanner, a joy stick and a digital camera. The press heaped praise on the product, although most journalists saw it as an attempt to echo Apple’s iMac strategy, with its emphasis on an eyecatching design, and user-friendly hardware. In his review for the Washington Post¸ Alan Kay said that although it ‘focuses more on style than computing,’ the Web PC is ‘a decent PC that’ll do most things you want.’ However, despite the number of benefits it offered, the Web PC was a flop. Dell pulled the machine from the market in June 2002, just six months after its release. Why? A number of reasons. Firstly, the emphasis on design was misguided. Sure, the iMac had been a success. But Apple had always been about design, and Dell hadn’t. Dell’s core customers wanted good value and functionality, not groundbreaking design. Dell’s Web PC was good-looking, but its looks were ultimately irrelevant. Whereas Dell usually uses its own in-house design team, for this project the company gave the job to a radical San Francisco-based design firm called Pentagram. ‘I’ve designed great things that have been failures,’ the chief designer told Business 2.0 magazine. ‘The product didn’t fit what Dell is about.’ Computer User magazine noted another problem. ‘Oddly, Dell is targeting its Web PC toward home or home-office markets where users would generally be better off with an expandable upgradeable system,’ commented the reviewer. Dell’s core market was traditionally business-orientated.
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Then there was the price tag. Although it was billed as ‘low cost’, the price of US $999 was more expensive than many competing models. ‘Consumers are looking at price first, then styling,’ said Stephen Baker, a PC analyst at research firm PC Data. ‘No-one aside from Apple has been able to crack that styling thing.’ Furthermore, Dell was selling in a completely new way. By offering a complete package, the world’s number two computer maker was breaking with its typical practice of offering pricing that allows customers to mix-and-match computer chips and other components to create a customized PC. If the Dell brand signified anything it signified customization and functionality over design. The Web PC failed to offer either one of these values. Lessons from Dell’s Web PC It’s not about the product, it’s about the brand. The Web PC was not a bad product, as the plethora of positive reviews testifies. However, it did not fit well with the Dell brand. A low-cost product needs to be perceived as such. Although the Web PC was good value, because the price covered a complete package, it appeared too expensive. Imitating the competition was a mistake. When computer manufacturers saw the success of the iMac, they inevitably wanted a bite of the apple. This proved to be a misguided strategy for Dell, a company normally associated with ‘beige and boxy’ computers. Good Marketing would make a difference. Dell concentrated a lot on providing various features on the new product and didn’t marketed the product well as they were into that belief of easy buying of such a complex product.
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6. References
Marketing Management, Twelfth Edition by Philip Kotler HBR Article on Marketing Myopia by Theodore Levitt, July-August 1960 www.dell.comhttp://www.motosindia.com/bajaj-chetak.htmlhttp://www.outlookindia.com/article.aspx?225007
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doc_530648516.pdf
This presentation is about Shadow of Obsolescence example Bajaj Chetak, Idea of indispensability Hindustan Motors Ambassador, Planned Obsolescence example Gold spot from Coca Cola, Kelvinator from Electrolux, Dangers of R & D example Dell’s Web PC.
Marketing Myopia: Application in Indian Industries
Group Members: Shyam Kakkad (122) Saloni Masalia (127) Pratik Ravani (139) Harsh Shah (145) Nishant Shah (150)
1
Table of Contents
Sr. No. 1 2 3 4 5 6
Topic Introduction Shadow of Obsolescence Idea of indispensability Planned Obsolescence Dangers of R&D References
Page No. 3 5 8 12 17 20
2
Marketing Myopia
1. Introduction
Marketing myopia is a term used in marketing as well as the title of an important marketing paper written by Theodore Levitt. This paper was first published in 1960 in the Harvard Business Review; a journal of which he was an editor. Some commentators have suggested that its publication marked the beginning of the modern marketing movement. Its theme is that the vision of most organizations is too constricted by a narrow understanding of what business they are in. It exhorted CEOs to re-examine their corporate vision; and redefine their markets in terms of wider perspectives. It was successful in its impact because it was, as with all of Levitt's work, essentially practical and pragmatic. Organizations found that they had been missing opportunities which were plain to see once they adopted the wider view. The paper was influential. The oil companies (which represented one of his main examples in the paper) redefined their business as energy rather than just petroleum; although Royal Dutch Shell, which embarked upon an investment program in nuclear power, subsequently regretted this course of action. One reason that short sightedness is so common is that people feel that they cannot accurately predict the future. While this is a legitimate concern, it is also possible to use a whole range of business prediction techniques currently available to estimate future circumstances as best as possible. There is a greater scope of opportunities as the industry changes. It trains managers to look beyond their current business activities and think "outside the box". It can be said that if a buggy whip manufacturer in 1910 defined its business as the "transportation starter business", they might have been able to make the creative leap necessary to move into the automobile business when technological change demanded it. 3
People who focus on marketing strategy, various predictive techniques, and the customer's lifetime value can rise above myopia to a certain extent. This can entail the use of long-term profit objectives (sometimes at the risk of sacrificing short term objectives). Furthermore, the article focuses on customer rather than product. It emphasizes more on satisfying the customer needs. In short, the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it. Levitt throws a sense of light on the following beliefs that the industries have been into over the period of time: Shadow of Obsolescence Idea of indispensability Dangers of R & D Planned Obsolescence Population Myth Production Pressure These are the traditional myths which led the industries to fall into the trap of selfdeceiving cycle. This report gives a detailed study of few of the myths and its implications on the practical application in the industry. It focuses on the failure of few products that has not taken into considerations the learning’s from the HBR article from Levitt.
4
2. Shadow of Obsolescence
It is impossible to mention a single major industry that did not at one time qualify for the magic appellation of "growth industry." In each case its assumed strength lay in the apparently unchallenged superiority of its product. There appeared to be no effective substitute for it. It was itself a runaway substitute for the product it so triumphantly replaced. Yet one after another of these celebrated industries has come under a shadow.
2.1. Case: Bajaj Chetak (1972-2005)
Brand: Bajaj Chetak Company: Bajaj Auto Ltd The brand which ruled the Indian roads have been laid to rest. Bajaj has officially stopped the production of Bajaj Chetak from December 2005. The stocks lasted up to March 2006. The company said that the product no longer have any relevance to the customer. To quote Rajiv bajaj “Any one who clings to the past is a failure". The brand which was launched in 1972 virtually owned the two wheeler segment. If reports are to be believed, Chetak was an unavoidable dowry in 1970's and 80's. It had a waiting period of more than 10 year. The brand which was named after the legendary stallion of the Rajput king Maharana Pratap, was known for the reliability and sturdiness. The brand thrived during the license raj with virtually no competition. It was during 1990-91 that the brand began the journey to the end.
5
Bajaj Chetak had huge brand equity. The brand had the persona of a “work horse". With reasonable price and the low maintenance cost made this product a huge hit among the middle class Indians. Promoted along the base line "Hamara Bajaj", this was the Indian Family vehicle - a position now owned by Maruti 800. The primary reason for the obsolescence is that the Brand forgot the customers. The company failed to understand the changing perception of the customers towards scooters. Rather than looking at the customers, the company focused on influencing Government to block the opening up of economy. Bajaj never did anything with the product. For 40 years Chetak had the same look, same quality and style. During the mid nineties the company realized lately that the segment has shifted to motorcycles. Scooters were no longer the option. But did the company made a mistake in discarding the scooter segment? Looking at the way the share prices are going, the market thinks that Bajaj Auto made the right decision. Contrary to expectation, the scooter segment has not died. It has only changed. Chetak lost its identity some where during the nineties. What should be the future of the brand: no body knew. It was only in 2004 that company made any change in Chetak. In 1994 Bajaj introduced Classic another scooter with same style as Chetak, but failed. Bajaj never was serious about product development. The R&D spent for a long time was a miniscule 1%. The average cycle time for the new product development was 4-5 years compared to 2-3 years of Japanese competitors. Even after the opening up of economy, the scooter segment did not witness much competition. The players like Vespa did not had much of success in this segment. Kinetic Honda managed to carve a niche with its gearless scooters. Another segment which was growing was the scooterette segment which was dominated by TVS scooty.
6
Bajaj never seriously looked at customer perception about Chetak. The product had serious problems like starting trouble and riding comfort. The tilting the chetak to the side for starting was a common joke. The company did not do anything for this. There was nothing wrong with the Promotion. "Hamara Bajaj " and " No one can beat a Bajaj " were famous base lines. There was nothing wrong with distribution and the pricing was very reasonable. The major problem was in the first P
roduct. Bajaj was never a leader in technology. They never bothered and paid the price. Had Chetak pioneered Electric start, had it provided more riding comfort, it could have survived. Somebody have just beat the Bajaj........ the customer! Lessons from Bajaj Chetak A constant scan on the customer requirements always needs to be monitored and the product should be modified according to their needs. Bajaj never worked on the product and thus the demand for its product faded off with changing needs of the consumer.7
3. Idea of indispensability
According to Levitt, the apparent solidarity of growth industries was due to the supposedly unquestionable superiority of their product which would therefore produce unbroken demand. Here, the industry believes that there is no other competitive substitute for the industry’s major product. To elaborate within the Indian context, the report elicits on the “Ambassador” brand in the auto market in India.
3.1. Case: Ambassador: Marketing Myopia Brand: Ambassador Company: Hindustan Motors
Ambassador can be called as the first Indian car. Although the car has a British legacy, it is considered as definitive Indian car. Ambassador was born in 1958. The car owes its design and technology to a British car model - Morris Oxford which was built by Morris Motor Co at Oxford UK. Hindustan Motors launched the Indianised version of Morris Oxford as Ambassador in 1958. From 1958 to 1980's Ambassador ruled the Indian market. Infact there were only two cars in the Indian market - Premier Padmini and Ambassador. The licence raj, lack of capital and the unfriendly Indian economic policies ensured that no automobile manufacturers entered the Indian market. 1983 saw the emergence of a new era in the Indian car market. Maruti Udyog Ltd launched the Maruti 800. Soon Ambassador lost its leadership position to Maruti. The family segment which is the largest segment in the car market embraced Maruti. Ambassador was reduced to a marginal player within no time.
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But Ambassador had some advantages over 800 which made it dearer to certain segments. It was the only Indian car with Diesel option. During those times, there was a significant difference in the prices between Diesel and Petrol. Second advantage was the space and sturdiness of the Amby. These two factors enabled the brand to become popular among big families and more importantly among the Taxi and tour operators. Amby was perceived to be a sturdy car ideal for Indian roads. The brand also had a positive perception of being less expensive to maintain. These two were only perceptions Infact Ambassador was expensive to maintain and even though the car looked sturdy and well built, the car lacked the quality and refinement. Rattling sounds and rusting was common complaints. But consumers bought the car because of the significant economy of diesel cars which made consumers to compromise on other parameters. Another significant market for Ambassador was the Government. Over 16 % of the brand sales came from the Government. Ambassador was the first choice for most bureaucrats. Ambassador used to be the Prime Minister's car till 2002. That status was lost when the PM of that time Mr Atal Bihari Vajpai replaced Ambassador with a BMW Limo. Soon the officials also lost interest in the brand. With the emergence of new and better models from other auto-makers, there was a significant drop in the orders from the Government. The fall of Ambassador from a leadership position to a marginal player is a classic case of marketing myopia. For four decades, the brand has been taking its customers for granted. There are many reasons that can be attributed to this brand's failure. The fundamental issue was with the product and price.
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If we look at the product, Ambassador never changed with times. The brand made many cosmetic changes from 1958-2000 and three upgrades was made which was named as Mark II, Mark III and Mark IV. There was no significant value addition between these upgrades. The look and the built quality remained the same. A major change happened when the brand introduced a 1800 Isuzu engine. The Amby with Isuzu again lifted the sales of the brand. But the euphoria was short lived. The apathy of HM to offer product changes in tune with the times made the brand stale. Second factor that failed Amby was the price. HM never bothered to rationalize the price of the brand. Even now Ambassador costs more than Rs 4,80,000. At that price one could afford a more luxurious Indigo sedan. It was well known that the HM plant had achieved full depreciation in 2000. But the company did not thought of passing on the reduced cost to the consumer. Had the company rationalized the price of Amby in 2000, the brand could have survived the competition. The nail in the coffin came with the launch of Indica. Indica took away the taxi car market from Ambassador. Again the diesel loving individual consumers had a better affordable modern car as compared to the ageing Ambassador. In order to lift the sagging sales of the brand, HM launched a radically designed Ambassador variant Avigo in 2004. Although the styling was radical, the customer response was lukewarm. Indian consumer is now spoilt with choices. The competition is immense and the quality of cars has also gone up. Consumers now have new set of purchase considerations like quality, brand, drivability, luxury, cost of maintenance etc
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In the value proposition domain, Ambassador is never in the radar of the consumers. The narrowing price difference between petrol and diesel also eroded the value in investing in an old dated Ambassador. The company also has never invested in the brand. Without investing in either brand or product, HM had sealed the fate of this brand. The question that arise is could a brand like Ambassador maintain its position Indian market despite all the competition? In the brand management perspective, it’s suicidal not to continuously invest in a brand .Often heritage brands wait till it becomes dated. Once the brand becomes dated, it’s virtually impossible to rejuvenate the brand. The task is to prevent the brand to become dated. For that the brand has to go to the consumer for ideas. Changes in product or promotions can sustain the brand even in the light of emerging competition. Brands like Lux, lifebuoy, Surf has been successful because of continuous investment in branding and product development. Ambassador should have learned from Maruti 800. The brand is still surviving because it made changes along with the changing consumer values. Also the brand rationalized its price in the light of emerging competition which made Maruti 800 relevant even in the current market. Lessons from Ambassador Constant evolution of a brand is necessary as the needs of the customer are evolved. Ambassador tried to maintain its top position in the auto market with a product which did not have any significant changes over a period of time. Consequently, the brand had to come up with new ideas to overcome the redundant looks and features of the product. This is where Ambassador failed to reshape the product and offer something new which has a significant difference and also the pick of the consumer.
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4. Planned Obsolescence
Planned Obsolescence is a strategy use to ride the production scale of economies and the experience curve cost efficiencies. In other words, it is a strategy applied by an organization where it takes over a brand with an intention to kill the brand or phase off the brand over a period of time. The famous example of Gold Spot can be considered into planned obsolescence as it was taken over by Coca Cola in order to make way for its other products to enter the market. 4.1. Gold Spot : The Zing Thing (1977-1993) Brand: Gold Spot Company: Coca Cola Gold Spot is a sad story in the Indian Branding world. This iconic brand was killed for paving way for Coke's brands in India. Every one knows the story but still... Gold Spot was one among the three major soft drinks brand that ruled Indian market along with Thumbs Up and Limca. The brand was built by Ramesh Chauhan of Parle after the exit of Coca Cola from India during born. 1977. Chauhan spoted the opportunity and three mega brands were
When Coca Cola came back to India in 1993, it bought out the three mega brands from Chauhan for a consideration of $10 mn. These three brands had a huge 12
market share (combined) of over 69 % of India's SDC market. Then came the expected move. Coke slowly began killing the Parle brands to make way for its own brands. Thumbs Up was sidelined in flavor of Coca Cola. Limca was sidelined and Gold spot was killed to make way for Fanta. Gold Spot was the orange drink with a Zingy taste. This iconic youth brand was positioned as “Zing Thing" and was promoted heavily through all media. The jingle “Gold Spot.. The Zing Thing" was one of the most memorable jingle at that time. Gold Spot was positioned as the youth brand and the ads talked about being crazy about the brand. But the brand was killed. Fanta was launched but till now the brand has not being able to take the position of Gold Spot. Coke was not able to clearly focus on the segmentation of Fanta. Fanta is never perceived as a youth brand. Fanta is not viewed or targeted at college students/youth. This confused targeting may have crippled the growth of Fanta and still it couldn't reach the status of Gold Spot. Coke expected that the users of Gold Spot will migrate to Fanta but it did not happened.
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Another case which has been a part of planned obsolescence is the refrigerator maker Kelvinator.
4.2. Case: Kelvinator
Brand: Kelvinator Company: Electrolux Kelvinator which ruled Indian
refrigerator industry is no more. The brand did not die on its own. This heritage brand was killed by sheer negligence and marketing myopia. Any marketer with common sense would not have done this to a brand like Kelvinator. Kelvinator came to India in 1963. The brand along with Godrej, Allwyn has ruled the market for decades. A global brand, Kelvinator has its origin dated back to 1914.The brand changed hands so many times and came to the fold of Electrolux in 1985. In India, the brand's disaster started in 1996 when Whirlpool acquired this brand globally. Whirlpool wanted to sacrifice Kelvinator for its own brand. The entire episode of the change of ownership of this brand will make any Hindi serial sops look like a kid's story. According to Business World, When Electrolux bought the company White Consolidated which owned the brand globally, In India during 1996 Kelvinator's Indian licensee sold the license to market Kelvinator to Whirlpool. So Electrolux became a contract manufacturer of its own brand which was being marketed by its competitor. Whirlpool had the license to market Kelvinator brand in India till 1997. Because of this Electrolux entered Indian
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market with its own parent brand. The fate of Electrolux in India was also not good since it ran into huge loses. You can see that Kelvinator brand lost its place because it fell into a cobweb of ownership issues. Whirlpool did not invest in Kelvinator since it had the rights to the brand only till 1997. So why invest in some other's baby. So during these years, Whirlpool harvested Kelvinator while developing its own brand. When the brand came back to its original owner, Electrolux did not have the money to build this baby. In 2005, Kelvinator was killed. When the brand was taken off, it had a market share of over 14%. A look at the brand assets of Kelvinator will make every marketer drool. An International pedigree and a whopping market share together with two great brand elements: Mascot Penguin Tagline : Its the coolest one. During its peak years, the brand was heavily built. During 2000, the Australian circket team endorsed Kelvinator and Adam Gilchrist was the main character in the TVC ran during that time. Kelvinator's main positioning was based on its cooling power. The tagline aptly captures the USP of the brand. Kelvinator's compressor was one of the best available globally. Besides that, the brand was considered to be a tough and reliable one. One of the best and most apt tagline for any refrigerator brand “Coolest one”, this tagline is still in the mind of many Indian consumers. The brand equity was so powerful that even without much promotion; the brand had two digit market share during early 2000.
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The reason for the death of this brand is its owners Electrolux. In 2005, when Electrolux decided to go for the parent brand, Kelvinator still had a life left. It could have been a wonderful entry level brand for Electrolux. A brand with so many heritages could have easily created volumes for this company. But alas. According to reports, Electrolux is set to come back to Indian market in a new avatar. “Do not go expanding your market, target on your objective customers. Don’t narrow, don’t expand, just focus on what business you are in.”
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5. Dangers of R & D
Another big danger to a firms continued growth arises when top management is wholly transfixed by the profit possibilities of technical research and development. Their expansion has been almost totally devoid of any marketing effort. In contrast there are companies that have leveraged their R & D abilities and have become very successful through strong marketing activities and brand building. Apple with its traditional ipods can be a perfect example to the above connotation. However, the Web PC introduced by Dell proves to be a victim of excessive R & D where the brand did not focus on the customer needs but relied more on the complex feature that it provided. Case: Dell’s Web PC In late 1999, computer manufacturer Dell launched the Web PC. The computer was small (a mere ten inches in height) and came in five different colours. The aim of the computer was to simplify the experience of surfing the Internet, while at the same time being attractive. ‘The quality of the customer’s experience will be the defining source of loyalty in the Internet era,’ Michael Dell told the press at the time. ‘The Web PC is breaking new ground for our industry as we take our one-on-one relationships with customers to a new level of helpfulness.’ One of the key features of the product was an ‘e-support button’ that instantly launched a self-diagnostic program. The button could also connect users directly to Dell’s award-winning online technical support team. The PC also included a ‘sleep mode’ designed to eliminate the time spent booting up the computer for Internet access. Users could simply push a button to instantly ‘wake up’ the computer. ‘Many of these benefits are made possible by the ‘legacy-free’ design of the Web PC,’ explained John Medica, the vice president and general manager of Dell’s Web Products Group. ‘We hand picked 17
every piece of technology that went into the Web PC without carrying over any technology from previous PC designs that doesn’t contribute to a pure Internet experience.’ The product centred around the slogan ‘Born to Web’, which drove customers to a Web PC Web site and free phone number, both of which acted as direct sales channels. In addition, Dell offered different peripheral products for the Internet and new technology failures 243 Web PC, including such devices as a digital scanner, a joy stick and a digital camera. The press heaped praise on the product, although most journalists saw it as an attempt to echo Apple’s iMac strategy, with its emphasis on an eyecatching design, and user-friendly hardware. In his review for the Washington Post¸ Alan Kay said that although it ‘focuses more on style than computing,’ the Web PC is ‘a decent PC that’ll do most things you want.’ However, despite the number of benefits it offered, the Web PC was a flop. Dell pulled the machine from the market in June 2002, just six months after its release. Why? A number of reasons. Firstly, the emphasis on design was misguided. Sure, the iMac had been a success. But Apple had always been about design, and Dell hadn’t. Dell’s core customers wanted good value and functionality, not groundbreaking design. Dell’s Web PC was good-looking, but its looks were ultimately irrelevant. Whereas Dell usually uses its own in-house design team, for this project the company gave the job to a radical San Francisco-based design firm called Pentagram. ‘I’ve designed great things that have been failures,’ the chief designer told Business 2.0 magazine. ‘The product didn’t fit what Dell is about.’ Computer User magazine noted another problem. ‘Oddly, Dell is targeting its Web PC toward home or home-office markets where users would generally be better off with an expandable upgradeable system,’ commented the reviewer. Dell’s core market was traditionally business-orientated.
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Then there was the price tag. Although it was billed as ‘low cost’, the price of US $999 was more expensive than many competing models. ‘Consumers are looking at price first, then styling,’ said Stephen Baker, a PC analyst at research firm PC Data. ‘No-one aside from Apple has been able to crack that styling thing.’ Furthermore, Dell was selling in a completely new way. By offering a complete package, the world’s number two computer maker was breaking with its typical practice of offering pricing that allows customers to mix-and-match computer chips and other components to create a customized PC. If the Dell brand signified anything it signified customization and functionality over design. The Web PC failed to offer either one of these values. Lessons from Dell’s Web PC It’s not about the product, it’s about the brand. The Web PC was not a bad product, as the plethora of positive reviews testifies. However, it did not fit well with the Dell brand. A low-cost product needs to be perceived as such. Although the Web PC was good value, because the price covered a complete package, it appeared too expensive. Imitating the competition was a mistake. When computer manufacturers saw the success of the iMac, they inevitably wanted a bite of the apple. This proved to be a misguided strategy for Dell, a company normally associated with ‘beige and boxy’ computers. Good Marketing would make a difference. Dell concentrated a lot on providing various features on the new product and didn’t marketed the product well as they were into that belief of easy buying of such a complex product.
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6. References
Marketing Management, Twelfth Edition by Philip Kotler HBR Article on Marketing Myopia by Theodore Levitt, July-August 1960 www.dell.comhttp://www.motosindia.com/bajaj-chetak.htmlhttp://www.outlookindia.com/article.aspx?225007
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doc_530648516.pdf