Thursday, October 28, 2010

Will P&G take over the Indian Razor Market?

tae hyun moon Gillette has been leading the world’s razor and blades sales and it possesses dominant market shares in the developed countries like the U.S. Then, what have brought such a great success to Gillette in those regions over the years? The answers are its “premium” quality and strong “brand value”. Its products are quite expensive, but consumers have been willing to purchase the pricy products because their value for the products exceeds the prices. For instance, its parent company, P&G, introduced the Fusion ProGlide in the U.S market in June 2010, which is its most expensive razor. A four-pack of the manual cartridges sells for $16.99, about a 15% premium to regular Fusion blades. According to the company, the Fusion ProGlide is now its best-selling razor in the market.

tae hyun moonAs the brand turns its eyes to the emerging markets like India, however, it has been facing new challenges to overcome. P&G has found out that the consumers in the emerging markets are totally different from the ones in the developed countries. Its failure to capture the differences in consumer attributes & behaviors has caused its poor performance in the emerging markets and Gillette has been behind some of its competitors and local brands.

For example, P&G has tried to penetrate the razor market in India for years. The brand, however, has been struggling with the market mainly because its products are “too” expensive for Indian consumers to afford. As a response to this, P&G introduced Gillett Vector, which has sold for a reasonable price, but there have been some complaints about Vector’s quality. Because the product is often carelessly manufactured, the cartridge for the Vector has even come under close scrutiny by consumers (http: //badgerandblade.com).

After seeing some failures, P&G is developing its Multidomestic strategy to improve its performance in the emerging markets. It is a business strategy with which companies produce differentiated products/services that could satisfy consumers in different markets who have different preferences and behaviors. For example, products as varied as detergents, shampoos, pickles, and cough syrup are sold in sachets in India. As an effort to adapt to the Indian market, P&G now uses “reverse engineering” as one of its Multidomestic strategies for its new product development. With reverse engineering, the company starts with price-setting at which consumers can afford and then adjusts the features and manufacturing processes to meet the target.

Gillette Guard, which P&G recently launched, could be considered as a product that the company developed with Multidomestic strategy. Gillette Guard is designed to be affordable for the Indian consumers and lead the brand to the top place in the market. The razor costs 15 rupees, or 34 cents, and uses blades that cost five rupees, or 11cents. Its price setting takes into account not only consumers but the booth (kiosk) owners who serve most shoppers in developing markets. The company hopes that the lower cost would stimulate more of the small store owners to stock up on the item (Ellen Byron, Gillette's Latest Innovation in Razors: the 11-Cent Blade, WSJ, Oct 1st 2010).

In addition to the price factor, P&G designed Gillette Guard to satisfy different tastes of the Indian consumers. For example, in designing the product, P&G took into account the fact that Indian men prefer a lighter weight although most men in the U.S. and Western Europe prefer a heavy razor handle. Gillette Guard also aims to attract users of double-edge razors, about 400 million men in India (Ellen Byron, Gillette's Latest Innovation in Razors: the 11-Cent Blade, WSJ, Oct 1st 2010).

Despite its different approach to the Indian consumers with Gillette Guard, there still remain a few challenges that P&G has to overcome to become the market leader. Competition against Super-Max would be one example. In fact, Super-Max is currently taking the first place in the double-edge blades market and its products cost roughly 1.5 to 2 rupees only, which is half of the cost of Gillette Guard. Whether Gillette Guard would successfully attract low-class consumers and increase its brand loyalties among them will be the ultimate turning point to the company which will determine its future market power in India.

Wednesday, October 27, 2010

How to start using Facebook Fan Page for small businesses

tae hyun moon Over the past three months, I have been helping some small companies (including start-up businesses) and a non-profit organization in developing their online marketing campaigns, especially for social media marketing stuff... It was really hard at the beginning due to the lack of their online content, fan bases, resources, etc. Also, the challenging part was not using “tactics” but developing “strategy”.

It has become a common sense that it is crucial to produce valuable contents and tell your stories to online users to see successful effects from social media marketing campaigns. But how? How could I start it from “nothing”? That was my question... Also, in the real world, not every business sells “interesting” products or “fun” services…

Here are my two cents on how to start facebook fan pages for small (start-up) businesses, which I have gained from the challenging experience.

The first step of Social media marketing is building social network and connecting with people online. This is why we have seen some “Big” companies organizing and working with their “Brand Ambassadors” to build their social media network quickly and efficiently. Some companies assign some of their “followers” as their brand ambassadors who have shown “strong” loyalties to their brands throughout social media sites such as Facebook Fan Pages (e.g. Levis). The brand ambassadors have engaged in increasing brand awareness online for those companies by spreading words and promoting certain campaigns throughout social media sites.

Then, what about the start-up or small businesses? They should find their own brand ambassadors, too! From where? They are all around you! Your friends, employees (if you have), your personal connections in social media sites, etc. Your friend can be the most valuable brand ambassador who spreads your brand out there for you!!! If you have taken Marketing 101, you are familiar with the term, “Early Adopter”. We have learned that we need to focus marketing efforts on those “Early Adopters” to spread words quickly and generate WOM effects effectively at the beginning marketing stage. In the social media marketing era, those brand ambassadors are “Early Adopters” and you need them in developing successful social media marketing campaigns.

tae hyun moon To give you an example about “Brand Ambassador”, let’s assume there is a “B” company that has 10 brand ambassadors and each of the 10 brand ambassadors have 100 “personal” connections (friends) in Facebook. When the company publishes a post on its Facebook Fan page and the brand ambassadors click the “Like” button or “share” the post, the post can have a chance to reach out to 1000 (10 X 100) people through Facebook without any cost. This is partly because of the “News Feeds”, which is one of the Facebook functions. Through the “News Feeds”, whenever one person updates his/her status (e.g. “Like”or “Share” a certain post), most of the people in the person’s Facebook connection can see the updates. This could lead the post to be exposed to the friends of the “10” ambassadors and turn them into “followers”.

Lastly, keep in mind that you need to spend most of your time and efforts in developing online content than asking your friends for some “help”. In the end, the quality and quantity of your online content will be the factors that determine the success of your online marketing campaigns. For this, I would recommend having your company’s own Youtube Channel or blog along with Facebook Fan Page for producing online contents constantly. Having blog articles or video materials in Youtube Channel will definitely help you build your contents on the Facebook Fan page as well and they will enable you to constantly provide special experience to your “followers”.

Wednesday, October 20, 2010

Case Analysis: How Has McDonald’s Become the Market Leader?

tae hyun moon McDonald’s has become the biggest fast food restaurant in the world and its logo can be seen all around the world these days. Its recent report for revenues also shows the company’s huge success; the company posted revenues of $5.945 billion for the second reporting quarter of 2010, which is a 5% increase compared to $5.647 billion in the second quarter of 2009. (http://www.wikinvest.com/stock/McDonald's_(MCD))

1. McDonald’s Success during the economic slowdown
Compared to its competitors like KFC and Wendy’s, the company managed to overcome the economic crisis well and generated strong revenue, which enabled the company to add 650 more outlets by the end of 2009. The company’s success can be attributed to its strategy called “Plan to Win” with which the company focused on increasing sales at existing locations by improving the menu, refurbishing the outlets, and extending hours. Its strategy also involves monitoring pricing to make sure its menu remains affordable without hurting the company’s profit margins. For example, although the company struggled with the increasing costs, it has kept the pricing on its Dollar Menu, which brings in almost 15 percent of total sales. To maximize its profit from the Dollar Menu, the company also replaced its $1 double cheeseburger with the McDouble, which is similar but less expensive to make (Strategic Management: Text and Cases). Its success during the economic slowdown can also be attributed to the nature of its products. Since McDonald’s products are considered as “inferior goods”, they were consumed relatively more than other normal goods and contributed to keeping the company business profitable.

2. Learning from Mistakes
Before seeing great success in 2008 and 2009, McDonald’s did experience hard time, which resulted from its “mistakes” in running franchises and monitoring operations over the past decade. For example, its growing size and continuous expansions made it difficult to maintain its core competencies such as consistent, fast, friendly service. Furthermore, it stopped monitoring its franchises for cleanness, customer service, and food quality, which laid the company behind the growing competitors such as Wendy’s. Even though the company has been known as the “best” and “biggest” fast food business in the world, according to a 2002 survey by market researcher Global Growth Group, McDonald’s came in third in average service time behind Wendy’s and sandwich shop Chick-fil-A Inc.

tae hyun moon However, the company learned lessons from its “mistakes” and seized opportunities to bring itself to the next level. Some of the efforts the company made to improve its sales again are as follows:

  • Getting the basics of service and quality right, in part by reinstituting a tough “up or out” grading system that would kick out underperforming franchisees.

  • Tried to draw more customers through the introduction of new products instead of expanding its outlets

  • Revamped the menu with “healthier” foods and promoted them with a slogan, “I’m loving it” (Strategic Management: Text and Cases)


3. My two cents on the company's future
There still exist some threats such as the growing concerns about health problems caused by fast foods, which would hurt the company’s growth. In addition, the company has also been facing the changes in the tastes of consumers, which have been led mostly by exotic “fast” foods like sushi. The growing competitions from supermarkets and convenience stores that also offer quick meals have become great challenges to the company as well.

tae hyun moon With the efforts that the company has made to improve its product lines and turn its bad image around, however, the company is expected to remain its market power in the industry and sustain its growth. For example, McDonald’s has been trying to include more fruits and vegetables in its popular Happy Meals. This improvement has raised the company’s operating costs because of the perishable nature of produce making it more expensive to ship and store.(Strategic Management: Text and Cases) However, this improvement in the menu will help the company change the way people think of McDonald’s and improve its brand image.

Customers purchase experience and value, not just “taste”. To sustain its “absolute” reign in the fast food industry, McDonalds should strive to be positioned as a brand that provides special experience and value to its customers, beyond just a place to eat a “Big Mac” burger.

Thursday, September 9, 2010

Barnes and Noble vs. Amazon.com

taehyunmoon
Last week, I read an article that analyzes the performances of the two companies, Amazon.com and Barnes & Noble, in the U.S book industry. Where in the marketplace are the companies placed now?? Who has been the winner and who has been the loser? How has that happened?? I would like to write down my own analysis on the two companies based on the article and put my two cents....

1. How the birth of Amazon has changed the Book Industry?

The U.S book industry can be divided into two eras; the time before and after the online bookselling. Barnes and Noble and Amazon.com are the companies that could represent these two eras. Barnes and Noble had been a leading company in the industry, which focused on creating special experience for its consumers with its in-store services like unique dĂ©cors, cafĂ©, etc. They tried to create special spaces for consumers where people could find “fun” that could be gained from other substitutes such as movie theaters or shopping centers. The company also emphasized on expanding its stores, which helped their distribution systems as well as increasing their brand awareness. However, the advent of online bookselling, especially the birth of Amazon.com changed everything in the book industry. Unlike Barnes and Nobles, Amazon.com took a different approach in offering their services, distributing the products, and generating sales leads. Following are some "absolute" factors that have enabled Amazon.com to dominate Barnes & Noble and further become the best in the industry.


2. How has Amazon been able to dominate the market?

First of all, by selling books online only, Amazon.com has been able to save significant amounts of fixed costs that other competitors have struggled with. One of the great examples would be the number of employers. While Barnes and Noble has spent a big portion of their money on human resource, which is the main source of their services for the consumers, Amazon has managed to spend their money on R&D to further develop effective and efficient e-commerce systems and their solid infrastructure.
Secondly, it has taken different approaches in providing special experience to its consumers. Unlike its competitors, Amazon has distinguished itself from others by providing information about the books it sold, posted author interviews, offered free book reviews, and gave links to other sites and features. It might attract attentions from people to provide coffee and play some jazz music in a book store. However, people who are interested in purchasing books look for information that could be helpful to their buying decisions. With tons of information about thousands of books provided on the website, Amazon has been able to attract online users, increase their constant visits, and build strong fan communities online. This also gave the company another opportunity for success in their business. Due to the high volume of web traffic, the company has made profits from other businesses who wanted to place their advertisements on the Amazon’s website.

3. My Two cents…
Given the increase in online users and technological advances, it seems that there are few chances for Barnes and Noble to get market shares back from Amazon.com. Like Barnes and Noble had enjoyed offline bookselling market with their experience and business practices in the past, it seems obvious that Amazon.com will keep significant market shares in the book industry with their endless investments and experience in online bookselling. Even though Amazon’s competitors like Barnes and Noble also started online selling, it seems like they just tried to follow what Amazon is doing. In other words, while Amazon keeps evolving itself to the next levels by integrating consumer services (not just for books) with highly advanced online technologies, other competitors seem just to follow the company without specific focus (or strategy). Other technological devices like Kindle or iPad have been even a strong leverage for Amazon in attracting more online users to their services. Instead of following the Amazon’s strategies, it is recommended that Barnes & Noble should build on their current strengths, focus on producing unique products and services offline, and try to distinguish itself in the offline bookselling market.

Monday, August 23, 2010

Budweiser vs. Heineken using Youtube as a "Secret Weapon"

budweiser vs heineken Youtube has been considered as a “secret weapon” in the web 2.0 & social media era. However, until I had the “special” experience with Budweiser, Youtube was just one of the media channels to me where I saw funny videos and watched some music video.

In January, I received an email announcing a casting opportunity for an online reality show (named as “Budhouse”) sponsored by Budweiser. What happened was the film company in charge of making the show was looking for candidates from the 32 countries qualified for the World Cup 2010. Because I love soccer (football) and have played soccer (not professionally) since I started walking, I became very interested in the show and ended up applying for the cast. Things went pretty well actually... After I went through some application process, I even got a free trip to Hollywood for the final interview (free flight and hotel for three days). Even though I couldn’t make it to the final cast, it was a very special experience.



Besides the special journey to the “fancy” world, I managed to find an interesting thing in utilizing “Youtube” for marketing purpose thanks to this opportunity. When I was in the application process for the show, I wondered why the company spent so much money for just one marketing event. The thing is Budweiser paid for every single cost that took for the application process and living costs for the final 32 casts to live in South Africa during the World cup 2010 (30 days). I fully understand the World Cup is one of the biggest opportunities for companies around the world for their marketing campaigns. However, given the fact that the show was aired only through its Youtube channel, I doubted if it was that much worth.



I found another interesting Youtube video made by the Budweiser’s main competitor, Heineken. Heineken made a video showing a “funny” experiment with some Italian soccer fans. Although it did not deal with the World cup, its basic concept was the same as Budhouse, Soccer Fever. The result was fascinating! The video has been viewed by more than 5 million people in two weeks and created great viral among online and offline communities.

In fact, Heineken’s “Italy Activation Milan AC Real Madrid” and Budhouse took a little different approach for promotion- Heineken showed the content to the public through both TV and Youtube while Budweiser put short commercials on TV and aired the show only through Youtube. However, both have taken advantages of Youtube in a smart and unique way for developing more effective and efficient marketing and they have seen great success.

Below are a couple of advantages that I think Youtube provides to us:

1. A Youtube video can have an online presence forever unless Youtube is shut down or the video is taken down.
2. The video could have great chances to be spread among millions of online users quickly.
3. It could bring in trimendous (positive) marketing effects with low costs.


For example, even though their “official” campaign seasons were already over – Budhouse for the World Cup 2010 and Heineken for the Champions’ League – those videos are still viewed by many people around the world who look for interesting video related to beer and soccer. Considering the amount of money that those two companies pay for a TV advertisement to keep their brand awareness and spread words, a “creative” and “funny” Youtube video can be a “golden goose” that brings in “golden eggs” with low investments.

I think the Heineken’s “Italy Activation Milan AC Real Madrid” and Budweiser’s “Budhouse” are great examples showing how we could use Youtube for self-marketing, corporate-marketing, branding, small business marketing, etc. We have seen many companies spending lots of money on putting ads on Youtube (like Google Adwords) to direct those people to their video materials. However, I believe ultimate strategies/tactics for Youtube marketing should be focused on producing funny and creative contents that provide “fun” and “special” experience to Youtube watchers rather than looking for ways to direct traffics to contents using Youtube ads or some “SEO” skills.