JUNE 2011

- Monthly Newsletter

INSIDE THE ISSUE

Page 2

Revamp of the “THANDA”:- Coca-Cola in India

Page 3

The Ifs & Buts of Celebrity Endorsements

Page 5

Let them eat cake (Luxury Marketing)

Page 6

Evolution of Marketing trends in Bollywood

Page 7

Experiential Marketing--‐ Is this the future?

Page 8

Pros & Cons of Celebrity Endorsement for a brand in

the Indian Context

After a series of faulty steps during recent years, the beverages of the US$31 billion multinational are back on the shopping lists of Indian consumers, and Coca-Cola India is reaping the re-wards. During the last financial year, its sales volume grew more than 30% and it turned a profit for the first time since it re-turned to the country in 1993 after a 16-year hia-tus. Much of last year's growth for Coca-Cola -- and its rival PepsiCo -- came from urban and semi-urban mar-kets, but experts note that Coca-Cola's rural push helped it consolidate its overall market leadership. Cold Drinks, Very Hot Markets The reality is that the consumers that Coca Cola covers the most today are in hard-to-reach rural India. Coca-Cola realizes that its future will be deter-mined in the countryside. Today's farmer could be tomorrow's city resi-dent; better to capture that market quickly. But unlike others, India is a market that makes neither distribution nor invento-ry management easy, and is hugely diverse in terms of tastes and buying power. Indeed, even established con-sumer-goods companies in India have covered only about a tenth of the country's 600,000 villages.

One reason why Coca-Cola's India for-ay faltered after it re-entered the coun-try was that it did not pay enough at-tention to refrigeration. In India, con-sumers -- urban or rural -- want a "cold drink" and not just a "soft drink," says Jagdip Kapoor MD of Samsika Market-

ing Consultants, a brand marketing-services firm in Mumbai. "Initial 3-4 years it was grappling with whether it should focus on Thums-Up or Coke, and refrigeration took a back seat." The key to the turnaround, Singh says, is a greater focus on refrigera-tion. In electricity-deficient areas, such as some of the hinterland in Uttar Pradesh, Coca-Cola now pro-vides shops with coolers that oper-ate with brine solution so its prod-

ucts can stay chilled up to 12 hours without electricity. In other places, it has trade agreements with local ice makers. As for distribution, Coca-Cola India has moved from a centralized distribution model to a hub-and-spoke approach. Rather than transporting beverages directly from the bottling plants to retailers, its goods are now sent first to a "hub," and are then parcelled out to nearby "spoke" centres when orders need filling. Among the benefits, this approach reduces costs because fewer long-haul journeys in large, uneconomi-cal vehicles are needed, while efficien-cy increases through more timely, tai-lored fulfilment. The High Cost of a Low Price The company also erred in adopting the low price-point strategy like many

other foreign consumer-goods companies to sell their products in rural India. "People think Indian consumers want low-priced products," says Kapoor. "There cannot be a bigger myth. They want good-quality products at a rea-sonable price." It’s a common practice for rural consumers to pay one rupee more for packaged beverages to cover the cost of keeping them chilled. "How can anyone say they are highly price-sensitive consumers?" he asks. Yet about seven years ago, Coca-Cola set out to woo rural consumers by halving the price of a 200-milliliter (seven-ounce) bottle to Rs. 5 (11 cents). Rs. 5 is a “psychological price point"; a price greater than Rs. 5 means the con-sumer has to "break a Rs. 10 note.". Now, Indian retailers found themselves arguing with customers, who wanted the drink for Rs. 5 and were unwilling to pay the extra rupee for refrigera-tion. Meanwhile, a price war erupted as rival PepsiCo matched the Rs. 5 price. Both

firms have since dropped the strategy. "The price barrier has definitely been a

Marketing Tidbits!!

A new anti-wrinkle pill which is based on tomato extracted Lycopene, has been jointly produced by a food company and a

cosmetic company. The companies are Nestle & L'Oreal

Revamp of the “THANDA”:- Coca-Cola in India

- Shashank Kumar Verma

Page 2 MARK - AVENUE

which is expected to help raise awareness of the brand, gener-ate positive associations for it and build purchase intention among its prospective customers. Sometimes, it’s merely a reactionary

step meant to nullify the impact of celebrity endorsement exercised by a competitor. The last decade also wit-

Globally, ‘celebrity endorsement’ is a very powerful marketing tool, em-ployed by firms to build their brand equity. In India, the Lux soap is known to have been endorsed way back in 1941 by the then famous film actress Leela chitnis. The in-troduction of celebrity endorsement in Indian TV advertising is marked by the com-mercials of 80’s featur-ing Kapil Dev, Sunil Gavaskar and Tabas-sum endorsing various consumer products. So, the potential of this concept has been well acknowledged, and tried and tested on the Indian soil for over 70 years now.

Why Endorse?

The compelling rea-sons for companies to yield a strategic posi-tion to celebrity en-dorsement in their marketing schemes vary. Very frequently celebrities are roped in during new brand introductions. The basic idea remains to cash on the popularity, credibility and mass appeal of the celebrities

nessed a novel application of celebrity endorsements for crisis management,

manifested bril-liantly in the Cadbury case to weather the ‘worm’ storm.

What are Fre-

quently En-

dorsed?

Among the in-dustries that have generously employed this marketing tool, and have reaped healthy dividends are those repre-senting FMCG, consumer dura-bles, automo-bile, construc-tion, healthcare and gems and jewellery among others.

Who Endorses?

Among the public figures, cinema and TV actors, artists and sportspersons

problem in rural India," concedes a spokesperson for Coca-Cola India. "Soft drinks that come in a glass bot-tle have to be returned to bottling plants, and no mechanism can provide such drinks at a cheap cost due to freight charges. We are now looking at alternative packaging and how to organize distribution." Neglecting Thums Up There are thornier issues involving brand management that Coca-Cola India has had to confront like its failed

attempt to let the popular Thums-Up brand fade away in the mid-1990s so that its own Coke brand could gain more market share. "Coca-Cola bought Thums-Up when it ruled the market."Initially, Coke ne-glected the Thums-Up brand. Then it started paying attention, and Thums-Up is still number one in India, with Coke and Pepsi following." As Desai of Future Brands notes: "Thums-Up is a brand that refuses to die ... although Coca-Cola never in-

tended to let the brand live. There are huge pockets of enthusiasm for it across the country, and it tends to appeal to rural audiences more than other brands. Wherever it is strong, it has a good rural profile." Today, after the resolution of these problems, can we say that Coca-Cola now is ready to rule the coveted Indi-an market??? Only time will tell......

The Ifs & Buts of Celebrity Endorsements

—Khalid Kamal Rumi

Page 3 BY MERCUR—I

are said to be the first choice for en-dorsements in India, followed by poli-ticians, journalists, activists and some others who have been, or, promise to be very successful in their niche areas.

It is also true that a number of ordi-nary faces also gained celebrity status with their appearance in some iconic ads, like Surf’s Lalitaji, the Complan boy and the Rasna girl to name a few.

Choice of Celebrity

The ‘consideration set’ of personali-ties for endorsement must be guided by the nature of customers a brand serves. Its target market or segment can be broadly identified on the fol-lowing parameters: geographic, de-mographic and psychographic. A com-pany needs to feel the pulse of its cus-tomer as the heart of a successful ce-lebrity endorsement lies there. It de-cides the avatar a celebrity personi-fies, the message she communicates and the medium through which it is conveyed. The lingo, accent, dressing and props used in an ad that may ap-peal to urban customers may not be the most popular and effective ones in rural settings. Similar is the case with distinct genre of celebrities appealing to different members in the same fam-ily, say, children, teenagers, house-wives and elderly. The role a celebrity plays in an ad de-pends on the kind of brand being en-dorsed. When it comes to lifestyle, fashion and luxury products, the en-

tire aura and cult figure of the celebri-ty needs to be accentuated. In the minds of consumers, this kind of prod-uct is usually placed as an aspirational one and the focus is more on emotion-

al appeal. But when there is a repeat purchase or low involvement product, the functional benefits tend to be highlighted more. Hence, to add to the believability factor, the celebs are usually made to resemble a common citizen representing shared points of pain and happiness.

Rocketing Endorsement Fees

Financially, celebrity endorsement is a

costly proposition for most compa-nies. With contract fees crossing Rs 1 crore for top celebrities in India, due diligence needs to be carried out to closely estimate the expected returns on investment (ROI). It is thus better advised to take professional help be-fore a company takes a call on celebri-ty endorsements.

How are Celebrities Valued?

In the US, the brand value of a celebri-

ty is indicated by some popular indices like Q score (a function of favourite and familiarity) and Davie-Brown In-dex (DBI) (a function of appeal, influ-ence and trust). In addition, a num-ber of renowned publishing houses like TIME, Forbes and Businessweek also come up with their Power & Influ-ence lists every year. In India, several publications like Filmfare and India Today release similar lists valuing ce-lebrities on expertise, likability and trustworthiness factors. After valua-tion, most of the endorsement deals are carried out through celebrity agents and expert ad agencies.

Endorsement Risks

Celebrities attract the maximum glare of today’s 24X7 media. Even a minor aberration on their part draws cen-sure from all corners of the society. The fallout for the brand she endorses may be devastating in some cases if the person over a period of time has become a synonym for the brand. There is another risk for the brand getting permanently associated with the personality of the celebrity, popu-larly known as the ‘celebrity trap’.

In the case of sports celebrities, bet-ting entirely on the performance of the endorser may have a more severe

impact on the brand popularity than in the case of artists and actors endors-ing the brand. Also, as a rule of thumb, viewing endorsements as a mere substitute for good products would only tantamount to a strategic blunder.

In Celebrity’s Shoes

From a celebrity’s point of view, the more offers for endorsement she gets, the more she becomes a house-hold name. The subsequent offers only promise a better deal for her. But

Page 4 MARK - AVENUE

“Let them eat cake” – a famous

phrase supposedly spoken by a great

French princess in 18th century, upon

learning that the peasants had no

bread. The cake was then a luxury for

the peasants. Whatever the poor can-

not have and the elite can, was identi-

fied as luxury. Is there any change in

the definition of luxury since then?

This old definition has lost significance

and in the new age, luxury means

different things to different people; it

may be exclusivity

of the product for

some, high crafts-

manship, precision

and quality for

some, and premi-

um priced for

some. But one

thing is certain. Luxury is no longer

the sole preserve of celebrities, aris-

tocracy and the super-rich. New cate-

gories are created which are called

accessible luxury or mass luxury.

But a rational marketer would accept

that marketing luxury products is not

playing the game in the same old turf.

Hence we try to put forth few points a

marketer should remember while

dealing with luxury brands. The most

important of these is the consumer of

a luxury product desires to fulfill his

actualization needs of the Maslow’s

hierarchy. The article Eight Things

That Every Marketer Needs to Know

about the New Luxury Market by Pam

Danziger, aptly summarizes the pur-

pose of this article.

No marketing analysis is complete

without discussing the perspective of

4Ps. From the product perspective as

outlined in eight things, consumers

expect luxury performance from the

product and quality a cut above the

average. Pricing of luxury goods has

very little to do with the money; afflu-

ent luxury consumers can afford to

pay full price for just about anything

they choose to buy. From the distribu-

tion perspective, unlike the regular

goods, luxury goods are available in

LET THEM EAT CAKE

-Srinath Akula

with every contract signed, she is re-stricted in her choice and the exercise of her free will is curtailed to some extent, at least in public appearances.

It would also be interesting to study the impact on celebrities switching their endorsements for rival brands (most of them doing so in the wake of their being dumped by the previous brand owners). They are sometimes signaled in the media as no-more-good-

enough and when they switch loyalty they are berated for chasing only money. Its immediate consequence is a loss of face, which may hit the lesser mortals more critically than the very established ones.

Celebrity Proliferation

The onslaught of mass media is churn-ing out celebrities every day from a plethora of domains. Leveraging web 2.0 platforms, they have been able to

garner, engage and entertain their bevy of fans and followers quite effec-tively. Many seem to be mere a flash in the pan, but their impact in influ-encing consumers is nevertheless felt. So, the relevance of celebrity en-dorsement is not the heart of the de-bate today, the crux is, who should we call a celebrity?

Page 5 BY MERCUR—I

Today bollywood is industry in itself

and growing big. Every year many

movies hit the Box office but things

have changed from past where only

couple of movies used to release on

Friday, Now every Friday the box

office is bombarded with at least 4-5

movies so to create a buzz for a mov-

ie, the marketing team of film has to

be very specific about how they want

to go about publicizing the film.

They don’t just have to attract but

also need to convince the audience to

visit theatres to watch the movie

which the audience might otherwise

end up watching on laptop.

The film marketing holds a great sig-

nificance today and very often the

marketing strategies of new movies

can be found, implementing the basic

principles of marketing which is STP.

An Aamir production Latest movie

Delhi belly has clearly targeted India’s

urban youth and positioned the movie

exclusively for 18+ and old .There is a

particular promo going air where

Aamir khan says that Delhi belly is not

a movie for you if you are old. Today

the marketing of film is as importance

as the story of the film, Earlier the

marketing was reduced to few ban-

ners , hoardings and print advertise-

ment but today these things have

become simply the hygiene factors.

Marketing of movies in case of bad

movies act like hedging of risk where

risk is reduced because even a bad

movie if marketed properly ends up

doing some business rather than just

going flat at box office. Due to mar-

keting , the buzz which is created

make people to come and watch the

movie and by the time people realize

that the movie is not good , the movie

recovers some part of its

cost .Similarly an average movie if

promoted properly can do wonders

for the film makers like Ghajini. Very

creative ideas are adopted to stand

out of the other film promotions. This

publicity is aimed at all the target au-

dience in the country for creating a

“buzz” about the movie. Aamir khan

in order to promote his film went on

to give fans, the Ghajini haircut. Simi-

larly he also visited many schools for

promoting Taare Zameen par.

Marketing has really taken off in last 4

years and the benchmark was set by

Krrish. The way the merchandisers

related to

the movie

like krrish

mask,

outfit were made available at the re-

tail stores, it created huge buzz in the

kids, Kids were excited to own such

stuffs. It started with that and today if

the film makers really believe that

they have a blockbuster, then they

certainly put a lot more effort in mar-

keting. Aamir Khan, known as Mr.

Perfectionist ways came with innova-

tive ways of marketing the film. Begin-

ning with the butt chairs that have

been set up at leading multiplex

chains across the country, Aamir did a

host of other activities to promote his

film. He walked the ramp with co-

stars Sharman and Madhavan for a

ramp show where they unveiled their

range of 3 Idiots T-shirts by Panta-

loons.

Marketing of a movie can be thought

of as creating instant brand identity.

As films have limited distribution win-

dow and therefore a limited shelf life,

the marketing has to happen at abso-

lutely the right time to get audiences

into the cinemas.

Evolution of Marketing trends in Bollywood

-Kumar Vaibhav

select stores or exclusive outlets. Pro-

motion

is predominantly aspiration-

al appeal focused and exclu-

sivity focused.

Celebrity endorsement is

widely used to create Refer-

ence group appeal. As a last

set of words, to ensure suc-

cess of a luxury brand, the-

se are the basic foundations

The brand must be expansive

The brand must tell a story

The brand must be relevant to the consumers’ needs

The brand must align with con-sumers’ values

The brand must perform

Page 6 MARK - AVENUE

What is Experiential Marketing?

Experiential Marketing is buzzword in

marketing world these days. Market-

ing world always try to invent the

wheel over and over again. Experien-

tial marketing is not new in this world,

yes the coy term “Experiential Mar-

keting” is new. Western world always

take clues from past and re---brand it

into a new approach.

Experiential marketing is a form of

relationship marketing. Here marketer

create emotional connection with a

consumer and try create a customer

experience using one or more senses

like touch, taste, smell, sight or hear-

ing. The moot point is to create a

memorable, emotional and interactive

experience. This is also called as right

brain experience. This ploy exploits

not only rational decision making abili-

ties but also emotional aspects of de-

cision---making. This new experience is

created using various things like M&M

to sell there tractors created a simula-

tor which gave farmers feel how their

new tractor can be used in fields. In

Australia, Absolute vodka used the

same ploy to create a buzz about their

new offering called “Cut”. They dis-

tributed a bottle of “Cut” to everyone

in two bars in Sydney and Melbourne

and in turn consumers where given

chance to contribute to exhibits of

photos.

Why use experiential Marketing?

Experiential Marketing is generally

targeted toward very small number of

consumers. So why use experiential

marketing!! When there are many con-

ventional methods available, when

marketers can easily reach to masses

using web, TV or press media. The

reason is simple, today there is very

large number of brands cluttering eve-

ry place possible, and consumer atten-

tion is getting shorter and shorter.

According to one of studies a consum-

er internationally and domestically are

bombarded with more that 5000 mar-

keting messages every day by various

means like TV, web, press etc. High-

lighting the same problem, Herbert

Simon says “…in an information---rich

world, the wealth of information

means a dearth of something else: a

scarcity of whatever it is that infor-

mation consumes. What information

consumes is rather obvious: it con-

sumes the attention of its recipi-

ents.

Hence a wealth of information cre-

ates a poverty of attention and a

need to allocate that attention

efficiently among the overabun-

dance of information sources that

might consume it” (Simon 1971, p.

40---41) So in this world of too

many brand, marketers need

something unique to get the atten-

tion.

Is this the future?

Not really. In my view experiential

marketing is the oldest form of

marketing that marketers have

been using. Think of world when TV,

web, press was not in so much domi-

nance. In those times only way to ad-

vertise was through showing the

product and word---of---mouth. When

a marketer showcased the product

he/she was actually creating an experi-

ence for customer, it use to create an

impression. And marketer through

customer’s reaction use to know how

good was their product. Is

“Experiential Marketing” that we talk-

ing about different from this? Not real-

Page 7 BY MERCUR—I

Experiential Marketing--‐ Is this the future?

-Aditya Anand

ly. Yes ways and means to do the

same has changed. There are more

reasons why experiential marketing

can’t be “the” future.

Firstly it is very short lived. A marketer

who is aiming to create a lasting

brand can’t use it for very long time.

Secondly it can’t be replicated very

easily. Experiential Marketing needs

special arrangements, which is not

possible for all products and all social

environments. Like Absolute Vodka

“Cut” can’t be advertised in India in

similar fashion.

Thirdly experiential marketing is not

fit in all cases, like you can’t promote

a well know product using experien-

tial marketing as users know the prod-

uct. Similarly experiential marketing is

not proper for all kinds of product,

like commodity FMCG products (read

soap, shampoo, flour etc.), software

(although trial version is form of expe-

riential marketing), electronic devices

and list can be very long. Experiential

Marketing is good for creating a buzz,

hype and catching attention of con-

sumer for very short duration, it is

definitely not the answer for future

and its not new.

Page 8 MARK - AVENUE

Among the very first memories that I have of a celebrity endorsement is the Kapil Dev- Palmolive ad –remember “Palmolive da Jawaab nahin”.( Need-less to mention that I had no clue then as to what the word ‘da’ meant and for the Kolkata boy in me, it always meant the short form of the word dada).

For the average Indian like me, cricket and movies were the stuff of dreams and all celebrities from those twin worlds back then were the last word in everything. Growing up, with ration-al thoughts replacing the foolishness of childhood, I realised how much sense celebrity endorsements made, in a country like ours’.

Till about the 90’s, any celebrity could just turn up for an ad and get the product selling. All you had to do was to say “Bingo!”, if there was also a fit

or say “look XYZ is buying it, ergo I buy”.

However as time changed and India too evolved to her modern avatar, consumers began looking at ads ob-jectively. Hence an Amitabh Bachchan endorsing a brand like Parker Pens, ICICI home loans and the famous Cad-bury ‘trust’ campaign, or a Rahul Dra-vid promoting Castrol went home well with the audience and contributed to the respective Brand Equities.

However lazy advertising like using Steve Waugh for ANP Sanmar or Boris Becker for Siyaram got the boos from the audience. At times it is not exactly the celebrity who is the wrong choice, but the product /positioning itself that is the bad fit. Amitabh Bachchan and his son Abhishek were the brand am-bassadors for Maruti Versa and de-spite that the brand tanked badly, it was only after repositioning itself as a ‘family car’-‘joy of travelling together’ that there was an upswing in sales.

To look at the positive aspects of a celebrity endorsing, a feeling of credi-bility is often lent to the brand, for e.g. if we were to look at the Cadbury- Amitabh commercials after the worm fiasco and the subsequent regaining of market share. Another aspect is the attention grabbing one, which is the most common reason for a celebrity

endorsement, case in point being Nakshatra Jewellery and Aishwarya Rai. A celebrity using a brand creates an aspirational value to the product, like the Tag Heuer watch endorse-ment by Shahrukh Khan.

The Psychographic connect is an as-pect for which Lux is always famous

for –“The Beauty Soap of Film stars”. Of course who can dispute the demo-graphic connect that these different stars have, when they are able to ap-peal differently to the different demo-graphic segments. For example a Sal-man Khan can appeal to the masses, while a John Abraham can be for a particular segment.

The other side of the coin is when ce-lebrity advertisement can act as a neg-ative impact on the brand. It may so

Pros & Cons of Celebrity Endorsement for a brand in the Indian Context

- P Vivek Krishnan

happen that the celebrity sometimes completely overshadows the brand, a recent example is the Priyanka Chopra Nokia ad, where Nokia though a pow-erful brand in itself could not help be-ing overshadowed by the celebrity.

Often the celebrity could, owing to his own actions, impact the brand negatively a.k.a Celebrity Credibility. The Salman Khan- Thums up Ads and the Fardeen Khan- Provogue botched endorsements are testimony. Some-times when the market leader is a very strong brand in itself, and the compet-itor advertises using a well known

celebrity, it can misfire. For e.g. Amit-abh Bachchan who endorsed Nerolac was wrongly associated with Asian Paints according to consumer surveys.

Sometimes the celebrity becomes so

associated with the brand that all re-peated advertisements somehow con-trive to fit the product to the celebrity and when they finally decide to get rid of the star, it fails-Celebrity Trap. For example the Binani cement ads with Amitabh and how they finally got rid of the star albeit with a different pre-

text. The Pantene Pro-V Katrina ads, the Tiger Woods-Accenture experienc-es are good examples for it

Whether or not celebrity endorse-ment has a positive impact, is a de-bate that can well stretch into the

next century too. However there is no denying the fact that celebrity en-dorsements do have a strong impact on consumer psyche and especially the Indian one. For as long as there are star gazers, there will be stars. Corporate Brands acknowledge the celebrity pull and hence are currently prepared to ride the celebrity en-dorsement bandwagon.

Page 9 BY MERCUR—I

A Short Quiz :

1) Whose Idea was twitter?

2) Which similar social networking site sued Facebook for allegedly stealing

source code?

3) What is the word limit for a Google search term ?

4) Which search engine was originally called 'BackRub'?

5) How much did Facebook pay to get its current domain name?

6) Recently against which company, Nokia approached Advertising Standards

Council of India against a TV ad which plays on the Nokia brand name

phonetically?

7) Generally what duration (in months/years) can be considered as long term in

Internet Marketing?

8) How many friends does the average Facebook user have?

We want to hear what you think about this issue…..

Please send us your comments\suggestions\feedback at mercu-ri@iimidr.ac.in.

Monthly Article Writing Competition, Cash Prize of Rs 500/- for the win-ner .

If you have any query regarding the competition, please reach out to us at mercu-ri@iimidr.ac.in

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Kumar Vaibhav

Member

Cell – +918349 479 454 Email – p10kumarv@iimidr.ac.in

Team

Answers:

1. Jack Dorsey 2.ConnectU 3. 32 4.Google

5. $200,000 6. Onida 7. One Year 8. 130