Saturday, 28 September 2013

12 - STP: Importance of serving customers by grouping


Market segment - Group of customers who share similar set of needs and wants.

Segmentation:
Geographic - class I & II cities; thought of while developing product.
Demographic - SEC AB F 20-34 yrs
Psychographic - Outdoor-oriented lifestyle
Behavioural - potential/ regular users, medium usage rate, readiness - aware & interested, positive attitude towards product. 

Consumer behaviour and demographics provides info on customer perceived value.

SEC - Classify urban households on the basis of education & occupation.
Need based market segmentation - to  identify small, better defined target groups
Segmentation criteria -
·         measurable
·         substantial
·         accessible
·         differentiable
·         actionable

Purpose of segmentation - risk reduction. Determined by behavioural variables for existing categories. Prerequisite for segmentation - established categories. For each segment, there are different brands that occupy a different mind-space.
For a particular category and customers, there is 1 final segmentation.

Targeting:
Lakme has several products in varied price ranges for different segments.
Targets through ad's, marketing mix elements, branding, brand building.
If Lakme wants to take on a competitor for a particular product, it should -
·         Identify segment
·         Decide if it is worth its time to invest on the segment
·         Have relevant POP comparable to competitor and POD which differentiates its product.

Positioning:
The way individuals rank products in their head; most Vs least preferred.
Lakme is the 47th most trusted brand in the world, no 1 cosmetic brand in the country.

Marketers want a brand's acceptance to be so high that there is no mind space for another brand.

11 - Sales management and consumer behaviour


Sales at Lakme does not follow a funnel structure.
Sales promotion - leads to incentive for action
·         Advertisement - least credible
·         Word of mouth - most credible

For Lakme, promotion can be:
·         Selective: Products promoted at malls, Health & Glow outlets, select online sites
·         Intensive: Products promoted at small stores (better distribution)

At Lakme - Informative & Reminder Advertising is required to let people know about product, to buy it.

Howard Sheth model of consumer behaviour:
1.       Motives - Even skin tone
2.       Brand comprehension - Safe cosmetic; suits Indian skin
3.       Attitude - Price-sensitive customers
4.       Confidence - No 1 cosmetic in India
5.       Intention - Skin should appear non-oily
6.       Symbolic - emotional - Kareena wears Lakme Absolute range in 'Heroine' movie
7.       Stimulus ambiguity - If consumer's are unsure if cosmetic will suit them, look up blogs of opinion leaders --> leading to  overt search.
8.       For a cosmetic category, people have in memory - choice criteria & brand comprehension.
·         Choice criteria - Take feedback from family, reference groups and social class.
·         Brand comprehension - After using the cosmetic to the finish over a period of time, consumers will have an opinion and will know if they want to repurchase/ switch brands.

10 - Promotion: IMC, ATL, BTL


While launching a new product, should write off entire advertising cost in 1st year.

Message:

Creative brief content:
mssg
TG
comm objective
key benefit
support for brand promise
media

Creative development execution:

TV ad's : Brand personality (colours used for diff cosmetic types)
Print ad's : Picture, headline, copy matter in that order.
Legal and Social issues:
ASCI (Advertisement Std Council of India)- self regulatory; women should not be portrayed in subordinate manner.
Monopolies and Restrictive Trade Practices Act 1969 - Wrong representation  is unfair trade practise

Sales promotion offer an incentive & attract brand switchers; however creates clutter.

Interactive Marketing:
Search ad's - when consumers search on google, ad appears depending on -
the amount company bids
search engine algorithm

Mobile marketing - ability to personalize mssg based on demographics, consumer behaviour characteristics.

Opinion leaders:
Clique - small group, frequent interaction
Effective comm; insulates them from new ideas
Challenge : Bring in Bridge - people part of clique, linked to person in another.


9 - Difference between Brands and Branding


The AMA defines brand as - name, term, sign, symbol, design or combination of them - to identify goods/ services of 1 seller or groups of sellers and to differentiate them from those of competitors.

Points of difference POD - mid-price range, reasonably long lasting for its price
Points of parity POP - category - cosmetic - compact, case with mirror and powder puff

Lakme - On top of the world
 



Branding - Endowing products & services with the power of a brand.
Brand equity - Added value endowed on products; reflected in consumer's reaction & market share.

Building Brand equity
·         Initial choice for brand elements - Lakme` (derived from Lakshmi)
·         Marketing activities supporting product - ad, events, blogs, lakme salon,   movie tie up's
·         Assosiation indirectly transferred to brand - Kareena Kapoor in 'Heroine' endorsing Absolute range

Brand reinforcement -
Partnered with cosmetic houses in Milan & Germany; accordingly develops technology.

8 - Distribution - Channel concepts: design, manage, control


Hybrid channels and multichannel marketing - 2 or more marketing channels to reach customers.
Lakme uses - online, retailer like health & glow, fancy stores
Manufacturer selling physical products needs 3 channels - sales channel, delivery channel and service channel.

Marketing flows in Marketing channel for Lakme
Physical flow - When transporters involved at every step of title flow.



MTF - offers consumers max benefit
In the case of Lakme:
ATL (Above the line) - Ad
BTL (Below the line) - Person deployed at the Lakme counter at Health & Glow, in malls.

Direct & Interactive marketing
Direct - Through websites - products can be purchased.
In their official site, they have Sabya (popular designer) write series of blogs.
Interactive - Users provide feedback on products, on official site

Word of mouth marketing
Opinion leaders blogging
People who purchase from flipkart, healthkart etc providing feedback

For Lakme, Distribution can be:
Exclusive: Products sold at Lakme salons or exclusive counters at malls
Selective: Products sold at Health & Glow & select stores
Intensive: Products sold at fancy stores







7 - Pricing concepts, effects and decisions


When price is high, the volume of the goods sold are relatively less i.e inverse relation. 
  •  Product -  the basis on which customer purchases product - awareness through different media. Customers can be innovators, early adopters, middle majority or laggards.

A connection is made between the product life cycle and the price by the consumer. It is compared to its competitors by consumers, ultimately competition determines its survival in market.
  •          Price - the customer perceived value for a product and if he feels the price is justified.
  •          Place – how the product is distributed(supply and distribution chain strategy). The length, width and depth of a product determine its distribution.
  •          Promotion - how aware the customer is about the product through packaging, ad and distribution strategy - push or pull.

How companies price?
1) Reference price - Lakme has priced this compact comparable to its competitors; all 3 compacts perform similar function.
·         Colorbar UV Perfect Compact 9g (Rs 250)
·         Lotus Herbals Naturalblend Botanical Compact (Rs 314)
2) Price quality inferences -
Mid-price range; hence an effective cosmetic to give an even skin tone for 8 hours; does not change the texture of the skin(not cream based).
3) Price endings-
Rs 265/ 275 - As it ends with 5, it is to facilitate easy customer recall.

Setting price
Selecting pricing objective - It is priced wrt competitors; however within lakme compact range also there is a significant difference between the different compacts.
Determining demand - Seller can charge higher price if he can convince customers that it offers lowest total cost of ownership.
If demand is elastic, sellers will consider lowering the price.
Target costing:
The firm should examine cost elements - design, engineering, manufacturing, sales - final projections should be in target range

Competitors-
Have profit maximization objective, as they react by improving ad budget or improving product quality.
As it is a product in mid-price range, it is at the orienting point.
Price - Only revenue bearing element which contributes to topline.
Cosmetic companies base their price on customer's perceived value.
Buyer's image of product quality, Trustworthiness, esteem - Due to brand name Lakme.
Warranty - 3 years
Customer support - Providing feedback on blogs; inform others.
Supplier's reputation - Health & Glow renowned to provide quality cosmetics.

To avoid increasing prices:
  •          Shrink product price
  •          Increase pack size
  •          Use alternate low-cost ingredients

Monday, 9 September 2013

6 - Differences from Products, GAPS model


INDIA:

According to Drug & Cosmetic act in India the labeling requirements for cosmetics are:
  •           Name of cosmetics and name and manufacturing address should carry on the both inner and outer labels.
  •      For small size containers on the label instead of mfg address the principle place of mfg and pin code are sufficient.
  •      The outer label should contain the amount of net contents of ingredients used in the manufacturing.
  •      The inner label addresses the direction of safe use and any warning indication or names and quantities of the ingredients those are hazardous or poisonous in nature.
  •      The label should carry a distinctive batch number and it indicated by the letter “B” and for soaps  the month and year of the manufacturing shall be given instead of “B” and this is not apply to cosmetics which are having 10grams or less for solids or semisolids and 25ml or less for liquid state products.
  •         On the label the letter “M” is indicate the manufacturing license number.


Some amendments have been notified in the labeling clause of D&C act, which are:

I. The ingredients should be declared in the descending order of their concentrations down to 1% and in any order below 1%.
II. Use before date instead of best use before date which was earlier declared as xx months/year from the date of packaging.
III. The  Import & Registration of Cosmetics rule says “no cosmetic shall be imported into India unless the product is registered under these rules by the licensing authority appointed by Central government”. The amendment comes into force with the effect from 1st day of April 2011.

Service:
In terms of my marketing diary product compact powder, I have explained the services provided by a store called 'Health & Glow' which sells my product.

Definition: Any act or performance one party can offer to another that is essentially intangible and does not result in ownership of anything.

  • Lakme compact powder 9g - pure tangible good
  • Service provided by 'Health & Glow' caters to customer's - personal need.
  • My product falls in the 'high in experience qualities' category - only after a person use's it, she will get to know if it suits her best.
  • This product has a mid-level credence quality - a buyer can evaluate product in fair manner only after consumption.



Distinctive characteristics of services provided by 'Health & Glow':

1) Intangibility -
·         Place - Exterior and interior have clean lines; passages have space so that people can look at products without blocking the way; layout across other branches are similar.
·         People - There is 1 person to look after each section eg: 1 person for lipstick etc; we can take suggestions from the person to know which cosmetic suits us best. Also if they have a display sample, we can apply it on our hand to know the specific colour.
·         Equipment - Billing is efficient.
·         Communication material - The employees will inform us about present offers.
·         Symbols - The symbol suggests a well-stocked cosmetic store where they do not tamper with products, most of which come without a seal.
·         Price - It sells recent-stocked cosmetics at MRP price.

2) Inseparability - Employee-customer interaction

3) Variability - Employees are trained and well informed across different branches, serve customers in proactive manner.

4) Perish-ability - On supply side -
·         peak-time part-time employees
·         peak-time efficiency from employees
·         increase consumer participation - bag their cosmetics



     Customer care contact:
     If you're a consumer, contact Levercare executive at -
     Toll free number: 1800228080, 18001022221 
     SMS 'levercare' to 54555 (BSNL 4555) 
     PO Box No 1470, mumbai 400099 
     Email: lever.care@unilever.com

     

     For feedback on Lakmé Salons and Ayush Therapy Centres please write tocare@lakmelever.com

Service-Quality 5 GAP model:


1) Gap between consumer expectation & management perception - Eg consumer wants a cosmetic that lasts long without reapplication but management has not realised need.
2) Gap between management perception & service-quality specification - Service quality is a comparison of expectations with performance.
Eg compact not catering to different skin tones.
3) Gap between service-quality specification & service delivery - Eg If customer service is bad, nobody responds to queries.
4) Gap between service delivery & external communications - Eg when consumers expectations after viewing the ad are not met.
5) Gap between perceived service & expected service - Eg when consumer thinks compact will even them even skin tone, but compact does not.
  •          Reliability - dependability, promised time
  •          Responsiveness - customer informed
  •          Assurance - instil confidence
  •          Empathy - individual attention to customer
  •          Tangibles
Zone of tolerance - Minimum level consumers are willing to accept and the level they believe can and should be delivered.

Saturday, 7 September 2013

5 - Understanding Product Concept and Product Management


LENGTH DEPTH AND WIDTH for Lakme Flawless Matte Complexion Compact 9g

Product family: Product classes that satisfy a core need with reasonable effectiveness. Eg powder
Product class: Group of products within family that have functional coherence. Eg cosmetics

Product Line: Summation of SKU/ Variant
For my specific product, the compact powder of 9g quantity comes in 3 shades at different prices -
  • Melon (for fair-complexioned people) - Rs 265
  • Apricot(for medium-complexioned people) - Rs 265
  • Almond(for dark-complexioned people) - Rs 275
Width: Summation of categories to which Lakme caters.
Skin, Eyes, Lips, Nails, Hair
(Compact powder, Nail paint, Foundation, Lipstick, sun expert range, dresser range, face wash)

Depth:  Other Lakme Cosmetic products
  •  Loose powder
  •  Cream based powder
  •  Foundation which gives a matte finish
  •  Creams which give matte finish




                             Customer                                                                   Firm
Core requirement
Even skin tone
Basic product
Powder
Expected requirement
To last for 8 hours and cover blemish
Augmented product
Compact powder, which has replaced loose powder among working women.
Unmet requirement
Mid-priced compact which does a good job
Potential product
Powder with whitening pearls which can guarantee fairness in a time period.

Thursday, 5 September 2013

4 - Application of the Life Cycle concept


Application of the Life Cycle concept
Evolution of powder over 300 years -
·         Egyptian women used to dab their faces with a mixture made up of chalk or clay. The purpose here was to stay away from evil spirits.
·          Later, this dabbing of chalk and clay mixture was used by women to cover up their tan.
·          Women from the royal families and those with higher status believed in having their faces painted white.
·          The women who were less wealthy used to make face powder made out of wheat flour.
·          In 15th century, production of rice and white flour started diminishing because of the growing usage as face powder.

      In 20th century, with theatre coming into picture, the demand for face powder again grew as the actors needed it for their make-up. In order to meet the demand for face powder, many nations started experimenting and in 1923, the English company, Laughton & Sons came up with the first compact or compressed powder.
           In the 20's Anthony Overton launched the first powder for Afro-Americans and called it as High Brown Brand. Following this, in early 40's Elizabeth Arden came up with the manufacture of powder along with other make-up products.
          In early 50's, Hollywood stylist Max Factor launched face powder for the actresses and affordable foundation for common women which was called as a pan cake.
     In India, sandal powder has been used since a long time as a face powder.
  • The establishment of the first beauty salons also appeared in the late 19th century.
  •     Customer Need that had to be satisfied -
  •     In a cosmetic sense, it was to appear fairer and have blemish-free skin. The purpose is to smell good and feel fresh; even babies have face powder made for them.

Value addition to powder -
·         They come in different textures - loose powder, compact (cake), cream based compacts
·         Compacts are conveniently packed - can be carried in purse; this has promoted increased use due to    many reapplications throughout the day.

Innovators
2.5%
Those who are aware of this product equivalent abroad and want to try out the Indian counterparts, which might suit their skin better.
Early adopters
13.5%
Those who own a cosmetic blog; anchors on TV who review cosmetic products for viewers; health & glow store
Early majority
34%
People loyal to Lakme brand and those willing to try it out.
Late majority
34%
People who have received good reviews and are convinced that product is worth their money.
Laggards
16%
People who may try the product if unavoidable; just before it is replaced by an in-house superior technology product.

Therefore in the initial stage, a profit of more than 2.5% cannot be made.


Packaging:
The cover is a deep purple and the writing is in a clear bold font, gold in colour and well spaced out.



The writing is also minimal.
Purple - Signifies royal and this colour is used, as it is a long lasting matte finish powder, which is in a mid-price range. They have a low-end compact priced at Rs 170 and a higher-end one priced at Rs 500.
Has a good expiry period as it needs to be used within 3 years.

Sunday, 25 August 2013

3 - Competitors, analysis, competitor maps

Strength of the forces of competition are mild in industries like cosmetics, where high returns are common. Cosmetic industry globally is worth $274 billion.

Facts about competition in cosmetic industry:
  •          Cosmetic industry grows 20 % annually
  •          Cosmetic industry's worth in India $1.5 billion
  •          Expected to increase to $3 billion by 2014
  •          19% CAGR (Compound Annual Growth Rate) expected by 2014
  •          Our industry expected to grow twice as much as Europe

Top companies in India
  •          Lakme - Unilever
  •          Revlon – 1932 American company
  •          Oriflame Cosmetics SA – 1967, Swedish origin
  •          The Lo’real group – World’s largest cosmetic giant at Paris
  •          Chambor – In India from 1994, Geneva company
  •          Maybelline – Started in 1915, acquired by L’oreal in 1996
  •          Avon products Inc – No 1 beauty direct seller in the world
  •          MAC cosmetics
  •          ColorBar cosmetics
  •          Streer wear

Product differenciation in Lakme -
  •          Skin - moisturising and sunscreen lotions and creams, facewash, foundation, compact, shimmers
  •          eyes - kajal, eyeliner, eyeshadow, mascara
  •          lips - gloss, lipstick
  •          nails - nail polish
  •          hair - shampoo, serum

Barriers to entry
The cosmetics industry exists in a market structure called monopolistic competition. The industry is characterized by a large number of firms that attempt to differentiate their products and maintain a certain degree of control over their pricing. In general monopolistic competition is characterized by relatively low barriers to entry and exit. Government regulation (mostly related to differences in the approach to safety issues) and distribution channels appear to be the most significant barriers to entry in the cosmetics industry.


Direct competitiors for Lakme (In terms of product category and not price) –  
  •          Maybelline Clear Glow All in one Fairness compact Powder 9g – Rs 185 (Comes in 5 shades)
  •          Loreal Paris True Match Powder Compact – Rs 850 (Comes in 4 shades)
  •          Colorbar Time Plus Powder Compact - 9 g – Rs 200 (1 shade)
  •          Coloressence Compact Powder Compact - 10 g – Rs 160 (Comes in 4 shades)
  •        Revlon Ivory Matte Pressed Powder 8.4 g – Rs 415 (1 shade)
  •          Lotus Herbals Natural Blend Botanical Compact SPF 15 – Rs 425 (1 shade)

Substitutes for compact powder
  •          Loose powder
  •          Cream based powder
  •          Foundation which gives a matte finish
  •          Creams which give matte finish

Monday, 5 August 2013

1 - Sources of Customer Value and application

LAKME
·         India's biggest and oldest beauty brand.
·         Presently owned by Unilever and run by CEO Anil Chopra.
·         Named after the French opera Lakmé, the goddess of wealth renowned for her beauty.
·         Lakme Salons and Lakme Studios across 130+ centers in about 25 major cities.
·         Lakmé also partners with the leading cosmetic house; Milan-based Intercos Italia, Schwann Stabilo Germany and Paris-based Fiabila



PRODUCT
Lakme - Flawless Matte Complexion Compact - 9g
Price : Rs 265/ 275
Shades
  • Melon (for fair-complexioned people) - Price : Rs 265
  • Apricot(for medium-complexioned people) - Price : Rs 265
  • Almond(for dark-complexioned people) - Price : Rs 275
Benefits:
·         Matte finish
·         Compressed texture
·         Vitamin E
·         Oil absorbing formula
·         Attractive pack with an attached mirror
·         Non-irritating
·         Does not get cakey


Competitive products within Lakme:
·         Lakme Radiance Complexion Compact 9g (Price : Rs 104) - matte finish for 4 hrs
·         Lakme nine to five Flawless creme Compact 9g (Price : Rs 450) - concealer, foundation not required,           cream texture
·         Lakme Rose Powder Compact 40g (Price : Rs 100) - loose & more quantity
·         Lakme Absolute White Intense Wet & Dry Compact 9g (Price : Rs 590) - (cream base & does not             spread uniformly on skin; wet & dry part separate), has hyaluronic acid (hydrates)
·         Lakme Perfect Radiance Intense Whitening Compact 9g (Price : Rs 170)



Competitive products outside Lakme:
·         Maybelline Clear Glow All in one Fairness Compact powder Compact 9g (Price : Rs 175)
·         Colorbar UV Perfect Compact 9g (Price : Rs 250)
·         Colorbar Time Plus Powder Compact 9g (Price : Rs 200)
·         Lotus Herbals Naturalblend Botanical Compact (Price : Rs 314)
·         Coloressence Compact Powder Compact 10g (Price : Rs 160)


What do you think before going to the store?
Is the product worth the money, does it serve the purpose, does it suit me, does it last long.

What is the product category?
Cosmetics.

Who are you?
I am either a student from a upper-middle class family background or a working professional.

Consumers who have bought this product before?
They will continue to buy it if it suits their skin (no allergy), if it makes them look better for a longer period of time and serves purpose (like skin should not look oily).

Consumers who buy this product for the 1st time?
Those who want to see if this party wear compact powder gives them an even complexion and makes them look better.

How customers are influenced to purchase?
As lakme is a well known safe Indian cosmetic brand and suits our skin well. The number of cases of allergies/ rashes post using lakme products is very minimal. it is also a reasonably priced cosmetic brand.

How to pitch marketing given different experience?
Customers can go online to the Lakme official site and see the shades in which the compact are provided. If customers go to a store like "Health & Glow", employees there tell them which shade is closest to their complexion & will suit them best.

Where  is the product bought?
·         First time - health & glow or cosmetic store or fancy shop
·         Second time onwards - if the person is online shopping savvy, either from sites like flipkart or from a cosmetic store

Why this product?
They have a lower & higher price range cosmetic powder also. This is a long lasting cosmetic in the mid-level price range.