Tag: marketing strategy

Market Research

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Conducting market research periodically is important for commodity companies. The market intelligence provides input for course correction in the marketing strategy. Survey can be with the channel partners, influencers and end users.

Attributes of Survey

The survey questionnaire for market research may not be very detailed. It need not be one involving several hundreds of respondents. However it should be systematic, fearless and unbiased.

Systematic means that the responses should be sought on similar questions from one type of respondents. There should be enough responses on any parameter to arrive at a conclusion from market research.
Fearless means that the respondents should be able to give their opinion in a free manner. Generally avoid to ask channel partners for feedback in front of company sales personnel as often they tend to give more negative feedback so to extract more benefits from the company. Some of them do not speak for fear of losing the goodwill of the company.

Ensure to cover all types of channel partners in the sample. This makes the survey unbiased. So, seek feedback from all types of respondents from the target segment in the survey- big and small, exclusive and multi-brand, young and old promoter-driven stores.

Objectives of Market Research

Collecting market intelligence can have various objectives. It can be done to understand customer preferences priorities. It can be done to estimate the market size. It can be done to evaluate the brand health or customer satisfaction with its products. It can be done to estimate the viewership or reach of its advertisement or what has been its impact on purchasing behaviour of customer. It can be done to gather competitor information.

Then companies also need to collect some information about the channel partners. They should be regularly updating their database of the retail counters and wholesalers present in the market, potential of each, financial background, brand preferences, market potential, etc. This will help in targeting specific channel partners who can add value to the existing network.

Company can conduct market surveys through its own staff or outsource the task to an agency.

Product Packaging- Powerful or Dummy?

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Product packaging plays a very significant role for FMCG products. Can the same be said about commodities? Commodities are generally bulky and purchased in larger quantities. Their handling is quite unsophisticated. Their users are often different from their buyers.

Packaged and Unpackaged Products

There are a few commodities, which allow packaging, while others are of such nature that no packaging is possible and branding has to be done on the product itself.
Commodities which have packaging: Cement, glass, paint, electric wires, barbed wires, tiles
Commodities which do not have packaging: TMT bars, gypsum/ fiber cement boards, cement sheets, metal sheets, plywood, metal framework

It has been seen that for commodities, where packaging is not possible due to the size of the product, companies employ stickers or wrap arounds to convey their marketing message.

Product Packaging Benefits

Apart from the functional objective of protecting the product from weathering or causing harm to environment/ people around, product packaging informs the customer of major USPs of the product. Product packaging helps in establishing the premiumness of the brand. If the packaging is attractive, the recall value of the product is also higher. A good quality of packaging assures the consumer that the content inside will also be of good quality.

Usage and storage guidelines are sometimes mentioned on the packaging so that the customer does not need someone to guide him how to use it. There are customer care contact details or email IDs mentioned for contacting in case of any query or problem. It often lists the links (company website/ product micro site) to enable the consumer to gather more information about the product or its installation technique. Then there are few details like Maximum retail price, physical properties like weight, date and place of manufacturing etc. which have been mandated by the government for a few categories of items.

Packaging also gives space to advertise any offers being run on the product to attract the customer’s attention. Finally, if there are any standards like BIS, ISO, etc. which the company is complying to and wants to inform the customers about it, can be communicated through packaging. For a few commodities, it is mandatory by the government to comply to certain standards in manufacturing or testing and companies have to mention the standard on the packaging. For example, in India, cement manufacturers have to mention the IS code on the packaging itself, depending on the type of cement (OPC, PPC or PSC).

In a nutshell, packaging is the last medium for advertisement just before purchase decision if the customer has not been exposed to any advertisement of the product earlier.

Product Packaging- What to avoid?

Packaging is a sensitive media when it comes to communicating about the product. The text on the packaging can be taken to the court if the product does not deliver on the promises mentioned on the product packaging. Only those claims about the product performance should be mentioned for which the company has reports from test, internally conducted or at an external lab. However, words like “Best”, “Cheapest”, “Most effective”, “Highest selling”, “Fastest” etc. are acceptable adjectives for the product as this are subjective terms and depend on several factors, a few of which might not be even possible to measure.

A lot of iterations are done before the final product packaging is decided. It should look appealing, be sturdy enough to bear transportation, weathering and handling and not add a lot of cost to the product. Environment friendly packaging material has recently become a trend as packaging material does not go into construction and have to be disposed off.

Environment focused campaigns

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“Go Green” is the new buzzword and Marketing Communications cannot ignore the environment focused campaigns. Companies need to build a perception about themselves that they have a socio-environmental agenda. This increases the acceptance of their products in the market. Not only the product’s features or its manufacturing but also the other activities the company indulges in should have a positive bearing on the ecosystem.

Communication in Environment focused campaigns

There are several themes around which communications are developed for environment focused campaigns. Some are around environment conservation theme. A few companies advertise that their product does not cause any damage to the nature due their bio-degradable nature. They do innovations in the packaging to make it bio-degradable as discarding of the packaging material is a big challenge for the users. A few also advertise that they have reduced their dependence on natural resources and are using more of industrial wastes so that natural resources are conserved for future generations.

JSW Cement has built its marketing campaign around being an eco-friendly cement company. They are trying to take the pole position in promoting Portland Slag Cement (PSC), which is considered to cause lesser CO2 impact to the environment than Ordinary Portland Cement (OPC). PSC manufacturing uses slag, an otherwise useless by-product from steel industry and gives better long-term strength than OPC.

Conservation of energy is another popular marketing message in the environment focused campaigns. Companies claim that usage of their brands will lead to lesser electricity usage at home. A few companies promote the fact that they are harnessing solar or wind energy or using recycled water for their manufacturing processes. Few companies have switched to technologies which allow for conservation of energy. For a few companies, it is not possible to conserve energy due to the nature of their business. So, they engage in activities which are towards providing renewable energy or clean environment to a community and use it for their PR activities.

Today’s consumer is more environment conscious and is willing to pay an extra buck if the product contributes to the cause of sustainability. Environment focused campaigns also help in bringing the influencers like architects and interior designers to the company’s fold. The role of architects becomes here more important as “Green Building” or “Net Zero” are good selling points for them when they are pitching to their clients and they are looking for products which helps the buildings designed by them achieve this. The support from the government bodies in promoting a particular product category is also more forthcoming if the product does not harm nature or conserves natural resources.

Internal challenges

Apart from advertisement, companies also try to imbibe being environment focused in their work culture, and not just do lip service to the environment. They undertake cleanliness drives and often encourage their customers to participate in them. Care is taken to ensure resources within the company are not wasted.

Environment focused campaigns need to be very carefully planned as any wrong claim can be challenged in a court of law and cause unnecessary damage to the company’s reputation. All claims should have proper data back-up.

Commodity Logistics

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Commodity logistics is an essential ingredient for building brand of commodities. There are several roles which commodity logistics division has to do for commodity servicing.

  1. Timely supply: The customers are very used to fast delivery. In order to supply them material on time, dealers also need to get timely supply of material from the manufacturers. Also, limited storage space at retail shops demand that the shops need to maintain minimum inventory.
  2. Good geographical reach: Small size trucks to reach far-flung areas as rodas might not be there for large trucks.
  3. Arranging various sizes of trucks to service different size orders & maximum utilization of the loading capacity of the trucks: Each dealer has a different stockyard size and cash flow cycle. So, the order size of each dealer is different which company logistics need to serve.
  4. Managing Carrying and Forwarding Agents or Handling Agents: CFAs make or break the reputation of the company in the market as often they influence the timely delivery, quality and a few pre-sales/ post-sales activities (proforma invoice, customer complaints, sample delivery etc.) from the godowns. So, both strict control on their working so that the dealer’s experience with them is good as well as empowering them enough for speedy resolution of customer complaints are important.
  5. Paperwork to meet statutory requirements: There is a lot of documentation needed to be submitted to the local authorities.
  6. Fleet maintenance: This often involves the complexity of managing Company trucks, outsourced transporters and customer trucks.
  7. Depot stock management: Stock at godowns need to be properly kept. FIFO needs to be maintained. Any manufacturing defect observed in the incoming material need to be immediately informed to the QA personnel so that bad material does not creed into the market.

Commodity logistics is at the heart of customer satisfaction and significant planning needs to be done for this.

Brand Architecture- 3 Types

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Most of the commodity companies have two or more brands. The question of which brand architecture to follow primarily arises at the time of introducing a new brand. The dilemma is similar to other industries:

Should you operate with Brand Extension strategy or Endorsed Brand strategy?

Should the identity of the new brand be completely away from the existing brand?

What is perception of the present brand in the consumers’ mind?

When to use which Brand Architecture?

Companies adopt various brand architecture for managing their brands, depending on their strategy.

Brand Extension or Branded House:

This brand architecture strategy is used when the brand equity of the existing brand is high and can be transferred to the new brand. It is generally used when a premium brand wants to introduce an even more premium brand.

Ultratech Cement launched an even more premium product Ultratech SUPER. The mass media advertisements were mostly for mother Ultratech brand, though at the retail counters, Ultratech SUPER was also promoted.

Endorsed Brand or Sub-brands:

For some companies, the trust level is high on the existing brand but it is seen more as a value brand than premium brand. The new brand to be launched is desired to be positioned in the premium segment. Then endorsed brand strategy is used. It is also used when the company is a conglomerate diversified in multiple products and wants to extend the brand equity to the new businesses.

When Lafarge entered India, it wanted to encash on the existing brand strength of Lafarge. So the brands it launched were Lafarge Duraguard and Lafarge Concreto. The focus on Lafarge was less, visible from the packaging of the product. All in-house developed Tata products have a mention of Tata in their brand name.

Standalone Brand or House of Brands:

This strategy is used when the image of the existing brand is quite negative and will have an adverse impact on the new brand if the consumers come to know that it from the same manufacturer. Alternatively, it is used when the brand perception of the existing brand is so strong that consumers will not be able to associate the new brand with a premium segment. A value brand from can potentially erode the premiumness associated with the existing brand.

Bangur Cement and Rockstrong Cement are from the same parent company Shree Cement but have no mention of Shree Cement on any of their marketing communications.

Brand architecture
Brand Architecture- 3 Types

Mixed strategies:

Then there are variants which are midway between the strategies. The focus on the parent brand ranges from high to low and are used by commodity companies, depending on the market feedback and requirement.

Brand Architecture defines the communication on the product packaging, advertisement in media and in-shop promotion, along with other things.