• The Country-of-origin effect

    Imagine I offer you a present – a watch. And I ask you to choose between a watch made in Switzerland, one made in India and one made in Brazil, or some other country. You’d most likely choose the Swiss watch (of course, the fact that the Swiss watch would cost me more than a by-pass surgery is not exactly your concern). I know I would have chosen it. I cannot point my finger at precisely why but somewhere in my head there is this perception that no on makes watches better than the Swiss.

    I do not know whether the Swiss have a long heritage at this, or if they are indeed better. But the country of origin plays a key role in purchase decision as we generally associate the characteristics of countries to products, and in some cases, we even associate certain products to countries.

    Swiss army knife

    I’ll give you examples of both. We look for a ‘Made in Japan’ tag or atleast a Japanese name when it comes to high-tech products. We know that something made in Germany would be built with the best of quality, technology and luxury in mind. People also believe that an Italian product would be designed to be the best looking.
    Now look at certain individual products – French Wine, German cars, Japanese Robots, Columbian Coffee, Italian/French fashion accessories, Swiss army knife, Swiss chocolate et al. Somewhere in our minds, these products are associated with these countries, owing to their legacy or culture or lifestyle which automatically leads us to perceive these as ‘premium’.

    Häagen-Dazs

    Foreign Branding is a concept that spawns from the country-of-origin effect and has become increasingly popular since the ’60s and ’70s. If you’ve read the previous article on this blog – ‘Whats in a name?’, where Pratik talks about the intricacies involved in naming a brand, you would recognise that many brands have been given foreign names to give a perceived ‘country-of-origin’ effect. Häagen-Dazs is one of the best examples of this. Based in the US of A, and started by a Polish immigrant, the brand was consciously given a Scandinavian sounding name since countries like Denmark are considered superior in dairy products and remind people of snow at the same time! The name is not even derived from actual scandinavian words, in fact, the digraphs “äa” and “zs” are not part of any native words in any of the scandinavian languages, yet the impact of the name is there for the world to see.

    This foreign branding can be observed most frequently in cosmetics and fashion accessories, where an Italian or French sounding name is chosen to appeal to the style-conscious. Makes it obvious why ITC chose the names Essenza di Wills and Fiama di Wills for its frangrances and personal care products, especially since they’re battling it out in the premium segment.

    In India, the government has put in place protections for domestic products which hold additional value owing to their respective place of origin. The Geographical Indications Registry is used to protect brands like Kancheepuram silk, Darjeeling tea, Basmati rice and Alphonso Mango from being misused. These measures prove the worth that certain products gain owing to their place of origin.

    In retrospect, it seems quite obvious that building such connections between your brand and a certain place of origin would add credibility to your brand, but more importantly, the actual product must ultimately live up to the standards. Lets face it, if Häagen-Dazs did not make good ice-cream, the name would be as useless as me changing my name to Präshäanth de Zšamuél or something. The country/place of origin, if used wisely and backed by a credible product, would be an incredible asset.

    I could go on to give you more examples, but being lazier than the others who post on this blog, I would instead ‘encourage’ you all to explore more examples, and I am conveniently using the pretext of ‘starting a healthy discussion’ to stop here. Happy marketing!

  • Ambush Marketing

    Waka Waka fever has gripped the world and people from across the globe are tuning in every day to see who would go on to raise the FIFA World Cup trophy on the 11th of July, 2010. Given the magnitude of the event and the global reach of every game, it is a marketer’s delight. In any such event, the coveted ‘official tournament sponsors’ position usually draws stiff competition. However, every tournament of this magnitude also draws a number of so-called ‘unofficial’ sponsors – the ‘ambush marketers’. Call them smart or call them dirty, ambush marketing is a reality and has been going on for quite some time now in the international arena. And it’s not just the small players who indulge in this, some of the biggest brands in the world use ambush marketing as their core strategy.

    What is ambush marketing? Imagine you are the official sponsor of a major tournament like the World Cup. You’ve pumped in a lot of money and have the official right to associate your brand(s) with the tournament – advertisements, marketing campaigns etc. Now suppose your rival manages to air an ad campaign with all the elements of the World Cup in it, minus the actual name of the tournament. Or say he airs a campaign featuring some of the star players from the tournament. His brand also gains association with the mega event and effectively hijacks mind space, air time and recall among consumers for free whereas you’ve put in a ton of money for the same! Welcome to the world of ambush marketing. Take a look at these examples.

    Reebok was the official sponsor of the 1992 Barcelona Olympics. However, Nike managed to steal the show by sponsoring press conferences for the US basketball team and needless to say, benefited tremendously in the process.
    At the same event, Michael Jordan, who was sponsored by Nike, covered the Reebok sign on his kit while receiving the gold medal for the US basketball team, in spite of Reebok being the official sponsors.
    During the 1996 Cricket World Cup in India, Coke shelled out Rs 40 crores to be the official sponsor of the event. However, Pepsi managed to gain more mileage through their “nothing official about it” campaign.
    There have been numerous such instances in the past. From time to time, we come across controversies involving sponsorship deals with stand offs between players, sponsors and the boards concerned. Attempts to prevent ambush marketing may have been one of the major culprits behind this.

    Is it legal? Well, that depends on the contract involved. Remember, the people involved in ambush marketing are very shrewd and smart people. This form of marketing succeeds primarily because of loopholes that exist in contracts signed between the official sponsors of the event and the event organizer. Marketers should be cautious while framing sponsorship deals and must look to block out competitors.

    The ethicality of the practice? Well, that is for all of us to debate. However, given the steep prices involved in officially sponsoring a mega event and the consumer reach it offers, ambush marketing is certainly here to stay.

  • The rural game

    The economic recession of 2008 led to a slew of media articles pertaining to the corporate world leaping in the rural market to take care of the plummeting topline. “Rural Marketing” became a buzzword and the panacea that would cure the frail health of the economy. And cure it did! But while acknowledging the fact that many companies developed an orientation towards the rural markets in that phase one must also acknowledge that rural marketing was a big game from before the recession. Here are some pointers – a) The literacy rates in rural India grew from 36% to 59% in the phase 1981-2001 b) The number of middle class households in rural India kept rising and at 27 million, it is now very comparable to the urban middle class at 29 million c) Out of these, about 5 million rural households have an average annual income of a million rupees or more.

    These developments can be attributed to various factors. To begin with, the Minimum Support prices of various agricultural products has increased steadily over the past two decades. One of the major problems with rural demand was of rainfall-dependence and unpredictability of agricultural production. However, with liberalization and urban development, rural India has benefited a lot from temporary migration. Many rural households got rid of “hidden unemployment” (term borrowed from economics, refers to sub-optimal labor-usage in small pieces of land) who found temporary employment in various urban development projects.At the same time, the government also increased its spendings in the rural sector through programs like Bharat Nirman and NREGS. All these factors clubbed to provide rural households a diverse portfolio of income. This diversity meant that the demand patterns became more stable, thus easing the task of marketers. According to the latest figures, the size of rural FMCG market is 14.4 billion rupees. Add to it the market for consumer durables and automobiles and we are looking at a market size of 27 billion or more. Companies like HUL, Hero Honda, Coke, Cavin Kare etc. had already identified the potential and had invested to create robust rural strategy much before recession.

    Coming to rural marketing efforts, firms have traveled a long distance from the past. While the factors liste

    d in above paragraphs made companies focus on the rural territories, the marketing efforts are still evolving. However, some of the companies have been able to come up with strong rural performance which tempts certain conclusions. From success stories, we can summarize the innovations that succeeded in rural marketing along the following lines:

    Innovation in distribution: Almost 50% of Hindustan Unilever’s revenues come from rural India. Much of this can be attributed to its rural distribution network. (For those interested in knowing more, here’s a very informative article about HUL’s rural distribution) In recent times, marketing firms have ramped up their rural distribution through innovative models like hub & spoke model, micro-distribution, streamline etc. Another emerging aspect is of partnerships among firms. Nokia set the tone in this field by bundling its handsets with operators’ SIM cards. Many other firms have experimented with existing rural players like IFFCO.

    Innovations in marketing: Successful firms have come up with novel ideas right from designing rurally relevant products to focused communications. Product development for rural context has been a common feature of many successful companies. Be it soaps and detergents which are effective in rural waters (literally) or mobile phones that can weather dust and sweat, companies like HUL & Nokia have delivered products that hit home in the rural markets. Another case in point would be Cavin Kare: its shampoo brand Chic is the second largest shampoo brand in India mostly due to its strong grip on the rural territory. When it comes to marketing communications, many companies have come up with culturally relevant campaigns. LIC used puppet shows to educate the masses about life insurance policies. Brooke Bond (another brand from HUL stable) organized magic shows in villages and Eveready conducted light shows in the breaks to spread the word about its product.

    While this article discusses some of the aspects of rural marketing and its drivers, there is much more to rural marketing than this post. Await the next post describing the new challenges for rural marketers and an update on the rural marketing efforts of some companies. For anything else, please feel free to write to us!