Nano, Premiumization, Repositioning, and Big Cat Is Not Cat It Is Tiger, Stupid

Nano was launched with great fanfare in March 2009. But before its launch, Nano became talk of motor world in almost all corners of the world. Nano cut into news channels and newspapers for something that was considered undoable in automobiles.  Cars or four wheelers were finely segmented in to different clusters on price-performance curve.  Lower performance came at lower price; compare Maruti 800 sitting at the base and BMW or Audi at the center and high performance sports cars on the top like Ferrari or Porsche.  The important point in Nano’s case was it challenged the point at which so called car value curve originated.  Implying for a vehicle to qualify as a car it must have some minimum engine capacity and thus minimum price. This was set by then prevalent  automobile engineering, manufacturing and marketing paradigm. 

Breaking a paradigm is often called ‘out of box’ or innovative thinking. It is critical challenge for many companies to break away from their low performance levels by rule breaking. Therefore innovation is a cherished idea in corporate circles. It is something like questioning ‘why the apple must fall on earth’ again and again. An out of idea when translated into a product and process may win accolades with the technical community of researchers and engineers but fail to ring with market.  For instance a refrigerator with see through door was rejected but designers saw great utility in its ability to convey stock levels of various things without having to open the door. Sony’s Betamx and Apple’s Newton are some other examples.

In a market typically products are clustered along price-performance dimensions. And this clustering is determined both technical or engineering constraints and customer expectations.  Consider bikes or cars or tractors or computers. The engine capacity and price if plotted on a two dimension diagram would reveal distinct clustering (bikes like 100cc, 150cc, 350 cc). A product created out of altering these combinations comes with both opportunities and risks. My best way to exemplify this is to imagine a cat making company in its attempt to expand market goes on to increase its size and it keeps increasing it. What happens beyond a point (on price-performance/power axis) it ceases to be a cat and becomes tiger. And if you decrease its size, again beyond the minimum psychological limit of cat category again it ceases to be cat. Product categorization is purely is a mental scheme by which mind creates ordering and classification to make the external reality manageable.

Each of categories of a product is usually tied up some consumer motives. For instance high power bikes (like Harley, BMW, Hayabusa) tied with dominance and ‘against’ identity. A car per se is a visible or item of conspicuous consumption. It conveys who you are (identity expression, existing psycho-socal group) and it assumes instrumentality in belongingness role (desired psycho-social group). In a consumption society which works on the construction-‘ you are what you  have’ – possessions both give self and social identities. How much would be the desire in people at the bottom tier of market (non car customers) to belong to car buying category (psycho-social group in terms of power and status). They certainly would like to buy a car for its psycho- social significance. They would like to  ‘unbelong’ or ‘disassociate’ from their present group to gain assertiveness and power (in new society the old sources of identity have diminished in their role).  Now consider how Nano fits in this scheme of things.

 

A car which is publicized for being the cheapest car is likely to a contender for accolades in academia and technical circles. This publicity simultaneously invests meaning in the car which renders is irrelevant for the target customers. The vehicle becomes an open display of one’s non-car buyer status. It marginalizes and pushed the owner the car to the bottom of the road power politics. Nano may be an excellent solution to driving in city conditions, but the publicity and hype that made it hog limelight extraordinaire became its own cross.

So what is the solution? Nano needs to break complete away from its price centric perception. Give potential buyers a reason to buy the cheapest car wrapped up in a motive other than price. It can become for instance, choice of smart pro planet people or ‘I am me’ group who buy cheapest car not for price’s sake but for ‘that’s how they are’.  Nano’s new campaign aimed to reposition it, ‘you re awesome’ trivializes the brand. A car is serious product category and people seek seriousness first before emotions of fun. Now BMW is pure joy and thrill to ride but much before this position it established itself as the ‘ultimate driving machine’. 

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Brand Archetype, Arvind Kejriwal and Power of Subliminal Suggestion

Last evening, Remo Fernandez said in an interview said that wants to join AAP. The reason he gave was that joining AAP is like joining a revolution.  In the similar vein one of my lady friends who happens to teach at one of the DU colleges said that she want to wear an AAP cap. By wearing AAP cap she thinks she would become a part of the change that is altering the Indian civil space in a very profound manner.

Meanings or concepts are conveyed though messages and messages are assembly of symbols. Communication is impossible without the use of codes or symbols.  Symbols generate meanings by the process of decoding.  Decoding involves extraction of meaning from a symbol. For instance when letters like s-u-n are assembled into one entity the term becomes ‘sun’ which as an established meaning- star around which earth orbits or which is at the basis of solar system.  Symbols convey meaning that two levels- denotative and connotative. Denotative meaning stands for dictionary or literal meaning and connotative meaning implies a suggestion that is implied or not explicitly suggested. Denotation is context specific or interpreted using established codes. For instance, diamond literally means a crystalline form of carbon but it connotes wealth, preciousness, status and exclusivity.

Almost all social interactions are about persuasion. Salesmen use express communication to sell insurance policies; ads use both verbal and visual symbols to persuade customers to buy and political players use speeches and banners to swing voters cast vote in their favor.  The communication environment has become overloaded. There is too much of communication to handle. Accordingly communication is countered by psychological process of filtration. A vast amount of information is screened out.  The messages that bank upon conscious processing to convey meaning are generally take a hit in this process. This is what necessitates use of subtlety in communication. 

 

Whatever we see evokes a meaning. For instance how a person is dressed up or how a room appears, communicates a lot. The meaning is extracted by using codes. These cues often make more sense than what is expressly communicated by words. Judgments are always made about people on the basis of how they dress up, their physique, their tone, facial expression, and how they conduct themselves.  Given the pervasiveness of crooked communication, these subtle cues become the lens through which express messages are seen and interpreted.  Symbols become part of our lives by the process of growing up in a culture and these provide means of communicating with each other.  Symbols are embedded in our subconscious, that part of mind which resides below the level of conscious or awareness.

Now consider Kejriwal, why has he appealed to collective conscious of people. He is a very ordinary human being who can be dismissed and crushed like an ordinary man-in terms of his looks, physique, wealth, pedigree, and demeanor. What connection has he managed to establish that people of Delhi voted for his party like a spell cast by Pied Piper of Hamelin. Carl Jung proposed the idea of archetypes or form of identities with defined set of meanings. The archetypes are universal and transcend language, class and culture. However these archetypes have their own unique values, intentions, behaviors. Brands are often developed anchoring their genre or essence on an archetype embedded in collective conscious.  For instance Jeep brand is built on ‘explorer’ archetype and Microsoft and IBM’s archetype is ‘ruler’, J&J’s shampoo’s genre is ‘care giver’, Harley Davidson and Apple appear close to archetype of ‘outlaw’.

 So what idea does Arvind Kejriwal represent? He is characterizes by traits such will power, courageous, unfearful, competent (may not be physically strong), expert, focused and underdog.  The identity he takes on is that of a ‘hero’ archetype, somebody who emerges out of darkness as savior, crusader, dragon slayer and warrior. Like any other culture, in India we have a lot of stories of how a hero appears on the scene to save poor people from the tyranny of somebody powerful (king, relative, money lender, ruler). Many of Amitabh Bachchan’s movies portrayed him as an underdog who emerges out of unlikeliest of places or classes to overthrow the misrule, missgovernance and tyranny of the powerful (consider the name of his movies like Coolie, Laawaris).  The brand Arvind Kejriwal makes sense to ordinary people (aam adami) through a strong sense of identification (common man turned savior).

By shunning all the visible symbols associated with the ‘tyrant ruler or powerful’ he has struck a chord with the people on the receiving side.  He has not only won but introduced a paradigmatic shift in Indian politics that an ordinary man can also be a winner in Indian political arena.  

Tea, Coffee, Beverage, Meaning and Starbucks

One of the reported items in the ET went by the title ‘Starbucks goes plush for India, give its stores s local flavor’. It reported that the company is positioning, its coffee chain as an aspirational brand. India is by and large is a tea drinking nation. The company spokesperson said that Starbucks coffee bars should be welcoming, inviting and familiar places for people to connect. The research indicated that coffee for Indian consumers is not the primary reason to visit café bars. Rather visitors use coffee bars to meet friends and relatives. A very small portion of sales is consists of take away orders. Starbucks wants to offer its customer a unique experience.

 The reason why I am writing this post is that recently I conducted a study titled ‘Coffee and tea: socio-cultural meaning, context and branding’. This study was motivated by a desire to explore the deeper meaning that these two common beverages hold in our minds.  It threw up interesting insights, which I called as’ beverages in opposition’.  Products or commodities not mere physical entities constructed out of their parts, components or ingredients rather they are also constellations of associations/meanings. They are transformed with conscious marketing efforts or often achieve transformations automatically into psycho-social constructions.  A product or brand is not merely a ‘manufactured or assembled’ entity it is ‘much more’. Branding to a major extent is about creating this ‘much more’. Consumer buying is about meaning construction and signification in a world that is less physical is more psycho-social. Let us look at what coffee and tea stand for.

 Though coffee and tea share a lot axiomatic similarity in terms of their preparation method and usage they differ radically in their hidden symbolism. Tea and coffee have different imprints. Coffee is celebratory and tea is ordinary. Coffee consumption is uncommon and its uncommonness imbues it with a unique mystique associated with a wealthy, refined and intellectually evolved class. Coffee is not a potion for sustenance. Tea is linked to ordinariness and ritualistic in home consumption. Tea is instrumental in bringing family together in close proximity and provides platform for sharing and caring. Symbolically tea brings the family together in close proximity where adults share ideas, joys and sorrows.  

 A certain mystique is associated with coffee. Coffee is predominantly outside drink, it derives its utility from social, aesthetic and emotional role. Coffee does not enjoy such time connections. Tea is routinely prepared but coffee is not. Coffee is celebratory and tea is ordinary. Its consumption is probably prompted by its signaling value which may stem from high price implying exclusion of masses; unique taste which only connoisseurs appreciate; and complex preparation process signifies  dexterity in culinary skills (beaten or filtered or brewed).

 A certain mystique is associated with coffee. Coffee consumption in uncommon and it is this uncommonness which imbues this beverage with a unique mystique associated with a wealthy, refined and intellectually evolved class Tea is functional but coffee is symbolic. Coffee houses differ in their spatial, sensory and social meaning. Some of the Coffee houses sell coffee as an alibi to engage in either intellectually evolved serious conversations (business meetings) or promotion of friendship, gossiping to spend time  and social bonding (one of the coffee chains makes a proposition that  ‘a lot can happen over coffee’ while the other are offers pure sensory indulgence in the aromatic world of coffee. 

Value Branding, Perpetual Discounting, Customerer Intelligence, Koutons and Peter England

A couple of years back some brands descended on the Indian apparel marketing space with a very interesting value model. These included LaFanso, Cantabil, TNG, Lee Solly, TQS, and Koutons. The brands announced ‘drop a bomb discounts’ previously unseen and unheard to lure value conscious middle class buyers. Take a look at the following:

50%+50% off

505=40% off

80%+20% off

90% off

 

But now most of these brands are reeling under crises. The results of Cantabil Retail India has not been good. It reported a standalone sales turnover of Rs 37.83 crore and a net loss of Rs 4.24 crore for the quarter ended Dec ’12. The case is no different for the other discount brand Koutons. The company is debt ridden and has been incurring losses. It has been closing down its showrooms discontinued it’s another brand ‘Charlie’.  Once a common sight on the market space, these brands seem to be slowly vanishing form the scene. A variety of factors have contributed to their fate including excise duty, raw material costs and inflation. But it is interesting to explore these brands from marketing perspective. Is deep discount model which rests on a perpetual promotional offer by which a high maximum retail price (often greater than top brands like Van Heusen and Park Avenue) is discounted by a big percentage to give an impression of irresistible bargain tenable in the long run?

 

Peter England arrived on the market and went on to write an impressive success story.  Unlike Van Heusen and Louis Philippe which were premium offerings, this was a value for money offering by Madura Garments. It went on to carve out a niche in ready to wear menswear market by intelligently packaging its value for money proposition as ‘honest brand’. By calling itself as an ‘honest shirt’ it indirectly struck a chord with value sensitive Indian buyer without bringing price into an explicit consideration. The affordability was brilliantly packaged as honesty. The idea was to deflect consumer consciousness from a discourse involving price, cheap, economy and bargain. It was ‘economy’ decently packaged.  The brand developed ‘down to earth’ ‘unpretentious’ personality which connoted ‘value proportionate to price’. Later the communication took the brand to a notch higher by a symbolic campaign ‘More is less’ in order to appeal the younger audience (psychographic matching).

 

Sales promotion schemes by definition are short run activities and generally involve tactical maneuvering of customer behavior. These are aimed to influence demand (spikes) by offering short term consumer incentives. But the crucial issue is can sales a promotion activity (explicit discounting in which high prices are reduced) be made part of brand identity? What effect does a sales promotion based discount strategy has on customers?

 

The attribution theory explains how people interpret events. People try to figure out why things happen in a particular way or why people behave in a certain manner. People try to make sense by determining cause behind a phenomenon. A short term deep discount can be interpreted as sudden stock liquidation or a celebration offer or competitive maneuver. But a long term use is likely to make people suspicious about genuineness of the offer.

 

How long a discount offer is likely to be perceived as golden opportunity? The adaptation theory explains that people have a tendency to get used to or adapt to a situation. As a result a situation/ stimulus ceases to be stimulating which causes people to seek novelty elsewhere. An offer like 50%=50% is likely to be perceived as an exciting offer for some time in the beginning and act like a magnet but its long term usage is likely to rob uniqueness out of it.

 

Discount brands tread on a difficult territory. Perpetual discounting can position a brand as cheap and create undesirable connotation. It is psychologically gratifying to be able to grab a bargain but socially it is undesirable to be associated with a bargain brand. People love to buy an aspirational brand (brand imagery) at a discount (made affordable) but shy away from a brand cheap brand (personality). There is fine distinction between a cheap brand and inexpensive brand. The concept of social signification applies equally to economy customers. It is here brand needs to deflect bargain oriented discourse from their image.

 

Peter England built its market by smart use of symbols in communication. By developing an ‘honest, down to earth and unpretentious’ personality it developed image of an affordable brand. A price oriented strategy promotes price sensitive culture and preempts a brand from seen from any other angle. Deep discounting model that relies upon ‘drop a bomb’ discounts to attract customer on equally ‘blow your tops’ maximum retail price is likely sow seeds of its own destruction by making customer clinically analytical about what actually is in the bargain.