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.

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Sleepy Needs, Unsought goods and ‘Wish I had it’

On Sunday February 17, 2013 the first page of Sunday Times was a shocker. The front page of the newspaper contained the following headlines:

  • ‘Short circuits spark 75% city fires’
  • ‘Farmer loses Rs 15L in fire’
  • ‘Woman dies in LPG blast’
  • ‘Family loss both children in blaze’
  • ‘Car catches fire in Lucknow’
  • ‘Fire erupts on 3rd floor of Indiranagar school’
  • ‘TV sparks blaze in Andheri tower’

 The entire page was flooded with news related to fire and devastation it causes. The reporting could shock anybody out his or her slumber. And in the middle of the page, a message in red ink sounded a warning: YOU MAY BE LUCKY …But ARE YOU SAFE? Disturbing visuals like a distressed women crying, fire billowing out of a building and fire fighters dousing the fire aggravated discomfort by stirring anguish and pain over loss of human lives and property.

The newspaper ‘disturbed’ readers literally. It ‘interfered with normal arrangement’ (absence of agitation, trouble, balance, poise, equilibrium) of the way people look at fire and fire fighting equipments. The message aimed to throwing people out of their mental balance (cognitions in harmony). It disturbed the belief that we are ‘safe’. Safety is taken for granted. It created a friction in cognition & feeling. It compelled people to pay attention to the fact as to how safe they are? It questioned: is it their luck which has saved them from the fury of fire so far or they are actually safe?https://i2.wp.com/sphotos-a.xx.fbcdn.net/hphotos-prn1/c32.0.843.403/p843x403/154195_10151396984121259_1451825671_n.png

This was an advertisement in the garb of actual news which used ‘shock and awe’ strategy to capture attention and sought to engage prospects into an issue which is taken for granted (low involvement). A balanced state or lack of friction makes the system closed and withdrawn (out of buying space). Throwing a potential customer out of his poise is essential to pushing him or her into decision frame or solution seeking behavior. The upsetting of mind created by the first page was followed by a big advertisement of a new product named ‘Fireguard’, a new fire extinguisher (by Eureka Forbes) with the headline: ‘It takes one call to get it. Or a life time to regret it.’ The ad signed off with a statement ‘Get it. Or regret it’.

Fire extinguisher is a low priority product because it is not perceived to be significant. This is due to the fact that people do not entertain an uncomfortable idea of fire to them to their property and take their safety for granted. Its ownership is not important psychologically or socially (higher order needs) and hence are not desired. However they assume importance when exceptions happen. When it rains we look for umbrella, when electricity goes off we look for candles/torch, when our car breaks down we wish we had bought breakdown service and when burglary happens we repent on not having taken an insurance policy. These are cases of sleepy needs and hence products that satisfy them are sought after.

Marketing is difficult to a sleepy consumer. Unlike an active customer (who is in a state of automatic arousal) a sleepy consumer is a withdrawn and closed system. People tend to be open and look out for anything that is of interest to them like interest in diamonds or sports or electronics. Marketing is easy in these situations. So what do you do to get a consumer who is in sleepy state with respect to a product that you intend to market?https://i1.wp.com/www.offeradda.com/wp-content/uploads/2012/11/Eurekaforbes-FREE-Demo-of-Eureka-Fireguard-Extinguisher.jpg

Technically the Fireguard launch ad aims to shift people from their sleepy state to lively/ alert state. The message alerts its prospects by linking the product to an issue of importance (high involvement issue- devastating fire). This it raises the level of significance or importance that a customer attaches to a phenomenon. This shift is first essential step in starting an engagement with target customer. The brand is likely to succeed if brand manages to achieve importance transference. For instance Rexona deodorant once ran a campaign which showed how body odor could lead to socially embarrassing situation (rejection). Here the brand used social rejections (important issue) to gain importance in consumer’s life.

Brands win when they become important to their target consumers. But this is difficult for brands in those categories to which consumers are sleepy.

One offer two techniques: foot-in-the-door versus that’s- not- all

Consider the following offer made by a direct marketer through print media (inanimate medium with lesser possibilities for dramatization):

‘Lotto combo: actual price Rs 10894 but we will give it to you at an offer price of Rs 2499- save 77%

  • Duffle bag
  • Gym bag
  • Lotto shoes
  • Lotto black T shirt
  • Lotto white shirt
  • Lotto wrist watch

And now consider the following offer made by a direct marketer on television (seller str talking straight to prospects):

  • Today’s special offer, Lotto shoes market price Rs 3499 at special price Rs 2499
  • That’s not all; you get duffle bag worth 1999 with the shoes
  • That’s not all, along with duffle bag you get a gym bag worth Rs 999
  • You get merchandise  worth Rs 6497 for just Rs 2499
  • It is a limited period offer

That’s not all, we will give you a pair of two T shirts (white and black) of your size worth Rs 2400 if you order now

Now you are getting good quality branded merchandise worth Rs 7697 for just Rs 2499

  • Can you get this kind of attractive offer any where?
  • We have limited stocks and the offer is open till stocks last.
  • Today is a lucky day for you customers, that’s not all in this combo.
  • We will give you a wrist watch worth Rs 3197
  • That makes the total combo value Rs 10894 which you will get for just Rs 2499

Technically both the offers are identical but would the method of selling make a difference in customer response? Professor Burger’s finding in similar kind of situation revealed that compliance rate is likely to be higher in the latter offer.

The first marketer’s offer is some what based on ‘foot-in-the-door technique’. This involves making a first big request (Rs 10894) followed by a more reasonable request (Rs2499) to extract customer compliance. This technique relies upon the principle of reciprocity. If somebody acts reasonably (sacrifices made by the marketer by coming down from a big amount to a lower amount) with us we feel compelled to respond similarly in return.

The second offer is built on ‘that’s not all technique’ to get the prospect into complying behavior. Here the initial deal is made attractive sequentially by subsequent additions ( to the other person, with each addition, the ofer begins to appear better and better- and thus evokes the obligation to respond. The social norm of reciprocity is that if he is making so much of concessions, I must do the same.

Reciprocity is the underlying principle employed in both of  these techniques. Superior compliance is achieved in that-is-not-all condition because the deal is made successively attractive even before customer gets a chance to reject the offer. This builds up pressure to comply. But in the door-in-the-face condition, when buyer rejects the offer he is offered a better deal. In that’s not all technique the customer is not allowed to focus on the real information; rather the successive additions drive attention away from it. The presenter employs high voltage pitch and pointers (camera zooms in on displayed articles) to draw attention to what customer is getting.

Reason as a part of emotion or emotion as a part of reason

Rene Descartes, a French philosopher observed, ‘I think, therefore I am’.

This statement became the foundation western philosophy. It gives supremacy to our cognitive capacity or thinking. It implies that I am able to think, therefore I exist. Thinking precedes existence. It is thought or consciousness we exist that we exist.

This statement is purely rationalistic. It suggests that I am rational (thinking) therefore I am. Accordingly in marketing and consumer behavior we have a very firmly established school of thought which assumes the consumer as a ‘cognitive man’. The consumer is seen as someone who uses his or her thinking (application of mind) to solve buying problems. Therefore rational thinking precedes buying which can vary in degree of cognitive involvement.

But Damasio’s work in the area of area of neuromarketing has put the conventional belief upside down. In his book Descarte’s Error a complete reversal of earlier thinking is proposed which proposes, ‘I have emotions, therefore I am rational’. This statement has far reaching implications for disciplines like psychology, sociology and consumer behavior. Martin Lindstorm’s investigations that used complex electroencephalography or EEG also reached similar conclusion as his book is sub titled as ‘how everything we believe about why we buy is wrong’.

What do emotions do for us? Emotions happen very fast and they prepare us for action and buying is an act. Buying involves decision making and its understanding is essential for effective brand building. Our thinking about consumer often is based on dichotomization reason and emotion. Therefore some decisions are classified as thinking and some as feeling. But Damasio proposes that thinking is not to be positioned against or opposite of emotions rather emotions are part of rationality and both are inextricably linked. Emotions do not exclude reason. And this is how brain is built (when we are emotional it does not mean exclusion of the reason).

It is often believed that emotions interfere with reason. On the contrary absence of emotions can break down rationality and thereby rendering the wise decision making impossible. The new paradigm proposes that emotions cause rationality. According to Damasio, somatic markers (how the body feels when we see something as a result of memories activation, consider seeing a snake) increase the accuracy and efficiency of the decision process (fear leading to running away).  The feelings become input to thinking process and thereby help us in acting wisely to a given situation. Feelings play an important part in interpretation of things (e.g. brands or retail outlets) and form basis of decision making.

The view that feelings are part of the interpretation (of anything including brands) which is the key to decision process it is important to understand how they play out. How we interpret something is based on our experiences (memories) which spill out like things falling off from a stuffed cupboard (recruitment).  

The new research suggests that emotions should not be viewed as diagrammatically opposite of reason or emotions are harmful to rationality (sometimes we believe we should approach totally with reason because emotions would compromise the decision effectiveness). Emotions are not independent rather they are intertwined with reason. They provide background against which a thing is interpreted.

Think of a purchase which you think you made totally rationally and now think again. Was it actually only reason playing out there then?

Weber, JND/ Differential threshold level and ‘Honey, they’ve shrunk the kid’s chocolate bar’

The statement ‘Honey, they’ve shrunk the kid’s chocolate bar’ was the headline of a news item that appeared in TOI on Nov 20, 2011. This news item reported that many brands in so called fast moving consumer goods/ impulse category have reduced unit quantity/weight subtly without catching consumer attention. Consider the following cases:
Product Price (Rs) Weight then (gms) Weight now
Lays chips 20- 68- 61
Good Day 10- 100- 84.5
Dairy Milk 20- 40- 38
Britannia bread 12- 100 -80
Hadiram sancks 10- 52- 48
Lux soap 10- 75- 65

Maggi- 10-52-48

Brands operate in a dynamic environment. Currently most of the marketers have been facing pressures of inflation on demand/ revenue and supply/ cost side. On the demand side consumer purchasing power has been adversely affected because of inflation. And on the supply side the input costs have been moving north. The upward movements in input costs make a case for a price adjustment in order to maintain profitability. However if price is maintained in the wake of rising input costs the profitability comes under pressure. However if income is also on the rise, it may not be difficult to pass on burden to consumers by adjusting price upwards.
Tinkering with the price that consumers get used to is not an easy decision. In some cases customers tend to be sensitive to price and even a small price change can upset value equation. Price is often under consumer and media gaze. An insignificant price change can potentially upset the position of a brand on the value spectrum in consumer’s mind. For instance price points for low ticket items could be Rs 2, Rs 5, Rs10, Rs 15 and Rs 20. A minor price increase can create perception of price hike far more than what it actually has been. Price changes sought to offset input costs may also be resisted by trade partners because of currency denomination issues.
It is therefore makes more sense to pass on cost increases by those means that customers are likely to be less sensitive about. The product quantity or grammage in this context makes a right case for neutralizing cost escalation. Although consumers do develop notions about sizes or quantity as a result to repeat previous exposures in the form of reference sizes but these are likely to be vaguer than prices. Unless sizes are radically changed they are unlikely to be noticed by people. People are less likely to be sensitive to product quantity rather than price because price is a more involving issue (price is marked, discussed, displayed, compared and paid for).
The lack of concrete grammage/ quantity benchmarks along with less consumer involvement provides marketers with an option to offset cost escalation by quantity reduction. But the crucial issue here is to decide an appropriate quantity of shrinkage that it goes undetected by consumers. The idea is to not to execute a change which would upset/disrupt the ‘consumer routine’ and bring him or her back into ‘problem solving’ frame. So what is the maximum quantity reduction which is likely to go unnoticed?
Let us take a look at the grams by which the brands mentioned in the table have been shrunk: Lays chips (7 gms), Good Day (15.5 gms), Dairy Milk (12 gms), Britannia bread (25 gms), Haldiram snacks (4 gms) and Lux soap (10 gms). Can the quantity reduction decisions be taken randomly? The answer to this question is negative. Here one of the behavior concepts that comes to the rescue of brand managers is ‘differential threshold level’ or ‘justice noticeable difference’. It is the minimum difference between two stimuli (quantity before change and after change) which is noticeable by a prospect. Therefore safe strategy is to reduce grammage or product quantity by an amount which is below JND or differential threshold level. This ensures that consumer gets less quantity at a given price and this also goes unnoticed or unperceived. The quantity so saved can be utilized to compensate for increase input cost. Look at the quantity by which brands in question have shrunk. These are too insignificant (probably below JND) to be noticed by an average buyer.
How do we arrive at specific quantity of reduction? This would largely depend upon the initial level. Weber’s law states that stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different. It is essential for marketers to determine the differential threshold level and then carry out negative changes (like quality or quantity reduction) by an amount that is likely to unperceived (below JND) and for positive changes (quality improvement) the improvement must be above differential threshold in order to be noticed by people.

What an ass! Flying Machine, and aesthetics

We are surrounded by objects which ‘do’ and ‘mean’. Products or objects meant to only ‘do’ in a socio-psycho space may not be the perfect recipe for success in the marketing system. Baudrillard suggested that there are four ways an object can acquire value: the functional value (eye glasses correct sight); exchange value (a slice of cake can be exchanged for a cup of tea); symbolic value (it is meaning assigned by a subject to an object, like chocolate may symbolize love) and sign value (this is value in relation to other objects within in the system, for instance an old time record player may not function but may suggest old money or class). Marketers surely ‘produce’ objects but they also ‘manufacture’ meanings.
A pair of jeans made with denim, added with an innovative fiber like lycra is no big deal. Lycra helps it gives the pair stretch ability, retains shape and softness. This obviously is advantageous for the wearer. No one can deny the functional usefulness of these qualities. The ad does mention these: ‘stretch denim that flatters your body 360 degree stretch retains shape, soft fabric’. But the question is: are these the brand triggers?
Marketing in its present form is about extending an object into the realm of symbolism. Objects are degraded by pervasive sameness and therefore marketers look for other triggers from the world of signs and meanings. Nothing can escape symbolism. There is nothing called single entendre. Melanie once said, ‘a thing is phallic symbol if it’s longer than it’s wide’. Brands negotiate meaning between denotation and connotation.
The words and picture in the ad (with the headline in exclamation, ‘what an ass!’) conveys meaning at two levels. On the surface the ad seeks to convey ideas at the literal level suggestive of the product and its elements. Literally ‘ass’ is here used to signify ‘donkey’ for the people who ‘did not call after the first date’ and ‘who refused to give a ride home’ and ‘the rest’ who misread the wearer’s figure (as not sexy) because of poor fitting jeans. The picture at one level shows somebody in a relaxed position unhindered by the wear. Is this the rallying point for the brand?
At the same time the ad manages to execute subtle transference of meaning which is at much departure and independent of what  seems to have been conveyed. The ‘ass’ and ‘what an’ exclamation conveys meaning through cultural codes of the target market. The ‘ass’ in this interpretational scheme of things signifies  a body part and calls people ‘fools’ and ‘idiots’ who did not call after the first date or refused to offer a ride home. Now the center of attraction is actually the butt. The headline captures the attention and shifts its focus immediately to the visual. Only a few are likely to move from visual headline to verbal body copy. The ad is designed to induce this jump.
Ads speak the language of time. These reflect reality. In the evolving socio-psychological space, the sense and sensibilities are changing. Sexuality and its role in personal and social space have been revisited. The traditional views are challenged and its form and role are given new meanings. The time we are living in is of duality or plurality. Along with  compliments like ‘Hey, gorgeous’ or ‘hi beautiful’ newer ones are ‘added’ like the headline in this ad (‘what an ass!’). The advertisement does bring the butt to the center of attention. It is no longer something to be covered and kept hidden from public gaze rather it is a matter of aesthetics and appeal in equal measure for some.

‘Swap your drive’ campaign of Ford: Market stagnation, Aggression and Comparative Advertising

What is common between SanjeetAhluwalia and Sarabjot Singh?
Well, these are two car users who feature in Ford’s ‘Swap your drive’ campaign. The headline boldly proclaims ‘we switched their cars for a week and changed their minds forever’. In the ad these two men from the masses stand smiling next to their Fords. But what is critical in this piece of communication is the mention of their currently owned cars which happen to be from the stable of Maruti and Tata Motors.
Comparative advertising is nothing new in brand communication, but it may vary in intent, execution and sting. Brand often bank upon ruthless comparisons to position the rival in poor light or rely on subtle form. Pepsi assaulted Coke with its direct hit on the face taste challenge campaign. Direct fact based comparisons are common is cars (for instance Alto is compared with Santro, Mahindra’s Scorpio is strategically compared with sedans), air conditioners, LCDs and other technical products.

However subtler form of comparison one finds in ‘chip chip’ (sticky cream) campaign of Boro Soft or many detergent ads where poorly portrayed brand is not mentioned rather it is left for the viewer to decipher (Rin versus Tide – which gives better whiteness, Heinz Ketchup versus others- the slow moving ketchup means more tomato, Olay- seven effects versus Ponds, Fair & Lovely versus Fairever with milk and saffron, water purifiers like Kent versus Acquaguard, Congress versus BJP on governance. Tata Indica Vista advertisement showed some Japanese looking people have a test drive and bow in respect to the car. In the recent ads of IndicaManza again a team of people from Japanese or Korean origin is shown to test drive the car and the boss asks his subordinates a series of questions mentioning car features whether their own car has these and the answer to all that is ‘No, Tanukasaan’. The brand communication leads the viewer to conclude him or herself.

Car buying is a cross between the ‘objective’ and the ‘subjective’. Specifications are important but experiential elements cannot be ignored. Great brands achieve their status from moving gently up from specification led objective superiority to subjectively held impression. Consider two most visible icons of the car industry: Mercedes and BMW (it has a long running campaign ‘the ultimate driving machine’, Toyota drilled ‘relentless pursuit of perfection’ to establish Lexus). The focus here has been on the brand to establish as highly evolved and finely engineered objects. The exclusion based on technological excellence has made these cars objects of desire.
The latest coup by Ford, ‘Swap your drive’ has taken the competition by the horns. The attack is very direct and scathing. It is not uncommon for cars brands to compare based on specifications. It is done all the time. But Ford’s comparison is based on customer experience. The object of comparison is not the car but the ‘subject’ of the car. Specifications derive the worth form their instrumentality in reaching the end customer aims to reach to. And the communication here shows the representative of the typical user class (slice of life) who share their swapping experience. This is precisely what ‘test drives’ help companies achieve. The testimonial from an ordinary person (commonality based identification) is often more effective than a celebrity. This is word of mouth in print. Car is not an FMCG. The infrequency of buy forces buyers to visit buying with full deliberation. It is here word of mouth and learning through the experience of others (vicarious learning) assumes importance.

How is it likely to be viewed by the customers? Certainly first issue would be that of source credibility. It is rare to criticize what one has or owns for it results in a dissonant state (positive behavior- owner ship and negative attitude of what is owned). Are these people paid? Secondly the claims made by the endorsers are ‘abstract’ (powerful AC, awesome mileage) which precisely potential people want to quantify in an expensive and long term buy. The ‘self-inferential mode’ has been substituted by ‘vicarious mode’ which intends people to jump over the mathematics of evaluation.

Naming the competition in communication is likely to pull the customer into more clinical mode. The brand so targeted is pulled into center form the periphery. Direct brand comparison also equally promotes the competition depending upon what customer lens customer uses to interpret information.

The essence of comparison is perceived proximity of advertised brand with that of competition. Comparison aimed to ‘differentiate’ also promotes ‘similarity’ by ‘affiliation’ and ‘contrast’. It makes more sense for a brand with smaller presence to affiliate with the leader in order to gain entry into consumer’s consideration by the process of ‘categorization’. Technically the brand intends to be categorized similar to the leader by focusing consumer attention on points of similarity and then points of distinction to prove its superiority. What happens when Ford Figo is compared with Swift and Ford Classic with Tata Indigo? The intention is to position these brands alternative to brands with higher sales by first by affiliation and then build perception of superiority by contrast.

However it is not a good idea for a leader to use direct comparisons. Customer majority trusts and buys the brand. It is better then to focus on brand’s strengths and move up the benefit ladder singularly. A direct comparison by a leader brand is an exercise in elevation of the follower and descent ion of the self.