Reflections

Investment in a brand is like any other investment. An organization either has enough cash in its kitty to be able to invest it in building the brand quity or the organization borrows from the bank. The ultimate objective of any investment is to generate return. How much the required rate of return is varies from market to market and form environment to environment. These are times of economic recession. Even the BRICs are now coming to around 7% GDP growth (with the exception of Russia which itself is heavily dependent on International Gas prices). Recessionary times are the true litmus test of marketers. Getting growth and developing market and categories are not easy. These are times of high interest rates in Pakistan with the discount rate being 10.5% and 1 year KIBOR at 12%. This means that an organization investing in the brand could alternatively invest in the risk free Banking sector and obtain a 12% return with the principal intact. So the investment in the brand should resul...

India’ GDP grew by 6% over same period last year in 1 st Qtr 2012; they are expecting a growth of 7.6% next year. But they are faced with 3 main economic challenges : inflation, fiscal deficit and current account deficit Inflation There’s 10% inflation (Consumer Price Index)in India   mainly because of food inflation and energy inflation. Otherwise the inflation (core inflation as they call it, which is non food non oil) would have just been 5%.   2009 onwards this rate has been hovering around 9%. Food inflation has been primarily because of the following factors: a)       Increase in supply of food has not been commensurate with the growing demand on account of bigger population and more buying power b)       Hoarding of onions , sugar and pulses c)        Cut in subsidies by govt to reduce fiscal deficit Energy inflation has been because of : a)       ...

In the middle of last year, Engro Foods launched it’s low end “milk” brand by the name o f Dairy Omung. It confounded some people as to what was the need for a cheaper milk brand when they had Olpers as the market leader; would it not cannibalize Olpers?   The fact is that this has been yet another move by engro foods which which shows its superior marketing capabilities. As AG Laffley, former CEO of P&G, used to see it: “We have a philosophy and a strategy. When times are tough, you build share.” In recessionary times, an organization has certain decisions to make: -           Increase A&P Since the PnL is under pressure during such times, firms tend to cut down on their marketing budget, as Olpers appears to be doing as they did not, for the first time, run any thematic during last Ramazans. Such a move which seems a necessity in the short term and does not really have any immediate future implications does carry long term im...

Differentiation and the positioning based on it are the new buzz words of marketing. Differentiate or die as they say. To arrive at this differentiation it is imperative that we realize that doing so is a process and not random brainstorming and choosing the positioning that’s unique. Well, the positioning may be unique but may not appeal to the consumer. As a starter, it is imperative that the following positioning strategies may be avoided: Differentiation on Quality : Using quality as differentiation is only easy on the marketers brain; the lack of imagination involved in differentiating on quality serves no other purpose. Consumers now take quality as a non negotiable. Everyone is supposed to give good quality products. And the higher the bar you raise for quality the more demanding the consumer will become without necessarily being loyal. Because quality can be easily replicated by competitors unless you have a once in a lifetime leap in product manufacturing Differentiation on ...