Friday, August 25, 2006

Product Sabotage & Market Cannibalization

Marketing is war! Be it within the organization or within the market segment or within the market on a generic level. There is a battle of the brands to get mindspace, shelf space, top of the mind recall, impulse purchase points and anything possible to make the consumer lift the product off the shelf and place it at a point of consumption in their personal lives. There are many ways that marketers achieve their desired results, be it in a legitimate way or sometimes borderline cases where the truth is bent so much that it makes any meandering river appear smooth as a well polished piece of wood.

Advertising has been the primary method for product promotion. Over the top advertising, online, offline be in a straight line, or not so straight line, products are advertised throughout the city, street or country. The popularity of the product and the places where all the products are advertised meets the eye at every nook and corner. Things right from pin to pianos are advertised in all media possible: electronic, print, radio television etc. This is the form that has the marketer standing and shouting from the roof tops about discounts and more discounts. Look at the strategy of any of the airlines. They shout and advertise about low airfares, and how these airfares are cheaper than the train fares, but what they don’t add is the fact that “other charges are extra”- namely a surcharge, tax and others. So what is so great about advertising, very specifically, it gives just the highlights of the product. However miniscule the “benefit”, that is built upon. Obviously, that is the logical explanation; you do not stand on rooftops and shout about the defects of the product.

It has been a trend of late, instead of moving from a product appeal to emotional appeal, thereby taking the consumers through the “advertising life cycle”, marketers are attempting to bypass the whole process by releasing emotionally appealing advertising first. This attempt, I feel, seems to be back firing big time, simply because, in advertising, like in kindergarten, consumers need to be hand held till they can stand on their own two feet and decide. There is a popular belief that the advent of the internet has made the process of purchase and the entire purchase cycle shorter, however, in a country like India, where the PC penetration is still a mere 14 per 1000 and the internet penetration being about 5 per 1000 [1] , so how does this contribute to the “increased” awareness? We still have 995 people out of every 1000 still basing their decisions on the advertisements they see on the various media, so I believe there needs to be a serious re-look at the advertising methods being adopted. When a brand connects with the customer on the emotional level, leaving out the first phase of “product enlightenment”, the customers are left vulnerable. Much like Abhimanyu’s attempt to breach the Chakravyuha. He was successful in breaking in, but unable to escape, breathed his last, in a vain attempt to free himself. Similarly, moving advertising onto the emotional level, by by-passing the first few levels, will leave the consumer highly susceptible to counterfeits and “pass-offs”, as the knowledge levels of the product are still in the infancy and the consumer has “bonded” with the product already, the window of opportunity to strike and dupe unsuspecting victims is evident at this stage.

Marketing is more than advertising, according to the marketing text-books, the product, price, promotion and place or the new mantra of creating value, communicating value and delivering value. So the value is created by the product team, this value is then communicated via the marketing team and finally the sales and distribution team delivers the value. However, sometimes value needs to be “destroyed” in order to build value. This means reducing the market share on one product in order to increase the market share of another product. Else, the introduction of flanker brands does just that. The market is captured by the fact that the main brand exists and the flanker brands, basically watered down versions of the main brand, work towards driving out competition. When car companies launch cars to compete in certain segments there is inevitably a spill over to another segment wherein there is competition with pre-existing models. Perfect examples will be high end models in one segment and low end models of the next higher segment.

There is another interesting phenomenon that seems to be getting noticed these days: Product sabotage [2] . Essentially, this means, pushing higher margin products, and keeping the lower margins off the “menu card” so to speak. Sabotaging the product, is also done in order to make the consumer upgrade to the next higher one. One example cited was the IBM printer example, in which IBM inserted chips into the printers in order to slow them down. Starbuck’s example of not featuring the cheaper ones on the menu, because the profitability on those are lower.

So what does all this translate to?

Consumers are becoming more aware that these things happen, more so, the ability of the consumer not to be taken for a ride is definitely reducing because of the internet. Developed nations such as Japan, the US, Europe and others where the PC penetration is high and the internet penetration is even higher, the ability to deliver information directly to the target audience is a growing challenge. This will be a constant battle in order to provide direct campaigns that ultimately resort to a higher convertibility in terms of sales.


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