FIGHTER BRANDS

SHOULD YOU LAUNCH THEM?- MARK RITSON

BY:ARVINTH G (19)

RANJIT PISHARODY (75)TIMI CHHABRA (109)

ECONOMIC RECESSION AND ECONOMIC STRAINS

MID-TIER AND PREMIUM BRANDS LOSE SHARE TO LOW-PRICE RIVALS.

WHAT SHOULD AN ORGANISATION DO?

“SHOULD THEY TACKLE THE THREAT HEAD-ON BY REDUCING PRICES?”“SHOULD THEY HOLD THE LINE, HOPE FOR BETTER TIMES TO RETURN?”

OR

SHOULD THEY LAUNCH A FIGHTER BRAND?

FIGHTER BRANDSMULTI- BRANDS

FLANKER BRANDS

“A FIGHTER BRAND IS DESIGNED TO COMBAT, AND IDEALLY ELIMINATE, LOW-PRICE COMPETITORS WHILE PROTECTING AN ORGANIZATION’S PREMIUM-PRICE OFFERINGS” - MARK RITSON

Flanker Brand - Advantages

•ELIMINATES COMPETITORS

•OPENS UP A NEW LOWER-END MARKET FOR THE ORGANIZATION

•GAIN MORE SHELF SPACE FOR THE COMPANY, WHICH INCREASES RETAILER DEPENDENCE ON THE COMPANY’S BRANDS.

•CAPTURE “BRAND SWITCHERS” BY OFFERING SEVERAL BRANDS.

•PROTECT THE COMPANY BECAUSE IT HAS A UNIQUE NAME - COMPANIES WITH A HIGH-QUALITY EXISTING PRODUCT CAN INTRODUCE LOWER-QUALITY BRANDS WITHOUT DILUTING THEIR HIGH-QUALITY BRAND NAMES.

SUCH TRIUMPHS ARE EXCEPTION

THE HISTORY OF FIGHTER BRANDS IS DISCOURAGING

LITTLE DAMAGE ON THE TARGETED COMPETITORS

COLLATERAL DAMAGE FOR THE COMPANIES

THERE ARE FIVE MAJOR STRATEGIC HAZARDS

HAZARD ONE - Cannibalization

KODAK : GOLD PLUSCOMPETITOR- FUJI -FUJICOLOR SUPER G FILM

KODAK’S FIGHTER BRAND : FUNTIME

Should appeal to the price-conscious segment while it falls short for current consumers of the premium brand.

fighter brand’s low price should match a equally low perceived quality

P&G : PAMPERSCOMPETITOR: Private Labels

FIGHTER BRAND: LUVS Cut back on R&D and product innovation on Luvs Cut back on TV advertising and promotional support. Cut back on Existing features: like handles on Luvs’ packaging

Final step : P&G focused greater managerial and financial resources on marketing and improving the features of Pampers.

HAZARD TWO- Failure to Bury the Competition

“Organizations overprotect their premium brands from cannibalization at the expense of the combative potential of their fighter brand.” – MARK RITSON

MERCK : ZOCOR (GERMANY)COMPETITION: Generic drugs

FIGHTER BRAND : Zocor MSD Priced just slightly less than the original premium brand. Once generics entered the market, the new brand’s price dropped to 90% of

Zocor’s. Desire to protect its profits for as long as possible led to a failure to launch a

competitive brand.

INTEL: PENTIUM PROCESSORCOMPETITION: AMD K6 PROCESSOR CHIP

FIGHTER BRAND: CELERON ; CELERON A. Underprice Make sure the quality matches the satisfaction of the buyers.

FIX HAZARD ONE AND HAZARD TWO

FIX HAZARD ONE:MARKET-TEST FIGHTER BRAND

FIX HAZARD TWO:PREPARE TO RECALIBRATE THE FIGHTER’S PRICE TO AVOID CANNIBALIZING OVERPERFORMANCE AND UNCOMPETITIVE UNDERPERFORMANCE.

MERCK: Blue-chip multinational. Lacked price-war competencies .

INTEL: History of frequent product launches, upgrades, and deletions. Better equipped for price-changes.

THE ONE TO BEAT

ANHEUSER-BUSCH – NATIONAL BREWER

REGIONAL BREWERS GAINED STRONG HOLD – AFFECTING BUSCH’S MARKET SHARE

BUSCH BAVARIAN : “YOURS AT POPULAR PRICES”

•PRICED AT THE SAME LEVEL AS REGIONAL COMPETITORS•ALMOST HALF THE WHOLESALEPRICE OF ITS SISTER BRANDS- BUDWEISER AND MICHELOB

TO DISTANCE IT FROM THE OTHER TWO BRANDS AND REDUCE POTENTIAL CANNIBALIZATION:

•ADVERTISING SUPPORT,•A SEPARATE SALES FORCE •DISTINCT DISTRIBUTION TRUCKS

HAZARD Three- Financial losses

Fighter brands may lead to disastrous financial loss for the company though it achieves brand success.

Saturn was a financial disaster

• High factory set up cost

• High employee head count

• High cost of production due to no shared GM

parts and separate marketing and distribution

Shared platforms, rebadged models, and GM promotions spelled the end of Saturn’s differentiation and led to increasing cannibalization of sister brands like Pontiac and Chevy

Profit

sustainability is

very importa

nt

HAZARD Four- Missing the Mark with Customers

The DNA of a fighter brand is potentially flawed from the very outset because it is derived from company deficiencies and competitor strengths, not a focus on consumers.

The fighter brand’s focus should immediately switch to the consumer segments that the new brand is targeting.

Only then will it achieve the kind of consumer orientation necessary to avoid a potentially fatal focus on competitors.

Notting Hill - Popular price segment but failed to focus on customer. It opened shops in metro cities instead of tier 2 and 3 cities

Notting Hill

2007-Popular price segment from raymonds

2009-“Notting Hill does not have any turnover at present” Mr. Deepak Khetrapal, Chief Operating Office

• Inefficient customer focus-Corporate customers

• Focused metros

• Cannibalization-Now they are sold through the Raymond shops in the Tier-IV and V cities

Hazard Five - Management Distraction

The fighter brand may render the company bankrupt

Opportunity costs of launching, managing and then withdrawing can have higher financial implications

Fighter brands do nothing to abate other competitive threats

The greatest cost of a fighter brand

is propensity to cause managers to delay essential strategic decisions

GM $15 billion on Saturn

Delta spent around $65 mn for the

launch of song and then a big amount for decommissioning

Pampers lost considerable market share to Huggies., when P&G was busy with Luvs

GM’s late realization that Saturn is not the answer to Japanese Challenge.

Thus , the strategic implications of dividing organization’s resources, should be considered

How Qantas Launched the Perfect Fighter Brand

Determine whether another brand is truly necessary? Exhaustive strategic sessions confirmed Qantas brand was simply not in a position to combat Virgin

Blue’s explosive growth

Run the numbers The detailed projections showed that by offering no frills, its new airline could achieve a 20% cost

advantage over its rival

Listen to customers, early and often Secret focus groups across Australia – a crucial step to avoiding excessive internal benchmarking or

competitor orientation

Move fast The speed at which Jetstar attacked took Virgin Blue by surprise and knocked it off balance

Control for cannibalization It took over the tourist routes that Qantas had lost money , thus it cannibalized only revenues, not

profi ts . It also opted for a shadow endorsement from Qantas

Reinvest in your premium offering and calibrate between the two brands Qantas was able to refocus on its more profitable business routes

How HLL launched the perfect Fighter Brand

Surf Rs.21/kilo and Nirma Rs 7/kilo

The low cost detergents had grown rapidly enough to account for 80% of volumes

The birth of Operation S.T.I.N.G. — STRATEGY TO INHIBIT NIRMA’S GROWTH.

Big challenge was a low cost product conforming to the HLL quality standards

All together different H.Q at Chandigarh

For the first time, it opted for third party manufacturers and for dynamic pricing model

How HLL launched the perfect Fighter Brand

Invested heavily in creating door-to-door programs for driving sales ,by tapping into the networks of local rural women

It came up with the classic ‘Dekho Dekho Dekho’ jingle, which was a big hit

“Maine maangi thi safaai, aur tune di haathon ki jalan”

Today with sales of over Rs 2,000 crore, Wheel is ‘Brand No 1’ in the HUL portfolio not to mention the world’s largest selling detergent in volume terms