How holistic is your approach to making decisions on the most important marketing lever?
Getting the right pricing strategy is very critical for CPG companies - more so in the alcoholic beverages (AlcoBev) category in India, because AlcoBev is a highly regulated industry subject to high taxes coupled with restrictions on distribution and mass media communications. This renders it very price sensitive and highly competitive. At Diageo India, we have developed an integrated brand pricing framework that encompasses the following dimensions: (i) consumers' current sensitivity to brand price; (ii) behavioural equity measure (total $ value that is the sum of functional and emotional benefits provided to the consumer by the brand, over and above price); and (iii) drivers of equity. This holistic framework enables maneuvering pricing in the market for the short-term while getting the right balance between price and total brand value, as perceived by consumers in the longer run and also driving actionability in terms of building up equity.
The study of the population's demand for consumer goods - as the stock of goods increases and becomes more diversified - is more and more complex. This research cannot be limited to gathering some global levels regarding sectors and big groups of goods. Finally, the act of buying is a concrete operation concerning a concrete commodity. In this context, the knowledge of the consumers' behaviour by means of motivation research, and the competent use of the results of this research should be an increasingly intensive concern in our socialist commerce. It is the only way of ensuring the effective formulation of the goods required, a more judicious organisation of publicity, and of influencing industry and the buyers.
This paper is in the nature of a progress report since the author's previous contribution at the ESOMAR Congress of 1966. It starts from the premise that profits on repeat-purchase consumer products can often be increased substantially by substituting cheaper alternatives for one or more of the basic ingredients in the product, while maintaining sales. Another way of putting this, in these days of continuing cost inflation, is to say that the manufacturer can hold consumer prices steady in the face of rising materials costs). In such cases, the manufacturer will usually aim to make a product which is as near as possible indistinguishable from his current product. To this end he will generally want to pre-test the new variant, to ensure that a sufficiently small proportion of his existing users would adversely notice the change if he made it. The author has learned a lot more about such "discrimination tests" since 1966 and this paper summarises lessons which other researchers may find useful, in the areas of research design, procedures and interpretation.
This paper outlines the basic steps that should be taken by manufacturers setting out to plan and implement distribution policies for their products. The steps relate specifically to mass market consumer goods and although many of the statistical examples quoted are taken from the United Kingdom Grocery Market, they are deemed to be typical of most of the major consumer goods markets throughout Europe. During the course of the paper, reference will be made to the experiences of United Biscuits in the U. K. Biscuit Market and to some of the research information which has helped us to formulate and control our own distribution policies. Again, although these references are to the specific, they are used to demonstrate general points of principle which are likely to apply, to varying degrees, in most consumer goods industries.
Company image research is generally thought of in connection with manufacturers of industrial products, air lines, banks and other institutions, and with objectives such as obtaining the attitude of the trade, investors and employees. Relatively little research has been carried out on company images in relation to the marketing and advertising of consumer goods. This is the area with which this paper is concerned.
The three main papers of this seminar do not deal explicitly with problems of a conceptual approach of the way advertising for consumer durable works. Dr. Joyce in his paper even expressly disregards the implications of advertising for this class of goods. Within the framework of this seminar it would seem useful, however, to elucidate some aspects of this problem, the more so as the function of advertising with regard to the buying behaviour for consumer durables is in some aspects essentially different from its function for high-frequency of-pure base products. Our comments concern in particular the problem of the rationality of the consumer's choice in the buying process on which Mr. Joyce has made some remarks regarding soft goods or convenience goods. To study the way advertising works we should start in our opinion with an analysis of the buying behaviour. In this way we can explore the possibilities for advertising to influence on a communicational and a behaviour level. Our data concern mainly results of buying process studies for electric durables.
Profits on repeat-purchase consumer goods can be increased by replacing raw materials with cheaper substitutes while maintaining sales. In these cases, it is obviously essential that the performance of the finished product does not suffer. But it is also desirable to pre-test that consumers cannot tell that the product has been changed at all. In the course of several testing programmes of this kind on medicinal products, we have been faced with some interesting problems of research design, some practical difficulties, some nice questions of interpretation and some anomalous results. In describing and discussing some of these tests, more-or-less as they happened and in their essential detail, it is hoped to show how these interesting aspects of discrimination testing grew naturally out of the questions being asked. Firm solutions are not offered in all cases and, indeed, several question marks are left for debate or for guidance.
In the context of this paper, I have restricted the term "International Marketing" to cover only the marketing of consumer goods with substantial advertising appropriations, i. e. appropriations aimed at and intended to create consumer demand for a brand. My material is based on work with some forty major companies on international marketing and marketing research problems and on some five more detailed case studies which I outline below. The significant comparative features of pre-war home marketing lay in the management and control procedures adopted. These have changed drastically in the last fifteen years but in international marketing the earlier methods are still current and exceptions are about as rare as they were in the home market in pre-war days. The organisational structure I describe below refers to the norm rather than to the exceptions. An understanding of the present structure and likely changes is necessary to explain not only how market research is currently used in this field, but also what developments can be expected, or seem desirable.
This paper is concerned with management decisions about marketing in the consumer goods industries; and particularly with non-durables (e.g. food, drink, tobacco, household necessities) which account for a large share of total marketing activity in free enterprise societies. Illustrative decisions discussed are concerned with: - Product development policy; - Advertising policies (level of expenditure, choice of media and copy); - Sales promotion and selling policies. I should make it clear that in this paper I am trying to describe the essence of a range of considerations making up the practical background for using research in marketing decisions, and am not describing the practice of any single company.
Marketing of consumer goods has undergone important changes in most European countries in the past ten years and this evolution has not yet come to an end. New selling methods and new types of business firms in retailing and wholesaling, ever increasing marketing costs for industry, concentration of business companies, as well as growing competition abroad and at home, are some of the reasons which focus interest of company managers on a problem which has been neglected a good deal in the past : the managerial approach to analysis and evaluation of channels of distribution used so far or to he used in the future by the company in order to market more effectively its products . The channel of distribution is a firm's direct connecting line with the market, its only way to reach the customer or consumer. The efficiency of this channel and its different links, its strength and length in comparison with other possible choices are decisive for the company's marketing strategy and its success. Apart from comparatively few studies on channels of distribution made by market research institutes for their business clients, not much has been undertaken to analyse channels from the point of view of the business firm. General economic surveys on channels of distribution in various branches of industry and product groups, however, have been established to a larger extent and they often present excellent and valuable material which for a business firm too is of interest. But these analyses are not sufficiently detailed and are naturally lacking certain information which the company manager needs to decide his selection of channels as a basis for his marketing policy. The general statistical picture presented in these studies is only one part of analysing a given channel. The marketing policy and techniques of the links of such a channel as well as the cost and profit comparison are further important points of consideration.