BIOLOGY OR BUY-LOGY?
David Vs Goliath-Who will be the winner?


Authors:

Prof. S. Suresh
Asst. Professor, Management Studies
Institute Of Management and Research
8th Milestone, Delhi-Meerut Road, Ghaziabad (U.P)
Ph: 0120-2788325/2675418(O), 98104-13396(Mobile)
Email:
sureshsannapu@yahoo.com

Ms. Rajni Chopra
Lecturer, Management Studies
Rajkumar Goel Institute of Technology
5th Km, Delhi-Meerut Road, Ghaziabad
Mobile : (0) 9811310033
Email:
rajni_choprain@yahoo.com
 


ABSTRACT

Foreign Companies have been fairly successful in the Indian Market. Their success has been attributed to various factors. The endeavour of this paper is to present the situation where in even the domestic companies have not only competed with foreign companies but also have gained the market leadership. The authors believe that being 'foreign'may have little relation with success but more to do with 'Buy-Logy'.

There is tremendous relevance to the psyche of consumer. As an organization one ought to comprehend some of the insatiable demands of today's customer, which are FREE, PERFECT, NOW, it is imperative for a marketing organization to keep ahead of competitor's strategies and inculcate trust on their ability.

A couple of success stories i.e. Kanpur Trading company (KTC) & Asian Paints have been presented in the paper.

DECLARATION BY THE AUTHORS

We, Prof. S. Suresh and Ms. Rajni Chopra hereby declare the following paper "Biology or buy-Logy, David Vs. Goliath-who will be the winner?" is original. All the views expressed in the article are personal contributions. However, references used have been mentioned along the author's name. This paper has not been published/submitted for publication elsewhere.

Ms. Rajni Chopra
Prof. S. Suresh
 


BIOLOGY OR BUY-LOGY?
David Vs Goliath-Who will be the winner?

The success of foreign companies in India has been attributed to various factors mentioned as follows:

    1. Possessing infrastructural facilities such as wide network of offices. Varied sources of information. Favourable product image and good market knowledge.

    2. Ability to get good agents and distributors.

    3. Having the capacity to mobilize money, workers and technology needed for production and sale of goods.

    4. Having the ability to acquire better Knowledge and skills.

    5. Capacity to provide better products at lower costs to consumers in developing countries.

    6. Being a good source of technology not otherwise available.

    7. Providing an element of entrepreneurship and risk taking.

Taking into consideration the above factors, does it mean that foreign companies are going to dominate the Indian market forever?

The endeavor of this paper is to present the situations where in the "foreign success mantra" has been defied by successful Indian companies. In fact. The success of a company in the domestic market has little relevance to being " foreign" and has more to do with what the authors call "Buy-logy".

Consumerism has become almost a truism to claim that buying habit of goods in many ways expresses consumer psychology, or in other words to study Buy-logy from Marketing perspective is as important as to study of biology from Science perspective.

To avoid complexities, let's move, into simplification of words.

Buy + Logy = Selling the goods from customer's perspective.

Of course, innovation and production of something new are intrinsic to consumerism. It is often suggested by marketers that new ideas identify pleasures and images, which fascinate consumers and facilitates selling of commodities.

Certainly, it is not feasible to comprehend the psyche of each and every customer and offer a product absolutely of his kind. However management often display high budgets, staff and logistics on planning, productivity and marketing of the products successfully taking the customer's interest into consideration, right from the origin of concept till consumption of commodity.

When a company, whether foreign or domestic, enters into the market, the consumer's perception is often as follows:

1. I don't know who you are
2. I don't know your company's products
3. I don't know what your company stands for
4. I don't know your company's customers
5. I don't know your company's records
6. I don't know your company's reputation
Now- what was it you wanted to sell?

(Ad: McGraw-hill magazine)
Moral: Sales starts before your salesman calls-with business.

According to Robin Rodin, CEO, Marshall Industries, three insatiable demands of today's customers are
1. They want their product or services "FREE"
2. They want it "PERFECT" and
3. They want it "NOW".

Certainly an organization can think over on its strategies, tactics, values and manpower. Beyond doubt concrete study lies in the synergy of all these components as success depends on alignments of vital factors.

From marketing point of view, one ought to have thorough knowledge of power, assets and infrastructure of one's organization. Technical knowledge may not be enough. One must transcend techniques so that the art becomes an artless art (Karate Saisetsu Suzuki)

Before moving into customer's premises, one must be clear in mind.

(i) How well he does he know his market
(ii) How proficient and skilful he is
(iii) How much faith he has, in his product and company.

The most important question for a marketing professional is to understand the reasons that make a customer buy one particular product from one particular supplier.

KANPUR TRADING COMPANY (KTC)

In this perspective let us look at a fast growing Indian company, Kanpur trading corporation (KTC). The indigenous marketing machine of KTC is posing a serious threat to the leader HLL in the detergent market. Kanpur trading Company (KTC), the marketer of Ghari detergent, is a rags to detergent story. Having started as a crude manufacturing unit, today, after 17 years, is one of the dominant players in the detergent market.

Ghari has stormed the UP market capturing shops sheleves and godowns. It has crossed the Rs. 550 crore sales mark this year and is the largest selling single brand in U.P and adjoining markets. To give you the sense of the size of the brand Ghari, it's almost as big as surf, Cadbury, clinic and fanta, twice the size of dettol and three times that of Ariel by sales. It sold less that Rs. 2 crore worth of detergent in 1990 when nirma and wheel, the two national brands were household names. Today, ghari is the largest growing brand with a market share of over 40 per cent in U.P and around 10 per cent volume share on an all India bases.

The success of ghari has been because of the following

    1. KTC has consistently maintained the quality at the right price. Ghari was priced 10 percent lower than that of Nirma and wheel.

    2. KTC has used their porters as the salesmen. They have picked up raw hands from lower middle class families, trained them in sales and distribution and rewarded them well for their good work.

    3. KTC has always been involved in financial assistance to its distributors and supported them with local advertising to boost secondary sales.

    4. Media communication was used to research out a wider consumer audience. While Ghari's price-value equation figured high in the minds of lower-middle and middle class buyers, the media blitz proved compelling to consumers on the fringes.

    5. Ghari's distribution was not expanded indiscriminately like many regional brands have done KTC would enter one market, achieve 100% penetration among the retailers there and consolidate before moving on to the next market.

    6. Ghari's growth has been without substantial reliance on carrots like promotions or high retail margins, both of which are very common in the industry. KTC has avoided using trade and consumer schemes as a strategic tool. The company gets high turnover which means even at a low 2.5 percent margin, a distributor gets fairly good returns on investment.

Ghari's sales have seen a compounded annual growth of 25% during the last five years. The brand grew over 20 percent last year even as the industry saw a decline due to recessionary conditions.

As we look at the success of Ghari, price-value equation is an important factor in consumer decision-making process. However, apart from price, there are several other factors a marketer can rely on. For example, once can take into account the emotional factors, which make people to purchase a specific product.

These include factors such as:
Want to be most admired
Want to appear fashionable/modern
Want to appear authoritarian
Want to look professional

Much of this comes down to one word-image
If one one is aiming to sell cosmetics to young woman. He may wish to present an image of a most charming beautiful lady. On the other hand a dauntless and rugged image is posed for youngsters and for older people a traditional friendly image is more appropriate.

ASIAN PAINTS

While many companies have created a strong image to succeed in the market. There are others who have looked toward distribution for success. One such Indian company is Asian Paints (A.P). Which had overtaken the foreign companies to gain market leadership.

Asian paints. Good lass Nerolac. IICI (India). Berger. Jenson & Nicholson and Shalimar are the leading companies in the organized sector in value terms. A.P is the Industry leader. With an overall market share of 33 per cent in the organized sector.

A.P has been consistently turning out a good performance over the years. For more then two decades now. It has been the market leader.

AP's sound marketing has earned it strong brand equity. It has been able to do it by focusing on product features that are appreciated by customers. And by ensuring that the products are of high and consistent quality and are widely available by building a strong distribution system.

The paint industry of India is more then 100 years old. Its beginning can be traced to the setting up of factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II. The industry consisted of just a few foreign companies and some small. Indigenous producers. Foreign companies continued to dominate the industry.

At the time AP entered the Indian paint business. Distribution was the most crucial task for any new entrant. Both physical distribution and channel management posed formidable challenges. The foreign companies and their wholesale distributors dominated the business. Also they were shutting the doors on any new paint company seeking an entry into the business. They concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development.

AP sized up the scenario and formulated a unique strategy. It went in for a strategy that differed totally from the existing pattern.

Elements of AP's Marketing Strategy

    1. AP bypassed the bulk buyer segment and went to individual consumers of paints.

    2. AP went slow on urban areas and concentrated on semi urban and rural areas.

    3. AP went retail. While its competitors remained content with a handful of wholesale distributors. AP preferred direct contact with hundreds of retail dealers.

    4. AP went in for an open door policy. It broke the prevailing trend in those days. Of limiting the number of dealers to the barest minimum. And chose to use practically everyone in the trade. Who was willing to function as its dealer?

    5. AP voted for nationwide marketing/distribution. It wanted to have an active presence throughout the country. In all the geographical zones. States and territories.


    Main steps in the implementation Process

    1. AP created a large network of dealers.

    2. It established a network of company depots to service the dealers

    3. It created a marketing organization that matched its distribution

    4. It successfully resolved the cost service conflict in distribution with a

      • A strong commitment to distribution cost control. Without compromising service level.
      • Effective inventory management
      • Effective control of credit outstandings
      • IT initiatives in distribution cost control

As already mentioned. Asian Paints is India's largest paint company and the market leader in decorative paints. The story of Asian Paints is a story of marketing excellence. It achieved an enviable leadership position by mastering the distribution function and gained a distinctive and powerful competitive advantage.

If by being Indian companies. KTC and Asian Paints could succeed. There is no reason why others cannot follow suit. Both the companies have shown the mettle required to cope up with foreign competition in the market. Both have understood the customer and gave them what they wanted. While KTC maintains a strong price value equation. Asian Paints ensures easy availability and a wide range of colour choices. In a way. We can say that they talk what the customer likes to listen. They show what the customer loves to see. They sell what the customer likes to by and make what the customer loves to be.

REFERENCES

    1. Sutherland Max, Sylvester Alice, Advertising & the mind of Consumer, 2000,268

    2. Rodin Robin, Free, Perfect, Now, 2000, 03

    3. Oglivey David, Oglivey on advertising, 2001, 118

    4. Varshney, R.L. and Bhattacharya B., International Marketing Management. 2001,450-454

    5. Rarnashwamy V.S. and Namakumari S., Marketing Management, 2002,452-457

Bhanu Pande, Brand equity- Economic Times, December 25,2002.1-2
 


Prof. S. Suresh
Asst. Professor, Management Studies
Institute Of Management and Research
8th Milestone, Delhi-Meerut Road, Ghaziabad (U.P)
Ph: 0120-2788325/2675418(O), 98104-13396(Mobile)
Email:
sureshsannapu@yahoo.com

Ms. Rajni Chopra
Lecturer, Management Studies
Rajkumar Goel Institute of Technology
5th Km, Delhi-Meerut Road, Ghaziabad
Mobile : (0) 9811310033
Email:
rajni_choprain@yahoo.com
 

Source : E-mail May 24, 2004

 

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