Question

Topic: Strategy

Strategy Required

Posted by tahir.ahamad on 5/7/2011 at 1:36 PM ET 250 Points
WE ARE INTO CHAPATI FLOUR MANUFACTURING & MARKETING BUSINESS . WE DO NOT HAVE HEFTY BUDGETS TO CREATE MARKET DEMAND FOR OUR PRODUCT. ALSO WE DO NOT WANT TO GRAB MARKET SHARE BY PRICE CUTS METHODOLOGY . WE BELIEVE TO SUSTAIN LONGTERM GROWTH , WE SHOULD CONCENTRATE ON CONSISTENT QUALITY & GOOD SALES DISCIPLINE .
NOW THE PROBLEM IS THAT RETAILERS DO NOT WANT TO WORK ON PRODUCTS HAVING NO CUSTOMER DEMAND AND THAT TOO ON PREMIUM PRICING CATEGORY. THERE ARE ALREADY TWO BRANDS PLACED IN SUCH PRICING CATEGORY BUT THEY ARE BACKED UP BY HUGE MARKETING BUDGETS. ALSO THERE ARE 4 BRANDS THAT WORK ON PRICE CUT METHODOLOGY. EG. BRAND A (LOW PRICE BRAND) : M.R.P 165/- RLP: 90/- CSP: 110/- , BRAND B (ESTABLISHED BRAND) : M.R.P 165/- RLP 138/- CSP: 150/-....OUR BRAND M.R.P 165/- , RLP:123/- , CSP :140. M.R.P MAXIMUM RETAIL PRICE, RLP RETAILER LANDING PRICE , CSP CUSTOMER SELLING PRICE.
CAN HELP US IN SELECTING A WAY TO MOVE AHEAD SLOWLY WITHOUT LOOSING OUR DISTRIBUTION CHANNEL PARTNERS ???
We want to build a brand rather than to just increase our sales volume and become a commodity player like some other brands.
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RESPONSES

  • Posted by mgoodman on 5/7/2011 at 3:02 PM Moderator
    Randall is right (as usual). The situation you describe guarantees that you will fail. You'll save yourself a lot of aggravation and money if you stop now. Great product and strategy are worthless without the resources to market properly.

    The retailers are telling you what it will take to gain their support, but you're saying you don't want to do that (or can't afford to play). If you can't come up with the funds required to compete with the other premium-priced brands, then you might as well close the doors and stop pretending you're a serious contender. It will cost you more to hang in there for months and then quit. Be kind to yourself and do it now. Every day you delay costs you more.
  • Posted by tahir.ahamad on 5/7/2011 at 3:26 PM Author
    First of all , I have very low marketing budget. which seems to be negligible infront of large players . You all mean companies with marketing muscles can only survive in fmcg retail. A small budget company with a best quality product should never try to enter in this market ? Also better than closing down , we too can play the price game as many other small players are doing . Retailers will accept our product t if they get better margins in our product as compared to other players , but problem is that they sometimes pass on the extra margins to customers as discounts and there by making our brand secondary . I think Trade schemes would be helpful as a push strategy to retailers ,
  • Posted by mgoodman on 5/7/2011 at 4:02 PM Moderator
    You ask:

    A small budget company with a best quality product should never try to enter in this market ?

    My response:

    Correct. The only good way to enter a competitive market with a top quality product is to invest heavily in marketing up-front. If you don't have the budget for it, you're better off playing a different game. Top quality without strong marketing support is a losing strategy.

    As for playing the price game, as you put it, that's always an option, but the margins are going to be thin, and your product costs are likely to be higher than your lower-quality competition. The result is that you'll always make less than they do. And, whenever they decide to do it, they can sell at a price you won't be able to match without losing money.

    Net, the price game can only be a winning strategy when you have the lowest costs. Otherwise, you'll lose in the long run. (And the long run may come very soon if you threaten the company with the lowest costs.)

  • Posted by Chris Blackman on 5/8/2011 at 9:55 AM Member
    Why don't you try to come up with some reason why your product should be preferred by the consumer, then develop some kind of guerrilla technique to drive demand for low-to-no budget.

    e.g. have an actress like Sherlyn Chopra introduce your product in a cooking show on TV saying it's her preferred flour for chapatis that help her stay in shape.

    Just an idea...
  • Posted by ranjanpaul on 5/8/2011 at 10:40 AM Member
    Here are some of my thoughts:

    1. When you say 'top quality', is it you who are saying it or do customers too feel the same?

    2. Quality has many dimensions. What is yours?

    3. Do customers see that as a reason to differentiate your product?

    4. Is there a way you can communicate this differentiation to your customers? If not, you have a major problem.

    5. You can get into a niche market as a specialty product - like sell through health food stores.

    6. Currently, mass market retail looks a little tough based on whatever you have said and I have understood.

    Best of luck,

    Ranjan Paul
  • Posted by tahir.ahamad on 5/9/2011 at 5:20 AM Author
    1. When you say 'top quality', is it you who are saying it or do customers too feel the same?

    yes quality difference is visible. Repeat sales is very good . we just need to get them try once.

    2. Quality has many dimensions. What is yours?
    Taste , Look & Smell
    Golden Color Chapatis with Roasted taste & aroma .

    3. Do customers see that as a reason to differentiate your product?
    Yes but getting them try it once is tough.

    4. Is there a way you can communicate this differentiation to your customers? If not, you have a major problem.
    We are using retail POS advertising. Danglers etc.

    Dear Chris Please suggest me some guerrilla techniques to drive demand for low-to-no budget. Can we introduce unique trade schemes for retailers so that they agree to push our product in market. As we just need a initial push from them & after that the product quality can make the wheel move.
  • Posted on 5/10/2011 at 5:54 AM Member
    Let us assume you already meet, or will be able to meet, what the customer considers "top quality," which is determined by the entire buying and usage experience. (Who is really your customer, the end user or the retailer?)

    Regardless, you need to pursue two avenues, "bricks" and "clicks." For "bricks," buy (or check out from the library) a recent (hopefully updated) edition of Jay Levinson's Guerilla Marketing, originally published in 1989.

    "Clicks" may be a better way to go. Certainly pursuing on-line marketing, including social media, can be made a low cost (albeit high time) approach. Again, go to the libary and also do some Internet surfing about E-commerce for starters.

    Two books to look at for social media are (1) Jeffrey Gitomer's Social Boom, (He is probably the leading sales trainer in the U.S.) and (2) The Dragonfly Effect, by Jennifer Aaker and Andy Smith.

    Amazon.com will show further information about both of these books, as well as others in this field.

    Regards,
    JH
  • Posted by tahir.ahamad on 5/12/2011 at 4:19 AM Author
    That means i should go for social media marketing , low budget online promotions and continue with trade schemes . Can anyone help me in designing road hoarding and hoarding punch line .
  • Posted by mvaede on 5/13/2011 at 9:14 PM Accepted
    Hello Tahir,

    Here's an idea:
    If your problem is to have people try your product, why not make it a contest.
    Let people get your product for free, either in the store (driving traffic for your existing or new retailers) and ask them to fill out a 2-3 questions about your product
    or find places where people gather and let them taste your product before filling out the same brief questions.

    You can do this area by area, getting help from existing retailers and as an incentive for new ones to sign up.
    Each event within an area should be filmed, commented and communicated to local press as well as showed on a simple website or online forum.
    The press as well as online forums should be notified about your activity in their area prior to you arriving there to create interest

    If you can't compete on marketing budgets, make the battle personal and local by getting involvement both in the stores that do carry your products as well as online in social media / forums.

    Repeat sales should pick up and cover your expenses. By doing it area by area also allows you to analyze which activities/demographics are the right ones and you can slow down your pace, should your budget be limited.

    Mikael
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