MARKETING MANAGEMENT SECTION E
Udit Chugh 2011207 Vasundhara Singh 2011222 Vinit Singh 2011230 Vishal Jhalani 2011233 Yugmala Singh 2011238 Aditya Vikram 2011248
Formulating an effective value delivery process to tap into an existing and prospective consumer market.
The case analyzes the response of the non-users of shampoo in an emerging environment, India. The non-users belong to the lower end of the socio-economic spectrum and they respond with their perceptions about the category of shampoo and well-known brands. The entrepreneur's challenge is to obtain the insights, analyze the attitude of the non-users towards the category and brands, and prepare a strategy to position a new brand of shampoo (‘Super’ brand) in the Indian mass market.
Customer Segmentation & Market Selection
Affluent consumers demonstrate that they have 'arrived' by buying bigger houses or cars. People at lower income levels do so by buying premium brands. This means brand loyalty is very high among less affluent consumers. That is why the rural market is critical for companies. The first-mover advantage is significant. Facts: Bottom of Pyramid in India There are two classes of BoP in India – • • Annual income of less than Rs. 75000 Annual income of Rs. 75000 to Rs.150000
There are around 150 million household (BoP) out of which 25 % from urban and 75 % from Rural population. The urban BoP constitutes 40% of the urban population which contributes only 15 % of the urban income which is expected to move upwards very fast. Rural BoP that is 82 % of rural household contributes about half of the total income of rural India. Executives have long recognized that to build real sales volumes they will have to reach outside the big cities. According to the National Council of Applied Economic Research (NCAER), an independent, nonprofit research institution, rural households form 71.7% of the total households in the country. Spending in this segment is growing rapidly and consumption patterns are closing in on those of urban India. Marketing to rural customers often involves building categories by persuading them to try and adopt products they may not have used before. A company like Colgate has to build toothpaste as a category, which means convincing people to change to toothpaste instead of using neem twigs to clean their teeth, which was the traditional practice. This is difficult to do and requires patience and investment by companies. It's not like getting someone to switch brands.
Here's an interesting business question: if roughly two-thirds of the world's population makes USD 1,500 or less per year, why try to sell them expensive, bulky goods and services originally designed for consumers who easily make twenty times as much in North America, Western Europe or Japan? According to a recent article in Foreign Policy by University of Michigan Business School professor C. K. Prahalad, and Allen Hammond of the World Resources Institute, the 18 largest developing nations are home to some 680 million families earning USD 6,000 a year or less. These low-wage earners take in USD 1.7 trillion a year - roughly the size of Germany's gross domestic product. 150 million households form a part of the Bottom of Pyramid and out of this 75% households belong to the rural areas. The Rural BOP, which constitute of 82% of rural households, contributed to about half the total income of rural India. There exists a significant opportunity, still to be capitalized, in these consumer market and upon a successful delivering of value to these consumers, a large market can be uncovered.
As per the given data the split between the sales of sachets and bottles is 60:40 in urban India, whereas in rural India 90% of the shampoo sales occurred as sachets and also according to the questionnaire based on Likert Scale (0-5), the Mean Value of quantified agreeing to a condition, the...