Marketing Management

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AMITY (Assignment)
MBA
Semester 2

Marketing Management
1st Block Assessment: Marketing Management (EDL 202)-Semester II
The runaway success of the brand, Amul, is one of the best case studies about the product, pricing, positioning and delivery.
‘Amul’ is derived from the Sanskrit word Amulya which means ‘priceless’. Amul is also the acronym for Anand Milk Union Ltd. Amul butter has lived up to its name for sure. Such has been the growth and popularity of the brand, Amul, that it has become synonymous with butter. The brand, which has given MNCs a run for their money, has a long history to it. It is also interesting to note that a co-operative movement has become one of the best examples of brand building. Amul, as a brand, presents a case of effective and smart communication. It also exemplifies the power of good and deep-rooted distribution as well as value for money.
Amul butter is processed at eight plants. With 48 sales offices, 3000 distributors and 2.5 lakh outlets, it has a robust marketing network. It is also exported to over 30 countries, including the U. S. Amul butter accounts for over 90 percent of the Rs.500 crore domestic market (2005). Clearly, it has the infrastructure that is needed for an organization of its size and kind.
The history of Amul can be traced to December 1946, when some dairy farmers under the legendary leadership of Tribhuvandas Patel registered the Kaira District Co-operative Milk Producers’ Union. The Father of the White Revolution in India, Verghese Kurien joined the Union as General Manager in 1950. In 1957, Kaira Co-operative registered the brand ‘Amul’. In 1973, The Gujarat Co-operative Milk Marketing Federation was set up, and today it is the country’s largest dairy marketing organization.
The co-operative movement not only assured good returns to farmers but also provided consumers with quality products under the brand names of Amul and Sagar. To make it distinctive from the butter available in the market those days, and also to convey the message that Amul butter was produced using buffalo milk, additional colour was added to it.
The Amul girl, a bubbly mischievous little girl with an orange face, blue hair and polka dots on her frock, has been the Amul mascot since 1966. Amul campaigns were all light-hearted advertising with hard-sell.
Amul was the market leader all over India, barring Bombay. Hence, in 1966 the Amul account was given to Advertising and Sales Promotion Company with the simple brief: “Dislodge ‘Poison’ from its ‘premier brand’ position in Bombay”. Poison butter was started by Pestonjee Edulji in 1926. The ‘utterly butterly delicious’ campaign was started after research in early 1966 had found that 50 percent of Bombayites had not tasted Amul butter. This hinted at a lack of awareness.
The media, because of lack of colour printing facility, offered little help as a vehicle for advertising. They searched for a vehicle that could allow them a large impact. It was noticed that just one hoarding at Bombay’s Kemps Korner used to give Air India a lot of publicity mileage. So they decided: ‘Why not try something like the Air India campaign?’ They had a media plan that included about 17 hoardings. Bus panels were also used effectively. Justification for hoarding and bus panels as media vehicles was that such a judicious mix would give the brand advertising ‘frequency of the clock’ as different from the ‘frequency of the calendar in the case of the press.’ The hoardings and bus panels also offered them the choice of colour. The campaign was a roaring success. It gave Amul a strong foothold in the market. It was also the first ad that used outdoor so intensively, with hoardings, bus panels and posters.
The path-breaking ‘utterly butterly delicious’ campaign (created by Advertising and Sales Promotion Company established the fact that Amul is not as expensive as consumers think. And since then Amul was on the road to success Poison dairy lost its supremacy in Bombay. Many other butter brands entered the market, but none was able to get ar. significant market share. Amul’s brute dominance created a big entry barrier for others. Such was the dominance that eve- companies like the Swiss dairy major Nestle had to make a hasty retreat from the domestic market.
Even today, Amul hoardings continue to dot the skies, with smart spoof ads on topical issues. And being ahead of others in creating interesting tag lines was its strength. After the Ambani break-up, Amul hoardings read ‘share the brea: equally’. The success of Bunty aur Bubbly was captured in ‘Bun, tea aur butterly’. Amul’s spoof ads are much like R.K.Laxman’s ‘common man’ cartoons. The Amul hoarding campaigns are also in the Guinness Records for being the longest running advertising campaigns – for over four decades. Amul ads have become a mirror of life, reflecting the myriads of festivals, cricket events and even politics!
It is not mere smart communication that has led to the runaway success of the brand. Distribution and value for money seem to be the major strengths on which the brand’s popularity rests. About 12 lakh units of butter (all packs put together) are sold daily. They need to ensure that the same quality product is available to a consumer at his nearest outlet and in the pack sizes required by him.
Availability assumes a greater significance when one considers the availability of several alternatives to butter. They ensure that their distributors strive to improve the network, availability, market presence and hygiene. Amul’s advantage is the loyal consumer base and the value for money proposition that it offers. That apart, it enjoys a tremendous distribution network edge over the competition, if any.
Another notable feature of the brand is its deep social connect. The brand has also done its bit in terms of serving good causes, whenever needed. During the Chinese aggression in 1962 Amul diverted all the milk and milk powder collected to the army to meet their requirement.
The brand Amul butter signifies various success stories, be its massive distribution network or catchy advertising and its value for money nature. The four-decade-long leadership is a shining example of how a good operating model can create brands like Amul that surely has made sense of its name – utterly butterly priceless!

1st Block Assessment

Question 1
The effective strategic planning of Amul is reflected by :
Amul has effective distribution strategy
Amul’s brute dominance created a big entry barrier for others
Amul butter is processed at 8 plants
None of above

Question 2
Amul butter success stories rests on
massive distribution network
Effective advertising ans sales promotion
value for money
All of the above

Question 3
“The path breaking success of “”utterly butterly delicious”” campaign rests on”
Effective pricing strtaegies
Advertsing and sales promotion department
Effective distribution system
None of the above

Question 4
“Amul “” ensure that their distributor’s strive to improve the network, availability, market presence””, states ________core concept of marketing”
Selling
Marketing
Production
Product concept

Question 5
Pick the odd one out:
Amul hoardings continue to dot the skies
Amul hoardings campaigns are also in Guinness Records
Amul enjoys tremendous distribution network edge
Gained lot of popularity through Bus Hoardings

Question 6
___________is the country’s largest dairy marketing organisation as
mentioned in the case
The Bombay Milk plant
The Nagpur Milk Refinery
The Gujrat Co-operative Milk
None of the above

Question 7
Amul Butter – A marketing success story depends upon
Its deep rooted distribution and as well as value for money products
Making Amul as not an expensive drink
All of the above
Amul offers the availability several alternatives of butter to consumers.

Question 8
“”” They need to ensure that the same quality product is available to a
consumer at his nearest outlet and in the pack sizes required by him””
highlights _________core concept of marketing”
None of the above
Production concept
Product concept
Both a & b

Question 9
“Amul Butter – A marketing success story, strongly emphaises most on the
following concept”
Marketinh concept
Social concept
Selling concept
Production concept

Question 10
“”” During the chinese aggression in 1962 Amul diverted all milk and milk
powder collected to the army to meet their requirement””, highlights
_________concept of marketing.”
Marketing concept
Societal concept
Poduction concept
None of the above

Quiz Score: 50 out of 100
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2nd Block Assessments

Case Study
Complan’s Positioning Success
The problem of marketing Complan is somewhat unusual. It is, and it is perceived as, ‘far superior’ to competing products. And that is precisely the problem. As one housewife remarked, “It’s too much of a good thing. Do I really need all that? ”

The origin of Complan explains its vastly superior formulation writing customer service goals . It was developed by Glaxo Laboratories as a complete and balanced nourishment for serious medical and surgical patients unable to take normal food. Introduced into the Indian market in the early sixties, Complan was first promoted ‘ethically’, that is, to doctors who then prescribed it for their patients.
This ethical positioning as complete and balanced nourishment obtained very good support from doctors and a growing, if modest, tonnage of sales was achieved. However, after some time growth levelled off. In 1970, Glaxo set up a Family Products group in the Company with the object of promoting some of its ethical brands over-the-counter, that is, promoting them directly to consumers with mass media advertising. It was judged that this would greatly increase their sales volume.
In its very first public appearance, Complan adopted the strategy of ‘Positioning by Competitor’. It positioned itself directly against milk.
‘Your body needs 23 vital foods’, said the first ad, ‘Milk gives 9- Complan gives all 23’
Factual information about these 23 nutrients bodily functions was also given in the ad copy. This advertising and the position assumed by the brand created a high degree of awareness and trials. The consumer off take of the brand rose from a volume index of 100 in 1969-70 to 298 in 1973-74. The steady growth also reflected that a considerable number who tried the brand stuck to it and repeatedly purchased it. But later, a rethinking on this positioning was called for. It was clear that Complan couldn’t displace milk which is a staple source of life, growth and health. A fresh look at the positioning decision logically led to looking at other malted milk-foods like horlicks, viva, bournvita, etc. in the health beverage product lines.
The decision was to reposition complan against horlicks, the leader in the health beverage industry. The new ad headline said: ‘Your body needs 23 vital foods every day. Check: how many do other food drinks give? ‘ The consumer was urged to read the label on the Complan tin and to compare it with the label of his present brand, assumed to be Horlicks. But this strategy bombed. The year 1974-75 was the first time when sales of Complan declined. A thorough review appeared to be need of the hour. A detailed review of the strategy brought some key problems to the surface. Complan’s price was almost twice that of Horlicks. Its taste was disliked by many, especially children. Also, many children related complain to a medicine, useful in sickness or thereafter. It was considered too special, and therefore, selectively used. While other brands were growing. Complan was not.
Complan then got a position not by competitor, but by target user and usage occasion:
‘Complan is ideal for totally fulfilling the nourishment needs of people who cannot or do not eat enough, because only complain is complete with 23 vital foods for the body.’
Complan was positioned as the only brand with enough good things to give her the reassurance she needed. Not only Complan advertising, but the product itself wore a new and more attractive look. The package design was cleaned up and modernized. The product’s taste was improved through a change in the manufacturing process. New flavours were introduced, and the price was increased.
The repositioning strategy, together with product improvements, provided the thrust for a take-off in sales. From an index number of 203 of sales volume in 1974-75, sales shot up to an index of 408 by 1978-79. The availability of full-fledged commercial TV in 1978 and the heavy use of this medium by Complan gave the brand further thrust.
It became clear that price was not the barrier to growth. By positioning Complan in a unique slot, consumers were persuaded to see that it had no real substitute and a new price-value perception was created for the brand. Soon, a sharper, narrow positioning strategy was adopted stressing that Complan was for growing children. Sales data showed that Complan’s growth was accelerated folloing the most recent re-positioning.
Question 1
Complan’s competitor’s include
All of above
Bournvita
Horlicks
Viva

Question 2
Complan decided to ___________against horlick’s.
enter new markets
Reposition
offer different sales promotion
market

Question 3
“Your body needs 23 vital foods every day. Check how many do other food drinks give”. The complan used ___________positioning strategy.”
positioning by target user
None of the above
positioning by usage occasion
positioning by competitor

Question 4
Which of the following statement is true
Complan was liked by children
Complan was never related to a medicine
All of the above
Complan’s price was almost doubled that of horlicks

Question 5
Complan tried the following positioning strategy
positioning by target user
positioning by competitor
All of the above
positioning by usage occasion

Question 6
Which of the following most recent re-positioning led to increase in complan’s sale
Competitor’s positioning strategy
None of the above
narrower positioing strtaegy on growing childern
Ethical positioning strategy

Question 7
As per the case the following factors influenced the behaviour of consumer’s buying complex
personal
Social
Cultural
All of the above

Question 8
Consumers of Complan must havr passed through the following sequential stages in the buying decision process
None of the above
“Information search, evaluation of alternatives, need recognition, purchase decision and post purchase decision.”
“Purchase decision, Information search, evaluation of alternatives, need recognition, and post purchase decision”
“need recognition, Information search, evaluation of alternatives, Purchase decision, and post purchase decision”

Question 9
Marketing research helped the complan to
All of the above
Highlight the like and dislike of taste
Highlight the importance of Complan by making it a complete nourishment drink
Highlight the relationship of price and product

Question 10
“The strength of the marketing leader Horlicks, is highlighted by”
Its appropriate pricing strategy
Increase in sales
Effective positioning strategy
All of the above
50
Quiz Score: 50 out of 100
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3rd Block Assessments
Case Study

HLL to revive ailing Kissan, Annapurna

HLL is reviving its ailing food brands. Kissan is slated for a major relaunch by the year-end while Annapurna atta is likely to gain national status once again with improved formulation and packaging.

Sources say HLL is anticipating tough competition from ITC in jams and sauces. The latter is expected to enter the category shortly and Lever fears aggressive pricing and innovative products from it in this category as well.

The tobacco company has already made rapid inroads into large categories such as atta, biscuits, spices and ready-to-eat food, eating away shares of market leaders. ITC’s Aashirvad atta is the largest selling brand with a marketshare in excess of 35%.

HLL is planning to relaunch salt, atta and jam with new, contemporary packing and significantly improved mix. the company has plans to make Annapurna aata a national brand again. HLL had withdrawn atta from the north Indian markets, where it sells the most, because of extremely low margins. At present, it sells atta in some select markets of the south where it charges a higher premium owing to subdued competition.

Analysts say HLL’s failure in understanding local tastes and identifying fast growth categories has resulted in losses in recent years.
Attempts to launch products such as atta and salt under the Annapurna brand had failed to take off. Most of HLL’s innovations in the ready-to-eat segment and instant foods never left the test-marketing stage. Max confectionery and Modern biscuits also failed to make a dent in the market.

Foods constitute around 55% of Unilever’s turnover while it contributes just around 6% to HLL’s revenues. The overall revenues from the foods business dropped between 1998 and 2004 from Rs 2,731 crore to Rs 1,565 crore. For the quarter ended June 2005, however, the foods business experienced a turnaround.

Nokia’s pricing strategy

Nokia is one brand name that inspires all those who are into the mobile culture. Of all the brand that touches our lives, Nokia stands out significantly. It has taken mobility a step forward by creating products with continuous innovations in this industry has made it imperative that every player keeps pace with changes. Nokia has been one step ahead in anticipating future market moves and strategizing accordingly.

Interestingly the company prices its products so competitively that it not only ensures that its margins are covered but also assures revenue maximization.

Let us see how Nokia leveraged it segmentation strategies, appealed to various segments with uniquely designed messages and differentiated between its products at every level to communicate and connect effectively with the intended target audience. When Nokia positions its product to the top end segment, it does it as a classy product. To the middle segment customers it is in the form of the best alternative. To the lower end segment, the carrot is that Nokia gives real value, as a high tech product, at low affordable price.

The pricing strategy of Nokia can be better understood when the juxtaposed with the skimming strategy and further interposed on Philip Kotler’s nine price/quality strategies model.

With a vast family of brand that caters to every segment, one can clearly see how Nokia, yielding to the pressure due to the competitive and innovative mobile handset market, slides each brand down the segments, one at a time by reducing its prices carefully and consistently).

Here are some live examples of Nokia’s skimming pricing strategy:

High Medium Low
High 1. Premium Strategy 2. High-value Strategy 3. Super-value Strategy
Medium 4. Overcharging Strategy 5. Medium-value
Strategy 6. Good -value
Strategy
Low 7. Rip-off Strategy 8. False economy Strategy 9. Economy Strategy
(Source: Phillip Kotler, Marketing Management, 11ed., Pearson/PHI)

Classic Nokia 8250:

Nokia phone model 8250which was available with the vendors during the year 2000 was price at Rs. 18000. It was without modern features like camera and MMS. The telecommunications infrastructure of the country was in its initial stages and so were the service provider’s fares. Hence only the premium segment could have afforded the phone. However with the easing of the government regulations and increased competition, market dynamics changed, and during 2004, the price of the model took a nosedive and was made available for Rs. 8000-10000. Now the model has been completely phased out. Only second hand products are available. Here was one product which despite market forces maintains its price distinction and continued to carry a premium connotation to it.

Neo Classic Nokia 6600:

This model from Nokia was made available in 2003, complete with a color screen, integrated camera and other contemporary features. In the beginning the product was prices in the range of Rs. 21000-22000. By November 2004, it was available in much lower, 15000-16000 range. The model is currently available for price of Rs. 9000-10000 only.

Modern Nokia 9500:

This is known as the snazziest model ever launched by Nokia in India. The Nokia 9500 communicator comes with office features and a large screen, coupled with increase and Bluetooth technology. Available in the market since 2005, it was initially priced at 42,000, but currently can be bought for just 26,000.

All the above models were produced in quick succession and Nokia’s strategy was to deliberately allow them to eat into each other’s market share. At the same time, Nokia proliferated the market with as many models as possible by 2006, at virtually every price point. Each one of Nokia’s model played a role in catapulting Nokia to the top of the heap, in the Indian mobile handset market.

It would be apt to map Nokia’s pricing strategy on the line of the premium, high value, and super value strategy, especially on the price-quality model.

On the flip side, consistent price cuts in rapid succession have the potential of smearing the brand image. But, in the buoyant telecom sector, where change is name of the game, the consumer is discerning enough to have a rational outlook towards a particular brand and its attributes, irrespective of the pricing strategy.

After all, skimming or no skimming, customer benefit is almost always guaranteed in the price sensitive competitive market.

Question 1
What strategies should be adopted by HLL at marurity stage to counter ITC entry
Marketing mix Modification
Market modification
Product modification
All of above

Question 2
“””The company HLL is planning to make Annapurna atta a national brand”” is an marketing strategy in Product life cycle of”
Product modification
Market Modification
market mix modification
None of the above

Question 3
“Most of Hindustan Lever Limited innovations in the ready to eat segment and instant foods , failed at ______stage of Product life cycle”
Test marketing
commercialisation
Product development
idea generation

Question 4
“””HLL had withdrawn atta from the north Indian markets”” reflects the ___________stage of Product life cycle”
Maturity
Growth
Decline
Introduction

Question 5
“The ITC company lets assume has 3 atta variants, 2 biscuits variants, 2 spices and 5 ready to eat food products.Mark the correct option”
Product width =3
Product Length =12
None of the above
Product Depth = 4

Question 6
Nokia’s pricing strategies aims to fulfill the following objectives:
All of the above
Ensure a specified target sales for different segments
Profit maximization
maintain price leadership

Question 7
“Among the various brands mentioned in the “”Noika Pricing Strategy””, modern Nokia 9500 communicator follows the ________pricing strategy.”
Rip-off strtaegy
Economy strategy
Medium-value strategy
Premium strategy

Question 8
“Nokia leveraged its pricing strategies to appeal different segments uniquely”, mark the correct option based on this statement”
For low-end segment it presents a low-technology product
For top end segment presents a classy product
None of the above
For middle segment it presents a costly product

Question 9
Nokia follows the _________pricing strategy
both a&b
Psychological pricing strategy
Competition oriented pricing
Demand/market based pricing strategy

Question 10
Pricing strategy of Nokia is an outcome of
Kept a future market vision
Technological Innovation
Continuous Innovation
All of the above

Case Study
“Our biggest challenge is not how to expand the market in India, but how to convince the indifferent Indian consumers about the world-class quality of Amway Products. The quality of the product is Amway’s strength.”
– Sudershan Banerjee, CEO & MD, Amway India in 1999.
A Dream Gone Awry In the late 1990s, the global direct selling giant Amway had to contend with increasing doubts regarding its survival in India. The company that had become synonymous with network marketing or multi-level marketing (MLM)1 the worldover was beset with problems.

Media reports were quick to point out Amway’s failure to sell the basic concept of direct selling to the Indians. Though the company managed to rope in a substantial number of distributors, the attrition rate was at an alarming high of 60-65%. Most of the products that the distributors bought, they consumed themselves. Estimates put the percentage of self-consumption at almost 50-60% of the total volume. (There were rumors that some distributors enrolled just to take advantage of the distributor’s margin of 18-30%). In the initial stages, when trials were the only criterion, this worked well. However, this self-consumption did not translate into repeat purchases. This was because the percentage of ‘active’ distributors at any given point
of time remained at a low level of 35-40%.
A Dream Gone Awry Contd…

Many people who joined in the initial frenzy returned the product kits within the first month. Company sources claimed that the returns constituted just 1% of the total strength, but rivals and ex-employees put the figure at over 5%. Of the total distributors, only about 10% showed reasonably high levels of activity. To top it all, Amway was burdened with an image that had little basis in fact. Its products began to be perceived as being very expensive and meant only for the premium segment. This was identified as the single biggest reason for the high attrition rate. What was overlooked was the fact that almost all Amway products were concentrates.
When used in the proper diluted form, the cost per use of each product worked out to be at par with (and in some cases, even lower than) the nearest competitor’s products. For instance, the product named LOC (priced above Rs 320 for a 1-liter pack), when diluted gave around 165 bottles. The cost per usage was thus very low. Either the distributors were themselves not aware of this fact, or they were unable to communicate
this to the customers.

Since the distributors themselves were unsure about the price-value equation of the products they were selling, they could not effectively convince the consumers either. Amway also had to contend with customers complaining of poor customer service on the part of the company.
Analysts commented that as long as the volume of products that moved through the network was high, network market such as Amway were satisfied. Even though customers complained of the lack of services, the company deemed it more beneficial to go for higher salesforce motivation programs rather than undertake customer service initiatives. This was largely due to the fact that the company was almost never involved directly with the end-consumers and the sales volumes were the end of all discussions.

Making of the Dream
Privately held by the DeVos and Van Andel families of US, Amway, short for American Way, was set up in 1959. Amway and its publicly traded sister companies supported 53 affiliate operations worldwide. About 70% of Amway’s sales were outside North America. With over 12,000 employees around the world, Amway was renowned for its strong R&D centre in Michigan, which had 24 laboratories.
Amway was present in over 80 countries and its manufacturing plants were located in US, Hungary, Korea,
China and India. The company had over 3 million distributors across the world. Besides its direct selling portfolio of 450 products, Amway promoted around 3,000 products through catalogue sales2 as well. Amway had received permission from the Foreign Investment Promotion Board (FIPB) in 1994, to invest $15 million in the Indian operations and to source products from India. The company began with identifying small and medium-scale companies to source its products from. Commercial operations began in May 1998 with a partnership arrangement with Network 21, a company, which acted as a support system and assisted in organizing training, seminars and meetings.
Besides its extensive internal research efforts before entering India, Amway also conducted market research through agencies such as Pathfinders and ORG-MARG. Though prior to its entry into India, Amway did recognize the need for a special India-specific pricing strategy and eventually there were just a few marginal cuts in the prices, which were still almost 20% higher than those of the competing FMCG products.

The company began with appointing distributors in the country by adopting the ‘NRI sponsored’ by getting NRIs to rope in their friends/relatives in India into Amway distributorship. These distributors were duly provided with starter business kits containing products, training material, and sales literature.
The company’s introductory product range comprised four home care and two personal care products, made available to distributors at the Amway Distribution Centers (ADCs) or through tele-service. A significant portion of Amway’s investment was on transferring state-of-the-art technology and processes to third-party manufacturers from the small and medium-scale sectors for the indigenous production of its product range.
Amway assisted its three manufacturing partners, the ISO 9001-certified Jejuplast at Pune, Naisa Industries at Daman, and the Hyderabad-based Sarvotham Care, to achieve benchmarking levels of product development, engineering and quality. These facilities were equipped with advanced machinery and world class technologies for production, packaging, and water filtration. Amway scientists and engineers at the India Technical Centre provided assistance in the processes of technology transfer and quality control. The company supported its independent distributors with five full service ADCs at New Delhi, Bangalore,
Chennai, Calcutta and Mumbai. ADCs operated as product selection centers for Amway’s entire product range and as training centers for distributors. Amway appointed Sembawang Shriram Integrated Logistics, and Mumbai-based First Flight Couriers as its total logistics partners for home delivery of Amway products
across 151 cities in the country. Amway’s domestic operations fell into five areas – personal care, homecare, nutrition, cosmetics and home
tech. The company introduced India-specific products, in pursuance of its go ‘glocal’ philosophy. Also, for the first time in its history, Amway utilized media advertising to promote its products. In the beginning, Amway had to deal with the negative attitude of many Indians to direct selling. Direct selling was typically seen as unwelcome, an intrusion into one’s privacy. This was true to a certain extent. Sales people often used a ‘hardsell’, the product quality was sometimes poor and most importantly, the salespeople were poorly trained and lacking in motivation. However, Amway changed all this radically and a significant change was brought
in the field. Amway was able to break the time tested and traditional distribution set-up of manufacturer-distributorretailer- consumer. Within 11 months, Amway became the country’s largest direct selling company and after two years of the commercial launch, Amway’s distributor base crossed the 200,000 mark. Its strengths were clearly manifested in the aggressive product launch plans, its products which claimed to exceed consumer expectations, the ‘money back’ policy, and a distribution network spread across 26 cities servicing more than
306 locations. In 1999, Amway reported a sales figure of Rs 100 crore. Reacting to reports stating this as a ‘below-expectations’ figure, company sources commented that the concept of network marketing had not been a constraint for Amway.
The then CEO & MD Bill Pinckney commented, “The direct selling model is not new to India. What’s new is the structure. And while it’s true that consumers do not rush in to buy an Amway product, network marketing works as a low-key approach and evolves over time.” However, the problems like distributor attrition, a false ‘premium’ image and customer dissatisfaction soon began surfacing. Amway could not sit back and let competitors like Oriflame, Avon and Modicare take advantage of its weaknesses.
Picking up the Pieces Amway soon woke up to the reality that it had to take steps to put its MLM machinery back to the track. For
this, it had to first identify where it had gone wrong. Amway realized that like most direct marketing networks, it had hoped to leverage the global promise of the lucrative business opportunity for its distributors.
Though this made sense in the developed consumer markets of the West, in India, distributors also needed to know the value of the products they were selling, this aspect was overlooked by the company. One of the first ‘corrective’ measures it took was putting stickers on its products, which clearly indicated the number of
usages very clearly. For instance, it introduced stickers on the packs of its car-wash solution to emphasize the number of washes that a consumer could get per bottle. The idea was to firmly establish the fact of Amway’s products being highly concentrated and with very low per usage cost. This practice was later expanded to other products as well. Amway realized that a complicated market such as India needed a focused approach for each of the product categories. To strengthen its product focus,
Amway set up strategic business units. Thus, though Amway had centralized marketing of all products worldwide, its Indian arm appointed category managers for individual product categories.
Amway also decided to focus on the market in the smaller towns. Quick expansion of the distribution network to smaller towns was identified as a major tool to offset the impact of attrition. The gameplan was to reach consumer homes all over directly by making the current distribution system more effective and decentralized.
In early 1999, Amway realized that servicing distributors in 160 cities through its 13 locations was curbing growth due to unavailability of critical infrastructure like networked banks, toll-free phones and multi-service courier companies. The cost of making long-distance calls, the courier companies’ refusal to accept cash and the time taken to deliver products were the three major hurdles that Amway faced. The typical direct selling system comprised a central warehouse located close to the manufacturing locations, which sent the products to regional hubs like the metros and then on to the branch offices. As opposed to the traditional
FMCG delivery setup, where the distributors or retailers carried inventory, here it was taken care of by the company warehouses and their region-specific distribution centers.
Long distance calls and courier companies took care of distribution in cities where the company had no presence. However, with these facilities not being upto the mark, Amway decided that it had to effectively handle these issues and rapidly expand its offices in order to capture the growing direct selling clientele in the country.
The company also decided to give incentives to cost and freight agents (C&FAs) who could deliver parcels in the same city within 48 hours outside, in about 72 hours. Amway then planned to tap unemployed youth in smaller towns by subsidizing the entry fee for the starters’ sales kit. Amway also offered to finance the sales kits through interest-free loans. It even gave free kits to visually impaired youth in Rajasthan.
But media reports were skeptical about Amway’s strategy to use localized strategies for its global products.

This ‘gamble’ as Amway’s biggest test case the world over, they remarked. In a bid to make its products more affordable, Amway introduced value-for-money ‘chhota (small) packs’ in December 1999. The sachets
significantly boosted sales.
Sachets had two advantages – they helped Amway shake-off the ‘super-premium-products-only’ tag, and with their lower prices invited consumers from lower income levels to try the products. This was expected to brand penetration. The most significant of Amway’s Indian initiatives were its ‘Indianisation’ efforts.
The company started printing Hindi slogan ‘Hamara apna business’ (our own business) on its stationery. The company’s first product line, Persona, was created specially for the Indian consumers. Amway even named its expansion drives as ‘Operation Gaadi’ and ‘Operation Ghar.’ Operation Gaadi was launched in east-Uttar Pradesh where a store was mounted on a truck and made trips to different regions on different days. The project was later extended to West Bengal as well. Operation Ghar was primarily designed to provide better service to the customers as well as to its large family of distributors. Involving an outlay of Rs 15 crore in its
Phase I, Operation Ghar eventually covered 19 state capitals. Operation Ghar was designed to provide five Es – ease of ordering, ease of paying, ease of receiving, ease of returning and ease of
information/operations. Amway also utilized the Internet and electronic kiosks to hook up with its distributors and give them information.
‘Network’ing its Way into the Future
By 2004, Amway planned to become a Rs 1000 crore company with a physical presence in 198 centers across India. The company also revealed that by 2002, it would be selling all the 450 Amway products that were available abroad, in India. As part of its plans to tap unexplored markets, Amway announced an ambitious expansion of its distribution infrastructure in Andhra Pradesh, which included setting up a
warehouse. Once the marketing business in urban areas was strengthened, Amway planned to turn tis attention to untapped rural areas as well. Even as Amway was establishing its roots in India, it was already facing troubles abroad. The very concept of network marketing was being threatened by the growing popularity of e-commerce and the Internet.
Through the World Wide Web, manufacturers had the opportunity of engaging in one-on-one direct selling in an even simpler way. This posed a major threat to multilevel marketers. However, the real threat seemed to be the merging of telecom networks with the cable television operators. This brought the customer directly in
touch with the company through telemarketing tools. This would naturally make the salesperson obsolete. Ofcourse, given the pace of developments on the Indian telecommunications front, network marketers could take it easy for least some more years. However, Amway prepared to meet these challenges by taking initiatives to further strengthen its online presence. With Internet usage levels increasing and little spare time for shopping, Amway believed that the Indians
would gradually move to online shopping. But it thought the process would take time, as het pleasure of window-shopping and the actual shopping experience could not be replaced very easily. Amway provided graphics and three-dimensional views in the product display sections on its website. The company also planned to have portals in various Indian languages to ensure wide coverage.

Question 1
Amway products failed to gain growth because of
its percieved to be very expensive
Self consumption by distributor’s
All of above
distributor’s unsure about price value equation of the products

Question 2
A distribution system rests on
Multi-Level Marketing
Network Marketing
Direct Selling
None of the above

Question 3
Pick the correct statement
Amway planned to concentrate more on salesforce motivation programme rather than on customer services
both a&b
None of the above
Amway had a direct selling portfolio of 450 products

Question 4
Amway relaized that servicing distributors in 160 cities through its 13 locations was curbing growth due to :
Unrelaible multi-service companies
lack of tool-free numbers
Lack of networked banks
All of the above

Question 5
Amway radically and significantly changed the attitude of ______________ among many indian mindsets
Advertising
Social Marketing
All of the above
Direct Selling

Question 6
Distributor attrition rate was tackled by
Expanding the distribution network in larger towns
The distribution system to be made more centralized
All of the above
Teaching distributors to know the value of product

Question 7 0 / 10 pts
Amway realized that the distributors growth was hampered by _______________
All of the above
availability of multi service courier companies
Unavailability of critical infrastructure
Availability of toll free phones

Question 8
Amway great efforts to capture Indian markets constitute the following
Introduction of value for money chhota packs
Long distance calls and courier companies to replace cities where the company had no presence
All of the above
Initiatives for its Indianisation efforts

Question 9
“As per the latest trends, the Amway utilized the ___________ to hook up with its distribution strategy”
None of the above
Social marketing
Pubilicity
Internet

Question 10
The salesperson is negatively effected or has become obsolete because of
Sales Promotion
E-Commerce
Effective marketing publicity
Effective public relationship

Quiz Score: 100 out of 100
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5th Block Assessments

Case Study
Promotion Goes the 360° Way
The advertising, or marketing communications industry in India has of age. From a bare R.S .2000 crore in 1995, by the beginning of 2005 industry has grown into a Rs. 12000 crore business (500 percent) and its future forecasts excellent growth. For the year 2005, the industry growth is estimated at 12 percent. About 80 percent of revenue is coming in from traditional sources and 20 percent from non-conventional (non- advertising) sources. An entertainment boom has resulted in many agencies registering over 40 percent growth in that segment. Mobile communication (SMS and MMS) has emerged as a significant revenue stream for agencies. Direct marketing and Interactive are the buzzwords, reflected in the 21 percent growth of OgilvyOne,0 and M’s fastest growing division.
Yet, advertising agencies are under pressure like never before. Clients are demanding more accountability and calling for Integrated Marketing communication (IMC). Consumer research and understanding should now be more effective, as consumer tastes and preferences are changing and becoming more unpredictable, as choices in the market abound.
The Opportunity In New Segments
Rs/crores
Sports marketing’ 300 – 350
Entertainment marketing 100 – 150
Retail 200 – 250
Interactive 150
Outdoors 800 – 900
Market activation 2500 – 3000

• Note: Sports marketing excludes broadcast opportunities.
The total commercial airtime on Indian television went up from 51 million seconds five years ago to 214 million seconds in 2004. But the average duration of ads came down from 20 seconds to 10-12 seconds, contributing to an increasing clutter on TV. Alongside, the TRPs (television rating points) of commercials also plunged 18.20 percent, because fewer people are watching the increasing number of ads. So now clients and agencies are looking for better alternatives like IMC.
Direct marketing, customer relationship management (CRM), event management, the Internet, mobile (SMS) and rural initiatives have become key areas of business. That is really what the multimedia 360° approach is all about and the idea is to get as close to the consumer as possible. The key to effective promotion today is to engage consumers at multiple touch points like in a retail outlet, ATMs, a multiplex, a mall, a mobile phone or the Internet. And advertising agencies are repositioning themselves in the changed scenario as full-fledged marketing and communication providers.

Question 1
IMC full form is :
None of above
Integrated Marketing Communication
Integrated Marketing Conflict
Internal Marketing Communication

Question 2
As per the case
80% revenus is coming from traditional sources
None of the above
80% revenue is coming from non-conventional sources
20% of revenue is coming from traditional sources

Question 3
As per the case the promotion mix includes :
Direct Marketing
Advertising Agencies
Mobile communication
All of the above

Question 4
The IMC’s greatest challenge in today’s time is to :
Consumer’s ignoring to watch commericals
All of the above
Adapt to the changes of consumer’s tastes and preferences
Both a&b

Question 5
Short term incentives to promote sales is called as _____________
Sales Promotion
Personal Selling
Publicity
Public Relations

Question 6
As per the case the key areas of business for IMC includes:
The Internet
Customer Relationship Management
All of the above
Event Management

Question 7
The Multimedia 360 degree approach emphaises on:
None of the above
Understand Your customer by getting as close to the customer as possible
Aggressive advertising
Constructing more ATM’s

Question 8
According to the case the key to effective promotion today is:
Engage consumers at multiple touchpoints
Design Effective Promotional Strategies
Spent Maximum on entertaintment Industry
None of the above

Question 9
Today the companies are using effective IMC for growth by:
Repositioning of the advertsing agencies as per the changing scenarios
All of the above
Continuous Contact and engage customer
Rural Intitiatives

Question 10
The marketing/communication industry should forsee the opportunity in the
following new segments:
Retail
Market Activation
Outdoors
Entertaintment Marketing

Full Syllabus Assessment

Case Study
Citibank’s value addition strategy
Citibank is the market leader in India in the credit card market. Citibank card was launched in India in 1990. The major reason for its success in the market is the sophisticated information system that it has developed, innovative customer service and value addition to the product from time to time.
Citibank cards are widely accepted all over India. This has been achieved mainly through the efforts of the sales and distribution wing of the bank to sign up many airlines, hotels, restaurants, petrol pumps, supermarkets, other retail outlets of FMCG and consumer durables, hospitals, etc.
The product range of Citibank includes a wide area – Diners Club Card. Prof erred MasterCard, Preferred Visa Card. Classic MasterCard, Classic Visa Card, with a variety of facilities to its customers. Diners Club Card is an exclusive card targeted at the high income, high society, high lifestyle segment. Preferred and Classic Card series are for the upcoming executive classes, with the Preferred Card offering higher insurance coverage and larger emergency withdrawal limit and other added benefits.
The concept of Moneyback’ or ‘moneyspinner’ is an incentive to make the cardholder use the card more and spend more. The cardholder earns 0.5% of his purchase value as money-back points and when these accumulate to 100 points, a sum of Rs. 100 is credited to his account. Citibank also assists its cardholders to pay their household bills (electricity, phone, etc.), mutual funds and the like where credit cards are not accepted by giving them the facility to dial the bank for issue of a draft, under the ‘Dial-a¬Draft’ scheme. Citibank offers a 25% temporary credit line increase for a period of three months to enable its cardholders to buy consumer durables or celebrate social occasions.
Citibank also provides Personal Accident Insurance free of cost. In the case of immediate reporting of loss of card, Citibank assures a card replacement within 48 to 72 hours. The liability of the cardholder against fraudulent charges is limited for Preferred Cards and zero for Classic Cards. The Credit Shield facility provided ensures that the cardholder’s outstandings are life-insured and are not a burden on their families. The Preferred series offers a Purchase Protection facility of up to Rs.20,000-Rs.50,000 (depending on approved credit limit) on all goods for a period of one month. In addition to these, Citibank advertises the excellent personalized service it extends to its cardholders 24 hours a day, 7 days a week. Its slogan is, “The Citi Never Sleeps’.
Citibank markets its facilities using the tag line “the best way to pay”. It has effectively managed to change the customer perception of a credit card from that of an elitist status symbol to that of a middle market convenience product in a very short span of time. The Bank’s present strategy is to aim at the ‘young and upwardly mobile professionals’ – the yuppies – in the IT and BP0 sectors. It is looking at cities that have a moderately high population and are showing signs of consumerism.
Citibank also offers many discount schemes to its cardholders on various items to be purchased, to induce spending. Another method adopted is inducing member merchant establishments to accept credit card payments even during a sale.
The Citibank-Philips tie-up deal is another value – added scheme. This is called “Bag-a-Bonanza”, where Citibank polders will get discounts and extended warranty on a variety of Philips products. All these offers are regularly informed customers through direct mail and advertisements in the newspapers.
In the context of direct marketing, Citibank asks its own card members to persuade their friends, relatives and acquaintances to acquire a Citibank card. By getting a specified number of credit card members, the original member would be entitled to a prize.
Citibank has also tied up with other organizations for co-branding. For example, there is Jet Airways-Citibank Card where mileage points gained on travel can be used for purchases through redemption.
Citibank has used the concept of cross-selling to its advantage. Since Citibank is a global consumer bank, it has large number of clients who take loans or make a deposit in the bank. These clients are induced to buy a card since they can get a discount on the card fee. Simultaneously, Citibank card owners get a discount on the interest rates for house and car loans which they find very attractive.
Citibank employs agencies to go to various offices and households to market the Citibank credit card. It retains cardholders by adding value to the card that the holder possesses.
Finally, Citibank owes its success due to its ability to move fast. Its competitors take a long time to catch up with its innovations. This gives Citibank the benefits of its innovations. Citibank was the first to tie up with petrol pumps to accept credit cards. All these value added innovative services will be remembered by members when it is time for renewal of the card membership.

Question 1
Citi Banks different product mix includes
Preferred Visa Card
Diners Club Crad
Preferred MasterCard
All of above

Question 2
“””Citibank also provides personal accident insurance free of cost””, states ____________ concept of marketing”
Customer concept
Production concept
Selling concept
the societal marketing concept

Question 3
Citibank’s market leader strategies in the credit card industry rests on __________________ concept
the marketing concept
None of the above
Production concept
Selling concept

Question 4
Citibank’s success in the market is due to
All of the above
innovative customer service
sophisticated information system
value addition to the product from time to time

Question 5
Citibank’s promotional mix includes
All of the above
Sales Promotion
Advertising
Personal selling

Question 6
The wide product range of Citibank card is successful because of ________________ effective strategy
All of the above
Targeting
Positioning
Segmentation

Question 7
Citibank cards are in the ________________ stage of product life cycle
Maturity
Introduction
Growth
Decline

Question 8
Citibank’s new card development begins with
Idea generation
concept development
product development
Business Analysis

Question 9
Citibank owes it success to _________
All of the above
innovative strategies
ability to fast
Tie-up with other companies

Question 10 0 / 10 pts
Citibank’s successful value addition strategy can be contributed to :
Citibank’s innovative competitive strategies
Citibank’s Successful co-branding strategies
Understanding the customer’s needs and designing the product accordingly
All of the above

Live Interactive Session Test

Question 1
Marketing Mix consists of
Product, Place, Prospect, Promotion, Principles, People and Physical evidence
Product, Place, Price, Positioning, Process, People and Physical evidence
Product, Place, Price, Productivity, Process, People and Physical evidence
Product ,Place, Price, Promotion, Process, People and Physical evidence

Question 2
Companies want to generate————- and —————-from the customer
need, desire
desire, demand
want, demand
want, desire

Question 3
Marketing and sales are the same
Yes
No
Maybe
IN some cases

Question 4
Black Box Model of Consumer Behavior is associated with
Philip Kotler
Michael Porter
Al Ries and Jack Trout
Howard-Sheth

Question 5
Post purchase, a dissatisfied customer is facing
spacial convenience
cognitive dissonance
subsequent monitoring
customer aggravation

Question 6
During consumer purchase process External factore include: Marketing Mix andEnvironmental factors
Yes
No
could be
both 1 and 2 options

Question 7
The product has many layers. The inner most one is
Basic
Expected
Core
Potential

Question 8
Capital goods are_________products and Specialty goods are ___________
tangible, consumer
consumer, industrial
industrial, consumer
variable, consumer

Question 9
Stages of Productlife cycle are
Innovatation
Introduction
Introduction
Introduction

Question 10
The true business of every company is to make and keep customers- Quote
is attributed to which management guru?
Philip Kotler
Malcolm Gladwell
Peter Drucker
Sethin Godin

Question 11
The customer lifecycle in CRM has the following stages:
reach, attention, conversion,retention and loyalty
reach, acquisition, consumer-centricretention and loyalty
reach, acquisition, conversion, retention and loyalty
reach, attachment, conversion, retention and loyalty

Question 12
The three types of CRM are
Operative, Analytical and Collosal
Operational, Affective and Collaborative
Operations, Analytic and Cllobarative
Operational, Analytical and Collaborative

Question 13
_________________is the practice of collecting information about a user’s online activity
Online Behaviour Advertising
Data Collecting Advertisng
Private Online Advertising
Online Personal Advertising

Question 14
When the organization, the technology service provider, and the digital
agencies work together is called________________
Team Action Environment
Collaborative Environment
Group Benefit Environment
Collective Collaboration

Question 15
SEO stands for __________________________
Search Entity Optimization
Search Engine Optimize
Search Electric Optimization
Search Engine Optimization

Marketing Management

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