Marketing the Addiction by Rajesh Korani

Cheers!!! And that's the exciting expression of addiction. Phew! You may be wondering why this guy is promoting addiction. Well, I personally do not favour promoting alcohol, but the amazing strategy and the cues involved in the alcohol branding and business evoked me to share some thoughts.

Although the exact date when alcohol was produced remains elusive, the discovery of late ‘Stone Age Beer Jugs’ has established the fact that intentionally fermented beverages existed as early as the Neolithic period.

Wine has appeared in Egyptian pictographs around 4000 B.C. The Babylonians considered beer as one of their key beverages. The Sumerians have engraved the art of making beer pictorially. The art of wine making reached the Hellenic peninsula around 2000 B.C.

Alcoholic drinks were an intricate part of most civilization ranging from China, India, Western Asia and Europe. In India alcoholic beverages appeared during the Indus Valley Civilization (We’re old timers…LOL), In Hindu Ayurvedic texts both the beneficial and detrimental effects of alcohol have been outlined Distilled spirits originated in India and China around 800 B.C. the distillation process emerged in Europe around the eleventh century. The Greeks worshipped the God Bacchus - the god of wine and the Romans worshipped the same god under a different name Dionysus. Around 55 B.C. the Romans introduced beer to the Europeans.

Wine became part of rituals with the rise of Christianity. During the middle Ages, wine was the preferred beverage and the consumption of alcohol began to spread to all parts of the world. Today alcohol is widely consumed by people all over the world. Consumption is in multiple formats, multiple tastes and multiple mixes. Isn’t it amazing! Hold on …..I’m not going to get into the chemistry of alcohol preparation. Since I follow brands thus I will talk about branding and marketing involved in alcohol products.

These are my personal views, some of your thoughts may differ. I’d segment alcohol branding in two main clusters. Cluster 1 would be “Authenticity” and Cluster 2 would be “Aspirational or Marketing”. Scotch, Whisky, Champagne and Wine would fall in cluster 1. Beer, vodka, rum and gin would fall in cluster 2.

Cluster 2: In a blind taste research one cannot differentiate one beer from other or vodka from other (unless you are a professional). In absence of product differentiation the strategy requires lots of creativity, branding ideas and communication to achieve the desired results. I really love one brand which has been consistent in establishing the brand through the shape of the bottle. Yes, you are right! Absolut, it’s a brilliant work from the ad agency. Lot of creativity with local connect being established under the same concept. Not sure how this line of communication was started by Absolut, but I guess it is related to the old saline bottle (This is my wild guess from the shape of the bottle. Please do share if you know about it)

I remember my research in some of the rural markets in India. While working for two of the beer brands I was completely surprised with the insights I mined from the consumers. At-least it gave me the cues that what positioning my brand should take so that the brand is in the consideration set in most of the drinking moments. Consumers whom I interacted had defined four keys with which they connect with alcohol brands 

• Key1: Aspiration (Success, happiness and feeling special)
• Key2: Larger than Life (Freedom, elegant & stylish life and dream) 
• Key3: Fantasy (youthfulness, relaxation, chilled out, my own world)
• Key4: Unsolved Problems (career, stress, failure and sorrows)

But majority of consumers would define their moment of consumption in the first and the last key. Such insights have helped various brands to take differentiated positioning and create their own set of loyal consumers. However, every time when I analyse or work on alcohol brands, I feel it easy as well as very difficult to create a proposition on “Marketing the addiction”

 

The entailing art in retailing by Rajesh Korani

You would barely find an individual who has not heard about the booming opportunity in organised retail industry in India. It has fascinated world’s top notch retailers to spread their footprint in this flourishing Indian economy. So we all know that there is huge opportunity and I’m not going to tell you the same old story. Rather, I’d share some insights, or my analysis that albeit of visible opportunity why retail industry in India didn’t propagate to the estimated levels in past 10 years.

My foremost question would be “Are we trying to reinvent the wheel?”

I’d say a huge ‘YES’ to that question! Although, organised retailing is a new concept in Indian sub-continent but it is a well-practised phenomenon in the west with a penetration over 95% vis-à-vis 6% in India. McDonald’s has experience of running 30,000 successful stores, Wal-Mart  10231 stores, Carrefour 9000 stores, Tesco 6351 Stores. Over a period they have cultured the art of retailing and have developed best practices to manoeuvre each store as a profitable SBU. So what exactly the strategy is? I would say it’s a mix of art, science and technology which has led these retail giants to attain excellence in ‘Art of Retailing’. The core of successful retailing is hinged on four key pillars

• Catchment
• Sourcing
• Footfall
• Conversion

The entire strategy, positioning, merchandise, pricing and service depend on these four fundamentals.

Retail Catchment

Catchment:

McDonald’s spends tons of monies to evaluate the catchment potential contained in 5Kms radius before finalising the store location. In last half-a-century of existence they have shut merely 700 (approx.) non-performing stores. Rest of the stores drive high footfalls and conversion from various strata of the society. All thanks to their scientific analysis of catchment population in the competitive scenario. So what’s involved in catchment analysis?

• Competitive environment: Unorganised retail, low price, highly discounted price, whole seller, counterfeit, cart seller, hawkers corners & organised retail
• Detailed Shopper profiling: Location surroundings, Quantitative segmentation, Income Group, Family type, profession and socio-psycho behavioural patterns of the shoppers
• Selling Situation: shopper affordability, retail characteristics, merchandise mix and unparalleled product mix

Sourcing:

Sourcing strategy for any retail whether food/grocery, fashion, multi-category, electronic should be in a constant state of flux, shifting to take account of changing markets, competition, costs, risks and opportunities. Sourcing Strategy must be aligned to the overall business strategy and its future objectives. A few imperative parameters to be addressed before putting sourcing plan are - 1) the right regions/countries you are going to source it from now, and in five years' time. 2) What are our financial targets (cost vs. price,) 3) what processes (import duties, local taxes, exchange rates or other taxes) can affect the financial performance. 4) What is the lead time to bring merchandise to shelf? 5) Local infrastructure, warehousing, cold chain and local supply-chain.

Retail giant Walmart has unveiled a new global sourcing strategy designed to reduce costs of goods, accelerate speed to market, and improve the quality of products. The strategy involves the creation of Global Merchandising Centres (GMCs), a change in leadership and structure, and a strategic alliance with Li & Fung, a global sourcing organisation. Walmart vice chairman Eduardo Castro-Wright said "By realigning our resources, leveraging our scale, and restructuring our relationship with suppliers, we will enable our businesses around the world to offer even more competitive pricing on merchandise and to provide our customers a clear and compelling assortment of better quality products at lower prices." In India, from past 3-4 years Wal-Mart is strengthening their backend systems, processes, vendor finalisation, local supply chain and warehousing, to ensure once they go full-fledged, there is no looking back.  

Footfalls

Shoppers

Retailers must define “what would be the footfall driver for each store”. Merchandise variety and options, unparalleled product choice, Store planogram, in-store ambience, front façade, in-store service are a few key parameters of footfall drivers. Depending upon the type of retail the ratio of planned shoppers vs. impulse / passer shoppers varies. For e.g. A successful fashion retail experiences 60% passer-by shoppers entering the store whereas 40% planned shoppers unlike grocery retail which is vice-versa. Diesel store at 5^th Avenue NY changes their façade every two weeks to sustain the excitement and new-ness at the store. This ensures increased number of passer-by shoppers. This is Diesel’s one of the key strategy to drive footfalls at the store. One mantra for the retail is “An empty store intimidates the shopper and a store with lot of people invites the shopper" 

Conversions

Wallet Share

This is one of the main issues encountered by utmost retailers. Although, the catchment marketing/advertising drives a lot of footfalls but retailers fail to get maximum wallet share or conversions. Conversion doesn’t function in isolation. Your product mix, pricing and service makes the difference. Conversion happens if shopper spends maximum time at the store. In-store sales staff plays imperative role here, but careful the in-store sales staff mustn’t infuriate the shoppers. Pricing also plays key role in conversion. If a shopper has entered the store due to brand-pull an inviting price ensures conversion. Christian Dior stores experiences huge volumes (conversions) for the neck scarfs which is offered at an attractive price of $25 - $50.

Currently in India, retailers are in a rat race to open new stores. I would say, retailers’ current focus is on real estate rather creating successful retail. This is resulting in closure of stores in a short span to time.

Retailing business is a scientific business which involves joining various dots of catchment, sourcing, footfalls and conversion. I’m sure if the retailers can align these four key pillars they can master “The Entailing Art in Retailing”