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PPT on hbr article of should you launch a fighter brand
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FIGHTER BRANDS
SHOULD YOU LAUNCH THEM?- MARK RITSON
BY:ARVINTH G (19)
RANJIT PISHARODY (75)TIMI CHHABRA (109)
ECONOMIC RECESSION AND ECONOMIC STRAINS
MID-TIER AND PREMIUM BRANDS LOSE SHARE TO LOW-PRICE RIVALS.
WHAT SHOULD AN ORGANISATION DO?
“SHOULD THEY TACKLE THE THREAT HEAD-ON BY REDUCING PRICES?”“SHOULD THEY HOLD THE LINE, HOPE FOR BETTER TIMES TO RETURN?”
OR
SHOULD THEY LAUNCH A FIGHTER BRAND?
FIGHTER BRANDSMULTI- BRANDS
FLANKER BRANDS
“A FIGHTER BRAND IS DESIGNED TO COMBAT, AND IDEALLY ELIMINATE, LOW-PRICE COMPETITORS WHILE PROTECTING AN ORGANIZATION’S PREMIUM-PRICE OFFERINGS” - MARK RITSON
Flanker Brand - Advantages
•ELIMINATES COMPETITORS
•OPENS UP A NEW LOWER-END MARKET FOR THE ORGANIZATION
•GAIN MORE SHELF SPACE FOR THE COMPANY, WHICH INCREASES RETAILER DEPENDENCE ON THE COMPANY’S BRANDS.
•CAPTURE “BRAND SWITCHERS” BY OFFERING SEVERAL BRANDS.
•PROTECT THE COMPANY BECAUSE IT HAS A UNIQUE NAME - COMPANIES WITH A HIGH-QUALITY EXISTING PRODUCT CAN INTRODUCE LOWER-QUALITY BRANDS WITHOUT DILUTING THEIR HIGH-QUALITY BRAND NAMES.
SUCH TRIUMPHS ARE EXCEPTION
THE HISTORY OF FIGHTER BRANDS IS DISCOURAGING
LITTLE DAMAGE ON THE TARGETED COMPETITORS
COLLATERAL DAMAGE FOR THE COMPANIES
THERE ARE FIVE MAJOR STRATEGIC HAZARDS
HAZARD ONE - Cannibalization
KODAK : GOLD PLUSCOMPETITOR- FUJI -FUJICOLOR SUPER G FILM
KODAK’S FIGHTER BRAND : FUNTIME
Should appeal to the price-conscious segment while it falls short for current consumers of the premium brand.
fighter brand’s low price should match a equally low perceived quality
P&G : PAMPERSCOMPETITOR: Private Labels
FIGHTER BRAND: LUVS Cut back on R&D and product innovation on Luvs Cut back on TV advertising and promotional support. Cut back on Existing features: like handles on Luvs’ packaging
Final step : P&G focused greater managerial and financial resources on marketing and improving the features of Pampers.
HAZARD TWO- Failure to Bury the Competition
“Organizations overprotect their premium brands from cannibalization at the expense of the combative potential of their fighter brand.” – MARK RITSON
MERCK : ZOCOR (GERMANY)COMPETITION: Generic drugs
FIGHTER BRAND : Zocor MSD Priced just slightly less than the original premium brand. Once generics entered the market, the new brand’s price dropped to 90% of
Zocor’s. Desire to protect its profits for as long as possible led to a failure to launch a
competitive brand.
INTEL: PENTIUM PROCESSORCOMPETITION: AMD K6 PROCESSOR CHIP
FIGHTER BRAND: CELERON ; CELERON A. Underprice Make sure the quality matches the satisfaction of the buyers.
FIX HAZARD ONE AND HAZARD TWO
FIX HAZARD ONE:MARKET-TEST FIGHTER BRAND
FIX HAZARD TWO:PREPARE TO RECALIBRATE THE FIGHTER’S PRICE TO AVOID CANNIBALIZING OVERPERFORMANCE AND UNCOMPETITIVE UNDERPERFORMANCE.
MERCK: Blue-chip multinational. Lacked price-war competencies .
INTEL: History of frequent product launches, upgrades, and deletions. Better equipped for price-changes.
THE ONE TO BEAT
ANHEUSER-BUSCH – NATIONAL BREWER
REGIONAL BREWERS GAINED STRONG HOLD – AFFECTING BUSCH’S MARKET SHARE
BUSCH BAVARIAN : “YOURS AT POPULAR PRICES”
•PRICED AT THE SAME LEVEL AS REGIONAL COMPETITORS•ALMOST HALF THE WHOLESALEPRICE OF ITS SISTER BRANDS- BUDWEISER AND MICHELOB
TO DISTANCE IT FROM THE OTHER TWO BRANDS AND REDUCE POTENTIAL CANNIBALIZATION:
•ADVERTISING SUPPORT,•A SEPARATE SALES FORCE •DISTINCT DISTRIBUTION TRUCKS
HAZARD Three- Financial losses
Fighter brands may lead to disastrous financial loss for the company though it achieves brand success.
Saturn was a financial disaster
• High factory set up cost
• High employee head count
• High cost of production due to no shared GM
parts and separate marketing and distribution
Shared platforms, rebadged models, and GM promotions spelled the end of Saturn’s differentiation and led to increasing cannibalization of sister brands like Pontiac and Chevy
Profit
sustainability is
very importa
nt
HAZARD Four- Missing the Mark with Customers
The DNA of a fighter brand is potentially flawed from the very outset because it is derived from company deficiencies and competitor strengths, not a focus on consumers.
The fighter brand’s focus should immediately switch to the consumer segments that the new brand is targeting.
Only then will it achieve the kind of consumer orientation necessary to avoid a potentially fatal focus on competitors.
Notting Hill - Popular price segment but failed to focus on customer. It opened shops in metro cities instead of tier 2 and 3 cities
Notting Hill
2007-Popular price segment from raymonds
2009-“Notting Hill does not have any turnover at present” Mr. Deepak Khetrapal, Chief Operating Office
• Inefficient customer focus-Corporate customers
• Focused metros
• Cannibalization-Now they are sold through the Raymond shops in the Tier-IV and V cities
Hazard Five - Management Distraction
The fighter brand may render the company bankrupt
Opportunity costs of launching, managing and then withdrawing can have higher financial implications
Fighter brands do nothing to abate other competitive threats
The greatest cost of a fighter brand
is propensity to cause managers to delay essential strategic decisions
GM $15 billion on Saturn
Delta spent around $65 mn for the
launch of song and then a big amount for decommissioning
Pampers lost considerable market share to Huggies., when P&G was busy with Luvs
GM’s late realization that Saturn is not the answer to Japanese Challenge.
Thus , the strategic implications of dividing organization’s resources, should be considered
How Qantas Launched the Perfect Fighter Brand
Determine whether another brand is truly necessary? Exhaustive strategic sessions confirmed Qantas brand was simply not in a position to combat Virgin
Blue’s explosive growth
Run the numbers The detailed projections showed that by offering no frills, its new airline could achieve a 20% cost
advantage over its rival
Listen to customers, early and often Secret focus groups across Australia – a crucial step to avoiding excessive internal benchmarking or
competitor orientation
Move fast The speed at which Jetstar attacked took Virgin Blue by surprise and knocked it off balance
Control for cannibalization It took over the tourist routes that Qantas had lost money , thus it cannibalized only revenues, not
profi ts . It also opted for a shadow endorsement from Qantas
Reinvest in your premium offering and calibrate between the two brands Qantas was able to refocus on its more profitable business routes
How HLL launched the perfect Fighter Brand
Surf Rs.21/kilo and Nirma Rs 7/kilo
The low cost detergents had grown rapidly enough to account for 80% of volumes
The birth of Operation S.T.I.N.G. — STRATEGY TO INHIBIT NIRMA’S GROWTH.
Big challenge was a low cost product conforming to the HLL quality standards
All together different H.Q at Chandigarh
For the first time, it opted for third party manufacturers and for dynamic pricing model
How HLL launched the perfect Fighter Brand
Invested heavily in creating door-to-door programs for driving sales ,by tapping into the networks of local rural women
It came up with the classic ‘Dekho Dekho Dekho’ jingle, which was a big hit
“Maine maangi thi safaai, aur tune di haathon ki jalan”
Today with sales of over Rs 2,000 crore, Wheel is ‘Brand No 1’ in the HUL portfolio not to mention the world’s largest selling detergent in volume terms