Piggly Wiggly..It's not about Pig..but store!!

Piggly Wiggly is world’s first true self service grocery store, which was founded by American entrepreneur Clarence Saunders on September 6, 1917 at 79 Jefferson Avenue in Memphis, Tennessee. This concept patented by Saunders in 1917, although the Gerrard brothers, founders of the Alpha Beta grocery market chain were already using the concept in their store in Ponama California, but it was not so polished. Clarence Saunders added very new things in grocery retail format that is considered as standard of supermarket format.

A true entreprenuer: - Piggly Wiggly’s founder Clarence Saunders born in Virginia. Saunders left school at 14 to clerk in general store. In 1900 he was nineteen years old and earning $30 a month as a salesman for a wholesale grocer. Through his experience he learnt that many small grocers failed because of heavy credit losses and overhead. He applied his learning in his very new store format. Though this format of grocery market was drastically different from its competitors, the style became the standard for the modern grocery store and later supermarket. The name of store is quite attractive and attention seeking. The story behind this name is that once he saw from a train window several little pigs struggling to get under a fence, which was the same way how customer struggled to get things in store. He wanted a name that would be talk about and remember. It was an example of store positioning.

Piggly wiggly – the store incorporated shopping baskets, self service branded products and checkout of front, attractive aisle displays and rearranging the store to force customers to view all of the merchandise. Piggly Wiggly was first to:

·         Provide checkout stands.

·         Price marks every item in the store.

·         Feature a full line of nationally advertised brand.

·         Use refrigerator cases to keep produce fresher longer.

·         Put employees in uniforms for cleaner who know the location of their favorite products in their local store knew where they were in every store.

·         Standardize product location in their local store where they were in every store.

·         Design and use patented fixtures and equipment throughout the store.

·         Franchise independent grocers to operate under the self service method of food merchandising.

On its peak Piggly Wiggly had 2660 store and annual sales of $180 million. In November 1992, Saunders attempted a squeeze on the substantial short interest in the stock running the share price from 40-120 and profiting by millions on paper. As a result stock exchange removed the stock of Piggly Wiggly. Saunders reputedly lost nine million dollar in the attempted corner. Following these events, the company was divided into strategic units and sold to regional grocer’s chains including Kroger, Safeway. Management of Toyota corporation were inspired by Piggly Wiggly’s just in time inventory strategy and used this model to develop its Toyota production system, a philosophy by which the company organize its manufacturing and logistics, including its interaction with suppliers and customers.

A revolutionary idea: - the concept of self service store is a revolutionary beginning in brand market. It started the new era of segmentation, targeting and positioning. After starting of self service format it became very important for brand owners to differentiate their products from other same products. The packaging of product and brand recognition became very important because now customers have various choices on one shelf and they were free to choose anything. This concept added new dimension in brand’s life. It allowed brand to show their power of positioning on the shelf. Customers became more aware of brands and were able to compare two different brands. Self service format also brought concept of inventory management and wide assortment. This concept gave chance to many companies to innovate for differentiation and strong positioning. It was a starting of true brand war. In store promotions also became very important to attract customers. It also innovated the new concept of impulse buying. Without self service, modern branded packaged goods, as we know them, would not exist.

Nadeem Shaikh

GLCRMM 1012

Brand Equity

The fields of finance and operations have been quantized successfully but its the marketing parameters which are yet to be quantized beyond doubt. One of few parameters which has been quantized is brand value which we generally know as Brand Equity.

David Aaker defined brand equity as 'set of assets(and liabilities) linked to a brand's name and symbol that adds to (or subtracts from) the value provided by a product or service  to a firm and/or that firm's customer'  

In short it helps us analyze and quantize the perception of the customers or population when a particular product is compared to a similar product or a substitute product.
Elements that can be included in the valuation of brand equity include (but not limited to): changing market share, profit margins, consumer recognition of logos and other visual elements, brand language associations made by consumers, consumers' perceptions of quality and other relevant brand values.

The brand equity is generally measured at various levels
At company level the brand value is measure taking into consideration the market capitalization, projected profits and the financial health of the company.
At product level  a branded product is  compared with a similar product with no brand and the premium the branded product can command when compared to the previous one.
At consumer level the brand association is calculated in terms of brand recall and recognition.


 Further reading:
[link] 
[link1]

 PRABHAV GARUDADHWAJAN

GLCRMM 1012

Mass Marketing!!!!!!

Two decades ago when the country had just one channel 'Doordarshan' the channel had a captive audience without any age bar, right from chunnu munnus to babus to chachas to dadis everyone were its audience. But now with the onslaught of media houses which start a new channel every six month  creating a niche for itself,  one question which arises is- Does mass marketing as a practice exists anymore? I guess not.

The first factor which supports my argument is the number of channels and their target audience.

Say a dedicated[stereotype]  star plus viewer[read female 27 and above] would hardly take interest in watching star world.. say a 'serious' news channel viewer would hardly take any interest in watching India TV which is yet another [so called] 'news channel'.

Second factor is again based on the fact that kind of ads which are shown
We all know that a scroch brite ad would not come in star sports or cartoon network as the channels itself caters to one particular segment of customers with very well defined common characteristics.

So basically any marketing effort which is put in place is from the beginning a sort of micro marketing and not mass marketing. Even if you say that products like coke or any biscuit is shown on almost every channel, there again the company is targeting one particular segment in its ad barring a few cases where celebrity endorsers are used[ saif and kaif offer-- lays]

Now with such clear fragmentation of market on how many channels are you going to put out your advertisement is the basic question? How is that decided? Even if you put it out.., how efficient will be your marketing strategy.. How is it qualitatively measured? what is your ROTI and ROMI. Is there a better way to market the product.., can there be an innovative way of both advertising and selling?

The answer according to me is micro marketing which is aided with on ground aggressiveness than wage a TV ad war.

P.S- When it comes to waging an on the ground assault, the best example which comes to my mind is D-Mart. This is one brand so deeply rooted to ground that it is next to impossible even for an organisation like future group to uproot them. D-Mart doesn't believe in marketing too much, but the main differentiating factor for them is 'pure business' they work with best set of business practices keeping customers in mind. 

 

- Prabhav G.

GLCRMM1012

“Kellogg’s Mate”- Why it failed??

“You are what you eat”..is a belief what made Kellogg’s a must breakfast every morning. It was set up by brothers Will Keith Kellogg and Dr John Harvey Kellogg in year 1870’s. In 1876, while experimenting with different ways to cook and crush wheat to make it more palatable without losing its goodness, he inadvertently ran a batch of cooked wheat through the rollers that had been standing around for a day or so. And out of the other side came… Kellogg's Corn Flakes! (a prototype version)

Let’s look at one of biggest idea failure of Kellogg’s. This shows sometimes improper research and failure to understand consumers can be great problem to brand, however big it is.

If you are given choice to eat Kellogg’s Corn flakes, how you would like to eat it, by pouring refrigerators cold milk over cereal bowl, or eat it at room temperature’s warm milk and cereals? The company failed to understand the choice of consumers. They launched product Kellogg’s Mates – “all-in-one” breakfast package in year 1998 with a $30 million TV and print advertising campaign, with a view of accelerating trend of convenience foods, increasing in working hours in United States causing short of time to prepare breakfast quickly. Kellogg’s Mate was a concept in ‘kit form’ - a four oz. box of cereal, a four oz. container of aseptically packaged milk [no refrigeration required] and a plastic spoon. The line consisted of four popular Kellogg’s brands; Corn Flakes; Fruit Loops; Mini Wheats; and Frosted Flakes.

However, despite of great efforts by Kellogg’s, it failed to make position in minds of customer. Let’s look all the major factors of failure one by one as studied by various marketing professionals and journalist:

1.      Breakfast Mate used the concept of warm milk. It contained “aseptically packaged” milk which did‘t need refrigerator. Many Americans who have tried drinking aseptically packaged milk—something available in the U.S. from local and international dairy sources—have complained that it tastes "burnt."

2.      The product suggested keeping the container in refrigerator, since most of Americans pour cold milk over cereals when they serve. This lead to more confusion among consumers. Breakfast Mates was not in a location where you would generally expect to find breakfast cereal. The expense of trying to re-educate the consumer to look for cereal in the dairy case proved too enormous—way beyond, apparently, what Kellogg’s wanted to spend on selling the new line.

3.      TV commercials, ad showed how parents tell their small children to serve breakfast themselves by using of Breakfast Mates and let them “sleep in”. But packing of this product was too far from child-friendly, as many a time young hands squeeze the soft side of packing too hard, causing spill of liquid all over the table. Thus what ad was communicating to consumers was too different from actual situation.

4.      Breakfast Mate was portable packet to be used when one is out of his home. This can be kept in lunchbox, briefcase, brownbag, and desk drawer. But the problem was the milk get warm up at the ambient temperature. This caused the change in taste of milk.

5.      Breakfast mate was charged premium for convenience. Its retail price was in range from $1.39 to $1.69 depending on retail store. Consumers felt that was too expensive for what they perceive as a four. Oz. box of cereal.

After a one-year market exposure, the company announced that it was discontinuing Breakfast Mates in year 1999. Convenience, ease and a handy spoon isn’t everything it seems—not when you’ve got cold cereal and warm milk. A company should look at all dimensions while launching a new product, sometimes looking only at one particular parameter and overseeing others can be fatal.

Reference:

“Brand failures The truth about the 100 biggest branding mistakes of all time”- Matt Haig

www.kelloggs.com

http://www.mrbreakfast.com

                                                                                                 Dishti Naik

                                                                                                 GLCRMM1012

Abhinav Prajapati
GLCRMM1012

Zara’s supply chain management practice

Zara is third largest apparel retailer of the world. Its supply chain model made it so special to achieve this success. Zara has achieved this designation not by traditional way of management but by exceptions. Zara’s supply chain management makes its store capable to exceed the customers’ expectations. That’s why Zara has more store visit ratio that industry average. One of the Zara’s success factors is execution of efficient vertical integration between manufacturing, distribution and retailing. Zara’s supply chain is so efficient that it can place a garment in any store around the world in a period between two to three weeks.


The biggest strength of Zara is its ability to spot emerging trends and react quickly. Zara’s strategy mainly works on pull strategy rather than forecasting and mass production. Zara’s 200 designers travel around the world to identify latest trends. Its store managers regularly send data about current inventory and sales to the central office to identify what customers would like to buy. By this strategy Zara is able to maintain the exclusivity of its products. The new stock is arrived twice a week which makes its store unique in service and quality. The other important thing is new trends and designs are based on store manager’s analysis and customer’s interest and not only on designer’s creativity.


Zara has very efficient balance between outsourcing and manufacturing process to ensure quality. The required style and trends is made by Zara while the basic design and knitting is outsourced. Zara’s distribution channel is quite expensive than other retailers. Its distribution network mainly works by planes and trucks rather than trains and ships to deliver the product twice a week. By this system Zara has achieved 98.9% accuracy in distribution process.


Though Zara’s supply chain model is very accurate and makes Zara’s store exclusive, but after recession this model is quite tough to manage. Where other retailers are shifting their production unit to Asian countries to minimize the cost, Zara has not shown any sign to minimize the cost. It has been working on maximizing the revenue for a long time. It could be tough decision for Zara to continue its way of work. Zara’s IT system is so simple and outdated which is again not suitable in this tech savvy business world. Zara’s vertical integration is also now considered as not efficient according to present business scenario. The disadvantage of this system is the lack of economies of scale which made Zara unable to produce large quantity of products.



At the end, the changing business environment, emerging global trends, economic stability of the world and customers buying behavior would decide that should Zara change its supply chain model and business method or not.


1. Zara has a centralized distribution system which is not cost efficient.  How can  the cost incurred for activities if sorting, rerouting and resorting merchandise and stores between manufacture  be minimized without compromising the accuracy of 98.9% in its shipments?


2.  How efficient is vertical integration in ZARA? Why it is now considered as outdated and discuss the factors  to be considered  while implementation of economies of scale?





                                                                                                  Dishti ,Nadeem

                                                                                                  GLC_RMM 1012

Nirma..Marketing strategy!!

As soon as one hear the word “Nirma” the first thing that strikes almost everyone is the decades old jingle “Doodh si safedi Nirma se ayi..”.Apart from that low-cost has become synomous to Nirma.Nirma was the invention of Karsanbhai Patel,a chemist from Gujarat who worked for the Department of Mining and Geology. Nirma was founded in 1969 and was named after Karsanbhai Patel's daughter Nirmala.He was experimenting to develop a detergent for door-to door selling in oder to earn some extra income and so Nirma came into existence.

The USP of this detergent was that firstly it was phosphate free unlike other washing powders secondly due to good quality and low price and thirdly becaue of the distribution model adopted by Patel which was door to door selling.At that time when the Surf was priced at Rs 15 per kg ,Nirma costed only Rs 3 per kg.Due to these reasons the popularity of Nirma grew in Patel's hometown and so he started the packing of Nirma washing powder in the room of his house itself.Instead of relying on any other source for the distribution of the detergent he would actully sell it on his bicycle on the way to office.Initially he hasd diffculty in pursuading the local shopkkeeps to stock his detergent and so he recruited housewifes to sell and create demand for the detergent.

Nirma was becoming popular mainly in the lower end segment due to a number of factors.Firstly even after a good start and success they did not give up on their philosphy of “providing quality products at best prices” .Second factor which contributed to the success was their promotional efforts and distribution network.They used around 400 distributors who would supply to over 2 million retail .One factor which diffrentiated it from its competion was that Nirma also had a deep penetration on the rural sector too which was untapped by Surf which mainly operated in the upper segment.

By 1970 HLL took notice of Nirma but did not give it a much thought as they thought that “this is not our market”.Their perspective was that Nirma is a inferior quality product and it can not affect Surf''s business.But soon HLL realized the potential danger from Nirma due to its increasing market share.To combat the competition it launched Wheel.Wheel just like Nirma catered to the low end segment. HLL also developed door to door distribution stratergy for Wheel. It was in 1980 that Nirma moved ahead of Surf.

In 1982 that Nirma launched it's first TV commercial with it's famous “Washing powder Nirma, Nirma” jingle.Since then the jingle has been a part of all Nirma communications.By 1985 Nirma had become a popular brand in households.

Patel now was thinking of cost reduction without affecting the quality of the detergent.So it planned for a backward integration to reduce the cost of the raw materials.It was planned to set up two plants at Baroda and Bhavnagar. Today it produces 90% of the raw material in their plants itself.They further eliminated the intermediaries and adopted the policy of directly supplying the order to the distributors using their own vehicles.In some places like Andra Pradesh ,Tamil Nadu where it was difficult to reach on short notice depots were maintained.They further started with in-house prinitng to reduce the cost of packaging.

Nirma was operating in the low end segment,and the upper segment was yet to be explored by them and so expanded in the beauty segment in the mid 90s.People were skeptical if Nirma would be able to repeat its success in the premium segment or not.Even in the premium segment it kept its prices lower than the competing brands.It created a sub premium brand by selling high fatty and rightly scented soaps at much lower prices.To combat competition from HLL it positioned its products against it like Nirma Bath against Lifebuoy, Nirma Beauty Soap against Lux.

One intresting study was conducted by Sansika Marketing Consultant -Nirma's Marketing Firm that in North people prefer pink color soas,in South people like green color soaps and sandal soaps.Hence it tried to segment the market on that basis.This time to succed in this segment it passed the benefits to the retailers and offered them huge margins .An unbelievable margin of 140% was given on Nirma Shampoo.

But the problem was that the soap segment had too many competitors and the market was too much fragmented and made it difficult for any soap to have a large market share.Here the USP of Nirma of low price did not help in the premium segment.People thought it was a cheap brand andwere almost ashamed of telling that they use Nirma toilet soaps and shampoos.Nirma did not get much success in the premium segment.Its venture in the toothpaste and shampoo failed though the salt Sudh is doing well.

Today it is the second largest toilet soap brand in India and has one of the largest volume sales with a single brand name in the world.

Neha Bisht

GLC RMM1012