Biscuits are a commodity. That is, any guy in the small scale sector can make some variation of the product and then market the product through local retail channels. Once this becomes a very widespread phenomenon, it becomes very difficult for the manufacturers in the organized sector to enter the market and sustain. This is exactly what happened to Brittannia. Wanting a slice of this market, this company came out with a superb product called Tiger biscuits for the common man. Even today, a small pack retails for less than Rs.5/-.
Today, this is the largest selling brand of biscuits in India. Similarly, there are several brands of commodities and these are sought to be discussed with specific reference to a superb article that was published in the April-May 1999, issue of Strategic Marketing, a publication from Economic Times, (Vol 1, issue 1, pages 32-36. This is a fabulous piece of conceptual ideas, and it never matters that it was published twenty years ago. There are four myths explained in this article. This is a special article of Economic Times and hence there is no specific author. However, each quote has been given as such and referred to as a quote on reality.
Here, the paragraphs are taken as given the text and then an Indian example is given to illustrate the idea. The four Myths are a) Myth one: Commodity markets are homogeneous and compete only on price.
b) Myth two: Commodities are indistinguishable c) Myth three: Commodity products are sold as generics and not brands and d) Myth four: Commodity products do not require advertising.
Myth one: Commodity markets are homogeneous and compete only on priceQuote on reality to bust this myth: "Customers do not buy a product; they purchase the benefits arising from the product. The needs of the customers are not all alike and there is space for various product-benefit propositions to exist".
Possibly around the same time when this article was published or maybe some five years earlier, there was this product called "Idayam Nalla yennnai" (gingelly oil), that came out with a very famous tagline in the same language. "ungala thoochu podunga, samachu kudunga endra sonnen, poi idayam Nalla yennai vangi kondu vanga endru thane Sonnen" (translates into: did I ask you to wash clothes or do any cooking? I want you to just go to the shop and buy Idayam Nalla yennai (oil) for me".
This was a big hit. This advertisement just talked about how pure the oil was and it implied that the oil was too good for health. More than 25 years later, this oil is the largest selling brand of gingelly oil in entire South India and is now reportedly a pan-India success. Those were times when the IT revolution did not happen in a big way. There were more housewives Hence, the advertisement was a huge success. In subsequent years, the manufacturers intelligently used Jyothika, a very famous Tamil actor to advertise the product. Hence, it is quite easy to explain the benefits to customers, even if the products are commodities. The myth itself has been broken. Those with relatively poor purchasing power, also buy cheaper brands. In the same variety of any commodity, there are too many brands and at different prices. Take the agarbathi market for example. Even ITC is present in the market. However, ordinary customers who cannot buy the costly product, even buy the unbranded product so freely available. The land of entrepreneurs of different kinds will also produce a huge variety of products for different markets. Take the so-called "butter biscuit" product. One hundred percent of this comes from cottage industries. The very poor people buy this product, that sometimes retails at just Rs.2 apiece in some markets. However, not everyone buys the product. When there are heavy advertisements, even daily wage earners are happy to buy branded biscuits that retail at just Rs.5 per pack.
Myth two: Commodities are indistinguishableQuote on reality to bust this myth. "Differentiation may sound like a marketing cliche but is the fundamental theme of branding". Take the case of the big Retailers from Chennai. Their brands are based on some sort of trust. They also seek to differentiate their product offerings on the same value-for-money proposition. For example, Jayachandran Textiles has a famous Tamil actor, a lady who now acts as a mother for most Tamil heroes, called Saranya screaming that the shop has a great variety at a very cheap price. You buy a branded pant and get two free. Forget for a moment that the so-called brands are all local brands, with raw materials procured in huge quantities from Surat and stitched with contract tailors; yet, millions of customers buy the ready-made pant for Rs. 625, as they get three pants and not one.
Myth three: Commodity products are sold as generics and not brandsITC, the Indian multinational, wanted to differentiate the atta made out of wheat. Now, this is a big commodity, as any housewife can do it at home as well. Yet, when the advertisement showed the chappathi being so soft and so nice, hundreds of thousands of housewives and busy working women have been hooked to it. Today, the Aashirwad brand is so famous.
Let us get back to this good piece of wisdom, the quote on reality to bust this myth from the same article: "The difference between a brand and a commodity is that a brand has an image and consequently a definite place in the consumer's mindset. The image is a product of multiple benefits arising out of multiple differentiations. In the quest of moving from commodity to brands, the producers have to differentiate on multiple dimensions to create substantial value and also as a defense against competition."
Another remarkable example is the big brand called Adayar Anandha Bhavan, famously referred to as A2B. This brand is so powerful because it advertised the eating out experience as enjoyable. Word of mouth publicity has made it as a big competitor of the famous Saravana Bhavan, the market leader, as of today. However, since the founder of the later is dead and gone, it remains to be seen if Saravana Bhavan can manage the A2B onslaught. For example, take Velacheri. A big and highly developed suburb of Chennai, now the heart of South Chennai. Its strategic location next to the famous Saravana Stores has made it a big success. What has happened is that the hotel offers great variety and the South Indian food items for dinner, for example, is so huge and very tasty indeed. The experience is key. Those who go there, go there again and again. In the business, the secret is to have repeat customers. Their brand of sweets is also very famous.
Hence, when an entire generation of IT guys with great purchasing power want to slog it out in their office and eat out, options such as A2B are readily available. It is also a fact that A2B is a big success in Bangalore as well.
Myth four: Commodity products do not require advertisingQuote on reality to bust this myth. "Commodities that strive to become brands do require advertising. Once a producer has built in the required attributes, he needs to communicate those benefits to the customers. The communication may take different forms depending on the relevance of the via media for the target segment, nonetheless, it is imperative. ( page 32).
Take any of the examples mentioned above. There are more too. For example, there is this famous brand that is a product of intelligent advertisement: kurkure from the MNC called Pepsico. Or Lays potato chips for example. The tagline for the latter was very intelligent: "no one can eat just one". Today, Lays is the largest selling big brand in the metro cities among customers with big disposable incomes. In the case of kurkure, the setting was perfect, A highly relaxed environment where friends chit chat and watch the TV and also have a snack. The emotional bonding was as evident as the target segment: youth, below 35. it is another fact that the product is now eaten by even people who are 45 plus in age.
Even toothpaste manufacturers are into the game of intelligent advertisements. They are differentiating themselves. The colgate Vedshakthi, talks about "marriage of science with Indian tradition". The implication is obvious. " I will give you a product that has the best of both worlds. The product is selling like hotcakes in many markets. Of course, there is a niche, but such niches also keep on growing, what with the effectiveness of Ayurvedha now reaching most corners of the world.
ConclusionIndia is a huge market. There is tremendous scope in advertising and once the advertisements create a particular value proposition in the minds of the customer, there is no stopping the sales of the product which rests on big brand value. Due to a global slump, we are now seeing fierce competition and the present trends of high decibel advertisement of commodities will continue, with the customer having too many choices live never before.