Glaxo's brand extensions lack fizz
Abhineet Kumar / Mumbai Jan 11, 2013, 00:00 IST -----Utsav Joshi
GlaxoSmithKline Consumer Healthcare (GSKCH) has two winners – Boost and Horlicks, which has been around for 140 years and became part of Glaxo’s portfolio when the drug giant merged with SmithKline in 2000. But the company’s ambition to grow beyond its core malted food drinks products in India has seen only a muted response.
New launches comprising noodles, biscuits, nutrition bars, flavoured milk, oats, among others have not found much success, with non-core business still contributing only 6.5 per cent of company’s sales in India.
The company has basically followed the strategy of brand extension. It has adopted a three tier strategy to grow. First, investing in the original Horlicks; second, expanding the brand’s footprint into new health drink extensions where it taps consumer segments that may not be using the category (eg Junior Horlicks, Women’s Horlicks, Mother’s Horlicks, Asha, Horlicks Lite etc) and third, expanding the brand to new categories like cereal bars (Horlicks NutriBar), chill dood, biscuits, etc.
While the first two parts of the strategy have helped the company grow, it is the third part that has attracted criticism. One of the major lows for the company has been the launch of noodle segment “Horlicks Foodles”. This led to investors’ concern about a brand erosion of Horlicks, which contributed over 70 per cent to the Rs 31,640 crore revenue in 2011. The company’s net profit for the year was Rs 4,512 crore.
They have tried to position Foodles as a healthier option than other noodles (Maggi) in the 2500 crore instant noodles category. But Foodles’ success has been below expectations.
Some experts are sympathetic towards Glaxo and believe that diversification through brand extension into unknown territories is the right approach when current product’s sales starts reaching a plateau.
Analysts believe that Glaxo may bring in more products from its parent company for reviving its growth in India.
Implications: GSKCH growth has stagnated in India. Its strategy of brand extension has not been a success. It has ventured into new segments like biscuits, noodles etc; in order to grow they have to adopt new strategies or bring in more products from its parent company for reviving growth in India.
The worst of times is the best of times to incubate brands
-By Kaushik Narayan
Review: - This article talks about how an organization can sustain in an economic recession through creative advertising. Creative advertising means spending ones way out of recession and coming out of it ahead of the competition both in terms of profit and market share. This article further illustrates on how companies like kellogs , Nike , Disney world , Apple , Lay’s, Fuel band have emerged as leaders in their field during recession times.
During the times of recession the company has to spend wisely on advertising, creating campaigns which are emotional in nature that creates an impact in the minds of consumers. Making the consumers feel that they are the brand divers, the organization can earn big bucks by doing so. The organization must also utilize social networking sites like Facebook, Twitter, you tube and also the traditional media to make their brand successful. For example: the great depression of 1924 gave rise to Disney land, and similarly during recession lay’s came up with “Do us a flavor” which went viral and lays generated more than 8 million recipes from 14 countries this gave rise to various unusual lay’s flavors and all this saved lay’s millions of dollars which would have otherwise been spent on predicting flavors and developing and advertising that flavor, The reason behind this success was the company made the consumers take the front seat and engaged them with the brand and made the company consumer friendly which again touched the sentiments of consumers. The creative advertising comes handy to gain edge over its competitors when the economy is slow and there is no development. It is really seeing beyond the recessionary practicalities and the brands are responding creatively to the new kind of consumer spawned by the digital revolution: the consumer holds the “like” button in her / his hand has the scepter of interactivity.
The storytelling that brands do through their traditional ads has so far been enough to earn them a place in the consumers’ heart. But, increasingly, consumers are judging brands based on how well they behave with consumers through the increasing number of interfaces that new technology is making possible. It’s a fundamental shift in the way consumers evaluate brands.
Implication: - It is necessary to combine traditional advertising with new methods of advertising so that it helps the brands to interact with customers in a meaning full way. Involving customers into the process is the way to go which will boost the company’s profit as well as create a bond between the customer and the company. Hence creative advertising is the way to go
Disrupt to Innovate
By Jacob joseph
Many organisations tend to walk a ‘safe’ path by plotting their innovation graph as continuous improvement of what they have delivered well. However, this can only lead to slight process or product improvement; it can rarely catapult an organisation to an entirely new league.
Innovation’ is the byword of this era. Industries, markets, advertising or art — everybody is out to do something different; to try and leapfrog ahead of competition. However, many organisations tend to walk a ‘safe’ path, by plotting their innovation graph as continuous improvement of what they have delivered well. Now the problem lies in the fact that this can only lead to slight process or product improvement, it can very rarely catapult an organisation to an entirely new league, as a disruptive idea can.
Re-shaping human habits
At a time when the world was ridden with oligarchy, Rome disrupted the political thinking with democracy. When the world thought that wars freed countries, Gandhi disrupted with his idea of non-violence.
Re-imagining consumer expectations
Disruptive innovations invade a market, and wipe out existing order. Take the example of the now ubiquitous TV. When the concept was first introduced, it turned the idea of visual entertainment on its head. Till then, people were used to flocking to live shows — now this miracle machine beamed music, videos and movies right into their own living rooms.
Long-term effects, post tipping point
One challenge that companies often face is that the initial quality of the disruptive innovation may result in limited use, and could be less appealing to established customers. Take the example of digital photography. While it has been tagged as a disruptive technology for a decade now, it took time for large-scale adoption — because it required not just devices that would take digital photos, but also called for a supportive ecosystem. look at the internet itself — starting as the preserve of the few, it has now spread to all corners of the world, and is now used not just to communicate, but to consume content, discover communities, and even report revolutions.
Problem of ‘continuing to improve’
Sustained innovation endorses the thought that if we consistently improve what we offer the customer, it will bring about a natural adaptation to changes around. Nothing could be further from the truth, because it doesn’t take into account disruptions which break through suddenly. Like a new technology enabling a new way of life.
‘I didn’t know I wanted it’
Disruptive innovation can delight and win over the consumer, by surprising them with a desire they weren’t yet aware of. The way the iPod swept users off the floor, by redefining the way people listen to music. Remarkably, this wasn’t a user-need per se before it was delivered to them. And no wonder they were thrilled.
Delivering short-cuts; making things ‘cheaper, faster, easier’
Disruptions are built on the “why-not” principle. They aim to deliver a cheaper, faster, easier experience built around an insight into consumers’ lives. For example, printing was once a herculean task requiring days of preparation. Laser printing technology up-ended this. Simple, efficient and handy, it went on to conquer offices, and homes. Grabbing this opportunity, a new set of entrepreneurs were born who offered easy laser printing integrated with quick deliveries.
Leveraging parallel thinking to win the game
Sustained innovation, by its very nature, is limiting because it calls for thinking along a set trajectory. There can be very minor change in direction. But disruptive innovation has no such compulsions. Haven’t we witnessed this in meetings and workshops? Someone surprises us with their different ‘take’ and walks away with the prize. Nothing has more potential than the parallel approach to a set thinking. That’s the kind of surprise that disruptions deliver, and unlock value. While repeatability might work for organisations that are already at a certain level of acceptance and scale, and have propositions geared to delight the customer, the threat of disruptions always looms large. A disruptive innovation has the power to be the David to an established Goliath-like organisation.
With technology continuing to gain importance in our lives, it is imminent that disruptive innovations will gain ground, and keep shaping new business models and products that challenge the status quo and rock the rules of the game. As Thomas Edison once remarked about his laboratory, “There ain’t no rules around here. We’re trying to accomplish something!”.
Kaya ready for a facelift
Viveat Susan Pinto / Mumbai Jan 16, 2013, 00:15 IST…….. Sangeeta Keni
· Kaya has struggled to drive footfalls at its less than 100 outlets in India at a time when consumers have cringed to spend due to inflationary pressures.
· Kaya has done it all — from driving promos and offers at regular intervals to shutting loss-making outlets to keeping head count under check. Even then, the retail business is a tough one to crack especially in those categories where spend levels are little high.
· Targeted mainly at working women, spend levels at a Kaya Skin Clinic depending on the service and frequency can start from as low as Rs 1,000 going up to Rs 1 lakh for a full-body laser and other high-end packages.
· The division was conceived keeping in mind the need for good-quality skin services amongst the vast majority of middle-class women who were beginning to demand something better than what their average neighbourhood parlours or salons could offer them.
· While the regular Kaya Skin Clinics will continue to follow this business model, the soon-to-be-demerged division is now putting in place a more “scalable” plan of action, which will see it set up smaller outlets called Kaya Skin Bars that will focus more on offering products than services.
· The idea is to cut losses and drive penetration of the brand in the country at a time when the skin solutions space is increasingly getting competitive. In five years, the game plan is to have approximately 150-200 of these smaller-format stores – more than double the number that Kaya has seen in the last ten years.
· The demerger also comes at a time when 100% FDI has been permitted in single-brand retail in India. With international retail majors keen to take advantage of this window, Kaya is readying itself for a new innings.
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