â€˜THINK BIGâ€™ MARKETING STRATEGY
A lot has been written about the need to offer small value packs, often referred to as low unit packs (LUP) to target the lower and the lower middle income classes. That seems to be the sure fire mantra to get to the pot of gold that is resting at the bottom of the huge pyramid that we call the consumer market of India.
The sachet packs are not the only way to salvation and they may not always work. The example is that of Ponds and Colgate which did not make much headway with their small sachet packs. Even refined edible oil brands have not had much success with their 200ml packs.
Sachet and small value packs may not be the only way to get consumers to buy a product. There are brands that have shown that there is another way to offer value to consumersâ€”through large volumes packs.
Small packs seem to work better when they are offered in a â€˜perceived luxuryâ€™ product category. When shampoo sachets entered the market, shampoos were a luxury and the market research has shown that consumers bought a sachet for the Sunday bath! Sachets and small unit packs do not seem to work all that well for daily use products.
The last few years have been seen savvy marketers looking at the price-value equation from a different angle. It is difficult to get a new consumer. Market Research has shown it is 6.8 times more difficult to get a new consumer, compared to retaining an old one.
Now conventional wisdom says that for a new brand the consumer is wary of quality and will test the product before putting down big bucks for a big pack.
An example of Godrej No 1 and its â€˜3 plus 1 freeâ€™ offer it is getting consumers to commit to a whole monthâ€™s supply of soap, but at a price that is comparable or even better than other low cost popular brands like Breeze and Nirma. The net result is Godrej No.1 is one of the fastest growing brands in the Indian toilet soap market.
Apparently, what started as a mere scheme to get rid of excess stocks has now become a regular offer.
A quick analysis of the prices of toilet soap brands reveal that four cakes [3 + 1 free; 75 gm each] of Godrej No 1 costs Rs 24. Thatâ€™s an effective rate of Rs 8 for 100gm of soap-almost a 40% saving compared to the market leader Lux. But interestingly, this price is almost exactly the same price at which Breeze and Nima/Nirma beauty soap retail. In effect, Godrej No 1 offered a bigger pack size and managed to rope in consumers for the longer haul.
Let us take the case of Anchor White toothpaste. Again, instead of offering a huge price advantage at the 50 gm pack level, Anchor offered the best price value offering at the 200gm level. While Anchor 50 gm is priced similar as Colgate, you commit to a larger pack, say 200 gms Anchor is 35% cheaper. A Colgate veteran commented, many of their early analysis missed that trick because of conventional wisdom the marketer believes that consumers always try new brands in small doses.
From the above case studies it seems large value packs work better in product categories that have reasonably high penetration so that the consumer can be moved into making bigger pack commitments. This strategy works better if the master brand has enough appeal, so that the consumer is not scared of a bad product experience.
Most brands that enjoy a big reputation have attractive pricing for their bigger packs. For them, to offer a further price incentive is a big challenge, so the marketer needs to be clear about the path to profit on this strategy.
All goes to show that the fortune at the bottom of the pyramid need not be excavated only with a teaspoon. You can at times use a giant sized shovel as well.
Some other examples of â€˜large can spell valueâ€™:
Â· Ayur shampoo has used the large value pack strategy to gain consumer loyalty.
Â· Amul, with its carry home packs, offered great value, and got consumers to take home two liter packs for the price of one.