Wednesday, July 30, 2008

Marketing Interactions

David Oglivy, the master of marketing communications had opined that...

If you're trying to persuade people to do something, or buy something, it seems to me you should use their language, the language in which they think.

And yet at another time he confessed that

“I once used the word ‘obsolete’ in a headline, only to discover that 43% of housewives had no idea what it meant. In another headline I used the word "ineffable," only to discover that I didn't know what it meant myself”.

But the marketers will always have their way. Norman R. Augustine had found that a recent government publication on the marketing of cabbage contains, according to one report, 26,941 words. It is noteworthy in this regard that the Gettysburg Address contains a mere 279 words while the Lord's Prayer comprises but 67.

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Friday, July 25, 2008

Big Trouble for Big Three Automakers

Shares of General Motors Are Trading at Prices Last Seen in the 1950s


July 5, 2008

America's automobile industry may be facing the biggest turnaround challenge in its history, a problem punctuated Tuesday as the carmakers released monthly sales results.

General Motors sales consultant Mike Bechtolt hangs a banner in front of the GM.

Times were tough enough in Detroit before gasoline hit $4 per gallon, but in the past two months the outlook has taken a turn for the worse.

Shares of General Motors are trading at prices last seen in the 1950s, their value cut in half in just eight weeks. Ford and Chrysler are in even worse shape, analysts say.

The sobering implication: The Big Three may have to become the Big Two, and even survivors will have a tough road ahead.

Bankruptcy is not a near-term threat, but the three carmakers are fast burning through cash reserves. And while government assistance – or perhaps an energy policy that supports new automotive technologies – could become a lifeline, it can't substitute for the hard work of transforming product lines.

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Tuesday, July 22, 2008


Marketing is all about satisfying the customer at a profit to one’s own self. But then how can one company do better marketing than its competitors? One way is to communicate in a more effective way. When Coca Cola became the official drink at one of the grand cricket tournaments, Pepsi walked away with the limelight by attracting the young generation with its slogan, ‘nothing official about it’.

In 1986 British Airways ran a promotion to give away 5,200 seats for travel on June 10th. Virgin Atlantic Airways ran ads that said, “It has always been Virgin's policy to encourage you to fly to London for as little as possible. So on June 10 we encourage you to fly British Airways.” The British Airways promotion generated a lot of news coverage, but most of the news coverage also included a mention of Virgin's funny ad. It cost British Airways a lot more than Virgin to get this coverage.

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Friday, July 18, 2008


Branding starts with deciding upon a name. What should I name my product? Which name is likely to make my product sell more? Should it be easy to pronounce, easy to remember, easy to correlate with the function, easy to relate to the customer or just anything? Does the name really have any significance? Isn’t it that a rose would be a rose no matter what it is called? But then would the rose be equally acceptable with any other name? Difficult to answer such questions. So let us see what others have done. And that makes the matter more confusing.

Interesting excerpts from are given below.

If you are searching for a name for your new product or service, what guidance can you get from the world’s leading brands? Business Week and Interbrand’s "100 Best Global Brands" rankings show the world’s leading brands, according to their value. In the top spot for 2005 was Coca-Cola, with a value of US$ 67.5 billion.

Following Coca-Cola come Microsoft, IBM, GE, Intel, Nokia, Disney, McDonald’s, Toyota and Marlboro; these brands make up the world’s "top ten" by value.

Interestingly, these top ten brands cover the full scope of naming possibilities. There are family names, like Disney and McDonald’s; initials, like IBM and GE; semi-descriptive and "associative" names, like Microsoft and Intel; and abstract names, like Nokia and Marlboro. Taking the complete list we find that family names are by far and away the most prominent, with 46 of the 100 brands named after their founders. Next are abstract names and semi-descriptive or "associative" names, with 21 in each group, and then come initials, with twelve.

Many of the family names are concentrated in such sectors as finance (Merrill Lynch, Morgan Stanley, Goldman Sachs) and fashion (Louis Vuitton, Gucci, Chanel), but they are to be found in most industries, as Mercedes-Benz, Gillette, Kellogg’s, Pfizer, Harley-Davidson, Wrigley’s, Hertz, and Heineken show. Abstract names occur at random (Toyota—Toyoda was the family name, Gap, Canon, Nivea), as do semi-descriptive and "associative" names (Citi, Volkswagen, Motorola, Caterpillar). The same applies to initials (BMW, UBS, KFC, MTV).

The first is to do with family names. As we have seen, these make up 46 of the top 100 brands. They are spread across industries and are by no means confined to "smokestack" or "heritage" businesses. They tend to be associated with products and services where the personal touch and continuity over the years are both seen as important. Authenticity is therefore an important attribute that family names help express. Perhaps the lesson here is that family names can be most effective in areas where the product or service is innovative and unfamiliar, and where consumers need that extra degree of reassurance to buy for the first time. The presence of a personal endorsement in the brand name (and therefore the implied accountability) can provide the trust that is needed to prompt the purchase decision.

Abstract names (those without any obvious descriptive content when it comes to the nature of the product, its use or benefits) are potentially strong marketing and legal properties. They can create powerful differentiation, which, if backed up by products and services of high quality and value for money, can lead to strong and successful brands. Precisely because such names lack any descriptive content, they are relatively easy to register and protect as trademarks. However, they need to be explained to consumers at launch.

Semi-descriptive and "associative" names contain a clue about the product or service and are therefore more user-friendly. The reality is that the world abounds with such names (Kwikfit, Dunkin’ Donuts, Mastercard, Duracell… the list goes on). Semi-descriptive and "associative" names have become the "lingua franca" of international branding. Because they are relatively easy to understand, they simplify the task of positioning the product or service concerned, and therefore, they allow the advertiser the luxury of developing "brand personality," thus strengthening differentiation at an emotional level. But semi-descriptive and "associative" names can sometimes prove difficult to protect as trademarks.

Initials are perhaps the most difficult form of brand name in which to create meaning. They tend, almost entirely, to be business rather than product brand names, and used by organizations that are confident they will be understood (International Business Machines contracted its name to IBM many years ago; Imperial Chemical Industries also condensed to ICI) or who are happy to shelter under relative anonymity (LG, for example). The truth is that very few companies or products would choose the initials route if they were new to the market. Initials lack information, differentiation and personality; they are also notoriously difficult to protect as trademarks.

So which is the right naming strategy for you, as you ponder the launch of your new product or service?

Your first duty is to the customer, because if you look after the customer, as the saying goes, the business will look after itself. This means that you must strike the right balance between explaining what the new product is about, and creating differentiation to secure future purchaser loyalty. It is the role of advertising to explain features and benefits as the first phase in any new product launch; it is the role of the name to capture this information and to provide the platform for developing brand personality. Perhaps, therefore, you might be better served by an abstract name?

It is perhaps no coincidence that two of the fastest growing brands in the world—Samsung and Apple—have abstract names. They both have excellent products, and this is the most important factor. But their names, which are highly distinctive and memorable, provide an extra competitive edge, and in crowded marketplaces this can make all the difference.

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Monday, July 14, 2008

Marketing Ethics

The question is ‘should we or should we not launch the product’. The question is not as easy to answer, as it seems. A number of industries will immediately cease to exist if the decision is in favour of not marketing harmful things – like tobacco, alcohol, drugs and armaments; unless of course clever words are used to prove that these items are actually good for the people and the environment!!

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Thursday, July 10, 2008

Flinch Test

There is an eternal love-hate relationship between the buyer and the seller. One cannot live without the other and yet they keep fighting all the time as if one’s survival depends upon how well the other one is fooled. And they have their own rules for the countless charades that they play. One of them is given below.

There is a trade secret in the purchasing world. They call it the “flinch test.” This is the test Procurement Agents and other professional buyers give to sales people when they provide pricing. “Wow! You are 25% higher than your competition.”

These pros are trained to react with surprise so that they can see if the sales person is confident in the price they have put forward. It is nothing more than a straightforward negotiation tactic. Often times, they overstate the price difference such that you can do some quick math and see that the differential is bogus. I can recall a time where I was told that we were 50% higher than the competition. When I reviewed the numbers, this meant that the competitor was losing 18% based on fixed costs that we both had. It was highly unlikely that the competitor was signing up for this kind of an account. When I asked the Procurement Agent about that figure again, he flinched and we ultimately won the business.

The key to passing the flinch test is to respond with confidence in your price. If you don’t believe you are providing a fair, competitive price for the solution, my question is why are you presenting it anyway? One would hope that you have integrity so why present something you don’t believe in?

Some responses that cause you to fail the flinch test.
  • What price were you looking for?
  • I’ll ask my manager if we can do better.
  • How about if I take 10% off?
The reason these are failed responses is that they create trust issues with the prospect. Were you trying to rip them off with the price you presented? One of two things is true. Either you were trying to rip them off or you believe you provided a fair price. What other option is there? Some will say that they were preparing for a negotiation. That’s a fair point; however, it is a terrible negotiation strategy to give the appearance that you will drop your price first moment someone balks. That approach gives the impression that you sought to gouge them. Most negotiations end at the middle ground. They wanted 5; you wanted 10 and settled at 7.5. That seems logical. However, if you lower your price early, the middle ground is lower. In the same scenario, if you dropped to 8 right off the bat, the middle becomes 6.5. As I mentioned, you have to manage the negotiation such that the middle is not lower than an acceptable price for your company.

Successful sales people have a planned, or dare I say “canned,” response for the flinch test. They don’t expect a prospect to respond with excitement about a price. They anticipate shock and have a process to handle it. Here are their secrets…
  1. They set expectations upfront. Early in the buying process, they set the expectation that they are not the low price provider. “To be clear, our company is rarely the low bid, does that mean that we won’t be working together on this project?” If they say no, you are set for the later phases of the process. If they say yes, at least you haven’t invested a ton of time in an account that you won’t win. If you are going to lose, lose early.

  2. They don’t flinch! “I’m not surprised by your reaction. I get that a lot. As I mentioned at the outset, we are rarely the low bidder.”

  3. They seek to understand. “When you say that you are shocked by the price, which part is surprising?

  4. They reinforce their position. “Since we are rarely the low price provider, what do you think our 1000 clients see that leads them to pay a little more to have us?

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Monday, July 7, 2008


Mergers and acquisitions are the order of the day. If the Tatas are acquiring a company in the UK, can the Birlas be far behind in acquiring one in the USA. It seems to be the easiest way to spread one’s tentacles and expand or start businesses in new territories.

But what happens if the marriage turns sour?

Case study prepared by Prof. Sydney Finkelstein of Tuck School of Business, Dartmouth, USA is worth reading in this context.

Click on to

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Thursday, July 3, 2008

A Mall is not Small Any More

DLF is planning to develop around 20 large shopping malls in the next 3-4 years, which would entail an investment of Rs16,000 crore. Billionaire K. P. Singh-promoted DLF is coming out with a 4.45 million sq ft “Mall of India” in Gurgaon - touted as the largest such facility in the country.

The shopping malls developed by DLF would come up at places like Chennai, Kochi, Hyderabad, Kolkata, Bangalore, Panipat, Jalandhar, Baroda, Goa, Mumbai and Ludhiana.

It may lease out space to reputed national and global brands including Louis Vuitton, Armani, Gucci, Cartier, Christian Dior and Fendi.

The news item contributed by:
Prof P Guha
(Globsyn Business School)