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Amitava Chattopadhyay


Amitava Chattopadhyay
Emerging Market Multinationals - Amitava Chattopadhyay


India

Earthspired: Building a Brand for Social Impact

Mrida (Sanskrit for soil), a recently founded social business venture, had launched the Earthspired brand a year ago to sell products made from high-value plants and herbs, which it sourced sustainably from small and marginal farmers in India, to  urban middle class consumers.  This was a key initiative for Mrida, and the founders had big ambitions. They wanted to grow the brand in India and internationally. To address this ambition, Mrida needed to address several interconnected questions: What should the consumer value proposition for Earthspired be and how should it be communicated? What was the most appropriate distribution channel – direct selling, retail, or on-line sales? What should be the business strategy to scale the Earthspired brand, given the limited resources available to a fledgling social business venture?

When Advertising is Just a Waste of Money

Watching the recent cricket test match between India and England on TV in India, I was staggered at the level of advertising repetition I experienced. During one hour, I decided to keep track of the commercials aired. The brands and the number of times they advertised during the hour period are below.

As one can see, 17 different brands advertised during the hour. These brands covered a broad range of categories across products (e.g., Blenders Pride, CEAT and Panasonic) and services (e.g., Amazon and McDonald’s), as well as domestic (e.g., Idea, Fogg and Kent) and global (Axe, Google and Suzuki) brands. Of the 17 brands that advertised, 11, or a whopping 65 percent, aired their ads three times or more, with Gionee, the Chinese mobile phone maker showing the exact same “creative” a mind-numbing seven times during the hour!

Advertising Repetition Levels in India are Off the Charts! How Much Money is Being Wasted?

Watching the test match between India and England on TV in India I was staggered at the level of advertising repetition that I experienced. During one hour, I decided to keep track of the commercials aired. The brands and the number of times they advertised during the hour period are below. As one can see, 17 different brands advertised during the hour. These brands covered a broad range of categories across products (e.g., Blenders Pride, Ceat, and Panasonic) and services (e.g., Amazon and McDonald’s), as well as domestic (e.g., Idea, Fogg, and Kent) and global (Axe, Google, and Suzuki) brands. Of the 17 brands that advertised, 11, or a whopping 65%, aired their ads three times or more, with Gionee, the Chinese mobile phone maker showing the exact same creative a mind numbing 7 times during the hour!

repetition

This brings me to the main point of this blog.  Why so much repetition?  Theory has it that consumer response to repetition follows an inverted-U shape.  That is, initially, consumer response increases with repetition, as consumers learn about the brand, but then declines, as repeatedly watching a brand’s advertising becomes boring and irritating.  The point at which additional exposures has a negative impact depends on the complexity of the advertising, the amount of attention consumers pay to advertising, and the like.  Most lab studies, which show participants ads embedded in a TV program during a viewing episode of less than one hour find that optimal impact is reached with three exposures, declining thereafter. According to Siddarth and Chattopadhyay (1998)[1], field studies find that incremental repetitions starts to have a negative impact on consumer responses somewhere between 12 to 15 exposures over a two-month period.  Indeed, Siddarth and Chattopadhyay (1998), show that, across product categories, consumers are likely to channel switch while watching TV, if they see a given commercial more than 14.5 times, and also show that channel switching negatively impacts purchase behavior. Importantly, these results were obtained using a dataset spanning two years!

To those of you who don’t know about cricket, a day of test cricket spans three, two-hour sessions.  The ads above were repeated throughout the day. Thus, 65% of the brands above would have been seen 18 times or more while viewing a single day’s play; for Gionee, the most advertised brand, there would have been 42 exposures. Across the five days of a cricket test match, and ardent follower of the game would have seen 65% of the ads a nauseating 90 times or more and even the lightly advertised brands, well above the 15 exposure threshold. Gionee’s advertisement would have been seen 210 times!  However, one slices the data, there is cause for concern.  Are these brands overexposing themselves to their detriment?

The research data on repetition effects I refer to above are from American consumers.  So one question to ask is, are Indian consumers different?  My intuition suggests that they cannot be that different.  Seeing an Amazon ad 90 times, an Axe ad 120 times, a Raymond ad 150 times, and a Gionee ad 210 times cannot reasonably be expected to not turn off a consumer through over exposure. Repetition beyond a reasonable level is annoying and turns consumers off a brand, be they American or Indian. Thus, I would submit that there is a significant degree of over-advertising in the Indian marketplace, which is not doing the sponsoring brands any good, and most likely hurting them. I’d like readers to weigh in with data from Indian consumers in support or otherwise.

[1] Siddarth, S. and Amitava Chattopadhyay (1998), “To Zap or Not to Zap: A Study of the Determinants of Channel Switching During Commercials,” Marketing Science, 17 (2), 124-138.

Study consumers in emerging markets…study firms in emerging markets

The key to successful entry into emerging markets lies in learning about customers in the field through experience. To compete against brands from emerging economies that will come to the fore in the future, it is necessary to learn “emerging market style” strategies. We met Prof. Amitava Chattopadhyay, who has studied firms from emerging markets for more than ten years, and learned those strategies from him.

Maintaining Market Dominance

Peter England, owned by leading menswear firm Aditya Birla Nuvo, has become a household name in India. As we describe in our case study, Peter England became the fastest apparel brand in Indian history to reach 1 billion rupees in sales and one of the most trusted brands in its category by providing aspirational apparel to India’s burgeoning middle class. When it launched in 1997, it focused on positioning its high-quality shirts for young Indian men at the early stages of their career, striving for success.

It was the first apparel brand in Indian history to leverage television advertising. Its messages centred on honesty, international quality and sub-premium pricing to court aspiring consumers who wanted to dress for success but found premium brands too expensive.

But despite meteoric growth, its performance in the second half of the 2000s slowed. Peter England had steadily expanded into new categories, especially premium apparel, under the sub-brand of Peter England Elite and party wear, under Peter England Party, to both cater to consumers who aspired to higher grade, higher priced apparels and those drawn to the emerging clubbing culture. But these extensions didn’t resonate. The brand was deemed by customers to be frivolous, forfeiting its original value of honesty.

Branding in an Emerging Market: Strategies for Sustainging Market Dominance of the Largest Apparel Brand in India

This case illustrates the key issues and challenges in creating and sustaining a successful brand in emerging markets. Peter England, India’s largest apparel brand by sales volume, was struggling to formulate a strategy to sustain the brand’s market dominance. Indian consumer tastes were changing rapidly, making it difficult for any brand to stay relevant and fashionable over time. Meanwhile, other domestic brands and foreign players were expanding and evolving rapidly, aiming to dethrone Peter England as the market leader. To devise a new strategy to sustain the brand’s dominance, the executive team has to dissect the forces that are shaping the market and develop a new positioning for the brand, a robust platform that can accommodate its broad portfolio of products and sub-brands. The executive team also has to develop an implementation plan for the brand positioning, entailing product development, advertising, promotions, pricing, and distribution.

How are EMNCs and Japanese firms different in their management strategies?

EMNCs are starting to globalize seriously. Their management strategies differ from the those of firms from developed countries. How should Japanese firms think about EMNCs? This time, we bring the latest info on EMNCs from Professor Amitava Chattopadhyay of INSEAD.

Make in India: Making it happen

Turning the rhetoric of Make in India in to a reality requires that the government deal with a number of important challenges…Without transparent and genuine engagement with the public the government will not be able to usher in the changes that are needed for Make in India succeed. If that were to happen, like many other potentially game changing initiatives, Make in India too will end up unrealized in the dung heap of history, at a great lost to our nation.

BASIX: Microfinance is but a Part of the Solution

BASIX, headquartered in Hyderabad, was the brand name of a group of entities with 6,000 outlets offering financial and livelihood promotion services throughout rural India. Despite its impressive progress in poverty alleviation, raising funds to continue such work was increasingly challenging, as BASIX found when it sought to raise Rs 2.5 billion in capital from private equity investors in late 2010. Not only did the diffuse nature of its work make valuation complex (the standard method would have been to take the sum of its parts and add a premium for the synergies between the entities using the discounted cash flow method ), but investors preferred simpler business models where the service/goods sold broadly met the same set of needs. One that met such diverse needs and spread across so many sectors was harder to figure out, as well as harder to scale up, making investment less attractive. Without scale it was hard to get capital; without capital it was hard to scale up. The question that Basix is grappling with is how best to position itself going forward.

Fabindia: Branding India’s Artisanal Craft for Mass Retail

As India’s most iconic garments and home furnishings company, Fabindia had come a long way from its humble beginnings as an export shop in 1960, selling handloom fabrics to overseas customers. In 1976, Fabindia started domestic operations in India, and in the next 38 years it had become synonymous with quality handmade products procured from artisans all over India, with a social conscience. The business combined the twin objectives of making a profit and providing a sustainable livelihood for rural artisans. A whole generation of loyal shoppers had grown up with the brand and the view that “If you were a Fabindia person, you were alright.” However, the winds of change were blowing. The next generation of consumers, who were part of a different economic environment and world order, were less tied to the Fabindia ethos and had wider consumption choices. Given the changes, was it time to evolve? Should Fabindia broaden its positioning? If it remained niche, could it continue the phenomenal growth it had experienced? If Fabindia chose to broaden its positioning, what should that broader positioning be?


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