Case Game; Case Solutions

CASE GAME
The Case For Managing The VFM Proposition
Contd.

Will The VFM Platform Work?

THE DISCUSSION

NABANKUR GUPTA
Group President, Raymond Woollen Mills

No large player, with the ambition of selling one out of four TVS in the country, can address the market through niches. In fact, the TV market is not amenable to such a positioning, especially for a company like Total, which is already one of the front rankers. When the flagship brand is firmly entrenched on a VFM platform, as in the case of Total, it offers an excellent opportunity to cover various price-points and, over a period of time, straddle not only the entire CTV market, but also acquire a leadership role. That is why I suggest that Total should go for what may be called the 'multiple-branding' approach. But each step in this strategy requires a different focus.

The first step is to go for sub-branding. Such an exercise should be targeted at the burgeoning rural market. It is noteworthy that the rural market operates on a slightly different mindset. Here, trust and confidence are two major factors that influence the purchase of a consumer durable. You can build rural marketshare only with the aura of an original brand. The product should be reliable without any frills and features. For instance, voltage is a critical factor in most of the countryside. A TV set that delivers consistent picture quality and sound clarity despite of voltage fluctuations becomes a winner. Evidently, the VFM proposition should be the main plank on which mass communication should be based. And, umbrella branding works at this stage.

Simultaneously, Total should strengthen its position at the median- and top-end of the CTV market. This is imperative because volumes grow, the outlets for growth in gross margins become limited and the company faces the risk of being choked from within. But, this is also an area where, as the company makes a foray into the median segments, the consumer begins to face a conflict about the core proposition of the brand. The other important prerequisite for Total is to have enough capacity at this stage to ensure economies of scale. As a thumb-rule, a manufacturing capacity of one million sets per annum provides the right platform for further initiatives in multiple-branding. It gives enough leverage for Total to be able to spend about 3-5 per cent of its turnover on advertising.

While still holding on to the VFM platform, Total should seek tie-ups and strategic alliances with well-known overseas majors for assembling and marketing their brands in the Indian market. That is the best way to neutralise the conflict in the mind of the consumer about the core proposition of Total. The tie-ups will help the company address various value-segments not only individually but also independently. Total may make all its products in one factory, but the marketing orientation of each should be different. This not only gives elasticity and flexibility at the operations level, including production and sales, but also enable the company to cover every single price point in the TV market with a focused approach.

RAVI JAIN
Advisor, UB Group

It is the VFM proposition which has created the CTV business for Total. A whole range of existing business processes is rooted in it. Two issues need to be considered before Total thinks of deflecting from its core proposition. Has VFM outlived its time and relevance? Has it become counter-productive? Given the fact that the market penetration of TVs is still low in India, the answer is no. Kumar and his team should, in my view, strengthen the prevailing core proposition. There are two ways of doing it.

First, Total quickly needs what may be called a bare-bones model. This will be a pure extension of the VFM proposition. Aimed at capturing volumes for the company, it should be targeted at the vast rural market. The profile of the customer is clear-the first-time buyer who is price-sensitive. The model should be strictly no-no bereft of frills are concerned, but uncompromising on fundamental, functional attributes like picture and sound. Given the acknowledged propensity for viewing on a wider canvas, the bare-bone model could perhaps offer a larger screen. It could also be a B&W-model. But two factors must be kept in mind. First, its price should be so low that it becomes easily affordable and drives the growth in volumes. Second, it should carry a mascot which becomes easily identifiable with the product, somewhat on the lines of Gattu (of Asian Paints) who has a far greater back-of-the-mind recall in the home improvements market than the company itself. The mascot will help underplay, over a period of time, the importance of Total as a corporate brand and facilitate upgradations without any conflict in the mind of the customer about what the brand stands for.

It is equally important to consolidate the VFM platform regularly, and also to strengthen profitability. Total can address both these issues by going for the MFV (Money For Value) platform. MFV sustains and nurtures the high end of the market. Opting for marketing alliances with well-known global brands is obviously an approach that Kumar should re-examine seriously. The apprehensions about these companies going their own ways after a while and about erosion in the brand equity of Total are misplaced. The only way Total can continue to be perceived as offering the best consumer value is to regularly add new features and new attributes to its existing product range. This is possible more easily through tie-ups, which ensure transfer of the latest technology in return for distribution support. The rub-off from an association with established brands would not only add to the brand equity of Total, but also enable it to regularly reinforce its MFV platform.

B.M. GHODESWAR
Associate Prof., NITIE

It is true that Total has underestimated the potential of rural demand. Rural markets have evolved and are now demanding technologically superior products. With increasing income levels in rural areas, consumers there now aspire for consumer durables, such as TVs, refrigerators, and two-wheelers-icons of a modern lifestyle. Now, educated children of the family want an improved lifestyle. In this way, rural youth is proving to be a key change agent in rural markets.

Thus, it is important for Total to reposition its CTV range to match the needs of the rural consumers to achieve the desired target of a 25 per cent market share. Today, products have to sell via the benefits platform, rather than features-by understanding the profile of a rural CTV customer, his usage pattern, and the product's multiple benefits.

To reposition the brand, Total should first understand the consumption and usage patterns. And the brand has to project the associations to match the expectations of the consumers. These associations could be in the form of product-related associations like features, design, quality, performance parameters; organisational associations like the capability to build new products, focus on technological innovations; personality associations like self-image, social image of the consumer, sense of achievement; and symbol associations that facilitate recognition and recall.

With 27 years of experience, it is imperative that Total adopt the strategy of being 'combination brand'-moving its positioning from low end, to the middle and high end of the rural market.

Total has to build a core identity for the umbrella brand name (i.e.Total) which focuses more on organisational associations-that it has the capability to offer innovative products that are relevant to rural markets, which fit into the rural psyche (through personality associations). The commpany should also should identify one product in each segment to act as a pivot or a flagship brand give this a distinct identity (extended identity) that matches the segment requirement by combining Total with another 'sub-brand' name. The combination of Total and this branfd would work wonders. This combination brand strategy will prove to be the most beneficial for Total. The brand awareness has to be enhanced by designing communication programmes that target local events like festivals, in addition to using other media.