The Consumer Durable's Life After Death

By Ranju Sarkar

Are you tuning into multichannel marketing? As new-for-old exchange schemes turn the conventional pay-money-buy-TV transaction into an anachronism, a whole new market-segment is being opened up by the second-hand sets that consumers barter for new ones. For, old TVs don't just fade away--they start life afresh. Consider the lifecycle of the exchanged product.

The key player, importantly, is not the manufacturer or the marketer, but the dealer, or the mechanic, who buys it from the dealer, who refurbishes the old set--which involves some cosmetic cleaning, replacement of a few parts, and packaging and transportation--at a cost of between Rs 100 and Rs 300. He then sells it to a rural wholesaler, at about Rs 4,800 (in the case of an old CTV set with remote control), pocketing a margin of Rs 500 in the process.

The rural wholesaler then pours the set into his network of retailers and sub-retailers, who target low-income urban customers in slums or rich buyers in villages, often using fairs and festivals to cash in on their spending sprees. The typical price: about Rs 5,500 which offers margins of Rs 500 and Rs 200, respectively, to the retailer and the rural wholesaler. As for the customer, she gets what she perceives as a well-known brand at a discount. While the size of this market is not known yet, estimates suggest that sales under exchange schemes may have notched up between five lakh and six lakh units in 1997-98, up from 2.75 lakh units in 1996-97. With virtually all those sets making it into the second segment, that market is, logically, just as large. Targeting the second-tier could well prove a durable strategy.

Cos(t)metic Change

By Pareena Kawatra

Is India's first middle-market herbal cosmetics brand losing its lustre? Eighteen months after its launch, the Rs 720-crore Dabur's Samara range of cosmetics is being peddled furiously through discounts ranging between 15 and 25 per cent. While price-offs aren't unusual to induce trial, the near-permanence of Samara's discounts seems to be a virtual repositioning of the product into a lower price-segment.

Of course, Dabur doesn't concede as much. Says Jyoti Shirali, 38, senior marketing manager, Dabur: "We do give price-offs, but they are tactical promotions." In Dabur's book, converting customers to the idea that they need to use more than one product to address a particular problem and, therefore, buy Samara's treatment packs, cannot be done without the pull of a discount. Perhaps. But, post-discount, Samara now competes with brands like Coty VitaCare and Lakmé, instead of L'Oreal and Biotique, against whom it was pitted earlier.

Moreover, caught as it was between known brands like Biotique and Shahnaz Husain in the Rs 250-crore herbal cosmetics segment, and transnational brands like Freya and L'Oreal in the Rs 1,200-crore conventional cosmetics market, it needed a unique positioning. Will price-competition bring a whiff of success to Samara?

A Dash Of Desi Differentiation

By Pareena Kawatra

KFC isn't chickening away from change. But is Tricon Restaurants International (TCI), the Indian subsidiary of the $30-billion Tricon Global Restaurants--spun off by the $31.60-billion PepsiCo as a subsidiary five months ago--biting off more than its consumers can chew by localising its menu? Raiding the grandmother's kitchen instead of Colonel Harland Sanders', the Kentucky Fried Chicken label is trying to lure the consumer out of her dining-room for a taste of familiar ingredients.

Will customers bite Indian food under a global brandname? Answers Kamini Banga, 43, CEO of the Mumbai-based Dimensions Consultancy and Qualitative Research: "The risk factor is quite high." Does KFC have a hedge? Apparently it does--in the form of a new logo. Claims Pankaj Batra, 32, marketing manager, TCI: "The message behind the logo is, we serve food real fast, and not fast-food." Cooked up or not, that may not be enough to bring in the hungry hordes.

Making Its Merc?

By Radhika Dhawan

Will the E-Class ever make it to A-Class sales? Now that Mercedes-Benz India--the joint venture between the dm 124-billion Daimler-Benz and the Rs 10,073.70-crore Tata Engineering & Locomotive Co. (TELCO)--has relaunched the Merc under the W210 series, it claims to have customers queuing up for the product that replaces the W124. Within two weeks of its launch in January, 1998, boasts the company, 22 cars were sold in Mumbai alone. At that rate, national sales are expected to hit 2,000 units by end-1998--which would represent about 66 per cent of the luxury cars market.

Are sales really revving up? That remains to be seen, since a new model inevitably provokes curiosity and some early sales. All the more so, since the W210 sports distinctly new front-end styling, with the traditional rectangular design being replaced by four oval headlamps and side airbags. The fact that the company hasn't hiked the rates of the tickets, leaving them in the range between Rs 21.90 lakh and Rs 24.70 lakh, depending on the accessories chosen, may have also helped jack up initial sales. Moreover, an expanded distribution network, with nine showrooms and 11 workshops, will provide greater exposure to the product. But with auto sales in low gear--and with the recent launch of Honda Siel's Honda City, Mahindra-Ford's Ford Escort 1.6, and TELCO's own Tata Safari all competing for the cheque book of the new car-buyer--the new Merc could still go into a skid.

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