Indira Institute of Management, Pune

Curious 2016- National Level Case Study Competition

Winners (1st Runner up)

Case Solution by Symbiosis Institute of Business Management Mr. Muazzam Khan, Ms. Shobhika Singh, Mr. Tejas Konde Deshmukh

1. The need to target the Indian market

1. It is felt that the Philips strategy mentioned in the case of not marketing in India because of cheaper options available to the Indian consumers is not sound.

2. In doing so, the company is ignoring nearly 16% of the world market population.

3. A few other points which indicate that Philips should not ignore the Indian market are:-

a. It is first amongst the emerging economies in the world with a constant annual GDP growth rate

of 8% annually for the last three years. Further, the USA in the west and India in the east are the

two economies which are being considered stable in view of a global economic slowdown.

b. Around the same time as that of the launch of the product, there has been a substantial IT boom in the country which has substantially increased the buying power of the country.

c. Over the last few years, there has been a substantial consumer tilt towards the niche and premium

market segment. (E.g Apple Iphones as well as Starbucks coffee are just a few of premium brands

doing well.) The Indian consumer has shifted from a need based purchase to a want based purchase

supplemented by a buying power. The brand being purchased is of significant importance apart

from just the need satisfaction.

d. The e-commerce boom has taken the country by storm. The growth rate is exponential and the

number of Internet users in India is now a staggering 300 million. However, only 40 million of these

use the internet to make online purchases (Source: Assocham- PwC Report) which is a clear

indication of the potential in the market.

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Fig 1.1

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4. The global market for Electric Shavers is projected to exceed US$6.0 billion by 2020, driven by design and

functional advancements and convenience and cost benefits offered by electric shavers when compared

to conventional shaving kits.

China and India, which represent two of the largest countries in the world with young population, offer significant opportunities for growth.

Fig 1.2

The demand for men's grooming market has seen a rise in the last few years because of increased

consciousness of their looks among the male customer. Also, as more than 50% of the population is under

the age group of 30, the industry has a huge local market. Moreover, rising urban middle class population,

and improved distribution channels in tier II and tier III cities, are also expected to stimulate growth in the

market through 2020.

Shaving products currently control the largest market share in terms of revenue in Indian men's grooming

market. As per estimates, Indian shaving products market is expected to grow at a CAGR of 20% till 2020

and maintain its market share position even in 2020.

5. This is substantiated by Fig 1.1(Reference: Euromonitor International) indicates that India is ranked 3rd

in the world in terms of the growth of men’s grooming products.

rising per- capita income

Westerni zation

expanding young

population

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Fig 1.3

6. Fig 1.3 ( Reference: Bloomberg) indicates that the Asia Pacific region( mainly India and China) has the

2nd highest potential growth rate of 28.44% after the Latin America region in terms of the use of men grooming products.

7. Basically, the consumer market in India has a changed a lot from what it was 25-30 years back and any major company can ill afford to ignore it.

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2. Segmentation And Targeting

Fig 1.4

We are aiming to target young people from the age bracket of 18 to 34 years. The target audience is

decide for the Modern Man – who is affluent, tech savvy and lives in urban areas. The cosmopolitan’s

follow trends in style and prefer premium category products will be targeted.

The age group includes youths who are in school/colleges.

The business professionals

Increasing focus of Youth on grooming in India may provide the product a good market.

The target audience will be the group which has low loyalty to other razors/shavers and can be easily attracted to the product. The product positioning will be aimed as High Involvement product.

Another untapped potential market is the female population who would like to gift their male

partners such grooming products. Educating such a segment through campaigns will automatically

increase confidence for the Philips brand in this segment and convert them into possible customers.

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3. Brand Positioning

Fig 1.5

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Fig 1.6

4. Marketing

The marketing strategy that will be employed will be a mixture of the traditional brick and mortar model and the digital marketing platform.

We will first consider the brick and mortar portion of the marketing plan.

Brick and mortar strategy:-

1. From the case study given, the product, Arcitec is a premium one. Also, from the targeting and

segmenting portion of the solution, we are aiming at targeting the segment of age group between 20

to 50 years in the Tier 1 and Tier 2 cities including metros.

2. The marketing of the product will be in such a way to create a feeling of exclusiveness in the product.

The proposed idea is initially allocate city wise the top 5 distributors of Philips for the sale of this product.

The campaign will be aimed at creating sufficient sales but maintaining the exclusivity of the product

through the fact that only a few of the Philips stores will be authorized to distribute the product.

3. In addition to arousing the interest of the consumers, such a strategy has the potential to incentivize

the distributors as well. The product being a premium high margin one, getting distributorship for the

same will become both a matter of prestige as well as increasing the margins for the distributors. This

will definitely spur sales.

4. Being a low volume high margin product, the exclusivity will be accompanied by a rich customer experience in terms of service provided.

Tie-ups:

1. The shaver will be advertised as a technologically advanced, comfort enhancing product but there is sufficient need to incentivize the customers further apart from creating the aura of exclusivity.

2. The same is proposed to be done through a series of tie ups with premium hair grooming/dressing

saloons. The same can be done through a coupon/offer related scheme of 2-3 complimentary visits to

a particular saloon on buying of the concerned shaver.

3. Another unconventional module is tying up with a technologically focused theme Fore.g a Bollywood

movie. For e.g. often, there is a movie of technological genre that comes up which can be

collaborated with.

4. Another use is the sport of cricket which has a massive fan following in India. Connecting the young guns

of the Indian cricket team to the audience through the use of the modern day, ultra smooth shaver can be

implemented.

Online strategy:-

1. An online digital strategy is a must in today’s age with more than 300 million internet users in India.

2. Further, out of the above, approximately 46% of the users (roughly 140 million) turn to social media for the product review and feedback before making a purchase.

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3. The idea proposed is adopting a 3 pronged approach in digital marketing :-The use of a mobile app

Fig 1.7

i. Fig 1.7 (Euromonitor International survey) indicates that the percentage of online shoppers is highest

for consumer electronics and appliances.)

ii. Further, the target group of 20-34 (which is the one we are focusing on the Indian markets) has the highest online shopping percentage.

iii. The tablet and computer purchasing habits are fairly consistent across age groups, but the likelihood of

buying products using a mobile phone varies widely. Young consumers (target group for the new

Philips product)are more likely to shop via a smart phone and across a broad range of categories.

Hence a mobile app for the same is a must.

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Fig 1.8

iv. Philips already has a Grooming: Shaving & Styling app( Fig 1.8) for personalized styling of shaving as

well as feedback and advice.

v. It is proposed to add a special feature of the sale of this particular product only through this mobile

application as a marketing strategy. Also, an addition of a freemium model where some basic

advice and tips are available to all but only the purchasers of the product will get tips and personal

advice from experts. This will be a definite value add.

vi. Application based incentives like reward points system for every purchase, referral points as well as discounts for loyalty etc. can be incorporated.

b. Use of conventional website based marketing.

i. Our focus will not be much on conventional website based marketing but still, a portion of the same

will remain in order to cater to consumers apart from the actual target market. It will not be a

dedicated website but will form a part of the other Philips products.

c. Social media campaigning.

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Fig 1.9

i. Social media platforms like Facebook, Twitter or even Whatsapp cannot be ignored in view of the

tremendous coverage as well as the power the consumer has in terms of giving feedback.

ii. To test the power of social media , we conducted a Facebook campaign to verifythe importance of

social media. It was called ‘Bolt Razors’ as a direct competition to the major players like Philips and

Gillette.

Reference: https://www.facebook.com/Bolt.razors/

iii. The actual campaigning ran for 3 days from 19th February 2016 to 21st February 2016 with a total of

36000 plus people talking about the campaign.

iv. A similar product specific page should also be made for the Philips Arcitec model where grooming tips, latest offers as well as consumer grievances etc can be addressed.

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Fig. 1.10

v. Fig 1.10 is a snapshot of the page made for the social media ad campaign.

vi. The response for even such an experimental social campaign was huge.

vii. Further social media can be used as:

Fig 1.11

Social media is the way! 5

Benefits VIDEO • Create Campaign

• Detailed concept + features

• Video made viral -> YouTube

• Boost awareness about Electric Shavers(female population for gifts)

• Propagate into full-blown YouTube channel

BLOGS • Grooming /lifestyle bloggers • Blog on omnichannel media

Online Contests for Organic Reach and Page Likes

AD MAKING CONTESTS • Ad making contests for college

students

• Arcitec gains awareness @ low advertising cost

• Best ads promoted digitally & on YouTube channel

SPONSORED EVENTS • Events sponsorship – Formula 1, Cricket

Matches

• Sponsor: Splistvilla, MTV Roadies, Music Concerts

Consumables

a. The consumables in the form of electric heads generally require replacement annually.

b. The cost of the electric heads for Arcitec is approximately $ 65.00 which translates in to Rs. 4200.

c. A subscription model for all the customers of the electric shaver with an annual fee is proposed @ discount of 10% on the consumables to make the customer experience smooth.

d. In case the consumers do not prefer a subscription model, a micro transaction model can be implemented.

e. Further, periodic emails at the projected time of shaver head expiry will go to the customer asking for replacement of the blades.

Pricing strategy

a. The pricing strategy is proposed to be kept at the high cost segment only ranging from Rs.9500 to Rs.11000.

b. This will bring a definite exclusivity to the product as well as create a niche aura around it.

c. Secondary research shows that there are a number of shavers ranging from Rs. 4000-6000(Philips, Gillette as well as Braun)

d. Therefore a range differentiator model is proposed with a high cost to separate the given product from these shavers.

Conclusion

Our team concludes that Philips should definitely enter the Indian market. The target and

segmentation should be concentrated on the 18-34 age group with a focus on the concept of

modern, faster and better man. Our target also is the female partners of this population who might

want to gift the same to their counterparts.

Our marketing strategy will be a mix of brick and mortar(offline) stores and the online strategy.

Though the focus is more on the online strategy, we have kept the option of brick and mortar as the

product is a high involvement one. The online strategy will primarily consist of use of Mobile app

and the social media. Social media may include Facebook campaigns, advertising competitions,

video competitions, blogs etc as indicated above.

The consumables will be taken care of through either a micro transaction or subscription model.

The pricing strategy will be high cost niche product to differentiate from other products in the segment.