Month: April 2020

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Retail Wars: Part Deux – David’s move

Like we discussed in our previous post, small retail companies currently have an advantage in terms of distribution and sales. Their swiftness has trumped the slow-moving giants. These companies are aggressively eating into the share of Big Retailer Cos. The Big Cos are back devising a strategy to regain the consumers they have cultivated over the years. Soon, the wave might turn against the smaller players as they lose their grip from the consumers’ minds and wallets.

What can the Small Retail Players do in order to maintain their position and permanently arrest the shift away from Big brands? The critical strategic play here is ‘Memory Embedding’. Here are some Strategic Instigations by Wolfzhowl about how smaller brands can create bigger memory structures in the consumers’ minds. Check out Wolfzhowl’s deck on Brands and Memory Structures

1) Be thankful – Gratitude goes a long way. Thank your Customers for trusting your brand in these tough times. Incentivise them, giving a smile or a sweet memory works too.

2) Don’t forget to leave a mark – Big players have the digital prowess and footprint that a small player might not have. Make sure the brand leaves behind a token visual mnemonic at every possible interaction with the customer.

3) Reaffirm Product Quality – Smaller brands often face the consumer perception issue cheaper price = low quality’. Therefore, they need to explicitly highlight high-quality control measures and establish that their product is at par, if not better, than the products offered by bigger brands.

4) Seize the opportunity for Product Innovation – With steady revenue coming in and big cos still left handicapped due to the lockdown, smaller brands have the opportunity to turn their focus on creating, hyper-local, consumer-centric, tactical product innovations. With some extra effort, this move can set your brand apart from other products and hence accelerate adaptability and memorability.

5) Increase basket-size with product bundling – Make hay while the sun shines. The more space the brand occupies in the consumer’s mind, the longer it remains in the consumer’s memory structure. Once your brand has entered the Customer’s wallet, make the most of it. If the brand has any other complementing products, bundle them with your fastest selling products via offers.

6) Create product consumer rituals – Effective long-term memory for brands can be created by associating the product with an action or a ritual. Invent a product consumption ritual via packaging, advertising or by gamification of product and its consumption. Eg. KitKat, Kinder Joy, Oreo etc. Create a unique, tangible mini-experience around your brand & product.

7) Unite to Fight – Evaluate Cross-category tie-ups with small manufacturers of other products to get into households with combined weight to tackle the post Covid19 onslaught of the big guns.

8) Underdog Advertising – Admitting that you are smaller player can feel like shooting yourself in the foot. But it’s a counterintuitive way to reach the consumer’s heart and be remembered for good. Smaller Cos are faster, cheaper and equally effective in the times of need. And just because they don’t have the strength of the big players, they work doubly hard to provide the best they can. This is an endearing way to embed your brand in your consumer’s mind and win some well-deserved brownie points.
Brilliant case of effective Underdog Advertising – Avis

9) Discount the Product, Not the Brand. Build one afresh – Brands that have been built in adversity have stood the test of time. Now is the best time for a smaller brand to lay the foundations and build a strong purpose from the ground up. A classic example of this is Dove.

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Two titans join hands for disruption. What does this mean for the rest?

Facebook invests in Jio

Facebook Inc announced its investment in Jio Platforms, making it the largest FDI for minority investment in India. At a time when the global economy is grappling with the impact of Covid-19, this is good news for India.

 

Let’s look at how this investment impacts various industries

  1. Indian Economy: A welcome sign, this investment brings back the investor confidence which was shaken up by the collapse & bailout of a few banks in 2019. This investment shines the spotlight on India once again, making it a favourite haven for a lot of technology, manufacturing, and automobile giants. It gives a strong signal to the world that India is back in business despite being in a 40 day lock-down. Here’s what it could mean to us:
    1. Rising consumer confidence could help in recovering the GDP growth rate from the abysmal 0.5-1% as predicted by the IMF.
    2. It could pave way for more FDI and FIIs, which, if done in manufacturing, can lead to the creation of jobs and higher tax collection by the government
    3. It gives hope to the retail investors to keep investing in the stock market, mutual funds and SIPsince it’s a sure shot sign of revival
  2. Retailers & Merchants: Mr. Mukesh Ambani specifically spoke about how this deal will disrupt the retail economy. This partnership will push Jio Mart, Jio’s retail management service for Kirana stores and enable financial transactions through WhatsApp money.
    1. An opportunity for social commerce will allow merchants to increase their network of sales beyond walk-in customers, making it easier for them to track orders and receive payment
    2. Better analytics to the retailer– Customer profiling through merchant services app, enabled with Facebook/Instagram/WhatsApp will mean that the merchant is able to track and predict what the customers will need and when will they need it. This will take care of their inventory management as well as credit limits with distributors
    3. Amazon and Flipkart will now find it difficult to onboard smaller retailers & merchants. Using Meesho, which is an innovative three-way marketplace enabling resellers, SMBs, and micro-entrepreneurs across India to connect with potential buyers using social media along with Reliance’s logistics & supply chain, Amazon and Flipkart will have to put in more resources to onboard smaller merchants and get them the desired visibility
  3. Hyperlocal Delivery: Apart from tapping into the merchants and grocery store owners, this collaboration allows Reliance an entry into the homes of the consumers directly. They already have Reliance Smart and Reliance Fresh. Social commerce of Facebook and WhatsApp pay can enable them to take orders and deliver groceries home, without spending too much on building a new logistics chain. This means that Dunzo and Amazon Now are at peril of losing their business to Reliance
  4. eCommerce Market across categories: A strong on-ground network along with superior digital connectivity disrupts the eCommerce market. Through Reliance Trends, Vimal, Reliance Digital, Reliance Jewels, Reliance footprint, Ajio, Project Eve, John Players to premium brands like Diesel, Dune, Armani Xchange etc, Reliance can assure quicker deliveries and faster payments across the board.
  5. Agriculture: WhatsApp is already the most popular tool used by farmers across the country to stay in touch, exchange information, share tips, etc. WhatsApp groups like “Hoy Amhi Shetkari” (Yes, I am a Farmer) that started out in one small part of Maharashtra has over 100 different groups that give out weather updates, information about insect attacks and the rates for fruits, vegetables and other produce at mandis.
    1. Enabling an ecosystem through digital payments: WhatsApp payments, Social Commerce, and Facebook groups along with superior connectivity, logistics of Reliance through its retail chains like Reliance Smart and Reliance Fresh could look at disrupting the supply chain for agriculture.
    2. Farm to home models now become even more feasible for farmers with the technology and connectivity offered by the giants.
  6. Fintech & NBFCs: It is no secret that Facebook has been trying to enter the Payments market in India for a very long time. This investment makes it easier for Facebook to launch WhatsApp payments and get more people hooked on to it. What does Reliance have to gain from this deal? Well, they can use Facebook’s data to add a layer of social credibility before deciding the credit-worthiness of the end consumer for their businesses like Reliance Money which offers loans to SMEs, Microfinance, Personal loans, etc.
  7. B2B: Covid-19 forced a large number of companies into experimenting with work-from-home models and this experiment has been quite successful. A lot of companies are considering implementing the WFH model even post lock-down. This means that there will be a higher demand for productivity apps and very good internet connections. While Jio takes care of the internet connection, by launching Work from Home plans, dongles, and Fibre to Home connections, Facebook offers productivity apps like Facebook for Work. One can safely say that if the trend of working from home catches up and becomes a reality for most of India, then this investment by Facebook Inc will pay off.

 

Beyond categories, what is the larger impact of this investment?

Reliance actively growing their IoT and Surveillance business. The added layer of Facebook Inc.’s social platforms that are widely used in India (Facebook, Instagram, WhatsApp) means that the companies together sit on a wealth of data. They not only know what the consumer is buying and where he/she is buying it from, but they now will also know what his/her social preferences are and how they interact with these categories and products in everyday life.

  • This will help them analyze and predict demand for categories much before the consumers can actually use them.
  • Selling the data to marketers to create a revenue stream for both the companies would become far easier
  • Inventory management and logistics for all the on-ground businesses become far easier
  • Product innovation through identifying latent consumer needs will help Reliance always stay ahead of the curve

 

Of course, there are a few possible conflicts that can arise from this investment and that could create a slight dissonance between the companies but those can be resolved to create a wider impact on the end consumer such as:

  • Payments – Jio has Jio Payments while Facebook has been trying to establish WhatsApp Payments in India for a very long time. Getting the two platforms together can help increase penetration into the market, cashing in on the ease of usage of a platform that all of us are already acquainted with – WhatsApp while Jio enjoys the trust and credibility that it earned with providing seamless internet at dirt cheap rates not only during the time of launch but also during the pandemic when many of us were forced to work from home.
  • Edutech– Facebook has invested in Unacademy while Reliance owns Embibe. Together, the brands can be a force to reckon with. While Unacademy focuses on the wealth of knowledge (with the number of courses it offers), Embibe takes pride in being an AI-driven platform for learning. Understanding consumer needs and offering far more number of courses makes this a go-to-choice for consumers.

 

What does this mean to the consumers?

  • Consumers can look at getting highly customized service  across brands and product offerings when these 2 giants come together
  • With both of them working towards net neutrality, consumers get a wider range of internet-based products & services to choose from at far lesser costs as opposed to any other telecom brand in the country
  • Consumers’ needs are met even before they arise, creating consumption frenzy and increased conspicuous consumption

 

How can brands compete with Facebook & Jio?

  • Brands need to build an emotional connection with their target audience. Emotional connect will always drive loyalty.
  • Invest in identifying and living your brand purpose. As more and more Gen Z get into the market as consumers and buyers, they seek out brands that are not vulturistic. They want to associate themselves with brands that serve a larger purpose. Brands can cash in on this need of Millennials and Gen Z.
  • Be agile and invest in innovation & design thinking. Brands need to evolve over a period of time and need to meet consumer expectations. If done well, brands can weather any storm and sustain it.
  • Identify the threats beyond just competitors and find out how you can solve these. If you can solve real-life needs of your consumers, they will never leave you.
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