Sunday, April 18, 2010

Parle Vs Britannia : Parle takes a dig at Britannia

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Not long after HUL and P&G were engaged in a court battle over comparative advertising, another category seems to travel in the same direction - Biscuits. Both the categories and campaigns have similarity with major players taking a dig at each other for market share in the respective category.


In a product category, that customers are unable to identify a major difference in features, it doesn't affect the brand (using comparative advertising) to a large extent though the product isn't up to the mark. i.e., the detergent category.. A category hard enough for the customer to identify which gives better whiteness, better smoothness to hands, etc. But, if the same kind of comparative advertising is used in a category well enough for the customer to understand the difference in features, it might kill the brand altogether as the customer may not try the brand again in the future. i.e., the biscuits category.. A Category good enough for even a kid to understand the taste as well as the taste compared to another brand(which you can call as perceived difference in value).


So, when you go for comparative advertising, you need to make sure that your product is the best in terms of perceived value.. And not to forget, perceived value in terms of the customer and not the manufacturer/company.


Parle's 20-20 Cookies competes with Britannia Goodday in both butter and Cashew categories. This category is perceived to be not the lower range like glucose/salty but, is a premium category. In this category, the customer's perceived value depends more on taste, quality rather than the cost unless until, there is a huge difference in the cost.


That's exactly where Parle has been on the wrong side of perceived value, when it came out with a comparative print ad campaign against Britannia Goodday in telugu dailies in the Andhra Pradesh market.(Couldn't verify if it has done the same in other markets too and couldn't find such ads in many verified markets..)

Headline of the Ad says, "Parle 20-20 Cookies only give proper value for your money. All other remaining will insert a flower in your ear(Insert a flower in the ear : A phrase in telugu meaning, "making you a fool") followed by a table comparing Britannia Goodday with Parle 20-20 Cookies in both butter and Cashew categories w.r.t the MRP, weight of the pack, number of cookies in the pack.


And this ad focuses on saying that Parle 20-20 pack comes with more weight(27 grams, etc.) and more cookies(8cookies).


This sort of comparision can hardly make any difference to the customers in this category from buying Goodday which has been there since long time with a very good perception in the category. The major reasons for the same being, the customer in this category hardly gives a preference to the small price difference advertised, as well as the number of cookies. Because, the price, number of cookies, weight are not that significantly different in this case. At the maximum, it can make a customer try out Parle 20-20 Cookies instead of Goodday when he/she is buying it next time. But, will this process of trying out a new brand make the customer choose his preferences from Goodday to 20-20. Maybe Yes, if it seems to be far better in taste, value perception as said in the ad.


I buy 4-6 packs of Goodday every month. But, this time I took a couple of 20-20 packs just to try it. My comparision of 20-20 and Goodday with a couple of friends says, "Parle is far behind in the Butter category and it is slightly below in the Cashew category." At the end, I feel like, I should have brought Goodday only.. and there ends my preference for 20-20. And obviously once tried out, it will take huge efforts from Parle if it needs to convince a customer who has a disliking already. And hence, hardly does it make any difference to a customer buying Goodday and the brand Goodday but, it ends up making a good negative impact on 20-20 for sure.


Hence, comparative advertising can turn into a huge negative for the brand, if the customer can perceive the differences that are being advertised... Whiteness in detergents, smoothness with Lubricant Oils, effects due to branded petrol etc are some categories that may not suffer if compared too.. But, something like 20-20 can turn dangerous for the brand.

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Sunday, April 11, 2010

SEBI Vs IRDA : SEBI cries over ULIPs like a kindergarten kid

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Suppose you have been working with an organization for the past 15years. And your HR/Rewards department has taken a decision, to allott/gift 10employees in your office a mercedes benz each from it's allocated budget 10years back. Today, the HR and Finance departments had some ego clashes on their authority as well as who is big types. And today, 10years after the decision was taken and implemented Finance department wakes up and says something that seems to shock you.. Let's consider 2 different scenarios here.


In the first scenario, your finance department in front of the whole office comes to some of you 8employees and asks you to stop using the mercedes and says, "You cannot have it because, you didn't take permission from us for a mercedes." And leaves off 2employees without saying anything about the mercedes given to them and that too without any logic for differenctiation between the 8 and 2employees.


In the second scenario, your finance department sends an email to the HR/Rewards department or sends a show-cause notice to why a mercedes was gifted to you and keeps you too in the loop of communication without making a show off in front of the whole office. And, if they don't get a proper response, move the matter to the higher authority and ask them to take necessary action against or guide against.


This is what has been happening exactly with IRDA (HR), SEBI (Finance department), you (Insurance companies) and the Mercedes (ULIPs). 2employees is the LIC.


ULIPs were offered for the first time around 2001 in the Indian market. Insurance companies have taken the required permissions from IRDA (Insurance Regulatory and Development Authority) to launch the same as it falls under their purview. Off Late, there have been some ego clashes between regulatory bodies in India and a month ago SEBI started behaving like a kid by sending notices to all the life insurance firms asking, "Why did you eat my chocolate in Kindergarten without my permission??" ("why they haven't taken permission from SEBI before launching ULIPs ??")

This led to companies sending some replies to SEBI and IRDA coming into picture with a couple of meetings with SEBI to solve the issue. But, it is really hard to find out on to whose purview do they fall under due to the complex ways what a regulation says. Indian financial regulations are similar to a traffic signal and a traffic constable where drivers interpret signals and directions in the way they want to and the constable acts as he likes to rather than giving preference to logic.


And as per the latest news, SEBI has proved that it is a kid by sending letters to Insurance companies banning them from selling ULIPs. (Notice from SEBI)

All this raises certain questions to prove the childish acts of SEBI:


1) What do you call the behaviour of the finance department in first scenario?? - Definitely Kiddish, childish..


2) What do you call the behaviour of the finance department in the second scenario?? - Responsible, Logical..


3) Where was the Finance department and the people in the department sleeping with for 10 long years??


4) If Finance department acts as in the first scenario, can the CEO ask HR and Finance to sort out the matter in between them?? - No, because the same CEO has given certain powers to the HR department saying it can reward a person in the way it wants within the budget allocated.. And CEO is our great Finance Ministry that asks the regulators IRDA and SEBI to settle it between them.


5) Can the finance department pull off the mercedes from 8employees and leave 2employees without saying anything without a proper explanation and logic?? SEBI has done it..

6) Let us assume, it hasn't come to a conclusion in the meetings with IRDA on, whose purview does ULIPs fall under?


Then, it should have gone back to the finance ministry or the other higher authorities that have set up the regulations to clear it off rather than sending letters with a one-sided view that ULIPs fall under their purview. This let to IRDA, like the underworld don come into picture immediately and say "Main Hoon Na.." asks the insurance companies to ignore the SEBI order and do business as usual.


7) And let us assume, ULIPs fall under the purview of SEBI.. It should have acted responsibly as in the second scenario.. By bringing out some timelines that companies should take permission within the next ‘x’ months of time as well as should have come out with the application guidelines for the permission?? But, SEBI chose the other way round to prove that it is a kid and it is not at all suitable to be called a regulator because, regulator needs to act responsibly rather than childish..


8) Let us assume that SEBI is right in it's stand that ULIPs fall under its purview.. Why didn't it regulate the market since last 10years?? Why did it allow companies to sell ULIPs for 10years. Do we need regulators that sleep for 10years without acting in time?? Why can't Life Insurance companies/IRDA sue SEBI in the court for defamation that they didn't take permission where as, it was SEBI's inefficiency that took 10 years for them to recognize??


All these questions though many remain unanswered at least confirms one thing.. “SEBI has screwed up big time like a kid”..

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