Does the Fighter Brand Strategy Work in the Mobile Phone Market? Part II

You may be interested to read the Part I before reading this write-up.

Based on realities on the ground, brands like Nokia and Samsung started offering fighting series in their line-up, specifically for the developing world. The latest addition to this fighter series was done (surprisingly) by Apple through its iPhone 5C (targeting entry level users in Europe, Australia and China, and not USA). While it is still unclear how Nokia and Samsung are doing in their fighter brand category, iPhone 5C has already shown its success in the category. Perhaps Nokia was kind of late in adopting this strategy, even not sure whether purely fighter strategy would have saved Nokia from being sold to Microsoft Corporation.

Based on the past cases of fighter brand strategies, it showed that apart from a few success stories, most fighter brands failed to churn out the “cheaper” market segment. Many would argue that, getting a “cheaper” segment’s share is not its prime objective, but to harass the cheaper copycats and protecting the premium brand, that is. Here comes the ultimate danger. If these were the objectives, then fighter brand strategy is a tricky one to design, implement and monitor at the field level.

First danger is the cannibalism (for example, buyers may buy a fighter brand instead of the premium brand of the same company, since the assurance may come in the brand name). The trouble gets worse when companies design a slightly inferior product to avoid cannibalism. Once downgraded, customers may think the value-for-money is better received in comparable copycat brands with “better” specs. So the entire proposition of fighter brand is gone. It not only failed in its prime objective, but also helped customers to functionally judge and choose a competitor’s copycat. iPhone 5C was smarter in this aspect since it targeted only the entry level users who would be buying an iOS smartphone for the first time (no issues of cannibalism!).

Second danger is the misplacement of priorities and resources. While a product development team could be engaged in developing and maintaining a fighter brand by investing time and money through hundreds of man-hours, the same investment could have yielded better results had these been employed for the premium brand. The problem gets worse when it becomes difficult to retract from the fighter brand strategy.

The third danger is the competitors’ ability to reverse engineer and offer “better” specs and feature. Many times, performance differences with premium brand, even though real, may not be perceivable by customers. Even though fighter brands may match the copycats’ offers, the copycats would become dynamic enough to change quickly and offer something “better”. Therefore, rather than cheaper brands being harassed by fighter brands, it gets the other way around- the fighter brands get harassed by cheaper brands!

Does it mean that brands should not think of this fighter brand strategy at all? Not really. It is wise to count on the pitfalls and do an extensive homework along with an exit strategy. It is possible that brand teams can add a success story of a fighter brand amid many failed cases.

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Does the Fighter Brand Strategy Work for Mobile Phone Market? Part I

A fighter brand strategy is about offering a lower-priced brand, usually by a prominent company that already holds a strong image and premium offers to the market, with a view to fighting the low-priced competitors with its low-priced “fighter version”. Obviously, this strategy aims at safe-guarding the long-term market share of the premium brand and put the fighter version at head-on confrontation with the low-priced competition.
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This has been a classic strategy by marketers in many instances. Nokia’s Asha series could be an example. Companies having premium brands often draw competition based on all possible fronts like price, features, warranty etc. Just like in the global mobile phone (hardware) market, the low-priced competition has been intense for quite a long-time in Bangladesh also. However, the most noticeable thing would be the immense improvement in quality of these cheaper phones during the last few years. Thanks to the hazy and reluctant enforcement of intellectual property laws in the developing world (no pun intended) and growing ability of thirsty techies whose ability to reverse-engineer has galloped lately. Perhaps this was the reason why big premium companies did not feel the necessity of launching fighter brands until recently. They started feeling the pinch on their premium brands’ market share since many of the cheaper brands can offer almost equivalent specs, performance and warranty, except the image. Companies have to accept these realities on the ground. (read more)

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Impulse Buying: A Goldmine for Retailers

Probably we might notice that, most times, we ended up with buying more than what were planned for while we shopped for groceries or other durable things. It may happen for many reasons. One could be due to coming across a product that we might need in near future but did not think of putting it in the buying list, simply because we forgot about it. While shopping for eggs, you might think that you were almost out of salt. This is quite an “innocent” type of need, recognized due to unplanned encounter. This may not be the impulse buying though.

So what is an impulse buying? Theoretically, impulse buying refers to purchasing anything based on emotional or momentary feeling of a need which was not actually thought of while started shopping. It is based more on impulse (momentary emotion at the time of encounter in the store) than on logical/rational assessment of customers’ actual need. Most (not all) impulse buying may result in customers buying things that he/she may not actually use in future, but he/she thinks that this is/are the thing(s) that need to be bought at that moment. Projecting in the future, one might find that he/she has an exercise gadget that was hardly used; bought books that were hardly read; bought a movie in dvd (due to its attractive cover) only to find a boring story later; bought a bunch of clothes that were hardly worn in a year; or bought some fancy gadgets that collected dust on the cupboard!

Without getting into an ethical debate whether stores should entice customers to get into an impulse buying situation or not, this type of consumer behavior could be a goldmine for retailers as customers may spend more than what they planned for if they can be wooed to buy a product that has impulsive value. Novelty products are often displayed so vividly that customers’ emotion may overtake logical assessment to lead an actual purchase. Fashion retailers and electronics marketers often use this technique to arouse impulsive buying behavior. Discounts and promotional deals in grocery stores may also give rise to impulsive buying. Discounted cars and top-notch in-store promotion of durable goods can also lead to this type of buying behavior.

Whatever reasons it may lead to impulse buying, it moves to the same end: customers buying more than what he/she thought to be needed. If you are a retailer, review your merchandise arrangement, in-store decoration and promotional displays in order to assess whether you are missing something from your customers.

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Dashboard and Exception Principle

Ever wondered how come pilots in big commercial aircraft manage hundreds of indicators, switches, knobs, and sound warnings while they fly? Are they looking at all of them and flying? They must be super humans!

No. They don’t have to look at all of them constantly. There are critical indicators at every stage of flying that need to be monitored carefully which would ultimately warrant subsequent actions (computerized auto-flight instruments have largely reduced this burden too). It does not mean that pilots are unaware of other indicators while they are monitoring the critical ones. It is about priority where attention needs to be focused. Priority is set based on urgency of action. As long as critical indicators are alright, you may not need to closely monitor all other indicators. This is called the principle of exception (or management by exception) where attention and actions are directed once critical indicators show exceptions of the norm.

Like an aircraft’s dashboard, we all should have our own management dashboard where we put important indicators that need to be monitored all the time. Find out critical indicators and take care of them first. This does not mean that you have to be a reactive manager and not a proactive one. Once you have taken care of your critical exceptions, you can spend time on preventing other “normal” indicators from getting beyond the critical range. While the management by exception could be termed “reactive”, spending time on that imaginary dashboard and taking care of all other “indicators” must be proactive.

How does your dashboard look like?

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How do we change things for better in the new year?

We want to forget the failures of the past and move ahead with a fresh year. Many of us will have their personal resolutions to be achieved in the New Year. Historically, many new years’ resolutions were meant for the first day/week of the year only! Then we forget to act upon those plans and go back to our business as usual. In the following year, we repeat the same resolutions and fail again. It is difficult to achieve these new resolutions unless we change the way we act and change our habits that fail us. We cannot achieve new things unless we replace our old habits with new ones that will help us succeed. For instance, celebrating new year with a fatty dinner with a resolution to lose weight will not work. The change must start on the first day, otherwise, this is not a resolution— just a wishful thinking. If we want to change things for better, let us start the change inside ourselves first. Let us make our actions persistent, leading to an embedded behavior or habit. I think Aristotle knew this secret long time ago, as he said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

Wish everybody a happy new year!

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Are holiday greetings becoming a nuisance?

Am I telling you to run away from people who are eager to greet you? Don’t we love to hear good words from people we care? Unfortunately, the evolving greeting culture may confer a different meaning than what it used to be in the past.

There was a time when we called and met our friends and families on holidays like puja, eid, christmas, etc. In the absence of mobile phones, we tried our best to get a dial-up connection to our near and dear ones despite the fact that most of the times the land-phone lines were faulty. After repeated dialing, staring at the phone-set with a mixed emotion of frustration and love, just to say hello to the other end, you might end-up having a connection that was full of noise and interference (cross-connection). The upside of this repeated act of frustration and hard work meant that the other party is “important” to us, referring a great value of meaning to the receiver of the message. In other cases, we used to buy greeting cards, put stamps on it, and post it through snail mails. Personalized and hand-written greeting cards also brought smiles to our friends as we made them feel “important” to us.

Now, with the advent of social media and mobile phones, fortunately, we are at ease to expand the base of our acquaintances to a great level. This is a good thing indeed. You can have thousands of followers and contacts in your smart phone through facebook, linkedin, xing, twitter— what not? You can have thousands of email addresses at your finger-tips just to retrieve and send messages as you want. Businesses are using this opportunity to send greetings and other messages on special occasions. So, what is wrong if we can cherish the age-old greeting culture through digital means? You tell me.

Just as you have access to thousands of emails and phone numbers, so do I. With all the good intentions in our minds, we will just try to make everybody happy and send them greetings with a touch on our phones. Voila, you have 500 greetings in your inbox, so do I. Who is reading what? The good-old-day’s hard work and conveying the meaning of “importance” in the receivers’ minds are no more there. It is, as if, people are greeting each other not because they are important, but because they can easily do it from their ends. Sorry, we are just increasing the number of messages in each other’s inbox.

Before we start cleaning the message box, we need to think how we can make it rather meaningful. We should not stop greeting people just because sometimes it seems to be annoying, rather a more personalized and meaningful way need to be innovated.

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A snapshot of mobile phone services market: Bangladesh perspective

In terms of the number of mobile phone subscribers, Bangladesh ranks 12th globally. Here is the list of top 14 countries based on mobile phone subscribers (www.mobithinking.com):

It seems that Bangladesh is among those attractive countries for mobile operators in terms of sheer customer numbers. However, from an operator’s perspective, that might be questionable.

While this is true that a respectable size of market exists, it is also true that the market has already become highly competitive after deregulation and allowing multiple operators. Bangladesh now has six operators, which has turned the market highly competitive for operators at one end, and very attractive to subscribers (customers) on the other. This trend of increasing competition is actually good for customers because it usually leads to lower prices, attractive offerings and improvement of services. Remember those old days when only one mobile company offered almost a half-kilogram phone with exorbitant rate plans, including paying out from your pocket whenever there was an incoming call? Now-a-days, you will find almost everybody on the street using mobile phones, prices and rate-plans of which have come down to a very affordable level. Where in the world can you find unlimited validity period like Banglalink except in Bangladesh? Where in the world can you find the cheapest ‘friend and family’ deals as offered by Airtel or other competing operators?

A study shows that, Bangladesh is a country where mobile companies have one of the lowest per customer revenue in the Asia-Pacific region. The measurement is called ARPU (average revenue per user). It is the amount of money, on average, that a company brings in for each of its customers per period of time (usually per month). Roughly speaking, the higher the ARPU for a company, the better it is from operators’ perspective. Obviously, the lower the ARPU, the better it is from customers’ perspective. Here is the summary of their findings:

Even though other measures are needed to understand the price-profit scenario, ARPU could be a good starting point. Amid this price pressures, operators are under compelling need to come up with differentiated products like 3G and mobile banking, the trend of which has already started. Hopefully, we will be enjoying low voice rates in coming days, and let the operators continue their pricey 3G services until the competition heats up again in this sector.

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Will printed books be obsolete in future?

With the advent of online libraries, pdf, epub and so many versions of virtual books, some may argue whether printed versions will be stacked on the shelves of history soon.

E-books have several convenience factors. It is cheap, storage does not require measurement in square-feet, babies cannot tear it down and you can easily carry thousands of them without hiring a taxi. The only downside could be the readers’ personal preference of turning pages, feeling and touching a book and experiencing the convenience of reading it without turning on gadgets and looking at battery level. Remember the fresh smell of new books when we started new school years? Some find e-books very mechanistic that does not add to the emotional experience of reading a “real book”. Well, some might disagree. Particularly, in the age of advance e-readers like Nook or Kindle, some readers feel that the lack of emotional connection to a physical book can somewhat be re-established.

So what is the magic point that would answer the question that we posed at the beginning? Will printed books survive? I guess the magic word is “convenience”. Once upon a time, “books” meant a stacked pile of carved stones that you had to handle to “read” inscriptions in there (muscle power required besides intellectual passion!). Then appeared the invention of paper, which was not what it looks like paper today, it contained some dried and straightened paste of fibers, combining some loose feeble scrolls that were delicate enough to be handled by average users. Today, we are lucky to have high quality paper that is versatile enough to print and store any thoughts in writing. This whole chain of evolution spanning over thousands of years was based on one single requirement: Convenience. So if there is any convenience factor that would be relevant to paper version of books today, they will probably survive.

There is one more thing that needs to be considered when we talk about “convenience”. How big is the size of consumers who think that either of the two (e-book vs. paper version) is more convenient to them? We never thought in the early ‘90s (when e-mail was the only virtual medium of texting) that there would be something like facebook and messengers which would be so convenient that a big chunk of users might love spending hours in the virtual world. Did we ever imagine spending hours in e-mailing then? No way. But spending hours on facebook or other social networking sites has become “convenient” because of the two-way real-time communication and consumers’ preference of multiple sources of information as those social sites offer today. So the “evolution of customers’ preference” by a sizable amount may also determine whether print version will be dead or not. For example, many readers (like myself:) would find printed versions personally more convenient to read and connect to the author. How about a decade down the road, majority of readers might find better technology and gadgets that would give them the same feeling and convenience of reading an e-book? Surely, the market size of paper versions might shrink to such an extent that it would be commercially unfeasible to produce paper books anymore.

Well, unless a sweeping technology completely takes away the convenience of paper books, we will probably see the co-existence of paper books and their e-versions.

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