Understanding Products Offerings

A report submitted To INSTRUCTOR: Prof. Abraham Koshy ACADEMIC ASSOCIATE: Dr. Sonal Kureshi In requirements of the course Marketing-II (2013-14)

By Group D4, Section D

Ankur Sinha Aravind T. Arushie Mangla Hemanshu Das Rahul Agrawal Saurabh Kothawade

On 14 October 2013
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INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

Zomato:
Zomato is an online restaurant guide providing information on restaurants. Its core content includes menu, photographs, contact details and geo-coded locations. Along with it, it provides community features such as reviews, ratings and ability to follow others recommendations to name a few. Zomato is owned by ZomatoTM Media Pvt Ltd and was re-christened as Zomato from Foodiebay (started in July 2008) in November 2010. Zomato was not the first of its kind product in India. Burrp.com existed two years before Foodiebay came into existence. But there were significant differences among the two. Burrp soon after its launch diversified into providing information on salons, shopping centres, movies, etc. whereas Zomato has remained focussed on providing its users information on the food outlets across the cities. For Zomato, the customers are advertisers but Zomato can attract advertisers only by attracting more users to its site. So, though commercial success or failure can be measure by the ad revenues it generates, we feel that ad revenues is depends on the number of users it attracts and thus we would define the success of the website(product) by the number of users Zomato has. This figure has been constantly growing and is currently 105million users, aided by the mobile applications. According to online sources, the number of unique visitors to site has doubled in the last one year. From the various advertisements on social networks, it apparent Zomato targets the youth and the officegoers in the metropolitan cities. This can be interpreted from exhibit 1 and the interpretation is reinforced by data from online metrics (Exhibit 6). Zomatos competitors are burrp.com, justeat.in and a few more startups. But none of them focus on listing and reviewing restaurants (Exhibit 4). Thus, Zomato aims at becoming the best source of restaurant listings, similar to what Trip Advisor is for hotels across the globe. From our interaction with peers, we can conclude that Zomato has become the must-check site before visiting a new restaurant. A key advantage of Zomato is its focus in involving users. Its reaches out to customers using both its social networks and small ads at restaurants seeking reviews. Thus, it is able to gather interest. More importantly, it engages its customers actively (Exhibit 3). It not only seeks feedback, but has also attempted to create ads by crowdsourcing (Exhibit 2). This helps retaining users and from our interaction with peers, we can conclude that Zomato has become the preferred must-check site before visiting a new restaurant. We feel that Zomato will succeed in increasing its user base even more as it launches its solution in more geographies. The growth will be aided by even increased awareness since internet penetration is sufficient in its target segment. Though it is expanding, it still stays primarily focussed on listing restaurants and providing as a platform for reviews (Exhibit 5). Its user engagement is praise-worthy and these factors will help it gain success in the Indian market Key Learnings: From Zomato, we understand the importance of focussing on its key product. By not trying to diversify and pursing its key innovation, we believe it has been able to and will remain as the preferred choice for restaurant information and reviews. It is important to have one value proposition. By trying to be

many things to many people (like burrp), one ends up being nowhere. Also, involving customers in the process can lead to both, greater customer interest and service imporvement. It can lead to significant benefits.

Forbes India:
Forbes India is a business magazine owned by Forbes Plc. and Network18. It is a biweekly magazine with topics related to business such as investing, finance etc. and also related topics such as technology and law. The magazine was launched in India in 2009 and joined a market which already had Business Today, Business World and Business India. Forbes India was the first print media for Network18 and thus, was a new-to-company product. For Forbes, both readership and advertisements are important sources of revenue. According to us, the premium on advertisements carried by Forbes are determined by the profile of readership and not just the number. We would define Forbes success by both the readership and the readers profile (Exhibit 7). Currently, 20% of readers are entrepreneurs with a turnover of more than 10cr and 43% of the readers belong to top management level of various organization. If this percentage increases along with readership, we can safely assume that the magazine is succeeding. Currently, though Forbes has the lowest readership among its competitors, it charges more than any other business magazine for full-page advertisement which is a direct result of its reader profile.(Exhibit 8) Currently Forbes India has a biweekly circulation of 75000 and has revenues close to 25 crores. This performance is much better compared to other magazines which have been in the market for decades but still have a turnover less than 50 crores. According to us, quite a few factors help Forbes differentiate itself in the Indian market. Forbes, due its American origin, successfully brings (or atleast portrays to bring) in the international perspective on Indian dealings. Also, being priced double of its competitors (except Fortune India) it highlights the fact that the magazine is for readers who belong to the higher income strata and who know what they want from the magazine and thus, brings a sense of seriousness. Moreover, featuring on the cover page of Forbes is considered as a huge appraisal and thus a big attraction for aspiring men and women. We feel these factors have contributed to the success of Forbes India so far. (Exhibit From Forbes Indias TVC, it is apparent that Forbes India portrays itself as a magazine for the elitist of the elite. According it attracts both the elite and those who aspire to be among them. Also, through the content it is able to retain its readership. Thus, we feel that the product will succeed in the coming future as it has been able to build a strong brand in its defined target segment and has associated the right attributes with the magazine. The aspirational appeal of the magazine also leaves room for significant growth as a large number of people would associate with the magazine because of that and not just business news. Key learnings: From Forbes India, we learn that merely capturing market share isnt important. The type of customers you capture (premium customers here) is also equally important and can be a significant competitive advantage. Also, it is possible to redefine the attributes of conventional products. It changed the

magazine from being a provider of business news to a product which targeted the aspirational needs of individuals.

Benchmark Gold BeEs (now rechristened as GS BeEs): Indias first Gold ETF
Company: Benchmark Asset Management Company Pvt. Ltd (BAMPL) A Gold ETF gives investors a convenient medium to invest in gold. The investors buy units of a mutual fund (which in turn invests the money in gold), which are listed on the stock exchange. These units can be traded on the exchange. BAMPL was the first company in the world to conceptualize a Gold ETF in May 2002 but it didnt get SEBI approval for it until 2007. Till then, the product was launched in a number of countries. Hence, while it was a new to the world product when it was conceptualized, it was a new to the market product when Benchmark Gold BeEs (Benchmark Exchange Traded Scheme) was introduced in February 2007. Being the first of its kind product, Gold BeEs attracted a lot of media coverage hence creating the necessary awareness for a new product. BAMPL was primarily targeting the retail gold buyers who bought gold in small quantities by buying gold coins and bars. It was also targeting HNIs as the government offered some tax benefits on investing in gold via ETFs. Bulk gold buyers or institutional buyers wouldnt have been willing to pay the 1% asset management fee that it charged. The key benefits it offered to its target segment: a) solved the problem of storage and safety b) eliminated the risk of fraud in gold quality (gold of lower purity or spurious metal) c) Allowed investors to invest in small denominations (starting from Rs. 10,000 as against UTIs minimum investment requirement Rs.20,000 ) d) Provided liquidity i.e. investors could sell the product on the exchange during market hours whenever they wished. Also, a lot of retail investors like to track the prices of their investments on a day-to-day basis. To satisfy this, BAMPL displayed a real-time NAV of its ETF on its website. The products first mover advantage was diminished to some extent as UTI Gold ETF was launched after it with a gap of only 10 days because of SEBIs approval process. However, Benchmark Gold BeEs charged an entry load of only 1.5% as against UTIs 2.5%. This together with the above mentioned benefits enabled it to capture a large chunk of the market despite competition from a strong brand like UTI. In March 2009, it had a market share of 40.64% (302 cr. out of 743 cr.) as against UTIs 26% share. As the market size increased, Gold ETFs saw increasing competition from other players. However, Benchmark Gold BeEs was able to maintain its leadership position by keeping its asset management fee at 1%, which was the lowest in the industry. This together with the strong brand it managed to create because of its first mover advantage ensured that it maintained its market leadership position. In March 2011, it had 38.71% (1700 crores AUM out of a total market of 4400 crores) share of the ETF market in value terms. BAMPL was bought by Goldman Sachs (GS) in 2011. The ETF was rechristened as GS Gold BeEs. Since then, the ETF has consistently lost market share. Its market share fell to 28.22 % (3287 crores AUM out of a total market of 11,647 crores) in March 2013.

We feel that GS BeEs wouldnt be able to regain its past glory going forward. This is because a number of trusted brands such as SBI, Axis & HDFC have entered the business. These companies come with a very strong distribution network which helps in New Fund Offering (NFO) i.e. new fund raising. Also, they have a lot of investor trust associated with their brand which is very important in this category. Also, in this category, investors also compare returns across funds before investing. GS BeEs has given a return of 20.68% in the last 3 years (ending March 2013) against a return of 20.93% given by SBI Gold ETF. Hence, in terms of performance rankings, which influence the perception of investors SBI (ranked 1) ranks higher than GS BeEs (ranked 5th). Hence, we believe that going forward, in the immediate future, GS BeEs will not be able to do as well as its competition. The market might grow with growing retail demand for gold but GS BeEs will lag its competitors in securing new business. Key Learnings: We learnt that often when you are launching a new-to-the-world product, you get a lot of free media coverage. It is very effective in creating credible brand and product awareness at absolutely no cost. Also, Minor differentiators (real-time NAV tracker on website) and accepting smaller denominations can have a major impact on the products success. And once a product become commoditized, it is important to keep costs low to maintain market share with increased competition. And a strong brand from the past doesnt ensure future success and market leadership. Equally strong brands may emerge in the market.

Sugar Free by Zydus Wellness Ltd.:

Sugar Free is a low calorie sugar substitute. It provides the taste and sweetness of sugar but with negligible calories. At present, two variants are available in the market under the Sugar Free brand: Sugar Free Gold and Sugar Free Natura. Sugar Free gold is made from aspartame (a protein derivative) and can be added to tea, coffee, milk, cornflakes, nimbupani etc. Sugar Free Natura is made from Sucralose, a zero calorie sweetener and it can replace sugar in all kinds of preparations like desserts, mithais, fruit custard, ice cream etc. SugarFree was launched as an OTC product in 1993. Before that, it was positioned as a prescription drug for diabetic and overweight customers. It was a new to the market product as sugar substitutes existed in foreign markets but it was the first one to be launched in India. Till 1999, the company didnt do much to change the positioning of the product. The packaging in blue and white had a medicine-like look. It largely targeted diabetic and overweight customers. However, in 1999 a senior executive of Zydus Wellness was travelling by train when he introduced himself to a co-passenger using a Sugarfree product. The copassenger was annoyed and tried to hide the sugar free pack. The incident revealed that no diabetic patient wants others to know that he is suffering from the disease and using Sugar free was an absolute giveaway of his medical condition. Based on this insight, the company changed the positioning of Sugar Free from a product for diabetic patients to a product for health-conscious people. (Exhibit 9) The companys advertising campaigns over the years featured prominent actresses like Bipasha Basu (2008) and Raveena Tandon (2003) and the popular TV commentator Harsha Bhogle (2003). These and other campaigns have regularly emphasized Fitness & Freedom from Calories (Exhibit 10) as the benefits.

The company also changed its packaging to a vibrant yellow color. These campaigns and packaging changes successfully changed the consumer perception of the brand from being a medicinal product to a product that promoted healthy lifestyle by reducing calorie intake. The product today is available in various forms such as pellets, tablets, sachets and powder. This offers wider choice to the consumer. It also makes the product capable of being used at various places. Eg. The availability of sachets ensures that restaurants can keep and serve it to consumers. The company also changed the distribution channel including kirana stores apart from chemists hence adding to its credibility as a product for daily household consumption. In the modern day urban lifestyle, the demand for the need that Sugar Free satisfies is huge. In our opinion, the change in Sugar Frees positioning emphasizing the attributes of Fitness & Freedom from calories (Exhibit 11) led to its success. The companys sales have increased from 7.9 cr in 2000 to over 200 cr in 2013. The company has managed to grow the category and retain its market share at over 90%. All competitors have failed to capture market share from it. These numbers along with the repeated failure of competition show that it has been successful in the past. Since Sugar Free has 90% market share, it needs to increase the category sales for its own growth. In our opinion, one of the factors hindering the category growth is the consumer perception of the harmful effects of sugar substitutes. This has not allowed it to become a daily use product for healthy people. The company needs to develop a product that can address these concerns and come out with a campaign to convey the safety aspect if it wants to maintain its growth in the future. However, the relevance of this category will still increase going forward considering the increasing urban lifestyle problems. Together with this, the number of people with diabetes in India is expected to go up to 75 million by 2025 from the current 50 million. These two factors will lead to significant demand growth. Sugar Free has managed to build an extremely strong brand and competitors in the past have failed to capture any significant market share from it. Hence, we feel that Sugar Free will continue to grow in the future. However, the extent of the growth would depend on its ability to expand the category size and in our opinion one of the things it will need to do is to improve on and then promote the safety aspect of its product. Key Learnings: We learnt from Sugar Frees success post 2000 that mere consumer awareness of benefits isnt enough. The way the product is perceived (product for health conscious people v/s product for diabetics) by the consumer is equally important. The image makeover of Sugar Free was not just about advertising but also about changing the packaging and most importantly expanding the distribution to kirana stores (from the earlier chemist stores). These subtle factors also strongly influence the brand image. We also learnt that when you are the market leader by a large margin, your focus should be on expanding the market and not on increasing market share. Sugar Free also managed to stay relevant to consumers at all times (by advertising campaigns relevant to the era) and at all places (sachet for restaurants, powder and tablets for home use) leaving no room for competitors. This is extremely important to maintain leadership.

EXHIBITS:
Exhibit 1: Advertisements of Zomato

Exhibit 2: Crowd-sourced Zomato TVC - http://youtu.be/5Grk51USrBI

Exhibit 3a: Customer Engagement

Exhibit 3b: Seeking Feedback

Exhibit 4: Newspaper article Focus on restaurant listings

Exhibit 5: Comparison between Zomato and Burrp

Exhibit 6: Online viewership data for Zomato from www.alexa.com Exhibit 7: Reader Profile for various magazines ( Source: www.themediaant.com)

Forbes: 43% of the Forbes India Magazine TG belongs to Top Management, 19% Mid Management & 7% Students 20% of Forbes India Magazine are owners of enterprises with a turnover of 10+ crores 97% of the readers of Forbes India Magazine are SEC A1 & 2 33% are between 36-44 years, 25% between 25-34 years, 23% between 45-54 years 83%+ of the readers of Forbes India Magazine live in premium localities 67% of the readers of Forbes India Magazine own high-end apartments / bungalows 48% own multiple cars & 1/3 of the readers plan to upgrade to a premium car next year 20% of Forbes India Magazine own super luxury watches & 80% own multiple premium watches
BusinessWorld:

45% of the readers of Business World magazine are 35+ 39% of Business World magazine readers own PCs with an internet connection at home 25% of the Business World magazine readers have premium club memberships 94% of the Business World magazine readers spend on high-end dining 95% of Business World magazine readers spend on high-end luxury products Business India: 79% Male and 21% Female 73% well educated 61% belong to SEC A, 21% SEC B and 18% C, D & E 75% are between 20 and 49 years and 18% are 50+ 60% are in metros.

Exhibit 8a: Ad Prices

Exhibit 8b: Circulation (per issue) Forbes India: 75000 Fortune India: 85000 Business India: 1,28,000 BusinessWorld: 1,80,000 Exhibit 9: SugarFree Natura Ad Positioned as a diet product

Exhibit 10: SugarFree TVC focussing on diet - http://youtu.be/H7bqNkAxLKM Exhibit 11: Freedom from Calories