Star Airways

Masters Program in Business Administration (MBA) Note :- Solve any 4 Case Study All Case Carry equal Marks. CASE I Sunder Singh QUESTIONS 1. What does the purchase of a product like Nike mean to Sunder Singh? Sunder Sing, just escaping homelessness is clearly proud that he was able to save and buy a pair of Nikes. He could undoubtedly have purchase a different brand that would have met his physical needs as well for much less money which he does not say why he bought the more expensive Nikes, a reasonable interpretation is that they serve as a visible symbol that Sunder Singh is back as a successful.

Sunder Singh is not Unique among low-income consumer in wanting and buying items such as Nike shoes. As one expert says. “The low income consumer wants the same product and services other consumer want”. He suggests that marketing efforts reflect those desires. Another expert state. There’s this stereotype that they don’t have enough money for toothpaste and that’s just not true. There has been some significance to them being called lower income, but they do buy things.

The working poor are forced to spend a disproportionate present of theirs income on housing, utilities and medical care due to lack of insurance. They generally relay on public transportation, they spend a smaller portion of their relatively small income on meals away from home and all forms of entertainment such as admission, pets and toys; they spend very little on their own financial security. However Sunder Singh illustrated they spend the same percent of their income though a smaller amount on apparel and accessories. . What does the story say about our society and the impact of marketing on consumer behavior? Marketing is generally thought of as the process of promoting goods and services to the end user. Society is generally defined as the condition in which members of a community live together for their mutual benefit. “Society can exist without Marketing, but Marketing cannot exist without Society” Marketing is the management process of anticipating, identifying and satisfying customer’s requirements.

The various conventional marketing tools- advertising, branding, direct marketing, sales promotion, publicity & public relations. Critics acknowledge that marketing has legitimate uses in as much as it connects goods and services to consumers who desire them. However some aspects of marketing, especially promotion and advertisements are subject to criticisms. They argue that product promotion is an attempt coming from the goods and service providers to influence demand. Advertising has become such an inextricable part of our lives that one cannot really imagine life without it.

Although we hardly ever notice, advertisements leave an indelible mark on our minds, especially the vulnerable groups like children and adolescents. Effect of Marketing on society, in particular on Vulnerable Groups Marketing and society, the commensuration of the two words raises a few eyebrows, as it is highly debatable. On the one hand, Society thrives on the marketing efforts of the Companies, while another school of thought argues that marketing makes the society more materialistic. Today, striking a balance between the two is the challenge faced by the Marketers.

The society expects the business to be ethical and desires corporate executives, at all levels to apply ethical principles in other words, guidelines as to what is right and wrong, fair and unfair, and morally correct, when they make business decisions. Advertisers are traditionally use techniques to which children and adolescents are more susceptible, such as product placement in TV shows, tie in between movies and fast food restaurants, to mention a few. Therefore there exist many marketing evils that lure people to buy even when not required. Case III Star Airways

Star Airways offered passengers air services within the country and served a territory of 18, 000 sq. miles with an expanding population of over 70 lakh of people who are potential users of the airline services. The geographic diversity and scattered business and commercial cities have led to steady increase in the number of people who use air travel. The clientele includes business people, as well as individuals on non-business trips, holidays, and leisure trips etc. As a result, the passenger traffic had been increasing steadily since the firm started operations in 1983.

In the last three years, however, the growth has not been consistent with the growth pattern showed by the company in the last fifteen years – as against a healthy growth of 13 per cent, the sales have marginally improved, registering a growth of 6 per cent. The company’s early success was due to the pioneering concepts used by it in the airline industry, which was dominated by large private and government operators with little market orientation. The launch of the company’s services coincided with a boom in the aviation sector and reduced government dominance, which opened up the skies for private operators.

Besides this, the company offered a host of innovations in the customer service functions such as smaller and newer planes, convenient schedules, free gifts, comfortable seats, exclusive terminals, express baggage-check, and airport-to hotel transit for its first and business class clients. In turn the fares charged by the company were premium in the category and almost 15 per cent higher than the industry average. The company president in the following words justified this move: ”We are selling entirely on the basis of providing quality experience to our clients.

Our services, ambience, and commitment to safety and time-bound schedule, all surpass the standards of the industry. ” During the first ten years of operations the company faced no direct competition. The only problems faced by the marketing staff were (a) the price, (2) the need to convince clients that air service was more efficient than other alternatives, (c) identifying the customers, and more importantly (d) developing the image of a dependable service. The consumers, who till now were forced to put up indifferent service offered by large government operators, did not offer much resistance and were agreeable to try out new company.

Once customers were convinced, retaining them was very easy. Hence the company enjoyed immense loyalty from its clients with almost 40 per cent of them being regular users. Sales were handled by the sales division as well as by some independent sales representatives. In early 1990s the company faced direct competition for the first time with a new company coming up with smaller planes and all other advantages which were previously associated with Star Airways. The growing business had made the market very lucrative and hence in the next three years, four major competitors were also vying for the market share.

The company slowly lost to these competitors and could manage to retain only 30 per cent of market share by the end of 1994. All the competitors were engaged in aggressive promotion and soon started a ‘price war’ in order to outdo one another. For the next six months, each of them offered big discounts and gifts (such as TV / audio systems) with the return ticket on different routes. The most profitable and commercia1ly viable routes were the major targets of these price related competitions. The consumer was the ultimate beneficiary and in short time, the companies started facing losses due to this price-cutting.

Star Airways had so far remained out of this ‘price-war’ and lost its market share on the competitive routes very rapidly. It was able to retain the clients on other routes, which were not a part of this intense competition. Unhappy an anxious about this state of affairs, the company vice president, marketing, developed a marketing plan with several components. The initial part of the plan consisted of a market research done on a cross-section of existing clients as well as the clients of competitors and the following observations were made : * Star Airways was considered a quality-oriented company but many felt that it was getting stodgy. The satisfaction with crew and schedules had declined over the last 5 years amongst regular customers. * The clients felt that the airline was losing its edge over customer service because it was nonflexible. * The prices offered by competitors are less and they provide only a fraction of services offered by Star Airways. This was the main reason of clients switching over to competitors. As many as 70 per cent respondents considered the costs as the most important factor in deciding on the airline. * Some deciding factors and their relative importance to clients were found to be following this pattern. * Feature offered by airline |Importance of feature as the deciding |Rank of feature in decision making influence | | |factor | | |Price |67% |1 | |Ambience and food |9% |3 | |Punctuality |14% |2 | |Services & convenience |7% |4 | |Free gifts etc. 3% |5 | The second phase of the plan included a massive advertising and promotion plan. The VP marketing, Anil Saxena, felt that the company needed to advertise it’s dedication to quality and rebuild an image of being a customer-oriented airline. He began discussions with the advertising agency to launch a campaign in the near future. After a month, the agency came out with the following recommendations: * The campaign is to be completed in four months time and the budget will be 351akh. * The company would reach 85% of target audience, once in a month by direct mail. * Four times a month a TV commercial will be aired on a business show time.

The audience TRP is consistent and highest in this category of shows. * Star Airways would build the campaign theme around ‘quality and customer service initiatives’ . * The direct mail letter would be sent to a database of 85,000 clients in four months. The letter will contain information on the airline and again stress on the same theme of’ quality and customer service’. QUESTIONS 1. What is likely to be the decision process in case of choosing an airline? 2. Would this plan suggested by the vice president help in convincing the customers to use Star Airways? Give your reasons. Case IV Mouse-Rid One hot May morning, Shobha, general manager of Innotrap India Ltd. , entered her office in Delhi.

She paused for a moment to contemplate the quote, which she had framed and hung on a wall facing her table. “If a man can make a better mousetrap than his neighbour, the world will make a beaten path to his door. ” She vaguely recalled that probably it was Ralph Waldo Emerson who said this. Perhaps, she wondered, Emerson knew something that she didn’t. She had the better mousetrap – Mouse-Rid – but the world didn’t seem all that excited about it. Shobha had just returned from a Trade Fair in Kolkata. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, this show had excited her. The Trade Fair officials held a contest to select the best new product introduced at the show.

Of the more than 150 new products, her mousetrap had won first place. Two women’s magazines had written small articles about this innovative mousetrap, however, the expected demand for the trap had not materialised. Shobha hoped that this award might stimulate increased interest and sales. A group of investors who had obtained rights to market this innovative mousetrap in India had formed Innotrap India in January 2001. In return for marketing rights, the group agreed to pay the inventor and patent holder, a retired engineer, a royalty fee for each trap sold. The group then appointed Shobha as the general manager to develop and manage Innotrap India Ltd.

The Mouse-Rid, a simple yet clever device, is manufactured by a plastics firm under contract with Innotrap India Ltd. It consists of a square, plastic tube measuring about 6 inches long and one and one-half inches- square. The tube bends in the middle at a 30-degree angle, so that when the front part of the tube rests on a flat surface, the other end is elevated. The elevated end holds a removable cap into which the user places bait (piece of bread, or some other titbit). A hinged door is attached to the front endofthe tube. When the trap is “open”, this door rests on two narrow “stills” attached to the two bottom corners of the door. The trap works with simple efficiency. A mouse, smelling the bait enters the tube through the open end.

As it moves up the angled bottom toward the bait, its weight makes the elevated end of the trap drop downward. This elevates the open end, allowing the hinged door to swing closed, trapping the mouse. Small teeth on the ends of stills catch in a groove on the bottom of the trap, locking the door closed. The mouse can be disposed of live, or it can be left alone for a few hours to suffocate in the trap. Shobha felt the trap had many advantages for the consumer when compared with traditional spring-loaded traps or poisons. Consumers can use it safely and easily with no risk for catching their fingers while loading. It poses no injury or poisoning threat to children or pets.

Shobha’s personal and informal inquiries with acquaintances and friends suggested that women are the best target market for the Mouse-Rid. Most women stay at home and take care of household chores and their children. Thus, they want a means of dealing with the mouse problem that avoids any kind of risks. To reach this market, Shobha decided to distribute Mouse-Rid through grocery stores, and kitchenware stores. She personally contacted a supermarket and some departmental stores to persuade them to carry the product, but they refused saying that they did not sell such contraptions. She avoided any wholesalers and other middlemen. The traps were packaged in a simple cardboard, with a suggested retail price ofRs. 150 for a piece.

Although this price made Mouse-Rid about five 1;0 six times more expensive than standard traps, those who bought it showed little price resistance. To promote the product, Shobha had budgeted approximately Rs. 300,000 toward advertising in different women’s magazines, such as Grah Shobha, and Good Housekeeping. Shobha was the company’s only salesperson, but planed to employ sales people soon. Shobha had forecasted Mouse-Rid’s first year sales at 2 million units. Through Aril, however, the company had sold only few thousand units. She wondered if most new products got to such slow start, or if she was doing something wrong. Shobha knew that the investor group believed that Innotrap India Ltd. ad a “once-in-a lifetime chance” with its innovative mousetrap. She sensed the group’s impatience. To keep the investors happy, the company needed to sell enough traps to cover costs and make a profit. QUESTIONS 1. Has Shobha identified the best target market for Mouse-Rid? Why or why not? 2. Does Shobha have enough needed data on consumer behaviour? What type of consumer research should Shobha conduct? 3. What type of advertising can influence consumers for this type of product? Case V Golden Glow Soap Anil Mahajan absent -mindedly ran his finger over the cake of soap before him. He traced the name ‘Golden Glow’ embossed on the soap as he inhaled its unmistakable sesame fragrance.

It was a small soap, almost like a bar of gold. There were no frills, no coloured packaging, and no fancy shape. Just a golden glow and the fragrance of sesame and Lucida font that quietly stated’ Golden Glow’. Mahajan smiled wanly and clasped the soap in his hands, as if protecting it from an unseen predator. He was wondering with quiet concern if the 30-year-old brand would last long. Sensi India, where Mahajan was marketing manager, was taking a long, hard look at the soap, as it was proving to be a strain on resources. There were varying stories about how Golden Glow was launched. Some said the brand was a ‘gift’ from the departing English parent company.

Others claimed that it was created for the then chairman’s British wife, as the Indian climate did not agree with her skin. They also claimed that the lady also coined the copy “The honest soap that loves your skin” was also coined by the lady. The line had stuck through three decades. Only the visuals had changed, with newer models replacing the older ones. Zeni was basically a speciality products company producing household hygiene, fabricare, and dental care products. Golden Glow was the only soap in its product mix, produced and marketed by Sensi. Its reliable quality and value delivery had earned it a lot of respect in the market. Golden Glow equity was such that Sensi was known as the Golden Glow Company.

Indeed, the brand name Golden Glow denoted purity, reliability, and gentle skincare. In 1994, Sensi UK increased its stake in the Indian subsidiary to 51%. Within months, all of Sensi’s products were given a facelift, thanks to the inflow of foreign capital. New packaging, new fragrances, new formulations and more variants were introduced. Only Golden Glow was left untouched. For, although it had a growing skincare business following some strategic acquisitions in Europe in the early eighties, Sensi UK was not a soap company. The UK marketing team ran an audit of every brand and product in the company’s portfolio. But when it came to Golden Glow, it faltered. We don’t know this one,” officials at the parent company said. “We don’t want this one to be touched,” Mahajan had said protectively, a sentiment tliat was endorsed by the managing director, Rajan Sharma. “Golden Glow is too sacred, we will leave it as it is,” he said. But the UK marketing team was confounded. What was a lone soap doing in the midst of toilet cleaners and fabric protectors; they wondered, however they somehow agreed that their proposed revamp strategy would only look at up-gradation, not tinkering with what wasn’t broken. Indeed, for 30 long years no one had tampered with the Golden Glow brand. And Mahajan felt there was no reason to start now.

Golden Glow, in his view, was a self-sustaining brand. That was a bit of an understatement because advertising for the brand was moderate and Sensi India had never used any promotional gimmick for it. Now, after four years of nurturing the other categories, Sensi UK had decided to launch its Vio range of skincare products in India. But Golden Glow’s presence and profile was a major roadblock to Vio’s success. “It will create dissonance, confuse our skincare equity and deter the articulation of Vio’s credo. It will stand out as a genetic flaw,” argued the UK marketing head. “You need to do a rethink on Golden Glow. ” Mahajan protested. “Why? It has such a strong equity and loyal following.

So much has been invested in it all these years. Why give up all that? ” Rajan, however, had another idea. “Let us then extend the Golden Glow brand. ” He said It was the simplest solution. Companies were now investing heavily in creating new equities for their brands. But in Golden Glow’s case, Sensi was already sitting on a brand with a terrific equity. He felt that extending this equity to other categories, such as skincare products would be successful. But Golden Glow needed a new positioning before it could be extended. Till a few years ago, it had been in premium category, priced at Rs. 15. Then new brands with specific positioning and higher price tags entered the market.

This created a level above Rs. 15 soaps and pushed Golden Glow down to the mid-priced range. So Golden Glow’s price was not commensurate with its premium position and image. Over the years, Golden Glow had become so sacred that Sensi India had been too scared to do anything to it. As a result, the soap was left with niche category of loyal users. This category neither shrank or increased, just kept getting older and older, and with it the brand also kept growing older. For example, when Mahajan’s wife had her first baby at 25, her mother had recommended Golden Glow for her dry skin and also for baby’s tender skin because it contained sesame oil.

That was in 1979. Today, Mahajan’s daughter had turned 21 and was being wooed by Dove, Camay, even Santoor, and Lifebuoy Gold, with their aggressive advertising. Golden Glow had begun to lose its image of being contemporary as newer brands came in with newer values. Today, at 46, Mahajan’s wife still used Golden Glow, but when she recommended Golden Glow to her daughter, she said, “But Golden Glow is a soap for mothers, for older people. ” That was a major problem. The Golden Glow brand had aged, and Sensi India hadn’t even been aware of it. While its equity had grown with its users, its personality had aged considerably in the last 30 years. I don’t think you can keep the personality young, unless you keep renewing the brand. The objective now is to widen your equity so that your image becomes young,” continued Rajan. “For instance, if today you were to personify a Golden Glow user now, it would be a woman of 45 years using the same brand for many years, who is aver-se to experimenting, very skincare conscious, very trusting, and very one-dimensional. As you can see, this is not a very competitive personality. These are the strengths of our Golden Glow, but these are also its weaknesses,” he analysed. The context had changed. Today, youth demanded brands that stood for freedom and fearlessness. They demanded bold brands that dared to cure, not just p;eserve. Preservation is for old people. Those are the attributes being presented in evolved markets,” said Rajan. To make Golden Glow contemporary, the attributes had to be re-framed, he felt. “You can’t make a young brand trusting caring, loving, without adding other attributes to it. Today, youth stands for freedom, for laughter, for frankness, for forthrightness. That’s what Close Up, Lifebuoy Gold, Vatika, and other brands propagate. So, either come clean and say it is for older skin which needs trust and kindness, or reposition the brand,” said Rajan. Repositioning was also necessary to address another anomaly in Golden Glow’s image: its perceived premium.

Sensi India had been unable to do anything about Golden Glow slipping into the mid-price range following the entry of more expensive brands. Now, as Rajan mulled over the brand extension plan, Mahajan felt that Golden Glow’s premium positioning was its core equity and that had to be maintained. “If you are premium priced in the consumer’s mind, your extensions are automatically perceived as premium. So, if you don’t present the other products as premium, the consumer will not see them as extensions of the brand,” he said. “For example, if you are to launch a shampoo which is priced lower than Sunsilk, but higher than Nyle and Ayur, then whatever the rationale, the consumer will not accept your product. It is not the Golden Glow I know,” will be the feeling,” he said. Mahajan felt that since premium positioning was one of Golden Glow’s equity values, it would be very difficult to convince consumers that the brand was being extended without hanging on to this particular value. “Will they buy your rationale that the very same values and equity would now be available at a low price? To be in the premium segment now, you have to price it at Rs 35 or 40, almost on a par with Dove,” he said. “With Dove retailing at Rs 45, Golden Glow will be perceived as a cheaper option. ” “We can’t simply raise the price,” said Rajan. “What are we offering for that increase?

You can ‘t add value because you don’t want to tamper with the brand. The consumers will then ask, “Golden Glow used to be so cheap, what has happened now? The user will forget that 15 years ago, Rsl0 was expensive, because all her comparisons would be in today’ s context,” said Rajan. “So what’s the option? ” asked Mahajan. “You don’t have to be expensive to be premium,” said Rajan. Golden Glow already has the image of a premium brand, thanks to its time-tested core values of purity, credibility, and reliability. What we can do is reinforce the premium through communication and positioning. In fact) we should have tinkered with Golden Glow long ago.

That is what HLL did with Lux. It also launched a bridge brand, Lux International, in the premium category,” said Rajan. “How could we have done anything to the brand? ” asked Mahajan. “The product had such a strong following. It stood for gold, for sesame oil, for its subtle earthy perfume. We changed the packaging periodically, but that’s all we could do. Remember the time we brought out a transparent green Golden Glow with the fragrance of lime? It bombed in the market. ” Rajan was not in favour of the premium positioning. It appeared very short sighted to him, given the bigger plan to extend the brand. “Where are the volumes in the premium segment? He asked. For some reason, every manufacturer feels that skincare can be an indulgence of only the moneyed class. As a result, there is a crowd in the premium end of the market. Do we want to be yet another player in the segment? ” Fifteen years ago, Golden Glow was perceived as a premium product. But today, globa1brands like Revlon, Coty, and Oriflame were delivering specific premium platforms. Golden Glow did not have a global equity. ‘Let us revisit the brand and examine what it stood for 15 years ago and examine the relevance of those attributes in today’s context,” suggested Rajan. “Golden Glow stood for care, consciousness, love, quality and all that.

But today, are these enough to justify a premium position? ” he asked Mahajan. “These attributes are viable in the mid-priced segment. ” He said. “The mid-priced brand is the proverbial washer-man’s dog,” said Mahajan. “You don’t know whether you are at the bottom end of the premium range or at the top-end of the low-priced range. You end up creating an image of being on the opportunity fence. It is a mere pricing ploy, with no strategic value. ” QUESTIONS 1. Discuss the nature of problem(s) in this case? 2. Suggest the kind of consumer research needed? 3. How should Golden Glow be positioned/ repositioned to bring about the desired change among consumers? Give your reasons. CASE VI

Impact of Retail Promotions on Consumers Shoppers’ Delight, a large retail store, had above-average quality and competitive prices. It advertised its retail promotions in local newspapers. Its TV advertising was mainly aimed at building store image and did not address retail promotions. The management knew it well that they had to advertise their retail promotions more, but they did not feel comfortable with the effectiveness of present efforts and wanted to better understand the impact of their present promotions. To better understand the effectiveness of present efforts, a study of advertising exposure, interpretation, and purchases was undertaken.

Researchers conducted 50 in-depth interviews with customers of the store’s target market to determine the appropriate product mix, price, ad copy and media for the test. In addition, the store’s image and that of its two competitors were measured. Based on the research findings, different product lines that would appeal to the target customers were selected. The retail promotion was run for a full week. Full-page advertisements were released each day in the two local Hindi newspapers, and also in one English newspaper that devotes six pages to the coverage of the state. Each evening, a sample of 100 target market customers were interviewed by telephone as follows: 1.

Target customers were asked if they had read the newspaper that day. This was done to determine their exposure to advertisement. 2. After a general description of the product lines, the respondents were asked to recall any related retail advertisements they had seen or read. 3, If the respondents were able to recall, they were asked to describe the ad, the promoted products, sale prices, and the name of the sponsoring store. 4. If the respondents were accurate in their ad interpretation, they were asked to express their intentions to purchase. 5. Respondents were also asked for suggestions to be incorporated in future promotions targeted at this consumer segment.

Immediately after the close of promotion, 500 target market customers were surveyed to determine what percentage of the target market actually purchased the promoted products. It also determined which sources of information influenced them in their decision to purchase and the amount of their purchase. Results of the study showed that ad exposure was 75 per cent and ad awareness level was 68 per cent and was considered as high. Only 43 percent respondents exposed to and aware of the ad copy could accurately recall important details, such as the name of the store promoting the retail sale. Just 43 per cent correct interpretation was considered as low.

Of those who could accurately interpret the ad copy, 32 per cent said they intended to respond by purchasing the advertised· products ‘ and 68per cent sad they had no intention to buy. This yields an overall intention to buy of 7 per cent. The largest area of lost opportunity was due to those who did not accurately interpret the ad copy. The post-promotion survey indicated that only 4. 2 per cent of the target market customers made purchases of the promoted products during the promotion period. In terms of how the buyers learned of the promotion, 46 per cent mentioned newspaper A (Hindi), 27 per cent newspaper B (Hindi), 8 per cent newspaper (English), and 15 per cent learned about sale through word-of mouth communication.

The retail promotion was judged as successful in many ways, besides yielding sales worth Rs 900,000. However, management was concerned about not achieving a higher level of ad comprehension, missing a significant sales opportunity: It was believed that a better ad would have at least 75 per cent correct comprehension among those aware of the ad. This in turn would almost double sales without any additional cost. QUESTIONS 1. Why would some consumers have high-involvement levels in learning about this sales promotion? 2 Is a level of 75 per cent comprehension realistic among those who become aware of an ad? Why or why not? 3. Do you think such promotions are likely to influence the quality image of the retail store? Explain.