Companies often compete with one another to gain shares in crowded markets, but what if there was a more effective way? In this lesson we look at a different approach: the Blue Ocean Strategy, which avoids competing and instead looks to create demand in untapped markets. The History of the Blue of Ocean Strategy When we think of competition between companies like Coke and Pepsi or Walmart and Costco, we think of competitors fighting to get the biggest share of the market. The companies try to outperform their rivals through more aggressive advertising, price wars, and other tactics. The Blue Ocean strategy is an entirely different approach. W. Chan Kim and Renee Mauborgne came up with the idea after they conducted a study of 150 strategic moves spanning 100 years and involving 30 industries. They found that the best option would be for companies to generate demand in a new market space rather than to compete for the same market space. They published these findings in a 2005 book called 'the Blue Ocean Strategy', which detailed what the strategy meant, examples of why other strategies are not sustainable, and examples of companies succeeding using their methods. Before the introduction of the Blue Sky Strategy, the existing theory on competition was headed by Michael Porter who claimed that successful businesses were either niche-players on a market or low-cost providers. The essence of the Blue Ocean Strategy If we think of all the companies in the world, they all have their own markets and compete in these markets with other rivals. The existing markets with competition are called red oceans. A good example of a red ocean market is the automotive and airline industries. Companies in these markets use similar tools such as advertising and pricing strategies to gain a greater market share. However, with lots of competitors in a market the struggle to gain greater share is even tougher, meaning companies spend more on advertising, marketing, improved customer service, or cut prices to attract more customers. All of these activities result in heightened competition and lower profits, meaning the chances for growth are slim, at best. The competition is so aggressive that it is referred to as cutthroat competition. The red ocean gets its name from the idea of oceans being red with blood from cutthroat competition. Nowadays, red oceans seem typical of most industries, implying the prospects for growth are not great. So what other options could companies consider? The blue ocean refers to industries that have yet to be discovered by companies. Industries which don't exist yet also have markets without competitors. Rather than fighting for the same customers, in blue oceans the demand is created and a market emerges. The blue ocean approach is based upon the concept of value innovation which was also introduced by the authors of the Blue Ocean Strategy, Kim and Mauborgene. The concept seems to go against all current business rationales as the message is not to compete. Instead, companies look to find untapped markets through creating a new demand whilst at the same time they seek to keep costs low. In this way, the company gains new markets and the buyer gets value for money. Finding Blue Oceans While avoiding the use of Harvard Business School’s Michael E. Porter's name, Kim and Mauborgne attack the famous "five forces" market analysis head on. Porter’s model looks at specific factors that help determine whether a business can be profitable based on other businesses in the industry.

Advocates of Kim and Mauborgne’s strategy would say this is a tactic that promotes merciless competition, remaining in the red waters. The key to exceptional business success, the authors say, is to redefine the terms of competition and move into the "blue ocean," where you have the water to yourself. The goal of these strategies is not to beat the competition, but to make the competition irrelevant.

To discover an elusive Blue Ocean, Kim and Mauborgne recommend that businesses consider what they call the Four Actions Framework to reconstruct buyer value elements in crafting a new value curve. The framework poses four key questions:

 Raise: What factors should be raised well above the industry's standard?  Reduce: What factors were a result of competing against other industries and can be reduced?  Eliminate: Which factors that the industry has long competed on should be eliminated?  Create: Which factors should be created that the industry has never offered?

This exercise forces companies to examine every factor of competition, guiding leaders to discover the assumptions they unconsciously make while competing. They can then search for blue oceans within their industries and make the shift.

Swiggy, Nykaa, Flipkart, I Tunes, Maruti etc Case Study: Kurl On: Ad Campaign

In May 2014, Ogilvy & Mather India (O&M), one of the leading advertising agencies in India, found itself in the eye of a storm over a Kurl-on ad it had created to highlight the product proposition of bouncy mattresses. The ad, one in a series of three print ads titled ‘Bounce Back’, featured a string of cartoon images of Malala Yousafzai, the young Pakistani student activist who was shot and injured seriously by the Taliban. The ad depicted Malala being shot in the head, falling backward covered in blood, being put on a drip, then bouncing off a Kurl-on mattress and recovering to accept the Nobel Peace Prize. The ad sparked global outrage and was widely criticised as being offensive and for using a horrific tragedy to hard sell a product. About O&M O&M, one of the leading advertising, marketing and PR agencies in the world, had more than 500 offices in 126 countries globally as of 2015. The New York-based agency was founded in 1948 by David Ogilvy, considered the father of advertising. According to its founder, an advertiser’s job was to come up with advertising that sells, and the advertising that sells best was advertising that built brands. Over the years, O&M has created some brilliant ads with catchy punch-lines and unique concepts that earned it accolades from all quarters. It built some of the most recognisable brands in the world, including Ford, Shell, Barbie, Pond’s, Dove, IBM and Kodak. In India, O&M is headquartered in Mumbai. It is headed by Piyush Pandey, the agency’s Executive Chairman and Creative Director of India and South Asia operations. Pandey has been with O&M since 1982. O&M is a leading ad agency in India and the creative mind behind successful brands such as Vodafone, Cadbury, Asian Paints and Fevicol. About Kurl-on Kurl-on, headquartered in Bangalore, is one of the largest producers of mattresses in India. The company’s products include mattresses, pillows, furniture and other home décor products. ‘More bounce and less wear and tear’, is the unique selling proposition (USP) of Kurl-on mattresses. The company also exports its products to a number of countries. In 2014, to retain its position as the major player in the Indian mattress market and to enhance its global presence, Kurl-on repositioned itself by emphasising the ‘bounce’ attribute of its mattresses. The campaign The Kurl-on ads sought to convey the message that a good night’s sleep on a spring mattress helped a person recover remarkably, both mentally and physically, from any kind of damage. Kurl-on wanted to highlight the ‘bounce’ attribute of its mattresses by linking them to famous personalities who had bounced back in life after major setbacks. O&M decided to use three iconic figures who were globally acclaimed and were looked up to – Mahatma Gandhi, Apple Inc.’s founder Steve Jobs, and Malala – for the three ads. To add a touch of humour, the characters in the ads were depicted as cartoons. The Malala ad sought to show how she had bounced back after being brutally shot by the Taliban. As a young girl, Malala had defied the Taliban after the group issued a fatwa banning the education of girls in Pakistan. She became a major advocate for women’s right to education and an inspiration for many as she continued defying the Taliban despite receiving death threats. On October 9, 2012, Taliban terrorists shot the 14-year-old Malala in the head. It was only after months of surgeries in the UK and rehabilitation that she was able to make a full recovery. Thereafter, Malala became a global youth icon. The other two ads that were part of the campaign showed a young Gandhi being thrown out of the train and bouncing back to become the Father of the Nation, and Steve Jobs bouncing back after he was kicked out of Apple. The punch-line for all the three ads read ‘Bounce Back’. According to O&M, the ads depicted how successful people bounced back in life by turning adversities to their advantage and going on to become legends. The ad agency felt that “bounce back”, as a figure of speech, also lent itself effortlessly to the spring mattress category. In May 2014, in order to enter the Kyoorius Advertising and Digital awards, O&M uploaded the ads on the online forum Ads of the World. The backlash The ad featuring Malala went viral. The ad, which was reportedly not run in any paid media, spread like wildfire across the Web. It drew flak from all quarters for its content, which was found to be offensive and in bad taste. The gory images used in the ad did not go down well, either with social media users or the international media. It was widely panned on social media platforms such as Twitter for the insensitive portrayal of a tragedy faced by a young girl. The ad was also condemned by human rights activists who called it morally wrong and an inhuman portrayal of a tragedy to sell mattresses. Some industry observers felt that though O&M had come up with a creative idea to promote the ‘bounce’ feature of the mattress, the ads could have been executed without making caricatures of famous people. However, some others felt that the ad was not insensitive and did not trivialise Malala, as alleged. According to them, the whole idea of bouncing back from an ordinary person to someone the world respected was brilliant and not offensive. Also, the connection to the brand itself was not weak, as sleep is actually an under-rated factor in living well and accomplishing goals. Some analysts pointed out that the ad celebrated the human spirit and that Malala had been chosen to represent the determination of the human will. They felt that, sometimes, ad agencies had to push a few boundaries and break a few rules to convey a point. They also lamented that people had begun to take offence at the slightest of things. The aftermath Faced with shrill criticism, O&M pulled down the ads and Kurl-on decided against releasing them formally. In a statement, O&M also tendered an apology to Malala and her family and said that the company deeply regretted the incident. It said the ads run by the India office were contrary to the beliefs and professional standards of O&M and its clients. The agency also vowed to investigate how its standards were compromised and promised to take the necessary corrective action. Looking ahead However, O&M’s India head, Piyush Pandey, said that the ads were legitimate and refused to accept that anything wrong had been done. Nevertheless, the debate over the Kurl-on ads raised many questions for advertisers, in general, and O&M, in particular. Some experts were of the opinion that though creativity knew no boundaries, ad agencies had to be careful while treading the line between creativity and being offensive. The question before them was: How do ad agencies do this fine balancing job of creatively communicating a message without being offensive? Your brief If you were the creative head of O&M, how would you creatively convey the message of the bounce in Kurl-on’s mattress, without coming across as offensive (as was the case with the Malala ad). Please write a concept note on the campaign you would conceive of for Kurl-on. Your note can outline your rationale for the campaign and also emphasise the copy line around the theme of your campaign. The idea should be for a print campaign. What you have to submit: 1. A concept note on the print campaign you have conceived for Kurl-on 2. Your rationale for the suggested campaign 3. The copy line you suggest around the theme of your campaign

Suggest right and appropriate Marketing Mix?

What strategy should Parle adopt to clock ₹1-billion sales within a year of relaunching Rol-a-Cola? In February 2019, a Twitter user from Kerala posted a picture, with the tweet “Dear Parle. Bring this back”. The tweet urged Parle to bring back Rol-a- Cola, a cola-flavoured candy, production and sales of which it had discontinued in 2006. Even though the product was taken off the shelves in India due to product rationalisation, Parle continued to sell it in international markets in Africa and West Asia. Following 10,000 retweets for the recall of Rol-a-Cola in a month, Parle decided to bring back the iconic brand. As of October 2, 2019, the #BringRolaColaBack campaign had secured more than 0.7 million impressions on Twitter. B Krishna Rao, Senior Category Head at Parle, said that a brand comeback based on consumer demand using social media as a platform was a unique experience in the marketing of Parle products, and that the company was looking forward to achieving sales of 200 tonnes of Rol-a-Cola in the first year of its re-launch. Parle expected to achieve sales of ₹1 billion, accounting for 10 per cent of its overall turnover in the first year of Rol-a-Cola’s re-launch. By mid-September 2019, Parle had started production and distribution of the candy across stores in India. It planned to reach 0.5 million stores within the first six months of the re-launch of Rol-a-Cola. Krishna Rao observed that even after 13 years, there was space for the brand in the Indian market and they should not have discontinued it in 2006. Background The recall of the Rol-a-Cola brand was seen by many analysts as a strategy to offset the losses incurred by Parle because of falling demand for its Parle-G biscuits (Parle-G). Parle-G was launched in 1939 as a low-cost alternative to expensive British biscuits, that were not affordable for the common people in India. Parle-G’s low price (₹5 for a standard pack) and deep reach (available even in the remotest villages) enabled Parle to claim a leadership position in the volume-driven and price-conscious biscuit segment. Even in the mid-1990s, after the launch of Tiger biscuits by Britannia Industries in the low-cost format, Parle did not change its price. According to market research firm Nielsen, Parle-G was the largest selling biscuit brand in the world in 2010. In 2019, the standard biscuit variants of Parle, which comprised milk and glucose biscuits, saw a 7-8 per cent drop in sales. The company attributed the economic slowdown and the high GST on biscuits to low sales. In August 2019, Parle-G had the worst sales, and the biscuit-maker was mulling options to lay off 10,000 employees. Confectionery Market in India The confectionery market in India is valued at around ₹100 billion, with candy occupying 30 per cent of the market. Parle’s share in the confectionery market was around 20-21 per cent and it planned to add 2-5 per cent by 2020 with the re-launch of Rol-a-Cola. The various confectionery brands of Parle were Kismi Range, 2in1 Eclairs, Cafechino, Friberg Range, Mazelo, Londonderry, Poppins, Mango Bite and Orange Bite. Parle’s competitors in the Indian confectionery market are Mondelez, Mars Wrigley (Mars), and Perfetti Van Melle (Perfetti). Mondelez was the leader with a market share of 66 per cent as of 2019, and its brands include Cadbury, 5-Star, Gems, and Perk. Mars’ brands include Mars chocolate, Bounty, Snickers, Spearmint and Wrigley juicy fruit. Perfetti’s brands are Alpenliebe, Mentos, Chocoliebe Eclairs, Alpenliebe, Juzt Jelly, Centerfresh, and CenterFruit.

Rol-a-Cola 2.0: Old Candy in New Packaging Parle had launched the Rol-a-Cola candy in the early 1990s, around the same time the Coca Cola beverage was launched in the Indian market, then priced at ₹10 per bottle. As most Indians considered the price of Coca Cola a bit steep, Parle saw an opportunity to fill the gap and came up with a cola-flavoured candy priced at ₹2 per pack. The candy was a fusion of Poppins (another Parle brand) and the coca flavor. In the re-launched Rol-a-Cola, the flavour and formulation were expected to remain the same, with more vibrant packaging and bigger candy size, in tune with the preferences of the target group of 13 years and above, including millennials (See graphic on old and new packaging).

Relaunch Powered by Digital Media Parle worked along with ad agency ‘Please See’ to relaunch the Rol-a-Cola brand and had earmarked 100 per cent of the advertising funds for the digital launch. The theme for the re-launch campaign on social/digital media was that Rol-a-Cola had gone on a long vacation abroad, had felt really homesick and was returning to India, stronger, bigger and sharper (See Graphic on re-launch campaign of Rol-a-Cola). The digital platforms included Twitter, Instagram, Facebook, and LinkedIn. Other digital initiatives included integration of the brand with the Web series and release of the digital films on OTT (over the top) platforms such as Voot, Hotstar, ZEE5, and SonyLIV.

Competitive pricing Before 2006, the candy was sold at ₹2 per pack and, in its new avatar, it was sold in two pack sizes priced at ₹5 and ₹20. The low cost was expected to ensure affordability, even for kids. Banking on distribution Parle had started production and distribution of re-launched Rol-a-Cola by mid-September 2019 and, by the end of the month, had sold 20-25 tonnes in the Indian market. The distribution initially started in the southern market and moved to the North and East and finally to the western market. The production facility for Rol-a-Cola is located in Indore, close to the western market. With a good distribution network, Parle expects Rol-a-Cola to become a ₹500 million brand in the next six months and a ₹1-billion brand in the next 12 months. Will Rol-a-Cola garner sales for Parle? Even though Rol-a-Cola had garnered sales of 20-25 tonnes by the end of September 2019, analysts opined that it was too early to conclude that the trend will continue in the future. It remains to be seen if Rol-a-Cola will be able to make up for the decline in sales of Parle-G and become a ₹1-billion brand by October 2020. Your Assignment Consider yourself part of a team tasked with analysing the marketing strategy of Parle for relaunching Rol-a-Cola in India. · What promotional strategy should Parle adopt for Rol-a-Cola to appeal to the rural market? . Parle has traditionally used a low-pricing strategy. Should it employ a different marketing strategy for Rol-a-Cola in urban and rural markets? · What strategy should Parle adopt to ensure long-term sales of Rol-a-Cola?

Case Study: Zomato Discounting

Since August 2019, Zomato, one of India’s leading food service aggregators (FSAs), had been engaged in a conflict with restaurant partners over its practice of offering high discounts to customers. While the FSAs were credited with creating a digital platform to bring restaurants closer to customers, the National Restaurant Association of India (NRAI) alleged that in their oneupmanship to acquire customers, they resorted to deep discounting, spoiling customers and eroding loyalty. NRAI alleged that restaurants bore the brunt of these heavy discounts, which came at the expense of their brand image, core value proposition and bottom-line. On August 15, hundreds of restaurants under NRAI launched a logout campaign and delisted themselves from the platforms of FSAs such as Zomato, EazyDiner, Nearbuy, Magicpin and Dineout. Zomato, in particular, came under severe scrutiny as its premium subscription-based dining out service Zomato Gold (ZG) had 6,500 restaurants partners and a total of 1.1 million subscribers in India as of August 2019. As part of the campaign, around 2,500 restaurants logged out from the ZG service. Zomato’s co-founder and CEO, Deepinder Goyal, urged restaurants to stop the logout campaign in the interest of consumers. He admitted that Zomato had made some mistakes and therefore listed out some corrective measures. NRAI contended that these changes did not resolve the issue of deep discounting and many participating restaurants refused to rejoin. While other aggregators such as Eazydiner, Nearbuy and Dineout agreed to limit discounting, Goyal hardened his stand and even expanded the ZG service to food delivery. NRAI threatened that the restaurants would remain logged out permanently from ZG, saying that restaurants could survive without FSAs, but FSAs would not survive without restaurants. With NRAI joining hands with the Federation of Hotel & Restaurant Associations of India (FHRAI) and other city-based associations in their fight against FSAs in October, time was fast running out for Goyal to find a solution that would be acceptable to all the stakeholders. Zomato Zomato was co-founded by Deepinder Goyal and Pankaj Chaddah in 2008, as a restaurant search and discovery service, but later extended to include table reservations, online ordering, point of sale (POS) systems and cashless payments. In 2011, the company introduced its digital app. Zomato was successful in obtaining funding from a number of sources and expanded in India and overseas. In March 2018, Zomato became a ‘unicorn’ with a valuation of $1.3 billion. By August 2019, Zomato was one of the largest FSAs in the world, with presence in 24 countries and more than 10,000 cities. It operated in over 200 cities in India, up from 15 cities in 2018, and served more than 70 million users monthly. For FY2019, Zomato’s revenues increased to $206 million (See Table 1).

Zomato Gold To recap a bit, in FY2016, Zomato had been incurring losses, that had increased over three times that year, to ₹4.41 billion. The company’s cash burn was also very high, at an average of $4.2 million a month, flagging concerns around its heavy investments in online food delivery services. In order to curb losses and capture the dine-in market in India, Zomato launched a premium, subscription-based programme called ‘Zomato Gold’ in November 2017. The exclusive membership programme offered customers complimentary food (1+1) and drinks (2+2) for every order they placed at select participating restaurants. Customers also get exclusive invitations to food and drink events, such as wine tasting sessions, new menu previews, pub crawls, chef cookout sessions and restaurant openings. Initially, when launched, ZG was meant to be an exclusive, invite-only service, targeted at high-end restaurants serving niche customers. The subscription started with a launch price of ₹999 per year with a limit of 10,000 subscribers. But eventually, ZG was made available to everyone and the subscription fee was raised to ₹2,000 a year. Benefits could be availed at any Gold partner restaurants and bars, for an unlimited number of times. The business model of ZG involved restaurants upselling a few additional items to customers and covering the cost of the complimentary item offered. The expenses toward the additional free drink or meal were entirely borne by the partner restaurant and Zomato did not pay any percentage to the restaurant from the subscription fee it collected. Moreover, restaurants had to pay a fee upwards of ₹40,000 to sign up as a Gold partner. Restaurants were willing to partner with Zomato as it provided them more visibility, leading to a potential increase in footfalls. By April 2018, ZG had about 180,000 subscribers across 20 Indian cities, contributing to about 12 per cent of the company’s revenue. In July 2018, Zomato introduced the Infinity Dining plan for its ZG subscribers that enabled them to have unlimited a la carte along with an open bar at partner restaurants, at a fixed per-person price. By March 2019, ZG had 12,000 partner restaurants on board across the world, of which 6,500 were in India. By August 2019, ZG had about 1.1 million subscribers in India, making it the biggest such loyalty programme for any unicorn in India. Grounds for conflict The food service sector in India was valued at around ₹4,238 billion as of March 2019, according to a report by NRAI (See Table 2). Much of the growth was attributed to the rise of FSAs. According to consulting firm Redseer, the number of orders placed on such ordering apps increased from around 1.7 million a day in 2018 to about 2.2 million in 2019. Major FSAs offered deep discounts to attract customers and increase orders placed on their platforms.

Customers not only gained huge discounts through FSAs but were also exposed to wider choices, convenience and greater transparency. The dine-in market contributed 92 per cent of the overall organised food service market in India. As FSAs shifted their attention to dine-in, competition grew and led to market distortions such as deep discounting. Customers were spoilt for choice and often switched loyalties to the FSA that offered the highest discounts (See Tables 3 and 4).

For restaurants, signing up for dine-in and table booking programmes came at a cost as the aggregator charged a commission of 18-22 per cent of the bill. Additionally, any discount given by the delivery platform had to be fully borne by restaurants, rendering their sales unprofitable. The discounts were a burden for many restaurants as they had to also contend with rising rents amounting to nearly 20 per cent of costs, food at 30 per cent and other expenses like labour and marketing at 20 per cent. The O2 scheme In August 2019, Zomato announced that ZG, which was earlier only for dine-in, would also be offered to ZG members for online food delivery. The new service was named “Zomato Gold O2 (Online Ordering)”. Under the O2 scheme, the restaurant would have to offer a free item of customers’ choice when they paid for a higher-priced item; as well as pay 18-25 per cent commission on the net order value. The partner restaurant would realise only about 38-42 per cent of the gross invoice value. Zomato did not bear any part of the discount, neither did it reduce its commission. This did not resonate well with the partner restaurants as there was no incentive left for them, with no potential for upselling and recovering the cost of the complimentary item in an online transaction. On August 13, 2019, the NRAI held a meeting with restaurateurs in Gurgaon to discuss issues related to FSAs and it was unanimously decided by restaurateurs to immediately delist themselves from all the dine-in platforms as a protest against deep discounting. A nationwide campaign against deep discounting, called the ‘logout campaign’, was launched by NRAI, urging restaurants to opt out of the dine-in discount programmes of FSAs. The campaign was supported by the FHRAI which, in a letter to the aggregators, called for a review of their schemes. Within a week, thousands of restaurants in several major cities across India logged out from the dine-in programmes of FSAs. Zomato faced the most heat, as over 2,000 of the 6,500 ZG restaurant partners opted out of the programme. Zomato was lambasted for allegedly using its market position to continually reset the terms of the trade, and making policy shifts without any consultation with the restaurateurs. Some restaurateurs said that Zomato was simply transferring the cost of customer acquisition to restaurant owners, while minting money from customers’ annual subscription fees and the joining fees from restaurants. NRAI then held a series of meetings with FSAs where it was decided that all aggregators would relook at their programmes and that discounts should be capped at about 15 per cent. Too little, too late? As the campaign intensified, Goyal announced Zomato’s willingness to make modifications to ZG and appealed to restaurant owners to stop the logout campaign in the interest of consumers. On August 16, 2019, Goyal wrote an email to the association and all the partner restaurants informing them of modifications made. The changes included limiting Gold usage to one restaurant per day, restricting Gold unlocks to a maximum of two per table, introducing single device logins, issuing hassle-free pro-rata refunds to unsatisfied customers, setting up a minimum Gold membership fee at ₹1,800, discontinuing trial periods for Gold, strengthening its two-way feedback system, providing advertisement credits worth ₹25,000, shooting free promotional videos, and personalising push notifications for non-peak days. Zomato said it would refund users who did not agree with the altered terms of the programme and even offered restaurants that had logged out in protest a free entry back into the system. However, NRAI remained belligerent and said its members would remain logged out of ZG. On August 20, Zomato sent a legal notice to restaurants, threatening them with legal consequences as they were contractually obligated to serve a 45-day notice period prior to delisting. Goyal accused Rahul Singh, president of NRAI, of unjustly portraying FSAs as bullies and using the logout campaign to sabotage aggregators while he himself was offering similar discounts at his own restaurant, The Beer Café. This elicited a caustic retort from Singh saying that a brand-owner was entitled to provide certain privileges to its loyal customers, but this does not apply for brokers. Goyal refused to make any further changes to ZG, saying that “Zomato is logging out of the logout campaign”, to which NRAI vowed to stay logged out of ZG permanently. Finding a solution For Zomato, ZG was expected to bring in about $25 million in revenue by the end of 2019, and any disruption caused by the logout campaign could destabilize Zomato’s business. Some analysts felt that Goyal would have to take a quick call on this issue, as the company ran the risk of being overtaken by rivals such as Swiggy and Dunzo. Restaurants delisting from ZG could also be painful for customers as many had become accustomed to deep discounts. It could also mean fewer options for them, especially for those who have subscribed to ZG service. The logout campaign had left many customers annoyed as they felt that restaurants inflated prices to begin with and did not want customers to save on orders. Anurag Katriar, Head of Mumbai Chapter, NRAI, said that it was not appropriate to push the consumer into the muddle. “The only thing that is growing is the valuation of these (FSAs)… Is it fair to have a policy that can kill the entire industry and benefit only a handful of companies in their valuation? Is this any recipe for growth?” he added. In September 2019, Zomato did engage with NRAI on the issue again; however, a solution to the problem is still not in sight. Meanwhile, Zomato had expanded its ZG option on delivery from 16 cities to 25 cities, eventually reaching 40 cities by the end of September. According to Zomato, it had roped in an additional 13,000 restaurants for ZG on delivery. Gaurav Gupta, COO, Zomato, was quoted in a September article in Livemint as saying: “Today, Gold drives 25-30 per cent business for its restaurant partners, and more and more Gold users (90 per cent) are exploring new restaurants because of the programme. It, therefore, makes eminent sense to extend this discovery behaviour to the delivery restaurant base.” However, going forward, major questions remained for Goyal and his team. Consider yourself a part of Zomato’s core team tasked with finding a solution to the problem that would be acceptable to all stakeholders, by answering the following questions: 1) How can the situation be resolved in the best interest of every stakeholder? 2) How can Zomato build great partner relationships with restaurants, protect their brand equity and minimise the effect of commoditisation? Should Zomato stop deep discounting? Should ZG go back to being an exclusive invite only service, as originally envisioned? 3) How can the scheme be redesigned to rein in deep discounts offered to customers? What will be the action plan to shift the focus of diners from discounts to loyalty?

Case Study: Future of Tata Nano

At a time when India’s largest selling car company, Maruti Suzuki India Ltd, was devising strategies to discontinue its lowest-priced car — the Maruti 800 — and make Alto its base model, another company was stretching its engineering prowess to produce the world’s cheapest car. Termed an engineering marvel by many, the initiative became a showcase project for Tata Motors. More and more foreign brands were entering the Indian market at the time, with much higher-priced cars. The market was also showing a favourable shift towards mid-segment sedans. The Nano project made many companies, including Bajaj, quickly rework their strategies on low-priced cars, as they felt they should have been the ones to launch this product in the country as a natural transition from being one of the bigger two-wheeler makers. Passenger car market

The production of passenger vehicles in the country was recorded at 3.23 million in 2012-13 and is expected to grow at a compounded annual growth rate (CAGR) of 13 per cent during 2012-2021, as per data published by the Automotive Component Manufacturers Association of India (ACMA). Passenger car sales stood at 1.89 million units in 2012-13.

Three basic categories in the market are hatchbacks, sedans and SUVs. Recently, this classification has become a lot more fluid as newly-launched models are starting to incorporate aspects of two or more segments; these are called crossovers. This trend is in line with more advanced markets, where crossovers are extremely popular. The Indian market continues to be dominated by hatchbacks though, within this, the mini-car segment (800cc or lower) has receded in importance. Currently, the mini-car segment makes up 21 per cent of the market. Maruti’s brands continue to be leaders with the top three slots being led by the Alto, the Swift and the Dzire in 2012-13. The Table alongside gives an idea of the current market shares of various companies. Journey of the Nano

After a long delay, the much-awaited Nano hit the market in April 2009. The Rs 1 lakh car was made available to the customer at a little above Rs 1 lakh, on the road. The launch was marked by high-profile media coverage and then came a waiting period, as expected. Heads turned as soon as people saw a Nano on the road and many wanted to touch and feel the car and look inside the engineering marvel. Auto magazines got down to analysing the vehicle and why it could be priced at Rs 1 lakh. One such analysis would throw some light on the issue and also give an idea of what the customer finally got. A series of events in the life of the new baby would chronicle its journey over the next few years. April 2009: Limited launch Sept-Oct 2009: Three Nanos catch fire in Delhi, Ahmedabad and Lucknow. Tata Motors orders checks on 7,500 Nanos July 2010: Tata Motors raises Nano price by 4 per cent Oct 2010: Price further increases by Rs 9,000 Nov 2010: Six Nanos catch fire, prompting the company to offer free protection. Monthly sales plummet to just 509 vehicles. Jan 2011: Nano sales become off-the-shelf across India Nov 2011: Nano gets a facelift, with a more powerful and better fuel economy engine. March 2012: Nano sales hit the peak of 10,475 units for the month June 2012: Sales dip to 5,025 units

Positioning, communication

During the same period, Tata Motors tried various positioning and communication strategies. Initially positioned as a replacement for two-wheelers, it moved towards a safety platform for the two-wheeler families. It was also positioned as the easy car for the wife, and so on. Some of the ads over the years give us an idea of the company’s strategy. SituationToday

With all the changes to the car, improved features and fuel economy, the car is now priced at above Rs 1.5 lakh, and the sales numbers as low as 1,505 in the month of February 2013. The company changes its positioning to appeal to the youth with a fresh new campaign “awesomeness unveiled” TheProblem

The strategy team for Tata Nano has various questions on its mind: Will the new strategy succeed? Is there a future for the product? Or will the company have to burn more fuel before it figures out the way ahead? Are there any other strategies missing?