Thursday, 20 August 2009

buying jeans on monthly instalments plans

Please click the title of the note to read Levi's pilot campaign in Bangalore (India). They are offering purchase of the brand on a 3 month installment plan.

This will stir up a lot of discussion. Its been done before - TVs- cars- houses- holidays- are all available on loan schemes. But Jeans? Interesting.

And if Jeans, what next?

Our opinion? Lets look at 2 issues first and then we will give our verdict:

- does this promotion serve the target audience of the Levi's brand in India? Given Levi's pricing, (4-5 times that of a 'local player', their target market would be the top 10% of India's population)

Is this person going to buy Levi's because of the instalment scheme? Maybe. But an instalment scheme cannot alter the price proposition of the brand- especially a 3 month instalment scheme. If it was a 12 month scheme, suddenly the equation changes. But that takes guts for the bank to execute. And it is expensive for the brand to implement.

- does this promotion increase consumption of the brand , or bring in more users?

Will the possibility of spreading my purchase cost over three months make me more inclined to buy Jeans (and T shirts) versus other Indian dresses- casual shirts- trousers? Unlikely.

A pair of jeans in India competes with other pairs of Jeans. In a market where a pair of Levi's costs 5 times the "private label", does this promotion really address the price issue?

Given that credit card penetration is very low in India, does this scheme actually enable to bring in more consumers?

Or is Levi's simply trying to get more share from the other brands such a Pepe/ Wrangler?

We think someone at Levi's India got really excited by the idea of selling jeans on credit. The bank charges restricted them to a 3 months scheme. And the marketing team just pushed ahead anyway.

Levi's may report a change in volumes and market share, but this is not going to expand the category. Sooner or later the other brands will launch the same offer, and the bar will be reset to zero.

Thumbs down! An installment scheme for Levi's cannot be a competitive advantage. But it makes for interesting news.

Thursday, 6 August 2009

beware the naked man that offers you his shirt

This note borrows its title from a book by Venkat's very first management guru, Harvey Mackay.

His lesson came to mind as we read this free book by Chris Anderson - FREE. Please click title to read.

Chris Anderson has written a well known book called "The long tail". He is a well known writer and his new book is on a concept that has been around in marketing for decades. (So we're glad its free, but still cost us our time).

Anyway its an interesting concept to summarise in a few lines. Marketing theory and practice has been using the idea of FREE for many many years. Among the 4Ps of marketing, 'FREE' falls under 'Promotions'.

Its various forms are:
- buy one get one free (increases volumes, the consumer gets one unit free.
- get X% more (same as above)
- Buy a set of razor blades, get a can of shaving gel free. (a company wanting to launch shaving cream will give free samples of this with every purchase of its razor blades.)
- 50ml of sunscreen lotion FREE on every purchase of body lotion.
- sampling - handing out trial packs of one time use to get people to buy more.

Once some years ago in India, we ran a very successful sales promotion giving away a micro wave free for every purchase of a Home PC. The logic was that Indians buy the PC when all other household purchases are done, so this offer was aimed at a two in one benefit for the family, accelerating the penetration of the first PC in the home.We made this possible by getting the marketing folks to buy microwave ovens instead of TV spots!

Free happens all around us. Has been for years. But its objective is to get us to pay for the stuff that makes money for companies.

Now what happens when ideas are shared for free? This is the interesting, but really no different from products being given free. Google gives away so much for free because it wants you to come back to its search engines where it makes money.

'Free' works if the free item was indeed valuable. Then folks come back for more, even if they need to pay.

'Free' works, if there is the probability of more 'free'. Even then folks will stick around for more.

But 'free' has to make money somewhere for the company. TO create something takes time and money- which costs. And the cost is always borne by the consumer.

In fact, the more 'free' stuff from a company, the more expensive its 'paid' content is.

Wonder why Mckinsey keeps putting out free industry reports?

Free and relevant insights build credibility and allow ideas to reach a wider section of people. And invite consumers to pay for more services if they so desire.

We like free. We blog to share our opinions for free. We think 'free' knowledge builds communities bigger and wider than any subscription service can. The problem with free is filtering. It makes it difficult for you to select your community. New technologies could help solve this problem, though.

FREE is a good idea to consider in any line of work. So what will you give away free today?

Venkat, Ritu