In the search for the vital differentiation factor, brands should look at alliances as a way forward.
Today’s market is suffering from a syndrome of ‘sameness’, with customers finding it increasingly difficult to differentiate between brands. The sameness lies not in the fact that many brands look the same; it is also present in the value proposition. In today’s tough macro-economic conditions Pakistan is a trying market for FMCGs and they are continually striving to identify effective penetration tactics and new resource streams to become more profitable. Customers, on the other hand, are much more focused on gaining maximum value for money. In this situation marketers need to look for alternative ways to create sustainable competitive advantages. Recent trends have shown that a well-executed alliance strategy can be very effective for both the brand and the customer. It can lead to a win-win situation for both brand partners and help them realise unexplored markets or untapped opportunities.
Until the early 60s, the value of a company was measured in terms of land and capital assets. This started to change when companies began to understand that their most important asset was their brand name and researchers started to refer to ‘image and reputation’ as the way to gain market share. In the 90s there was a huge interest in branding corporations and products. This growing interest was partly due to the success of companies such as Armani and Nike. Today the focus is on entering into alliances with other companies in the form of affinity programmes, cause-related marketing, ingredient branding, cooperative advertising, dual branding and joint sales promotion. In fact, brand managers rather than building brands on their own, are exploiting the possibility of achieving more efficient brand management by cooperating with other brands.
When the concept of alliances was first introduced in Pakistan, one of the core objectives was to optimise rising advertising costs. Another objective was to respond to changing customer behaviour by providing added value for money. Here are some recent examples of successful alliances in Pakistan:
Alliances help usage extension. In 2009 Samsung introduced its Corby Series mobile phones at selected McDonald’s outlets across Pakistan. The objective was to provide young customers with hands on experience of the latest Samsung Corby. The branches were selected at strategic locations across Pakistan, including Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Sialkot and Hyderabad. All the customers at those branches were entered into a lucky draw, with a chance to win a Corby phone.
Co-branded offers are also launched with the objective of identifying new product needs and then creating a market for them. In 2007, Zarai Taraqiati Bank, in a bid to penetrate further into the rural segment, entered into an alliance with Nestlé Pakistan aimed at providing rural finance and services to small farmers and help them generate income resources as well as enhance milk production in Pakistan.
Some alliances are entered into to reduce cost. In 2011, Unilever Pakistan partnered with Cadbury and TSD (a transportation provider) with the objective of saving an expected 544 metric tonnes of carbon dioxide (CO2) per year. As a result of this saving, Cadbury was able to use Unilever’s dedicated vehicles to transport merchandise on the return journey from Karachi to Lahore. This was not only a CSR initiative; it also resulted in cost savings for both companies.
Pakistan’s telecom industry has also collaborated in multiple successful alliances, including:
Mobilink and Shell, whereby every Shell Rimula pack contained a scratch code. Customers would then text that code to a number via their Jazz connection, after which they could win a four-litre Shell Rimula pack and be entered into a lucky draw with a chance to win tractors, motorcycles, Shell Rimula packs and thousands of free minutes if they were new Jazz customers.
To increase its reach among farmers, Ufone used the insight whereby a farmer’s ultimate aspiration was to own his own tractor. Based on this, Ufone launched a Kissan Package which included special call rates and the opportunity to enter a lucky draw and win a Millat tractor. Ufone also teamed up with Stylo Shoes & Bags to promote their ‘ladies package’. Until that point Stylo Shoes & Bags had not realised the power of advertising and segmentation. The success of this promotion prompted Stylo Shoes & Bags to change their retail outlook strategy.
Strategically put together alliances (such as the Intel Inside programme) can help companies achieve market leadership. However the cost of the promotion may in some cases exceed the long term return. Another factor to keep in mind with alliances is that both brand partners can lose control over their brand. Caution therefore must always be exercised before adopting an alliance strategy.
Khurram Mahboob is a telecom professional in Pakistan.