In particular, India has seen striking growth during recent years, which can mainly be attributed to rising disposable Income levels and the resulting demographic shift to a fast growing middle-class. Many consumers have already upgraded their standard of living by acquiring luxury items such as mobile phones and cars. Thus, their disposable income is increasingly directed towards pampering themselves. The subsequent rise in expenditure on personal care, together with lowered trade barriers has opened up a myriad of opportunities and has encouraged many FMC enterprises to enter the Indian market.
Consequently, the country competitive environment has heated up significantly. Marino Ltd, one of Indian’s leading consumer goods companies, has so far successfully kept up with this Increasingly fierce marketplace. The company operates in 25 emerging countries in Asia, Africa and the Middle East, and has consciously decided not to enter developed markets. To maintain its market position, Marino attempts to circumvent direct competition with large volume players whilst keeping expenses at a minimum. . Product Positioning In Niche Segments Rather than participating in the continual price slashing of large volume players, Marino positions its brands as high quality products, and offers only a handful of niche products which are catered to health-conscious consumers in the upper middle class. ‘Edible oil’, for instance, is a major category in the Indian FMC sector. Marino only covers a small, high-end segment which is promoted as a good for the heart’ product.
Emphasizing Its brands’ value propositions and avoiding price wars, enables Marino to establish profit margins higher than the Industry-average. 2. Benefit from Market Expansion Marino fosters rapid expansion into other emerging countries by acquiring regional rand’s in foreign emerging markets which generally have under-penetrated supply in several consumer goods categories. At this stage of an economy, entry barriers are still relatively low and little financial resources are necessary to build a brand and Increase Its market share.
By purchasing existing product lines which already have strong brand awareness, Marino is able to evade extensive investments in marketing activities when establishing their positioning in foreign markets. 3. Focus on Core Products and a neatly defined Target Group Macs generally offer a broad portfolio of products which are present In various price segments. They adjust their products to country-specific needs and even cascade their marketing approaches down to regional habits.
This diversity of target segments leads to a severely complex organization; and the imperative need to invest heavily in R&D entails a high cost-structure. To avoid the latter, Marino decided to concentrate on countries with a similar economic situation and cultural mind-set to India. In all markets the company offers Its locally purchased brands and Its two core keeps R&D costs low as there is a limited necessity to adapt product attributes to local preferences.
Evaluation of Strategy Marco’s strategy of charging high margins in niche segments, whilst simultaneously avoiding major investments for future growth is part of the company’s recipe for its current success. But how will Marino survive the increasingly challenging arena of competition in the long-run? The company’s strategy does not adequately consider increasing competition in forthcoming years and thus, might soon precipitate Marco’s downfall. Neither in developed, nor in emerging economies do Macs rely on a single marketing strategy like Marino does.
Instead, they create a multitude of approaches for their diverse target groups and regional-specific requirements. Hindustan Lever, for instance, offers various products such as shampoo, coffee or tea in small and low-priced packages to make them affordable for low-income consumers. Procter & Gamble employs sales women in remote Indian villages who, equipped with product samples and pictorial literature for illiterate people, go from door to door explaining the products and increasing brand awareness. Moreover, Nestle approaches rural Brazil by selling its brands ‘Magi’ and ‘Nesses’ via boats on the Amazon River.
By comparing these diverging market approaches, it becomes obvious that Marino risks losing market share to companies who have already adapted to the increasingly hybrid consumption patterns in emerging countries. Instead of focusing on its short-term success factors, the company should step back and have a look at the big picture: Only by anticipating and proactively responding to increasingly complex customer demands will Marino drive sustainable growth and successfully compete against the big guns who already dominate economic evolution in various emerging markets.