Marketing Cases From Emerging Markets

Dilip S.
Mutum
Sanjit Kumar Roy
Eva Kipnis Editors
Marketing Cases
from Emerging
Markets
Marketing Cases from Emerging Markets
Dilip S. Mutum Sanjit Kumar Roy

Eva Kipnis
Editors
Marketing Cases from

Emerging Markets
123
Editors
Dilip S. Mutum
Sanjit Kumar Roy
Eva Kipnis
Department of Marketing and Advertising
Coventry Business School,
Coventry University
Coventry, West Midlands
UK
ISBN 978-3-642-36860-8
DOI 10.1007/978-3-642-36861-5
ISBN 978-3-642-36861-5
(eBook)
Springer Heidelberg New York Dordrecht London

Library of Congress Control Number: 2013943336
Springer-Verlag Berlin Heidelberg 2014
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Preface
There is a sustained increase of interest in the emerging markets by Western

businesses. Emerging markets are no longer only seen as sources of cheap labour
and raw materials but increasingly becoming markets of primary importance due
to growing economic prominence and consumer purchasing power. However, at
the same time, emerging markets are fraught with several complex economic,
political and social issues which often frustrate and confuse Western investors.
Understanding these issues is crucial to students and professionals in the international business, marketing, strategy and management fields. Surprisingly,
despite the fact that experts acknowledge the importance of these markets, there is
a dearth of real case studies specially focussed on marketing issues in these
markets and limited body of knowledge on the complex socio-cultural, political
and economic dynamics and issues which are unique to these countries contexts.
This book is composed of long and short real cases with varying complexity in
different sectors including airlines, hotel, fashion, etc. These cover issues are
unique to the emerging markets. Thus, this case study book is believed to be
important and timely in providing a framework for marketing educators, students
and researchers (both academic and industry) to understand the dynamics occurring in these countries. We expect this case study book to appeal to a broad
audience internationally and the book can be used for both undergraduate and
graduate level courses in marketing, advertising, strategic marketing, marketing
ethics and international business programmes.
This is an edited case study book with contributions from lecturers in the
Department of Marketing and Advertising, Coventry Business School, Coventry
University, Coventry along with their collaborators in other universities as well as
industry professionals. The lecturers have varied research interests and a number
of them have professional backgrounds with several years of industry experience.
The integration of these varied academic and professional viewpoints has resulted
in a very unique and exciting content.
We welcome your comments and suggestions for further improving this book.
Dilip S. Mutum
Sanjit Kumar Roy
Eva Kipnis
Contents
Part I
Introduction
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilip S. Mutum
Part II
Socio-Cultural Influences
Introduction to Socio-Cultural Influences . . . . . . . . . . . . . . . . . . . . . .

Julia Tyrell
Case Study 1: Mongoose Lager Beer Eyes up India . . . . . . . . . . . . . .

Julia Tyrell
13
Case Study 2: KFC in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hsiao-Pei (Sophie) Yang
17
Case Study 3: Lakme Pure Defense: An Antipollution Cream . . . . . . .

Atanu Adhikari and Sanjit Kumar Roy
25
Case Study 4: Ikea Malaysia and the Halal Food Crisis . . . . . . . . . . .

Dilip S. Mutum and Ezlika M. Ghazali
31
Part III
Market Orientation and Brand Strategies
Introduction to Market Orientation and Brand Strategies . . . . . . . . .

Dilip S. Mutum
37
Case Study 5: Brands: The New Co-stars in Bollywood . . . . . . . . . . .

Anvita Kumar
41
Case Study 6: Junglee.com: Amazons Entry in India. . . . . . . . . . . . .

Sanjit Kumar Roy and Rajdeep Chakraborti
45
vii
viii
Contents
Case Study 7: Indonesian Fisheries . . . . . . . . . . . . . . . . . . . . . . . . . .

John Heap, Simon ORourke, Rory Dillon and Lara Chaplin
59
Case Study 8: Kolkata Knight Riders:

Developing a Brand Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
Case Study 9: The National Basketball Association (NBA)

in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adrian Pritchard
81
Part IV
Product Development and Market Entry
Introduction to Product Development and Market Entry . . . . . . . . . .

Geoff Alcock and Ali Baig
Case Study 10: A Sweet Deal: Cadbury Leads Kraft
into Emerging Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lara Spiteri-Cornish
Case Study 11: Marketing of Services: The McDonalds Way . . . . . . .
Rik Paul and Sanjit Kumar Roy
Case Study 12: Shangri-La Hotels Expanding
to Non-Asian Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Case Study 13: Marketing the $35 Akash Tablet . . . . . . . . . . . . . . . .
Ramendra Singh and Sanjit Kumar Roy
Part V
89
93
99
113
117
Marketing Communications and Social Media Marketing
Introduction to Marketing Communications and Social

Media Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anvita Kumar and Carmela Bosangit
139
Case Study 14: Air Asia: Using Social Media to Reach Out
to New Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
143
Contents
ix
Case Study 15: Its More Fun in Philippines:

Riding on the Waves of Social Media. . . . . . . . . . . . . . . . . . . . . . . . .
Carmela Bosangit
149
Case Study 16: Cathay Pacific Airways Using LinkedIn

for Brand Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
159
Part VI
Conclusion
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilip S. Mutum
165
Part I
Introduction
Introduction
Dilip S. Mutum
The term emerging markets was used for the first time in 1981 by economists at
the international Finance Corporation (IFC) [1]. However, there is still no clear
definition of the term. As the Economist points out, there can be more than one
definition of the term emerging markets depending on who defined it. For
example, the United States Department of Agriculture, Foreign Agricultural Service, defines emerging markets as any country that the Secretary of Agriculture
determines:
(a) Is taking steps toward developing a market-oriented economy through the
food, agriculture, or rural business sectors of the economy of the country; and
(b) Has the potential to provide a viable and significant market for U.S. agricultural commodities or products of U.S. agricultural commodities [2].
Other terms which are used interchangeably include less developed countries, newly industrialising countries, transition economy, developing
nations, Third world countries and poor nations [3]. Hoskisson et al. [4]
made a distinction between the developing countries from Asia, Latin America,
Africa and the Middle East and the transition economies made up of the former
Soviet republics and China. These countries are considered emerging as they are
not as developed as compared to the worlds richest industrial countries. The
Economist suggests using the term re-emerging economies instead, due to the
fact that countries like India and China are regaining their former eminence [5].
Initially the countries that were expected to deliver the strongest revenue and
profit growth were Brazil, Russia, India and Chinathe BRIC countries. The
acronym was coined by British economist and retiring chairman of Goldman Sachs
Asset Management, Jim ONeill in 2001 [6]. South Africa later on joined the group
in 2010 to make up the group collectively known as BRICS which claims to
D. S. Mutum (&)
Department of Marketing and Advertising, Coventry Business School, Coventry University,
Priory Street, Coventry, West Midlands CV1 5FB, UK
e-mail: dilip.mutum@coventry.ac.uk
D. S. Mutum et al. (eds.), Marketing Cases from Emerging Markets,

DOI: 10.1007/978-3-642-36861-5_1, Springer-Verlag Berlin Heidelberg 2014
D. S. Mutum
represent the interest of the emerging markets. According to a World Bank report,
Global Development Horizons 2011Multipolarity: The New Global Economy,
more than half of all global growth will be driven by six major emerging economies, namely, Brazil, China, India, Indonesia, South Korea, and Russia [7]. Of all
these countries, India and China are the most populous and have much higher
economic growth rates [7] than the rest and as such, most of the cases in this book
are related to these two countries.
Traditionally emerging markets were seen as source of cheap labour and raw
materials but this has gradually changed [8]. These countries have seen fast
urbanisation and changing demographics. They have high domestic growth rates
which have led to the growth of huge middle classes with increasing disposable
income. They are no longer seen as a source of cheap labour and raw material but
increasingly as markets (both B2C and B2B) with an insatiable appetite. The
saturation of Western markets has motivated companies to explore new opportunities offered by emerging countries [9, 10]. As per market reports, emerging
markets accounted for about 45 % of global GDP (evaluated at purchasing power
parity exchange rates) in 2008. This share is forecasted to rise above 50 % in 2013,
and by 2050, emerging markets may well account for around 80 % of global
economic activity [11, 12].
It is now common for multinational corporations to highlight emerging market
investments when communicating with shareholders [12]. For example, China has
also overtaken the UK as Jaguar Land Rovers biggest market and the country now
accounts for 17.2 % of total sales compared with 16.5 % for the UK. Sales have
also increased in Russia [13]. Similarly, while the European Union remained
number one trading partner for Brazil (20.8 %), China (16.1 %) has overtaken the
USA (12.8 %) in 2011 as Brazils second major trade partner. In fact, most of the
top 10 trading partners of Brazil are emerging economies: Argentina (8.3 %),
Japan (3.6 %), South Korea (3.2 %), Chile (2.1 %), Nigeria (2.1 %), India (2.0 %)
and Mexico (1.9 %) [14].
However, many Western multinational companies are unsure of how to penetrate these markets. The fundamental inconsistency in the market strategies of
multinational firms was pointed out by Dawar and Chattopadhyay (2002) who
mentioned that their marketing programs are scarcely adapted for these markets[15]. According to them, three key factors characterise emerging markets,
namely, low incomes, variability in consumers and infrastructure, and the relative
cheapness of labour. As multinational companies from the developed countries are
increasing finding out, the local companies are fighting back. For example, local
and regional banks are increasingly beating global banks in the emerging markets
[16]. The companies who do succeed are those which understand the local complexities and able to develop relationships with their customers. Even those
companies which are doing well are facing unforeseen issues round every corner
(See the case study, Ikea Malaysia and the Halal food crisis).
Another interesting phenomenon is the rise of multinationals from the emerging
markets. Companies from these emerging economies have not only holding their
own against the multinational companies from the more developed countries, they
Introduction
are actually moving into their own backyards and competing with them. A good
example is the takeover of the British luxury auto marques Jaguar and Land Rover
from Ford by Tata Motors, a subsidiary of the Indian Tata group. Justin Yifu Lin,
the World Banks chief economist and senior vice president for development
economics, notes that Emerging market multinationals are becoming a force in
reshaping global industry, with rapidly expanding SouthSouth investment and
FDI inflows. International financial institutions need to adapt fast to keep up.
Unfortunately, academic literature on marketing issues in emerging markets is
quite limited and a number of experts have emphasised the need to conduct more
research in emerging markets. This is simply due to the fact that theories developed in the developed countries may not necessarily apply to these countries
[8, 17]. For example, it was assumed that as they became richer, consumers in
China would become more or less like consumers in developed countries. However, the way Chinese consumers think and their motivations to buy, is fundamentally different from consumers in the West and is something deeply rooted in
their culture [18]. According to Professor Qing Wang, of the Warwick Business
School, it is not about the stage of development [18]. Companies from developed
countries definitely need to rethink their strategies and frameworks before
applying them to emerging markets [8].
References
1. Khanna, T., & Palepu, K. G. (2010). Winning in emerging markets: a road map for strategy
and execution. Boston: Harvard Business School Press.
2. USDA. http://www.fas.usda.gov/mos/em-markets/World%20Bank.pdf.
3. The Economist. (2006). A question of definition. http://www.economist.com/node/7878108.
4. Hoskisson, R. E., Eden, L., Lau, C. M., & Wright, M. (2000). Strategy in emerging
economies. Academy of Management Journal, 43(3), 249267.
5. The Economist. (2006). The new titans. http://www.economist.com/node/7877959.
6. The Economist. (2013). Why is South Africa included in the BRICS? http://
www.economist.com/blogs/economist-explains/2013/03/economist-explains-why-southafrica-brics?zid=295&ah=0bca374e65f2354d553956ea65f756e0.
7. World Bank. (2011). Emerging market growth poles are redefining global economic
structure, says World Bank report. http://go.worldbank.org/CMHAKTKV40.
8. Arnold, D.J., & Quelch, J.A. (1998). New strategies in emerging markets, MITSloan
management review. http://sloanreview.mit.edu/article/new-strategies-in-emerging-markets/.
9. Harvey, M., & Myers, M. B. (2000). Marketing in emerging and transition economies.
Journal of World Business, 35(2), 111113.
10. Keller, K. L., & Moorthi, Y. L. R. (2003). Branding in developing markets. Business
Horizons, 46(3), 4959.
11. Steenkamp, J.-B., & Burgess, S. M. (2002). Optimum stimulation level and exploratory
consumer behavior in an emerging consumer market. International Journal of Research in
Marketing, 19(2), 131150.
12. Kaynak, E., & Zhou, L. (2010). Special issue on brand equity, branding, and marketing
communications in emerging markets. Journal of Global Marketing, 23(3), 171176.
13. BBC News (2012). Jaguar Land Rover sales boost Tata Motors profits. http://www.bbc.co.uk/
news/business-17029257.
D. S. Mutum
14. EU Website (2006). http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113359.pdf.

15. Dawar, N., & Chattopadhyay, A. (2002). Rethinking marketing programs for emerging
markets. Long Range Planning, 35(5), 457474.
16. The Economist. (2013). Lands of eternal promise. http://www.economist.com/news/specialreport/21577183-emerging-markets-local-and-regional-banks-are-increasingly-beatingglobal-ones-lands?zid=295&ah=0bca374e65f2354d553956ea65f756e0.
17. Burgessa, S. M., & Steenkampb, J. E. M. (2006). Marketing renaissance: how research in
emerging markets advances marketing science and practice. International Journal of
Research in Marketing, 23(4), 337356.
18. Potter, A. (2013). Understanding Chinese. Core: Contemporary business with a twist, vol 1.
Warwick Business School, pp 1415.
Part II
Socio-Cultural Influences
Introduction to Socio-Cultural Influences

Julia Tyrell
Any international marketer faces many challenges and one of the biggest challenges is dealing with socio-cultural factors and their influence on buying
behaviour in the international environment. Hence any decisions relating to
product design and usage, marketing communications, and making products
available are all, to some extent affected by these factors.
Social factors and cultural factors are often linked together, but in many ways
the two areas interact and the distinction between the two is not clear cut [1].
Reference groups, family, roles and status in society are all part of social factors
[2], however culture tends to influence all these areas. We are all products of our
own cultures, whose behaviours we learn as children at school and within our own
families. Culture is difficult to define but mainly focuses on learned behaviour
shared by members of a societyfor instance, the collective programming of the
mind which distinguishes the members of one category of people from another,
[3], or put simply the way we do things round here [1]. Thus culture is concerned
with understanding the values, beliefs, traditions and customs shared by members
of a society, and it has been observed that many of us only realise what is special
about our own culture when we come into contact with other cultures [1]. Thus,
when working in overseas markets, international marketers must try to avoid
automatically judging other cultures according to their own culture (known as
self-referencing). This is a typical human reaction and requires a special effort to
remain neutral. It is better to judge another culture as being different rather than
viewing an overseas culture as inferior.
Understanding culture is crucial for any international marketer because culture
contributes to the complexities of doing business across borders. Misinterpreting
J. Tyrell (&)
Coventry Business School, Coventry University, Priory Street, Coventry CV1 5FB, UK
e-mail: bsx110@coventry.ac.uk

10
J. Tyrell
culture has led some British retailers to fail in the US retail market, despite the
seeming cultural similarities between the two countries.
The following examples illustrate the typical challenges that international
marketers face when applying a formula that seems to work well in one overseas
market but does not work as well in another seemingly similar overseas market.
Tesco has failed in the US market with its chain of West Coast stores called Fresh
& Easy, which it opened 6 years ago. Analysts believe that Tesco failed to
understand the cultural differences when it comes to shopping. For instance,
American food shoppers tend to buy in bulk, once a week, rather than going to the
shops two or three times a week and buying more fresh food, which is more usual
for European shoppers. In addition, self-service checkouts were the norm for Fresh
& Easy stores, whilst American shoppers expect to see checkout staff on the tills,
plus extra sales assistants to pack your bags [4].
So Tesco joins a long list of UK retailers (Sainsburys, Marks & Spencer, Laura
Ashley, The Sock Shop, etc.) who all thought they could crack the US retail
market relatively easily, perhaps feeling that the British and American cultures
were similar, but have eventually failed there.
Many international marketers, having worked for US and European multinational companies, understandably tend to view other cultures according to their
own western view of the world. To some extent this western view amongst
American and British marketers is further complicated by other cultural differences such as the values which Hofstede (2010) uncovered when investigating
work-related values in various countries across the world. According to his
dimensions of culture, the USA and UK tend to be strong individualistic societies,
where everyone looks after their own self-interest (the me culture) and where
independence and personal responsibility are valued. This contrasts with the Asian
value system which stresses group harmony (collectivism or the we culture),
shared responsibility and co-operation. Countries such as Malaysia and Taiwan
have low individualism scores, whilst Japan and India exhibit mid-range scores on
this dimension. The implications of all this for marketing, means that in business
negotiations, selling for instance, American and British managers have the
authority to make decisions independently, whilst their counterparts in Taiwan or
Malaysia would tend to refer any big business decisions to a group of managers
before making a final decision.
As the focus of world trade has now shifted to the growing markets of Asia,
Western companies now realise the importance of building trade in Asian markets,
and with it, the challenge of learning about different cultural values and belief
systems. Hence international marketers must change from a western focus to an
Asian focus and that means understanding the socio-cultural factors of the Asian
markets to be successful there.
Introduction to Socio-Cultural Influences
11
References
1. Doole, I., & Lowe, R. (2012). International marketing strategy: analysis, development and
implementation (6th ed.). Andover: Cengage Learning EMEA.
2. Kotler, P., Keller, K.L., Brady, M, Goodman, M., Hasen, T. (2009). Marketing management.
Harlow: Pearson.
3. Hofstede, G. (1984). National cultures and corporate cultures. In L. A. Samovar & R. E. Porter
(Eds.), Communication between cultures. Belmont: Wadsworth.
4. Morris, R. (2013). Fresh and easy failure: can UK firms make it in the US? http://
www.bbc.co.uk/news/business-22168463.
Case Study 1: Mongoose Lager Beer Eyes

up India
Julia Tyrell
Introduction
Faced with a declining home beer market many UK brewers are casting their eyes
to growing overseas markets in order to increase sales and satisfy shareholder
demands. The attraction of the Indian market is obvious from a population point of
viewin 2012 the population was 1.2 billion people according to Euromonitor
(2012), however the Indian market is not an obvious one when it comes to alcoholic beverages [1]. In the UK, drinking alcoholic drinks down the pub and in bars
is a deeply embedded into the British culture. But will the consumer demand for
beer in India be the same as UK, given the official intolerance of alcoholic drinks
on religious grounds? Will a relatively small niche brand such as Mongoose,
positioned deliberately as an Indian brand and consumed in Indian restaurants in
UK, work in the real Indian market? Can Mongoose overcome the cultural
issues? Can the brand position of Mongoose be maintained in the Indian market?
The Indian Economy and Trade with the UK

India is the worlds second largest country (after China), and one of the fastest
growing economies. Indias Gross Domestic Product reached Rs 91.7 trillion, up
significantly from Rs 62.6 trillion in 2006. Generally, many Indian consumers,
particularly the middle class consumers, have benefited from the countrys robust
economic growth over the past few years, with real incomes growing. Indeed, per
capita disposable income increased from Rs 48,267 in 2006 to Rs 61,591 in 2011.
Perhaps not surprisingly, as per capita disposable incomes have increased, so has
per capita spending. In 2011, per capita consumer spending reached Rs 44,462, up
J. Tyrell (&)
e-mail: bsx110@coventry.ac.uk

13
14
J. Tyrell
from Rs 34,713 in 2006. Officials at the Indo-British Partnership Network

acknowledge that even though trade with India has more than doubled in the last
10 years, it is only scratching the surface. Exports have continued to grow, with
figures suggesting that UK exports to India in the year to Dec 2011 grew by 35 %.
India is very important to the UK, a fact that was reinforced when David Cameron
visited the country in July 2010 on one of his first official trade visits since taking
office.
Brewing in India
British brewer Wells & Youngs launched Mongoose Premium Beer in June 2010,
aimed at the buoyant Indian restaurant market in the UK. This new launch is part
of a joint venture between Wells & Youngs and Gandhis Wine Supplies Ltd., the
largest Indian restaurant supplier in the UK [2]. It was Gandhis desire to launch a
premium lager, following the success of another premium lager Cobra. Cobra used
to be brewed under contract by Wells & Youngs, until the brand was bought by
Molson Coors in 2010. Mongoose has been available on draught in Indian restaurants for a little while now, but this year sees the first shipments from the Wells
& Youngs brewery in Bedford, UK, of 330 and 670 ml bottles. What is interesting
about this beer, is that it is based on an original Indian recipe developed over
15 years ago and was aimed at challenging Kingfisher and Cobra, the leading beer
brands in India [3].
Following the success of the Mongoose launch in the UK, Chris Lewis the
Marketing Director for Wells & Young is keen to investigate the Indian market,
and has gained a lot of useful knowledge from Gandhi Wine Supplies, and from
the Indo-British Partnership Network, which was set up by the UK government to
promote trade between the two countries.
Drinking Alcohol and Indian Culture

With a population dominated by Hindus and Muslims, India probably would not
strike the casual observer as the best place to set up a brewery. But despite the
official intolerance of Hindus and Muslims towards alcohol consumption, it is
becoming increasingly acceptable for Indians to be seen with a drink in their hand.
Indian society is changing rapidly. A few years ago, many men would not have
drunk alcohol in public. Now it is fairly common because for many it is no longer
an issue.
The sales of alcoholic drinks in India registered double digit growth in
20102011 [1], higher than the growth rates seen across the rest of the Asia
Pacific countries. Consumption has also been fuelled by the wide availability of
drinks in bars at sporting events in India such as the 2011 Cricket World cup,
Case Study 1: Mongoose Lager Beer Eyes up India
15
the IPL, and the recent arrival of Formula 1 Racing to India. In fact, beer sales in
2013 have grown to double-digits due to an increase in demand for strong beers
from brands such as Kingfisher Strong and Tuborg Strong. This segment accounts
for 85 % of the Indian beer market [4].
However, beer consumption is still remarkably low in India, which is why Chris
Lewis believes that the market has the scope to expand over the next 10 years. The
average Indian drinks 1 L of beer a year, just over 1 % of the 99 L consumed by
the average Britain. The disparity with the Czech Republic, home of the worlds
biggest beer drinkers, is even higher, with the average beer drinker there putting
away 160 L a year.
Conclusion
As the UK market for lager beer continues to decline in volume terms, with British
consumers continuing to drink less beer overall, developing markets like India
continue to look very attractive. The obstacles for foreign companies trying to do
business in India are slowly being dismantled by more pro-Western Indian governments. However, Indian bureaucracy and red tape is still legendary, as well as
a complicated distribution network for food and drinks. Once Western companies
learn how to deal with these issues, the rewards look very attractive.
Questions
1. Discuss and evaluate the key socio-cultural and economic factors that will face
Mongoose beer as it establishes a more permanent presence in the Indian
market.
2. Mongoose Beer is in preliminary talks with a local joint venture partner,
Mukherjee Brewery, Bangalore. Advise Mongoose beer on the likely risks and
benefits of operating a joint venture company in a challenging market like
Southern India.
3. Strategic issues such as brand position can largely be standardised for global
brands. Discuss whether you think this is possible for Mongoose premium beer
in India.
References
1. Euromonitor (2012). Beer in the United Kingdom. http://www.euromonitor.com/beer-in-theunited-kingdom/report.
2. Nelson, L. (2010). Exclusive: Mongoose bites Cobra. http://www.brewersguardian.com/
brewing-features/marketing/868.html.
16
J. Tyrell
3. Briggs, F. (2011). Wells & Youngs launches Mongoose Indian Beer. Retail Times. http://
retailtimes.co.uk/wells-young%E2%80%99s-launches-mongoose-indian-beer/.
4. Dalal, M. (2013). Beer sales rise as liquor demand stays weak, Live Mint. http://
www.livemint.com/Companies/DuhDwGVwhh5zxRr2V0BEQJ/Beer-sales-rise-as-liquordemand-stays-weak.html.
Case Study 2: KFC in China

Introduction
In China, Yum! Brands, the parent company of Kentucky Fried Chicken (KFC),
are opening a KFC store every day. Utilising a different strategy compared to other
Western fast service counterparts, KFC has become the largest restaurant company
in mainland China. KFC outpaced its nearest competitor, McDonalds, by more
than 1,000 restaurants in China and is outpacing its development by a roughly
three to one [1]. The US chicken giant adapts its Western business model in
Chinese market through acknowledging the social and cultural differences. KFC
realised that the US fast food model needs to be adapted because Chinas culture is
not individualistic which is the characteristic of the US culture [2]. Therefore, it is
necessary to combine the US fast food business model and adapted them to serve
the needs of Chinese consumers.
China and Chinese Customers

In late 1978, China began implementing economic reforms to develop and
modernise its economy. The economic reform opened China market to the outside
world and improved the living of average Chinese people. A socialist market
economy was adapted by the Chinese government to lessen the governments
control of the economy, allowing some aspects of a market economy and
encouraging foreign investment.
Since then, income levels in China have been rising steadily as the countrys
citizens reap the benefits of its economic growth. A big challenge, however, for
H.-P. (Sophie) Yang (&)

e-mail: aa5859@coventry.ac.uk

17
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H.-P. (Sophie) Yang
companies like KFC is that Chinese diets are changing quickly as incomes improve.
Currently, there are more than 300 million middle class in China, creating significant long-term demand for restaurant brands and encouraging rapidly new unit
development in the restaurant sector [1]. The rapidly rising income level increases
Chinese consumers spending power, and in turn drives market growth for companies operating in the country. Consequently, China is now KFCs fastest-growing
and highest-margin market [3].
China has become the highest-growth market of KFC through its unique
CHAMPS strategies that stands for Cleanliness, Hospitality, Accuracy,
Maintenance, Product Quality, and Speed and by demonstrating its understandings of Chinese culture. Research of the behaviour of KFC consumers in China and
USA found that the Chinese customers showed more positive brand impressions
towards KFC than their American counterparts [4]. Interestingly, Chinese customers ranked the KFC higher than their American counterparts in areas like
furniture, dcor, cleanliness of restroom, healthiness and freshness of food. Furthermore, Chinese customers suggested that efficient, courteous, and nicely dressed service personnel and attractive and well-done advertising contributed to its
positive brand impression of KFC [4]. Due to the positive brand identity, Chinese
customers are more apt to eat within KFC restaurants and spend more time doing
so than the American counterparts.
The Foreign Fast Food Market in China

A recent Mintel report (2012) suggested the total amount of foreign fast food
outlets in China were 50,000 in 2012up from 48,477 in 2011 and 36,037 in 2006
[5]. Moreover, 44 % of Chinese consumers said that they plan to spend more on
fast food in the coming year. Therefore, the potential for the foreign fast food
sector in China is clear. Actually, the market for foreign fast food in China has
seen steady growth over the past 5 years, as Chinese consumers have incorporated
it ever more into their lives and culture. Chinas foreign fast food sector grew at a
compound annual growth rate (CAGR) of 19 % from 2006 to 2011 to reach a
market value of RMB 75.1 billion. And there is further good news for the market
for foreign fast food in China, as Mintel forecasts the sector to increase to RMB
171 billion by 2017. Chinas fast food sector has recorded double-digit annual
growth since 2003. The market was estimated at US$303 billion in 2009 and
forecasted to reach around US$450 billion by 2014. Furthermore, the number of
outlets, chained and independent, is expected to increase to 71,964 outlets by 2017,
up 39 % on the expected number for 2012 [5].
In terms of competition, KFC and Pizza Hut, both owned by Yum! Brands, are
still ahead of McDonalds in China. KFC has the highest number of outlets in
China, while Pizza Hut remains Chinas number one casual dining chain [6].
However, McDonalds, with more than 1,000 restaurants in China, is investing
19
heavily to catch up with Yum! Brands. Specifically, McDonalds plans to

re-image about 80 % of its stores by 2013, which will involve European and
Australian designs, comfortable seating, warmer colours and amenities such as
WiFi.
KFC Adapts Its Strategy in China

KFC opened its first restaurant in Beijing in 1987. Owing to its successful
localisation strategies in the China market, it has over 3,700 stores [7] in 700 cities
in China and is becoming a good example of cross-cultural marketing of multinational enterprise. KFCs adaptation in China is discussed next to show how the
US business model was altered in China.
Menu Adaptation
KFC China aims to be part of the local community and not be seen as a foreign
company and it reflects on changing the original Western menu to suit Chinese
tastes and preferences. Chicken is a familiar choice of food in China which is much
cheaper and more widely available than other forms of meat, such as beef.
However, in order to change the menu according to the Chinese preferences, KFC
largely increased its menu items in China. Actually, KFC Chinas menus typically
include 50 items, compared with about 29 in the US.
The extended wide range of product offerings in China include items such as
spicy chicken, fired dough sticks, porridge, sesame seed cakes, egg tarts, soya
milk, and other items that tailor to the tastes of specific regions within the country,
such as wraps with local sources or fish and Shrimp burgers on fresh buns. For
example, KFC introduced rice dishes in Shanghai before selling them in other
branches [8]. The company also introduces about 50 new products a year, compared with 1 or 2 in the US [9].
To counter concerns on fast food and obesity as it is now in the West, KFC
China offers a healthier menu and has completely eliminated supersized items.
From 2005, the company developed new fast food concept, focusing on nutritious, balanced and healthy living diet. The product items added to its menus
include roast chicken, sandwiches, fish, shrimp, and more fruit and vegetable
dishes. Furthermore, KFCs children meals are served with vegetable and juice,
while fries and soda can be substituted on request [9].
Due to the extensive menus offered, it requires more staff in the kitchen area.
Therefore, KFC China cannot position itself as the cheapest dining option. Also,
Chinas inflation rate has hovered above 5 % in 2011, driven by the countrys
speculative real estate market and soaring demand for commodities [10]. Due to
20
H.-P. (Sophie) Yang
the pressure from food and labour inflation, the company raised prices in China in
2011 and 2012 to help offset higher costs for food and labour and to bring margins
up to around 20 % [11]. KFC China increased prices on a number of its popular
menu items, including prices on chicken dishes, drinks, and burgers in order to
battle soaring business costs. In average, customers spend the equivalent of $2.50
$3.50 per visit to a KFC in China [9].
Distribution Adaptation
In China, multinationals normally focused on first tier cities, where their global
brands attracted mid- and high-income consumers with an interest in western
lifestyles. However, growing competition in first tier cities resulted in a growing
focus on lower tier cities, particularly from KFC China. In 2007, KFC notably
introduced lower franchising fees for second and third tier cities, with the chain
subsequently expanding more rapidly in these cities [12]. Following that, KFC
embraced smaller cities and build a national business with outlets all over the
country. As Chinese government restricts direct foreign investment in early days,
KFC China utilised a franchise model. However, when the country becomes more
receptive to wholly owned foreign enterprise, the company switched to a strategy
of company-owned outlets, which allows greater control compared to the franchising model [9].
KFC China sources food from within the country whenever possible. This is not
an easy task in the early stage, when the supply chain system for chicken isnt
well-developed and multiple vendors provided only a handful of birds each.
Despite of the highest population in the world, compared to the West, the supply
chain in China is still unsophisticated, aboriginal, and relying on small food
processors which are inefficient and lack of technology for mass production [13].
As food safety is a big concern for Chinese consumers, KFC China made a big
decision to build the supply chain from the ground to help ensure quality. Despite
of the huge investment involved, such decision is necessary if the company was to
expand rapidly, carry a lengthy and complex menu, and introduce new products
quickly [9].
Furthermore, in order to broaden the reach of its brand, KFC China offers
delivery services in more than half of its restaurants. In average, KFC is opening
about 450 new restaurants in China per year, and half of them among those offer
delivery services [14]. According to Yum! Brand Chief Financial Officer, Rick
Carucci, KFC aims to have more than 2,000 new KFC restaurants in China that
will offer delivery over the next decade.
KFC also adapts the delivery format in China. Unlike the drive-through format
operated in the West, KFC delivery drivers ride red motorbikes on streets in China,
equipping with similar heated boxes, who charges a flat fee for delivery. Thanks to
the technology, online orders now account for about 40 % of the delivery orders
for KFC China. As a result, KFC China plan to stop building call centres in the
21
future as the numbers of customers buying online are increasing. Furthermore,

Chinese customers tend to order more food online because they dont feel as
rushed as they order by phone [14].
Training Adaptation
The extended menu means that food preparation is more complex and requires
more staff in KFC China than in US. KFC China typically employs 60 people in a
restaurant, which is nearly twice as many as in the US [8]. To maintain its current
restaurant-opening rate, KFC needs at least 1,000 new managers and 30,000 new
crew members a year. In terms of personnel recruitment, the strategy of KFC
China is to hire local management. They hire Chinese managers who read and
speak the language, who understood the restaurant business and Chinese consumers but also have had Western business experience [2]. Still, teaching
employees how to interact with customers is a challenge, as one-child policy and
the wide usage of home PCs mean that the younger generation in China interact
less with others than their parents generation [2].
KFC adapts to the working needs of those young employees, as many are
college students working their first job. For example, young employees are
encouraged to socialise over company provided video games on their breaks. This
practice serves several purposes: it eases the minds of parents anxious about
sending their children out into the world, provides crucial social skills for young
adults who grew up in single-child households, creates lifelong Yum! Brands
customers, and develops a culture of customer service in a country where there
was none [2].
The Road Ahead

Despite its huge success in China, KFC China is facing a typical corporate
dilemma. They are more capable to improve and make changes within current
setting than to take entrepreneurial approach to start new type of business. For
example, Yum! Brands, the KFC parent company, started a Chinese food brand
named East Dawning from 2006, but it was not as successful as expected.
Compared to its rivals, KFC China is taking a radical approach, which is also a
more interesting road. When the competition is timid, it will continue to enjoy
success. However, with an extended and complex food menu in China, the long
term evolvement of KFC China is obviously challenging. It risks brand identity,
operation simplicity and long term development in exchange for hypothetical
larger consumer base and more revenues in order to meet its fast expansion [15]
(Table 1).
22
H.-P. (Sophie) Yang
Table 1 Summary of the key strategies utilised by KFC in China

Adaptation
Key strategies
Menu adaptation
Distribution
adaptation
Training
adaptation
Extended menu items

Product items tailor to suit Chinese tastes, varying by geographical regions
Introduced healthier menu to counter concerns on fast food and obesity
KFC China focused on opening stores in second and third tier cities to build a
national business rapidly
KFC China switched from the franchising model to a strategy of companyowned outlet to allow greater control
KFC built the food supply chain from the ground in China in order to expand
rapidly and carry its complex menu
KFC focuses on the delivery services in China to broaden the reach of its
brand and the delivery format was also adapted
KFC China hires Chinese managers who had experience in the Western way
of doing business and who understood the restaurant business and the
Chinese consumers
KFC China adapts to the working needs of young employees and facilitates
the building of their social skills since they grew up in single-child
households
Questions
1. Discuss Chinese customers consumer behaviour in selecting fast-food services
and evaluate the potential of the China market for the foreign fast food chains.
2. Evaluate the suitability of KFCs approach to amend its menus largely in China.
3. Examine the distribution strategies of KFC China. What are the pros and cons
of its approach in opening stores in second and third tier cities in China?
4. Discuss the training adaptation of KFC China. What challenges does KFC face
in China?
References
1. Quick Service Restaurant (QSR) web (2010). Yum! Brands promotes two Yum! China
division execs, Su now CEO. http://www.qsrweb.com/article/95404/Yum-Brands-promotestwo-Yum-China-Division-execs-Su-now-CEO. Accessed 27 Aug 2012.
2. Starvish, M. (2011). HBS cases: KFCs explosive growth in China. Harvard Business School.
http://hbswk.hbs.edu/item/6704.html. Accessed 31 Aug 2012.
3. BBC News (2011). KFC and Pizza Hut owner Yum Brands sees profits rise. http://
www.bbc.co.uk/news/business-13153516. Accessed 27 Aug 2012.
4. Witkowski, T. H., Ma, Y., & Zheng, D. (2003). Cross-cultural influences on brand identity
impressions: KFC in China and the United States. Asia Pacific Journal of Marketing and
Logistics, 15(1), 7488.
23
5. Mintel (2012). Breakfast key to growth of foreign fast food market in China. http://
www.mintel.com/press-centre/press-releases/910/breakfast-key-to-growth-of-foreign-fastfood-market-in-china-reports-mintel. Accessed 28 March 2013.
6. DAltorio, T. (2011). Fast-food culture grows in China. http://www.investmentu.com/2011/
February/fast-food-culture-grows-in-china.html. Accessed 28 March 2013.
7. Mellor, W. (2011). McDonalds no match for KFC in China as Colonel Rules Fast. http://
www.bloomberg.com/news/2011-01-26/mcdonald-s-no-match-for-kfc-in-china-wherecolonel-sanders-rules-fast-food.html.
8. Peoples Daily Online News (2010). Rice on the menu at Shanghai KFC. http://english.
peopledaily.com.cn/90001/90778/90860/6912182.html. Accessed 31 Aug 2012.
9. Bell, D. E., & Shelman, M. L. (2011). KFCs radical approach to China. Harvard Business
Review, 89(11), 137142.
10. Strategic Sourceror (2011). KFC raises prices in China. http://www.strategicsourceror.com/
2011/11/kfc-raises-prices-in-china.html. Accessed 31 Aug 2012.
11. Reuters (2012). KFC parent Yum sees more China price hikes in 2012. http://www.reuters.
com/article/2012/02/07/yum-idUSL2E8D77CY20120207. Accessed 31 Aug 2012.
12. Euromonitor International (2011). Fast food in China. http://www.euromonitor.com/fastfood-in-china/report. Accessed 31 Aug 2012.
13. Wang, P. (2011). How KFC make a stride in Chinas QSR market. http://blog.caijing.com.cn/
expert_article-151538-15237.shtml. Accessed 31 Aug 2012.
14. Jargon, J. (2011). Asia delivers for McDonalds. http://online.wsj.com/article/SB1000142
4052970204397704577074982151549316.html. Accessed 31 Aug 2012.
15. Wang, P. (2011). Two mens race: McDonalds and KFC in China. http://blog.caijing.com.cn/
expert_article-151538-15237.shtml. Accessed 31 Aug 2012.
Case Study 3: Lakme Pure Defense:

An Antipollution Cream
Atanu Adhikari and Sanjit Kumar Roy
Introduction
Unilever is known all over the world with a huge product range targeting various
segments of customers. In April 2008, Hindustan Unilever Ltd was embarking on
the launch of its product range of antipollution cream called Pure Defense. This
new range was developed in India with the help of Unilever skincare technology.
Launching a new product type needs long-term research and effort and every
department of the company is involved in evaluating every detail, the pros, and
cons and then based on their evaluations, the managers decide whether to go ahead
with the launch.
Background of Hindustan Unilever Ltd

and Its Beauty Products
The first Indian subsidiary was set up by Unilever in 1931, followed by three more
subsidiaries: Hindustan Vanaspati Manufacturing Company, Lever Brothers India
Limited, and United Traders Limited. They merged and formed Hindustan Unilever Ltd (HUL) in 1956.
Later Tata Oil Mills Company merged with HUL in 1993 and then Lakme
Limited, another subsidiary of Tata, formed a 50:50 joint venture called Lakme
Unilever Limited, with HUL in 1996 and was completely taken over by HUL
in 1998. Kimberly-Clark Lever Ltd and HUL also formed a 50:50 joint venture
A. Adhikari
Indian Institute of Management Kozhikode, Kerala, India
S. K. Roy (&)
Priory Street, Coventry CV1 5FB, UK
e-mail: ab1631@conventry.ac.uk

25
26
A. Adhikari and S. K. Roy
in 1994. The famous tea brand, Brooke Bond later merged with HUL as well.
In 2000, HUL was awarded with 74 % equity in Modern Foods by the Government of India. In 2003, HUL acquired the Cooked Shrimp and Pasteurised
Crabmeat business of the Amalgam Group of Companies, a leader in value
added Marine Products exports. All these mergers and acquisitions led to an
expansion of HULs product range. Their direct-to-home business was launched
in 2003. Hindustan Unilever campus was established in Mumbai and includes
their Customer Insight & Innovation Centre (CiiC). HUL now owns numerous
brands including several food, home care, personal care, water, nutrition,
health, hygiene, and beauty brands.
Indian Beauty Products and the Market

India has witnessed enormous economic growth since 1991 due to liberalisation
of the economy. Several taxes were reduced or removed and international
companies were allowed to enter the Indian market. This has lead to the
growing disposable income of the population and a huge middle class. The
purchasing power for beauty products is increasing. Indian beauty products
include baby care, bath and shower, colour cosmetics, deodorants, depilatories,
fragrances, hair care, mens grooming, oral care, sets/kits, skin care, and sun
care products. According to a report published in 2009 by market research firm
Kline & Co, the beauty market in India was growing four times faster than
mature beauty markets and twice as fast as the global market. This data shows
that beauty market is one of the fastest markets in India. Although the growth
rate of beauty market was in the double-digit figures, the market penetration of
cosmetics and toiletries products in India was very low in 2009. In comparison,
the market size is rising 20 % a year [1] Purchasing power of consumers is
increasing because female population began to earn own money and media has
positive effect on female population.
Different Competitors and Their Products

Many companies are involved in the beauty market in India and competition is
quite tough. For instance, multinational players such as J.L. Morrison,
Palmolive, Ponds, Unilever, and Colgate and international players such as
Maybelline, Avon, P&G and LOral are all big players in the beauty market.
P&G with its strong infrastructure and earnings is one of the biggest rivals
along with Olay for HUL. Olay has a similar product range which is even
bigger than Lakme [2].
Case Study 3: Lakme Pure Defense: An Antipollution Cream
27
Behavior of Beauty Product Consumers in India

Initially Indian consumers preferred functional products. In other words, they
paid attention to product functions such as colour, quantity and permanence.
However, the booming middle class, rising disposable income levels, westernisation, and pervasive media, all have had a huge impact on the beauty
market in India. Slowly consumers started to choose more attractive products
rather than functional products. Nowadays, they want to be cool and fashionable and also feel good. Furthermore, there is an increasing awareness of health
issues. Consumers are increasingly concerned about the safety and quality of
the beauty products.
The Product: Lakme Pure Defense

The Lakme Pure Defense product range was launched with the aim of protection from the sun and pollution. The most crucial aim of their products is to
protect from pollution and UV rays and to feed the skin. Detoxifying facial
wash deep cleansers, detoxifying serum, protective day lotion, and restorative
night cream are the most popular products. Consumers reviews about Lakme
Pure Defense products are generally very good.
Segmentation, Targeting and Positioning

Lakme Pure Defense targets lower and middle income class and consumers
who want to protect their skin against pollution and UV rays. In other words,
their target market consists of consumers who pay attention to their skin health
and want to clean their skin. Moreover, the range is targeted at working women
who spend most of the time outside looking for protection against the sun and
pollution.
Pricing
Lakme Pure Defense products prices are lower than Olays products. HUL
tries to appeal to lower and middle income class. However, middle income
class is increasing day by day in Hindustan. For this reason, HUL should
increase a little their price and so their margin will rise up.
28
A. Adhikari and S. K. Roy
Distribution
HUL prefers retail outlets to distribute Lakme Pure Defense because lower and
middle income class usually goes to the retail outlets. In addition, salespeople
communicate with customers more efficiently in retail outlets than other distribution ways.
Advertising and Promotion

In advertising and promoting the new launch of Lakme Pure Defense, HUL has
deviated from the traditional mode of advertising and opted for a different strategy.
The company has deployed beauty advisors at 1,200 Lakme retail outlets across
the country to promote its new launch ignoring the conventional mass media ad
campaigns. On the other hand, HULs nearest competitor Procter & Gamble India
(P&G) has started an aggressive consumer activation programme to popularize its
skin care brand Olay in Mumbai. Clearly, the accent seems to be on direct
consumer contact in the Rs 2,200 Crore ( 26 Million) Indian skin care market.
On Lakmes new initiative, Anil Chopra, vice-president, HPC Hindustan Unilever
Ltd said Our strategy is not to use mass media advertising to promote Lakme
Pure Defensethe first of its kind across the globe. Instead, we have opted for the
education route to create awareness for our new product [3].
Industry analysts opined that Indian skin care majors are increasingly opting for
direct marketing concept to create awareness for their products. One business
analyst in Mumbai said that: Recognising the growing significance of targeted
marketing, HUL and P&G are now using this method to attract consumers at
different retail outlets including malls, medium retail outlets and departmental
stores.
Prospective Marketing Dilemma and Challenges

The top management of HUL wants to initially concentrate on distributing trial
versions and promotions. Their reasoning was that, consumers would be willing to
try out smaller packs and then if they liked it, they would go and buy big packs and
recommend it to their friends and family members as well. HUL knew that customers experiences were crucial for other customers and they are thinking of
going for contacting consumers directly using well-educated and motivated
salespeople. However, Procter & Gamble which is their main competitor has a
strong market presence all over the world and has a stronger customer base as
compared to Unilever. P&G pays more attention to detergent and shampoo sector
more than face hygiene products and is leading in cleaning products with brands.
Case Study 3: Lakme Pure Defense: An Antipollution Cream
29
They are also in the process of rolling out an aggressive marketing campaign titled
Total Proof. Total Challenge led by cine actor Tisca Chopra [4]. According to
the spokesperson from P&G India, they hoped that this initiative would lead
women to swap their moisturisers with for Olay Total Effects.
Questions
1. Develop a marketing strategy for Lakme to launch pure defence.
2. What HUL should do to minimise cannibalisation of its existing product?
3. What are the pros and cons of the direct marketing strategy of HUL for such
innovative product like Pure Defence?
4. What pricing strategy should HUL follow for its new launch?
5. Which segment of market is most attractive for Pure Defence, and how should
HUL target them?
References
1. Bhattacharya, P. (2009). India Quarterly: Indian beauty market roundup. http://www.
gcimagazine.com/marketstrends/regions/bric/38826982.html. Accessed 10 December 2012.
2. Euromonitor (2012). Country report: beauty and personal care in India. http://www.
euromonitor.com/beauty-and-personal-care-in-india/report. Accessed November 2012.
3. Rise of the Indian beauty market. http://cosmetics.indianetzone.com/1/rise_indian_beauty_
market.htm. Accessed 10 March 2012.
4. Srinivasan, L. (2008). Lakme steers clear of old marketing strategy, The Financial Express. http://
www.financialexpress.com/news/lakme-steers-clear-of-old-marketing-strategy/269671/2.
Accessed 10 March 2012.
Case Study 4: Ikea Malaysia and the Halal

Food Crisis
Introduction
In 2005, IKEA Malaysia faced one of their most serious challenges since they
started operations in the country, when their restaurants were raided by government officials on suspicion that food served there did not comply with the strict
religious dietary regulations in the country.
About the Company

IKEA was founded by Ingvar Kamprad in 1943 in Sweden. Since then the IKEA
Group has grown into a global retail brand with franchise stores in more than 53
countries/territories. All together, there are 301 IKEA stores in 37 countries/territories. The IKEA Group itself owns 267 stores in 25 countries while the other 34
stores are owned and run by franchisees outside the IKEA Group in 16 countries/
territories including Malaysia [1].
IKEA entered Malaysia in 1996 as part of the One Utama mall in Bandar
Utama, Selangor. It later re-located to a new IKEA store in Mutiara Damansara,
Selangor, in 2003. The new IKEA store was the largest in Asia at that time and it
currently covers 35,000 square feet. It is operated by Ikano Pte. Ltd. which is a
franchisee of Inter Ikea Systems B.V. Besides the Malaysian store, they also own
and operate two IKEA stores in Singapore and one in Bangkok, Thailand [2].
Malaysian customers have developed a taste for both Swedish style flat pack
D. S. Mutum (&)
e-mail: ab1771@coventry.ac.uk
E. M. Ghazali
University of Malaya, Kuala Lumpur, Malaysia

31
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D. S. Mutum and E. M. Ghazali
furniture and their food as well including the popular Swedish meatballs. In 2011,
the Malaysian store was the fourth most visited Ikea store in the world with 5.7
million visitors [3].
About Malaysia
Malaysia is a South-eastern Asian country which comprises of Peninsular
Malaysia and the two states of Sabah and Sarak on the island of Borneo. It shares
boundaries with Thailand to the north and Singapore to the south. In the east,
Sarawak shares boundaries with Indonesia and Brunei while Sabah is bounded by
Indonesia. With a population of 28.3 million [4], the Bumiputra, which include
ethnic Malays, make up 62 % of the population. The Chinese constitute
about 24 % while Indians (mostly Tamil) and others make up the rest of the
population.
Though Malaysia has a multi-ethnic, multi-religious society, it has a majority
Muslim population with Islam as the official religion. All food outlets selling to
Muslims are required by law to serve only Halal food and have verified halal certificates. Halal is an Arabic term which means permissible or lawful in Islam. Halal
food thus refers to the Islamic dietary standard as prescribed under Islamic law. This
includes the kind of animals that can be eaten and the way they are killed [5].
Crisis in the Restaurant

The IKEA restaurant is on the first floor of the store and seats 1686 customers. It is
highly popular with consumers. On 15th of March, 2005, their restaurant on the
first floor of the IKEA store, was raided by the Malaysian Domestic Trade and
Consumer Affairs and Health Ministry, the Selangor Religious Affairs Department
(JAIS) officials, Malaysian Muslim Consumer Association and police.
Sixty boxes of sausages were seized from the restaurant by the team as they
were suspected to be non-Halal6. This followed raids at the factories of their
suppliers, namely, Muller Sausage Haus Sdn. Bhd. and Pacific Refrigerating Sdn.
Bhd. at Kompleks Selayang Industrial Zone, for suspected non-compliance with
the countrys strict halal manufacturing regulations. It was revealed that the halal
certificates of the factories had expired in January 2004 [6]. The store was also
investigated to verify that they had the valid halal certification from the religious
authorities failing which they were liable to be charged under the under the Trade
Descriptions Act 1972 which provides for a fine of up to RM 250,000 (approximately 51,280 then).
Case Study 4: Ikea Malaysia and the Halal Food Crisis
33
Ikea Malaysias Response

The response from the top management was swift. The first response was to
immediately close down their restaurant and cafe despite the fact that the
authorities had only asked them to stop selling the sausages. They immediately
sent out press releases detailing the incident and informing the public that the
management were working with the authorities to verify the halal compliance of
the other food suppliers.
A ritual cleansing or samak, was voluntarily carried out by 80 of the stores
Muslim staff and supervised by officials from the Selangor Religious Affairs
Department [7]. This ritual cleaning involved not only all the utensils and cutlery
but also the racks, ovens, the storage and exit areas. The general manager Joseph
Lau said that the restaurant and cafe would only open after all of their 11 frozen
food suppliers had signed a statute of declaration confirming that their current
halal certificates were valid. They also terminated the supply agreement with the
food company which supplied the suspected sausages. Sausages were removed
from the menu as well. The caf reopened for business on 26 March 2005 and went
on to become more popular than before.
Questions
1. Do you think it is right for Ikea Malaysia to apologise publicly when the whole
crisis was due to a supplier who had not renewed their halal certification?
2. Were any mistakes made by Ikea which led to this crisis?
3. Do you think that the companys response was culturally-sensitive and timely?
References
1. Ikea Facts and Figures. (2013). http://www.ikea.com/ms/en_US/about_ikea/facts_and_figures/
ikea_group_stores/index.html.
2. Ikano Retail site. (2013). http://www.ikanogroup.com/retail-ikano-pte-ltd.html.
3. Leong, S. H. (2012). The low-price, flatpack phenomenon, The Star online, http://thestar.
com.my/lifestyle/story.asp?file=/2012/8/27/lifeliving/11910125&sec=lifeliving.
4. Malaysian Tourism. (2013). http://www.tourism.gov.my/en/Master/Web-Page/About-Malaysia/
Fast-Facts/.
5. HMC website. (2013). http://www.halalhmc.org/DefintionOfHalal.htm.
6. Malay Mail (16 March 2005). IKEA food court faces probe.
7. New Straits Times. (15 March 2005). Jakim raids food outlet over sausages.
Part III
Market Orientation and Brand Strategies
Introduction to Market Orientation

and Brand Strategies
Dilip S. Mutum
Marketing Orientation
Despite the fact that there are so many empirical studies on marketing orientation, the
evidence from literature indicates several perspectives of this concept. However, all
the different perspectives of this concept do have three common areas of agreement,
which includes: [1, 2]
1. An emphasis on customers;
2. Marketing activities as an inter-functional and important culture of the
company;
3. Being responsive to the market needs and wants, leading to customer
satisfaction.
It can be defined simply as the degree of adoption of the marketing concept by
companies and has been shown to be an important determinant of firm performance. Majority of studies on marketing orientation have been based on developed
countries, particularly the United States and European countries and empirical
research from emerging markets is negligible [3]. Market orientation studies in the
developing countries are still ignored and it is simply assumed that the empirical
findings generated in the developed countries are generalisable. In fact, research
results indicate that relationships between market orientation and performance in
emerging countries are different from that in industrialized/developed countries.
For example, it was found that market orientation does not have a direct impact on
sales growth or return on investment in emerging economies [4]. Several emerging
markets are still behind the developed countries when it comes to branding or
D. S. Mutum (&)

37
38
D. S. Mutum
marketing. According to Professor Qing Wang of the Warwick Business School,

marketing carries a negative connotation to a lot of Chinese businesses, associating
it with lying and cheating [5].
Branding Strategies
Though a number of studies have focused on brands and effects of brands in
influencing consumer behaviour and attitudes, surprisingly, a review of literature
reveals that there is no consistent or even a universally accepted meaning of the
term branding [6]. A rather simplistic definition of branding was given by Kotler
et al. [7], as the process of endowing products and services with the power of a
brand. Another definition was given by Keller et al. who pointed out that an
important goal of branding is to differentiate your product and set it apart from its
competition [8]. Later, de Chematonyl [9] highlighted the shift in branding literature from image to identity, which is more concerned with the roles of staff as
brand builders and how they make brands unique. According to Aaker and
Joachimsthaler [10], the brand identity needs to resonate with customers, differentiate the brand from competitors, and represent what the organisation can and
will do over time. It is the brand identity which makes a brand unique and
different from others [11]. Brand image is another important concept in branding
and refers to the cluster of attributes and associations that consumers connect to
the brand name [12].
As the emerging markets get mature and sophisticated, it was assumed that the
demand for brand and products offered by Western companies would increase.
However, it has been revealed that even though there has been an increase in
demand, the customers in these countries are also increasing becoming more
demanding. There have been other issues as well. A brands aim is to communicate
a set of emotions, and associate those feelings with the brand itself. However a
global brand may find difficulty making its emotion association relevant to each
person, or even to each market. Local brands are learning from their Western
counterparts and with the advantage of their local knowledge, sometimes are
beating the MNCs from the developed nations in their own game. Arnold, D. J. &
Quelch, J. A. [13] suggests that developing local brands, through acquisition, along
with their global brands may be one of the strategies to penetrate the foreign
markets. Relating back to the previous chapter on socio-cultural influences on
marketing, van Gelder [14] has identified some key imperatives for branding in
terms of strategy, creativity and leadership. Culture differences can have a huge
impact on the way these imperatives manifest themselves [14]. For example, the
concept of humour and the way it can be used in branding campaigns varies
hugely across cultures. An effective global brand needs to appreciate and assimilate such cultural differences. Those brands which have been able to identify the
common strands between cultures have been the most successful globally
examples include Starbucks, Ikea, etc. These brands are the ones who have provide
Introduction to Market Orientation and Brand Strategies
39
high quality products, are associated with positive emotions and have been able to
carefully manage their perceptions in each country and adjusted the product
offerings where required. It is time to recognise the post-global brand [15],
proposed by Professor Jean-Noel Kapferer, one that moves away from the rigid
model of total globalisation and allowing a degree of regional flexibility. Yet, at
the same time trying to connect with similar universal emotions associated with
the brand.
References
1. Lafferty, B. A., & Hult, G. T. M. (2001). A synthesis of contemporary market orientation
perspectives. European Journal of Marketing, 35(1/2), 92.
2. Avlonitis, G. J., & Gounaris, S. P. (1999). Marketing orientation and its determinants: an
empirical analysis. European Journal of Marketing, 33(11/12), 10031037.
3. Mohd Mokhtar, S. S., Yusoff, R. Z., & Arshad, R. (2009). Market orientation critical success
factors of malaysian manufacturers and its impact on financial performance, International
Journal of Marketing Studies, 1(1), 7784.
4. Appiah-Adu, K. (1998). Market orientation and performance: empirical tests in a transition
economy. Journal of Strategic Marketing, 6(1), 2545.
5. Wang, Q. (2013). Marketing not high enough on the agenda for chinese firms. http://www.
wbs.ac.uk/news/marketing-not-high-enough-on-the-agenda-for-chinese-firms/?dm_i=ZLB,
1FV99,8RU79K,4VZJ2,1.
6. Molander, J. (2012). Branding is not enough to make social sell, http://www.targetmarketingmag.com/channel/making-social-sell. [Accessed July 27 2012].
7. Kotler, P., Keller, K. L., Brady, M., Goodman, M., & Hansen, T. (2012). Marketing
Mangement, 2nd edn. Pearson: Harlow, p. 925.
8. Keller, K. L., Apria, T., & Georgson, M. (2008). Strategic brand management: A european
perspective. Harlow: Pearson.
9. de Chernatony, L. (1999). Brand management through narrowing the gap between brand
identity and brand reputation. Journal of Marketing Management, 15(13), 157179.
10. Aaker, David A., & Joachimsthaler, E. (2000). Brand Leadership, London: Free Press.
11. Kapferer, J. N. (2004). The New Strategic Brand Management: Creating and Sustaining
Brand Equity Long Term. London: Kogan Page.
12. Biel, A. L. (1993). Converting image into equity. In D. A. Aaker, A. L. Biel (Eds.), Brand
equity and advertising (pp. 6782). Hilldale, NJ: Lawrence Erlbaum Associates.
13. Arnold, D. J., & Quelch, J. A. (1998). New strategies in emerging markets. http://sloanreview.
mit.edu/article/new-strategies-in-emerging-markets.
14. van Gelder, S. (2005). The new imperatives for global branding: strategy, creativity and
leadership. Journal of Brand Management, 12(5), 395404.
15. Kapferer, J.-N. (2005). The post-global brand. Journal of Brand Management, 12(5),
319325.
Case Study 5: Brands: The New Co-stars

in Bollywood
Anvita Kumar
Dont forget to catch the Audi Q7 starring alongside Salman

Khan in Bodyguard.
tweet by Audi India [1].
Bodyguard, a 2011 Bollywood1 blockbuster earned a record Rs 22 crore net

(US$3.7million) as first day collections [2]. The movie boasts of popular Indian
stars, Salman Khan and Kareena Kapoor. However, they are not the only co-stars.
The film also offers screen time to a number of brands such as the Audi Q7 car,
Tupperware, Blackberry and Sony Vaio notebook [1].
Introduction to Brand Placements

Recently, there has been a surge of popular brands appearing alongside the stars in
movies and television programmes. Brand placements, more popularly known as
product placements, is the practice of placing branded products in the content of
mass media programming [3]. It has gained popularity as a tool to reach the
increasingly fragmented audiences. The commercial that is not a commercial
helps in avoiding the zipping and the zapping of ads and reduce audience volatility
[4]. According to the industry reports, global branded entertainment spending will
continue to grow at accelerating rates in the forecast period as well, posting a
9.1 % CAGR from 2009 to 2014, with paid product placement as the fastest
growing segment [5].
The earliest noted instance of product placement was in 1945, when Joan
Crawford sipped on Jack Daniels Bourbon Whisky in Mildred Pierce (Karrh
1995) [6]. However, the stupendous increase in candy consumption (65 %) after
the publics exposure to Reese Candy in the film ET-Extra Terrestrial, established
it as the hidden advertising plug (Weaver and Oliver 2000) [7]. Brand
1
Bollywood is the nickname for the Indian film industry, which is located in Mumbai,
Maharashtra.
A. Kumar (&)
e-mail: ab3512@conventry.ac.uk

41
42
A. Kumar
placements, riding the wave of globalisation, are becoming prominent marketing

strategies in the emerging markets as well. For instance, the Bollywood movies
have become an important channel for brand placement strategies to capture the
huge Indian market base [8].
Bollywood-the Indian Film Industry

Bollywood is the nickname for Indias leading movie industry based in Mumbai
and its potential is growing. According to PricewaterhouseCoopers, the Indian film
and television industry generated revenues of around 7.7 billion dollars in 2008
and the figure is forecasted to top 13 billion dollars by 2015. It has also been
reported that around three billion movie tickets were sold in India, compared with
1.5 billion in the United States, according to a Crisil media and entertainment
report last September [9]. With Bollywood offering an enormous production
output (approximately 1,000 films/year) as compared to Hollywood (473 in 2003,
Motion Picture Association of America, Inc.) and a large audience [9], it is little
wonder that companies have started placing their products within Bollywood films.
Market homogenisation [10] is another driving force which is facilitating this
branding strategy as Indian consumers are becoming increasingly media-savvy and
familiar with the international brands. According to Nelson and Devananthan
(2006) [11], globalisation of media has created transnational audiences who are
presented with a multitude of international and domestic brands within commercial
media.
Increasing the Reach of the Medium

Bollywood movies have now gained widespread acceptance in the U.S and U.K.
theatres. It has been observed that these movies have become community foci for
the South Asian communities across the globe. Though separated by a vast
distance from home, South Asians have found Bollywood films to be a great way
of staying in touch with their culture and their fellow South Asians [12].
While Bollywood (in Mumbai) leads India in film production, its specialty lies
in Hindi language movies. There are other regional film centres in India which are
slowly entering the spotlight, such as Chennai which produces films in Tamil and
Kolkata, the Bengali movie capital. Bollywoods film production centres in Film
City a government-owned studio facility. The film industry traces its inception to
1911 when the first silent Indian feature film was released by D. P. Phalke. The
industry has not looked back since then and currently, there are over 250 theatres
in Mumbai alone [12].
Case Study 5: Brands: The New Co-stars in Bollywood
43
Brand Placements and Bollywood

A 2005 study by PQ Media, revealed that there are three main types of brand
placements: Paid, in which brands placed in a movie are by arrangement and
financial compensation is mandatory; Barter, in which products are again placed
within a movie but the products serves as a compensation and lastly, Gratis
whereby products are placed simply to add realism to the programme context.
A recent study posits that subject to the degree of integration of their products
within the movie plotline, companies are negotiating for paid product placements
from over Rs 30 m (US$660,000 approximately) to up to Rs 2bn (US$44.4 m
approximately) to allow their brands to share the spotlight with the Bollywood
stars [13].
According to the marketing director at Tupperware, Movies are a passion for
Indians. Thus association with a Bollywood movie is an excellent way to position
our product in Indian culture and take our brand to every home. We are Family
is a family movie set in a home. So there was a perfect match between the movie
and the personality of our brand [13].
The chief executive of an Indian company that specialises in in-film product
placements also observed that this marketing tool is definitely effective, particularly with the big names in Bollywood effectively endorsing the products.
The strategy has been observed to be mutually beneficial for both the movie
producers and brand companies. For instance, Coca cola garnered a substantial
market share from Pepsi, through its product placement strategies in Bollywood
[14], such as Taal (1991) and Aap Mujhe Ache Lagne Lage (2002).2 On the other
hand, the director of Taal, Subash Ghai earned 20 % of the production budget out
of the Coke placement in that movie.3
Similarly, Ray-Bans integrated placement in Dabaang (2010) as the signature
style of Chulbul Pandey played by Bollywood superstar Salman Khan, has
reportedly increased its sales post-Dabaang [15]. In India, the metro cities of Delhi
and Mumbai, are the biggest markets for this high-end brand, with target consumers in age range of 2535 years.
However, local brands, such as Pass Pass4 and Times of India,5 are also joining
the bandwagon and it would be interesting to observe how the product placements
for these brands fare as opposed to the international brands placed in a regional/
national movie content with respect to the county-oforigin bias, if at all. Furthermore the ethical and aesthetic components of the practice has to be considered
to deem this marketing practice a success yet.
Product Placements-Global Scan, [online] http://www.mediae2e.com/downloads/Product%20

Placements-%20Global%20Scan.pdf Accessed April, 2013.
3
[online] \http://www.iimcal.ac.in/[ cited in Product Placements-Global Scan (see above).
4
A local mouth freshner brand available in North India.
5
A English language daily newspaper in India.
44
A. Kumar
Questions
1. What are the international marketing issues faced by practitioners while trying
to adopt product placements in overseas national/regional film industries?
2. Identify the posible reasons for success of product placements of international
brands in the Indian market.
3. What are the ethical dilemmas a practitioner may face when opting for brand
placements both in host and home markets?
References
1. Sauer, A. (2011, September 6). Bollywoods bodyguard features hollywood-style product
placement. Retrieved October 30, 2012, from http://www.brandchannel.com/home/post/
2011/09/06/Bollywood-Bodyguard-Product-Placement.aspx
2. World Snap (2012, January 2). Bodyguard box office collection/earning: Breaks opening day
record. Retrieved March, 2013, from http://news.worldsnap.com/entertainment/bollywood/
bodyguard-box-office-earningreport-record-opening-day-collection-109421.html
3. Russell, C. A. (2002). Investigating effectiveness of product placements in television shows.
Journal of Consumer Research, 29(3), 306318.
4. Ephron, E. (2003). The Paradox of Product Placements. MediaWeek, (June 2), 20.
5. PQ Media (2010). Social Media Sponsorship Forecast 2010-2014, IZEA Inc.
6. Karrh, J. A. (1995). Effects of brand placement in motion pictures. Proceedings of the 1994
American Academy of Advertising Conference (pp. 9096). Athens, GA: American Academy
of Advertising.
7. Weaver, D. T. & Oliver, M. B. (2000). Television programs and advertising: Measuring the
effectiveness of product placement within seinfeld. Paper Presented to the Mass
Communication Division at the 50th Annual Conference of the International
Communication Association (ICA) Mexico.
8. Product Placement in Movies (2012, June 21). Brands in bollywood movies. http://
productplacementandmovies.wordpress.com/2012/06/21/brands-in-bollywood-movies/
9. The Express Tribune (2010, November 11). Hollywood, bollywood sign landmark
cooperation pact. http://tribune.com.pk/story/75679/hollywood-bollywood-sign-landmarkcooperation-pact/
10. Concept posited by Levitt (1984).
11. Nelson, M. R., & Devanathan, N. (2006). Brand placements bollywood style. Journal of
Consumer Behaviour, 5(3), 167279.
12. Rosenberg, M. (2013). Bollywood: Indias movie industry known as bollywood. http://
geography.about.com/od/culturalgeography/a/bollywood.htm
13. Ravel, A. (2010, September 29). Bollywood: Revolutionising product placement. http://blogs.
ft.com/beyond-brics/2010/09/29/bollywood-in-film-branding/#axzz2APOXEL9p
14. Business week (2013, February) In Singh, P. (2013). An analytical study on covert
advertising: Product placement In Indian cinema. International Journal of Research and
Development -A Management Review, 2(1).
15. Twishy (2012, November 6). Ray-Ban: Teaching lessons in smart in-movie placement.
Retrieved April, 2013, from http://www.exchange4media.com/48663_ray-ban-teachinglessons-in-smart-in-movie-placement.html
Case Study 6: Junglee.com: Amazons

Entry in India
If you look at our corporate culture, weve always had

a customer obsession, and weve always been pioneering.
Jeff Bezos, Amazon.com.
Introduction
On February 02, 2012, Amazon.com announced the launch of its much awaited
Indian website called Junglee.com (Junglee means wild in Hindi) [1]. Speaking
on this occasion, Mr. Amit Agarwal (Amit), VP, Amazon.com commented that,
We are excited to give customers in India a single online starting point where
they can shop a wide selection of products sold by local and global retailers, and
make informed purchasing decisions [1]. True to the promise, Junglee.com was
comprised of a selection of a wide variety of Indian and global brands. Another
unique feature of Junglee.com was that the customers had access to both online
and offline buying options, including Amazon.com, in 1 place. At the time of
launch Junglee.com included 10.2 million products with the option of buying from
hundreds of online and offline retailers, which included well known Indian retailers
like Homeshop18, UniverCell, FabIndia. The current selection on Junglee consists
of around 9 million books, and products worth more than US$ 3 million from
approximately 14,000 Indian and global brands. The site has more than 25 product
categories, including consumer durables, books, music and jewellery [1].
Junglee.com is unique in the sense that it includes products from both the online
and offline retailers simultaneously and this selection was available to prospective
customers through Amazons search technology [1]. Junglee.com was equipped
with the same recommendation engine technology which is used by Amazon.com
to provide the customers some unique features such as the Most Frequently
Viewed Products or Customers Who Viewed This Product Also Viewed
options [1]. Similar to Amazon.com, Junglee.com provides information related to
S. K. Roy (&)
R. Chakraborti
IBS Hyderabad, Hyderabad, India

45
46
S. K. Roy and R. Chakraborti
customer reviews, price, and number of days required for the product to reach the
customers, so that the customers could make an informed decision. Customers
could also read millions of real-time customer reviews from Amazon.com, choose
and share products through Facebook, Twitter as well as email [2].
In the past Amazon has never entered a country with a completely different
brand name. The reason behind this was Amazons belief in its brand name and
logo. Amazon believed that the name and the logo conveyed the amazon-ness of
the venture to the customers and exposed them to an unexplored world of online
retailing [3].
The History
Amazon.com is a Fortune 500 e-commerce company with its headquarters in
Seattle, US. It was one of the pioneers in the online retail sector. The company was
founded by Jeff Bezos (Bezos) in 1994, and was launched in 1995. Initially it was
named as Cadabra.com, but founder Bezos renamed the company Amazon after
the worlds largest river, the Amazon. He saw the potential for a huge volume of
sales in an online bookstore (as opposed to a bricks and mortar), which was a
completely new concept at that point of time [4]. Initially Amazon started out as an
online bookstore and then quickly diversified into different sectors such as electronics and electrical goods, CDs and DVDs, software, video games, clothing,
furniture, toys, etc. [4]. The motto of Amazon.com is: to offer the earths biggest
selection and to be the earths most customer-centric company, where customers
can find and discover anything they may want to buy online.
The Initial Days

Throughout the 1990s, the IT boom helped the creation of World Wide Web
(www) and the craze of internet was rising rapidly. As use of the internet became
more and more popular, different online retailers decided to use the Web as a new
channel for commerce. They soon found out that selling products over the Internet
offered a variety of choices and opportunities and it was less costly also as it saved
the cost related to the payment to the dealers and retailers. Online sales also helped
a company to reach a much wider audience across the globe compared to a brick
and mortar store. As already mentioned, one of the pioneers of this e-commerce
revolution was Bezos, who founded Amazon.com.
In 1994, Bezos resigned as the vice-president of the Wall Street firm D.E.
Shaw, moved to Seattle, and started to work on a business plan to come up with an
online retail store which eventually came to be known as Amazon.com. He was
successful in coming up with a business plan which projected annual web growth
at 2,300 %. Encouraged by the initial success of the website, Bezos shortlisted 20
Junglee.com: Amazons Entry in India
47
products that could be sold over internet. From the initial list of 20 items, he
narrowed down the list to the five most promising products according to him: cd-s,
computer and software, videos and books. Due to the large worldwide market for
literature, and the existing low price that was being offered for books in addition to
the huge selection of titles that were available in print, Bezos eventually decided
that his brainchild, the online retail website would sell books over the Web.1 He
strategically chose Seattle as the company headquarters because of the easy
availability of high-tech work force and its proximity to Oregon which was the hub
of a large book distribution centre. Bezos then simultaneously started to raise
funds for the company and started to work with software developers to build the
web site. The web site debuted in July 1995 with the name of Cadabra.com and
quickly became the number one book-related site on the Web [5].
In just four months since its inception, Amazon.com became the sixth best site
on Point Communications top 10 list, a place on Yahoos whats cool list
and Netscapes whats new list. The sheer volume of the website reveals its
range of the titles. The site opened with an accessible database of over 1 million
titles and customers were given enough scope to make an informed purchase using
search information and comments about the title and its genre. The customers were
also given the option to order the books using their credit cards and have the books
shipped in a just a few days [5].
What made Amazon unique was that unlike its large competitors, such as
Barnes & Noble and Borders, it carried only a small inventory of approximately
2,000 titles in stock. As most of the orders through Amazon.com were received via
wholesalers and publishers, no warehouse was needed. It was basically playing the
role of intermediary. Initially the company was being run from Bezos garage, but
its success forced it to move into its Seattle office, which was used as the base to
the customer support, shipping, and receiving area. Within a month of launching
the web site, Amazon.com was handling orders from all the 50 states of USA as
well as from 45 other countries.2
As a pioneer in the world of Internet commerce Bezos decided to make
Amazon.com as customer friendly as possible. He also gave importance to ensure
that all kinds of customers could relate themselves with the website. For the
regular readers, who knew what they were looking for, Amazon.com offered a
powerful search engines which was capable of accessing its expanded 1.5 milliontitle database very fast. Apart from that, Amazon offered 1030 % discounts on
most of the titles ensuring affordable prices to the customers [6]. For the general
readers, Amazon offered a content list in categorical manner, which made it easier
for the readers to search for the specific genre they were looking for. For the
undecided reader, Amazon.com came up a concept called the recommendation
centre. Here a customer could find books based on his or her mood, reading
habits, or choices. The recommendation centre also could suggest different
1
2
Schneider, L. (2013).
Perez, E. (September 19, 1995).
48
books to a particular reader based on their purchase history [7]. It also included
some unique features such as optional gift wrapping and the eye service, which
informed the customers about the arrival of a new book of their favourite subject
or by their favourite author. The site also offered the customers an open discussion
forum about the books that were available via the website creating a more
informed customer base as well as generating interest amongst the non-readers [7].
Going Public
Within two years of operation, Amazon became as a public company in May 1997
and launched its first initial public offering (IPO) of 3 million shares. The money
generated from the IPO was invested by Bezos on improving the already productive web site and to help broaden the companys distribution capabilities, and
to release the pressure on the existing distribution centre that came from such a
high volume of orders.3 With the growing size of the business, Amazon.com, in
September 1997 declared that an East Coast distribution centre in New Castle,
Delaware would be opened for the better service delivery. On top of that, Bezos
announced that there would also be a 70 % expansion of the companys Seattle
centre to cater to the customers in a much better and efficient manner. The opening
of its new office at Delaware helped Amazon to establish itself very close to the
East Coast publishers, which decreased Amazon.coms service delivery time. In
lieu of this development, Bezos set a goal for the company that 95 % of the instock orders will be shipped on the same day, reaching the customers at a much
faster pace than before.4
Amazon.com was successful in its Associate program as well. Established in
July 1996, this program ensured that the individuals who owned web sites could
choose books of interest and place ads of those items on their own sites, allowing
visitors to purchase those books. Amazon.com only took care of all their orders.
Those people, who posted the ads on their websites, were offered 38 % commission from books sold on their sites. Though initially started with a low scale,
the Associates program really began to show some signs of improvement in mid1997, when Amazon.com joined hands with Yahoo, Inc. and America Online, Inc.
two of the most popular websites. As Amazon continued its growth over time, it
was able to get into collaboration with websites including Netscape, GeoCities,
Excite, and AltaVista.5
With the continued growth of Amazon, Bezos announced in October, 1999 that
Amazon.com was on the verge of becoming the first online retailer to reach 1
million customers. This included customers across the entire US and 160 countries
3
4
5
Hazleton, L. (1998).
Ibid.
Ibid.
49
worldwide. The small business plan from Bezos was now a company with
US$147.8 million in yearly sales [8].
Further Expansion
By February, 1998 the Associates program had 30,000 members, whose commissions reached up to 15 % for recommending and selling books from their web
sites. This number went up to 60,000 members within a span of 4 months [8].
Financially also, Amazon was facing a huge growth in customer database. The
customer base increased by 50 % in three months and reached 2.26 million in
March, 1998 which was 564 % more than the previous year. This established
Amazon.com as the third largest bookseller in the US [9].
In late 1997, the company was buoyed by a US$75 million credit which helped
it to continue to expand its catalogue to over 2.5 million titles, and to redesign the
service delivery system to reach the customer at a much faster time. In addition,
the company added Amazon.com Advantage, a program to help and encourage the
sales of books written by independent authors and publishers, and Amazon.com
Kids, which had over 100,000 titles for younger children and teenagers.6
In early 1998, Amazon.com also expanded its business by acquiring 3 independent business units. To create a stronghold of Amazon.com in Europe, it
decided to acquire Bookpages, one of the largest online booksellers in the UK.
This gave Amazon access to the U.K. market. Apart from this, Amazon also
acquired the largest online bookseller in Germany, called Telebook. This helped
Amazon to add the German titles into its already huge list of titles. Not only these
two newly acquired companies gave Amazon.com the desired access in the
European market, but it also gave existing Amazon.com customers access to a
wider array of titles to choose from.7 On the other front, Amazon acquired the
Internet Movie Database (IMDB), to support plans for its move into online video
sales. The vast database of IMDB served as a valuable and important asset in the
construction of a customer-friendly and informative web site for video sales.8
In 1998, Amazon decided to venture into the online music business. Bezos
wanted to make the site as useful as possible for his customers and asked its
bookstore customers and the music professionals to come up with the designs of
the new web site [10]. The music store was opened in June 1998, with a collection
of over 125,000 music titles. This online music site was equipped with most of the
familiar features of the original Amazon website. People could search the database
6
7
8
Business Week (4 Feb. 2002).

Ibid.
Ibid
50
by artist, song title, etc. in addition to that, customers had access to more than
225,000 sound clips from which to make their selection [10].9
Riding on the back of the success of its new websites, Amazon.com had a
strong second quarter of 1998. Total number of customers touched 3 million and
sales figures for Amazon.com continued to rise indicating a bright future ahead.
Bezos told Fortune magazine in December 1996: By the year 2000, there could
be two or three big online bookstores. We need to be one of them [7].
Growth Continues: 1999 and Beyond

In 1999, Amazon.com launched an online auction service entitled Amazon Auctions. It divided its product offerings into individual stores on its site to make it
easier for customers. The results were evident as the sales climbed to US$1.6
billion proving that Bezos efforts to create an online powerhouse had indeed paid
off. In 1999 Time Magazine named Bezos as the Person of the Year for 1999. This
was largely in recognition of the companys success in popularizing online
shopping.10
However, there were some negative aspects too. Bezos focus on market share
over profits forced the analysts speculating whether the company would ever be
profitable or not. Though, sales continued to grow as the company added new
products to its site (kitchen wares, furniture, etc.) it continued to post net losses. In
addition, the bursting of dot-com boom in the early years of the new millennium
made the situation of Amazon even worse [11].
During 2001, the company had no other option but to lay off 1,300 employees
and closed a distribution facility [12]. To overcome these problems, Amazon.com
joined hands with well-known retailers as Target Corporation and America Online,
Inc. Products from other well known retailers such as Toysrus.com Inc., Circuit
City Stores Inc. and a host of other retailers were also selling via Amazon.com [13].
This was the turning point for Amazon.com. In 2001, sales grew by 13 % to
reach US$3.12 billion. During the fourth quarter of 2001, Amazon.com secured a
net profit of $5 million. In 2002, the company diversified again and launched its
first apparel store in collaboration with retailers like The Gap and Lands End.
Amazon.com reported a net loss of US$149 million for the year 2002, which was a
significant improvement from the US$567 million loss reported in 2001. However,
the trend changed in the fourth quarter of 2002 when Amazon managed to turn
around a quarterly net profit of US$3 millionthe second net profit in its history
[13]. While this was a major turning point for Amazon.com, a July 2002 Business
Week article warned, after seven years and more than US$1000 million in losses,
Amazon is still a work in process [14]. Nevertheless, Bezos and his Amazon team
9
10
Ibid.
51
believed that the firm was on the right track. With US$3900 million in annual
sales, Amazon.com was on its way to fulfil Bezos dream [14].
One of the reasons behind the success of Amazon.com was the values and the
existing work culture of the company. The work culture in Amazon.com was
divided into certain segments such as: customer obsession, innovation, bias for
action, ownership, high hiring bar and frugality.11 These segments together indicated that though the focus of the organisation would be on the customer, it would
not mean that the customers have the last word. The suggestions from the customers would be taken into consideration and the best possible option for both the
company as well as the customers will be chosen as the solution. Apart from that,
on the recruitment front also, there was a very high ceiling for recruitment. As
Amazon.com is known for continuous innovations, their engineers tackle some of
the most complex challenges in large-scale computing. Experts from all possible
fields such as software development and testing, program managing and userinterface work in small teams across the company to contribute to the e-commerce
platform thats used by the huge customer base of Amazon, the huge network of
the sellers and the group of external developers. This is the reason why Bezos
ensured a high recruitment bar.12
The IT department at Amazon.com has a massive responsibility. Their job
included taking care and monitoring of an enormous system that continues to be
extremely reliable. Amazon.com described their IT group as system, database, and
networking experts (that) build and operate highly reliable, scalable distributed
systems with terabyte-sized databases and infrastructure that can handle a massive
number of transactions.13 In 2000, VoiceStream Wireless,14 the then fastest
growing wireless telephone network in USA joined hands with Amazon.com to sell
their products and services through the Amazon.coms online wireless phone store
[15]. Speaking on this occasion, VoiceStream President and COO, Bob Stapleton
(Bob) opined that, The agreement between VoiceStream and Amazon.com is a big
win for consumers. VoiceStream makes wireless service affordable, Amazon.com
makes purchasing it convenient and hassle free. VoiceStream and Amazon.com are
a powerful team that brings customers the best value in wireless service online and
delivers it right to their door.15 Addressing this Occasion, Christopher Payne
(Chris), VP of Amazon Electronics, commented that, Amazon.com has built a
reputation for helping consumers find the best value online. VoiceStreams clear
GET MORE offering is an attractive service to online shoppers who have come to
11
Ibid.
13
www.amazon.com
14
One of the major nationwide providers of communication services in the USA and operates
and uses the globally dominantGSMtechnology platform. VoiceStream is a member of The GSM
Alliance, L.L.C., a consortium of U.S. and Canadian digital wirelessPCScarriers.
15
Business Wire (28 Nov 2000).
12
52
expect value and variety when shopping at Amazon.com. 16 The magnitude of the
website became so huge that, O Reilley and Associates17 decided to come up with
a book called Amazon Hacks, written by Paul Bausch, which will contain details
of how to make the most of using Amazon.com [16]. In the words of Rael Dornfest,
editor of O Reilley and Associates, Amazon Hacks will be a collection of tips and
tools for getting the most out of Amazon.com. The book will appeal to a variety of
readers, including shoppers using the site to discover new products, Amazon
Associates honing their sites for better linking, sellers listing products for sale on
Amazon.com, and programmers building their own application using Amazon.com
Web Services [16]. Speaking on this occasion, Colin Bryar, Director of Amazon.com Associates and Web Services, commented that, We are thrilled that
OReilly is publishing this book to help third parties create even more interesting
applications using our powerful platform. This book represents continued recognition of Amazon.com technology and will be a tremendous resource for Amazon.com Web Services developers, web site owners, sellers and customers who
want to take our platform to another level [16].
International Expansion
The global growth of Amazon has played a significant role in the success it has
achieved so far. Although Amazon had the infrastructure to deliver products across
any country of the globe, it has established country-specific websites and fulfilment networks which were strategically located. It all started with its expansion in
the UK and Germany in 1998. These two major expansions were followed by the
opening of Amazon.com websites which were specifically suited for the customers
located in France (2000), Japan (2000), Canada (2002), and China (2004). These
expansions ensured that Amazon had its presence in all the growing e-commerce
markets across the world and the financial results of these expansions clearly
indicated that the growth in these countries were far ahead than the growth of its
original website catering to the American customers. The reason behind might be
stiffer competition Amazon was facing in the North Americas as well as their
approach to integrate the entire bundle of successful services available to the
international market. Thus, it could be said that the expansion of Amazons
international businesses were benefitted from the experience it gained through US
markets, though the proper application of these experiences in the international
markets played a significant role in accumulating the success of Amazon.com.
Another strategy that made Amazon unique was that it allowed its competitors
to advertise on its website. These competitors were allowed to advertise their
16
Ibid.
A leading publishing house who publishes books related to the leading edge computer
technologies.
17
53
offerings on the Amazon.com website and were even allowed to compete with
Amazon using the same webpage. These merchants were to pay a certain percentage of the price of the varied offerings being sold using its website. Although
the gross profit on these transactions was much less compared to if Amazon sold
them directly. The underlying strategy behind this was that Amazon.com website
became a one stop destination for the online shoppers with a consistent experience
for the customer. It also ensured that Amazons website carried a much wider
variety of items, which made it the most sought after online shopping website. It
was estimated that almost 30 % of the items sold on Amazon were actually the
offerings from the third parties [17].
Junglee.com
According to the experts, Junglee.com is just a testing phase for the Amazon.com
as it tries to gauge the reaction of the Indian people towards the e-commerce
sector. Experts predict that India is going to experience an e-commerce boom.
With a population of more than 1,000 million people and the technology savvy
young generation who are ready to experiment with the e-commerce and online
shopping, India is an unchartered and lucrative market. Asheesh Raina, a principal
research analyst at global consultancy Gartner commented that, This market
could be a game-changer for Amazon-these e-commerce retailers survive on
volume. India with its large number of people could be a huge opportunity [18].
Junglee.com, was a modified version of the Amazon.com website. Junglee.com
allowed customers to search for different products and compare prices as it was
there in the Amazon website, but in case of Junglee, the buyers have no other option
but to make their purchases through a network of third-party suppliers, be it through
online booking or by personal visits to the stores in case of offline retailers [18].
This was an intentional strategy as this setup allows Junglee to avoid Indian government rules which prohibit the foreign multi-brand retailers from operating in
India as Junglee.com works as a gateway to the different online retail sites rather
than selling the products directly. Commenting on this strategy by Amazon, Saloni
Nangia, president of Indian research consultancy Technopak opined that, Its a
clever way of getting into the Indian market that works with the rules [18]. Experts
believe that Amazon is waiting for the government to ease the regulations to allow
online multi-brand retailers such as Amazon to do business in India. However, since
its not certain when the regulations will be eased, the experts believe that Amazon
did the best thing that it could do to enter the Indian market [18].
Amazon.com vice president Amit Agarwal commented that Junglee.com was
trying to give a single online starting point access to its Indian customers. He
also added that, They can shop a wide selection of products sold by local and
global retailers and make informed purchasing decisions.[18] On the other hand,
Gartners Raina opined that the move was nothing but a low-cost way for
Amazon to find out what the Indian market is aboutbuild brand loyalty and
54
hopefully when the retail regulations loosen in India take their customers with
them[18]. Long before Junglee.com was launched, Amazon set up its first of the
warehouses, known as fulfilment centres, in India, which would allow Amazon
to store products and ship them swiftly across the subcontinent [18].
The Competition
Amazon faces a stiff competition in India from the popular e-commerce portal
Flipkart.com, which is the brainchild of two ex-Amazon employees and was
established in 2007. Experts opine that, with its headquarter in the southern city of
Bangalore, Flipkart.com does in India exactly what Amazon did in the USA,
namely, selling a range of goods from books to television sets. An added advantage
for Flipkart faced is that as an Indian company, it is exempted from the government
rules and regulations that prevent Amazon to launch a full-service site [18].
Though Junglee.com was expected to face stiff competition in India, it was still
expected to reach at least US$100 million in sales for the 20122013 financial year
and US$1 billion by the end of 20152016 financial year, up from only US$11
million in financial year 20112012. This rise was mainly due to the exponential
growth rate of Indias e-commerce market [18].
According to a report of Internet and Mobile Association of India, India has
only around 52 million active Internet usersthose who go online at least once a
month, which indicated a very low internet penetration volume [18]. However, the
experts believe that this figure is expected to grow rapidly, helping e-commerce to
take off. Commenting on this, Nangia opined that, This is just the beginning of
the market with the number of smart phones, debit and credit cards rising so
quickly. Many Indian young people have no history of only going to retail stores of
only consuming in a certain way making prospects for e-commerce even bigger.
[18]. Technopak forecasted that the e-commerce market, consisting of travel and
financial services among others, will grow to US$200 billion by 2020 from US$10
billion in 2011 which indicated a bright future for Amazon.com.
Now, the question that arises is that why Amazon decide to enter India with the
brand name Junglee? Looking at the History of Amazon.com, the company is
very possessive about its brand name and logo and has never used a different name
or logo when they entered different markets across the globe. Amazon bought out a
small database technology company in Sunnyvale way back in 1998 called Junglee. Later when Amazon decided to enter India, this name, Junglee was used for
the online shopping website to cater to the Indian market.
55
Junglee.com
The name Junglee was chosen with a conscious effort. There is an Indian-ness to
the name Junglee. It gives a very similar feel to that of Amazon with the added
advantage that Junglee is an Indian word which Indians could easily identify with
it as the desi version of Amazon [18].
As it is a well known fact that Indians are very much price conscious, the
question was that how the consumers would perceive the product sold through
Junglee.com. Amazon believed that in the Indian scenario, the lesser the price the
higher the hits. So, it will be interesting to see how the brand equity of Amazon
helped Junglee to compete with the already existing web stores in India, such as,
Ebay.com, Quickr.com, Letsbuy.com, Yebhi.com, Flipkart.com, Infibeam.com,
rediffshopping.com, myntra.com, indiatimesshopping.com to name a few [18].
Amazon was more concerned about how to maintain the efficient distribution
network or the delivery model in India as well, which was much different from the
other markets they were doing business in. To start with, Amazon decided to go for
free shipping to the Indian addresses if the purchase amount was more than
US$100, to find out whether the same effectiveness could be maintained in the
Indian market or not.
After being satisfied with the market and functional efficiency of the Indian
market, Amazon decided to launch Junglee.com in India. The experts are still
debating whether Junglee will be the sole representative of Amazon in India or
whether the company will also launch their flagship website with the url: Amazon.co.in. Whatever happens, the Indian online consumer are going to be the
winners as they will have much more options to choose from and with the cutthroat competition expected between the top online web stores, they could expect
the best in the customer service. Initially, Junglee.com was launched as a reference
website, where one could get information about the products on sale on the web
stores who registered with Junglee. At the initial level Junglee.com did not have
any direct responsibility for delivering the products purchased by a customer.
Junglee had a statement on their website: We help you discover over 1.2 crore
(10.2 million) products. You choose where to buy!
PTI18 reported that Amazon.com, the worlds largest online retailer would
come up a facility in Hyderabad which will generate employment for over 3,000
people. The announcement was made after a meeting between the Andhra Pradesh
government and an Amazon delegation led by John Schoettler, VP (Global Real
Estate and Facilities) in November, 2011 [19]. It was expected that Amazons
arrival will create a fierce competition among the existing popular online stores
such as FlipKart.com. Incidentally, Flipkart.com was launched by two former
Amazon employees, and follows more or less the same procedure for speedy, cashon-delivery service for a range of products including books, electronic goods,
music and video and home appliances. However, there were adverse reactions as
18
Press Trust of India.
56
well. According to one Junglee.com customer, Amazons entry into India with
Junglee.com has created a big buzz in the media but the fact is that it does not list
prices by the Top Players like FlipKart, Yebhi, LetsBuy, InfiBeam or Rediff which
also offer the lowest prices.
If you see similar Indian Websites like http://www.SearchDeals.com who do
actually list the lowest prices, they are much better than Junglee [20]. Another
user called Tanisha commented that Amazon is not listing products from many of
other Indian e retailers like tradus, myntra, indiatimes, letsbuy and so many others,
where as an Indian shopping search engine cheapestinindia.com has host of sites
and huge number of products available. They claim to be a search engine and an
independent Indian entity.19
The Road Ahead

In the initial days of Amazon, experts used to compare Amazon to other e-commerce competitors like Buy.com, Overstock.com, Walmart.com, etc. However
over the years, the dominance of Amazon ensured that such comparison were not
at all comparable. Amazon considered its largest competitor as not a particular
company, but all the online retail stores and the brick and mortar retail stores in the
US and across the world. While the penetration of online sales depends on the
category (in USA: 1 % penetration in food, and 22 % in computer peripherals).20
However, online sales still represent only a fraction of the Indian retail market
(less than 1 % to be precise) [21]. The continuing shift towards online purchasing
amongst the youth in India is a major trend which should provide Amazon with
sustained long-term growth potential in the Indian market. Amazons continued
focus on increasing selection and availability, lowering prices, and providing a
great product and service towards the Indian customers are the most important
aspects of its long-term growth strategy in the Indian market.
As Amazon continues to venture into different categories and different markets
to experiment with building different types of businesses, substantial investments
have been made in Junglee.com to gain substantial revenue opportunities in the
untapped Indian market. Even if a few of these schemes succeed, this could
translate into a huge success for Amazon in the lucrative Indian market.
19
20
PTI (2 Feb. 2012).

http://www.wikinvest.com/stock/Amazon.com_(AMZN)
57
References
1. Business Standard. (2012, February 02). Amazon debuts Junglee.com in India. www.
businessstandard.com
2. Business Standard. (2012, February 2). Amazon debuts Junglee.com in India. http://www.
business-standard.com/article/companies/amazon-debuts-junglee-com-in-india-112020200135_
1.html
3. Amazon Forests and Junglee.com. www.brandyou.com
4. Schneider, L. (2013). Amazon.com company research. http://jobsearchtech.about.com/od/
companyprofiles/a/Amazon.htm
5. Perez, E. (1995, September 19). Store on Internet is open book: Amazon.com boasts more
than 1 million titles on the Web. Seattle Times, E1. http://community.seattletimes.nwsource.
com/archive/?date=19950919&slug=2142506
6. Hazleton, L. (1998). Jeff Bezos: How he built a billion dollar net worth before his company
even turned a profit. Success, 5860.
7. Martin, M. (1996, December 9). The next big thing: A bookstore. Fortune, 134(11), 16870.
8. Zito, K. (1999, December 23). Amazon CEO Tells of Life at the Top, San Francisco.
Chronicle, 81. http://www.sfgate.com/business/article/Amazon-CEO-Tells-Of-Life-at-theTop-2889026.php
9. Business Week. (2002, February 4). How Amazon cleared the profitability hurdle. http://
www.businessweek.com/stories/2002-02-03/how-amazon-cleared-the-profitability-hurdle
10. Jeffrey, D. (1998). Amazon.com eyes retailing music online. Billboard, 89.
11. Haines, T. (January 23, 1998). Amazon.com Sales Grow While Loss Widens. Seattle Times,
C1.
12. Soto, M. (2001, 5 February). Amazon Layoffs: Whats It All Mean? Seattle Times.
13. (2002, February 4) How Amazon cleared the profitability hurdle. Business Week.
14. Colker, D. (2003, January 24). Amazon Delivers Profit for the Second Time. Los Angeles
Times.
15. Business Wire (2000, November 28 ). Voicestream wireless teams up with Amazon.com Get
More goes online for holiday shopping season. http://www.thefreelibrary.com/Voicestream+
Wireless+Teams+Up+With+Amazon.com+%60Get+More+Goes+Online-a067385305
16. Business Wire (2003, April 22). Unleashing Amazon.comOReilly & Associates to Publish
and Release Amazon Hacks (this Summer)
17. Miller, R. (2009, July 19). Outage for Amazon Web services. Data Center Knowledge. http://
www.datacenterknowledge.com/archives/2009/07/19/outage-for-amazon-web-services/
18. Agence France-Presse (2012, February 8). Amazon enters India with Junglee.com.
19. Jayadevan, P. K. (2012, February 12). American online retail giant Amazon enters India with
Junglee.com, an online shopping site. www.theeconomintimes.com.
20. PTI (2012, February 2). Amazon.com launches India specific online shopping service
Junglee.com. http://ibnlive.in.com/news/amazoncom-launches-india-specific-online-shoppingservice-jungleecom/226557-11.html.
21. India B2C E-Commerce Report 2013. www.ystats.com
Case Study 7: Indonesian Fisheries

John Heap, Simon ORourke, Rory Dillon and Lara Chaplin
Introduction
Though Indonesia has been successful in growing the value of its fisheries sector,
there are issues and constraints which make further growth more difficult to
achieve. Some of these factors are external factors which affect both Indonesia and
its main competitors; others are specific issues relating to the industry within
Indonesia. There are, for example, barriers to increasing trade with particular
countries (which might represent high export growth potential) due to technical
barriers to trade (TBT) and SPS (Sanitary and Phytosanitary) standards/regulations. This case study examines the challenges of moving from a predominantly
product/quality centred focus to adopting a marketing orientation.
These issues are linked tobut do not fully representthe ability of firms
within the Indonesian fisheries sector to meet the quality requirements of those
major export markets where a premium price may be achieved by meeting particular quality thresholds. This requires a systematic approach to adding value and
meeting quality standards including addressing the technological infrastructure,
cultural factors and skills gaps.
Background Information
The strategic geographic location of Indonesia between two continents and two
oceans make the seas around Indonesia an extremely rich and fertile source of a
number of marine products. The trade balance of fisheries products increased by
J. Heap S. ORourke R. Dillon
Grimsby Institute of Further and Higher Education, Grimsby, UK
L. Chaplin (&)

59
60
J. Heap et al.
approximately 5 % per annum between 2001 and 2006, moving from US$1.53
billion to US$1.94 billion, whilst the export volume over the same period
increased by just over 15 % per annum, from 487,113 tonnes in 2001 to 926,478
tonnes in 2006 [1].
The major products within this trade are tuna, shrimp, pearl and seaweed with
the remaining items simply being categorised as other fish commodities or other
fish. In the 20012006 period, shrimp represented the highest export value at
US$1.12 billion in 2006, tuna represented US$250.56 million in 2006, other fish
commodities represented US$673.57 million, seaweed was US$49.59 million and
pearl was US$25.26 million [2]. Tuna and most other species are caught at sea;
shrimps are raised on farms by a process known as aquaculture. Thus, raw
materials are sourced by a combination of capture and aquaculture. Tuna sells
in a variety of ways. If tuna landed at port is of high qualityand can be shipped
(by air freight) to Japan so that it lands on a table of a sushi house within 30 h of
being caughtit is known as sushimi grade and commands a premium price. If it
cannot make this time constraint or is of slightly lower quality, it is packaged as
tuna loin/steaks and sold as freshfor a reasonably high price. Tuna which fails
to meet quality standards is sold for a significantly lower price to processors for
canning or other forms of modification.
The major export markets for Indonesian fishery products over the last 10 years
have been USA, Japan, EU, China and Singapore (in decreasing order). However,
for the last 2 years (2009) Indonesian fisheries products have been banned from
the EU on hygiene grounds (The inspection authorities in Indonesia think they
have done enoughand proved soto get this ban lifted but the EU moves slowly
and cautiously on such issues). The import of fisheries products is also important to
Indonesian trade and in the period 20012006, the import value increased by 14 %
per annum from US$103.62 million to US$165.72 million [2]. The importance of
the fisheries sector to Indonesia is evidenced by the fact that the Ministry of
Fisheries and Maritime Affairs was established in 2001 (as a breakaway from the
Ministry of Industry) to oversee the strategic development of the sector.
The Indonesian government clearly wants to maximise the benefits of these
resources since the (GDP) Gross Domestic Product of the Fisheries Sector (both
captured fish and aquaculture) makes a strategic contribution to national GDP and
the fisheries sector is responsible for maintaining the livelihoods of just under 5
million workers and their dependents (approximately 2.6 million in the capture
sector, 2.3 million in aquaculture and 0.75 million in secondary industries) [2].
Known Issues
Products from the Indonesian fisheries sector need to meet international quality
standards but also need to be price competitive. In 2009 there were certain factors
within the industry, partly relating to the geography of the country and partly
relating to the industry infrastructure, that mitigate against this. For example,
61
products are shipped from particular capture zones to internal consolidation ports
(where a transfer from one container size to another might take place) and then
perhaps to an external consolidation port (such as Singapore, where another
container transfer might take place).
A key issue in relation to quality is cooling and refrigeration. If tuna, for
example, is frozen quickly to -60 it can be maintained as fresh. Most boats are
quite small and do not have refrigeration on board. These generally carry blocks of
ice which are used to keep the catch cool. Though the use of ice is certainly better
than using no freezing, it is not a particularly effective means of maintaining
quality. For extended voyages, such boats have to re-ice by buying new blocks
off supplying boats in the fishing zones.
The price of fuel (which represents about 60 % of the total cost of putting a
vessel to sea) is currently causing great concern (as it is throughout all countries).
It also has a major impact on the aquaculture process since it directly affects the
price of feed, one of the major sources of cost for shrimp farmers. However, fuel
price increases have differential effects according to the nature of current fuel
efficiencies and this has implications for the fisheries sector.
Finally, a strategic long-term approach to fisheries development clearly
involves the management and conservation of stocks. This requires an understanding of the nature, life cycle, behaviour and inter-dependence of fish species as
well as of the wider coastal and marine ecosystem resulting in appropriate policy
and practical intervention. For example, tuna is a migratory species and any
conservation strategy must be the result of trans-national co-operation (Freedom to
fish the high seas comes with responsibility). There are areas of the seas around
Indonesia that the country does not currently fully exploit (in the Indian Ocean),
though these areas are not necessarily unexploited by other bordering countries.
Illegal, unreported and unregulated (IUU) fishing results in significant losses. Any
move into these areas by the Indonesian fishing industry would require significant
investment in capture/landing/logistics facilities.
Stakeholder Analysis
The government is clearly a primary stakeholder. Though the Ministry of Fisheries
and Maritime Affairs is the main government department with responsibility for the
sector, a number of other government departments have a stake in, and influence
over, parts of the sector. Thus, principal government stakeholders are, namely,
Ministry of Fisheries and Maritime Affairs, Ministry of Trade, Ministry of Industry
and the National Planning Board. In terms of industry, there is a number of collective associations that act as representatives of specific sub-sectors and activities.
Consulting with these associations allows representative and consensus views to be
obtained. The key associations reflecting both the essential supply/value chain
components and the major sector products are The Indonesian Tuna Association,
The Tuna Long Line Association, The Shrimp Association, The Frozen Seafood
62
J. Heap et al.
Association of Indonesia and The Cold Chain Association of Indonesia. These

various associations come together, with others representing other parts of the
sector, as a Confederation under the co-ordinating responsibility of the Indonesian
Fisheries Society.
Discussions with Stakeholders

Throughout the preparatory phase of the research a number of discussions took
place with these stakeholders, both individually, so that stakeholders could make
frank comments in private, and in a series of workshops, to allow interaction and
constructive debate. In the case of government departments, discussions also took
place with officers at different levels so that strategic, tactical and operational
issues could be explored.
Industry representatives recognise that compliance with international, and
especially EU, standards is an essential step towards increasing export potential.
They are frustrated by what they see as a lack of capacity within the inspection
service and delays in inspection resulting from this. Most of the discussions,
however, were with government representatives, with the competent authority and
with members of the inspection service itself. It was clear that there is a lack of a
strong, coherent management system to ensure that the inspection regime is used
to drive quality back up the supply chain. Similarly, in terms of making effective
use of resources, the roles of national and provincial agencies need to be clarified
such that the provincial agencies are responsible for inspection within their
province and the national agency is used to audit and validate those inspection
services.
Discussions with all stakeholders suggest that there is a broad, shared understanding that specific changes to the quality grading of particular products in
particular markets will result in the ability to charge premium prices. However, it
would be wise to confirm the nature of this relationship with structured market
research so that any quality/price parameters used in the EIAM are based on
evidence rather than simple assumptions. For example there is a need to understand price/supply elasticity to confirm that any price premium would be maintained in a situation of increased supply. The discussion with stakeholders raised
the following big issues:
inconsistency of quality from smaller-scale producers

the need for a no compromise approach to quality control
the lack of inspection capacity
lack of a specific image/identity for Indonesian fish/seafood
cultural factors amongst the fishing community that impede quality development (linked to reward structure to incentivise improved quality)
rising fuel costs and the impact on capture (see below)
63
rising fuel costs are causing a reduction of raw material available to processors,
both in the capture and aquaculture sectors
lack of refrigeration/ice-making/cold chain capacity in some geographic areas
over-regulation of the industry by government
need for knowledge transfer in support of new product development
lack of business planning by producing organisations in support of export
expansion
the cost of technology investment in support of improved quality and/or
efficiency
significant stocks of fish off Eastern Indonesia lie unexploited due to a lack of
suitable vessels and a lack of appropriate port facilities
lack of adequate road transport infrastructure in some parts of the country
lack of a port of sufficient size and with sufficient facilities to avoid consolidation of shipments in Singapore
the need to be aware of longer term sustainability of fish stocksand of organisations that lobby on sustainability/environmental issues (such as Greenpeace) whose influence on the market can be significant
a lack of direct flights to key market destinations prohibits the sale of fish as
fresh.
In addition, government stakeholders in particular referred to the need to
upgrade elements of the overall logistics infrastructure. The issue of branding has
been raised several times. It is seen as a major issue in terms of raising the profile
of Indonesian fisheries products in general. However, it is recognised that any
strategy for branding must be linked to initiatives to improve quality, to meet
internationally-recognised standards and perhaps to achieve specific quality (or
related) certification.
The Indonesian Fisheries Society talked at some length about branding,
pointing out that branding is a relatively broad term incorporating promotion at
different levels, such as the country the sector, the species of fish and the organisation. In addition it is possible to co-brand and to use third-party certification
brands (such as those promoting environmentally-friendly and sustainable sourcing and processing or those associated with particular process technologies).
The other item that raised most comment was the price of fuel. The ability of
fishing vessels to make extended capture journeys and return greater quantities
increasing the fuel efficiency and lowering the cost of fuel per unit of catchis
affected by the size of the vessel and its ability to maintain the quality of caught
product over the extended period (for example by effective freezing. Vessels may
now put to sea for 6, even 12, months (whereas once a typical trip would be
2 months) and this involves re-fuelling from local tankers, re-stocking with bait
etc. Regulation determines that Indonesian fishing vessels must land their catch at
an Indonesian port; however, sometimes vessels are forced to land their catch
illegally elsewhere. Of course, extended voyages mean that vessels are unable to
land the highest quality, sushimi grade, tuna (for the Japanese market) since this
must be landed within a much smaller timeframe. (Landing fish as fresh after
64
J. Heap et al.
extended time at sea requires on-board refrigeration at -60 and only 17 vessels in
the entire Indonesian fleetof hundreds of vesselshave such technologymost
being able to freeze to only -30) [3].
Vessels do receive a fuel subsidy from the governmentthough only for a fixed
quantity of fuel per month. This results in a number of behaviours, not all strictly
within the rules. Some fleet owners, for example, use the allocation for several
vessels to resource extended trips by a smaller number of vessels; a few even
(illegally) sell their allocation to others. Another choice is to change the fishing
gear and catch other speciesthough this may result in a lower value catch, it
involves lower cost and is thus a rational economic decision (though it impacts
negatively on the governments aim to increase export value).
The Indonesian Fisheries Society (the confederation of the major associations
and societies representing specific sectors and functions within the fisheries sector)
is promoting the concept of Indonesian Fisheries Inc as a tri-partite, co-operative
venture between the government, the confederation and academicians (recognising
that this requires further trust-building). This seemed to have broad approval
from all key stakeholder groups.
Conclusion
Much of the Indonesian fisheries output is simple raw materialproduct that is
minimally processed before being exported. Where this involves high quality
product carrying premium pricing, this is an obvious and sensible strategy.
However, wherefor some of the logistical reasons we have already identified
product cannot be sold as high quality and cannot therefore attract premium
pricing, there is a need to consider alternative strategies.
Clearly there are two basic approaches: to find a way of converting a significantly higher proportion of product to high quality and continue to sell it as raw
material; or to use additional processing steps to convert product into different
forms that can be sold at a price where the additional revenue is greater than the
additional processing costs. This is the area of value-added processing as a sub-set
of new product development. It would be prudent to confirm with the market that
particular quality thresholds continue to attract premium prices (and would do so
in the light of additional supply). Additionally, there seems little point in trying to
replicate products already in the marketespecially as a low price strategy
might be the only way to enter such an established market. What is needed is to
develop viable products and/or new forms of packaging that are uniquely or primarily Indonesian, perhaps by using the variety of tastes/textures already existing
in regional cooking throughout Indonesia or simply by using a common theme to
all packaging of specific product ranges.
Any market study needs to understand the nature of demand in a range of
markets for value-added products and a parallel study of the ability of Indonesian
producers to move up the value chain to meet any identified demand.
65
Questions
1. Identify the business orientation followed by the Indonesian Fisheries sector?
2. What stages must the Indonesian Fisheries sector take to adopt a marketing
orientation?
3. What potential issues would the Indonesian Fisheries Sector encounter if trying
to adopt a marketing orientation?
4. Critically evaluate if the Indonesian Fisheries sector should attempt to adopt a
societal orientation.
References
1. Indonesian Ministry Marine Affairs and Fisheries (2009). Fishery is one of the food security
pillars in D-8. Retrieved July 2009 http://www.kkp.go.id/en/
2. United Nations Commodity Trade Statistics Database. (2009). Annual totals table (ATT) for
imports and exports. Retrieved 2009 http://unstats.un.org/unsd/trade/imts/annual%20
totals.htm
3. Indonesian Ministry Marine Affairs and Fisheries. (2009). Shrimp tax to Japan zero percent.
Retrieved January 2013 http://www.kkp.go.id/en/
Case Study 8: Kolkata Knight Riders:

Developing a Brand Identity
Winning games is not enough to build a successful sports

brand. Teams need to engage the local community, attract star
players, who inspire a wide audience, and develop a strong
marketing communications programme,
Richard Yoxon, Director, Intangible Business International
Introduction
In the fourth edition of the Indian Premier League (IPL), held in 2011, the Kolkata
Knight Riders (KKR) decided to revamp the team by changing the entire set of
players. Even, Sourav Ganguly, the teams icon player for the first three editions of
the IPL was dropped from the team. Instead, Gautam Gambhir (worth $2.4 million)
was purchased by KKR to handle the responsibility of captaining the side in the
absence of Ganguly.
However, KKR had a disappointing start of season, losing to Chennai Super
Kings by 2 runs in their first outing in Chennai. It was a bitter experience; it seemed
that nothing has changed. Like the previous three editions of IPL, KKR had a strong
team but they could not perform to their potentials. After the first match of the 2011
edition of IPL, the same sinking feeling started to creep in. However, unlike the
previous editions, KKR fought back, winning their next three matches against
Deccan Chargers and Rajasthan Royals at Kolkata and Jaipur respectively. KKR
went on to win the matches against Delhi Daredevils, Kings XI Punjab, Deccan
Chargers, Chennai super kings in Kolkata and the other against Pune Warriors India
in Navi Mumbai ensuring a place in the play-offs for the semi-finals [1]. However,
in the eliminator they lost to Mumbai Indians, losing their chance to enter the semifinals for the first time in the IPL and the franchisee history [1].
On the supporters front, as Ganguly was not picked KKR the supporters initially
turned their backs to the home matches at Eden Gardens, the home ground of KKR
S. K. Roy (&)
Department of Marketing and Advertising, Coventry Business School,
Coventry University, Priory Street, Coventry CV1 5FB, UK
R. Chakraborti

67
68
at Kolkata. This was followed by a silent protest rally, signature campaigns and
stadium protests [2]. But the fans reactions gradually improved as the team started
to perform well and the Eden Gardens started to attract supporters and was back to
its sold out capacity.
KKR may have performed poorly in the last three seasons of IPL. However, KKR
was a profitable business venture for the owners. KKR brand was valued at USD
57.56 million and was ranked the third most valuable franchise in IPL 5 (2012).1
Indian Premiere League (IPL)

The Indian Premier League (IPL) is a professional league for cricket championship
in India initiated by the Board of Control for Cricket in India (BCCI). BCCI Vice
President Rajeev Shukla is the chairman of IPL who also serves as the IPL
Commissioner. It is currently contested by nine teams representing different parts
of India and each of these teams consists of players from around the cricket
playing countries of the world except from Pakistan.
In 2010, IPL became the first sporting event ever to be broadcast live on
YouTube [3] and its brand value was estimated to be approximately US$2.99
billion in fifth season [4]. However, the league came under scrutiny due to the
corruption scandals where allegations of cricket betting, money laundering and
spot fixing were made repeatedly [5]. The Premier League is considered to be the
worlds showcase for cricket where top Indian and international players showcase
their talent, contributing to what is the worlds richest cricket tournament.
Historical Background
KKR was one of the initial 8 franchise teams which took part in IPLs inaugural
season. It was co-owned by Bollywood actor Shahrukh Khans Red Chillies
Entertainment, in partnership with Juhi Chawla Mehta and her husband Jay Mehta.
In 2008, KKR franchise was bought at a cost of USD 75.09 million in 2008.
Right from the days of inception, KKR was never away from the controversies.
During the first season of IPL in 2008, there were reports of a rift between
Shahrukh Khan and Ganguly over various issues such as team composition, and
other off the field matters. Though, the team denied about any problem in the KKR
dressing room, the performance on the field became bad to worse. There were also
speculations that KKR wanted to shift its base to Ahmedabad because of the
money demanded by the CAB.2 But Jagmohan Dalmiya, the President of CAB
ensured that the franchise stays in Kolkata.
1
2
Online: www.ipl.com.
Cricket Association of Bengal.
Case Study 8: Kolkata Knight Riders
69
But, even though these controversies were chasing KKR management, financially, they were the most successful franchise in the IPLs first edition by
achieving a profit of Rs. 130 million.3 Sports analysts commented that this was
solely due to the efforts of SRK. According to the experts, Shahrukh Khan was
able to successfully use his charisma to bring international sponsors like Tag
Heuer,4 Sprite,5 Nokia6 for KKR. Noticeably, all these brands had SRK as their
brand ambassador.
The controversies did not leave KKR as Ganguly was stripped off his captaincy
in the second season of IPL in 2009. He was replaced by Brendon McCullum at the
last moment. Apart from that, an anonymous blogger, who called himself fake
IPL player, claimed to be a member of KKR team and started to reveal all the
team secrets, minutes of team meetings, arguments between staff and team
members, post-match parties and pre-match strategy [6]. Though it created a
controversy in the team as well as in the media, the blog was found to be a fake [7].
KKR set up a Talent Resource Development Wing (TRDW) in 2009 to spot
local talent across India and Makarand Wainganker (Wainganker), who had first
initiated the TRDW concept for the KSCA7 was appointed as the chief of the
project [8]. However, the controversies followed KKR even there as Wainganker
resigned after having to fight continuously with the then coach John Buchanan
over team selection and Buchanans multiple captains theory [9].
On the brighter side, KKR was ahead of any other franchises to implement
innovative ideas. KKR became the first team in IPL to choose their cheer leaders
by a talent hunt show called Knights and Angels, which had Ganguly and Bollywood8 actor Purab Kohli as the judges. Unfortunately the winners of the show
could not perform at IPL 2 as the local authorities only allowed South African
cheerleaders to perform during the games.
In 2010, KKR had a roller-coaster ride in the tournament. After 11 games, they
were required to win all their three remaining games to qualify for the semi-finals.
Unfortunately, they failed to beat Chennai Super Kings in Chennai leading to their
ouster from the semi final spot. But, KKR made a decent finish to their 2010
season by winning their last two matches against the Rajasthan Royals and
Mumbai Indians.
The ouster of Ganguly from the team led to a decline in support for KKR. The
crowds did not support the team in the initial stages of IPL 2011 and the newly
appointed skipper, Gautam Gambhir (Gambhir), did not receive a good welcome
3
US$ 1=INR 44.8661 as of 13 June, 2011.

TAG Heuer is a Swiss luxury watchmaker known for its sports watches and chronographs.
5
Sprite is a transparent, lemon-lime flavored, caffeine free soft drink from the house of CocaCola.
6
Nokia is the worlds leading mobile phone supplier and a leading supplier of mobile and fixed
telecom networks including related customer services. It has its headquarters at Finland.
7
Karnataka State Cricket Association.
8
Bollywood is the informal term popularly used for the Hindi-language film industry based in
Mumbai (formerly known as Bombay), Maharashtra, India.
4
70
from the crowds. But, Eden Gardens stadium began to witness screaming KKR
fans once again as the team qualified for the playoffs for the first time.
Brand KKR
The name Knight Riders was chosen to reflect the idea that by courage, youth,
talent, ambition, focus & dedication and armed with the recognition that with great
honor comes greater responsibility.9 The logo of KKR consisted of a blazing
golden viking helmet against a black background with the name of the team
Kolkata Knight Riders written in gold. The team merchandise was supplied by
Reebok. The tag line of the team was chosen as All the Kings Men.10 The
official color combination as well as the design of the team kits was designed by
Manish Malhotra (Manish).11 Manish chose black and gold because Black represented the courage of Maa Kali12 and gold represented the spirit of glory. In
2010, after continuous poor performances, KKR decided to change the color of
their kit from clack and gold to purple and gold. The team mascot was called Hoog
Lee, which was a lazy Royal Bengal Tiger who was passionate about burgers. The
name Knight Riders was chosen keeping in mind the excitement and adventurism
that that name reflects, and was a reference to the famous television show from the
early 1980s called Knight Rider.13
Nokia was one of the companies who agreed to join Star Plus,14 Reebok,15 Tag
Heuer, HDIL,16 Belmonte17 and The Telegraph18 as the sponsors of KKR.
According to the experts, as SRK was the brand ambassador of all these companies
apart from The Telegraph (The Telegraph has their base at Kolkata), it became
easier for KKR to have such big brands as their sponsors. Nokia decided to go for
an aggressive campaign to promote KKR. Devinder Kishore, director (marketing),
www.kkr.in
SRK is fondly known as King Khan in India.
11
A noted fashion designer from India.
12
A Hindu Goddess.
13
Knight Rider was an American television series that originally ran from September 26, 1982,
to August 8, 1986. The series was broadcast on NBC and starred David Hasselhoff as Michael
Knight, a high-tech modern-day knight fighting crime with the help of an advanced, artificially
intelligent and nearly-indestructible car.
14
STAR Plus is a Hindi language general entertainment television channel based in India. The
channel is part of the STAR TV networks bouquet of channels.
15
Reebok International Limited, a subsidiary of the German sportswear company Adidas, is a
producer of Athletic shoes, apparel, and accessories.
16
HDIL is a leading real estate builder/developer in Mumbai, India.
17
Belmonte is SKumars new brand in the Rs 80000 crore apparel industry.
18
The Telegraph is an English daily newspaper in India founded in 1982 and published by the
ABP Limited (an enterprise of Ananda Publishers).
10
71
Nokia India said that, To create a compelling engagement for the contest, we
have undertaken a 360 degree approach to communication with a judicious mix of
electronic, print and digital media, this includes a 15 s TVC (TV commercial), an
eight-city print campaign, road shows in Kolkata over weekends during the IPL
series. We will also be present online prominently through internet advertising as
well as a viral campaign.19 apart from this, Nokia also organised several promotional events such as Blog with Shahrukh! to capture the imagination of the
people of Kolkata of all age groups.
Even though KKR finished last in the 2009 season of the IPL, it still remained
as the tournaments most popular team [10]. In 2009 SRK entered in a sponsorship
deal with Coca Colas Sprite as a sponsor for KKR from 2009 season onwards,
and for that SRK sacrificed his own contract with Pepsi India [10]. In 2010, SRK
roped in XXX energy drink and LUX Hosiery apparel brand as KKRs sponsors
[10]. The question that arose was that what was there in the brand KKR, that
despite the poor performance on the pitch for the first three seasons of IPL, it was
able to attract sponsors such as Nokia, Sprite, XXX,20 etc., without any problem.
Normally, the attitude of the corporate is to get attached to a winning team so that
its audience could view the corporate as a winning outfit as well. But the same was
not the case with KKR. The pundits opined that Nokia, Belmonte, Tag Heuer were
associated with SRK even before KKR existed. Star Plus was associated with SRK
from the Kaun Bange Crorepati (KBC) 3 times. Reebok got its products placed in
SRKs movie My Name is Khan, a Hindi film released by Fox worldwide, as it was
the official kit supplier to KKR. Sprite, XXX and Lux Hosiery21 featured SRK in
its advertisements only because they were sponsors of KKR. SRK had to make an
appearance on the advertisements of the official sponsors of KKR to promote his
own investment in the team of KKR. This was an opportunity which the small
companies like Lux Hosiery and XXX could not afford to lose.
As for KKR, the credit for their marketing success over the other franchises in
IPL was largely due to the good brand image it was able to create during the first
edition of the IPL. Kolkata being a city where the people are extremely fond of
sports and arts, helped KKR immensely. As a result when SRK launched KKR with
Ganguly as the captain of the team, the emotional impact it had on the Kolkatans,
created a brand that became a household name. The KKR management used knew
that their target market was west Bengal and they focused solely on promoting the
team within that region. Even, for a national level competition, they came up with a
Bengali slogan for KKR, which was the only slogan in the regional language among
the other IPL franchises. The slogan: KORBO, LORBO, JITBO RE was
extremely catchy and it became a household line of every cricket lover in Bengal.
Further, KKR decided to launch different road-shows and competitions held in
different cities of Bengal offering the winner the chance to meet SRK and Ganguly.
19
20
21
ibid.
XXX Energy Drinks, is a subsidiary of the JMJ group.
An apparel company owned by Ashok Todi and based in Kolkata.
72
Before IPL, Cricket was considered just as a sport, but SRK and his promotional
campaigns and the brand positioning of KKR made every Bengali a KKR supporter.
The humanitarian efforts undertaken by KKR also made the franchise a very
popular amongst the social circle [11]. In addition to that, KKR decided to recruit
70 boys (ten boys for each of the 7 home matches at the Eden Gardens) from the
Future Hope22 organization.
In 2009, Coca-Cola became the associate sponsor and official pouring partner of
KKR. In return, Coke got the rights for putting Sprite on players apparel (leading
arm) as well as on the Helmet. According to Venkatesh Kini, VP-Marketing, CocaCola India, Twenty20 Cricket is clearly a growing passion with todays youth. The
success of IPL, 2008 has taken the game to a new high. It provides Coca-Cola India
with a very exciting platform to connect with all its consumers. We are happy to bat
with Kolkata Knight Riders as an associate sponsor and pouring partner. Our entire
association with KKR has been conceptualized in an exciting and engaging manner,
in keeping with both KKR and brand Sprites positioning, Seedhi Baat, No Bakwaas Clear Hai!23They also decided to work together to launch an extensive
360-degree campaign. The 360-degree communication effort included mass media,
Out-Of-Home (OOH) media as well featuring Ishant Sharma, Brendon McCullum
along with Ganguly. Apart from these, Sprite in association with Nokia also launched a Para (neighborhood) Cricket competition in Kolkata and sent 11cricketers
of the winning Para to South Africa to cheer for KKR. Apart from Sprite, there were
many more sponsors carried out other promotional campaigns as well. NOKIA was
roped in by SRK as presenting sponsor of KKR. On this occasion, SRK said, I
thought of Nokia because Nokia could connect my 22 players who were diverse but
came together in one thought- they hated the thought of losing [12]. Nokia also
came up with exclusive Nokia 2 Hot 2 cool album which featured five exclusive
songs composed for the team by the prominent music directors such as Bappi Lahiri,
Pritam Chakraborty and Vishal-Shekar. Nokia and SRK have additionally come up
with a consumer contest titled Millan of the Villains, where people would get an
opportunity to chat online with SRK on the issues related to KKR, IPL and his
association with Nokia. As for KKR, they were able to hit the right tune as their
marketing strategy was responsible for the brand image it was able to build during
the 1st edition of the IPL. Commenting on this, Jay Mehta, co-owner of KKR opined
that, From the time of inception last year, Kolkata Knight Riders has far exceeded
the expectation of competitors and compatriots in terms of our fan following and the
success of our brand and business. With Sprite now on board as associate sponsor
and official pouring partner, I am confident we will together provide more enhanced
experiences to our fans and consumers, making the second season of IPL 2009, all
the more action-packed and exciting [13].
22
It is an organization set up to provide a home, education, medical care and opportunity to
street children of Kolkata in 1988.
23
CocaCola India. Sprite to Bat with IPL Team, Kolkata Knight Riders as Associate Sponsor &
Pouring Partner. [Online] www.coca-colaindia.com.
73
The TV Campaigns
According to the experts, in 2008 KKR came up with some exceptional promotional campaigns. The music video of its theme song, Korbo Lorbo Jeetbo Re..
was picturized indicating how SRK was selecting the best people for KKR from
across the different parts of society, indicating KKR was a team for everyone and
not for a certain class of people. The first set of TV advertisements for KKR was
able to generate enough hype about the team. In one of the advertisements, the
team was shown to walk across a difficult terrain and desert to reach their aim,
indicating that the team was ready to cross any difficulties to achieve their goals. In
another advertisement, it was shown that a KKR bowler has appealed unsuccessfully to the umpire. Then he appeals again with such vigor that the umpire
evaporates and the leg umpire gives the batsman out to save his life. This ad
indicated that the furious and desperate nature of the team. In another advertisement, a KKR batsman was shown to get hit by a bowler 23 times in the helmet.
The bowler asked the batsman whether he was hurt and whether he wanted to
continue or not. The KKR batsman took out his helmet and took a bite off the ball
and asks the bowler to go back and bowl again. This advertisement indicated the
strength, power and the fearlessness from the point of KKR players. According to
the experts, these advertisements hit the right cord to the people of Kolkata and
across India making KKR an instant hit amongst the cricket lovers.
In 2009, when the IPL shifted to South Africa due to the Lok Sabha elections,
SRK launched a new promotional campaign for KKR. SRK danced to the tunes of
Korbo Lorbo Jeetbo even though he had a broken hand in a sling. Though the
tune was same, the theme was changed from the soft Bengaliness to a rougher and
tougher African theme. The music video included African tribal dancers and SRK
dancing in the rough and barren African terrain indicating the difficulties KKR was
facing.
In 2010, KKR came up with an advertisement indicating IPLs return to India.
The advertisement featured Ganguly, who was shown to be saying that he missed
the Indian peoples love for him and the name Dada given to him fondly by the
Indian people and was looking forward to hear it again in the Indian fields. The ad
ends by showing Ganguly as saying Dada ne bhi aapko miss kiya (Dada missed
you too).24 In the same year, KKR launched a campaign called Main Bhi Coach.
The theme of the campaign was sarcastic in nature as it aimed at getting expert
advice from all over India to make KKR perform better for the third edition of IPL.
The idea again caught the imagination of KKR fans as it gave them the opportunity
to get their grievances and thoughts about the KKRs game across to the team
management (in theory, at least). It ensured that the brands KKR & Nokia got
some more exposure; and in financial terms, both KKR and Nokia got the rewards.
The campaign was launched across TV, radio, newspaper and outdoor media. The
theme of the campaign was that anyone could be the coach of KKR. The TV
24
www.kingsrk.wordpress.com
74
commercial portrayed a newspaper boy as the coach of KKR, taking a training

session on hitting the stumps. The ad consisted of players like Ishant Sharma
saying in frustration, isse coach kisne banaya! (who assigned this person as the
coach?), followed by SRK saying very proudly, maine (I did). On the other
hand, the radio commercial featured a housewife saying, ball fainkna pati par
belan fainkne jaisa hai (bowling is pretty similar to throwing belan at your husband), while the print and the outdoor ads focused on the message that anyone
could be the coach of the team [14]. One of the advertisements in the series of
Main Bhi Coach was even directed by Farah Khan [15].25
In 2011, Nokia in association with KKR launched a new set of campaigns which
included ads like Maalish, Lassi and Tension Mat le Yaar. These ads featured
Players like Gautam Gambhir, Yousuf Pathan, Jacques Kallis, etc. and focused mainly
on how to keep cool during the tensed times. The theme of these advertisements
was that KKR reaches to people of different levels of society like the way Nokia
reaches to them. These ads were directed by noted ad film maker Shoojit Sircar26 and
according to the experts, were able to generate positive vibes about the team.
However, in 2012 KKR changed their tagline from All the Kings Men to
New Dawn, New Knights. The process of changing KKRs identity started in
February 2012 when the global designing agency Lambie-Nairn was given the
responsibility of creating the new logo for KKR [16]. Speaking on this issue Team
owner Shahrukh Khan commented that, The new identity of the brand is modern,
vibrant and unique. We look forward to the upcoming season and our new campaign,
New Dawn. New Knights [16]. Sophie Lutman, creative director for LambieNairn opined that, The KKR identity had a lot of quality but it was not designed for
use across the wide range of platforms that are used today. We wanted to retain the
existing heraldic imagery and purple and gold colours, as these features differentiate
the team from competitors and ensure instant recognition. However, we needed to
refine the logo and ensure that it would work across every touch point, from the
screen to merchandising, [16]. Commenting on the new image of KKR, the CEO of
KKR, Mr. Venky Mysore opined that, We have been fortunate that the KKR brand
has become the leading brand in the IPL. We are working very hard to add value to
our sponsors, grow our fan base and build a profitable business. I am confident that
our new logo and our new campaign will help us achieve our objectives [16].
The Online Promotional Activities

KKR came up with a website www.kolkatanightriders.com which has all the
match schedules, videos archives of matches, player interviews and blogs. It was
able to succeed in becoming a regular destination of KKR fans to get the daily
25
26
Famous choreographer and director from Bollywood.

A famous ad film maker from Barrackpore, Kolkata, based in Mumai.
75
information of IPL including the videos, interviews and blogs. In addition, the
website provided an opportunity for KKR fans to interact with KKR management
as well as the players. The KKR website also included a contest section which was
created by www.Contest2win.com where, the fans were faced with games such as
quizzes, Hangmans, Twisters prepared solely to test the fans knowledge about
KKR [17]. These games were designed to allow the fans to interact with KKR
players or fictional elements such as Hoog Lee and The 12th Man. The
adaptability of the contest engines supplied by C2 W helped KKR to create
contents across genres as well as customize them whenever necessary. As for
example, since McCullum was a hit after the first match of IPL 1, KKR launched a
quiz game in the KKR website completely dedicated to McCullum. KKR used the
flexibility of these contest engines supplied by C2 W that they have used these
engines for their loyalty program of KKR as well. KKR created a set of contests in
their website and asked the users to participate in those contests. The users could
play at their own time within a certain time period and could score points. The
highest scorers in those contests were then given the opportunity to become the
registered members of KKR [17].
In 2011, KKR launched their official page on Facebook and Twitter [18]. KKR
decided to use Facebook and Twitter to continuously engage and engage and
interact with its fan base before, during and after the IPL season. For that purpose
KKR joined hands with Bengaluru-based digital agency 22 feet, and gave the
responsibility to 22 feet to handle KKRs social media marketing activities [19].
Speaking on this occasion, Vineet Gupta (Gupta), managing partner, 22 feet,
opined that, From March 1 onwards, we will manage the social media presence of
KKR for 12 months. Our mandate is to keep the brand alive before, during and
after the IPL [19]. As of 23 February, 2011 as a group in Facebook, KKR had a
following of 11,000 members and on Twitter (www.Twitter.com/KKRiders), it
was being followed by more than 31,000 Twitter members [19]. Gupta explained
that 22 feet had plans to create original and unique content for KKR in the
Facebook and Twitter and promised to build applications for the KKR team. He
also emphasized on the role of social media to push the sales of KKR branded
merchandise across the country [19].
Though KKR had a presence in Facebook, it was there only just as a group.
KKR decided to go for a webpage in FaceBook so that they could include several
customized KKR applications that will be developed and will be made available to
the KKR fans. It was interesting to see that SRK, who was not an ardent fan of
social networking sites, used both FaceBook and Twitter to promote KKR and to
communicate with KKR fans across the country and across the globe [18]. Apart
from this, KKR took the help of Indigo Consulting, a Mumbai based digital
creative agency to come up with an iphone, ipod and ipad application known as
KnightWatch to extend its reach to its fan base. KKR was reported to have
46,584 followers in Facebook. In addition to that, it had 659 Twitter followers
(1.43 % growth) in the last 14 days as of 10 July, 2011 [20].
76
The Problems for KKR

For KKR, IPL 2008 started with a bang as McCullum single handedly dealt a
defeat to the Bangalore Royal Challengers. Overnight KKR became the team
everyone was talking about. In addition to their performance in the first match of
IPL, SRKs presence and glamour helped KKR to be an indistinguishable part of
IPL. However, that performance deserted KKR since then and it continued till IPL
2010 [21].
The problem for KKR started during IPL 2009 season as the then team coach
John Buchanan (John) decided to get involved into the unique experimentation
involving the rotating captaincy policy. John Buchanans decision of removing
Ganguly as captain and giving charge to McCullum disturbed the unity of the
team. The team finished at the bottom of the table.
SRK again got himself surrounded by controversies related to IPL as he openly
came out in support of inclusion of the Pakistani players in the IPL which agitated
some political parties. As if it was not enough, the endorsement deal with Lux
Cozy brand for KKR came into much criticism from both the public as well as
from the legal front. SRK roped in the inner wear brand Lux Cozy as one of the kit
suppliers and he was appointed as the brand ambassador of Lux Cozy. The owners
of the company, Ashok Todi and Pradip Todi were accused of supporting of
murder in one of the most controversial cases in Bengal. Finally, KKR decided to
part ways with the sponsorship deal with Lux Cozy [22].
During IPL 3 season, KKR was performing better than the first two seasons of
IPL. They won their first three matches of the season. But then they lost their way
again and could not qualify for the semi-final for a third straight season [21]. Even
though the team consisted of several big names both in international and national
level (such as Chris Gayle, Ishant Sharma, etc.) the highest scorer for KKR was
Ganguly who retired from international cricket. It indicated the level of effort
given by the KKR players. Though he played well at a personal level during the
IPL 3 season, he lost the aggressiveness that made him a standout captain.
Kolkata might have become the most successful franchise of IPL commercially,
but as SRK spoke publicly about his emotional attachment with KKR, he was
concerned about the performance of the team as well. At the end of another failed
attempt to reach the semi final of IPL 3rd season running, SRK signed out from his
KKR blog page knowing that the team again disappointed its supporters and the
people associated with it [21].
In 2011, KKR came out with a completely new looking team (the team consisted of only four players from the previous editions: Iqbal Abdullah, Manoj
Tiwary, Jaidev Unadkat and LaxmiRatan Shukla) and a new captain (Gautam
Gambhir) at its helm, KKR was desperately looking for success that it could not
achieve in the previous three editions. But, as always controversies rocked KKR
once again, the decision to drop Ganguly from the team was not taken in good
mood by the KKR fans. And it was reflecting in the attendance in the stadium as
well. Though KKR won their first match at the Eden Gardens, the stadium was
77
almost half empty. KKR fans openly came out and criticised SRK for not taking
Ganguly in the team, the fans even threatened to boycott the matches at the Eden
Gardens. Understanding the depth of the problem, SRK tried to convince the
people of Kolkata by declaring that Ganguly was the source of inspiration for KKR
and offered Ganguly the role of mentor for the KKR players. Ganguly refused
politely and in the later part of IPL 4 season, joined the Pune Warriors as a
replacement to Ashish Nehra [23]. This decision of Ganguly went against the
image of KKR as Gangulys fans comprehended that it was a ploy by the KKR
management to save their face and retain the strong base that they were able to
build over a period of last 3 years.
The Road Ahead

KKR finally showed their ability on the field and was able to reach the top four for
the first time in the IPL history.27 By reaching the top four of the IPL table, they
also got the opportunity to fight for a place for the Airtel Champions League28 to
be held in India during SeptemberOctober of 2011. As KKR started to perform on
the ground, the fans returned to the Eden Gardens and it was a great sign for KKR.
Finally, the performance of KKR on the field was at par with its performance off
the field.
But as always some skeptics would always make themselves heard. JWT
India29 CEO Colvyn Harris opined that, They have created a lot of hype around it
but it remains to be seen how IPL lives up to it. The slots that they have taken are
tough as far as grabbing the attention of the prime-time audience is concerned
[24]. But, in this case, their opinions seemed to be right as the latest Brand
Finance30 study indicated an 11 %, or US$460 million drop in the brand valuation
of IPL [25]. Starting from 2008, a couple of years solid growth ensured that value
of IPL was more than doubled by 2010, with a valuation of $4.13 billion in 2010.
In 2011 the valuation was found to be at a price of $3.67 billion. Speaking on this
issue, M Unni Krishnan, MD of the India office of Brand Finance opined that,
The honeymoon is over; the IPL juggernaut has sure hit a speed breaker, now its
sustainability will largely depend on infusing governance policies to align all the
stakeholders towards winwin relationships, thereby preserving the value in the
long run. [25] Talking on the aspects of franchise branding, Swapan Seth, CEO of
27
www.ipl.com
The Airtel Champions League Twenty20 is an international Twenty20 cricket competition
between club teams from India, Australia, England, South Africa, Sri Lanka, New Zealand and
West Indies.
29
JWT (J. Walter Thompson) is the worlds best-known marketing communications brand.
Headquartered in New York, JWT is a true global network with more than 200 offices in over 90
countries.
30
A UK-headquartered firm that specialises in brand valuation.
28
78
Equus Red Cell31 opined that: They have not really been able to whip up the
euphoria. The team branding has also not been done properly. [24] Fortunately
this was proved wrong by the franchises led by KKR. As the figures indicate,
though the brand value of IPL had decreased, the aggregate brand value of all
franchises increased from $333 million in 2010 to $355 million in 2011 [25]. The
brand values of the franchises were evaluated on the basis of financial, marketing,
cricket acumen and corporate governance. It was found that apart from Rajasthan
Royals, King XI Punjab and KKR, the other six franchises were able to improve
their brand values [25].
This again put the brand KKR in dilemma. When KKR was performing poorly
on the field, they were having a better brand value, while in the 2011 edition of
IPL, even when KKRs performance was the best compared to its previous performances, their brand value did not improve. The question is whether KKR has
started losing the race off the field as well?
Questions
1. What was most influential in creating the brand identity of KKR? Was it the
team or the presence of star players in the team or was it the brand identity of its
owner?
2. Could the identity creation strategy of KKR be applicable across all the
industries? Explain.
3. What possible roles might the sponsors have played in the creation of KKRs
brand identity?
Exhibit 1: KKR at a Glance

OwnersShahrukh Khan (Red Chillies Entertainment) in partnership with Juhi
Chawla, Jai Mehta (Mehta Group).
Franchisee FeeUSD $75.09 million (for a term of 10 years)
Main SponsorsNokia, Belmonte, Royal Stag, Tag Heuer, Sprite, Reebok,
Videocon d2h, XXX energy drink
Valuationapproximately USD $ 100 million as of 2012 (after winning the
IPL season 5)
Brand ambassadorShahrukh Khan.
Chief Operating Officer & Managing DirectorVenky Mysore
DirectorJoy Bhattacharya
31
An advertising firm based in Mumbai.
79
CoachJohn Buchanan (20082009), Dav Whatmore (20102011), Trevor

Bayliss (2012present).
Assistant CoachVijay Dahiya
Bowling coach and mentorWasim Akram
PhysiotherapistAndrew Leipus
Physical TrainerAdrian Le Roux
Mental Skills CoachRudi Webster
Team AnalystA. R. Srikkanth
Most Expensive PlayerGautam Gambhir (USD $ 2.4 million)
CaptainGautam Gambhir
References
1. Gambhir, G. (26 May 2011). Gambhir praises fighting spirit of Kolkata Knight Riders. The
Times of India [Online]. Retrieved April 17, 2012, from http://articles.timesofindia.
indiatimes.com/2011-05-26/news/29585476_1_kkr-skipper-gautam-gambhir-kolkata-knightriders-manoj-tiwary
2. The Times of India. (14 January 2011). Facebooks Ganguly fans plan protest March.
Retrieved April 20, 2012.
3. Cricinfo. (20 January 2010). IPL matches to be broadcast live on Youtube. Retrieved January
21, 2010.
4. Bhat, V. (8 April 2011). Brand IPL comes under a cloud. Business-standard Retrieved
December 12, 2011.
5. Biswas, S. (13 April 2012). Why is the Indian Premier League floundering? [Online].
Retrieved May 15, 2012, from http://www.bbc.co.uk/news/world-asia-india-17699415
6. Blogger Bounces Knight Riders. Retrieved April 21, 2009, from www.cricketvoice.com
7. Aney, S. (28 August 2010). And the Fake IPL Player is [Online]. http://www.
hindustantimes.com/News-Feed/TopStories/CricketNews/Article1-593020.aspx
8. Zee News. (2009). Waingankar Joins Kolkata Knight Riders as Trdw Chief [Online]. http://
zeenews.india.com/sports/sports/waingankar-joins-knight-riders-as-trdw-chief_16432.html
9. Waingankar, M. (30 May 2009). In a Hell Called Kolkata Knight Riders [Online]. http://
178.63.30.31/article/sports/in-a-hell-called-kolkata-knight-riders
10. Rao, K. S. (31 January 2010). Brand SRK Bags Big Bang Deals for KKR [Online]. http://
articles.economictimes.indiatimes.com/2010-01-31/news/28407662_1_kkr-brandambassador-apparel-brand
11. Future Hope. (2010). Future Hope Children to be IPL Ballboys [Online]. www.futurehope.net
12. One India. (18 April 2008). Shahrukh Launches Nokia 2 Hot 2Cool [Online]. http://
entertainment.oneindia.in/bollywood/features/2008/shahrukh-2-hot-2-cool-180408.html
13. Goswami, S. R. (18 Feb 2009). Coke and Knights seal deal [Online]. http://www.telegraphindia.
com/1090219/jsp/frontpage/story_10558849.jsp
14. theamarketer.com (2010). KKRs Latest Marketing Gimmick: Main Bhi Coach.
www.theamarketer.com
15. Planetsrk.com. Farah Khan Directs Kolkata Knight Riders Ad for Shah Rukh.
www.planetsrk.com
16. Afaqs.com (15 February2012). KKR set for New Dawn, New Knights [Online]. http://
www.afaqs.com/news/story/33086_KKR-set-for-New-Dawn.-New-Knights
17. Livemint.com (13 May 2008). Kolkata Knight Riders Tie-Up with C2W for Customized
Contests [Online]. http://www.livemint.com/Consumer/b2JSl6LtdAmyMr0qbGfxrL/KolkataKnight-Riders-tieup-with-C2W-for-customized-contest.html
80
18. Ashar, U. (2011). SRK IPL 4 [Online]. http://timesofindia.indiatimes.com/SRK-IPL-4/

speednewsbytopic/keyid-579654.cms
19. Ohri, K. (23 February 2011). Kolkata knight riders appoints 22feet for social media
marketing
[Online].
http://www.afaqs.com/news/story/29769_Kolkata-Knight-Ridersappoints-22feet-for-social-media-marketing
20. Kolkata Knight Riders Social Media History. www.sportsfangraph.com
21. Ameya. (2010) Should SRK Reconsider Kolkata Franchise? Retrieved April 15, 2010, from
www.cricketsimple.com
22. Bhattacharjee, S. (23 February 2010). Amidst Controversy Shahrukh Drops Todi.
www.entertainment.oneindia.in
23. IPL Kolkata Knight Riders KKR Team Details and Controversies. www.liveiplscore.com
24. IPLs Big Branding Game. Retrieved April 22, 2008, from www.sifysports.com
25. IPL-4: IPLs Brand Value Falls By 11% to $ 3.67 Billion. Retrieved April 7, 2011, from
www.ipl4odds.com
Case Study 9: The National Basketball

Association (NBA) in China
Adrian Pritchard
History of Basketball and the NBA

Baseball was invented by James Naismith in Springfield, Massachusetts, USA, in
1891.The sports popularity grew with the first professional competition in 1896 at a
Young Mens Christian Association (YMCA) event in Trenton, New Jersey.
A number of leagues were formed in the late part of the nineteenth and early
twentieth century operating with varying degrees of success. The NBA was formed
as the Basketball Association of America (BAA) in 1946. It emerged as the
strongest league in 1949 with 17 teams, following its merger with the National
Basketball League (NBL). Since then it has consolidated its position in North
America. Currently the league has 30 teams; 29 in the USA and one in Canada; they
play at least 82 games a season (the regular season). This usually runs from late
October until April. However, a dispute between players and management meant
the 2011/12 season start was delayed until December. The eight best performing
teams then proceed to the play offs which run until the Final in mid June [1].
In the USA the sport is governed by USA Basketball, a non profit organization,
responsible for the rules of play and the national team. The NBA as the main
league is a far wealthier organization. It is headed by a Commissioner and power
lies in the hands of a Board of Governors (the 30 team owners), there are no
outside investors in the league. In addition to the NBA two other leagues are run:
WNBA (Womens National Basketball Association) a twelve team league; and the
NBA Development League (the D-League) a 16 team league founded in 2001.1
This is the official minor league and part of its purpose is to act as a feeder league
for NBA. Unlike European sports leagues there is no movement of teams between
leagues. New teams, usually referred to as franchises, are only allowed entrance by
1
For a brief history of the three leagues see www.nba.com/careers/prolevel_leagues.html.
A. Pritchard (&)
e-mail: bsx121@conventry.ac.uk

81
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A. Pritchard
agreement of existing franchise holders. As in most American team sports there is

a clear profit motive in the operation of the franchises. Those that make losses are
likely to cease operating, be sold to new owners and/or relocate to other parts of
North America.2
The main streams of income in the sport are from: spectators at matches,
sponsorship, broadcasting and merchandising. There are a number of broadcasting
partners the main one being NBA.TV an American sports channel dedicated to the
sport, which is backed financially by the NBA. The channel also broadcasts every
game on line through their portal at www.nba.tv/nbatv/. This subscription service
is available globally, though a number of countries are excluded including the
USA and Mainland China. International sales of products and services are estimated to account for about 15 % of the leagues revenue [2].
Basketball in China
Introduced into the country in the 1890s by YMCA missionaries the sport caught
on quickly throughout the country, being declared a national pastime in 1935. The
Chinese government estimates that 300 million people currently play the sport.
The national team is regarded as one of the best in Asia and has regularly competed at the Olympics, though the standard of play is not as high as the USA. The
top league in the country is the China Basketball League (CBA) which has 17
teams and began in 1995. Their season runs from November to February with
teams usually playing three games a week. Each team is allowed two foreign
players on the court at any time, some of these have played in the NBA [3].
Sport within China is administered by the China General Sports Administration.
Details of their strategy are contained within the National Policy Framework, which
is updated every 5 years. Basketball is viewed not only as recreation but also as a
significant industry impacting both on society and commerce. Though much of the
control of the teams still lies in the hands of the state at both a national and regional
level, both local and foreign corporations have become increasingly involved in the
sport. There are plans to transfer all the teams to private ownership [3].
NBA Involvement in China

NBA has worked with the Chinese basketball authorities for a number of years.
The first game played in China between the then Washington Bullets and the
Chinese national team took place in 1979. In turn the USA first hosted the Chinese
For a detailed history of franchising in North American sport see Frank Jozsa Big sports, big
business. Prager: USA, 2006.
Case Study 9: The National Basketball Association (NBA) in China
83
national team in 1985. The leagues television deal with China Central Television
(CCTV) dates back to 1987 when footage of NBA games was provided in
exchange for a share of advertising revenue. Viewing figures grew through the
1990s, receiving a great boost when CCTV5 began to broadcast live matches and
Yao Ming joined the Houston Rockets in 2002 and became one of the star players
in the NBA.
Games have been played in China as pre-season warm up for the NBA since
2007. In addition to staging matches and selling broadcasting rights the NBA
engage in a number of other activities. Touring basketball events have been staged,
merchandise is sold through a range of retail outlets and a Hong Kong office
opened in 1992. The NBA became the first American sports league to stage games
in China in 2004 with the NBA China Games in Beijing and Shanghai. Online
http://china.nba.com/ has become one of the most popular sporting sites in China.
The NBA also advised the Beijing Organizing Committee for the Olympic
Games (BOCOG) on the design of the Basketball arena that was to be used during
and after the 2008 Olympics. The arena management venture is run by a partnership involving BOCOG, NBA China and AEG, a wholly owned subsidiary of
Anschutz who operate facilities in the USA. Arenas have since been opened in
Guangzhou and Shanghai. In addition to basketball games they stage concerts,
shows and a wide range of events that have even included a travelling circus [4].
Eric Drummond sees a number of attractions in the Chinese market. Size is the
obvious one. The 1.3 billion population includes a growing middle class, 400
million people have moved out of poverty in the last 20 years. The sport is also
one of the most popular in the country, particularly in the 1524 age group with
83 % identifying themselves as fans of NBA. The popularity is evidenced by
viewing figures In 2007, when an estimated 200 million Chinese watched a regular
season game between Houston Rockets, with Yao Ming in the line up and
Milwaukee Bucks, with Yi Jianlian [4].
NBA China
In 2008 NBA China was formally established as a separate legal entity to conduct
all of the leagues business in Greater China (China, Hong Kong, Macau and
Taiwan). The aims are to get more people interested in the sport with a strategy
that involves sponsorships, promotions and staging events [5]. Five strategic
partners invested $253 million to acquire 11 % of the share capital: ESPN (5 %),
Bank of China (2 %), Legend Holdings (2 %) and Li Ka Shing Foundation (1 %)
acquired 10 % which was the initial plan. China Merchants Bank were allowed to
purchase a further 1 % because of their strategic importance. The venture was
valued at $2.3 billion by Goldman Sachs at the launch. By 2010 there were three
offices based in Beijing, Shanghai and Hong Kong. Though specific financial
information is not disclosed industry estimates put revenue at between $150 and
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A. Pritchard
170 million in 2010. The leagues overall revenue for the same period was $4.3
billion. [6]
David Stern, NBA Commissioner, announced at the formation that:
The strategic investment from these companies will allow us to continue working with the
General Administration of Sports and the CBA to grow our sport and emphasise in both
rural and urban Chinese communities its contribution to fitness, health lifestyle and an
appreciation of teamwork [5].
Sponsorship and licensing are arranged locally, a number of partnership deals

have been signed, see Table 1. Local grassroots activity is an important part of the
marketing strategy as the league tries to promote the sport to young fans. Popularity is also evident among Chinese social media sites such as Weibo and QQ
where it is estimated there are over 45 million fans of the NBA and 4.7 billion
page views on the leagues website. NBA has high level of awareness among the
Chinese, 95 % are aware of it and 89 % claim some interest in it [7].
The first ever NBA Chinese New Year Celebrations were held in January/
February 2012. These involved a 21 game broadcasting schedule, customized
content and a variety of themed events in both the USA and China, viewing figures
in China were estimated at 96 million people [8]. NBA China Jam Live a 6 day
entertainment event was held involving exhibition games and celebrity coaching in
May 2012. NBA Nation a 6 month travelling basketball and entertainment roadshow was planned for later in the year [9].
Table 1 NBA China marketing partners

Partners
Category
Adidas
Amway
Cisco
Coca-Cola
EA
Gatorade
Lenovo
Mengniu
Nike
Oppo
Peak
Spalding
Toyota
Tsingtao
Visa
Sportswear
Non-liquid vitamin and dietary supplements
Technology solutions
Soft drinks
Video games
Sports and energy drinks
Personal computers
Dairy products
Footwear
Mobile handsets
Athletic footwear
Basketball
Automotive
Beer
Payments products and services
Source Lombardo (2010) [6]
Case Study 9: The National Basketball Association (NBA) in China
85
Distribution of NBA products and services in Greater China

NBA
Sponsorship
NBA Matches in
USA
NBA League Pass

live stream (only in
HK , Macau and
Taiwan)
NBA Matches in
China
Broadcasting via
CCTV
Merchandise and
licensing
NBA-China
Coaching and
events (some with
CBA)
Arena management
Social media
Retailers
NBA retail stores
Greater Chinese consumers (China, Hong Kong, Macau and Taiwan)
Fig. 1 Distribution of NBA products and services in Greater China
Current Situation
The NBA is far more active in China than other team sport marketing a wide range
of products and services using a number of distribution channels, see Fig. 1. Other
team sports have also been attracted to the Chinese market. The NFL (National
Football League) has plans to play games in China, but this has yet to happen.
European football teams have played in China, but most of the games have been
exhibition matches and there has been criticism over fielding weakened teams and
ticket prices. Critics of the NBA in China argue that there are not enough games
staged in China. There is also concern that since the retirement of Yao Ming in
2011, there is no Chinese player in the NBA to maintain interest.
The NBA has also been unable to date to create a Chinese affiliated version of
the league. How such a league, if created, might function is not clear. It could take
the form of a co-branded league; a league with Chinese franchises; as a tournament
between North American and Chinese teams; or a variant on these themes [10].
The CBA league is also becoming stronger as the countries wealth increases and
entrepreneurs take more interest in the sport [11].
Questions
1. Explain the advantages and disadvantages of setting up a separate company to
operate in China.
2. Are there likely to be any areas of conflict in the future between NBAs online
offering and their broadcasting partner CCTV? Explain how these might be
overcome.
86
A. Pritchard
3. Explain the advantagers and disadvantages of NBA Chinas distribution system

for merchandise in China.
4. Eric Drummond, Head of HRM at NBA claims that their best export is not a
team but their knowledge of how to run a professional league. Evaluate this
statement.
5. Explain the advantages of the joint venture in arena management with BOCOG
and AEG.
6. Evaluate the setting up of a NBA China league with franchised teams.
References
1. ESPN (2011). NBA cancels first 2 weeks of season. http://espn.go.com/nba
2. Drummond, E. (2009). Entrepreneurship a good play for NBA in China, Institute for
International BusinessGlobal Forum Report, Winter, 415. Drummond was at the time of
publication Head of International Human Resources for the NBA.
3. Bou, F., Chen, D., Guo, S., Han, F. & Liao, M. (2011). Beyond Yao: The future of Chinese
basketball, Knowledge@Wharton.
4. Drummond, E. (2009). Entrepreneurship a good play for NBA in China. Report: Institute for
International BusinessGlobal Forum. p.14.
5. NBA (2008). NBA announces formation of NBA China http://www.nba.com/news/
nba_china_080114.html
6. Lombardo, J. (2010). After two years, NBA China on steady course, Sports Business
Daily.com.
7. Smith, D. (2012). Toronto raptors guard DeMar DeRozan takes NBA message to China.
The Star.
8. Martin, B. (2012). Big things are happening in China. www.nba.com/global/news
9. Chine Daily (2012). NBA China program draws 96 m viewers. www.chinadaily.com
10. Bou, F., Chen, D., Guo, S., Han, F. & Liao, M. (2011). Beyond Yao: The future of Chinese
basketball, Knowledge@Wharton.
11. Yardley, J. (2012). The New York Times: The NBA is missing its shots in China. 1 Feb.
Part IV
Product Development and Market Entry
Introduction to Product Development

and Market Entry
Geoff Alcock and Ali Baig
How can managers increase the profitability and profit growth of their organisations? This is a central marketing challenge and drives the strategic marketing
thinking of many firms. In recent years, economic uncertainty, rising costs and
saturated domestic markets are coercing managers to look to untapped and
undeveloped overseas markets, which, if approached appropriately, could offer
potential solutions for organisations seeking greater financial returns.
Fundamental marketing theory has for decades been built around the core
strategic solution of entering new markets, and as a result, seminal models such as
the Ansoff growth matrix [1] sit alongside other models of competition and
product/market portfolio analysis at the foundation of the discipline. Ansoff
encouraged the marketer to think beyond the current market of operation and
product range. He demonstrated that business growth could result from further
market penetration of current products into existing markets but it is the evaluation
of the potential risks and rewards of product and market development that can
present the greatest opportunities for sustainable and continued success.
Until recently, the greatest financial benefits were reaped by entering markets
and producing new goods for wealthier developed nations. Lack of economic
development and smaller potential target segments made more developing countries unattractive or unviable for product or market development. This paradigm,
however, no longer holds true. The balance of global wealth has long been tipping
from west to east and the arrival of the 21st century has now cemented this shift
[2]. Unprecedented growth in China and other emerging markets of Eastern
Europe and Asia now means they have become the fastest expanding source of
potential profitability and profit growth for organisations. The global changes in
social-demographics, means that there is growing demand in these markets for
G. Alcock (&) A. Baig
A. Baig

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G. Alcock and A. Baig
sophisticated goods and services. Huge swathes of the populations of India and
China now have the requisite financial resources, material aspirations and appetite
for consumption that savvy marketers are attempting to satisfy. On-going development of other nations such as Brazil and Russia is driving the focus towards
emerging markets, and is amplified by the effect of the global financial crisis as
well as saturation and stagnation in the established economies.
However, as the case studies in this section will illustrate, marketers must not
apply traditional strategic models as if in an old-fashioned context. They must be
cogniscent of the more complex environmental patterns that now shape international markets. The classical dyadic relationship between the developed, highly
productive economies sourcing low-cost materials and labour from foreign markets, and selling back appropriate goods and services, has metamorphosed into a
more multi-dimensional picture. Patterns of business ownership, global trading
and communications networks, and a more fragmented map of sub-economies
have all contributed to this. Many of the principles of product development and
market entry can still be used. However it is best now to think not of a home
market and a foreign market, but of a single fragmented market full of diversity,
opportunity and risk.
One of the implications of this dynamic international marketing environment is
that faster new product development capability is essential for firms striving for a
higher degree of export involvement [3]. It is also important for marketers to
consider product development and market entry options together, in the context of
substantive international market analysis. The questions of whether and how to
enter new markets will inevitably feed into those of how to adapt or standardise
products and product portfolios. The pressure for local responsiveness conflicts
with the need for cost reductions but it is clear that adaptation is crucial to avoid
potential rejection of products or services by consumers. International brands such
as McDonalds (illustrated by its growing success in India) and Cadburys (now as
part of Kraft Foods) have come to understand the importance of adapting their
offerings to different local tastes and cultures, while maintaining and exploiting the
global powers of their economies of scale and their specific brand appeals. These
principles can equally apply to brands that have grown from within the emerging
economies themselves. Shangri-La (hotels) group provides a case study that
encapsulates the brand appeal of Asian hospitality that needs to be adapted to the
more individualistic cultural values of non-Asian markets to facilitate successful
international market entries.
In other instances the core product itself is adapted in less fundamental ways in
response to the cultural demands of the country or region. In the case of the
Aakash tablet the company, the British registered and Canadian founded company
Datawind, have worked in close collaboration with the Indian Ministry of Human
Resource Development. Here the adaptation is primarily focussed on the
requirements of unit prices, and the technological and educational infrastructure of
the target market. While the adaptation can be construed as cultural in the broad
sense of the term, the challenges have been primarily economic and technical. In
the case of the United States NBA (National Basketball Association) in China, the
Introduction to Product Development and Market Entry
91
core product offering is not in dispute; the Chinese love their basketball. The
challenge is one of engagement of the population, and making the sport and its
derivative products and services accessible to them.
While reading the case studies the reader is encouraged to consider the fundamental theories and disciplines of product development and market entry.
Companies are liable to analyse their product portfolio in the international market
context. It is possible, in terms of the Boston Consulting Groups growth-share
matrix, for a Dog in a mature market to become a Star in an emerging market,
and for products at saturation or in decline in the Product Life Cycle [4] to find
new growth in alternative settings with minimal or minor adaptations. Where new
product development is a requirement, it would seem reasonable for a company to
test both the concepts and the specific emerging markets before proceeding to full
commercialisation. The product development and market development approaches
may well run in parallel, as ever greater commitments are made to markets through
the establishment of distribution networks, licensing agreements or the establishment of full production and marketing subsidiaries. An alternative approach is
through the establishment of strategic alliances to facilitate international market
penetration. The alliance may be with a company indigenous to the target nation or
region, or, as in the case of the Kraft purchase of Cadbury, the acquisition of a
brand with an established presence in target world markets on which other brands
and products can piggyback.
Companies can therefore gain many strategic and financial advantages through
product and market development internationally. However, many have also come
to realise that a strategic overview and control of global marketing operations is
essential also for the long term health of brands. A balance is needed between the
local requirements of marketing mixes to achieve success in diverse markets, and
the consistent need to retain core brand attributes that are universal and therefore
sustain the differential positioning of the companys name and its international
brands. This challenge is common to all the cases in this section. It may be a case
of adapt or die, but if a brand is over-adapted it can lose its core identity and with
that, its potential sustainability. It is in achieving this balance that the longer term
global success of brands, and the ability to continue developing new products and
successfully entering new markets under those brand umbrellas, may ultimately
depend.
References
1. Ansoff, I. (1957). Strategies for Diversification. Harvard Business Review, 35(5), 113124.
2. Agtmael, A. (2007). The Emerging Markets Century, Simon and Schuster.
3. Lim, J., Sharkey, T. W., & Heinrichs, J. H. (2006). Strategic Impact of New Product
Development on Export Involvement. European Journal of Marketing, 40, 4460.
4. Polli, R., & Cook, V. (1969). Validity of the Product Life Cycle. Journal of Business, 42(4),
385400.
Case Study 10: A Sweet Deal: Cadbury

Leads Kraft into Emerging Markets
Lara Spiteri-Cornish
Introduction
February 2010 saw the acquisition of Cadbury, one of the two major confectionary
players in the world, by USA-based Kraft Foods Inc [1]. Analysts believe that the
acquisition of Cadbury was the final step in a strategy designed to enable Kraft to
be restructured and split into two companies by the end of 2012: a grocery business
worth around $16bn; and a global snacks business worth approximately $32bn
global [2]. Cadbury was pivotal in providing the scale that Kraft needed to
strengthen its snacks business, providing it with the sought-after foothold in
emerging markets, defined here as Latin America, Middle East, Africa, Eastern
Europe and Asia Pacific. But how was Cadbury able to do this?
Cadbury: Background
Cadbury was founded in 1824 when a Quaker named John Cadbury opened a shop
in Birmingham, England to sell drinking chocolate as a virtuous alternative to
alcohol. From 1969 it traded as Cadbury Schweppes plc until, in 2008, it split its
global confectionery business from its beverages business which it renamed
Dr Pepper Snapple Group Inc [3]. The company grew through mergers and demergers and by 2009 Cadbury was the second largest confectionery company in
the world after Mars-Wrigley [4]. It marketed mainly three types of confectionery
products, namely chocolate, gum and candy. In 2009, Cadbury held 10 % share of
the global market and the top two positions in over 20 of the top 50 world
confectionery markets with strong brands in the markets for chocolate (Cadbury,
Fry, Bournville, Green & Blacks and Jaffa), gum (Trebor, Trident and Hollywood
Chewing Gum) and candy (Bassetts and Maynards) [3, 5].
L. Spiteri-Cornish (&)

93
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L. Spiteri-Cornish
Kraft: Background
Kraft, Inc. was established by James L. Kraft, the son of a Canadian farmer [6] In
1903 Kraft started a wholesale cheese distribution business in Chicago with the
aim of relieving grocers of the need to travel daily to the cheese market by
delivering cheese to their doors [6]. At first, business was slow but eventually it
began to improve. James was joined by his four brothers, Fred, Charles, Norman,
and John and in 1909 the business was incorporated as J. L. Kraft & Bros.
Company. New product development, innovative advertising and strategic mergers
and demergers fuelled the companys growth[68]. In 2010, Kraft Foods Inc. was
the largest food company in the United States and held the number two position
worldwide, behind Nestl S.A. It had two main operating units, namely Kraft
Foods North America and Kraft Foods International. Its brands were divided into
five main sectors: snacks (30.6 % of global revenues); beverages (19 % of global
revenues); cheese (18 % of global revenues); grocery (16.6 % of global revenues)
and convenient meals (15.8 % of global revenues). Top players for Kraft Foods
Inc. included Kraft cheeses, Nabisco cookies and crackers, Maxwell House coffee,
Philadelphia cream cheeses and Oreo cookies. By the time of the offer for Cadbury, Krafts top seven brands generated annual revenues of more than $1bn [4]
each. In 2009, Krafts product portfolio led by the billion dollar Milka brand
enjoyed a 7.8 % market share in the global chocolate market.
Krafts Foothold in Emerging Markets

In 2010, the recession saw Krafts lucrative American market begin to stall.
Conversely, emerging markets began to see double-digit expansion. While
emerging markets have always underpinned both Cadburys and Krafts growth
strategies (for example, in 2010 sales in emerging markets accounted for 38 % of
Cadburys sales and 20 % of Krafts sales) [9, 10], Kraft realised that the acquisition of Cadbury would allow an increased market share in emerging markets
where the multinational already had a strong presence (e.g. Brazil : Krafts 2008
revenue : $1.2 billion and China: Krafts revenue: $400 million) [9] and more
importantly, a foothold in emerging economies where Krafts presence was minimal. Cadburys presence in emerging markets has historically been strong and in
2008, 60 % of its business growth came from emerging markets. Indeed, Cadbury
enjoyed a dominant position in these regions when compared to other market
leaders such as Mars and Nestle [11] (Fig. 1).
It also generated 38 % of its sales from new emerging markets [3]. Preacquisition results showed sales up by 5 %, with emerging markets showing
growth of 9 % and developed markets 2 % [3]. India is one of the emerging
1
Cadbury Annual Report and Accounts 2008: Explaining Cadburys Markets.
Case Study 10: A Sweet Deal: Cadbury Leads Kraft into Emerging Markets
95
Fig. 1 Positions in emerging markets1
markets where Cadbury had a strong presence whereas Kraft had a minimal
foothold. Since it was set up in India 60 years earlier, the corporation became the
largest confectioner in the country with approximately 70 % of Indias US$425
million chocolate market,2 with Nestle coming a distant second. Analysts believe
that Krafts acquisition of Cadbury was party motivated by its intention to penetrate the Indian market.
Krafts Acquisition of Cadbury

The incorporation into its portfolio of Cadburys popular brands like Dairy Milk,
Creme Egg, Flake, and Green & Blacks has made Kraft the biggest player in the
global chocolate industry. The corporation increased its share in the high growth/
high margin packaged food market and also significantly strengthened its presence
in highly lucrative emerging markets3. Cadburys infrastructure and distribution
networks have been instrumental in Krafts increased market share in the Middle
East, Africa, Latin America and India. In 2011, the acquisition of Cadbury began
to pay off with revenue from emerging markets increasing from 23 to 30 %.4 In the
Middle East and Africa, the company rose from 18th to third largest packaged food
competitor [12]. Value sales in Latin America, Krafts largest emerging market
before the integration with Cadbury, also rose to 14 %. Post-acquisition, Krafts
portfolio increased to over 40 confectionery brands, each with annual sales of
more than $100 million [11]. Total revenue for the quarter increased 11 %, to
2
Euromonitor (2011). How can Packaged Food Companies Grow their Presence in Emerging
Markets?
3
See Footnotes 2
4
See Footnotes 2
96
L. Spiteri-Cornish
$12.6 billion, as sales rose 40 % in India, and 20 % each in China and Indonesia
[13, 14]. Kraft also announced the opening of an $80 million manufacturing plant
and an investment of over $200 million in Brazil, maintaining that this country is
one of its 10 priority developing markets.
However, the biggest success took place in India. India has historically been one
of Cadburys most resilient markets. By 2008 sales growth of Cadbury in India
averaged 20 % with profits growing at 30 % per annum [15]. Cadburys legacy
increased Krafts share in the confectionary market exponentially and also enabled it
to introduce its bestselling Oreo biscuits to the Indian market. In March 2011, Kraft
sold Oreos under the purple banner of Cadbury rather than the red and white of
Nabisco [16] to capitalise on its pre-existing equity in India. Further, the company
also used Cadburys network of small mom-and-pop stores to push their Oreos and
Lacta chocolate, a strategy which was also implemented in Mexico [17]. Prior to
acquiring Cadbury, Kraft had no meaningful presence in India [18]. In 2012, Krafts
combined retail value sales pushed US$1 billion, a nominal increase of more than
60 % since 2010.5 Cadburys historic local strength enabled Kraft to penetrate
Indias virginal packaged food market, opening the door to product innovations, such
as chocolate products that survive the extreme heat, which will seal its popularity.6
Krafts increased presence in emerging markets is strategically significant since
growth of the confectionary market, of which chocolate represents the biggest
segment with a 55 % share in value, has been considerably higher in emerging
markets (10 % p.a.) than in developed markets (3 % p.a.).7 Indeed, the doubledigit annual growth in chocolate sales in emerging markets is forecasted to be the
driving force behind increased market share in the future [11]. Analysts attribute
this trend to higher population growth rates and rising affluence which has
increased demand for affordable luxuries and treats. The importance of operating
in emerging markets is evident when considering that by 2015 about 88 % of the
global population is estimated to live in emerging markets. Further, by 2015
emerging markets are expected to post higher compound annual growth rates in
total GDP then developed regions.8
Future Outlook
In October 2012, Kraft changed its name to Mondelez International and spun off
some brands into a new company called Kraft Foods Group. This company focuses
on the North American food business, while Mondelez International focuses on the
Euromonitor International (2012). Chocolate and Cheese: The Way Forward for Mondelez
International.
6
KPMG (2012). The Chocolate of Tomorrow: What todays Market can tell us about the Future.
7
See Footnotes 1.
8
See Footnotes 2.
Case Study 10: A Sweet Deal: Cadbury Leads Kraft into Emerging Markets
97
global snacks business, including Cadbury. The start of 2013 saw Mondelez
International (Cadbury in India) restructuring its emerging markets operations to
create individual business units for India and China and dissolve the development
markets division [19]. Under the new structure, Mondelez International will have a
presence in five worldwide regions, namely Europe, North America, Latin
America, Asia Pacific and Eastern Europe, Middle East and Africa. The company
intends to focus its efforts across Asia Pacific, Latin America and the Middle East
and Africa, all regions where Cadbury enjoys an established consumer base and
supply chain networks. India and China are seen as growth engines [19] and are
key components of the growth strategy of Mondelez International.
Emerging markets are expected to make up to 44 % of Mondelez Internationals revenue by 2016 [20] and it is believed that the profitability of its
emerging markets business give it an advantage over other packaged food companies [11].
Questions
1. Has the acquisition of Cadbury by Kraft impacted the Cadbury brand? How?
2. Recently creations such as Cadbury with Oreos and Philadelphia with
Cadbury have hit supermarket shelves in the UK. How do you think consumers respond to these products and why?
3. How can Mondelez International ensure its continuing growth in emerging
markets?
4. What are some of the challenges that Mondelez International will have to face
in the next few years?
5. China is a difficult market for confectioners. What strategies can Mondelez
International implement to getter a stronger foothold in this market?
References
1. IBS Centre for Management Research (2011). Krafts Takeover of Cadbury.
2. Financial Times (2012). Krafts Takeover of Cadbury.
3. Burns, P. (2011). Entrepreneurship and Small Business (3rd ed.). Palgrave Macmillan
Financial Times (2012).
4. Financial Times (2012). Krafts Takeover of Cadbury. www.ft.com/cms/s/0/1cb06d30-332f11e1-a51e-00144feabdc0.html
5. Shelley, A. (2009). Case study: Cadbury. Sweet like chocolate. Inside, 12(6).
6. ChoiceLevel (2009). Kraft Foods Inc. Business Background Report, Filiquarian Publishing.
7. Deogun, N., Fairclough G., & Branch S. (2000). Philip Morris agrees to acquire Nabisco,
Wall Street Journal, A3.
8. Sanger, E. (1985). Still the big cheese, Barrons, 51.
98
L. Spiteri-Cornish
9. India Knowledge@Wharton (2010). Sweet Surrender: Can krafts cadbury acquisition help it
tap the Indian market? http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4451
10. Euromonitor International (2012). Unlocking the door: How cadbury acquisition increased
krafts global footprint. http://blog.euromonitor.com/2012/10/unlocking-the-door-howcadbury-acquisition-increased-krafts-global-footprint.html
11. Nasdaq (2012). Emerging markets drive krafts chocolate & candy market share.
12. Euromonitor (2011). Kraft Foods Inc in Packaged Food (World).
13. Kraft Foods Q1 2011 ResultsEarnings Call Transcript, May 5, 2011.
14. Bhushan, R. (2011, May 18 ). India fastest-growing market for kraft food. http://
articles.economictimes.indiatimes.com/2011-05-18/news/29555982_1_cadbury-portfoliooreo-biscuits.
15. Bhushan, R., & Vijayraghavan, K. (2010, January 20). Cadbury buyout gives kraft foods
access to India. http://articles.economictimes.indiatimes.com/2010-01-20/news/28466189_
1_kraft-foods-cadbury-s-dairy-milk-confectionery.
16. Euromonitor International (2012). Chocolate and cheese: The way forward for Mondelez
international. http://blog.euromonitor.com/2012/10/chocolate-and-cheese-the-way-forwardfor-mondelez-international-.html.
17. Boyle, M. (2010, August 11). Kraft chief pitches Brazilian tang in blitz on emerging markets.
http://www.bloomberg.com/news/2010-08-11/kraft-chief-rosenfeld-pitches-brazilian-tangin-blitz-on-emerging-markets.html.
18. Pinto, V. S. (2010, January 21). Kraft set to get a taste of India. http://www.businessstandard.com/article/management/kraft-set-to-get-a-taste-of-india-110012100018_1.html.
19. Vijayraghavan, K. (2013, February 27). Global snacks major Mondelez International ups
focus on India with new setup. http://articles.economictimes.indiatimes.com/2013-02-27/
news/37331072_1_grocery-portfolio-cadbury-india-mondelez-ceo
20. Euromonitor (2011). Kraft Foods Inc in packaged food (World). http://
www.euromonitor.com/kraft-foods-inc-in-packaged-food/report
Case Study 11: Marketing of Services:

The McDonalds Way
Rik Paul and Sanjit Kumar Roy
If you work just for money, youll never make it, but if you love
what youre doing and you always put the customer first,
success will be yours.
Ray Kroc, Founder, McDonalds Corporation.
Introduction
For a lot of people, the name of McDonalds instantly brings a smile. It is known
for its crispy burgers and its wide network of outlets. The company started its
business operations in India in 1996 as a 50:50 joint venture partnership between
the two businessmen Amit Jatia (Jatia)1 and Vikram Bakshi2 (Bakshi). India was a
challenging market, given local dietary preferences for vegetarian dishes. Tim
Fenton3 pointed out that Indias eat out market was about $128 billion a year
compared with $132 billion in China, but was growing faster than that of China.
Adding that McDonalds India is planning to open 40 stores in the country soon,
Bakshi said, Our comparable sales in metros have been nearly 20 % in 2010 and
as the fast food market continues to expand across the country and across various
consumer segments, there is tremendous scope for expansion [1]. With reference
to the age old saying when in Rome, do as the Romans do Bakshi also
1
Amit Jatia, the MD of Hardcastle Restaurants, joined the McDonalds family as the youngest
JV Partner in 1995. He took hands on training for a year at McDonalds in Jakarta (Indonesia) as
well as a degree in Hamburgerology from the Hamburger University, Oak Brook (Illinois, USA).
He was also nominated for The Economic Times Awards for Corporate Excellence as
Entrepreneur of the Year in 2004 and 2005.
2
Vikram Bakshi became the MD, McDonalds India (North and East) on September 28, 2006.
He was also nominated as the President of the National restaurant Association of India.
3
Tim Fenton was the president of Asia, Pacific, Middle East and Africa and was accountable for
the 38 countries and more than 8,200 McDonalds restaurants in this region. He served as
president, East Division, for McDonalds USA. He was responsible for more than 5,200
restaurants in the eastern United States, covering eight geographical regions in 21 states.
R. Paul (&)
e-mail: rik.paul.iimt@gmail.com
S. K. Roy

99
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R. Paul and S. K. Roy
commented on the USP of McDonalds in India and the introduction of menu

dishes like McAloo Tikki Burger,4 Pizza McPuff,5 McVeggie6 keeping in view the
strong liking of north Indians towards spicy stuff [2].
From its India debut in 1996 with just one outlet at Basant Lok in Delhi,
McDonalds had 211 restaurants in India by 2011, of which 105 were in North and East
India and 106 in West and South. Apart from the metros, McDonalds also reached
rural areas as well, with 14 outlets in Haryana, 11 in Punjab and 28 in Uttar Pradesh [2].
The Fast Food Market in India

India, being a country of rich culture and heritage, its tradition is like a pearl
necklace where every beautifully white pearl expresses customs like respecting
elders, joint family tradition, and strong religious perspective that even extends to
their food habits and forms an extremely strong and integral part of their life.
Therefore Indian food completely differed from the food habits of the other people
of other origins. Indian people are mostly fond of their own regional Indian food
such as samosa,7 kababs,8 chola bhatura,9 pakoda,10 aloo-paratha,11 poori-bhaji,12
It is a vegetable burger, which includes a patty made out of potatoes, peas, and spices. It also
includes tomato slices, onions, and vegetarian mayonnaise.
5
It starts with a rectangular shaped crust, but instead of a creamy sauce, it is flavoured with a
tomato-based sauce and then is topped with carrots, beans, bell peppers, onions, peas and
mozzarella cheese.
6
It looks similar to McAloo Tikki Burger, but starts with the sesame seed bun. In between the
bread, there is a vegetarian patty made from peas, carrots, green beans, red bell pepper, potatoes,
onions, rice, and seasoning. It is garnished with lettuce, and has mayonnaise spread thickly on the
bread.
7
A samosa is a stuffed pastry and a popular snack in South and Southeast Asia. It generally
consists of a fried or baked triangular, semi-lunar or tetrahedral pastry shell with a savory filling,
which may include spiced potatoes, onions, peas, coriander, and lentils, or ground beef or
chicken.
8
Kababs are a wide variety of meat dishes originating in Persia and later on adopted by the
Middle East andTurkey, and now found worldwide.
9
Chole bhatura is a combination of spicy chick peas and fried bread called bhatura made of
flour.
10
Pakoda is a fried snack (fritter) found across South Asia. It is created by taking one or two
ingredients such as onion, eggplant, potato, spinach, plantain, cauliflower, tomato, chilli, or
occasionally bread or chicken and dipping them in a batter of gram flour and then deep-frying
them.
11
A paratha is an Indian flat-bread that originated in the Indian subcontinent. Parathas are
usually stuffed with vegetables such as boiled potatoes, leaf vegetables, radishes or cauliflower
and/or paneer (South Asian cheese). Aloo-paratha is the variety that is stuffed with boiled potato
and spices.
12
The bhaaji is a vegetarian dish made from a vegetable. A typical north Indian lunch or dinner
usually starts with Poori (flat bread), accompanied by one or more bhaaji(s).
Case Study 11: Marketing of Services: The McDonalds Way
101
dosa,13 and sambar vada14 and these are available in both specialty and multicuisine restaurants throughout India. Home cooked foods are not only a preference
but are also a matter of self esteem for most Indians. The Indian catering services
sector of which fast food is a part is estimated to be worth Rs.15 570 billion, of
which only Rs. 39.40 billion or 6.9 % is accounted for by the organized retail
market.16 While such restaurants were expensive, there was a large unorganized
sector consisting of roadside food vendors and dhabas17 which provided a wide
option for food within affordable price ranges. The local food business had their
own customers with distinct set of preferences [3]. There are 22,000 registered
restaurants in India. In addition, there are thousands of dhabas that sell a variety of
regional and regular foods in cities and on highways. Thus naturally it is a lot
tougher for the foreign food markets to survive in a country which is already
biased towards their own rich food habits and varieties. However, contrary to
expectations, the foreign food companies were welcomed into the periphery of the
Indian food circle and the problems that were considered fatal were erased and
foreign food products were rapidly accepted into the household of the Indians.
There was a sudden mushrooming of KFC, McDonalds, Subway, Dominoes and
Pizza Hut outlets [4].
(Refer to Exhibit I for a brief profile of the major players in the Indian fast food
industry, Exhibit II for the percent share of the fast food market in India and
Exhibit III for percent share of fast food chains in India).
Organised food retailing in India had established north Indian and south Indian
style classic restaurants mostly in the metropolitan cities. The big Indian food
business companies were soon raging as they attempted to defend their strongholds
in the country.
13
Dosa is a fermented crepe or pancake made from rice batter and black lentils. It is indigenous
and is a staple dish in the southern Indian states of Andhra Pradesh, Karnataka, Kerala, and Tamil
Nadu.
14
Vada can vary in shape and size, but are usually either doughnut or disc shaped and are about
between 5 and 8 cm across. They are made from dal, lentil, gram flour or potato. Vadas are
preferably eaten freshly fried, while still hot and crunchy and is served with a variety of dip called
sambar.
15
Rs = Indian Rupee (s), Re. 1 = 100 paisa, In February 2011, US$1 = Rs. 45
(approximately).
16
V S Rama Rao, Fast Food Retailing in India, www.citeman.com, September 17, 2010.
17
In India, highways are dotted with local restaurants popularly known as dhabas (singular:
dhaba). They generally serve local cuisine. They are most commonly found next to petrol
stations, and are generally open 24 h a day.
102
Exhibit I Some Major Players in Indian Fast Food Industry

Company
Profile
Dominos
Pizza
KFC
Pizza Hut
Taco Bell
Nirulas
Dominos Pizza opened its first store in India in January 1996, at New Delhi. India
Retail Report 2009 indicated Dominos as the largest Pizza chain in India and
the fastest growing multinational fast food chain between 20062007 and
20082009 in terms of number of stores. Over the period since 1996,
Dominos Pizza India had focused on delivering great tasting pizzas and sides,
superior quality, exceptional customer service and value for money offerings.
Dominos Pizza India had grown into a countrywide network of more than 300
stores with a team of over 9,000 people by 2011. They also had established a
reputation for being a home delivery specialist capable of delivering pizzas
within 30 min or else FREE to a community of loyal consumers from all our
stores around the country.
KFC is the largest brand of Yum Restaurants, a company that owns other leading
brands like Pizza Hut, Taco Bell, A&W and Long John Silver. Renowned
worldwide for its finger licking good food, KFC offers its signature products
together with introduction of many specialized offerings for its growing
customer base in India. Its signature dishes include the crispy outside, juicy
inside Hot and Crispy Chicken, flavourful and juicy Original Recipe chicken,
the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket
and a host of beverages and desserts. For the vegetarians in India, KFC also
has great tasting vegetarian offerings that include the Veg Zinger and Veggie
Snacker. In India, KFC had grown rapidly and by 2011 it had presence in 21
cities with close to 107 restaurants.
Pizza Hut is one of the flagship brands of Yum! Brands, Inc. Pizza Hut is said to
be the worlds largest pizza chain with over 12,500 restaurants across 91
countries. By 2011, in India, Pizza Hut had 140 restaurants across 34 cities,
including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and
Chandigarh amongst others. Yum! Also declared to be in the process of
opening Pizza Hut restaurants at many more locations to service a larger
customer base across the country.
The first Taco Bell in India was launched at Mantri Square Mall, Bangalore, in
March 2010. True to its brand promise of providing craveable tastes and
unbeatable value, Taco Bell offered a wide range of products to mesmerize the
Indian consumer. The menu in India included a variety of vegetarian and non
vegetarian Tacos, Burritos, Signature Quesadillas, Grilled Stuft Burritos,
Nachos, and other specialty items. Several combos to satisfy the craving for
Taco Bell food at lunch, snack and dinner were also offered. It also offered
unlimited refills on the entire Pepsi beverage range. Taco Bell focussed on a
unique dining experience with the vibrant restaurant ambience, dynamic, set of
activites, zest and contagious energy.
Nirulas was Indias oldest fast food restaurant chain, based in north India and
most popular in Delhi. It started Delhis first fast food restaurant in Connaught
Place in 1977. In 2011 it had over 75 outlets in NCR Delhi, Punjab, Haryana,
Rajasthan, Madhya Pradesh and Uttar Pradesh states, which included familystyle restaurants. Nirulas specialized in Desi version of western fast food as
well as offered Indian cuisine, casual dining, pastry shops and ice cream
parlours, and two hotels in Noida and Panipat. The company announced its
plans to venture into a large number of quick service restaurants in every
major city in India by the end of 2011. With an aggressive expansion strategy,
the organisation planned to have a national presence by opening 150 new units
in the next 2 years in high footfall locations.
(continued)
103
Exhibit I (continued)
Company
Profile
Subway
Haldirams
Bikanervala
Sagar Ratna
Subway Systems India Pvt Ltd opened its very first restaurant in 2001 in New
Delhi and had swiftly grown its operations to 183 operating restaurants in 26
cities across India. Although it is a global brand with a menu that is relatively
the same around the world, Subway restaurants took great pride in honouring
and respecting local traditions and food preferences and had earned a
reputation for offering a healthier alternative to traditionally fatty and greasy
fast food. Subway restaurants in India served no beef or pork products and
had an expanded selection of vegetarian choices. Popular sandwiches, both
local and international favourites, included Veggie Patty, Paneer Tikka, Aloo
Patty, Chicken Meatball Marinara, Roasted Chicken, Chicken Teriyaki,
Turkey, and Tuna.
Established in 1937 it took more than six decades for Haldirams to become the
leading manufacturer of Indian savoury snacks. Known for its unbeatable taste
in Mithais and Namkeen segment, Haldiram was an household name to urban
Indian consumers. Being a Rs. 1,200 crore company by 2011, Haldirams had
diversified to fast food industry with 28 restaurants in the domestic market
with an average size of 5,000 sq ft. the restaurants served assorted traditional
vegetarian recipes together with the availability of a wide selection of chats
and namkeens.
Bikanervala was one of Indias most prominent families in the business of
traditional hospitality products like Sweets and Namkeens. As of 2011
Bikanervala Foods Pvt. Ltd. was an ISO 9001:2000, HACCP and SQF
2000 cm certified company with four modern manufacturing units in the
National Capital Region and a chain of 88 outlets in India and abroad, serving
vegetarian north Indian, south Indian, continental, Chinese cuisine and fast
food along with a vast variety of traditional Indian sweets and snacks.
Sagar Ratna is a well known brand of restaurant chain in northern India serving
vegetarian cuisine with a speciality in south Indian delicacies. As of 2011 the
company had more than 24 outlets and 29 franchisees and was still looking to
grow more in the near future.
Source Compiled from respective company websites
Exhibit II Percentage share of food market in India (2010), Source Technopak Advisors
104
Exhibit III Percentage share of fast food chains in India (2010), Source www.budding
markets.com
McDonalds India Entry

Multinational company (MNC) restaurant chain owners had struggled consistently
to adapt to the needs of Indias many markets from their earliest investments in
India. Some even pulled out of the country after ventures that did not work out and
had failed miserably. However, consolidation of the hugely fragmented Indian
retail sector had also slowly begun, and there was a raw hesitation that Indians
would prefer the foreign foods like burgers and fries to local food offerings. When
McDonalds India first launched in 1996, Indians in Mumbai and Delhi ate out
three to five times a month.
However, in the intervening decade, McDonalds continued to open brand new
outlets in the country, and evolved their marketing strategies through their
impressive endeavours even though there were minor protests from existing political
parties [5]. After the first Indian McDonalds outlet in Mumbai in 1996, outlets had
begun trading in metropolitan and Tier II towns across the country. By September
2008, it had premises in Mumbai, Bangalore, Baroda, Pune, Indore, Nasik, Chennai,
Hyderabad, Surat and Ahmedabad. The past decade has witnessed a marked
change in Indian consumption patterns, especially in terms of food. Households in
middle, upper, and high-income categories now have higher disposable income per
member and a propensity to spend more, said Amit Jatia in 2000. He further added
that Our growth plan for the next 3 years is more a function of getting our logistics
and cold chain right rather than going too far off places [6].
By September 2008, McDonalds had completed 12 years of its operations in
India and had its presence in Mumbai, Delhi, Bangalore, Chennai, Hyderabad,
Ahmedabad, Baroda, Nasik, Pune, Indore, Surat and other tier I and tier II cities
[7]. Meanwhile, there had been a significant increase in the Indian eating out habit.
Analysts expected the Indian quick service restaurant market to be US$6.3 billion
by 2011.
105
Marketing Strategies
Promotional Campaigns
In 2000, McDonalds India came out with their first television ad campaign. It
featured a child who suffers stage fright and is not able to recite a poem. On
entering McDonalds, he properly recites it in the stores familiar and easy environment without any reluctance. A similar campaign featured a child and his
family moving into a new unknown place. The child misses his previous surroundings until they see McDonalds which provides something familiar and.18
Singhal said that the first TV commercial, Stage Fright, attempted to establish an
emotional connection between the (Indian) family and the brand together with the
aim of establishing McDonalds as a familiar place. These storylines of the
campaigns were all supported by other creative initiatives. The company promoted
1 min service guarantee which attempted to reinforce its reputation for quick,
friendly and accurate service and it also ran in-store events for mothers and little
children.
K.V. Sridhar (Sridhar), National Creative Director, Leo Burnett,19 McDonalds
agency in India, said In the launch phase, the communication focused solely on
building brand and product relevance. The brands scores on relevance to families
and kids were very high. Furthermore the introduction of the toys and other little
gimmicks that came along to with the meals appealed to the children and they all
craved for more [6].
In 2004, McDonalds realized the strong potential in the youth audience, but
they considered McDonalds to be expensive and pocket burning and were mainly
for children. Thus the Happy Price Menu with a value message for a younger
audience was launched and for the first time McDonalds India saw an upsurge of
young people entering the restaurants [8].
In 2008, the latest impressive campaign from the McDonalds-Leo Burnett
stable used father-son duos from Bollywood20 to rejuvenate the theme of Yesteryears Prices. It featured Bollywood stars from past decades along with their
sons with the message that prices of the fast food had not risen in line with the
onslaught of time [9].
18
The Burger Story www.tonicpanel.com.

Leo Burnett Worldwide is an American advertising company, created in 1935 by Leo Burnett.
The company was opened in Chicago in 1935. In 1950 the company started its two first major
advertising projects, for Kelloggs and P&G.
20
Bollywood is the informal term popularly used for the Hindi-language film industry based in
Mumbai, Maharashtra, India. The term is often incorrectly used to refer to the whole of Indian
cinema; it is only a part of the total Indian film industry, which includes several regional film
industries sorted by language.
19
106
McDonalds has also explored strategic tie-ups with Indian sport events in the
country such as the IPL21 cricket tournament, where it was one of the events food
managers. Jatia remarked, The eating out market in India is very large and has
huge potential fuelled by rising disposable incomes. There are many Indian and
international players who have entered in the market since the last decade and
unbranded food chains have also grown significantly. The Indian consumer has
seen value in what we have to offer at our restaurants which is a testament to our
model [10].
Products, Pricing and Distribution

In the initial days, McDonalds India made efforts to completely change Indian
consumers perceptions, which related it with being foreign or often American.
Consumers typically had the feeling of not knowing what to expect which made
India a more challenging market due to the local dietary preferences for nonmeat
dishes. India was the worlds vegetarian paradise with nearly one billion people
who eat meat only occasionally or never at all [11].
McDonalds India thus invested time and effort to develop a customised menu
for India, a menu that reflected both the taste and beliefs of the natives. In the
words of Bakshi, It really doesnt make sense to sell beef in a country where
85 % of the population doesnt eat it or will even shun a restaurant where beef is
served. The second largest community, the Muslims, did not eat pork. To
establish a market in India, McDonalds managed to design a menu that included
only chicken, fish and mutton products he added. McDonalds in India also
devised a comprehensive range of vegetarian products with the addition of Indian
spices as a large population in north India preferred Vedic style of eating, which
propagated vegetarian food [12].
McDonalds used the most creative forms of innovations to make their efforts
palatable and catchy so that even the kids would love their endeavours. The names
of the Mac Burgers namely the Maharaja Mac had an Indian connotation, therefore
was more acceptable to the customers of the country. Jatia revealed that the
products like McAloo Tikki burger, Veg Pizza McPuff and Chicken McGrill
burger were formulated and introduced using spices favoured by Indians. He added
that the menu development team was responsible for special sauces which used
local spices that did not contain beef and pork. Other products too did not contain
eggs and were 100 % vegetarian. The Indianised products have been so well
received that we even export McAloo Tikki burger and Veg. Pizza McPuff to the
21
The Indian Premier League (IPL) is a professional league for Twenty20 cricket competition in
India. It was initiated by the Board of Control for Cricket in India (BCCI) headquartered in
Mumbai, India.
107
Middle East exclaimed Jatia though certain flagship items like Mac Nuggets were
served both in US as well as in India [3].
Sridhar, remarked that, When McDonalds launched we took a conscious call
of not introducing any beef or pork in our products. Thus, when controversies
around McDonalds products started during the early and growth stages of the
Indian business, we reacted quickly. We educated our customers about the build of
our products and did extensive kitchen tours for our customers. We showed them
how we use separate vegetarian and non-vegetarian platforms for cookinga first
in any market for McDonalds [13].
McDonalds kept the prices of its products low which was made possible by as
a result of its strategies like bulk buying, manufacturing efficiencies and long-term
vendor contracts. In 2004, McDonalds India launched the Happy Price Menu
under which products were priced as low as Rs. 20 [13]. For their individual
products they adopted value pricing strategies and went for bundling strategies for
the combo meals which typically consisted of a burger, french fries and coke.
Apart from typical first food restaurant set ups all across India, McDonald also
launched home delivery services. The key idea is convenience. We are a quick
service restaurant available at high-traffic locations. But there is a large number of
people who find it difficult to travel. By offering home delivery we can reach out to
them and increase our penetration, said Jatia. There were no restrictions on the
minimum order for home delivery, but a flat fee of Rs. 10 was charged per order as
delivery charges, irrespective of the size of the order, Jatia added [14]. McDonalds India also started a single nationwide McDelivery no: 66-000-666, in an
effort to upgrade its home delivery service [15].
McDonalds wanted to be recognised as Indian and a promoter of family
values and culture, and as being comfortable and easy. Operationally, it was
committed to maintaining a good quality service, cleanliness and offering complete value for money.
Intensifying Competition
Assocham22 reports that the consumer spending on processed food in India
increased at an average rate of 7.6 % annually from 2008 to 2010 and this was
expected to rise at an average of around 8.6 % until 2012. The report also indicated the major shift in food habits in metropolitan cities was about 86 % of
respondent households preferring to have instant food due to steep rise in dualincome levels, standard of living, convenience and influence of Western countries.
Mona Sharma, a 24 years old BPO employee, remarked that due to odd working
22
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) is the umbrella
body of chambers of commerce in India. The organisation represents the interests of trade and
commerce in India, and interacting with the Government of India on policy issues, and liaisoning
with their international counterparts to promote trade between India and other nations.
108
hours and work pressure it was very difficult to get out and eat. We normally
place group orders from our office to outlets which serve ready to eat food like
burger and pizzas. It saves our working time, she added [1].
Sales at fast-food chains were growing at a rate of 28 % in India. As a result,
American fast-food companies voraciously tried to expand their markets. Ajay
Kaul, CEO of Jubilant Food Works, the master franchise for Dominos Pizza in
India expressed his desire to open more than 60 new outlets every year. At a
growth rate of nearly 42 % for the last 5 years, the India operations of Dominos
Pizza was its fastest in the world. At the opening of its 300th outlet in Delhi,
Patrick Doyle, the global CEO of Dominos Pizza Inc, remarked, Our teams in
India and Louisiana, USA, are two of the largest and best franchisees [16].
The Food Franchising Report23 2009 depicted that the eating out market is on an
upswing in India due to the rising number of working women and nuclear households, and an increase in general affluence which in turn have led to higher discretionary spending on food. The report also points out that, 30 % of working singles
ate out at least once a month, with a majority of them spending at least Rs. 101150
per outing. On similar note Technopak Advisors24 reported the spending on eating
out at 11 % to be the second only to groceries for Indian households and urban
Indians had repast outdoor eating six times a month compared to 2.7 times in 2003.
Thus, whether it was multinational chains like McDonalds, Pizza Hut, KFC or
indigenous ones like Sagar Ratna,25 Yo! China,26 Haldirams,27 Bikanervala28 or
Nirulas,29 they were all participants in the expansion game. Yum! Brand, owner
of the KFC and Pizza Hut, planned to add 15 and 20 outlets respectively in the
year 2010 [16]. Nirulas which already had 80 outlets (company owned and
franchised) in 7 cities across Delhi, Uttar Pradesh, Uttaranchal, Haryana, Rajasthan and Punjab planned to open 70 more till 2012 [2]. Sagar Ratna planned 35
new outlets by December, 2011. Bikanervala and Haldirams too announced their
expansion plans of four to five new outlets every year. An Indian is only
23
Indias first Food Franchising Report by Franchise India and CIFTI-FICCI. The primary
objective of the report is to provide a snapshot of current trends in Food Franchising vis-a-vis
expert analysis of various elements having implications on it.
24
Established in 1991 by Arvind Singhal, Technopak Advisors is a Management Consulting
firm in India, offering strategic advice, start up assistance, performance enhancement impetus,
consumer insights and capital advisory to Indian and International companies.
25
Sagar Ratna is a well known brand of restaurant chain in northern India serving vegetarian
cuisine with a speciality in south Indian delicacies.
26
Yo! China is Indias first and largest chain offering Indian Chinese cuisine in almost all
corners of the country. It offers a trendy casual dining atmosphere and has 43 points of presence
in trendy locations across India.
27
Haldirams is one of Indias largest sweets and snacks manufacturers, based in Delhi, India.
28
Bikanervala is a chain of traditional restaurant in India which specializes in ethnic Indian food
specially sweets and snacks.
29
Nirulas is Indias oldest fast food restaurant chain, based in North India and most popular in
NCR Delhi. It specialized in Desi (local) version of western fast food as well as offered Indian
cuisine and casual dining.
109
ultimately satisfied by desi food, no matter how many pizzas or burgers he eats.
commented Shyam Sunder Aggarwal, MD, Bikanervala [16]. Even traditional
entities like the Bangalore based MTR Restaurant30 and the Chennai based
Murugan Idli Shop31 (MIS) were looking at Delhi and Mumbai, for the first time
in 80 years, according to Hemamalini Maiya, managing partner, MTR
Restaurants.
The scramble by global food companies into Indias fast food sector intensified
as several U.S. chains announced their plans to enter the country, in the hope of
tapping the surging spending power in Asias third largest economy. William
Edwards (Edwards), chief executive of EGS, which handled Dennys Corps32
international expansion announced the plans to make an Indian foray in 2012, and
their constant effort to set up a supply chain network that would help them customise the offering to suit local palates with menus stripped free of beef and pork
but focused on fish and vegetarian dishes instead. In India we are planning to
have regional licensees with 10, 25 or 50 units, Edwards said, adding that every
10 units required an investment of about $5 million. Pollo Tropical of Carrols
Restaurant,33 known for Caribbean flavored chicken, Applebees and Johnny
Rockets,34 known for its hamburgers, were also looking to cash into the Indian
quick service restaurant market worth $13 billion. Others wanting a foothold
included Wendys,35 Arbys International,36 CKE Restaurants with Carls Jr37 and
30
Mavalli Tiffin Room (commonly known as MTR) is the brand name of a food related
enterprise located in India. It is famous for the MTR restaurant located on the Lal Bagh Road in
Bangalore and also for the pre-packed food articles which are sold in packets having the MTR
brand. MTR also claims to be the inventor of the popular South-Indian breakfast item, Rava idli.
31
Murugan idli shop is considered among the best to taste South Indian dishes. Idly, Dosai and
Meals are enjoying the prominent positions among the menu of a south Indian.
32
Dennys Corp is a full-service coffee shop/family restaurant chain. It operates over 1,500
restaurants in the United States. Dennys is known for always being open, serving breakfast,
lunch, dinner, and dessert around the clock. .
33
Pollo Tropical is a fast food restaurant chain specializing in the Floribbean cuisine of South
Florida (a fusion of Florida cuisine and Caribbean food). Pollo Tropical is owned and operated by
Carrols Corporation. The chain has its headquarters in Kendall, unincorporated Miami-Dade
County, Florida.
34
Johnny Rockets is an American restaurant franchise whose concept is to create a classic
American restaurant atmosphere. The theme is the diner-style restaurant that had become a
common sight by the 1950s.
35
Wendys Old Fashioned Hamburgers is an international fast food chain restaurant founded by
Dave Thomas. As of March 2010, Wendys was the worlds third largest hamburger fast food
chain with approximately 6,650 locations.
36
Arbys is a fast food restaurant chain in the United States and Canada that is a wholly owned
subsidiary of Wendys/Arbys Group. It is primarily known for selling roast beef sandwiches and
curly fries. The companys target market attempts to be more adult-oriented than other fast food
restaurants.
37
CKE Restaurants, Inc. is the parent company of the Carls Jr., Hardees, Green Burrito, and
Red Burrito restaurant chains.
110
Focus Brands with Schlotzskys Deli,38 all known for sandwiches and burgers.
BannaStrows Crepes and Coffee,39 Moes Southwest Grill40 and Carvel Ice
Cream41 were also in line [19]. President of Franchise India, Gaurav Marya,
comments that India is the biggest consumption market in the world. Even chains
like Dunkin Donuts,42 Popeyes Chicken,43 Pizza & Co,44 Swensens45 and Burger
King46 are in talks with local partners to enter India [16].
Growth and expansion plans from the competitors were not the only hurdles, B.
Narayanaswamy, president, Ipsos Indica Research47 commented that, One of the
biggest questions is whether restaurants can localize as every region of India has a
different taste. Thus even the selling ethnic food on a national scale hadnt been
easy in a country which was historically used to a variety of dishes. Indian consumers are price conscious as well. Therefore compared to a basic burger, say a
thali was available for Rs. 50. To counter such an issue, Dominos re-launched its
Pizza Mania offer, serving pizzas at Rs. 35 [17] Not only did Dominos get into
price reduction, so were McDonalds and other players.
The changing lifestyles of young Indians also posed difficult problems as well
as opportunities for growth. Trying to reach to customers even when they are
travelling, fast food chains had opened their outlets on a variety of locations
including highways, malls, airports and metro stations. With limited time, customers need to be tapped wherever they go, says Niren Choudhary, MD, Yum!
Restaurants India adding that the company had set up express delivery counters at
airports. Even Sagar Ratna CFO K.S. Suresh expressed his desire of exploring an
38
Schlotzskys is a privately held franchise chain of restaurants, specializing in sandwiches,
headquartered in Downtown Austin, Texas. As of November 20, 2006, Schlotzskys has nearly
380 franchised and company-owned locations in 36 states in the United States and in six other
countries around the world, generating $210 million in systemwide revenue.
39
BannaStrows is a franchise concept that focuses on a menu of Crepes and Waffles, cooked to
order in front of its customers for a wonderful show.
40
Moes Southwest Grill is an American chain of fast casual style Tex-Mex restaurants
headquartered in Atlanta, Georgia.
41
Carvel is an ice cream franchise owned by Focus Brands. Carvel is best known for its ice
cream cakes, which feature a layer of distinctive crunchies. It also sells a variety of novelty ice
cream bars, ice cream sandwiches and soft serve ice cream.
42
Dunkin Donuts is an international doughnut and coffee retailer founded in 1950 in Quincy,
Massachusetts by William Rosenberg.
43
Popeyes Chicken & Biscuits (sometimes named Popeyes Louisiana Kitchen or Popeyes
Chicken & Seafood; often referred to as just Popeyes) is a chain of fried chicken fast food
restaurants, owned since 1993 by the Sandy Springs, Georgia-based AFC Enterprises.
44
The Pizza Company is a restaurant chain and international franchise based in Bangkok,
Thailand.
45
Swensens is a global chain of ice cream restaurants that started in San Francisco, California.
46
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants
headquartered in unincorporated Miami-Dade County, Florida, United States.
47
Ipsos Indica Research is an independent company which ranks fifth among global research
companies.
111
express model by next year 201. Currently two people spend an average 30 min
in the restaurant. This will reduce the time to 12 min approximately, Suresh said,
highlighting that home delivery is another big area, growing at 15 to 20 % [16].
The problems were aggravated with the high cost of real estate. Added to the
rising input costs; companies claimed that their margins were getting squeezed.
Expert reports indicated that, while the global standards were 10 to 15 % of sales
as rentals, in India it went as high as 20 to 25 % [16].
Road Ahead
By 2011, most fast food brands had moved into the phase II of their expansion in
India, which is penetration. Phase III was marked by the saturation point, where
companies were required to overhaul menus, at least partially, and innovate. Much
of the second phase growth came from tier II and III cities where eating out was
still an occasion, experts said.48 But, Bakshi, said otherwise, We dont plan to
tweak our menu too much. Now we will grow to new areas and increase our
concentration in areas where we are less spread. The response from tier II and III
cities was overwhelming he added. In 2010 McDonalds India opened an outlet in
Amritsar. Consultants said it was a city which loved Punjabi food, so the company
opted for a smaller, 100 cover set up. Six months later, Bakshi felt a second
restaurant was needed [18].
Questions
1. Traditional fast food retailers dominated the market when McDonalds entered
India. What made it so challenging for them to change the consumer
perception?
2. Why do you think that McDonalds makes a constant effort to train their
employees and also to educate customers?
3. Wherever McDonalds went, they tried to localise their products and services.
Do you think that it is a good strategy in India given the competitive scenario
and the varied tastes and preferences of the customers?
4. What is more important to customers? The service products or the service
experience at McDonalds? Discuss.
48
indiafranchiseblog.blogspot.com.
112
References
1. Rediff.com (2011, January 25). Fast food industry booms in India. http://www.rediff.com/
money/report/fast-food-industry-booms-in-india/20110125.htm
2. Sharma, A. (2011, January 25). Fast food industry on fast track. news.in.msn.com
3. Kulkarni, S., Lassar, W., Sridhar, C. & Venkitachalam, A. (2009). McDonalds ongoing
marketing challenge: Social perception in India. OJICA-Online Journal of International Case
Analysis, 1(2).
4. Ganguly, D. (2002, February 25). Blowing hot and cold: Challenges facing fast food chains in
India.
http://www.just-food.com/analysis/challenges-facing-fastfood-chains-inindia_id93659.aspx
5. Lahoti, N. (2010). McDonald. http://www.scribd.com/doc/26816297/McDonald-201-0
6. Kaimal, S. (2009). A study of the Marketing Strategies of McDonalds with special reference
to Indore, MBA Dissertation, Govindram Seksaria Institute of Management and Research,
Indore
7. India Franchise Blog (2010, May 17). Growth of the India fast food industry and the
opportunities it offers. http://www.indiafranchiseblog.com/2010/05/growth-of-india-fastfood-industry-and.html
8. Adgully Bureau (2011, February 17). McDonalds happy price menu spreads happiness.
http://www.adgully.com/mcdonald-s-happy-price-menu-spreads-happiness-45823.html
9. Exchange4media.com (2008, March 29). McDonalds carries forward the baap-beta saga
10. Business Standard (2009, April 23). McDonalds launches special offer to cash IPL frenzy.
http://www.business-standard.com/article/companies/mcdonald-s-launches-special-offer-tocash-ipl-frenzy-109042300148_1.html
11. Petrun, E. (2007, April 2). Wheres the beef? CBS News. http://www.cbsnews.com/2100500522_162-2640540.html
12. Mathur, S. (2011, February 6). McDonalds spices up products for Indian vegetarians.
McDonalds Spices up Products for Indian Vegetarians
13. Chaturvedi, P. (2008). How McDonalds evolved its marketing in India. http://ipm.ge/article/
How%20McDonalds%20evolved%20its%20marketing%20in%20India_ENG.pdf
14. Ganapati, P. (2004). Home delivery from McDonalds now! Rediff. http://uswww.rediff.com/
cms/print.jsp?docpath=//money/2004/apr/08spec1.htm
15. Indiaretailing.com (2008, April 10). McDonalds tie up with vCustomer corporation. http://
www.indiaretailing.com/News.aspx?Topic=1&Id=1813
16. Vaish, N. (2010, May 7). Taste of growth. www.indiatoday.intoday.in
17. Jain, V. (2009, April 14). Affordable meals drive sales at fast-food chains. http://
www.livemint.com/Companies/B5vbOgO2ZOhMANyrayIEaK/Affordable-meals-drivesales-at-fastfood-chains.html
18. Punjab Newsline (2009, December 24). McDonalds India to open more restaurants cum
drive thru in Punjab. http://punjabnewsline.com/news/node/16353
19. Nandita B. (2011, April 11). U.S. fast-food chains bet on India to drive growth.
www.reuters.com
Case Study 12: Shangri-La Hotels

Expanding to Non-Asian Markets
Introduction
In the past two decades, brands from emerging markets have made significant
inroads into developed markets, including those in the tourism industry [1]. Brands
from emerging countries increasingly market their brands with the ambition of
positioning them as global brands [2]. This case study illustrates the expansion of
the Shangri-La hotel group as a good example of emerging markets brands
expanding to the Western markets. The Shangri-La group was a Hong-Kong based
hotel group, focusing on luxury hotels. This case study pointed out the market
entry challenges the Shangri-La group faced when it entered its first non-Asian
market in Australia. As the case study illustrated, one of the biggest challenges
faced by the Shangri-La group was preserving its Asian brand identify while
adapting to the cultural differences in a new market. This case study also showed
some possible challenges an emerging market brand might face before reaching
cultural integration in a new market.
Company Background
The Shangri-La group established its first deluxe hotel in Singapore in 1971. Today,
this Hong Kong-based hotel group is one of the Asia Pacifics leading luxury hotel
groups that own 75 hotels and resorts throughout Asia Pacific, North American, the
Middle East and Europe, with a room inventory of over 30,000 [3]. New hotels
under development of the Shangri-La group are in mainland China, India, Malaysia,
Mongolia, Philippines, Qatar, Sri Lanka, Turkey and United Kingdom. The Shangri-La group has four hotel brands including the Shangri-La hotels, Shangri-La

113
114
H.-P. (Sophie) Yang
resorts, Traders Hotels and Kerry Hotels. In 2003, the Shangri-La group entered its
first non-Asian market in Sydney, Australia. Following that, other non-Asian
markets the group had expanded into included Dubai, New Delhi, Vancouver and
Paris. The Shangri-La group believes in the unique characteristics encapsulated by
Asian hospitality, which shapes its philosophy Shangri-La Hospitality from a
caring family, which differentiates this Chinese hotel group from other Western
competitors.
Market Entry Challenges

The biggest challenge faced by the Shangri-La group in its expansion into nonAsian markets was preserving its Asian brand identify while adapting to the
cultural differences in new non-Asian markets. This case study uses the example of
the Shangri-La group expanding into its first non-Asian market in Sydney, Australia, to point out some possible challenges a Chinese company might face before
reaching cultural integration in entering a new market. The three key challenges
identified by the management of the Shangri-La group in entering the Australian
market included [4]:
Restrictive Workplace Legislation

The management of the Shangri-La group found the Australian workplace legislation being quite restrictive compared to Asia, as it focuses more on centralised
and formalised-based legal adversary relationship. Therefore, it is a challenge to
get Australian staff to be flexible at work, such as getting a maid to change a light
bulb or do something like that, which is different from Asia.
Different Workforce Composition

The composition of the workforce in the Australia hotel industry is different to
Asia, as nearly two-thirds of staff are either part-time or casual, whereas the staff in
Asian locations are mainly full-time. Such staffing composition has implications
on training outcomes and motivation.
Case Study 12: Shangri-La Hotels Expanding to Non-Asian Markets
115
Different Cultural Values

Asian countries like China, Taiwan and Singapore are more collectivistic in cultural values, whereas non-Asian cultures such as Australia are more individualistic. Moreover, Western cultures, such as Australia, United Kingdom and United
States, have smaller power distance than in Asian countries [5]. The management
of the Shangri-La group noted that their Asian employees think their guests have
higher social status than them and will treat guests very respectfully while Australian staff would think that they are doing a job to serve the guests but they are
equal in status.
Although the Shangri-La group had training contents that were widely used in
Asia, the management of the Shangri-La group was willing to adapt the training
contents as well as after-work social activities to suit the needs of their Australian
employees. The management of the Shangri-La group also found the strengths of
Australian employees differ from their Asian counterparts in areas like empowerment and anticipation of customer needs. Moreover, it was noted that Australian
employees learn quicker in the training session and require less repetition of
concepts when compared to Asian staff [6]. The above observations led to the
redesign of training contents and adaptation of company communications,
including accepting exceptions to organisational routines, such as reducing the
training sessions as well the repetition in the training in Australia. Those adoptions
all contributed to the preservation of the Shangri-La groups Asian brand identity
and the success of this Chinese parent company when expanding into a non-Asian
market like Australia.
Conclusion
The Shangri-La group repositioned its brand label from Asian hospitality to
Shangri-La hospitality after entering the Australian market. Chinese companies,
like the multinationals that have come to China over the past two decades, are
reaching for opportunities in new markets abroad. Similarly, they will have to
acclimate to new surroundings, just as the foreign companies that entered China
did. In terms of adaptation, two key adaptations Chinese companies often need are
adapting organisational culture and balancing cultural norms [7]. Firstly, many
Chinese companies need to redesign organisational culture in their expansion
beyond China, as many of them are still organising from the top-down, and the
headquarters is the nominal centre where decisions are made. Secondly, Chinese
companies often need to find a balance of cultures as they globalise, because
similar to the case study of the Shangri-La group discussed above, they will face
the challenge of combining Chinese and Western forms of communication and
cultural norms. For many, this will be one of the greatest obstacles to global
integration and to performance in global settings.
116
H.-P. (Sophie) Yang
Questions
1. Discuss the market entry challenges faced by the Shangri-La group in its
expansion into the Australian market.
2. Explain the common adaptations Chinese companies might need in entering the
Western markets.
3. Discuss the possible challenges facing by emerging markets brands when
expanding into a Western market.
References
1. Guzmn, F., & Paswan, A. K. (2009). Cultural brands from emerging markets: Brand image
across host and home countries. Journal of International Marketing, 17(3), 7186.
2. Melnyk, V., Klein, K., & Volckner, F. (2012). The double-edged sword of foreign brand names
for companies from emerging countries. Journal of Marketing, 76(6), 2137.
3. Shangri-La Hotels and Resorts (2012).Retrieved November 1, 2012, from http://www.shangrila.com/corporate/about-us/milestones/
4. Hoffernan, T., & Droulers, M. (2008). East and west: The successful integration of cultures at
Shangri-La, Sydney. The Marketing Review, 8(3), 297309.
5. Hofstede, G. (1980). Cultures consequences: International differences in work-related values.
London: Sage Publications.
6. Hoffernan, T., & Droulers, M. (2008). East and west: The successful integration of cultures at
Shangri-La, Sydney. The Marketing Review, 8(3), 297309.
7. Dietz, M. C., Orr, G., & Xing, J. (2008). How Chinese companies can succeed abroad.
McKinsey Quarterly, 3, 2231.
Case Study 13: Marketing the $35 Akash

Tablet
Ramendra Singh and Sanjit Kumar Roy
It should not require technologists to use computers, that it

should be a common mans thing.
Steve Jobs
Introduction
In April 2006, a U.S non-profit organisation approached the Indian government
with a proposal to purchase their device with an offered price of US$100
(approximately 65) device. The device was similar to a laptop but with less
functionally and specially designed to target underprivileged school children. In a
developing country like India, where 75 % of the people live on less than $2 a day,
the offered price was a big question in a sense of affordability. The Indian Ministry
of Human Resource Development (MHRD) thought that the ideal price of device
should be less than $50, with a goal of reaching up to US$10 as per Indian
requirements which is of very large numbers. Therefore, the organisation refused
the order saying that producing a device with such an ultra low cost was impossible. This sets the genesis of the mission with an objective of producing a
functional computing device at a cost of around $35/device, which could revolutionise delivery of education in India [1].
The week when the world was mourning the death of Steve JobsFather of
social media, the man who changed our relationship with computers forever, India
was launching its first ever Low Cost Access cum Computing Device. It was
initially named as the Sakshat tablet, later changed to Aakash and officially
launched by former MHRD Kapil Sibal on 5 October 2011 in New Delhi, India.
The name is derived from the Sanskrit word Akasha or Aakash in Devnagri with
several other related meanings like ether, empty space, and outer space. The word
R. Singh
Indian Institute of Management, Kolkata, India
S. K. Roy (&)

117
118
R. Singh and S. K. Roy
in Hindi means sky.1,2 The first version of Aakash was developed jointly by Indian
Institute of Technology Rajasthan and a London-based company DataWind [2]. It
is manufactured by the India-based company Quad, at a new production centre in
Hyderabad [3]. The development of the second version of Aakash is taking place
at IIT Bombay.3
First Prototype
During November, 2006 [4], MHRD started making efforts to design the ultra low
cost device. The ministry requested big players in VLSI (Very Large Scale Integration) design to work upon this mission. Before heading in this direction, the
idea of creating such a device was discussed with a group of experts and Professors
at various IITs like Kanpur, Kharagpur, Madras and Bombay along with IISc
Bangalore and VIT. The ministry nucleated a small team of persons with experience of commercial issues and negotiation and hardware and software designers.
The core team decided to create specifications meant especially for educational
purposes and came up with different prototypes [5]. In July 2008, Minister of State
for Human Resource DevelopmentD.Purandeswari announced that the device
cum laptop would cost around $10. PC World mentioned that the gadget would
initially cost $20 and later $10 as production ramps up.
In February 2009, the first prototype was unveiled during the inauguration of
the national Mission on Education Programme organized by the union HRD
Minister Arjun Singh at Sri Venkateswara University campus, Tirupati, India. The
device was called SAKSHAT, a $10 device cum laptop nearly equal to the cost a
student would have to spend on textbooks per year. However, this controversial
price and lacking photos or videos of the device had doubted the people about its
existence or specifications. The photo presented described that it was a white brick
like device with 10.5 inches in length and width and an onboard memory of 2 GB.
Wires were loosely held inside and were coming out of it with no keyboard and
usable display. There had been a lot of rumours about missing features from
Sakshat. According to Times of India, Sakshat was not a laptop at all but was only
USB storage with 2 GB capacity which could be accessed by user by connected to
a laptop [6].
The core team suffered from a fair amount of criticism and scepticism, both
from within the system and from experts outside. Some vested interests were
publicising reports saying that such a device was not possible. However, the teams
preserved in their task with the single-minded determination and the thought this
PIB Press Release PIB. Accessed 26 July 2010.

http://www.aakashstore.in/2011/11/worlds-cheapest-tablet-aakash-can-turn.html.
3
http://www.fastcompany.com/1839297/how-failed-aakash-tablet-object-lesson-indias-longroad-ahead-tech-innovation. Accessed 17 December 2011.
2
Case Study 13: Marketing the $35 Akash Tablet
119
initiative would not only create an ultra low cost device for the students, but also a
new market niche. It was claimed that this prototype would help build a $60 laptop
at some point in the future.
Second Prototype
In September 2009 [7], MHRD decided to head the task of developing and testing of
this device to Indian Institute of Technology Rajasthan. Dr. Prem Kalra, director of
IIT Rajasthan, accepted the challenge. He had dedicated his school to overcoming a
challenge of connecting the last person of the nation. The focus of Kalras attention
was the question Can the financially worst-off person in India be empowered if
given the basic tools to acquire enough skills to overcome dire poverty. Here the
challenge was designing and making a stripped-down iPad-like tablet usable for
distance learning, teaching subjects and with internet or wireless connection at the
cost of around $35 which the poorest Indian family, saving about $2.50 a month for
a year, could afford given that the government subsidised the rest [8].
The Aakash team at IIT Rajasthan was managed by Kalra along with two
electrical engineering professors, one of whom was from a village that still has no
electricity: Prof. Anupam Gupta and Prof. Sandeep Yadav [8]. They advised a
group of about 170 students in total involved in various parts of the development
and testing. They came up with a prototype which was unveiled on 22 July 2010
by Indian former MHRD minister Kapil Sibal. The price of the exhibited device
was projected at $35, eventually to drop to $20 and finally to $10 [9]. The
specifications shown were 256 MB RAM, 2 GB of internal flash-memory storage
running the Android operating system with features of video playback, internal
Wi-Fi and cellular data via an external 3G modem.
IIT Rajasthan students who were a part of developing team of device had gone
through initial user-testing process. They revealed to authorities that the prototype
would become slow once it heated up after 30 min [10]. But this problem was not
taken in account by the professors of IIT Rajasthan who were leading the project.
Prof. Vivek Vijayvargiya, an assistant professor in IIT Rajasthan, who was part of
the Aakash team, conceded these problems but pointed out that one could not
compare this device with a high tech laptops or iPads.
After being criticised for second time for its missing features and slow processor, the U.S based non-profit organisation One Laptop Per Child (OLPC)
founder and Chairman Nicholas Negroponte, had offered his help in developing
$35 laptop by allowing full access to all of his software and hardware technology
of OLPC with free cost. He had offered this help even after the Indian government
declined the OLPC proposal in 2006. Negroponte warned the Indian government
against making a cheap device only for media consumption rather than an inexpensive one as an education tool focusing on primary level school children [11].
120
Tender Process
The government announced the launch of its $35 laptop on January 15, 2011. The
tender for the ambiguous $35 laptop termed Sakshat had been cancelled. HCL
Infosystemswho was the so called vendor of Sakshat failed to furnish a bank
guarantee of INR60 Crore bank guarantees which was mandatory as per the Indian
governments General Financial Rules, 2005 to idem the government in case a
vendor fails to deliver the project. However HCL said that no information of a
decision been taken was shared with the company and in the tender they only bid
for the latest Expression of Interest. According to a government source and tech
analyst the laptop components alone were costing more than $35 to the vendor
without including any kind of taxes into it. They doubted if the financial disagreement was the reason for tender cancellation [12]. MHRD was left with no
option other than seeking for a new vendor. It started shouting out for bidding
again. Datawind came out as lowest price bidder and won to become the new
vendor for the tablet over several other bidders. It quoted an ex-factory price of
US$37.98 which was close enough to the cost mentioned by the government [13].
About Datawind
DataWind is a company founded in 2001 by two brothers Suneet and Raja Tuli who
live in Canada. The research and development team is in Montreal, Canada, while
the products are mainly sold in the Britain where it is registered as a limited liability
company (LLC). According to Alia Khan, the vice president of British operations, it
sold about 100,000 units of web-searching devices including the PocketSurfer, a
check book sized gadget in 2011. The major products of the company are manufactured in China but this deal with the Indian ministry has changed a little in the
strategy of the company. Unlike other products, the company decided to manufacture the $35 tablet in India itself. Suneet Tuli decided over a telephonic interview
with an executive at Quad Electronics in Secunderabad, Andhra Pradesh, that his
company would be manufacturing the tablets in India for Datawind with the condition that the company would not be identified. For the past 14 years, Quad has
been manufacturing electronics like modems and wireless routers. They have a total
of 900 employees, and manufacture around 700 tablets a day [14].
Finally the development of the device took place in India with some criticism
that it was nothing more than a made-in-China gadget. However, hundreds of
components were sourced from around all over the world. The major countries for
component supply (by value) are as follows: South Korea: 39 %, China: 24 %,
United States: 16 %, India: 16 %, and Taiwan: 5 % [5].
121
Launching Aakash
On 5 October, 2011, the device was finally launched by MHRD Kapil Sibal and
named as Aakash. At the launching ceremony he announced that it was the worlds
cheapest tablet.
Pricing and Distribution
In 2010, as a lowest bidder, Datawind quoted an ex-factory price of US$37.98 and
the government accepted it thinking that the price was merely close to the desired
price. This cost covered all the costs of manufacturing including components and
materials as well. The final price which came in reality was $49.98/unit
(approximately = INR 2,276 at the time of the order). This price includes taxes,
levies, and charges like freight and insurance, servicing and documentation along
with one-year free replacement warranty from the manufacturer apart from other
costs. However, it did not include any subsidy from the Government. On the date
of launch on 5 October 2011, Suneet Singh Tuli, CEO of Datawind said that
Aakash, is the computer for the masses. He also mentioned that the price quoted,
i.e., $49.98 is for Indian government while it is $39.98 if one buys ex-factory.
Mr. Tuli further commented that the price of manufacturing was less than the
target price ($35) but taking care of his companys profitability, it arrived at a
relative higher price. The government had ordered 100,000 units initially and the
real volume break was at two to three million units. There were a lot of questions
about its ultra low price and specification. Answering these questions, Tuli
explained that there were three big reasons behind it. Firstthe technology was
developed with the help of 18 US patents, dozens of other international patents
which shifted the burden of processing and thus reduced the processor cost.
Secondmore vertical integration than the average manufacturer by buying 800
components which was very large in number compared to 50 of others. This
process eliminated the middle ware cost. Thirdmonetising the operating system,
means one need to buy an application from the company app store to install it.
Buying the application would make some money to the firm same way as Apple
makes with iTunes. Combining all these factors had a huge impact on the price.4
By the time it was launched, the government had planned for two series of the
tablet for the retail market. One would be the subsidised student version, called
Aakash and other would be the commercial version, called Ubislate7. The government decided to make the tablet available to students at a subsidised price of
Rs. 1,730($35) against Rs. 2, 999 ($49.98).5 Ubislate7, the commercial version
was to be made available at retail stores from November 2011 onwards.
The Indian government had earlier bought 100,000 tablets at a price of
Rs. 2,250 for giving to secondary students across the country under the National
Mission for Education. These were distributed to all the states with each receiving
3,000 units in order to test in various climatic and usage conditions. At the time of
4
5
http://www.sakshat.ac.in/pdf/Final_FAQ_Aakash.pdf. Accessed 5th oct 2011

Ibid.
122
launch, the tablets were also distributed among 500 students for field trials and
feedback. These students were from different colleges including the IITs, RECs,
BITS Pilani, Teri University among others. Feedback from all the testing would be
used to designing the next version of the device [15].
The government had promised that the Aakash tablet, i.e., government subsidised student version, would be made available through the institutions in they
belong by directly contacting the student cell or Dean, Students Welfare [13].
Media Reviews and Feedback

Aakashs functionality and affordability is a hot deal in India although it has
received mixed reviews upon launch. One of the students who tested the device at
the time of launch said that it was a great device as he has never used laptops
before. Its a whole new experience for those kinds of students. Some other student
told that the best part is its portability since it is unlike personal computers or
laptops. However, there were some issues as well. When one of the students from
IIT tried to watch a video on full screen, it was not possible to rewind or stop the
video once it had started. The tablet hanged and he could not shut it down even
after pressing the button. He further added that the battery was too poor to work
with when the device started functioning again. The IIT students were not happy
with the device and they complained that it was of no use to them as they could not
even listen to the video lectures or open PDF files. A student from TERI University said that using this laptop was a kind of time wastage as the processor was
very slow [16]. One primary sourced student from BITS Pilani told the device
was looking very pleasing like an ipad but it lacked in specifications. The biggest
problem was with its sensitivity and slow processor. The display resolution was
dull and the tablet didnt have any in-built camera or Bluetooth.
(Technical specifications of Aakash Tablet revealed on 5th Oct 2011, in
Exhibit 1).
A student of IIIT-Allahabad wrote in an article of Hungry and Foolish that the
device was aesthetically clean, durable and solid. The two USB ports in the device
was a new feature which is not present in other ipad. The device has resistive touch
screen with a low memory RAM of 256 MB only. He further said that this tablet
could have a wide reach to see more rural penetration than any other device due to
its ultra low cost [17]. A reporter at the VentureBeat said that the device is a kind
of Jugaad6 with a very high technology but the components were cheap and easily
sourced which led to cost saving. The Indian government thinks the $35 Aakash
Android tablet has the power to change the world. After testing one out, wed tend
to agree he added in the report.
An Indian word which mean to make-do.
123
Exhibit 1 Technical specifications of Aakash Tablet revealed on 5th October 2011

S No. Measures
Specifications
1
2
3
4
5
6
8
9
10
11
12
13
Dimensions: 115 (H) * 185 (W) * 8 (D) mm

Weight: 0.34 Kgs
Display
700 (15.5 cm.) LCD Resistive touch screen
800 * 480 pixel
Processor
366 MHz with graphics accelerator and HD video
processor
Memory
256 MB (RAM)
2 GB Flash (Internal storage)
Micro SD card (2 GB provided) supports up to
32 GB (External storage)
Networking and Wireless
Wi-Fi (IEEE 802.11 a/b/g)
Input/Output
2* Standard type A USB 2.0 ports
1* 3.5 mm audio-out jack
1* 3.5 mm audio-in jack
Power and Battery
Built-in 2100 mAh battery
Up to 180 min (mixed use)
AC adapter 200240 V
Operating System
Android 2.2 (Froyo)
Productivity Application
Supported document formats: DOC, DOCX, PPT,
PPTX, XLS, XLSX, ODT, ODP
PDF viewer
Text editor
Images and Video
Image formats: PNG, JPG, BMP and GIF
Video codes: MPEG2, MPEG4, AVI, FLV
Audio
Audio formats: MP3, AAC, AC3, WAV, WMA
Browser and Internet
Xhtml 1.1 COMPLIANT, JAVASCRIPT 1.8
COMPLIANT BROWSER
Separate application for on-line
YouTube video viewing
Safety and manufacturing Standards CE and RoHS certification
Size and Weight
Source Aakash Tablet, http://www.sakshat.ac.in/pdf/Specs_Aakash_LCAD.pdf, Retrieved

October 5th, 2011
Summarizing the whole idea, the most common problems faced by students or
others while using the device wereoverheating (within 1030 min), extra slow
processing, frequent hangs, poor sound quality, lack of user-friendly touch screen,
absence of support for all formats, and inability to install free software available
online. Aakash was much below the expectations of users.
Addressing to all these misunderstandings and problems, Mr. Tuli said that the
company had only supplied 1,000 devices to state coordinators including students
for testing purpose. After hearing the results of testing they would submit their
reports after 4560 days so as to correct the lacking or not working part to improve
the device functionality [18]. However, he had also assured that in near future the
company might come up with an economical capacitive touch screens.
124
Improved Commercial Version

It could be said here that Aakash Tablet did not disappoint the users but neither did
it satisfy their wishes. The commercial version of Aakash, i.e., Ubislate 7 was
scheduled to arrive by November 2011 in retail market. But it did not come by the
scheduled time. A spokesperson of Datawind told that the feedback received from
the testing of earlier student version (Aakash) formed an input into the new
designs and the company decided to improve the specifications, which resulted in
this delay. However they were expecting an improved version of Aakash, i.e.,
Ubislate7+ to be available in retail market by January 2012 [19].
During mid of December, 2011, Datawind announced that the student version
named as Aakash Tablet was available for order online at at Rs. 2,500. The
company also opened their official website for pre-order booking of upgraded
version of Ubislate at Rs. 2,999 at (www.ubislate.com/prebook). According to a
press released, Mr. Tuli told that about 30,000 tablets were put up online on sale
and about 400,000 pre-sale orders for the tablets were received by the company
within three days of sale opening [20]. On December 19th, 2011, Datawind
announced in their website that the first phase of Aakash tablet had been sold-out
completely [41] While online pre booking for Ubislate7+. Looking at this overwhelming response, on 20th December, 2011, Business Today on Online Bureau
commented that the governments programmed to expand education through
information technology had received great appreciations [21]. The commercial
version was put up for just Rs. 499 more than the original version with some
improvement like adding GPRS along with Wi-Fi and fast processor [22]. Datawind had confirmed 1.08 lakh units bookings in India and 4 lakh from dealers
around the world.
(Difference in specifications of Aakash Tablets mentioned in Exhibit 2 and
Exhibit 3).
Exhibit 2 Difference in specifications of Aakash Tablets

Specifications Aakash (Student version)
Ubislate7+ (Commercial version)
Price
OS
Microprocessor
Network
Battery
Made in
Rebate
Replacement
Rs. 2, 500
Android 2.2
Arm11-366 MHz
Wi-Fi
2100 mAh
India
50 % off for Indian students
1 year replacement
warranty
Rs. 2,999
Android 2.3
Cortex A8-700 MHz
Wi-Fi and GPRS (SIM & Phone functionality)
3200 mAh
China
No rebate
1 year warranty and 30 days replacement
warranty
Source Worlds cheapest tablet Aakash goes on sale for Rs. 2,500 Online with One week
Deliverywww.aakashtablet.com, [Online] \http://www.mytechskool.com/2011/12/worldscheapest-tablet-aakash-goes-on-sale-for-rs-2500-online-with-one-week-delivery-wwwaakashtablet-com/[. Accessed 17 December, 2011
Android 2.3 (Gingerbread)

700 resistive
800 * 480 pixels
Wi-Fi and GPRS (SIM and 3G)
Cortex A8-700 MHz ? HD video
co-processor ? graphics accelerator
256 MB
2 GB ? 2 BG Micro-SD
(Expandable up to 32 GB)
2full sized
External USB and front facing camera
3200 mAh
Rs. 2,999
Operating system
Screen
Screen Resolution
Network
Processor
Android 2.3 (Gingerbread)

700 resistive
800 * 480 pixels
Wi-Fi and GPRS (SIM and 3G)
Cortex A8-700 MHz ? HD video
co-processor ? graphics accelerator
256 MB
2 GB ? 2BG micro-SD
(Expandable up to 32 GB)
2- full sized
External USB and front facing camera
3200 mAh
Rs. 2, 999
Operating system
Screen
Screen Resolution
Network
Processor
USB ports
Camera
Battery
Estimated price
RAM
Flash
Aakash LCAD Tablet

(Ubislate7 +)
Specifications
USB ports
Camera
Battery
Estimated price
RAM
Flash
Aakash LCAD Tablet (Ubislate7+)
Specifications
3 USB 2.0 ports

Yes
3000 mAh
Rs. 15, 750
512 MB
2 GB
No USB port
Yes
4000 mAh
Rs. 23, 500
512 MB
16 GB
No USB port
Yes
6930 mAh
Rs. 31, 900
256 MB
16 GB
iOS
1000 capacitive
1024 * 768
Wi-Fi
1 Ghz
1 mini USB port

Yes
600 MHz
Rs. 14, 990
512 MB
512 MB
Android 2.2
700 Capacitive
800 * 400 pixels
3G and Wi-Fi
600 MHz
OlivePad V-T100
1 GB
16 GB Micro-SD, expandable
up to 32 GB
1 microUSB (MHL) v2.0
Yes
Li-Ion 1730 mAh
Rs. 33, 900
Android 2.3.4 (Gingerbread)

S-LCD capacitive
540 9 960 pixels
Wi-Fi, GPS
1.5 GHz
HTC Amaze 4G
No USB port
Yes
3400 mAh
Rs. 12, 999
512 MB
4 GB
Android 2.3
700 Capacitive
800 * 400 pixels
3G and Wi-Fi
800 MHz
Reliance 3G Tab
Samsung Galaxy Tab Apples iPAD
Micro USB port

Yes
2200 mAh
Rs. 9, 990
256 MB
8 GB
Android 2.2
700 resistive
800 * 400 pixels
3G and Wi-Fi
1 Ghz
Beetel Magiq
Fedora Linux
Android 2.2
7.500 TFT (Not touch)
700 capacitive
1200(H) * 900(V) 200 (DPI) 1024 * 600 pixels
Wi-Fi
3G & Wi-Fi
433 MHz
1 Ghz
OLPC
512 MB
4 GB Micro-SD, expandable
up to 32 GB
1 USB 2.0
Yes
4000 mAh
Rs. 5, 000
Android 4.0 (Ice cream sandwich)

700 capacitive
1024 9 600 pixels
Wi-Fi, 3G
1 GHz
MIPS NOVA7
Exhibit 3 Competitions in specifications of existing tablets with Ubislate7+

125
126
From IIT Rajasthan to IIT Bombay

After launching the Aakash tablet, Datawind was now working on making a tablet
with capacitive screen unlike Ubislate7+ which have resistive screen. However,
Ubislate7+ was not launched yet. During January 2012, the development story took
a twist, with a scrap breaking out between the manufacturer, Canadas DataWind
Ltd, and its erstwhile assembly partner, Hyderabads Quad Electronics Solutions
Pvt. Ltd. Datawind claimed on Quad Electronics that it has signed an agreement
with IIT Rajasthan to manufacture Aakash competitor, which they were unsuccessful in making. DataWind executives were tipped off after they saw a senior
Quad Electronic executive on the daily flight to Jodphur, and the Quad Electronic
executive tried to hide his face with a newspaper. In April 2012 Quad Electronic
confirmed that it had signed a memorandum of understanding (MoU) with IIT
Rajasthan. The agreement was not for producing a competing tablet but for technical expertise for products, services and IP [intellectual property] creation. Mr.
Tuli further added that the Quad executive said his company assembled 20,000
tablets, but stopped delivery after 10,000 tablets. Over this Quad executive said that
they had sent a legal notice to Datawind for not paid yet for tablets delivered [23].
In late February, a committee headed by R. Chandrashekhar, a senior bureaucrat in the governments Information and technology department, met to discuss
about this issue. Finally the government decided to transfer the project from IIT
Rajasthan to IIT Bombay. Mr. Kalra, the director of IIT Rajasthan was asked to
resign as leader of the project. In March, 2012, Aakash project was transferred to
IIT Bombat. It is now being led by Deepak B. Phatak, a professor at IIT Bombay,
who set up the Affordable Solutions Lab in 2003, which aims to develop low-cost
technological solutions. He is very optimistic about the future of Aakash and wants
to start from scratch. On April 13, IIT Bombay sent a single-party tender to
DataWind for 100,000 tablets. Datawind has no relation with Quad now and has
appointed new partners to assemble the tablet [24].
The Controversial Tablet

From December 2011 to March 2012, when online bookings for the Aakash was
opened up, thousands of people had booked the tablet and they ended up disappointed with the companys failure to deliver Ubislate7+ on time even after they
had paid an advance. These customers claimed that they were not even able to find
their status of booking as the toll-free number was not working and there were no
replies to their emails. They wondered whether this would turn out to be a failed
government project. Tuli explained that the delay in launching Ubislate7+ was due
to their search for a new partner. He assured that the deliveries would be made for
pre-paid customers shortly and if customers wished not to wait any more then the
company would offer full refunds. In his mail to the Mint, Tuli said that a large
127
majority of customers were still making pre-bookings. However, he also said that
anyone who had paid in advance heard back from the company within 48 h and was
given an email address and phone number to call instead of the toll-free number.
But the customers were still complaining in the online consumer forums [23].
Aakash-2 on the Way

Finally after a long wait of almost one and half year from the time of launch of the
Aakash tablet, the commercial version of Aakash 1- Ubislate7+ was launched on 26
April, 2012. The company decided that the pre-booked orders would be given priority and that the paid ones would get their devices shipped by the end of the month.
The basic unit was priced at Rs. 2,999. The Ubislate7C was also launched, which is
now known as commercial version of Aakash-2 (a project which had been transferred
to IIT Bombay). It has an advantage of having a capacitive screen as compared to the
resistive screen of Ubislate7 ? and the price has been kept at Rs. 3,999 [25].
On 25 June 2012, Aakash-2 was launched in IIT Bombay. Upon launch, the
government said that the institute would be handling over 100,000 of the improved
tablets to students and teachers at engineering colleges across the nation and it was
expected to begin in July 2012. It is an improved version with upgraded specifications and faster processor while maintaining the cost. It has a much better
capacitive screen and battery power of approximately 3 h unlike Aakash-1 and the
price was negotiated from Rs. 2,263, down from Rs. 2,276, said by Prof Deepak
Phatak, who is the team leader of Aakash. He also told about the Aakash lab which
has been set up in the department of Computer Science at IIT Bombay. The motive
behind this was to drive the project so as to make Aakash a ubiquitous tool in the
hands of students, at all levels of their education. The team consists of around 150
people, including faculty, Ph. D. scholars, M Tech students and project engineers.
The institute has partnered with Centre for development for advanced Computing
(CDAC) for testing the development of educational applications and deployment of
tablets in engineering colleges for field testing of devices through actual users. The
new aim of the institute is to develop useful open source applications and contents
especially in Indian languages. Aakash-2 has been loaded with few more specifications like accessing video lectures, permitting to run computer programs like C,
C++, Python and open source package Scilab. This effort emphasises that it is not
just an access device but also a regular computer for learning programming. IIT
Bombay has a long term vision to work on Aakash research and developments and
it hope to contribute significantly to this great initiative by the government [26].
At the end of June, 2012, the government had announced that Aakash tablet was
in manufacturing process by Datawind and supposed to be released in August,
2012 [27]. During the first convocation of Birla Institute of Technology and
Science (BITS) Hyderabad campus, on 12th August, 2012, Kapil Sibal while
addressing, announced that the Aakash-2 is going to be made available very soon
[28].
128
At the end of August 2012, when a group of students at IIT Bombay were told
that government is giving 50 % discount on Aakash table, i.e., they would be
charged below Rs. 2,000, their reactions were unbelievable. Each and everyone
from the group decided to buy the tablet, though they knew that the processor
would be relatively slow. When one of the students was asked the reason behind,
she told in a very casual way that the tablet was very cheap irrespective of the
features and even if it did not work properly, she could at least get a chance to try
it. As the group was from IIT Bombay itself, they easily enquired about the Aakash
by giving a call to Aakash lab at Computer Science department of the institution.
But they came to know that the student version of Aakash has not been released
yet and they need to wait for few more days to get it, they got disappointed.
Market and Competition

The news about the Akash tablet has attracted a lot of attention by the newspapers,
news channel and the internet since 2008 when Mr. Sibal had announced the
inception of idea of 700 tablet in only $10. Since then Aakash had received around 3
lakh pre-launch booking orders for Ubislate 7+, the commercial version. Even the
retail bookings had exceeded the governments estimated 250,000 tablets in a PC
market dominated by Apple, Samsung and Reliance. Datawind had also launched
an applications design competition in November 2011. The best applications
would feature in the tablet and the winners would also win a money award of Rs. 1
lakh. Datawind in association with Nasscom Foundation had also conducted
contest wherein ten NGOs had an opportunity to win 20 tablets, mainly to improve
their operations and programme implementation [29]. To publicise the tablet,
Indiaweb.in sponsored an Aakash give away contest in Nov-Dec 2011, in which
five winners were awarded Aakash tablets [30].
To increase its popularity amongst the students, government of India is also
offering almost 50 % discounts to the students in Mumbai to buy the Aakash tablet
at a price of only Rs. 1,138 instead of the actual retail price of Rs. 2,500. Every
university across India has been informed by the government about the Aakash
tablet and are been asked to give suggestions on technical specifications, subsidies
and any other relevant matter [31].
From the date of launch of online booking system, Aakash tablet was sold out
completely in three days only and then to promote the Commercial version of
Aakash, Datawind started online campain to get maximum orders. Aakash Store
website also ran a contest from 23 December 2011 to 31 January 2012, in which
the people were asked to answer a multiple type quiz on specification and features
of the Aakash tablet [32].
129
Emerging Markets for Aakash

In recent years, the notebook personal computer has gained significant amount of
market share among laptops, largely due to its more user-friendly size and
portability. According to Goldman Sachs, PC growth would be 11.4 % in 2011 and
9.5 % in 2012 worldwide without tablet cannibalisation [33]. Reliance Communications group head for marketing and branding Sanjay Behl said the tablet
market has doubled in a year. The first quarter of 2009 to the first quarter of 2010
saw a 72 % growth in Netbook sales. E-commerce in India has hit 10 billion in
2011 as per published in Asia Tech News for the World [34].
Aakash hit global market after an official announcement that the Indian government would be distributing this cheapest tablet to students across India, many
foreign countries like US, Panama, Malaysia, and Thailand etc. had shown interest
in the tablet. Panama had approached India to buy one lakh units of Aakash tablets.
Malaysia had approached HRD minister of India to release the know-how to
produce Aakash tablets locally in Malaysia but the ministry declined this request.
Thailand had directly approached the Datawind Company for the manufacture
of one lakh tablets. There was even a personal invitation from the President of
Sri Lanka to Datawind. This tablet has received a strong demand, not because of
its features but because of its low cost price. The Indian ministry has not refused
the various requests by these countries but pointed out that they wanted to produce
more tablets for Indian customers first [35].
It first landed in America in the last week of October 2011 in the hands of a
visiting professor at the University of California at Berkeley and Duke, Vivek
Wadhwa, who is researching the Indian education system and is a columnist with
the Washington Post. He received an Aakash tablet from Kapil Sibal, HRD of
India to the VentureBeat office.
Aakash has evinced a lot of interest among several other world leaders and
international organisations like UNESCO and World Bank. During the visit to
UNESCO, Kapil Sibal, in the first week of November 2011 said that the president
of the general council displayed the Aakash tablet to the audience while the World
Bank showed it among the board of directors. Several prime ministers and ministers wanted it for their country in thousands. India was also offered for collaboration from International Finance Corporation, which coordinates its activities
with other institutes of the World Bank group, for improving the device [36].
In April 2012, Philadelphia, which is sixth largest US state in terms of gross
domestic production, has showed interest in Aakash tablets. Philadelphia-based
Wilco Electronics was negotiating with the Indian MHRD to procure the tablets for
use by school children and disadvantaged ones. Brigitte Daniel, executive vice
president of Wilco, came to New Delhi late last year to personally see and understand how the tablet works and was quite interested in the project. According to her,
Aakash is in demand across the US. She believes that Aakash tablet could potentially
make an impact within the US National Broadband plan, which aims to bridge the
digital divide for low-income and under served communities and schools [37].
130
Competitive Environment
In the present scenario, where low-price tablet strategy plays vital role to attract a
set of tablet users, it is thrilling the world by imagining the level of competition in
Tablet industry which would result in low cost devices only to attract more and
more number of customers. The international media seems to love tagging India as
the cheapest market, especially after the launch of Tata Nano. A similar story
followed the launch of Aakash Tablet, dubbed as Worlds cheapest tablet and
priced at Rs. 2,999. This news created some notable fuss in the Tech market, due
to the fact that the features and specifications were quite good with respect to its
price. The Aakash tablet has a promising future in India but when it comes to take
it market to the different countries especially to the west, the tablet may suffer a
huge competition with giant tablet makers. But as being affordable this tablet can
easily be used by anyone and thus creating a huge threat to the other market player
in tablet manufacturing. While comparing Aakash with similar offering from
Apple or HTC Amaze 4G, one should keep in mind that they are targeted at
different market segments.
There are many buyers in the market looking for tablet PCs who see sense in
investing in a low-cost tablet. This reason keeps vendors like Datawind, Beetel,
HCL, Milagrow, Spice, Reliance and Lenovo, among others, optimistic. Indian
consumers bought around 85,000 tablet PCs in 2012, and the market has already
attracted over 15 players with tablet PC models as per the CMR data. Ajit Joshi,
CEO and MD of Infiniti Retail (Croma) told that low cost tablets PCs are offering a
choice for the customers [38].
Research indicates that Aakash may not actually be the worlds cheapest tablet.
There are several other manufactories in countries such as Taiwan and China who
are producing tablets at the same affordable consumer price of just $39.71 with
faster processors. The cheap tablets in China primarily come with WiFi. At an idea
exchange session with Delhi Technological University, Tuli mentioned that Chinese companies like Huawei and ZTE many compete with Aakash at any level. In
December 2011, MIPS Technology, a China based company launched a new
Tablets called Nova 7 with Googles Android 4.0 and priced it $99. Very soon it
will be launched in India and will be a huge competitor in the low cost market
[39]. Bangalores based company, Allgo embedded system, has also launched a
tablet in 2012 called Stamp Tablet. This tablet is based on the Android operating
system and the cost is around Rs. 8,000. The specifications are similar or better
than Aakash but this tablet is not designed for the retail market yet and it targets
business customers, with a delivery time of about eight weeks [40].
Aakash is also being pitted against other low-cost tablets such as the Beetel
Magiq and the Reliance 3G Tab. Reliance proposes to charge 1 GB of data for just
Rs. 10 which is about one tenth charged by existing 3G technologies. Their 4G
tablet is priced nearly one-fourth of what is being offered by well known phone
131
makers such as HTC, Dell and Motorola. Delhi-based Bharti Groups Beetel is
also heating up the competition by launching its low-cost Android 2.2 tablet called
Magiq, an upgraded version of the Huawei IDEOS S7, priced at Rs. 9,999 in
2011 [41].
This competition is getting intense with the entry of new vendors and tablets.
The vendors are not only targeting on hardware but also at education providers
with full package offers for the student community. When it comes to educating
the underprivileged village children, Aakash has a big competition with OLPC too,
though there is little in common between the MHRDs $35/$50 device and
Negropontes $100 OLPC. MHRD is going for the urban and college crowd while
OLPC is targeting the village school goers. OLPCs dominance in the learning
learning segment is not just about its hardware, which might be Aakashs
weakness. Its about OLPCs entire ecosystem that comes with every application
imaginable and works in the villages, tried and tested by three million children
over the past few years. Another competition for Aakash is end-to-end desktop
virtualisation company, Ncomputing, which has positioned 420,000 Ncomputing
virtual desktops in major state of Andhra Pradesh, Bihar, Punjab and Maharashtra.
It claims that the low-cost Aakash tablet is not the answer to the woes of Indias
education sector and that the Government should adopt the Ncomputing model to
save customers and taxpayers money as its technology saves energy and reduces
costs by up to 7590 % [42].
The two biggest competitors of Aakash are the latest entrants: Micromax and
HCL Infosystem. In mid 2012, Micromax unveiled a tablet PC called Funbook
with a price of Rs. 6,499. While HCl Infosystems introduced the MyEdu Tab
priced at Rs. 9,999. Micromax is trying to make educational content available to its
tablet by partnering with Pearson and Everonn. HCL MyEdu will also have
National Council Of Educational Research And Training (NCERT) K12 mapped
contents containing free NCERT text books both in English and Hindi for standard
I to V students with animation in 2D and 3D. WishTels IRA tablets also comes
with eBook reader application and course contents for CBSE, ICSE, state boards
along with higher engineering and medical education stuffs and cost between Rs.
4,000 and 5,000 [43].
Aakash has created a niche where many more competitors would have to join
the price and specification war, resulting in many different specifications. However, an increasing number of low-cost tablets is certainly adding to the confusion
for the consumers. The ultimate winner will be the Indian student and anyone who
had not been able to afford such computing devices. Apart from the price, the
functionality of the Aakash and availability of suitable educational content targeted for the device through the Sakshat Portal would be the USP of this device.
This device could then become a leading light in that direction. For normal customers, the Indian tablet market, especially the budget-tablet segment, is currently
witnessing an intense competition
(Specifications of existing tablets with Ubislate7+ are shown in Exhibit 3).
132
Aakash as an Educational Tool

India is a developing country and along with the development of technologies,
population here is also increasing at a rapid rate. It crossed 1 billion in 1997 to
more than 1.2 billion in 2011 as per the data of World Bank. According to 2001
census figures, literacy levels in India are at 63 %, lagging far behind most other
developing nations, including Chinawhere the figure is 93 %. According to a
recent report, the number of Internet users in India grew 15-fold between 2000 and
2010, still, only 8 % of Indians have access to it compare to nearly 40 % in China.
Some 19 million people subscribe to mobile phones every month, making India the
worlds fastest growing market, but it is mostly from the wealthier segment of the
population. An expert on the use of communications technology for development
said the budget tablet could also be used to deliver distance learning in rural areas
and among students [44].
Mr. Kapil Sibal is making an effort to enacting the Right of Children to free
and Compulsory Education (RTE) Act, which will provide free and compulsory
education to every child between 6 and 14 years. Through the Sarva Shiksha
Abhiyan (SSA) program, Indias investment in basic education has achieved an
enrollment rate close to 100 % over the past decade (net enrolment ratio of primary level education was 98 % in 20092010). Mr. Sibal also planned to increase
the number of accredited institutions and open up education to the private sectors,
offering dual degree programs to increase the educational options for students in
collaboration with foreign universities as a part of the higher education reform. He
believes that this will spur more competition among universities which may cause
enhancement in the quality of education in near future. Under the National Mission
on Education through Information and Communication Technology (NME-ICT),
the government aims to provide high-quality, personalised, and interactive
knowledge modules over the internet in any-time, any-where mode. The purpose
behind could only be served by providing connectivity to all colleges and universities, providing low cost and affordable access cum computing devices to
students and teachers and providing high quality e-content free of cost to all
learners in the Country [5]. Nearly 80 % Universities and Colleges in the country
have already been connected to BSNL. Included in the mission is spending on ebooks and e-journals for students, development of translation tools, upgrades to
educational networks and more PCs for high schools and it is coordinated via the
Sakshat web portal, on which students can register and can then use to monitor
their progress. Nearly 500 webs based and video courses are available and
uploaded on Sakshat, YouTube and NPTEL portals. MHRD has brought in a real
paradigm shift in the educational computing environment seeking education
delivery in any environment at any time without much dependence on regular
power supply and classroom [5].
133
Conclusions
The Aakash tablet is a ray of hope that India can leverage technology to get more
of its 220 million students enough tools to escape poverty and poor teaching. In a
developing country like India which is called a home to 40 % of the worlds poor
[44], the costs for the technology have to be kept low for the benefit reach to
maximum number of people. Due to its affordable price, now every student in
India can have access to world-class lectures and educational content in anytime,
anywhere mode even in the most remote corners of this country without any bound
to classrooma lifetime dream to numerous college students in rural locations in
India. The Idea is to make available this device to colleges and universities at a
50 % subsidy and then to ask the colleges and universities to issue these devices to
financially weak students from the library on the pattern of the Book Bank scheme
[13]. This tablet is an example of a technology where the latest innovations jump
directly into areas where legacy technologies never penetrated. Unique Identification Development Authority of India has approached ministry to collaborate
with Aakash tablets using Aadhar card for establishing identity of students and
their attendance. Laptops in India range from anywhere between $400 to $1000
and average income of Indians are much lower. In an Idea Exchange session held
at Delhi Technological University, Suneet Singh Tuli, explained how Aakash
serves the purpose of a phone, a computer and an entertainment device in India.
According to him, the gap between the Internet subscribers (18 million) and
Internet users (120 million) out of total 1.2 billion populations is due to affordability to buy computer, laptops and Internet access. If assuming 300 million
Indian families, only 10 million would have broadband while 290 million is still
left out [45]. The customs excise duty is 14 % for a computer and 2 % for a mobile
phone in India. So the government has been providing an incentive for mobile
phones and not for computers. Cell phone today is not a communication tool alone
though it is a commerce tool. Tuli once said that If we allow the poor man the
utility, the opportunity, he will create wonders that we cannot imagine. Five years
ago, we would have been surprised if we saw a rickshaw wallah7 with a mobile
phone. Today, we are surprised if we see him with a business card. Tomorrow we
will be surprised if we see him with a website. He will take advantage of the
Internet as a commerce tool, he added [45]. There is a great hope that with
Aakash, more people particularly the countrys youth will have greater access to
technology.
Means Rickshaw driver.
134
Questions
1. Develop a marketing strategy for the Aakash tablet.
2. Design an advertising strategy for the new product keeping in mind the existing
competition in the market.
3. What do you think about the pricing and distribution strategies of Aakash. What
changes would you suggest?
4. Carry out a marketing mix analysis for Aakash using the 4A framework.
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Part V
Marketing Communications and Social

Media Marketing
Introduction to Marketing
Communications and Social Media
Marketing
Anvita Kumar and Carmela Bosangit
Marketing Communications, referred to as the voice of the company and its

brand, is one of the four principles of marketing, which strives to engage the consumers in a dialogue to build brand equity and relationships among consumers [1].
Over the recent years, there is a new imperative to integrate a variety of promotional tools available to the practitioners to reach their consumers with consistent message across the range of media available. These integrated promotional
tools, also known as Integrated Marketing Communications (IMC) [2] was
developed for consumer focused marketing system, which brings together a
number of marketing variables such as distribution channels, financial health of the
market, competition and supporting industries.
Targeting consumers in emerging consumer markets becomes challenging as
most of the practitioners/multinationals entering these markets overlook the fact
that the Emerging Consumer Markets (ECM) differs politically, economically and
culturally from Western markets [3]. It has been observed that industry practitioners often face failure as they ineffectively apply western principles to
emerging markets [4], more often than not reflecting the self-reference criterion
(SRC). Thus, developing IMC has become more complex with the established
importance of emerging markets [4]. For instance, it has been observed that in the
emerging markets many of the factors necessary in IMC are non-existent or in
nascent stages of development. Hence, the following questions become crucial for
the industry: how to optimise IMC-related strategies in the emerging new markets?
Are the existing IMC tools culturally relevant? If not, how much of the strategies
need to be adapted or standardised given the cultural characteristics of a host
market? [5]
A. Kumar (&) C. Bosangit

C. Bosangit

139
140
A. Kumar and C. Bosangit
Extant studies indicate that many of the marketing theories stem from Western
settings with a notion that international generalisations are possible without explicit
reference to socioeconomic, institutional, and cultural contexts [6]. One explanation for this approach is provided by Alden, Steenkamp, and Batra ([7], p. 84), who
posit that a global strategy might be more effective than a local strategy in ECMs
since consumers in these markets tend to admire the economic centre, [7] though
in many instances, the meanings of products and brands may be altered at local
context [3, 8]. On the other hand, London and Hart [9] argue that recognising that
Western-style patterns of economic development may not occur in these business
environments is crucial in ECM [9].
The case studies presented in this chapter are examples of companies and organisations from emerging markets which also competes in order to capture the
EMCs. Central to their strategies is the use of social media which closes the huge
gap between the western multinationals and smaller businesses resources. Social
media has made it possible for a person to communicate with hundreds or thousands
of other people about goods and services and its impact on consumer-to-consumer
communication has been greatly magnified in the marketplace [10]. New media
channels such as Facebook, YouTube, Google and Twitter has threatened long
established business models and corporate strategies but also provide ample
opportunities for growth through new adaptive strategies [11]. Hennig-Thurau et al.
[11] stated that characteristics of new media include: (i) digital (virtually no costs
for producing extra copies of digital products and individuals can easily distribute
their creation ta global audience); (ii) proactive (using new media to contribute to
all parts of the value chain, e.g., reviews on good, testing new product and reporting
flaws, etc.); (iii) visible (consumers activities are seen by others); (iv) real-time and
memory (new media can be accessed by consumers at the time they are produced,
allowing them to share experiences and comments and reviews are also available
indefinitely); (v) Ubiquitous (consumers reach and can be reached by consumers
and companies almost anywhere at any time) and (vi) networks (consumers used
new media to participate in social networks to create and share content, communicate and build relationships with each other). Definitely there are changes to
consumer behaviour, the way customer interacts with companies and even customers transactions and outcomes; and the companies and organisation featured in
this chapter have used these changes as leverages in developing their marketing
communication strategies.
AirAsia, is presented here as an example of a company in emerging markets
that benefitted from deploying and expanding the marketing practices that worked
in the Western context but enhanced definitely by the use of social media in
engaging with their customers. The western low cost business model combined
with innovative marketing techniques such as the Real People, Real Stories
campaign allowing customers to share their experiences on social media has been
fundamental in turning this small budget airline in Asia into one of the global
players. Cathay Pacific Airways, on the other hand, has used social media, in
particular LinkedIn to increase brand awareness in a specific target marketthe
business travellers. Working on the existing environment and market, the airline
Introduction to Marketing Communications and Social Media Marketing
141
used LinkedIn for (a) identifying members who belong to LinkedIn groups who
are related to business travel; (b) targeting these members with display ads and
sponsored polls, and (c) establishing Cathay Pacific Airways Page on LinkedIn and
use Status Updates and Recommendations to build brand awareness and
drive engagement. This marketing campaign had generated a substantial response
from business travellers; and almost a hundred recommendations on the product
page of the airline and most importantly it provided them with insights to
advertising effectiveness and data for useful campaign. Last, the case study on the
tourism campaign of the Philippine Department of Tourism is an illustration of the
combination of strategies of building on local capacity and the traditional marketing practices and social media. The tourism campaign Its more fun in the
Philippines has capitalised on the Filipinos being members in many social media
networks and allowing them to create their own memes (supported by an application and with certain guidelines) has contributed to it going viral in a short
period of time. This has resulted to the country hitting the first time high of four
million tourists within a year of launching the campaign. This campaign has
effectively reached some of the emerging markets.
The marketing communications landscape has changed drastically over the
years because of the new media development which has definitely empowered
consumers and changed the way the companies/organisations should communicate
with them. However, this has given companies in emerging markets somewhat
another strategy to enhance their marketing strategies by modifying Western
culture practices in combination with the potential of social media and even traditional marketing practices or even simply to focus on targeted markets. The
emerging markets consumers and companies and social media are contemporary
trends that should be constantly monitored by marketers and researchers because
they are areas of opportunities for companies may it be multinationals or national/
local businesses.
References
1. Keller, K. L. (2009). Building strong brands in a modern marketing communications. Journal
of Marketing Communications, 15(23), 139155.
2. Hartley, B., & Pickton, D. (1999). Integrated marketing communications requires a new way
of thinking. Journal of Marketing Communications, 5(2), 97106.
3. Guillaume, D. J., Elliot, R. M., & Grier, S. A. (2010). Conceptualizing multicultural
advertising effects in the new South Africa. Journal of Global Marketing, 23(3), 189207.
4. Al-Hemaidi, S., Y. Belachew, P. Bhattacharya, N. Houki, A. Fanqiu Hu, A. Kar, J. Liu, S.
Narayanaswamy, M.Cullivan, N. Vijay & Omokwale, O. O. (2013). Understanding IMC in
emerging markets: A study of the resources and marketing landscape of ten emerging
markets, [Online] \http://jimc.medill.northwestern.edu/Archives/2012/EMERGINGMARKETS_FINAL.pdf[. Accessed 6 May 2013.
5. Schultz, D. E., & Patti, C. H. (2009). The evolution of IMC: IMC in a customer-driven
marketplace. Journal of Marketing Communications, 15(23), 7584.
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A. Kumar and C. Bosangit
6. Steenkamp, J.-B. (2005). Moving out of the U.S. silo: A call to arms for conducting
international marketing research. Journal of Marketing, 69, 68.
7. Alden, D. L., Steenkamp, J. B., & Batra, R. (1999). Brand positioning through advertising in
Asia, North America and Europe: The role of global consumer culture. Journal of Marketing,
63(1), 7587.
8. Ger, G. (1999). Localizing in the global village: Local firms competing in global markets.
California Management Review, 41(4), 6483.
9. London, T., & Hart, S. (2004). Reinventing strategies for emerging markets: Beyond the
transnational model. Journal of International Business Studies, 35, 350370.
10. Mangold, G., & Faulds, D. (2009). Social media: The new hybrid element of the promotion
mix. Business Horizons, 52(4), 357365.
11. Hennig-Thurau, T., Malthouse, C., Gensler, S., Lobschat, L., Rangaswamy, A., & Skiera, B.
(2010). The impact of new media on customer relationships. Journal of Service Research,
13(3), 311330.
Case Study 14: Air Asia: Using Social

Media to Reach Out to New Customers
Introduction
With the tag line Now everybody can fly AirAsia has revolutionised air travel in
the Asian region by offering incredibly low fares and innovative marketing
techniques. The airline is one of the most innovative companies in the World,
which has successfully deployed and expanded on the latest marketing/promotion
practices. From August to December 2010, the airline ran their Real People, Real
Stories campaign where customers were encouraged to share their experiences on
social media for a chance to win free tickets. The result was a flood of entries
including stories as well as videos from satisfied customers around the World on
various social media including their Facebook page. This case study examines how
a small budget airline in Asia has become a global player by adopting the latest
technologies and innovations in order to actively engage with their customers and
improve efficiency and ultimately satisfy these customers
Company Background: From Music to Airlines

The airline was initially established by DRB-Hicom Bhd., a Malaysian governmentowned conglomerate in 1993 and started operations on 18 November 1996. However, the airline did not do well. The success story of Air Asia started when Tony
Fernandes, a former Warner Music executive, bought the loss making airline from
DRB-Hicom Bhd for only one Malaysian Ringgit (approximately 25p) in 2001.
D. S. Mutum (&)
E. M. Ghazali
University of Malaya, Kuala Lumpur, Malaysia

143
144
Tony is the CEO of TuneAir Sdn Bhd. which he started in partnership with Datuk
Pahamin A. Rajab (Chairman). TuneAir officially acquired 99.25 % equity (51.68
million shares) in AirAsia from DRB-Hicom and went about converting it into a
short-haul low cost carrier. AirAsia became Malaysias second national and Asias
first low frills, ticketless airline as of 8 December, 2001 [1]. The deal came with a
RM40 million debt but to the surprise of critics and supporters alike, AirAsia broke
even after operating for just 1 year.
Initially the airline started with only two aging jets and operated six flights to
domestic destinations in Malaysia. It later entered the Thai market by forming a
successful joint venture with Shin Corporation of Thailand through Thai AirAsia.
On February 15, 2006, it was announced that Asia Aviation, a registered Thai
company, had taken Shin Corp.s 50 % stake in Thai AirAsia. At present, Asia
Aviation holds 50 % stake, AirAsia has 49 % and the remaining 1 % is held by
Thai AirAsia CEO Tasapon Bijleveld. AirAsia also entered the Indonesian market
on 1 December 2005 through another joint venture, Indonesia AirAsia (formerly
known as Awair).
The airline started flights to Macau in June 2004, while flights to mainland
China (Xiamen) and the Philippines (Manila) were started in April 2005. Flights to
Vietnam and Cambodia followed later the same year. In 2007, AirAsia X was
established as an separate associate company, which was involved in the low-cost
long-haul business. AirAsia X is rebranded separately from AirAsia and has
separate management and marketing teams [2]. The airline started flying to
London in 2009. Today AirAsia flies to more than 78 destinations in 20 different
countries in three continents, namely Asia, Europe and Australia. AirAsia Philippines is their latest subsidiary, which started operations in March 2012 [3]. The
airline has been voted Worlds Best Low Cost Airline for three years consecutively
since 2009 [4].
Technology Innovations
AirAsia is well known in the airline industry for the use of pioneering technology
and innovation. It was the first airline in Asia to implement ticket less travel
which was implemented in March 2010 [5]. Passengers were able to buy tickets
over the phone directly and just use a booking number to check in. The company
also holds the unique distinction of being the first Asian airline to start online
ticketing though their website, which was launched on 10th May 2002. This was
quite revolutionary considering that Ryanair, which is one of the biggest budget
airlines in Europe, had launched its own booking website only in January, 2000
[6]. In fact, Air Asia was far advanced than several of the low cost airlines
operating in Europe such as Flybe, which launched their on-line check-in facility
in 2006 [7]. It was also voted as the most popular website for online shopping in
the 11th Malaysia Internet User Survey conducted by AC Nielsen in April 2005
[8]. Members registered with the companys website receive information about
Case Study 14: Air Asia: Using Social Media to Reach Out to New Customers
145
promotions and offers via e-mail. In March 2005, online sales exceeded offline
sales, growing from a paltry 5 % in January 2002 to almost 55 % in 2005 [9].
AirAsia has been able to achieve this by gaining a competitive advantage achieved
through the in-depth understanding of the context and specific consumer needs/
expectations.
In August 2003, the airline introduced bookings through the short messaging
service (SMS) on mobilesthe worlds first airline to offer this service. At that
time, it was estimated that at least 42.4 % of the current Malaysian population
were mobile phone users and the SMS booking service would enable AirAsia to
expand its reach to 10 million mobile phone users [10]. The service was developed
in association with Maxis Communications Berhad and Dutch technology firm
Getronics.
AirAsia has also invested in the latest technology including the new reservation
system called New Skies, which is used by several other airlines including Jetstar
and Ryanair. The migration to the new system which took just 9 months as
compared to 1824 months for other major airlines [11] and was officially launched in July 2010 [12]. This state-of-the-art customer relationship management
(CRM) system allows customers to better manage their online bookings. New
features include multiple language support, the Low Fare Finder which indicates
the lowest fare available according to their destination and date of travel. Another
improvement was the ability to book seats for several cities in just one transaction.
Previously, customers had to make separate bookings if they were flying from
different cities in different countries, for example from Bangkok to Kuala Lumpur,
then on to Melbourne.
Social Media Marketing

AirAsia first foray into social media was in 2008 through their corporate blog, Just
Plane Thoughts [13]. Unlike other corporate blogs, the tone of the blog is fairly
informal and feature stories of their employees, customers as well as contest
announcements. Since then, the company has actively embraced social media. The
company has different Facebook pages for different locations around the World and
it was the first airline outside the US to have over a million fans on Facebook [14]. In
China they use the local network RenRen, due to restrictions imposed on Facebook.
They also have a presence on Flickr, YouTube and Twitter And the airline was voted
as the Best Airline in Social Media in 2011, in a poll hosted by consulting firm
SimplyFlying [15]. Tony Fernandes, the CEO, is also a keen blogger and Twitterer
and his personal Twitter page has over 170 thousand followers.
Besides using social media to make announcements and inform customers
about latest deals and promotions, AirAsia actively uses social media for various
branding campaigns [16]. The Real People, Real Stories campaign was one of
their most successful campaigns. This was one of the first social media marketing
campaigns by an airline company in the World. In the first phase, their Real
146
People, Real Stories Video Contest involved user generated content where customers were invited to share their personal story by creating a 3090 s video or
animation. This was followed by The Real People, Real Stories: COMMENT and
WIN competition where visitors to AirAsias YouTube page were invited to
comment on any video listed in any of the five categories. The comments could be
about how they related to the video or any other opinion. In the second phase, in
their run-up to celebrate their 100 millionth guest, customers were asked How
has AirAsia changed your life for the better? and invited to share their stories via
Facebook, Twitter, YouTube and AirAsias corporate blog. The entries came
flooding in with customers sharing their experiences with the airline in blog posts,
pictures and several creative videos. The AirAsia Video/Animation Contest had
over 100 videos submitted out of which 37 winners were selected. The winners
won a pair of return tickets from the airline [17]. According to their 2010 annual
report [18], the company was rewarded by the stories, which reaffirmed our belief
that we are not just in any business; we are in the business of changing lives. This
focus on customers has paid off and AirAisa showed an increase in profits for a
fourth straight quarter in February 2013 [19].
Questions
1. Do you agree that the innovative use of technology played a key role in AirAsias success story?
2. What is your opinion about AirAsias competition where participants have to
create 3090 s video or animations? Could they have made it easier for the
participants?
3. Why do you think that AirAsias marketing campaigns have focused on social
media as compared to other airlines in the region such as Singapore Airlines
which are still focused on traditional media such as TV ads and ads on print
media?
References
1. Kang, S.L. (2003) Fernandes pilots AirAsia to greater heights. New Strait Times, December
22, 2003 p. S6.
2. BBC (2010). How air Asia founder Tony Fernandes dream came true. Retrieved November 3,
2010 from http://www.bbc.co.uk/news/business-11647205
3. Suarez, K.D. (2012 March.28). Philippines AirAsia finally takes off. Retrieved March 28,
2012 from http://www.rappler.com/business/3083-philippines-airasia-finally-takes-off
4. Skytrax (2011). AirAsia wins worlds best low-cost airline award for 3rd consecutive year
Retrieved June 10, 2011, from http://www.worldairlineawards.com/Awards_2011/
lowcost2011.htm
Case Study 14: Air Asia: Using Social Media to Reach Out to New Customers
147
5. Annual Report 2010AirAsia (2010). Retrieved June 24, 2010, from http://www.airasia.com/
iwov-resources/my/common/pdf/AirAsia/IR/AirAsia_AR10.pdf
6. Ryanair (2012). About us. Retrieved July 4, 2012, from http://www.ryanair.com/index.php/
en/about
7. Flybe (2012). Company history. Retrieved February 6, 2013, from http://www.flybe.com/
corporate/about-flybe
8. Sulaiman, A., Ng, J., & Mohezar, S. (2008). E-ticketing as a new way of buying tickets:
Malaysian perceptions. J. Soc. Sci., 17(2), 149157.
9. Patrick, S. (2005). Online sales have eclipsed offline sales (p. 3). AirAsia: Star InTech.
10. Easen, N. (2003). CU L8R: Now book flights via SMS. Retrieved September 25, 2003, from
http://articles.cnn.com/2003-09-25/world/biz.trav.sms.airlines_1_sms-services-mobilephone-booking?_s=PM:asiapcf
11. Air transport news (10 July 2010). AirAsia goes live with New Skies reservation system
New system implementation successfully completed ahead of schedule. Retrieved July 10,
2010, from http://www.atn.aero/article.pl?id=24523
12. Wan, C. (16 July 2010). AirAsia opens up New Skies for bookers.Retrieved July 16, 2010
from http://www.webintravel.com/news/airasia-opens-up-new-skies-for-bookers_274
13. Air Asia Blog. Retrieved May 23, 2013 from http://blog.airasia.com
14. Pal, S. (2011). For getting AirAsia a million fans on facebook and making it the leading
social airline brand, Karen Chan is the SimpliFlying Hero for June 2011. Retrieved July 6,
2011, from http://simpliflying.com/2011/for-getting-airasia-a-million-fans-on-facebook-andmaking-it-the-leading-social-airline-brand-karen-chan-is-the-simpliflying-hero-for-june-2011
15. Nigam, S. (2011). The best airlines, airports and hotels in social mediafinalists for
simpliFlying awards for excellence in social media. Retrieved August 30, 2011, from http://
simpliflying.com/2011/the-best-airlines-airports-and-hotels-in-social-media-finalists-forsimpliflying-awards-for-excellence-in-social-media
16. AirAsia (2010). Annual Report 2010 Retrieved June 24, 2010, from http://www.airasia.com/
17. eYeka (2010 September 17) AirAsia video/animation contest winners, Retrieved September
17, 2010, from http://blogen.eyeka.com/2010/09/17/airasia-videoanimation-contest-winnersrevealed
18. AirAsia (2010). Annual report 2010. Retrieved June 24, 2011, from http://www.airasia.com/
19. Koon, C. P. (2013). AirAsia jumps on profit surge, dividend plan: Kuala Lumpur mover.
Retrieved February 26, 2013, from http://www.bloomberg.com/news/2013-02-26/airasiaposts-fourth-straight-profit-increase-on-travel-demand.html
Case Study 15: Its More Fun

in Philippines: Riding on the Waves
of Social Media
Carmela Bosangit
Introduction
Emerging markets are equally important to the tourism industry. In 2010, the UN
World Tourism Organisation reported that international tourist arrivals grew by
more than 7 % in the first 4 months driven partly by a strong rise in numbers in key
emerging markets despite the challenging conditions as the world recovers the
global economic crisis in 2009 [1]. The real growth opportunities can be found in
the BRIC economiesBrazil, Russia, India and Chinaas well as the GCC nations
such as the UAE and Saudi Arabia where emerging middle classes have desires to
travel and hence they are the future of the travel and tourism industry [2]. It is
projected that international travellers will almost double by 2020 to approximately
1.6 billion with the most significant increases expected to take place in markets like
China, India and South East Asia, followed by Eastern Europe, Latin America and
African markets [3]. It was already seen in the World Travel Market 2010 Industry
Report that the industry has switched its focus from the developed markets of UK,
Europe and the USA to these emerging economies [2].
From the destination management and marketing perspectives, this presents
new opportunities and challenges as both developed and developing tourist destinations would compete for these emerging markets. Therefore, it is crucial to
design an effective and creative marketing strategy that would stand out and
capture the attention of these target markets. However, in the current economic
climate of public austerity, most national tourism organizations (NTOs) are losing
elements of their funding and the ability to market as widely as they did previously; hence many NTOs are turning to social media as a relative low-cost and
global reach marketing tool [4].
The Philippines is an archipelago in the Southeast Asia and like its neighbours
it has much to offer to tourists from its beaches, wildlife, culture, history and
C. Bosangit (&)

149
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C. Bosangit
hospitable and friendly locals. However, due to its location, attracting tourists to
the country remains a fundamental challenge to the national tourism organisation,
the Department of Tourism (DOT). Thailand and Singapore, strategically located
within the region have enjoyed most number of tourist arrivals in the region. For
example, Thailand has reported welcoming 14 million tourists in 2011 while the
Philippines have merely 4 million visitors in the same period [5]. Like any other
countries, the Philippines have utilised several tourism slogan over the years, with
the most recent ones as WOW Philippines and Pilipinas Kay Ganda which
unfortunately did not work effectively as a unifying tourism campaign unlike
slogans such as Amazing Thailand, Malaysia Truly Asia and Incredible India.
With the recently elected President, Hon. Benigno Aquino, III who fully supports the tourism industry, the DOT was provided a budget of 3.1 Billion pesos to
establish a new tourism marketing campaign to reach their new tourist arrival
target of 10 million in 2016 [6]. The new tourism marketing campaign, Its more
fun in the Philippines, has successfully used social media with the help of the
Filipinos in the country and abroad. Traditional media were also used in combination with social media. The DOT has reported 2.14 million tourists arrival to the
country for the first two quarters of 2012, an increase of 11.68 % compared to
tourist arrivals in the same period of last year and this was attributed to the new
tourism slogan [7].
Background
In November 2010, the DOT has launched a tourism campaign called Pilipinas
kay Ganda (translates into How Beautiful, the Philippines) [8], however this has
been criticised for several reasons: (a) it is a mouthful phrase and hard to
remember by foreign tourists; (b) it is similar to a Polish campaign and (c) a search
of this phrase on search engines brings up a pornographic websites with a similar
name [9]. The reactions of Filipinos publicly criticizing the tourism slogan were
immediate and went viral in few hours of its launch and this forced the DOT to
pull out this campaign.
The DOT launched the new campaign Its more fun in the Philippines in
January 2011. This campaign came out from one of the highest stakes pitches in
recent Philippine ad history with seven top agencies competing for the prestige of
advertising the country [10]. BBDO Guerrero, a local chapter of the biggest
advertising agency in the world which also handled the previous tourism campaign, WOW Philippines campaign, won the bid. According to David Guerrero,
who led the team, the concept was born during a dive trip, while he was staying in
the Calypso Resort in Boracay, which was voted by Travel and Leisure and
Tripadvisor as number one tropical island destination [10]. Being at such place,
inspired the idea which made him wrote four pages of examples of what could be
more fun in the Philippines.
Case Study 15: Its More Fun in Philippines
151
Aside from the phrase, the logo (Exhibit I), included a weave which represents
the native banig. Guerrrero explained that this reflects the fact that the country
weaves various influences and cultures into one wonderfully colourful whole [10].
The colours are based on those traditionally used around the country; while the
weave and pixels refers to the technological sophistication as evidenced in its
advanced telecom and information and technology industry [10].
According to the DOT Secretary, Ramon Jimenez, the new tourism campaign
aims to answer the question Why Philippines? He described this campaign as
(a) grounded on basic, truthful communication between two persons; (b) a campaign for people who havent seen the Philippines yet; (c) with a new tourism line
that allows the Filipinos to take the line and own it to themselves; and (d) it is not a
manufactured line; it is drawn from the way Filipinos have touched the lives of
tourists [11].
Marketing Strategies
Social Media
The team came up with three photographs and then launched it online with the
campaign openly inviting the countrys bloggers, tweeters and Facebook users to
come up with their own ads [5]. There are 27 million Filipinos who are on
Facebook and their response was immediate and resounding as expected from a
social media [5]. Indeed, the campaign was picked up by both digital community
and traditional media resulting to #itsmorefuninthephilippines trending on Twitter
after being picked up by international celebrities like Neil Gaiman and local
celebrities in less than a week [9]. The digital community quickly created their
own versions and an onslaught of memes has been incredible. For example,
Roland Benzon, one of the many Filipinos who seized the campaign with delight
created a Facebook album of ads and within 24 hours this was shared by over
10,000 people. According to Benzon, the democratic nature of the campaign
Exhibit I Source Department of Tourism. Campaign guidelines: its more fun in the Philippines
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C. Bosangit
Exhibit II Samples of the memes officially released by the Philippine Department of Tourism.
Source Department of Tourism. Campaign guidelines: its more fun in the Philippines
inspired him, adding that this time Filipinos can make the ads instead of just
passively reacting to it and voicing opinions on them [12]. The memes highlighted
what is uniquely Filipinos sense of humour and creativity. They are considered
positive reactions from the Filipinos. From the first three photographs initiated by
153
the agency, there are now 12,000 versions of the material [13]. The DOT capitalised on how Filipinos can cause trends on twitter. #ItsMoreFuninThePhilippines
was trending on Twitter worldwide just 30 minutes after the unveiling of the new
slogan. The hash tag(#), a symbol before a word or group of words that signifies a
topic or message category and makes searching for relevant keywords or topics
much easier, were used by Filipinos which allowed the tagline to multiply like a
virus [8]. To encourage the creation of memes, DOT has provided an application
[9] and Logo guidelines [14] that allow people to easily create their own ads. An
official website for the tourism campaign has also been developed: http://
itsmorefuninthephilippines.com/. In the website, various memes from the DOT
and the public are shown and categorised into the following: nature and adventure,
beaches, lifestyle, culture, water activities and fun. This website is targeted
towards foreign tourists, encouraging visit to the Philippines.
The design of the tourism campaign (Exhibit II) which allowed Filipinos to
produce their own version of the slogan has awakened creativity among the Filipinos as well as letting their sense of humor shine through which makes it more
attractive to its audience. With the help of the public, a vast amount of memes
went viral which highlighted what is uniquely Filipino yet was able to relate it to
an equivalent concept that is recognisable globally such as those slogans of angry
birds (with a picture of a popular Filipino game/past time of cockfighting);
Farmville (with a picture of rice farming); flipflops (with a picture of abaca made
slippers), just to name a few. The tourism campaign goes beyond promoting tourist
destinations but draws also on the Filipino culture, tradition and everyday lives of
the Filipino which strongly delivers the message to its audience on why it is more
fun in the Philippines. The public has widely contributed to the campaign by
letting them express what they think is uniquely Filipino. The support of the
Filipinos are seen in the way they use the tagline of its more fun in the Philippines in their Facebook statuses, twitters and even blogs. There are also
compilations of these memes that were uploaded, downloaded and shared among
Filipinos. An example would be this blog post titled 100 Things That Are More
Fun In The Philippines, by Rojae, a travel blogger [15].
The Traditional Media

The DOT reinforced their promotion by using traditional forms of marketing such
as TV commercials, posters and bill boards, road shows and trade shows.
Three months after launching the campaign through the social media, the DOT
rolled out a new TV commercial on international cable news channel CNN, a 30second video compilation of memes made and contributed by the public [13]. This
was also launched in time with the 45th Annual Meeting of the Asian Development Bank Board of Governors which the country hosted from 2 to 5 May 2012
[13]. In addition to this the TVC was aired along with a special segment, Eye on
the Philippines. According to officials the airing of the commercials costed about
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C. Bosangit
P60 million and the hosting of the ADB annual meetings cost was about P300
million pesos [16].
In March, the DOT also participated in the Internationale Tourismus Borse
(ITB_Berlin) 2012, the worlds largest travel fair. A launch party was also held at the
ultra trendy disco club Felix to give more than 300 European travel-trade and media
representatives an experience of how it is indeed more fun in the Philippines [17].
The DOT has also been intensively promoting the country through various events
and trade shows across the globe, namely: in Japan during the Philippine Business
Mission; in the US for the Memphis in May International Festival, in the Middle East
during the Arabian Travel mart and in Korea at the Yeosu Expo 2012 [7].
In New York Times Square, billboards show footage of promotional materials
on the Philippines [13]. Around the bustling streets of London, 25 double-decker
buses and 50 black cabs have uniform design of the slogan logo and the different
faces of the Philippines [18]. The cabs also come with a 30-min digital ad featuring
the 30-seconder and 15-seconder TV commercials making DOT the very first
national tourism organization to advertise through the digital platform of taxis
owned by Verifone Media [18]. It was seen as a perfect opportunity to capture
millions of visitors to the London 2012 Olympics [7].
Several partnerships were formed with the DOT as private sector supports the
tourism campaign. Jollibee Foods Corporation [19], Land Rover Philippine Motors
[20], Microsoft Philippines [21] and SEAir have launched their own advertising
campaign using the theme Its more fun in the Philippines. For example, the
Land Rover came up with a series of Land Rover TV commercials and print
advertisements featuring local tourist spots and off-road destinations in the country
under the campaign dubbed Land Rovering: More fun in the Philippines [20].
SEAir, a Filipino carrier, has dedicated two of its brand new Airbus 320s to the
tourism campaign by painting the countrys colourful logo on the aircrafts front
fuselage [22]. This kind of campaign was likened to a flying billboard as it flew in
and out of various Asian countries such as Singapore, Thailand, Hong Kong and
Indonesia [22]. The PDOT is continuously seeking support from private sector to
sustain the tourism campaign.
The Results
After more than a year of launching the campaign, the PDOT has announced that it
has achieved a new milestone with a record of 4,272,811 visitor arrivals, a 9.07 %
increase from the 3.917,454 arrivals during the previous year [23]. This is the first
time that the country has reached the 4 million mark, reflecting increases in all
major markets: South Korea, US, India, Japan, Australia, Malaysia, Russia, Taiwan, China Singapore, Canada, Hong Kong, UK and Germany [23].
Based on the tracking survey conducted by Ipsos ASI Philippines among 1,000
Filipinos ages 15 to 64 years old, by March 2012, the overall likeability of the
tourism slogan has improved to 92 from 87 percent only in February [24].
155
The company added that the campaign is communicating its intended messages,
namely: making Filipinos proud, making people want to travel, making people
want to tell others about the beauty of the Philippines and making people believe
that it is more fun in the Philippines.
Measuring success of social media efforts are extremely difficult to gauge [4].
Social metrics media metrics may measure: (a) audience size (i.e., number of
followers); (b) reach (e.g., viral impacts); (c) engagement (e.g., number of comments); (d) sentiment (e.g., consumer response) and (e) outcomes (e.g., resulting
traffic, conversions) [25]. As Cruz observed, no reliable agency or entity has
provided yet an estimate on how much free media the campaign has generated
through the use of social media. However, she presented a few facts social to
illustrate the power of social media [9]:
Official Facebook Page has 10, 151 likes (as of April 2012).
The #itsmorefuninthephilippines trended internationally on Twitter for less than
an hour on the day of the launch.
A search on Google can go as deep as page 30 with relevant results.
Alexa ranks it as 8,343rd most popular site in the Philippines.
Despite the lack of measurement of the actual effects of social media, the
increase in tourist arrivals after the campaign is perceived by the PDOT as an
indicator of the success of the campaign. It would definitely be interesting to
follow this tourism campaign in the next few years if it will be able to maintain the
support from Filipinos as well as achieve its target of 10 million tourists by 2016.
Conclusion
Its more fun in the Philippines campaign has demonstrated how a national
tourism organisation can use social media in enhancing traditional marketing
strategies in competing for market shares of the emerging markets. It is clear that
although the PDOT has invested billions in the campaign, the social media has
amplified its impact and produced tangible outcome in terms of tourist arrivals
growth. Filipinos being allowed to create and share their own memes in social
networking sites features an element of co-creation which recognises the power of
the connected, informed and active consumers which according to Pralahad and
Ramaswamy is crucial in co-creation process [26]. Over the past few years, Filipinos have been in shaping up this tourism campaign initially causing the withdrawal of the previous campaign and massively supporting the current campaign
and the PDOT. The design of the tourism campaign was effective and creative in
providing the public with a slogan and a template to create their own versions and
craft their own marketing messages. Combined with this burst of creativity, people
were sharing them across many social networks which easily spread among Filipinos within the country and abroad, making an impact domestically and internationally. The impact of the tourism campaign is quite hard to measure
156
C. Bosangit
quantitatively but there are definitely outcomes to the combination of traditional

marketing and use of social media. The interaction between the PDOT and the
public was fundamental to the campaign, and a basis for co-creation [26]. Filipinos
feel they have ownership to the marketing campaign and the PDOT had taken
some risks in allowing the public to create their own versions as inevitably there
are people who created versions of the memes which highlighted negative aspects
of the country but these were not as many as the positive versions that went viral.
Nevertheless, this tourism campaign is an illustration of the power of social media,
the co-creation process and traditional marketing strategies in marketing tourist
destinations.
Questions
1. What are the key success factors for this tourism campaign?
2. Go online and search for memes of the tourism campaign by entering the key
word its more fun in the Philippines. Given the memes that were generated can
you identify what could be possible challenges that this campaign may
encounter in the next few years?
3. Do you think the tourism campaign would be effective without the reinforcement of traditional media.
References
1. Davitt, D. (2010). Emerging markets drive global tourism recovery, says UNWTO.
www.moodiereport.com.
2. The Telegraph (8 November, 2010). WTM report: Emerging markets. www.telegraph.co.uk.
3. Tourism Intelligence. From halaal meat to high street shopping: how to understand and woo
the emerging travel markets. www.tourism-intelligence.com.
4. Hays, S., Page, S.J., Buhalis, D. (2012).Social media as a destination marketing tool: its use
by national tourism organizations. Current issues in tourism (ahead of print), pp 129.
5. Boykoff, P. (May 3, 2012). Philippines tourism campaign hopes for boost from social media.
www.cnn.com.
6. Torres, E. (August 8, 2012). P1.2B more needed for Its More Fun in PH campaign.
www.abs-cbnnews.com.
7. Mateo, J. (6 Aug. 2012). Its more fun in PH: higher tourist arrivals recorded in first half of
2012. www.thepoc.net.
8. Arnaldo, M.S.F. (6 Jan 2012). Its more fun in the Philippinesspread the word, says DOT.
www.interaksyon.com.
9. Cruz, X. (25 April 2012). Its more fun in the Philippines crowdsourced marketing.
www.creativeguerillamarketing.com.
10. Aragon, R. Its more fun in the Philippines: the inside story from David Guerrero.
www.balikbayanmagazine.com.
11. Metro Manila Directions. New DOT tourism slogan and logo: its more fun in the
Philippines. www.metromaniladirections.com.
157
12. Boykoff, P. (2 May 2012). Philippines tourism campaign hopes for boost from social media.
www.cnn.com.
13. Garriga, N. (10 May 2012). DOTs its more fun in the Philippines campaign goes global.
www.ph.news.yahoo.
14. Department of Tourism. Logo guidelines on the its more fun in the Philippines tourism
branding campaign. www.tourism.gov.ph.
15. Rojae (2012). 100 things that are more fun in the Philippines. http://adventuroj.com/2012/02/
28/100-things-that-are-more-fun-in-the-philippines-25/.
16. Rosero, E.V. (4 May 2012). Interview: tourism secretary Jimenez on its more fun in the
Philippines. www.gmanetwork.com.
17. Department of Tourism Media Center (13 March 2012). Its more fun in the Philippines
campaign rocks Berlin. www.tourism.gov.ph.
18. Philippine Embassy (4 June 2012). Tourisms its more fun in the Philippines campaign
gets warm welcome in London. www.philembassy.no.
19. Torres, E. (11 Oct 2012). Jimenez calls on private sector to support, its more fun in the
PHL tourism campaign. www.businessmirror.com.ph.
20. Top Gear Philippines (7 Sept 2012). DOT teams up with Land Rover PH for domestictourism campaign. www.topgear.com.ph.
21. Villegas, R. (6 Sept 2012). Microsoft launches I.T.: its more fun in the Philippines campaign.
www.thepoc.net.
22. Uy, J.R. (19 Aug 2012). SEAir planes now bear tourism fun slogan. www.globalnation.
inquirer.net.
23. Voyagers World (29 Jan 2012). Visitor arrivals in the Philippines records. 4.3 million in 2012.
http://www.voyagersworld.in/article/visitor-arrivals-philippines-records-43-million-2012.
24. Remo, A.R. (7 June 2012). Its more fun in the Philippines catching on-survey. www.
globalnation.inquirer.net.
25. Schetzina, C. (2010). Introduction to social media analytics. New York: PhocusWrigth.
26. Pralahad, C. K., & Ramaswamy, V. (2004). Co-creating unique value with customers.
Strategy & Leadership, 32(3), 49.
Case Study 16: Cathay Pacific Airways

Using LinkedIn for Brand Building
Where we advertise is where the business person is going to be.

And on the social media side, where is the business person?
Theyre on LinkedIn.
Dennis Owen, VP Marketing Americas at Cathay Pacific
Airways.
Introduction
Consumers are adopting increasingly active roles in co-creating marketing content
with companies and their respective brands. In turn, companies are looking to
online social media and campaigns in an effort to reach consumers where they
live online [1]. However, the challenge facing many companies is that although
they recognise the need to be active in social media, they do not truly understand
how to do it effectively. This case study highlights a best-practice organisation and
its successful efforts to leverage social media in reaching an important audience of
business consumers. Specifically, this case study explains Cathay Pacific Airways,
a Hong-Kong based airline, used LinkedIn successfully for brand building and it
points out how companies can maximise the potential of social media to better
meet customers needs.
Cathay Pacific Company Background

Cathay Pacific Airways is an international airline registered and based in Hong
Kong, offering scheduled cargo and passenger services to over 140 destinations
around the world. The airlines primary product is premium non-stop service to
Asia with a focus on the business class market. The company was founded in 1946
and it continues to make substantial investments to develop Hong Kongs aviation
industry and enhance Hong Kongs position as a regional transportation hub. In
addition to the fleet of aircraft, these investments include catering, aircraft
maintenance and ground handling companies, as well as the corporate headquarters at Hong Kong International Airport. Cathay Pacific and its subsidiaries and

159
160
H.-P. (Sophie) Yang
associates employ 21,000 staff in Hong Kong. Additionally, Cathay Pacific

Airways is a founding member of the OneWorld global alliance whose combined
network serves over 600 destinations worldwide [2].
Cathay Pacific Airways and LinkedIn

Despite its success in Asia, the challenge faced by Cathay Pacific Airways is to
reach the business class air travelers with a personal message that is compelling to
them as individuals. Cathay Pacific Airways therefore turned to LinkedIn in order
to increase brand awareness among travelers who fly business class between the
United States and Asia. LinkedIn differentiates itself from other social media sites,
such as Facebook or Twitter, by mainly attracting users who are professionals or
business people. Therefore, Cathay Pacific Airways is able to precisely target
potential customers via LinkedIn by industry, group, job title and/or company. In
addition, because of the social networking nature of LinkedIn, Cathay Pacific
Airways can engage with time-strapped business travelers in an environment
where they are already comfortable, receptive, engaged and spending time.
The three marketing approaches adopted by Cathay Pacific Airways via
LinkedIn include [3]:
1. Identifying members who belong to LinkedIn groups who are related to business travel in Asia, such as Global Workers, China Networking Group, Hong
Kong Connection.
2. Target these members with Display Ads and Sponsored Polls, i.e., using
Sponsored Polls to ask business travelers what else they might want to redeem
their airline points for, in addition to free airline tickets. Poll results gave
Cathay Pacific Airways insight into customer preferences, as well as identifying
prospects and loyal customers.
3. Establish Cathay Pacific Airways Page on LinkedIn and use Status Updates and
Recommendations to build brand awareness and drive engagement.
Results for Cathay Pacific Airways from using LinkedIn:
Three Sponsored Polls generated a total of 1,324 responses for Cathay Pacific
Airways from business travelers.
Recommendation Ads generated 97 recommendations on the Product Page of
Cathay Pacific Airways.
LinkedIn Research Network provides Cathay Pacific Airways ongoing insight to
advertising effectiveness and provides useful data for the future campaigns.
Interestingly, LinkedIn also helped Cathay Pacific Airways to identify many
small and medium-sized companies and individuals who are much harder to be
identified when compared to big organisations. As this case study shows, social
media platforms provide extensive opportunities to customise user engagement.
Although the social media platform does not require participants in the sphere of
Case Study 16: Cathay Pacific Airways Using LinkedIn for Brand Building
161
influence to learn anything new, companies should provide some element of

uniqueness and authenticity in branding via social media, which will give consumers a reason for engaging electronically and be a great weapon against boredom: the one sin for which there is no forgiveness online [1].
Conclusion
In the digital era, social media is being used more frequently by companies to
better achieve corporate goals through meeting and exceeding customer needs
better than the competition. As the marketing power of social media grows, it no
longer makes sense to treat it as an experiment, and marketers of companies should
tailor their use of social media for each stage of the consumer decision-making
process for maximising the impact of social media on marketing [4].
This case study shows how Cathay Pacific Airways utilised LinkedIn to identify
and target potential air travellers, drive engagement and create two-way dialogues.
However, more than targeting potential customers, future opportunities that social
media can create for companies could include obtaining customer feedback, creating new products/services, strengthening customer loyalty and engaging in
online dialogue with followers. Specifically, it has been shown that social media
enables targeted marketing response at individual touch points during consumer
decision-making process [4]. Also, the various functions that social media can
achieve for companies include brand monitoring, crisis management, customer
service, facilitating referrals and recommendations, fostering communities, brand
advocacy, increasing brand awareness, facilitating product/service launch, communicating targeted deals and offers, and utilising customer input for new product/
service development [4]. Therefore, apart from using LinkedIn, Cathay Pacific
Airways and other companies can harness social media to shape consumer decision-making process in order to maximise the potential of social media to better
meet customers needs.
Questions
1. Explain why LinkedIn is suitable for Cathay Pacific Airways in reaching the
business class air travelers with personal message that would increase brand
awareness.
2. Discuss the three marketing approaches adopted by Cathay Pacific Airways via
LinkedIn.
3. Evaluate the results for Cathay Pacific Airways from using LinkedIn.
162
H.-P. (Sophie) Yang
References
1. Hanna, R., Rohm, A., & Crittenden, V. L. (2011). We are all connected: The power of the
social media ecosystem. Business Horizons, 54(3), 265273.
2. Cathay Pacific Airways (2012). Company background from Linkedin. Retrieved December 31,
2012 from http://www.linkedin.com/company/7097
3. LinkedIn (2012). Cathay Pacific Airways case study. Retrieved August 5, 2013 from http://
business.linkedin.com/content/dam/business/marketing-solutions/global/en_US/site/pdf/cs/
linkedin_cathay_pacific_case_study_us_en_130314.pdf
4. Divol, R., Edelman, D., & Sarrazin, H. (2012). Demystifying social media. McKinsey
Quarterly, 2, 6777.
Part VI
Conclusion
Conclusion
Dilip S. Mutum
It was felt that the teaching materials utilised by Western educators, lacks real case
studies related to marketing and business contexts in these markets. These 16 case
studies cover a wide range of marketing topics, from product development to
social media marketing. We have grouped the cases broadly into four chapters
depending on the particular area of marketing the authors are considering. Several
cases cover different areas of marketing. For example, Junglee.com: Amazons
Entry in India is placed in the Market Orientation and Brand Strategies chapter
but could well come under Product Development and Market entry as well.
Moreover, the cases cover the whole spectrum of industries, ranging from the fast
food sector (KFC and McDonalds) and beauty creams (Lakme Pure Defense) to
airlines (AirAsia) and sports (NBA in China and Kolkata Knight Riders). The
cases also highlight the need to understand the interplay of the strategic three Cs of
Marketing [1] namely, the customers, the competition and the corporation.
A sustainable competitive advantage can only emerge by integrating these three
forces. The cases highlight the unique issues and challenges as well as some
success stories. The importance of understanding your customers, of proper targeting and positioning of your brand, is highlighted in a number of the cases.
They reveal the complex issues facing Western multinationals trying to
penetrate or expand in these markets. At the same time, some of the cases look
at how local companies and brands are holding their own against the foreign
onslaught. It has been pointed out that growing sophistication will not automatically result in growing demand for global brands. In fact customers in
these markets are highly value-conscious and they are indeed demanding more
from the MNCs. Local companies are learning from the strategies adopted by the
Western companies and they often have support from the local governments who
have different agendas [2]. Three cases specifically look at the marketing
D. S. Mutum (&)
Department of Marketing and Advertising, Coventry Business School,
Coventry University, Priory Street, Coventry, West Midlands CV1 5FB, UK

165
166
D. S. Mutum
campaigns involving the Government departments, namely, the Indonesian

fisheries sector adopting a marketing orientation; the development and marketing
of the Akash Tablet in India and the new tourism marketing campaign Its
more fun in Philippines to promote the Philippine tourism industry.
Western organisations may face tougher competition in emerging markets that
have become markets of primary importance for organizations seeking sustained
growth. The AirAsia case illustrates how Multinational companies from emerging
markets are benefitting from deploying and expanding the marketing/promotion
practices learnt from their Western counterparts in a context with which they are
much more familiar with. AirAsia has achieved a competitive advantage by
adopting and adapting several technological innovations including the use of
social media marketing campaigns, in order to engage with and satisfy their
customers.
Not surprisingly, branding emerges as a common theme. The concept of a
truly homogenous, global brand may well be dead and MNCs have realised that
ideas of complete standardisation of the market offering is simply not possible.
For example, McDonalds, which maintains strict controls on its branding, had to
be flexible by offering minor changes to their menu, such as no beef or pork in
India. This example also highlights another underlying theme which is common
in a number of the cases, that is, the importance of local culture and its influence
on marketing. Despite taking all precautions, well established companies can
face crisis in areas of their business where and when they least expect it.
A perfect example is the Halal food scandal faced by IKEA Malaysia. The Halal
issue could have quickly snowballed into something much bigger but prudent
action by the management along with a good PR campaign nipped the crisis in
the bud. A few of the cases also highlight the growing importance of integrated
marketing communications and social media marketing in particular. The success
stories seem to indicate that social media is most effective when used to engage
with consumers and build up long term loyalty rather than as a tool to sell.
We acknowledge that most of the cases are from India and China, the two
biggest emerging economies simply because of the immense interest in these two
countries. However, it would be a mistake to ignore the rest of the emerging
markets. A number of other countries in Asia, Latin America and Eastern Europe
are also growing in terms of revenue and profit, especially in the fast-moving
consumer goods sector despite lower prices. In fact, the highest growths came
from the BRICET nations, which include Eastern Europe and Turkey besides
the BRIC group [3]. We need to have more case studies from these countries as
well.
Conclusion
167
References
1. Ohmae, K. (1991). The mind of the strategist: The art of Japanese business. New York:
McGraw-Hill.
2. Arnold, D. J., & Quelch, J. A. (1998). New strategies in emerging markets. http://
sloanreview.mit.edu/article/new-strategies-in-emerging-markets/.
3. Shankar, S., Ormiston, C., Bloch, N., Schaus, R., & Vishwanath, V. (2008). How to win in
emerging markets. MITSloan Review, http://sloanreview.mit.edu/article/how-to-win-inemerging-markets/.

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Dilip S.

Marketing Cases from Emerging Markets

Dilip S. Mutum Sanjit Kumar Roy

Marketing Cases from

Springer Heidelberg New York Dordrecht London

There is a sustained increase of interest in the emerging markets by Western

Introduction to Socio-Cultural Influences . . . . . . . . . . . . . . . . . . . . . .

Case Study 1: Mongoose Lager Beer Eyes up India . . . . . . . . . . . . . .

Case Study 2: KFC in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Case Study 3: Lakme Pure Defense: An Antipollution Cream . . . . . . .

Case Study 4: Ikea Malaysia and the Halal Food Crisis . . . . . . . . . . .

Market Orientation and Brand Strategies

Introduction to Market Orientation and Brand Strategies . . . . . . . . .

Case Study 5: Brands: The New Co-stars in Bollywood . . . . . . . . . . .

Case Study 6: Junglee.com: Amazons Entry in India. . . . . . . . . . . . .

Case Study 7: Indonesian Fisheries . . . . . . . . . . . . . . . . . . . . . . . . . .

Case Study 8: Kolkata Knight Riders:

Case Study 9: The National Basketball Association (NBA)

Product Development and Market Entry

Introduction to Product Development and Market Entry . . . . . . . . . .

Marketing Communications and Social Media Marketing

Introduction to Marketing Communications and Social

Case Study 15: Its More Fun in Philippines:

Case Study 16: Cathay Pacific Airways Using LinkedIn

D. S. Mutum et al. (eds.), Marketing Cases from Emerging Markets,

14. EU Website (2006). http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113359.pdf.

Introduction to Socio-Cultural Influences

D. S. Mutum et al. (eds.), Marketing Cases from Emerging Markets,

Introduction to Socio-Cultural Influences

Case Study 1: Mongoose Lager Beer Eyes

The Indian Economy and Trade with the UK

D. S. Mutum et al. (eds.), Marketing Cases from Emerging Markets,

from Rs 34,713 in 2006. Officials at the Indo-British Partnership Network

Drinking Alcohol and Indian Culture

Case Study 1: Mongoose Lager Beer Eyes up India

Case Study 2: KFC in China

China and Chinese Customers

H.-P. (Sophie) Yang (&)

D. S. Mutum et al. (eds.), Marketing Cases from Emerging Markets,

H.-P. (Sophie) Yang

The Foreign Fast Food Market in China

Case Study 2: KFC in China

heavily to catch up with Yum! Brands. Specifically, McDonalds plans to

KFC Adapts Its Strategy in China

H.-P. (Sophie) Yang

Case Study 2: KFC in China

future as the numbers of customers buying online are increasing. Furthermore,

The Road Ahead

H.-P. (Sophie) Yang

Table 1 Summary of the key strategies utilised by KFC in China

Extended menu items

Case Study 2: KFC in China

Case Study 3: Lakme Pure Defense:

Background of Hindustan Unilever Ltd

D. S. Mutum et al. (eds.), Marketing Cases from Emerging Markets,

A. Adhikari and S. K. Roy

Indian Beauty Products and the Market

Different Competitors and Their Products

Case Study 3: Lakme Pure Defense: An Antipollution Cream

Behavior of Beauty Product Consumers in India

The Product: Lakme Pure Defense

Segmentation, Targeting and Positioning

A. Adhikari and S. K. Roy

Advertising and Promotion