More Is Beautiful

Says Harish Bijoor, general manager marketing of Tata Tea Ltd, With value for money emerging as the most credible platform for companies, it makes more sense to give consumers what they perceive as value addition.

Take the case of Tata Cafe, launched in March this year. The Rs 455 crore instant coffee market has been dominated by the two multinationals Nestle and Brooke Bond Lipton. According to the Operations Research Group figures, Nestle's Nescafe continues to woo coffee drinkers with a market share of 52 per cent with BBLIL at 48 per cent. But Tata Cafe available only in major metros is aiming high. By the end of the first year, we should have a market share of at least 30 per cent, claims Harish Bijoor. And with retailers vouching for product offtake, competitors are using a plethora of promotions to stall defections.

 

Nestle is at its promotional best. It is offering 30 per cent more coffee in its 50 gm Nescafe packs. It is also supposed to hit the market with another major promotion with Rs 10 price off. Why is Nestle guarding its turf so fiercely? Firstly, like most other fast moving consumer products, there is little differentiation between products. Secondly, at Rs 52, the price of Nescafe is double that of Tata Cafe.

Hence, the offer of 30 per cent extra is seen as justification for the high price differential. While it might not have taken the wind out of competition, retailers claim they have been able to hold on to loyal Nescafe users. Without the bonus packs, Nescafe users would have switched allegiance to the cheaper brand, which is equally good, reveals a retailer in downtown Mumbai.

But marketing experts are quick to point out, that bonus packs are not driven by competition alone. The objective is broad