Complexities in Managing Business Projects
Overview
Local market competition is targeted toward customers, and competitors strive to win the customer, temporarily or permanently. However, in business-to-business process, the competition may turn more tactical and strategic in order to outperform the rival firms. In this way, competition can be seen as regulated struggle. There are rules of economic competition and they do not generally include the destruction of competitors. The innovative business projects are grown over the difficult tasks of discovering customer needs, and the subdisciplines of consumer and organizational buying behavior attempt to provide theoretical bases for the results. In this process, the business projects are encircled with several complexities. This chapter critically examines the drivers and attributes of market chaos, complexities in technology growth, and dynamics of organizational work culture that affect the building and implementation of business projects. Companies work out the process of diagnosing, designing, implementing, and evaluating an effective method of resolving conflicts in the business projects as well as within an organization. This chapter discusses the possible innovation interventions, spatial and temporal variations, project timeline management, and innovation networking for reducing the discrete operational complications. In addition, the question of how to develop right project goals for making the business projects sustainable constitutes this chapter.
Behavioral Shifts
In order to compete in the big emerging markets, companies need to reconfigure their strategies by ascertaining appropriate responses on the competitive fitness and redesign cost and operational dynamics (Prahalad and Lieberthal 2003). It is observed that though premium consumer segment may attract the companies with global vision, but bottom-of-the-pyramid markets appears to be more promising from the perspectives of building the brand equity and customer-centric posture of the company. Companies entering into the premium segment may push themselves to a high-profile niche, but this segment might not support the objective of increasing the market share and staying at par with the mass customers. The new commercial reality is the emergence of omnipresence of global companies across the consumer segments and leaning toward marketing more standardized products and services than offering customized products on a previously unimagined scale of magnitude. The marketing technology for global, multidomestic, and transnational companies today is to move to digital platforms and give consumers the convenience and cost advantages over the conventional wisdom of laying nonflexible marketing standards. The companies with global standardized products enjoy the benefits of economies of scale in production, distribution, marketing, and advanced management in reference to functional, reliable, and price competitiveness (Levitt 1983).
Integration of various digital socioeconomic communication platforms is argued to explain that globalization is a reflexive process and that brings the global markets on one boundaryless play field. The development of new technology allows mass media to become universally available to consumers, and this combines with cross-border marketing opportunity for multinational companies (Ritzer 2007). These market trends lead to homogenization of consumer needs and develop pro-innovation and overseas cultures in the emerging markets through new consumption trends, standardization, intercultural collaboration and coordination, and cross-border competition. Consistent with the globalization trend, many international companies begin to utilize a global approach, in which companies market their products on a global basis to take the place of the traditional multidomestic approach, in which local subsidiaries market local products to the local markets (Kotabe and Helsen 2010).
Market Chaos
Dynamic behavior with referred uncertainty in business drives chaos in market. Chaos is a natural phenomenon in any dynamic state of actions unless it is regulated or controlled through the set principles of action. The theory of chaos behavior has emerged as a field of study in mathematics, with applications in several disciplines, including meteorology, sociology, physics, engineering, economics, biology, and philosophy. Recently, this theory has also been interpreted meticulously in business as it leads to various uncertainties in market competition. Chaos theory studies the behavior of dynamical systems that are highly sensitive to initial conditions, a paradigm popularly referred to as the butterfly effect. In reference to business, the butterfly effect drives through small changes in marketing mix, corporate policies, organizational culture, and competitive strategies that lead to larger effects in stimulating market share, business growth, and acquiring and retaining customers. Chaos in market is commonly caused due to congestion of competitors, frequent introduction and with-drawal of products and services, and extensive price promotions. Small differences yield widely diverging outcomes in dynamic market systems, often rendering long-term prediction impossible in general in a market or a business. This happens even though the market systems are deterministic, meaning that their future behavior is fully determined overruling the uncertainties. In consumer markets, the chaos is frequent as well as these markets are very susceptible to the butterfly effects. In consumer markets, the chaos and butterfly effects are very popular in fashion products and consumer electronics. The market chaos largely affects the low-end markets as exhibited in Figure 4.1.
Figure 4.1 illustrates the bidirectional dynamics of innovation process in the global markets wherein multinational companies aim at reaching the markets at mass and bottom-of-the-pyramid segments and acquire local-level innovations that demonstrate potential for commercialization. The multinational companies face the market competition by adapting to the competitive pricing, promotion, and customer services strategies that offer opportunities of operating on economies and scale and mass production of innovative products. Multinational companies have now developed the seriousness of working through the reverse innovation by partnering with the start-up enterprises. The start-up enterprises operate in niche with limited resources but are open to collaborating with sponsoring companies to take their innovations at the global scale. The success of any innovation, which has been targeted for the mass market, may trigger market chaos as fierce competition begins at the low-end markets. Such competition would divert consumers from the principal brands and acquire consumers to low price-utilitarian or social status products. The growth of virtual channels would also drive the competition and chaos in the market. The market chaos at the low-end markets are generally prompted by the local companies, which give way to the international and virtual companies to push through the market space. On the contrary, chaos in the high-end market occurs due to the rush of identical products by high-priced brand icons. Such competition at the high-end markets fragments the market share of companies and drives most consumers to adapt to the fashion consumption behavior without developing loyalty for any brand. Many firms that enter with one-touch technology fall into the high-end market chaos.
Figure 4.1 Market chaos and attributes of disruption
Chaotic market behavior is predictable for a while and then appears to become random, driving consumers to a dilemma whether to respond to the uncertain marketing strategies of the companies. The amount of time for which the behavior of market chaos can be effectively predicted depends on the factors including the tolerance limits of uncertainties in the market, how accurately market dynamism and chain causes and effects can be measured, and how effectively a temporospatial scale can be created to monitor and control the market uncertainties in a given time. Chaos in the market is often initiated by the companies who would like to have a leapfrog experience in competition by earning higher market share by applying price-driven tactics. Companies under such market conditions experience high uncertainties and are unable to develop strategic plans. Thus, embracing chaos seems the opposite of discipline and planning. However, uncertainty is embedded in negotiations, and the negotiators who ignore this fact and follow rigid strategies blind themselves to unexpected threats and slip potential opportunities (Wheeler 2004).
Many factors determine the nature of competition, including not only rivals but also the economics of particular industries, new entrants, the bargaining power of customers and suppliers, and the threat of substitute services or products. A strategic plan of action based on this might include positioning the company in such a manner that its capabilities provide the best defense against the competitive forces, influencing the balance of forces through strategic moves and anticipating shifts in the factors underlying competitive forces (Rajagopal 2012). In outwitting the competitors, the companies must detect changes in the strategy game in reference to the market players’ status in gaining more knowledge, networking, entrepreneurship, and increasing ambitions. The driving forces of competing firms, their organization, and microeconomic environment need to be studied carefully by the company planning to overtake competitors in the business. Further in the process of winning the battle of rivals, it would be helpful for a company to understand the changing stakes of the competitors and the forces after such developments. A company can outmaneuver the competitors by being more skillful in particular tasks and reshaping the stakes in one or more business arenas. Outmaneuvering the rivals is the core of changing the rules of market place. The strategy for outperforming the competitor is largely based on two basic issues—the performance parameters and assessment criteria of the performance. However, the critical parameters may include probe for the following information as who is:
Creating new customer needs that do not exist,
Developing and establishing the new attributes of the product,
Establishing new channels to reach all the existing and potential customers,
Reinventing stakes to make others confined to play catch-up roles,
Creating new capabilities as the source of new products and customer needs,
Creating knowledge base for driving the capabilities for the new goods and services,
Establishing new relationships with the channels, institutions, and customers,
Winning or losing in the business battle,
Establishing new chain of customer delight,
Leading the product, and
Dominating the price–value relationship.
The parameters and assessments of the aforementioned actions would help in focusing both the thinking and strategy-building process for sailing through the competition successfully. The current and future strategy of competitors must be considered by any company planning to outwit, outmaneuver, and outperform them.
The chaos in the global as well as local markets has been caused due to introduction of new products as an outgrowth of continuous innovation and growth in technology, free entry and exit of firms, frequently changing consumer preferences, and high substitution effects that makes the trust and loyalty of consumers fragile. Chaos in market prompts abrupt changes and also triggers distractions in the business growth in the companies. Chaos in market occurs as innovation and technology breakthroughs are akin to the life cycle of many industrial and consumer products comprising stages of introduction, acceleration (growth), acceptance (maturity), and renewal/diversification (decline). Each big idea catches hold slowly and moves through the stages in the market, but chaos occurs in the market as many ideas grow in the market simultaneously. Yet, within a relatively short time, the new approach becomes so widely accepted that it is difficult even for old-timers to reconstruct how the world looked before. As the market competition is growing and consumers are rapidly shifting their preferences, most companies are moved to the verge of creative destruction as survival options in the market have been narrowed down to change-or-perish philosophy. Accordingly, most companies are leaning toward continuous innovations to differentiate their products and services, but at the same time they are also susceptible to failures due to random and nontested efforts. Thus, the business in modern times poses uncertainty and moves on the common rationale of no pain, no gain. Understanding the changing market and consumer behaviors, the creative destruction may be necessary, and even preferable, in certain situations (Abrahamson 2004).
The community creation model in managing new businesses across the diverse market segments is a governance mechanism for managing innovation that lies between the hierarchy-based (closed) mechanism and the market-based (open) systems for new product management and driving butterfly effect. The community-centric model shifts the focus of innovation and drives the change process beyond the boundaries of the firm, to a community of individuals and firms that collaborate to create joint intellectual property. Such strategies involve community in spanning the change instituted by the company and set ground rules for participation, and developing sustainable consumer behavior with differentiation. The community of creation model allows innovation-led changes to initially pass through a complex environment by striking a balance between order and chaos in the market (Sawhney and Prandelli 2000).
With the high advancement of information technology and business forecasting tools, most companies are able to sustain short-run market chaos by predicting the future market dynamics. Most companies are also able to determine and interpret the competitor signals in the chaotic markets. The foreseen uncertainty due to chaos in the market is characterized by radical marketing elements comprising market communications that lay loose ends for free interpretations, marginal differences with existing and substitute products, and varied use values. In order to manage market uncertainty and chaos, companies need to play pro-customer roles, drive loyalty toward corporate brands, and build confidence in the changing technology-led lifestyles to gain strategic competitive advantages. Companies must learn to ascertain the best mix of tools and techniques to select while driving changes through differentiation in products and services and managing the market in chaos (Meyer, Loch, and Pich 2002).
Companies often make substantial efforts to innovate their products, and the processes to improve profit margins are often expensive and time-consuming, requiring a considerable upfront investment. Most companies step back from entering into the risk of engaging in driving change to gain butterfly effects and refrain from making large consumer products involving research and innovation investments (Economic Intelligence Unit 2005). A similar global study conducted by International Business Machines Corporation (IBM), in which over 750 corporate and public sector leaders were interviewed on the subject of innovation, researchers found that competitive pressures have pushed the business model innovation much higher than expected by many multinational companies seeking global expansion and exploring markets in the developing countries (Raphael and Christoph 2012).
Managing chaos in the market should be learned through the constructive strategies and analyzing multiple perspectives that have no fear of waning the image of the company that is engaged in driving change in consumer behavior. In a growing market chaos among the several competitive products that have marginal differentiation, global organizations need to develop quickly the customer values to streamline the desired change in market and consumer attitudes. Large organizations, if led properly, can do more for more people and flip the chaos, complexity, and pressure to manage the new-market endeavors. Nissan Automobiles has been able to cope with crises among the Asian automobiles and chaos of low-cost cars penetrating the potential emerging markets such as India and China. The chaos was triggered by the Nano brand of Tata Motors Corporation in India, which promised low-end price in the mass market. Similarly, in China, Faw Automobiles has driven its low-priced cars to the global markets. However, Nissan tried to cut through the chaos by generating diverse values concerning the quality and services among the consumers in the global markets (Barton, Grant, and Horn 2012). Increasing market competition has become an essential phenomenon in globalization, which does not always have a pattern. Competition in the regional markets often grow randomly by free entry and exits of firms of all categories, while the competition among the large firms operate in a streamline with reference to a particular product or service category. However, in both the market situations, competition generates chaos and companies try to implement various strategies to overcome the chaotic market conditions.
One of the common practices followed by most companies to create a distinct space in the market chaos is to carry out a well-defined differentiation in products and services that provides unique posture to the companies. Amidst the competitive fray, most companies drive enormous intellectual and financial resources into creating differentiated products or services for acquiring consumers and creating a defection in the strength of the competitor’s consumers. However, in many situations, differentiation may not be a profitable strategy. Companies drive consumers to learn about their preferences from advertising and pick up the right differentiation for gaining competitive advantage. As many consumers do not see advertising for all relevant alternatives, a significant fraction of them makes decisions with limited information about the available alternatives. The value of creating differentiated products is ambiguous when awareness of products and their characteristics is the key determinant of consumer behavior (Soberman 2003).
Market chaos and differentiation have a complex juncture, where competing companies are always averse to risk in achieving desired success. However, often, profitable strategies built on differentiation deliver customers the tangibles they value, that competitors do not have. Thus, most companies concentrate on continuous differentiation of their products or services to have unique selling propositions and wider outreach of consumer segments despite the variable outcomes across the markets and strategies. The differentiation matrix needs to be understood by the companies in reference to communication and advertisement, price, quality and perceived value, technology, and environment. In fact, companies can differentiate at every point where consumers’ preferences are guided by need, value for money, and peer response. Most companies open up their thinking in tune with the consumers’ experience to uncover opportunities to position their differentiated products in the markets through ways that keep the competitors inaccessible (Rajagopal 2014).
Companies in the complex competitive market conditions differentiate any product or tangible deliveries with intangible values to augment customer satisfaction. The differentiated product includes the generic product, competitive differentiation to add value to product, and affordable price to drive customer purchase intentions. The purchase intentions are driven by variables such as delivery, terms, support efforts, and new ideas, and the sale of the generic product depends on how well the customer’s wider expectations are met by the differentiated products and services. Most companies believe that successful differentiation with a wider outreach is possible by penetrating into lower-income consumer segments in the emerging markets through slashing price and adding value to the product features. Besides, companies appeal to potential customers by demonstrating that differentiations introduced by the companies act as competitive agents to enhance the value and lifestyle of consumers. Offering product differentiations with culturally appropriate positioning helps companies succeed in lower-income consumer segments in emerging markets (Rajagopal 2015).
Technology Growth
Technology growth is an ongoing process that allows the new entrants to identify their respective strengths and weaknesses. Analyzing the movements of parallel technologies developed in the niche, mass, and premium markets, a firm may develop better understanding of what products or services to offer in the segmented market, how to market them effectively, and positioning them appropriately in the given market. One way to measure the strength of an existing technology is to measure the consumer preferences for the same. Competitive intelligence involves legal methods of data collection and analysis, from scouring securities filings and news reports to database research to conversing with representatives of rival companies at trade shows. The soundness of the economy of a country largely governs the consumer confidence, which further determines the buying plans of the consumers. A favorable economic environment helps consumers optimize their buying decisions and augment propensity to spend money. International marketers should examine the extent to which their business is vulnerable to economic conditions. For example, in a booming economy, consumers tend to buy durable goods. On the contrary, in recession they avoid spending money. The prevailing economic environment is just an indicator to review the business fit with the technology and innovation in the given marketplace. Even if the short-run economic environment is not conducive to technology-driven profits, a company may decide to enter an overseas market in anticipation of favorable long-term economic prospects in the country such as growing political stability, declining inflation, or the low wage rates. However, the long-run perspective is the most critical decision factor, which provides the firm sufficient resources to endure waiting for the future favorable environment.
The market attractiveness of emerging technologies and innovations may be described from this point of view. The microeconomic environment of a technology, innovation, product, and market also play a significant role in its performance in the given consumer segments. The marketing approach comprising technology, product design, pricing, and advertising for the core of innovation management strategies in the competitive marketplace. Most firms believe that competing through business models is critical for success, but developing appropriate business strategies to push technology and innovations through the business models is a difficult task. Technology firms focus on creating innovative models and evaluating their efficacy. However, the success or failure of a company’s business model depends largely on how it interacts with the players within the industry and the competitive marketplace. Any business model can perform efficiently in a pure monopolistic or temporary-monopoly market conditions.
The technology in the photo film products has been growing with competitive price and promotion strategies among the major international brands such as Kodak and Fuji. The consumers have found Fujifilm as a close technology provider to Kodak. Fujifilm has emerged from a minor player in the early 1980s in American market to acquire the highest market share as well as the target of Kodak. The success of low-priced super stores such as Wal-Mart has taught retailers that diversification, scrambled marketing, and “one-stop” shopping is important to consumers. Technology growth with low-price products has provided Fujifilm the opportunity to prosper in the industry and the competitive marketplace. The high-level technology converged with the affordable prices and consumer acceptability has driven Fujifilm to sustain in the market and imagery industry. Though Kodak and Fuji always play the roles of market leader and challenger to acquire higher market share, the real benefactor is the consumer as both the companies officially deny that they are engaging in a price war but make strategic moves by carrying out continuous technological development. Kodak and Fuji traditionally enjoyed healthy margins and treated the market as a mutually profitable duopoly (Finnerty 2000). Once consumers tried Fuji, they liked the product as long as it was priced lower than Kodak. In the late decades of 20th century, the raging pace of competition between Kodak and Fuji was slowed down. However, still the companies are on neck-to-neck competition in the market, though other brands such as Agfa, Yashica, Minolta, and Sony, have made a dent in the global technology-led innovative photo film product markets.
Technology-led innovations and business models can be successful, provided they are user-oriented. The agile use of technology, however, can erode customer care. Firms must listen empathetically to the requirements of consumers to cater technology to the consumers, managers, and frontline employees. However, impulsive innovations targeted primarily at lowering the costs and increasing the use values have made many companies impervious to their customers. Such situation drives estrangement of employees from customers, and firms face difficulty in diffusing, launching, and serving the technology to the consumer segments. A number of innovative companies have shown intricate relations between businesses and consumers they serve. Indeed, technology can actually enrich consumers, provided firms uphold their commitment, involve empathetically with consumers, understand the ways in which current technology is valued by consumers, and co-promote the new technology and products through social networks and informal ways to help consumers in developing sustainable storyboards and inculcate trust on the firm and technology service providers (Gorry and Westbrook 2011). The market of mobile phones had received unexpected shocks in 2010 with the plans of Beijing Xiaomi Technology Co. Ltd. (Xiaomi) to launch innovative phones with a price-competitive bargain in Asian market. The company had gained the market in Asia and Europe since 2011 on its differentiated products and services and has grown into the third-largest cell phone brand in China and the sixth-largest in the world. The company has been successful in driving its innovative communication devices solely deployed in online channels, which has not only enhanced its market outreach but also contributed to enhance its market share. In the initial stage, Xiaomi depended on its own online channel to interact with consumers and make them aware of the product line of the company and analyze voice of customers to reinforce them in the market as user-friendly products and launch sales at large scale. Using the innovative product design, attributes, and price-competitive features, the Xiaomi product line was laid successfully in the Asian and European marketplace, and three years after its inception, the company established its flagship store on the largest business-to-consumer e-commerce platform in China to commercialize its innovative business project deliverables. However, Xiaomi was facing a series of challenges, such as competitors’ imitation (market disruption) and consumer complaints regarding services contracted through the third party (Cui et al. 2015). As the new technology is growing rapidly in the market, it is simultaneously bringing more challenges for the emerging companies to overcome the technology disruptions and consumer defections in the market. In the early 1990s, Teradyne and Hewlett-Packard identified new technologies that had enormous potential to cause new-market disruptions from the point of view of displacing the existing technology in use. Managers at both companies forced their organizations to invest time and money on these new technologies, believing they had a chance to enter new markets. Consequently, Teradyne’s efforts were soon rewarded with a new line of business that created revenues in excess of $200 million over the next several years (Gilbert 2003).
Cannibalization in global marketplace is very common in the liberal entry policies adopted by many countries in response to globalization. The expansion of product lines and continuous innovations drive cannibalization not only for the competing products but also within the product line of a company. Companies often design product lines by segmenting their markets on quality attributes that exhibit a “more is better” or “value for money” property for all consumers. Since products within a product line that have marginal differentiation turn as close substitutes and consumers self-select the products they want to purchase, such products often threaten competition among the products within the product line. Multiproduct firms need to meticulously address the cannibalization problem in designing their product lines and avoid product overlaps. It has been observed that if lower-quality products are attractive, consumers concerned for “value for money” may find it beneficial to buy lower-quality products rather than the higher-quality products targeted to them. Accordingly, lower-quality products can potentially cannibalize higher-quality products. The cannibalization problem forces the firm to provide only the highest-valuation segment with its preferred quality, while other segments get lower qualities than anticipated. The firm may not serve some of the lowest-valuation segments when the cannibalization problem is very severe. However, not much is known about how and when the cannibalization problem affects product line design in an oligopoly. Also, consumers may differ not only in their quality valuations but also in their taste preferences (Desai 2001).
Under some conditions, the cannibalization problem does not affect the firms’ price and quality choices and each firm provides each segment with that segment’s preferred quality. Each firm finds it optimal to serve both segments. In case the consumer preferences of the high-valuation segments are sufficiently weak, more intense competition in the high-valuation segment is expected to reduce that segment’s incentives to buy the product meant for the low-valuation segment. This mitigates the cannibalization problem and makes it more likely for the low-valuation segment to get its preferred quality. Similarly, when firms are less differentiated in the low-valuation segment, stronger competition between the firms makes the cannibalization problem worse, and the low-valuation segment may not get its preferred quality (Desai 2001).
Cannibalization has also become a critical phenomenon in selling products and services of identical nature in the competitive consumer segment. Consider a seller who faces two customer segments with differing valuations of quality of a durable product where demand is stationary and known, the technology exists to release two products simultaneously, and the seller can commit in advance to subsequent prices and qualities. Under the simultaneous strategy, the lower quality would cannibalize demand for higher quality. To reduce cannibalization, the seller could lower the quality of the low-end model and reduce the price of the high-end. Alternatively, he could increase the quality of the low-end model, but delay its release (Moorthy and Png 1992). Large firms in the global marketplace strive to reach the lowest consumer segments by generating the social impact and financial viability that provide optimal value for money to consumers. Thus, popular firms demonstrate higher brand equity at various tiers of market in a given region and assume challenging role to meet the twin goals of commercial profitability and social development of the firm. Firms with larger market share and higher equity implicitly signal lower perceived risk and higher acceptance by the marketplace. Such firms also tend to have larger resources, higher brand equity, buying incentives, and increased loyalty, and undertake higher advertising levels at the bottom line markets (Anderson 1979). The competing firms show higher concerns on quality, cost, and management factors in order to prove better over others in the marketplace. Competing firms try to attract the consumers by various means to polarize business and earn confidence in the market place. It is necessary for the successful business firms to look for a place of business, which provides them better location advantage and holds the consumers for their goods and services. Business cordoning or securing the trade boundaries is an essential decision to be taken by the competitive firms for building competitive strategies to attack rivals in the marketplace.
Disruptive innovation may be a product or a service designed for a new set of customers by defecting them from the existing stream of buying. Generally, disruptive innovations are technologically straightforward and convincing to consumers, and generate value for money. Some disruptive innovations offer more for less to customers through a different package of attributes that have higher significance to the consumers in the bottom-of-the-pyramid market segment than to those of the mainstream market. Christensen argues that disruptive innovations can damage successful brands and the well-managed products of reputed companies that are responsive to their customers and have invested resources in conducting excellent research and development to support innovation. These companies tend to bypass markets that are most susceptible to disruptive innovations as there appears the risk of low profit and scope of business growth. Thus, disruptive technology provides products and services with focus on the customer and drives strategically counterproductive impact on the existing products in a market. However, in a positive sense, the disruptive innovation may be considered as the constructive integration of attributes to the existing technology. Disruptive innovations generate radical insights that could help in improving the economic benefits to consumers and provide better opportunities for the firms to grow in mass market.
Most managers presume that the purpose of developing and implementing an effective marketing strategy is to drive the optimal profit and gain sustainability in the competitive marketplace. Thus, embracing chaos seems the opposite of discipline and planning in marketing theory. However, in practice, often uncertainty delivers opportunities amidst the threats in the market. Companies that ignore this fact and follow rigid strategies blind themselves to unexpected complexities and miss potential opportunities. In order to gain a competitive edge in market chaos, companies need to learn how to adapt quickly in changing circumstances. A study of U.S., Japanese, and European companies shows that large companies can be quick in technological innovation than the small companies but the conventional products might be capable of giving a tough battle for the large companies to carry regional expansion of business. However, effective management of innovation is surprisingly similar in both, where only the scale of operations differs (Quinn 1985). Small companies pursue their technological goals slowly by keeping costs low and protecting them over uncertainties and setbacks, but demonstrate the potential for adapting to market needs and delivering differentiated products for larger benefits. Innovative large companies face the unruly realities of the innovative process when competing companies turn to aggressive marketing strategies and the local markets are engaged in hatching disruptive innovations.
Technology has created an attractive product market and consumers are continuously motivated to consider a new option with better value for money. Technology innovation has made the emerging business firms creative think tanks. The 21st century is largely driven by the development of technology, and business enterprises are depending on technology not only to offer new products but also to drive consumers to more convenience-bound behavior. The technology growth in the society affects people (including consumers), products, operations, materials, manufacturing and marketing process, and the state of consumer preferences. Before employing any new technology, firms need to assess its social, economic, and legal perspectives. New technologies drive customer value and increase market competitiveness. As the advancement in technology emerges on the horizon, the existing businesses are threatened. Firms in marketplace strive to make a seamless transition to lead the competition. Such responses of competitors cede most of the established market to the adaptation of new, dominant technology and develop strategic alternative to head-on competition. The competing firms develop two types of bold strategies encompassing retrenchment to a niche of the traditional market, where the old technology has an advantage over the new one in addressing customer needs, and relocation to a new market, with superior offerings and low risk (Adner and Snow 2010). Increasing globalization and competitiveness in the retail environment is thrusting retail firms to reach high levels of consistent experimentation of new technology in store management, product information, and customer services. Technology management can be used to help retailers test new ideas and implement the most successful ones. However, human behavior is particularly important in the retail setting, where projects are generally focused on testing new concepts, increasing collaboration, and implementing new technologies (Thomas, Tillmann, and Fawcett 2008).
In the scenario of growing competition, retailer firms can also establish how customer relationship management and monitoring system ensure the buying decision-making process through the use of joint project teams and facilitating technology. Development and innovative applications of e-commerce transactions as well as the integration of available technology can provide an organization with a unique opportunity to remain competitive within today’s global business environment. Although technology plays an important role in gaining competitive advantage for organizations worldwide, information technology professionals, consumers, and e-retailers ensure proper security measures to overcome harmful impact of the misuse of these same technologies (Medlin and Romaniello 2008).
The technology impact on the various functions in retailing has been increasing. As the number of channels for a retailer increases, managing the dynamics of customer behavior in the rapidly emerging multichannel environment becomes complex. Building and retaining a long-term association with customers require that relationship management applications should be able to accommodate the various channels. Multichannel customers are the most valuable customers and, hence, multichannel integration would improve customer loyalty and retention. Besides self-service retail stores and grocery stores, technology has enormously supported the buying process of consumers for capital goods such as automobiles. The purchase of a car is a highly involved process when compared with other retail experiences. Despite the range of purchase channels available and the increased level of accessible information, majority of customers still choose to buy a car through a traditional dealer network. However, since the end of 20th century, computer-assisted buying process has been well received by customers (Reed, Story, and Saker 2004). The most evident reason to drive the companies go global is the market potential in the developing countries that act as major players in the world market. Companies such as Nintendo, Disney, and the Japanese motorcycle industries have been greatly benefited from exploiting the markets of the developing countries and reassuring their growth in the world market to harness the promising market potential. The emerging scope of spatial diversification has also been one of the drivers for enhancing the global business utilizing the additional production capacity at the economies of scale and low-cost outsourcing. The saturation of the demand for the products and services of a company in domestic market may also be an effective driver to globalization wherein the company looks for building value for its brand across the boundaries. A product that is near to the end of its life cycle in the domestic market begins to generate growth abroad. Sometimes, the cross-culture attributes of overseas markets become the source of new product ideation. Such backward sourcing of technology insights may also be considered as one of the potential drivers for globalization of business and explore the strategic alliances with prominent regional or multinational brands thereof.
Complexities in Technology Marketing
Market competition and growth of innovation and technology have always featured the unpredictable, the surprising, and the unexpected in the global marketplace. However, the increasing deployment of information technology in the firms has developed hyper-connectivity on the one hand and complexity in business management on the other. Market competition and growth of technology are now intertwined and interdependent as market need has become the principal driver of innovation and technology. The new products are embryonic to the consumer need and the market demand, and are grown largely on predicting outcomes. There are too many continuously changing interactive elements in play that create complexities in managing the marketing of technology-led innovative products in different market segments. Managers looking to handle these difficulties need to adopt strategic approaches rather than tactical ones for sustainable results, and to overcome conventional wisdom by using the models that simulate the behavior of the market players, including consumers in order to make the technology-led new products sustainable. They should also make sure that their strategies are future-oriented and can manage the market risk. Firms introducing new products rapidly in the marketplace should minimize the need to rely on predictions and work with the user-oriented product design and applications. They can list the complexity factors in a system and build the innovation projects to minimize the consequences of failures in the business system, develop strategic alliances to share the unforeseen risks in the innovation and technologies-led products, and enhance organizational capabilities and competencies.
Administrative complexities play a significant role in explaining new technology drive. Process simplification, zero-defect products, cost and profit, and overall governance of new products development have many odds to be either eliminated or managed within the organizational system. Most managers do not set up innovation platforms foreseeing the odds and complexities or think about them during the process and give up the business process. Such behavior is also significantly affected by the perception of administrative complexity. Firms that are engaged in rapid development of new products find the gap between diffusion and adoption. It is expensive for companies to manage over piled inventory of obsolete products unless they can be improved and revert to the active demand. Expensive downtime for production-line changeovers and merchandise languishing on retailers’ shelves or in their showrooms also cause serious concerns to the firms engaged in developing new products. For service companies, though, complexity is much harder to spot and root out, largely due to the ease with which new products can be created and marketed (Gottfredson and Aspinall 2005).
Large organizations are complex by nature and face new business challenges such as globalization, innovative technologies, and regulations over the period. Market uncertainties and competitive threats add layer upon layer of complexity to corporate structure and management. The technology marketing grid has several factors that pose conflicts and challenges to the innovation and technology development firms during different levels of the process. The complexity grid comprises 12 commonly observed points of conflicts, with independent effects of each point as well as in a matrix form. The conflict points in the grid include ideation, resources management, process management, capabilities and competencies, technology marketing, growth and next-generation innovation and technology issues, involvement, organizational policies, operational efficiency, competitive decision, business environment, and organizational culture, all of which nurture the innovation and technology development projects in the firm. In the complexity grid ideation process, the extent of involvement of employees, consumers, and market players stage cognitive and organizational conflicts and challenges, while management of resources and organizational policies raise various challenging issues during different phases of innovation and technology development. Similarly, the process and operational efficiency commonly drive various issues of concern in reference to capabilities and competencies, and work culture of the organization. Firms face many conflicts during the innovation process on marketing of the technology-led products and the existing business environment. Moving the innovation and technology to next generation is also not an easy step-up as firms often get snared in the unwise competitive decisions in an effort to push the innovation and technology-led products in the marketplace.
Large firms have been the driving force behind the market economies in the developed countries. Traditional theories suggest that new products that are not consistent with the existing demand retard economic growth. Classical theories suggest that serving products to the existing market demand is safer than creating demand in the market to position the products. However, the global competition and changing consumer behavior on experimenting new products have raised new theoretical concepts on the relationship of launching new products with the market demand. Large firms are engaged in continuously developing new products and could benefit, in contrast to small firms, from economies of scale and scope. Many economists believed that larger firms would lead to more economic growth and that the share of small firms would eventually disappear or reduce to only a small fraction. Globalization has induced extensive cross-culture working ambience and driven most firms to multidimensional manufacturing and marketing operations to sustain in the competition marketplace. Hence, most firms have become increasingly complex and ungovernable causing decline in performance, unclear accountability, and opaque decision process that raise questions on the sustainability of the firm. To avoid frustration and inefficiency, executives need to systematically address the causes of complexity using a simplicity-minded strategy in their companies by streamlining the structure, pruning nonresponding products before introducing new products to create space, building disciplined processes, and improving managerial behavior (Ashkenas 2007).
Firms operating in niche environment have tried to secure against risks by focusing on potential threats outside the organization like competitors, shifts in the strategic landscape, natural disasters, or geopolitical events. They are generally less skillful at detecting internal vulnerabilities that creep into organizations through various interrelated systems. Indeed, as firms increase the complexity of their systems they often tend to fail, drawing sufficient attention to the introduction of new products and strategies and manage growing system flaws. The possibility of random failure rises as the number of combinations of factors that can go wrong increases, while the opportunity for competitors to counter strategies also goes up. Firms should meticulously assess the risks in technology marketing and stay aware of market information to guard against market uncertainties and make appropriate decisions. It is also necessary for technology marketing firms to identify vulnerabilities in the marketplace and fix them before competitors or disruptive innovation products attack the new technology products (Bonabeau 2007).
Business leaders have expressed that previous assumptions and business models developed to cater regional oligopolistic market requirements are inadequate to help managers in understanding the strategic needs for global markets. Management practices that are guided by complexity science lead to a highly human-oriented approach to business that not only brings greater purpose and fulfillment to people’s lives but also steers organizations to greater financial success (Hoe 2001). In today’s increasingly competitive global marketplace, companies create value and ensure survival based on their ability to manage the complex web of suppliers and customers comprising their value chain. At the heart of this process is the accurate, timely, and complete disclosure of information between value chain partners to enable the types of coordinated action mandated by exchange partners (Hausman et al. 2005).
Temporal and Spatial Factors
There are many externalities in a market that influence decisions of companies on the most appropriate time to launch new consumer products, including issues of seasonality. Clearly, it should be beneficial to launch a new product as seasonal demand grows, and predicting this high season for a product is vital (Radas and Shugan 1998). The timing of new product introduction has drawn significant research interest and many studies have traditionally analyzed the introduction of new products within the context of product line expansions in a given time. It has been observed that optimal timing of introducing two new products depends on the degree of substitutability between an extension of an existing product line and the introduction of an improved product (Wilson and Norton 1989). A sequential introduction of two new products in the market comprising one of a high quality, and the other of lower quality alleviates cannibalization by forcing consumers of the lower-end product to wait before they make a purchase. With this strategy, the company balances the benefits of weaker cannibalization against the deferring of profits from the low-end product. Hence, producers may delay introducing new products until the need for growth is felt to be greater than the fear of cannibalizing their existing products (Moorthy and Png 1992).
Integrated product development is an approach for developing new products focused on the early and active involvement of design, manufacturing, marketing, and other key new product development (NPD) stakeholders in order to achieve cross-functional integration and concurrent execution of various NPD activities (Boyle, Kumar, and Kumar 2006). Firms can synchronize introduction of new product in reference to the seasonal demand expansions, as they are more regular and predictable than those of the business cycle. Hence, demand fluctuations can explain more of the seasonal variability of new product introductions than that of the business cycle. Firms are also responsive to the business cycle market expansions, as the demand expansions at macro level are usually stronger and more persistent than the seasonal ones. Various factors including timing, logistics, inventory, and competitive strategies influence new consumer products in the market. Pricing is one of the major factors that affect the performance of newly introduced products at a given time and market as it stimulates the demand upward or downward (Calantone, Cavusgil, and Zhao 2002). Fluctuations in demand are attributed to diverse factors, mainly competitive conditions, consumer preferences, and distribution systems. It has been observed that seasonality in new product introduction is reflected in one of the three main strategy manifestations—diversification of the product mix, change of the consumer mix, and aggressive pricing. There are three kinds of demand variability, including structural (e.g., seasonality), managerial (e.g., promotions), and random (i.e., unpredictable) among the consumer food products that affect consumers’ perceptions, product attractiveness, and buying decisions. It has been observed that while structural and managerial variability govern the market demand, random variability influences consumer satisfaction and buying behavior in reference to competitive advantages on existing brands (Caniato et al. 2005). Introduction of new technological products makes it important for marketers to understand how innovators or first adopters respond to persuasion cues. It has been observed in a study that innovativeness and perceived product newness, which are the constituents of new product attractiveness, are independent constructs that have independent effects on consumer’s attitude toward the brand and purchase intent for the new product (Lafferty and Goldsmith 2004).
Introduction of new brands in a product category in a given market is subject to seasonal variation in market demand derived by consumer preference, advertising recall, product attribute positioning, purchase intent, availability of the product, perceived use value, and overall competitive advantage of the new products. Analysis of the variables in the study would help managers develop appropriate strategies to launch new products and optimize the profit of the firm in a synchronized pattern emerging from market demand and seasonality. A Company may also need to consider emphasizing on integrated promotion strategy for new brands in reference to attributes, awareness, trial, availability, and repeat (AATAR) principle. In highly competitive markets, research methodologies need to be adapted to understand the end-users’ needs with greater clarity than hitherto when new products were developed. Integrating marketing and sensory analysis to measure customer preferences for the extrinsic and intrinsic attributes of new products can help consumers by augmenting perceptions on quality (Rajagopal 2008). One of the challenges for the marketing manager of a firm is to incorporate preferences of the consumer into the design of new products and services in order to maximize the consumer value. An augmented and sustainable consumer value builds loyalty toward the product and the brand. Systematically explored concepts of demand seasonality and market-driven approach toward new products would be beneficial for a company to derive long-term profit optimization strategy over the period. In order to gain returns in the short run by measuring appropriately the seasonality and market demand effect, companies may need to meticulously determine the profitability associated thereof in terms of product attractiveness, volume of buying and market share while introducing new products in a competitive market environment.
It would be appropriate for a company to develop a two-dimensional seasonality metric taking into consideration the attributes of new products and consumer preferences in various food product categories. A mismatch of new product introductions with seasonality and market demand patterns may create negative effect in the market in terms of consumer choice, buying behavior, retail store environment, sales personnel attitude, pricing policies, and promotional activities. On a tactical level, managers need to consider the optimum spread of consumers on a matrix of product attractiveness and market coverage. Besides market demand, managers also need to consider planning differentiation with large product portfolios operating in volatile markets, which are governed by asymmetric consumer behavior. In addition, the complexity of market, channel, and supply networks make supply chain planning more intricate. Hence, companies need to critically consider new product launch solutions in reference to market demand and consumer behavior on a case-by-case basis. In order to cope with the increasing competition, food products manufacturing firms need to continuously launch new products. However, adoption of new products may require substantive cognitive efforts from consumers. Therefore, firms should be able to monitor and influence their consumer’s knowledge base along with the shifts in the market demand.
Success of new products is a major concern of companies as it determines their standing in the marketplace. Strategies that can provide innovative combinations of products and services as “high-value integrated solutions” tailored to each consumer’s needs, instead of simply “moving downstream” into services are being developed by large and reputable firms in order to sustain in increasingly competitive markets (Davies 2004). Innovative combinations of service capabilities such as operations, business consultancy, and finance are required to provide complete solutions to every consumer’s needs in order to augment the consumer value perceived in innovative or new products. The time gap between changes in customer preferences and product mix affects the introduction of new product and its life cycle in a given market environment. The consumer product manufacturing and marketing firms observe seasonality within markets, and are exposed to demand volatility for certain elements of the complex product mix. Market-responsive manufacturing strategy entails adaptive and flexible production and supply capability in conjunction with real-time market interaction through profit optimization.
It has been observed that the effects of consumers’ decision on their probability to try new product are systematically moderated by elements of the marketing strategy associated with the new product (Steenkamp and Gielens 2003). As new products are introduced, a firm may routinely pass operational costs on to consumers resulting in high prices. However, some marketplace and experimental studies show that consumers are more sensitive to changes in price than to innovation and new products introduced by the firm (Gourville and Koehler 2004). Accordingly, a more effective strategy in a competitive situation may be to maintain price, with greater emphasis on quality, brand name, postsales services, and consumer relations management as nonprice factors in order to drive the new product in the market. In addition, variations in seasonality and market demand also affect new products. The impact of seasonality on demand suggests that firms may reasonably expect growth and decline in demand parallel with those effects that influence the firms to take decision on developing and launching new products. Accordingly, firms find it better to launch new products into a growing market rather than a declining one.
The key factors fostering growth in packaged food markets are convenience, functionality, and indulgence, with packaging becoming an integral constituent of processed food products that contributes to consumer value and market demand. Recent trends in the marketing of functional foods suggest that multiple-benefit products are becoming more common, and frequent introduction of new processed food products in the market is being encouraged. Companies stimulate consumer preferences for new product introductions based on some specific nutritional attributes; for example, tomato juice with soy positioned on its organic and nutritional attributes. While naturally occurring nutrients are preferred over fortification, health benefits and the use of natural ingredients are positively valued. However, such preferences and valuations are influenced by an individual’s education, income, and food purchase behavior (Teratanavat and Hooker 2007).
There are many marketing concepts including market orientation, marketing competencies and resources, and competitive marketing strategies that explain success among small agro-food companies in international markets. Some research studies indicate that the influential impact of adopting a market orientation, developing competencies in advantage-generating consumer food products, channel and relationship management areas, leveraging strategically relevant managerial, production and brand resources, and deploying appropriate competitive marketing strategies significantly affect the process of new products introductions and variability in their cyclicality (Ibeh, Essam, and Panayides 2006). Consumer-oriented innovation is an increasingly important source of NPD and competitive advantage in reference to the speed with which product innovations are introduced to the market. In many cases, aesthetic properties are as important as technical functions. When one considers the subjective part of the requirements, the feelings, impressions, sensations, or preferences of the consumers must be quantified and modeled in advance. This is a major challenge in new consumer products design (Petiot and Grognet 2006). There are many externalities in a market that influence companies’ decisions on the most appropriate time to launch new consumer products including issues of seasonality. Clearly, it should be beneficial to launch a new product as seasonal demand grows, and predicting this high season for a product is vital (Radas and Shugan 1998).
The timing of new product introduction has drawn significant research interest and many studies have traditionally analyzed the introduction of new products within the context of product line expansions in a given time. It has been observed that optimal timing of introducing two new products depends on the degree of substitutability between an extension of an existing product line and the introduction of an improved product. A sequential introduction of two new products in the market comprising one of a high quality and the other of lower quality alleviates cannibalization by forcing consumers of the lower-end product to wait before they make a purchase. With this strategy, the company balances the benefits of weaker cannibalization against the deferring of profits from the low-end product. Hence, producers may delay introducing new products until the need for growth is felt to be greater than the fear of cannibalizing their existing products. Emphasis on the drawbacks of inappropriate timing of introducing new product has been studied by some researchers (Rajagopal 2008). The research tested empirically the relation between the timing of a new product introduction and its market success. In the retail food sector, it has been observed that entry-based advantages for new products are due to the relationship between market demand and consumer perceptions. The perceptual measures of overall preferences and attribute-level beliefs contribute to the success of new products. However, early entrants are perceived by the customers to be significantly superior to later entrants (Denstadli, Lines, and Grønhaug 2005).
Introduction of new products in the marketplace seems critical for many companies to check decline in the overall sales volume of their products and prevent consumers from switching to other brands. However, timing of launching new products is crucial for their success in the market and companies need to analyze carefully market conditions before introducing new products (Axarloglou 2003). Introduction of new consumer products often faces operational problems in managing proper supplies. Manufacturers of consumer goods need to see the market situation and end consumer demand in order to efficiently allocate production capacity and procure materials. However, the difficulty of obtaining timely and accurate demand data from the point-of-sales (POS) calls for alternative solutions. A research study offers a solution that is based on readily available sell-through data from channel partners, such as distributors, to monitor what happens in the market in product introduction situations. The difficulty with using demand information from distributors rather than the POS is the bullwhip effect that distorts demand as you move upstream in the supply chain (Salmi and Holmström 2004). Physical factors such as time and place involved in buying new products also affect consumer decisions toward new products.
Managing Low-End Market Segments
In the growing competitive spree, multinational companies are exploring remote markets to position global brands. This strategy has leveraged market access of global brands to regional level. Such accessibility to the markets is further reinforced by reducing the trade barriers through far-reaching business communication strategies, product and market development programs, and consumer relations. Markets for implementing brand strategies can be divided into three levels comprising premium markets, regular markets, and low-end markets located in rural habitat in a region. Consumer behavior toward large firms in the premium markets and regular markets are generally driven by push factors including brand equity, brand personality, and brand endorsements, while brand strength is determined by the consumer pull factors such as price advantage, social status and perceived use value in the low-end market segments (Rajagopal 2009). The competing firms show higher concerns on quality, cost, and management factors in order to prove better over others in the marketplace. Competing firms try to attract the consumers by various means to polarize business and earn confidence in the market place. It is necessary for the successful business firms to look for a place of business, which provides them better location advantage and holds the consumers for their goods and services. Business cordoning or securing the trade boundaries is an essential decision to be taken by the competitive firms for building competitive strategies to attack rivals in the marketplace.
The Darwinian principle of struggle for existence for the firms at the bottom-of-the-pyramid market segments of the society argues that, moving beyond decades of mutual distrust and animosity, competitors keep learning to cooperate with each other for mutual gains. Realizing that their interests are converging, firms are working together to create innovative business models that are helping to grow new markets at the bottom-of-the-pyramid market segments. Firms from Brazil, Russia, India, and China are also eager to enter the global marketplace. Yet, multinational companies typically pitch their products to the tiny segments of affluent buyers in the emerging markets, and thus miss out on much larger markets further down the socioeconomic pyramid (Prahalad and Lieberthal 2003). The low-end philosophy of business further argues that by stimulating commerce and development at the bottom of the economic pyramid, multinationals could radically improve the lives of billions of people and help create a more stable, less dangerous world. Achieving this goal does not require multinational companies (MNCs) to spearhead global social development initiatives for charitable purposes but rationally establish business by positioning global brands also in the low-end markets (Prahalad and Hammond 2002).
The low-end marketing strategies are contemplated toward stimulating commerce, which reveals that multinationals could radically improve the lives of billions of people and help to create a more stable, less dangerous world. Achieving this goal does not require an MNC to spearhead global social development initiatives for charitable purposes. The philosophy of managing bottom line markets gave a clear indication to the MNCs that the reluctance to invest is easy to understand, but it is, by and large, based on outdated assumptions of the developing world. Although individual incomes may be low, the aggregate buying power of poor communities is actually quite large, representing a substantial market in many countries for what some might consider luxury goods such as satellite television and phone services. Because these markets are in the earliest stages of economic development, revenue growth for multinationals entering them can be extremely rapid. The debate on low-end markets throws various perspectives concerning global firms that confront their own preconceptions particularly about the value of high-volume and low-margin businesses for companies to master the challenges or reap the rewards of these developing markets. Thus, global firms need to start thinking about their marketplace as all six billion people on the planet. Global firms could augment revenue through poverty alleviation as the poor deserve world-class products and services. The lifestyles of the poor are different than what their income levels might suggest, as can be seen from the way poor people allocate their income to consumption (Prahalad 2002).
Global companies are targeting their brands in low-end market segments comprising large consumer communities with small per capita purchases. These companies are developing low-end market strategies based on personal brand relationships, with local institutions, retailers, or distributors of global brands in the region. Low-end market segments have been identified as potential outlets for global brands when the semi-urban and rural markets are modernized. Globalization has segregated the consumer behavior in rural and semi-urban marketplaces and influenced the urban marketplaces (Cruickshank 2009). Intensive competition from global firms not only decreases the market share of small and medium enterprises that are grown locally but also induces price wars, reducing profit margins and limiting market growth of firms. This situation motivates companies to consider positioning their brands in the unexplored markets, and by targeting these segments with products in small packs at lower price points, companies might experience great success. The low-end market segment that constitutes large number of small consumers has become the principal target of most of the consumer brands emerging from multinational firms. The brands penetrating at the low end of market should provide constancy and agility at the same time. Consistency is required if the brand is to build awareness and credibility while agility in the brand builds perceived values among consumers. Agility is required if the brand is to remain relevant in a free marketplace (Blumenthal 2002).
Globalization thrust in the market has increased competition on the one hand and behavioral complexities of consumers on the other. The traditional marketing and branding strategies of multinational firms are gradually refined in reference to changing business dimensions to gain competitive advantage. It is observed that in current times marketing-mix strategies considerably influence branding strategies in different types of markets. Marketing mix has now stretched beyond product, place, price, and promotion dimensions to packaging, pace (competitive dynamics), people (sales frontliners), performance of previous brands, psychodynamics (consumer pull), posture (brand and corporate reputation), and proliferation (brand extension and market expansion). Previous researches have established that there is a close relationship between the firm’s attributes and the corporate image concerning the emotional values of consumers. This relationship in turn influences the consumer’s responses toward building brand loyalty at the lower layer of markets in a region. The quality connection between personality traits and corporate image depends on the perceived attractiveness of the brand to a large extent. However, the role of attractiveness in the relationship varies across individual brand personality dimensions (Hayes et al. 2006).
Firms penetrating in the bottom-of-the-pyramid market segment largely affirm the value to the consumers in reference to the strategies pertaining to product, price, place, promotion, packaging, and psychodynamics. When a firm in low-end market segment is supported by these strategies, it develops consumer pull effect and becomes more tensile. Such firms face consumer sluggishness in the beginning, but become strong over time with increasing consumer satisfaction on the brand. On the contrary, the global firms are found to be initially stronger in perceptional values of consumers, which turn sluggish over time as the new brands penetrate in the low-end market. Thus, often consumer brands in the premium markets live in agility. The relationship between the brand and consumer personalities has three dimensions—strong, vacillating, and weak. The strong hold of the relationship leads to loyalty development, while the weak links form the discrete relationship. The vacillating dimension thereof cultivates the risk of brand switching due to uncertainty of consumer decision to get associated with the brand or otherwise.
Firms in low-end market segments are largely identified in the context of packaging. A study revealed that rural residents in India found that packaging is more helpful in buying, that better packaging contains a better product, and that they are more influenced by the ease of storing a package than their urban counterparts. Easy-to-carry size of package, gross weight, simplicity, transparency, and similarity of packaging have also emerged as critical brand identity factors among the consumers of low-end market segments in urban areas (Rajagopal 2010). Low-end brand strategy demands intensive advertisements, sales schemes, and attacking sales force. Low-end brands should show strong point-of-purchase displays, sales promotion schemes, and consumer response analysis at the retail outlets. Brand equity and price premium on the consumer products in the low-end market segments delineate the role of uniqueness, together with the awareness, qualities, associations, and loyalty as principal dimensions of brand. Relevant brand associations such as origin, health, organizational associations, and social image along with the quality attributes such as taste, odor, consistency/texture, appearance, function, packaging, and ingredients are the major variables that influence consumer behavior toward brands in the low-end market segments.
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