India

'Reduce drinks packs, not price, and target the bottom of the pyramid'

By RJ Whitehead

- Last updated on GMT

'Reduce drinks packs, not price, and target the bottom of the pyramid'

Related tags: Marketing

Beverage brands must appreciate how perceived packaging wisdom in a mature market may be inappropriate if it is applied in emerging markets like India.

Marketeers also need to accept that national markets can vary wildly in their own consumption patterns largely due to the disparity of wealth inside the borders of a number of Asian countries, says James Maddock, Euromonitor International’s packaging analyst.

In many developing markets, especially those in Asia, consumers simply do not have the ability to purchase products in the quantities that those in developed nations can, and do​.”

Bottom of the pyramid

To grow their markets, Maddock believes brands should not focus on a country’s higher earners, who can afford their products, but instead target lower economic groups. They should do this by introducing smaller pack sizes that are within the means of consumers with very limited disposable income. 

Two main benefits could be gained if this kind of relationship were established, he says.

The most obvious is that by bringing your product into the range considered affordable by a new consumer band, you increase the amount of product you can actually sell. Reaching a level of affordability through pack size reformulation, as opposed to price reduction, will also help safeguard margins​.”

The second benefit is not as immediately advantageous as the first, but maybe more lucrative in the long-term, though it is much harder to measure and will take time to evaluate. 

By reaching out to the lower-in-the-pyramid consumers and creating a sense of brand loyalty, brand owners will be in pole position to reap the rewards with the climb of the income bands of these consumers​.”

Coca-Cola reaped the benefits

Coca-Cola is one of the brands targeting India’s lower socioeconomic groups, having decided on this policy ahead of pitching to the more affluent at a higher price point.

Over the last five years, the company has sought to strengthen its position by using this tactic for its Maaza brand, which is best known for its mango juice cartons.

Coca-Cola launched Maaza in 100mm Tetra-Pak containers with a retail price of just Rs5 (US$0.08) in a move designed to increase its access to the market.

"There are 2m retail outlets in rural India where we sell our products. There are consumers who want packaged beverage at an affordable price​,” said Atul Singh, Coca-Cola India’s president and chief executive at the time of the launch of the new carton. 

We have been working with our suppliers to get affordable packaging and have got Maaza at the right price point​.”

This approach is why Maaza has been so successful, says Maddock.

Today Maaza is the top juice brand in India and concerted efforts to connect with those rising into the country’s middle-class should help Coca-Cola to maintain its position​.”

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