Case-1 Kurlon Ltd This case discusses the following issues Brand equity Product development/modification Brand portfolio decisions Costing of the product Pricing of product Brand positioning Promotion budgeting Advertising Content analysis “Let us plan for a meeting of the four Deputy General Mangers (DGMs), along with both of us in a month's time here in Bangalore. Alex can also join us”. Suggested Mr Shivram Bhat, Vice President (VP), Marketing of Kurlon Ltd to his subordinate Mr Pradeep Menon, DGM, Marketing and Information System (M&IS). “Yes, Sir, we need to do something innovatively to once again accelerate our pace of growth. Maybe we were never used to a decline in our market share that, we have all become very complacent over the last few years. Sir, it is not difficult to be back on our usual growth path, But, I feel, the intervention has to be done much more professionally,” quipped Pradeep to Shivram. Both, were discussing the overall performance of Kurlon Ltd as the financial year 2003 draws to a close. They were trying to figure out whether the drop-in sales were due to the flaws in product design in terms of features and benefits offered to customers, changes in positioning strategy, low differentiation in the brand This case was already published in ITM-Ahmedabad's Vikalpa, Vol 31, No 3, July-September 2006. This case titled “Kurlon Ltd” was prepared by Dr Simon George, Professor of T'A Pai management institute (TAPMD, as the basis for class room discussion, rather than to illustrate either ineffective or effective handling of an administrative situation, Dr Simon George, TAPMI, Manipal, e-mail: simon@tapmi.edu. in, Copyright IIM- Ahmedabad. Published with permission. 2015, 1Cases in Brand Management and Services Marketing portfolio, ineffective advertising and promotion strategy, wrong costing and pricing structure and even poor motivation to dealers. Their discussions were inconclusive as they realized that the time was too short for elaborate discussions and the issues were so large as well as the magnitude of problems were big enough, requiring the participation of more members of the senior management team. “Then, we will plan for a two-day meeting of all the DGMs here in Bangalore in the last week of this April. Why don’t you organize the same?” Shivram told Pradeep. Kurlon Ltd-A Profile: Karnataka Consumer Products Ltd (KCPL) was established in 1962 with the intention of manufacturing relaxing and sleeping accessory products. KCPL wanted to establish itself as a reputed player in the comfort industry. The company had its modest start by manufacturing cushion seats and bare blocks made of polyurethane foam for the automobile sector. The factory was set up in one of the main industrial estates of Mysore. The company started introducing the concept of rubberized coir and cushioning material using the know-how, which was imported from Austria and using raw materials available locally. KCPL is headquartered in Mysore while its Marketing division is located in Bangalore. KCPL introduced for the first time in' the country the concept of rubberized coir mattress, in the year 1965 under the brand name of Kurlon, It seemed the market was not ready for such an innovative product as the sales was found too sluggish in the beginning years. But the company was compensating the sales of this product by brisker sales through its other products like cushion seats and bare blocks. The company’s business during those days came largely from supplying bare blocks of rubberized coir to furnishing and automobile manufacturers, who could finish the products according to their requirements. For nearly two decades, KCPL moved on contently supplying bare blocks of rubberized cushioning material to industrial buyers like Premier Automobiles, Mahindra and Mahindra and Nissan, It also started supplying the rubberized coir matiress blocks to products according to their requirements. It also started supplying the rubberized coir mattress blocks to other mattress manufacturers who slowly started accepting the concept of rubberized mattress, which was in a big way different from the traditional cotton mattress. In 1985, the company d:cided to go for a forward integration by manufacturing its own range of finished rubberized coir mattress for the end user, under the brand name of Kurlon. By 1985, the company had a capacity to produce 800 tons of rubberized coir. Of the above quantity produced, 60% was being sold as bare blocks and the rest as finished mattress. But in 1987, the company stopped its line of bare blocks business and concentrated mairily on finished mattresses. In the 1990s, KCPL added pillows, bolsters, and cushion seats to its product portfolio. The company’s product portfolio consisted of mattresses, pillows, towels, doormats, and bed sheets under the Kurlon~ Korlon Ltd brand name. Rubberized coir mattress contributed to 92% of its sales. In 1995, the company changed its name from Karnataka Consumer Products Ltd to Kurlon Ltd. Company Performance Kurlon Ltd is a public limited company promoted by one of the highly successful entrepreneurs in South India. It is managed by a group of well qualified professional managers. Over the years, it has become the leader in Indian comfort mattress industry. In 2001-2002, the company had sales of Rs 1174.0 million with a PBT of Rs 44.0 million (See Exhibit 1 showing the sales performance of the company). But, for the year 2002- 2003, the company chalked up a sale of Rs 1172.50 million with a profit before tax of Rs 10.2 million, with report of drastic drop in sales and profitability in the current year Exhibit 1: Sales performance of the company over the years Year Sales (Rupees in million) 1987-88 82.66 1988-89 122.21 1989-90 168.55 1990-91 210.15 1991-92 278.19 1992-93 361.27 1993-94 483.79 1994-95 735-65 1995-96 1009.24 1996-97 1095.72 1997-98 1130.02 1998-99 1162.84 1999-2000 1162.50 2000-01 1132.85 2001-02 1174.05 Kurlon also exported its products to West Asia, Singapore, Australia, Middle East countries, Sri Lanka, Maldives etc. Even though, there were complaints from some of the countries regarding the product, the export sales had been reasonably satisfactory. Exports contributed to 10% of its mattress sales. The company sawits sales in some of these countries saturating, as customers in these countries were developing a strong preference for full foam or spring based mattresses. The company’s profit and loss account for the two recent-years are shown in Exhibit 2. 3 hCases in Brand Management ond Services Marketing Exhibit 2: Profit & loss account for the years 2001 and 2002 31 March 2002 1 March 2001 Rupees (in million). Rupees (in million). INCOME: Sales 1165,68 1126.38 Other Income 8.31 6.47 1174.00 1132.85, EXPENDITURE: Cost of Sales including Selling & Administrative expenses Raw materials 549.26 533.05 Manufacturing expenses 61.99 46.17 Wages &Salaries 39.28 37-39 ‘Transport& Freight 102.05 99.03 Commission on Sales 82.54 75.31 Sales Promotion 13.36 19.49 Advertising 40.97 43.20 Other Expenses 165.96 196.17 1055.45 1049.83 Bank & cther Interest 49.07 55.87 Depreciation 22.89 22.36 1127.42 1128.07 Prior year item 258 6.84 Profit before Tax 44.00 11.63 Less: Provision for Tax 10.50 1.30 Profit after Tax 33.50 10.33 Product Details Rubberized coir mattress is an evolution from the traditional cotton mattress. Kurlon mattress is made of million of coir fibers bonded with latex, and compressed to form rubberized coir block. 4 reinforced high density center part supports extra body weight and prevents sagging while a person rests or sleeps on it. When a person sleeps on a soft mattress, the spinz tends to curve due to lack of support. Hence, the muscles of the back tries to pull the spine back to its original position throughout the night, causing back ache over a period of time. Some of the good quality mattresses have a density of only gokg/M3 whereas the most common ones sold in the market had a density of 18 kg/M3, The rubberized coir mattresses made by Kurlon have an average density of Sokg/M3 while, orthopedic mattresses have a density of 100kg/M3. Kurlon mattress’ design structure allows free circulation of air and prevents heat buildup between the mattress and the cot. A layer of foam is laid over the rubberized coir block to provide acequate cushioning for the mattress. A wide variety of machine sewn tapestry gave the \inal touch to the mattress, 4Kurlon Ltd Manufacturing Process ‘The basic raw materials used for the manufacture of Kurlon’s rubberized coir mattress are coir obtained from coconut husk, liquid rubber/latex and foam. The husk, which is obtained after removing the coconut from the shell is passed through rollers and crushed so that, cracks are formed in the husk. The cracked husk is soaked in water for the fiber to become soft, The husk is then, passed through spiked rollers, which tore the fiber loose. The loose fibers are then, made into ropes. The ropes are then, kept in curled form for two or three months. This stage of processing is done outside the factory at various other sites. In the factory, the ropes are unwound so that, each fiber is in the form of a spring. This coir spring has resilience and forms the basic structure of the mattress. This coir is pushed into a convelor and sprayed with liquid rubber known, as latex. (Latex is liquid rubber obtained from the rubber tree as a result of tapping). Latex is mixed with chemicals like stabilizers, accelerators, etc. before spraying on the coir. The rubber sprayed on the fiber helps to bind the coir fiber together resulting in continuous sheets of rubberized coir. This sheet is cut to the required size. Five to "six fleeces of coir and latex are laminated together to form a rubberized coir pad. The rubberized coir pad is put in a hydraulic press and pressed to the required thickness. This rubberized coir pad is then, vulcanized to form the mattress. It is this hydraulic pressing and vulcanization stage in manufacturing, which gives the required density and thickness to the mattress. The vulcanized pad is then, trimmed to the correct size. Kurlon added two thinner layers of PU foam on the two sides of the rubberized coir blocks for creating softness. This is then, covered with cloth to form a mattress. Product Varieties Based on the raw materials used, the mattresses available in the market could be classified under the following four categories, namely 1. Natural: Rubberized coir, cotton 2. Synthetic: Full PU foam 3. Spring mattress: Foam and steel springs, and 4. Latex rubber mattress. But, Kurlon manufactured only rubberized coir mattresses. The most popular varieties of mattresses in India are that of cotton, rubberized coir and foam, These three varieties differ in density, freshness, comfort, strength, and shape retention. Cotton mattress in India has a market share of about 70%. Cotton mattresses are very widely used in rural India. In many foreign countries, mattresses are made of springs. Spring mattress has extra springs in the centre which occupies more than one third of the space. This is to support the extra weight of a man’s body. Three years ago, Kurlon decided to have spring reinforcements for its mattress. A foreign collaborator alsq was identified for the same. But since then, the project had 5Cases in Brand Managemient and Services Morkefing ” to be shelved for some time. Full foam mattresses are also popular in many foreign counties. Full foam mattress brands are also available in the Indian markets. The — demand for good quality foam mattress is picking up in the country, especially in the metropolitan cities (See Exhibit 7). Foam mattresses are very light and are washable and cheaper than rubberized coir. A Comparison of the varios categories of mattress is given in Exhibit 3. Brand Portfolio ! The Kurlon factory also produces PU foam (which occupies 10-20% of volume of the rubberized coir mattress) which is used for packing the two sides of the coir blocks inside the mattress. Kurlon has the technology, process, and manpower to produce PU foam for making a full PU foam mattress. One estimate earlier done by the company showed that with an additional investment of Rs 70 million, the company could mass produce full PU foam mattress also. Exhibit 3. Comparison of product categories Mattress type | Advantayes [Disadvantages PU foam Soft, very light, foldable [Hot, expensive, sags Latex rubber__|Not as softas foam, comforTable __| Expensive ‘Spring mattress |No sagging, long life, supports back | Very expensive, could get noisy as the mattress ages Rubberized coir | Firm, reascnably priced Sags, not foldable Cotton mattress [Cheap, foldable, any size possible _ | Forms lumps and hence not uniform. Kurlon’s rubberized coir mattresses are available in five categories namely Apsara, Super deluxe, Romantique, Klassic, and Ortho. Kurlon offers approximately 94 varieties or models of mettresses under these five sub brands. (See Exhibit 4 for sub brand wise performance) i Apsara: It is an economy rnodel, It is available in cotton tapestry without quilting. It comes in three and four inches thickress. Super deluxe; It isa premium model. Itis available in cotton and satin tapestry with simple quilting. It comes in three and four inches thickness. Romantique: tis a super soft mattress encased in colourfully designed tapestry. Romantique is available in plain cotton viscous wide variety in quilt pattern. [tis available in 4.5 inches thickness, Klassic: it is the company’s super premium model. It is available in printed cotton viscous and “exquisitely” designed quilt pattern. It comes in five inches thickness. Ortho: A mattress with bonded foam for extra support. Ortho has cotton and satin tapestry with delicate quilt patterns. It is scientifically designed for total back cum spine support. It is available in four inches. {n 1990, Kurlon decided on a sub branding strategy of separately naming the various varieties of rubberized coir mattress brought out under Kurlon brand name. The sub branding was the result of the thinking by the company that, there exists differences inKurlon'tta the market in terms of customer's preferences towards benefits, attributes, and price expectations towards its mattresses. Hence keeping various segments in mind, Kurlon created sub brands, differentiating them and hence hoping to satisfy the various need levels. But these sub brands were added to their portfolio at various times. The first sub brand Apsara was added to the portfolio in 1991. It was launched to cater to the SEC-C, SEC-B2 and SEC-Bi (the eight Socio Economic classes (SEC) range from the uppermost, which is Ai to A2, Bi, Ba, C, D, and E1 to the lowest, which is E2). It was expected to create switching from the high-end cotton mattress users to rubberized coir mattress. Super deluxe was launched in 1992 and was aimed at SEC-Bi and SEC-A2. Klassic was launched in 1994 and was aimed at the highest end of the market i, e. SEC-Ai and SEC-A2. Romantique was launched in 1995 and was targeted at newlyweds and young couples in the SEC-A1, SEC-A2 and SEC-B1. Ortho was targeted at health-conscious SEC-A1, A2, B1 and B2 households. It was also targeted at older people in these four SECs and to those who have perennial back problems. Each of the sub brands have variants/models to fit different cot sizes and varied thickness needs. Exhibit 4: Category wise performance in year 2003 r LC ‘Apsara | Super deluxe | Klassic | Ortho | Romantique | Models 25 28 13 | 10 16 | Sales (Rupees in million) |_342.01_| 145.01 222.48 | 17513 | 196.27 | PBT (Rupees in million) | 2.90 0.91 1.86 1.22 1.33 The Market Rubberized coir mattress was bought mainly by the high-income group (See Exhibit 4). But out of this, households with income above Rupees 15,000 are the major customers of rubberized coir mattress. They constitute 35 % of the high-income group. The highest penetration for this product was in the South, followed by West, East and North. The penetration for PU foam and spring mattress is observed more in North followed by West, East and South. Exhibit 5: No. of households in the *high income (HI) category in India and Kurlon sales in the year 1998-99 India | North South| East | West Kurlon sales | Gn Rupees million) | Total households (in million) | 176.57 | 49.54 | 48.54 | 39.15 | 42.35 | Urban population (HI) 250 | 0.74 | 651 | 072 | 05.0 | 852.13 Rural population (HI)_1 237 | 073 | 0.24 | 0.45 | 0.74 280.72 Kurlon sales (in Million) = | 279.08 | 418.62 | 116.28 | 348.8: 1162.8: } * High income group consists of households with a family income above Rupees 8000 per month ' Institutional sales formed 8-10% of the company’s sales. The product was marketed to institutions like hospitals, hotels, railways, and transport corporations. 7Cases in Brand Management ond Services Marketing Costs and Pricing Raw material cost constituted 52% of the net billing rate (NBR) of a unit of Kurlon mattress. In this raw material cost component, the share of rubberized coir was 50% followed by 8-10% of foam, 13-15% of cloth, and 27% thread and label. The composition of other costs in the product were as follows: Manufacturing overheads-8%, Excise-4%, Administrative overheads—3%, Selling and distribution overheads 24%, Interest charges~4% and Margin—5%. The taxes (5%), and dealer margins were added over the NBR to fix the maximum retail price (MRP). Kurlon offered a dealer margin of 20%. Duroflex offered a margin of 29% while Bedsy offered 38%, Restolex-34%, Starlite-25%, Sleepwel-20%, and Springwel-25%. The prices of various sizes of Kurlon mattresses are given in Exhibit 6. It was found that some of the competing brands offered mattresses in different ranges in breadths of 30, 36, 42, 48, 60, and 72 inches with the standard lengths of 72, 75, and 78 inches. Their prices were also 10-20% lower than Kurlon mattress. Exhibit 6: Price of differen’ sizes of some popular Kurlon mattress models (in Rupees) Dimensions ‘Apsara Superdeluxe | Klassic_[ Ortho | Romantique Length*breadth | #3” 4 fa 3 72°30 1526.00 | 1825.00 | 1855.00 | 2209.00 | 3130.00 | 2619.00 | 2755.00 72°36 1791.00 | 217.4.00 | 2165.00 | 2529.00 | 3600.00 | 3070.00 | 3171.00 72°48 2285.00 | 2: 32.00 | 2757.00 | 3268.00 | 4635.00 | 4022.00 | 4076.00 75236 3852.00 | 7182,00 | 2246.00 | 2619.00 | 3733.00 | 3177.00 | 3283.00 75°42 2132.00 | 3512.00 | 2575.00 | 3018.00 | 4271.00 = ‘3757.00 75260 3119.00 | 3763.00 | 3748.00 | 4495.00 | 6406.00 | 3302.00 | 5561.00 78°36 1917.00 | 2253.00 | 2325.00 | 2719.00 | 3865.00 | 3284.00 | 3403.00 78°48 2452.00 , 2922.00 | 2971.00 | 3511.00 | 4979.00] | 4379.00 78°72 3735.00 | 4498.00 | 4495.00 | 5369.00 | 7656.00 | 6389.00 | 6659.00 4 Mattresses are available in 3”, 4”, .5” super deluxe, and 5” thickness Customer's Buying Behaviour The buying of mattress by customers showed a combination of variety seeking and dissonance reducing buying behaviour patterns. This could be found out from the data of the study conducted, by TSG-a market research agency in the towns/cities of Mumbai, Bangalore, Indore, Coimbatore, Calcutta, Cochin, and Delhi. The study ‘was conducted on 200 sample households with a family income above Rs 15,000 per month. A brand equity study was also conducted. It was conducted for a few brands, on the customers of branded rubberized coir mattress. It was found that most of the "households purchased a mattress once in three to six years (Exhibit 7). The largest purchasers of rubberized coir mattress were by households with husband and wife in the age group of 35:45, followed by 25-35, 45-55, and above 55. 8Kurlon Ltd Exhibit 7: Ownership and preference of households for mattresses* Cotton | Rubberized | Full PU Spring mattress -coir Foam mattress 80. | 10. 20 10 Preference for next purchase 30 I 320 30 20 “Number of households totaling 200 The most important reasons (See Exhibit 8) suggested for the purchase of a mattress were: ‘© Son/daughter getting married; * Oldone damaged; * Addition to the family in the form of child birth or parents coming to stay « Increased health concerns. Exhibit 8: Reasons which triggered purchase of mattress [Rank Old one Addition to Son /daughter | Health damaged | the family __| getting married | concern a EA 25 50 30 2 40 20 70 45 3 1s 65 35 4 25 35 30 3 70 25 100 Note: The numbers in the Table shows the number of households expressing preference Buyers gathered information with the help of: (a) advertisements, (b) consultation with mattress dealers, (c) consultation with friends, and (d) consultation with relatives in that order of importance, in addition to, one’s own knowledge of the product. Advertisements were considered a very important source of information. Dealers also influenced the purchase by providing sufficient data for evaluation. Buyers sought data about various factors of the product as well as promotion schemes before purchase. (See Exhibit 9). The decision to purchase was usually made by the lady of the household and the purchasing was done by both the husband and the wife. Exhibit 9: Importance of factors used for evaluating brands Rank /Price |Softness |Thickness |Tapestry |Brand |Weight |Promotion Design _|name scheme Note: The numbers denote the number of households, which have given the ranking 9Cases in Brand Management and Services Marketing The study also brought out the three most preferred sublevels (See Exhibit 10) under each factor used for evaluation by buyers in the purchase of mattress. The decision to purchase the particular model was the result of the utility that the buyer perceived in combination of factor sub levels existing in the brand. Exhibit 10: Preference for product sub-levels Factor Preferred Sub-level [Price [Rs 1,500, Rs 2,500, Rs 4,500 Thickness | Density 20KG/M3, 30KG/M3, 60KG/M3 Colour of tapestry [Blue, Green, Yellow Design on mattress Plain, flowers, line designs Measurement 72*30, 72°42, 75°60 Foam 10%, 20%, 30% The selection of the brands by most of the households were done by evaluating two to three brands on the above parameters and after visiting two to three retail outlets. A customer of Indore’s view was so typical of quite a few other customers. She said, “I wanted to buy Kurlon brand and hence visited a big retail outlet near my house. Since Kurlon had such a large range of products, I was confused as to what model to buy, Finally, I ended up buying another brand with some help from the retailer.” Kurlon is one of the few brands which has a national presence. But there are strong regional brands in most of the markets. Some of the popular brands in these markets are Duroflex, Restolex, Starlite, Bedsy, Centuary, Aaram, Coiron, Rilaxon, and Sulfex (See Exhibit 12). Exhibit 11: *Evaluation of brands Brands | Price| Softness | Thickness | Tapestry] Brand ] Weight] Sales Promotion design | name schemes Duroflex | 7.4 78 | 82 8.1 79. 8.2 8.3, Bedsy 8.2 6.8 6.9 8.2 6.8 78 7.8 Centuary | 7.5 67. 7 75 76 | 75 8.2 Restolex | 7.6 | 7 79 78 8 9.0 Starlite. | 6.6 79_| 67 5.8. 17 8.4 Gary IG a 64 | 76 Ba Coiron 3 81 5 5.7 6.4 6.9 Rilaxon_| 68 49 | 63 72 Sulfex | 65 47 | 58 76 ‘[Kurlon [67 75 | 79 89 | 69 6.9 «The brands are evaluated on the parameters on a scale of 1-10 with 1 being poor and 10 being very good. These are the average scores of the 200 respondents. 10)Kurlon Ltd Competition and Brand Equity Indian mattress are a Rs 27.50 billion market, where 73% belongs to the established cotton mattress. The rubberized coir mattress industry is worth Rs 5.50 billion with the branded rubberized coir market worth Rs 3.70 billion. Kurlon is the leading player in the country in the rubberized coir mattress followed by Duroflex, Starlite, Centuary, and Aaram. Duroflex has market share of 16% followed by Starlite with a market share of 11%, both of which also has got national presence. Centuary has a market share of 9% and has national presence while Aaram has a market share of 7% and is strong in Delhi and North India, Rilaxon is strong in the East. Restolex and Bedsy have strong base in Karnataka while Coiron and Sulfex are the popular brands in Kerala and Tamil Nadu. Most of these brands showed a sales growth of 5-15% during the last couple of years, In addition to the ten popular brands mentioned above, there are a host of other regional and local players, both in the branded and unbranded category. Full PU foam and spring mattress was also growing markets with 5% and 1% market share, respectively. The two major players in the PU foam mattress market are Sleepwell and MM foam. Springwel is a big player in the spring mattress segment (See Exhibit 14). The market research group (TSG) had conducted a brand equity study. Brand equity of a few brands were measured using the models developed by David Acker and Kevin Lane Keller. (Brand equity means the difference in value perceived while the name of an established brand is mentioned against a fictitiously named brand. Customer based brand equity involves the consumer's reactions to an element of the marketing mix for the brand in comparison with their reaction to the same marketing mix attributed to a fictitiously named version of the product.) ‘The following are the five components on which TSG measured brand equity. The variables under each component is shown against each of the components. Customers of each of the brand gave points on the basis of the intensity of presence of each of the variables. The cumulative scores of all respondents/customers were found out for each of the variable and then was reduced to a score out of 100. Then the total was added up for all variables, component wise to give the total brand equity score for each brand. (See Exhibit 12). 1, Brand awareness-top of the mind (TOM), aided recall and unaided recall; 2. Brand loyalty-switching cost, satisfaction, liking, and commitment; 3. Perceived value-on performance, features, conformance with specifications, reliability, durability, fit, and finish; 4. Brand association—uniqueness, favorability and strength of association of the brand with the most important “aspect” of the brand; and 5. Other proprietary assets—logo, name, and slogan. WCases in Brand Management and Services Marketing Exhibit 12: Customer based brand equity scores of a few brands al Kurlon |Restolex Starlite |Aaram |Centuary |Duroflex 1, Brand awareness | a, TOM 90 45 75 70 65 73 b, Unaided recall 55, 25 40 45 48 50 ¢, Aided Recall 40. 25 35, 37 38 40 2.Brand loyalty a, Switching cost 65 45 65 55 67 70 ». Liking 75 40 70 62 72 65 c. Satisfaction 68 35. 68 3 | 72 [| 60 | 4. Commitment 50 40 62 57 66 62 3.Perceived quality a. Performance b. Features ¢. Conformance with specifications 68 59 62 60 65 70 d. Reliability 75 58 68 62 62 65 e. Durability 60 65 59 68 70 f, Fit and finish 55, 58 78 57. 65 75. 4. Brand Association a, Strength of association 65 35 43 50 47 52 ». Uniqueness of association 55_| 40 35 43 57. 58 50, 37 56. 48 49 52 85 45 59 55 58 62 45 30 40 33 38 43 , Slogan 45 30 4 31 32 40 Total score* 1194 814, sa1_| 1004 [1091 1140 *Note: All the dimensions excep! aided and unaided recall are allotted a maximum of 100 points. Unaided is allotted 70 points while aided is allotted 50 points. The detailed explanation regarding the computation of the points for each brand for its brand equity, is beyond the scope of this study and case. Promotion and Positioning Kurlon advertised through Newspapers, Magazines, TV, outdoor, and through brochures. (See Exhibit 13). Most of the national dailies in addition to the popular regional newspapers were used for advertising its products. 112Kurlon Utd Exhibit 13: Promotion spend Media/Vehicle Spent by Kurlon Spent by Duroflex Spent by Starlite (Rupees in million) | (Rupees in million) | (Rupees in million) ‘Magazine 450 6.50 50 Newsp 14.00) 9.50 7.50 19.00 11.00 3.50 7.50 Brochures ‘Other POP material Sales promotion to 8.00 5.50 8.00, consumer Trade promotion 5.30 7.50 850 Total 61.30 $4.00 57:50 ‘The company had themes like advanced centre densification (ACD), comfort, greater back support, doctor's advise, emotional wedding gift, reliability, etc. as themes of its advertising campaigns from time to time (See Annexure for the latest advertisement). The other established brands followed a very aggressive advertising policy of concentrating intensely on their regional markets. Kurlon’s positioning statement for the last seven years till 2001 was “India’s largest selling mattress.” But in year 2001, it was changed to “pure sleep - nothing else.” The | reason for the change as expressed by Shivram Bhat was that, the earlier positioning ; had become very stale and a more dynamic, appealing, unique statement was required. © The strategy hence was to project sleep as something very basic and sublime as well as highlight the importance of a pure undisturbed sleep by using the Kurlon mattress. 1 Dealer Support Strategies Kurlon also had sales promotion schemes to customers like gifts with coupons, season discounts, exchange schemes, slogan writing contests etc. For the trade, the company offered promotion schemes like gifts, higher commissions on achieving targets, awards, etc, The company emphasized more on promotions to customers than to trade, During the year 2002, the company spent to the tune of Rs 13,30 million in sales promotion. Most of the competitors, as felt by the dealers, followed a more aggressive and attractive sales promotion strategy than Kurlon. Most of the competitors focused as well as hada bigger budget outlay for trade promotions than for consumer sales promotions. One dealer's comment echoed the sentiments of a few Kurlon dealers “Kurlon has too many brands and since they advertise most of thejr sub brands too to customers in a big way, many customers are confused of which sub brand to buy. In this process, they end up buying the competitor's brands. Moreover, most of the competitor's offer many tempting promotional schemes like foreign trips, huge price discounts, high margins, costly gifts to performing dealers. I feel, Kurlon will be in for tough times if they don’t 13re sk increase the dealer promotion budget as well as introduce more attr. ctive schemes itself”, Another dealer’s observation dchoed the first dealer's concern, “Why should Kurlon have so many variants in their sub brands, when the standard type of cots are in the 72*36, 72°48, 75*42, 75*60, and 78*48 specifications. [he variations in thickness also added to the confusion and hence changes in price perception towards Kurlon.” But, a few other dealers were of the view that Kurlon as a leader should have other variants also, in addition to those for the standard cot size. Marketing Structure ‘The Marketing function in the organization was headed by Mr Shivram Bhat, who was the VP (Marketing). He had been with the company for the last seven years and had about 20 years of experience in the marketing of consumer durable. He reported to the President who even‘ ually reports to the managing director (MD) Under the V P, were placed four DGMs in each of the four zones of the country. Each DGM had area sales managers, sales nianagers and sales executives in different levels under them. In addition, in the four-zonal headquarters of Kolkata, Chennai, Delhi, and Mumbai were placed four zona’ managers, who reported to DGM and coordinated the entire sales activity of the zone. The area sales managers directly reported to the zonal manager. There were 42 area sales offices/branches located in most of the towns in the country. The ASOs v ere headed by area sales manager under whom were one or two sales mangers/executives. The company had about 3500 direct dealers and 5500 sub dealers all over the country. Another DGM (M&S) who was based in the marketing office in Bangalore reported to the V P and coordinated the various marketing activities with the DGMs of all the zones. The DGN's (M&S) function included decision making regarding: * Product decision and modification; + Price fixation and changes; + Nation: promotion campaigns; © Marke ing research; and, * Competitor analysis. The company, two years back recruited a product executive, Binoy Alex who worked under Pradee ) Menon, the DGM, (M&S). Binoy assisted Pradeep in carrying out all the marketing tasks. Binoy Alex was a management graduate from a reputed management institute. ‘The Meeting The first day of the two-day meeting between the four DGMS, DGM (M&S), product executive an | V P (Marketing) was spent on analyzing the company’s past marketing VaKurlon Ltd strategies as well as analyzing the latest market research data. The meeting revealed more issues and problems than what was anticipated. The DGMs from the four zones expressed their concern towards the emerging intense competition in their zones. At the start of the meeting Vijay Goel, DGM, North, by surprising everyone, commented “We have too many sub brands and their variants. We should drop some. Meanwhile, I feel we should even go for spring as well as foam mattresses.” He was supported by the DGM from East. But the DGMs of South and West disagreed that the time was not ripe to introduce spring or foam mattress. They felt that, what was required was a re- look at the attributes and benefits of the present products offered. Moreover, both of them believed that, Kurlon need to have a re-look at its promotion strategy including that of advertising. “Why did we change our positioning?” asked the DGM from East. Meanwhile, the DGMs from North and West felt that the dealers were also getting a poorer deal. “When I look at the competitors, I am increasingly feeling that the costing and pricing structure of our products/brands needs overhauling,” commented one of the DGMs. Finally, everyone presented there, heard with a bit of surprise from Pradeep (DGM-M&IS), the final comment when he pointed out that “the tasks in front of us are large and big and now we are getting clear of what all to do, but the hands are few to carry them out?” Alex was expected to compile the list of issues and questions which were raised on the first day of the “brainstorming” meeting of the marketing heads of the company. The second day was planned as the “action” day meant to develop strategies and action plan. ' Questions for Discussions 1, How should Kurlon modify its product? What all attributes should be modified? What benefits should be strengthenéd? 2. What should be Kurlon’s brand portfolio in terms of sub brands and models/ variants? 3. Should they modify their dealer margins? 4. What should be their product/brand cost structure? Based on this, how should the MRP of the models that they are offering be modified? 5. Was Kurlon right in changing their positioning statement? What will the new positioning strategy be? 6. What should be Kurlon’s advertising strategy be in terms of theme, media and budget? 7, Do you agree with Kurlon’s present trade promotion policies? 16Cases in Brand Management ond Services Marketing Annexures Annexure: Kurlon’s latest advertisement EXHIBIT-17: KURL-ON ADVERTISEMENT ats easing anion, Gele AN ey atacn te an