Page 1: Challenges
In the highly competitive modern global market place, no organisation can afford to stand still. As global markets are so competitive, large companies can no longer produce hundreds of different products in lots of different product categories. That approach is inefficient and spreads resources too thinly.
Big companies recognise the importance of focusing on their power brands, i.e. on those lines in which they have the greatest competitive advantage relative to rivals and which offer opportunities for profitable growth. It pays firms to
- invest in these products and concentrate resources on them
- support them with sufficient marketing, product development, advertising and promotional efforts.
In recent years, BIC has reaffirmed that its ongoing success depends on key factors.
BIC has simplified its product range. This has involved focusing from 9,000 SKUs to 150 products in customer-relevant packaging, and reorganising itself in the process. Production has been rationalised to a limited number of 'super-factories' which are the sole sites for manufacturing particular products for global distribution.
This way of operating creates huge economies of scale whereby massive quantities can be produced at very low unit cost. For example by operating continuous flow production, where the shaver factory's production line runs for 24 hours every day, using highly automated machinery that minimises labour costs.
BIC focuses on two sets of customers:
- the retailers to whom it sells directly
- the end consumers that the retailers supply.
BIC carries out detailed market research to discover the wishes of these two groups e.g. the best mix of products, delivery patterns and promotions to support its products in the shops for retailers as well as final consumers' expectations and requirements for BIC products.
In one city in Poland, for example, BIC supplies not only a 24hr/7day supermarket but also 100 small kiosks. To do this well, BIC had to identify the needs of both retailers and consumers. It then had to satisfy them.
Many BIC trademarks including those shown bottom left are well known e.g. BIC, BALLOGRAF, SHEAFFER, CONTÉ, TIPP-EX, BIC WITE-OUT. However, as well as building on the success of existing brands constantly improving the quality of the core products, the company is constantly developing new products to meet consumers' expectations and aspirations. For example, in 2002, 20 per cent of the company's stationery sales came from new products and line extensions.
In a carefully controlled programme, BIC designs and launches new products that offer greater value-added technology. For example, as mentioned earlier, the BIC Cristal is the world's leading selling pen. The number one growing category in writing instruments is gel ink. It is essential that the company offers products with gel ink. BIC has combined these two ideas to create the BIC Cristal pen (the highest quality pen of its kind, and thanks to BIC's efficient methods available at an affordable price) offering the smooth writing of gel pens at a BIC price.
Conversion from the traditional point-and-ink system to the new Smooth Gel Ink system (offering greater writing comfort) involved significant modifications in manufacturing processes for inks and colourings in addition to re-tooling the machines that make the points. These changes required two years of research and a further year to implement in pilot plants (in France and the Americas), thus reflecting the large investments made by the Group in its core categories.
BIC has invested heavily in brand development, to strengthen the recognition of the brand and its reputation among consumers. In 2003 BIC utilised Martin Johnson, the England Rugby World Cup winning captain. Johnson's association with the new 3-blade shaver, BIC Comfort 3 is another example of BIC vision = offer the 3-blade technology to all customers at a BIC Price.
BIC has also developed co-branding operations with Disney, and produces a range of writing instruments (mechanical pencils, etc) that feature Disney characters, and targeted to young children, a colouring range under the Disney Magic Artist BIC brand.
Page 4: Segmentation
When marketing a product category, firms need to identify the different market segments. Segmentation involves identifying sets of characteristics that distinguish particular groups of customers from others. For example this may be based on:
- Demographics, i.e. to divide up the population into groups based on age, gender etc. BIC uses this approach to some extent, recognising that different retailers appeal to different types of consumer based on age profiles and income, and that different groups of end consumers seek different products e.g. male and female shaver requirements. Promotion, advertising and presentation of products are therefore tailored to these differences.
- Usage, in addition to its world-leading range of pocket lighters, BIC introduced BIC Megalighter designed to light BBQs and BIC Megalighter for candles in 2004.
BIC also uses a segmentation approach looking at the behaviour or needs of consumers. For example, BIC's research into its stationery product category shows that there are three distinct types of writing instrument shopper.
- Best value for money - This type is typically bought by offices and households that have writing instruments in virtually every room. Everyone is allowed to use any available pen, so there's no great problem if one is misplaced. Households tend to seek lower priced pens, and regularly make new purchases of assortments of writing instruments based on current needs.
- Seeking specific benefits - Here consumers are looking for a more personalised item; something they regard as 'my pen'. It will be kept in a private place belonging to that individual, who may be reluctant to let anyone borrow it. Buying decisions will typically take longer, and involve careful consideration over choice. Key features looked for will include the pen being comfortable to hold and its capacity for producing smooth, writing that reflects the individual e.g. by colour or handwriting style. Marketing activity therefore needs to focus on these more sophisticated individual needs.
- Impulse buy - Impulse buys are unplanned. Innovative designs will attract this segment, largely because the consumer is buying for pleasure. Purchasing in this segment is far more emotional and so the skilful marketer will seek to create 'objects of desire'. Attention grabbing Point of Sale displays are essential to stimulate impulse buys.
BIC aims to create a balanced product portfolio, including:
- reliable, value for money products for regular household purchasers
- premium high quality products for the consumer that wants 'something special'
- novel, attractive products, sometimes with a fairly short life cycle.