Demand Structure Analysis
Think about the additional notes on demand structure analysis. Which
"demand node" (i.e., market demand, market share, margins via SKU
migration) seems to be the most attractive for Brinda Patel to pursue and
why?
In the case of Brinda Patel and Cottle-Taylor's efforts to expand their oral care group
in India, SKU migration seems to be an attractive “demand node”. I believe shifting
focus towards SKU migration to higher-margin products appears particularly
compelling. This strategy, essentially nudging existing customers towards more
expensive, higher-margin products, is not only financially appealing due to the
substantial potential boost in profit margins, but also strategically sound
considering the complexities of the Indian market as described.
Migrating customers to higher-margin SKUs capitalizes on Cottle's established
customer base. This approach is more straightforward and potentially more cost-
effective than broad strategies aimed at increasing total market size or drastically
altering consumer habits, such as daily brushing frequency, which could face
significant cultural and logistical barriers. Moreover, the existing consumer base
may demonstrate quicker responsiveness to enhanced product offerings that
promise added value, as compared to adopting entirely new behaviors.
Further, the strategy of SKU migration involves less radical changes in consumer
behavior, focusing instead on modifying purchasing decisions within existing habits.
This can be achieved through targeted marketing strategies that highlight the
superior quality or performance of higher-margin products. The success of similar
strategies in other regions, as detailed in Cottle’s global operations, underscores the
potential effectiveness of this approach. Additionally, these incremental changes in
consumer buying choices are often more straightforward to implement and can
yield quick, noticeable improvements in financial performance, which aligns with the
immediate goals set by Patel's management.
This focus on shifting consumer preferences towards higher-value products in an
existing market—where brand recognition and consumer habits are already
established—also supports a more sustainable growth strategy in the long term. It
enables Cottle to not only increase margins but also solidify its brand presence in
higher-value segments of the market, thus aligning with the company's broader
strategic objectives to dominate the oral care market in emerging economies like
India.
Given these considerations, concentrating on SKU migration to higher-margin
products offers a clear pathway for Brinda Patel to enhance market share and
profitability in a challenging yet rapidly growing market. This approach promises not
only to meet the ambitious growth targets set by Cottle’s senior management but
also to build a durable competitive advantage in the Indian oral care sector.
