Why Snapdeal’s Competitor Focused Strategy Is Juvenile – Strategy with RS

Flipkart has launched a multimedia teaser campaign ‪#‎achhaKiya. Obviously to indicate to online buyers that they should postpone their buying decision because another big sale is coming up!

They have extended this campaign to Out Of Home, where the text reads, ‘Nahin Khareeda. #AchhaKiya’.
Snapdeal, Flipkart competitors decided to ‘ambush’ Flipkart. It placed its message under Flipkart hoarding, ‘Accha Kiya Bata Diya’ with a ‪#‎Yahan‬ Se Khardo.

Media has labeled this as ‘Ambush’ marketing. It is not. Ambush marketing means surreptitiously apportioning another brand property & passing it off as their own. In this case, Snapdeal has not apportioned Flipkart’s brand property. It is seeking to be perceived as a ‘smart & agile’ brand. Ambush marketing is illegal & invites jail sentences. All global sporting events like Football World Cup, have very strict Ambush marketing clauses which are ruthlessly implemented!


I am totally against pursuing this juvenile strategy. Snapdeal should ask itself a fundamental question – what business is it in? To score over a competitor? Or to serve its customers better? If the later then why is it wasting its precious resource on being competitor focused? Great companies are customer not competitor focused. They will not allow competitor to dictate their strategy.


Only marketing guys feel good that they have blunted their competitors move. But have they?

By pursuing this strategy they have inadvertently got people more interested in knowing why is Flipkart asking them not to buy. More benefit is likely to accrue to Flipkart … exactly what Snapdeal would not want. Take yourself. After seeing Snapdeal hoarding campaign are you positively influenced to buy from them?


Snapdeal is a serial offender in pursuing this strategy. More so when it is running in losses. It is estimated that it could record a five-fold increase in losses going up to $250 million (Rs 1,500 crore) this fiscal (Source: 19th Feb’15, ET).

What are the contributors to the losses – people cost, advertisement cost & high cost of operations!


If you were Snapdeal CEO would green light this strategy?

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rajesh-srivastava-insideiim

 

In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

Comments

10 comments

Mayank Tewari

I’m just an aspirant right now sir, but this is exactly what Pepsi and Coca-Cola do. Whenever one comes up with an advertisement, the other one too comes up with its own. Agreed that Snapdeal is not as such in a strong position economically speaking, but, personally speaking, it hasn’t spiked interest in the Flipkart’s sale. Everyone expects it to be similar to every other sale they do over frequently.

Rajesh Srivastava

Mayank can you share any such ‘war’ between Coke & Pepsi. As a strategy Coke does not react to Pepsi.

komalsahu

I feel that Flipkart’s ‘Nahin Khareeda. #AchhaKiya’ marketing campaign was not an exciting campaign as the communication message made very obvious about the upcoming sales offers. The Flipkart main strategy was to convert their desktop shoppers to Mobile shoppers. However, Snapdeal strategy was to catch the eyes of the customers to improve its rank in the e-commerce website consideration list. The second highlight of #‎Yahan‬SeKhardo was to pass a message to its TG that Snapdeal already have products at much discounted rates; hence online shoppers don’t have to wait for Flipkart’s Sale Festive season. I feel that both of the e-commerce giant had different strategy to simply reach out to its customers. I as a marketing practitioner dont feel that Snapdeal was wrong or misused its valuable resources to cut-out its competitor. It was a smart move by Snapdeal to improve its brand recall to improve its consumer base.

Rajesh Srivastava

Komal agree with you.
But Snapdeal followed a very expensive & juvenile strategy to gain attention. A good brand invests every resources in strengthening its competitive positioning. Snapdeal should understand what is its USP & spend $ there to strengthen it. And not react to a competitor move.

Sarthak Rai

sir,

I beg to differ here. I think this is Snapdeal’s marketing strategy ( I think this does not fall under marketing strategy also, they just did it without much expense, may be few lakhs) and not Business strategy. I am not able to understand how did we concluded that Snapdeal focusing on the wrong C. I am wondering even if this fall under the purview of Strategy??

Rajesh Srivastava

Sarthak I feel that every business should be customer focused & should have a USP . And every resources it has should be directed towards strengthening its USP. When this path is consistently pursued then it will put its competitor to shame on the attribute t has chosen to differentiate itself. Take Snapdeal. What is its USP which is unique to it? And when a company / brand does not have it then its spending may not be focused.

Sarthak Rai

Dear Sir,
I agree customer focus is necessary. But what can be a USP in e-commerce sector where threat of imitation is so high. How does Snapdeal differentiate itself from flipkart when the same seller sell on both the platform and may be also at the same price ( unless some cost is borne by the marketplace). what will you suggest Snapdeal to do to focus on if they want to be customer centric when the customer is just looking for discounts and has no loyalty! How do you reduce threat of imitation ???

Rajesh Srivastava

Sarthak take 2 e-commerce companies the world admires – Amazon & Alibaba. Both these companies have uniques proposition which has made them so valuable. It requires commitment which is more than just a commitment to making money!

Raj Ram

Hi,
If I own any such brand which is quite famous among people. I wud rather focus on customer than competitor. Yes competitor study analysis is important but I would invest my strategy to give customer the most complacent service and encourage them to buy or visit website. Where ground level employee management is pivotal. With my Ir-house i.e invention and reinvention I would bring and nurture company employees thinking power.which will take care of system stagnancy which is common problem in MNCs these day. When sieved thoughts of thousands of employee comes together which has direct relation with customer will make my competitor Irrelevant no nred to fight to invest intellectual there. I need not to waste anythng to take on others.

N I understand it will only b successful if we maintain great team with great respect.

Rajesh Srivastava

Agree Ram shree. You have so passionately argued your case … I agree with every thing you have mentioned . Thanks so much. Keep sharing more of your thoughts & experiences.