build and retain its premium image (which will require patience and investment in the short-to-medium term);
generate volumes in the short term (which may produce revenues, but at the cost of eroding its exclusivity);
do both (which will require a lot of balancing).
Thus, the key issues are:
Why is Hertig entering the Indian market?
Can Hertig afford to take a short-term view of the market and look for viability in the first year of operations?
Is the premium market large enough for Hertig fountain pens to survive with more well-known brands? Can Hertig survive without generating the volumes that will come from the lower priced segments and ball-point variants?
Will lower price offering dilute the brand image?
What retailing strategy is appropriate? Will selective retailing enhance the brand image?
The answers lie in a good understanding of Hertig's value proposition, the needs of the Indian consumer and the dynamics of the Indian market.
Let's look at each of the issues. Overall corporate objective: The fundamental issue is why is Hertig entering the India and market and what are its objectives. Does it want to be a niche player or a broad-based player? Does it want to be a Rs 1-crore or a Rs 10- crore player? The recommendations outlined below reflect the lack of clarity on this issue and need to be fine-tuned based on wh-at management wants to achieve.
Time horizon and size of the market: Any international company entering the Indian market with a consumer product needs to look at a minimum of three years, even before expecting to break-even. If Hertig is looking for viability in year one, then it can not survive on the premium market alone. A revenue target of Rs 45 lakh in a market of Rs 5 crore amounts to a market share of about 9-10 per cent
