Reprint R1610x Published In Hbroctober 2016 Article HBR Case
Reprint R1610xpublished In Hbroctober 2016articlehbr Case Study Co
Reprint R1610xpublished In Hbroctober 2016articlehbr Case Study Co
REPRINT R1610X PUBLISHED IN HBR OCTOBER 2016 ARTICLE HBR CASE STUDY Competing with a Goliath A Peruvian apparel company struggles to position itself against a global brand. by Jill Avery For the exclusive use of R. Ferguson, 2019. This document is authorized for use only by Raif Ferguson in MBA 682 Fall 2019- AP taught by MARIE-MICHELE BEAUCHESNE, Barry University from Aug 2019 to Feb 2020. Case Study Competing with a Goliath A Peruvian apparel company struggles to position itself against a global brand. by Jill Avery “IT FEELS WEIRD eavesdropping like this,†Alejandra Chirinos told Ricardo Rodriguez, her marketing VP, and Miguel Martinez, her head of sales. They were in a conference room in Lima watching a focus group in Surrey, England, via Skype as the group discussed the fashion ponchos designed and manufactured by Alejandra’s five- year-old company, Tela.
Ricardo chuckled. “They know they’re being watched,†he said. Soledad Orellana, the market research consultant who’d arranged the session, concurred. “There are cameras everywhere in that room.†This was Alejandra’s first focus group. She’d agreed to it because Soledad and Ricardo had convinced her that Tela needed to up its marketing game if it was to compete on an international stage against the U.S.-based poncho maker Saira.
While Tela’s ponchos were made in Peru of local, sustainable materials, Saira’s were made in Bangladesh of cheaper materials and labeled “Peruvian design.†But Saira had launched a few years before Tela and had quickly captured a 60% share of the category across markets in western Europe and North and South America—in fact, in every South American country except Peru. This was mostly due to its smart and heavily marketed “buy one, give one†business model: Like TOMS with shoes and Warby Parker with eyeglasses, Saira donated a poncho to a person in need for each one a customer purchased. Tela had a social mission too. It employed traditional weavers and set up programs to teach weaving to underprivileged women.
And not only were its ponchos authentically Peruvian, but they retailed for $40 to $70, whereas Saira charged $60 to $100. But Tela hadn’t been able to get those messages across outside its home market, and Peru was too small to provide a platform for continued growth. Ricardo, a Lima native who’d been working as Saira’s head of marketing for South America, had decamped from the U.S. company’s São Paulo office to help Alejandra figure out how to better position her brand. She was thrilled to find someone with his experience, not to mention a shared love of the product and Peru. Together they’d decided to invest a sizable portion of their meager marketing budget to partner with Soledad on developing and testing several marketing messages in key expansion markets, such as the UK.
On-screen, a British facilitator stood facing 10 compatriots. “If you had to use one word to describe the ponchos in your hands, what would it be?†she asked. “Soft,†replied a woman with dyed red hair. An older lady spoke next: “Peru.†“Real,†said a man with a nose ring. “I know this isn’t one word, but I have to ask a question,†said a guy in the back.
“This is the same poncho as Saira’s, right? With a different label?†Ricardo winced. “Ouch, that stings,†he said. He had come to believe that Saira’s charitable giving was just a marketing ploy designed to cover the fact that the quality of the products didn’t warrant their high prices. “It’s not a bad thing,†Miguel countered.
“If customers see no difference between our products and Saira’s but ours cost less, it will be easy to take some of its market share.†This was an ongoing debate between the two men: Should Tela emphasize the quality and authenticity of its products, or their affordable prices? Alejandra had always argued that the company should promote its social mission. It sometimes infuriated her that Saira had claimed the crown of “do good†poncho company before Tela had had a chance to make a mark. But her colleagues and Soledad agreed that the company needed one simple story to sell to customers around the world. Saira had “buy one, give one.†What did Tela’s brand stand for?
Alejandra held up a hand. “We’re not here to rehash old arguments,†she said. She looked at the screen. “Let’s listen to what they have to say.†OW EN D AV EY Jill Avery is a senior lecturer in the marketing unit at Harvard Business School. October 2016 Harvard Business Reviewâ‚‚ EXPERIENCE FOR ARTICLE REPRINTS CALL OR , OR VISIT HBR.ORG For the exclusive use of R. Ferguson, 2019. This document is authorized for use only by Raif Ferguson in MBA 682 Fall 2019- AP taught by MARIE-MICHELE BEAUCHESNE, Barry University from Aug 2019 to Feb 2020. The red-haired woman said she tried to buy “socially responsible†products, and a young man agreed it was important to “give back to a cause.†Alejandra smiled. “See, I told you mission matters,†she said, forgetting the directive she’d given moments before. “Maybe we’ve found a winner.†“Not so fast,†Soledad warned.
“That was just the first one.†Ricardo was only too happy to jump back into the conversation. “Unfortunately, Saira has already staked out that territory,†he said. “Yes, but it’s our territory too,†Alejandra replied. “I founded this company to give Peruvians stable, well-paying jobs and to help develop a new class of entrepreneurs.†“You don’t have to convince me that what we do is more effective and important than what Saira does,†Ricardo said. “They hand out donations; we create employment and develop economies.
But they sold their social mission first and better. We can’t compete. We’d look like copycats—ones with a much more complicated message.†“You could ride in their marketing tailwind,†said Soledad. “A lot of small companies have grown by attaching their sails to the biggest ship.†As if on cue, the man who had mentioned their rival did so again. “I’d bet doing good is why Saira has become so big in the UK,†he said.
“When you buy a poncho for yourself, you’re helping someone else. It’s easy to understand. I guess I care about helping weavers and Peru’s economy. But putting warm clothes on a child’s back? That just feels good.†Ricardo gave Alejandra an “I told you so†look.
Authenticity The facilitator turned to the next concept, the one positioning Tela as a maker of “authentic Peruvian ponchos†with an emphasis on tradition and back- to-the-land craftsmanship. When she finished reading the taglines, a young woman spoke up. “I don’t understand the distinction. I know the knockoffs in Tesco aren’t made in Peru. But Saira’s are, right?†“Wrong!†Ricardo shouted.
The facilitator explained the differences between the two companies’ supply chains, and Ricardo got excited. “I’m telling you, this is Saira’s Achilles’ heel,†he said. “The people buying these ponchos want to know they’re getting the real thing, and my old colleagues are shaking in their boots, worried that someone will expose their product as the fraud it is.†Miguel shook his head. “You really think they spend time worrying about us? They’re too focused on world domination. And what are you suggesting—that we go on the attack? Accuse Saira of cultural misappropriation? Not only would that diminish our brand, it would be like a flea kicking an elephant’s toe!†Alejandra shushed them. The Saira fan was talking again; she was beginning to think he worked for the company. “Does it really matter where they’re made as long as the quality is good and you know you’re helping someone?†he asked.
“It matters to me,†said the man with the nose ring. Tell us what you’d do in this situation. Go to HBR.org. WHAT DREW YOU TO THIS STORY? I’ve been researching how underdog brands can position themselves as passionate and determined by calling attention to their disadvantaged status.
While in Buenos Aires I visited Paez and found that it was experimenting with several value propositions to compete against TOMS but hadn’t yet given thought to labeling itself an underdog. HOW DO STUDENTS TYPICALLY REACT? They are often reluctant to make hard choices about the positioning options and want to combine all the messages into one. WHAT LESSONS DOES THE CASE OFFER? Strong, compelling value propositions are relevant to consumers and durable against the competition.
This case provides an opportunity to analyze some of the most common positioning options companies are using today—price, social mission branding, authenticity, and lifestyle. Case Study Teaching Notes Jill Avery teaches the case on which this one is based in her branding course. The Social Mission Soledad and Ricardo had come up with four concepts to test. The first emphasized Tela’s support of local entrepreneurs and workers; the second its made-in-Peru bona fides; the third its price point. The fourth was a combination of the other three.
As the facilitator read the taglines for the first concept—“Tela isn’t just about style; it’s about livelihood†and “Our ponchos keep you warm and keep women entrepreneurs in business‗ there was lots of nodding in the focus group. EXPERIENCE 3  Harvard Business Reviewâ‚‚ October 2016 For the exclusive use of R. Ferguson, 2019. For article reprints call or , or visit HBR.org. For the exclusive use of R. Ferguson, 2019. This document is authorized for use only by Raif Ferguson in MBA 682 Fall 2019- AP taught by MARIE-MICHELE BEAUCHESNE, Barry University from Aug 2019 to Feb 2020. The red-haired woman said she tried to buy “socially responsible†products, and a young man agreed it was important to “give back to a cause. Alejandra smiled. “See, I told you mission matters,†she said, forgetting the directive she’d given moments before. “Maybe we’ve found a winner.†“Not so fast,†Soledad warned.
“That was just the first one.†Ricardo was only too happy to jump back into the conversation. “Unfortunately, Saira has already staked out that territory,†he said. “Yes, but it’s our territory too,†Alejandra replied. “I founded this company to give Peruvians stable, well-paying jobs and to help develop a new class of entrepreneurs.†“You don’t have to convince me that what we do is more effective and important than what Saira does,†Ricardo said. “They hand out donations; we create employment and develop economies.
But they sold their social mission first and better. We can’t compete. We’d look like copycats—ones with a much more complicated message.†“You could ride in their marketing tailwind,†said Soledad. “A lot of small companies have grown by attaching their sails to the biggest ship.†As if on cue, the man who had mentioned their rival did so again. “I’d bet doing good is why Saira has become so big in the UK,†he said.
“When you buy a poncho for yourself, you’re helping someone else. It’s easy to understand. I guess I care about helping weavers and Peru’s economy. But putting warm clothes on a child’s back? That just feels good.†Ricardo gave Alejandra an “I told you so—look.
Authenticity The facilitator turned to the next concept, the one positioning Tela as a maker of “authentic Peruvian ponchos†with an emphasis on tradition and back- to-the-land craftsmanship. When she finished reading the taglines, a young woman spoke up. “I don’t understand the distinction. I know the knockoffs in Tesco aren’t made in Peru. But Saira’s are, right?†“Wrong!†Ricardo shouted.
The facilitator explained the differences between the two companies’ supply chains, and Ricardo got excited. “I’m telling you, this is Saira’s Achilles’ heel,†he said. “The people buying these ponchos want to know they’re getting the real thing, and my old colleagues are shaking in their boots, worried that someone will expose their product as the fraud it is.†Miguel shook his head. “You really think they spend time worrying about us? They’re too focused on world domination. And what are you suggesting—that we go on the attack? Accuse Saira of cultural misappropriation? Not only would that diminish our brand, it would be like a flea kicking an elephant’s toe!†Alejandra shushed them. The Saira fan was talking again; she was beginning to think he worked for the company. “Does it really matter where they’re made as long as the quality is good and you know you’re helping someone?†he asked.
“It matters to me,†said the man with the nose ring. Tell us what you’d do in this situation. Go to HBR.org. WHAT DREW YOU TO THIS STORY? I’ve been researching how underdog brands can position themselves as passionate and determined by calling attention to their disadvantaged status.
While in Buenos Aires I visited Paez and found that it was experimenting with several value propositions to compete against TOMS but hadn’t yet given thought to labeling itself an underdog. HOW DO STUDENTS TYPICALLY REACT? They are often reluctant to make hard choices about the positioning options and want to combine all the messages into one. WHAT LESSONS DOES THE CASE OFFER? Strong, compelling value propositions are relevant to consumers and durable against the competition.
This case provides an opportunity to analyze some of the most common positioning options companies are using today—price, social mission branding, authenticity, and lifestyle. Case Study Teaching Notes Jill Avery teaches the case on which this one is based in her branding course. The Social Mission Soledad and Ricardo had come up with four concepts to test. The first emphasized Tela’s support of local entrepreneurs and workers; the second its made-in-Peru bona fides; the third its price point. The fourth was a combination of the other three.
As the facilitator read the taglines for the first concept—“Tela isn’t just about style; it’s about livelihood†and “Our ponchos keep you warm and keep women entrepreneurs in business‗ there was lots of nodding in the focus group. EXPERIENCE 3  Harvard Business Reviewâ‚‚ October 2016 For the exclusive use of R. Ferguson, 2019. For article reprints call or , or visit HBR.org. For the exclusive use of R. Ferguson, 2019. This document is authorized for use only by Raif Ferguson in MBA 682 Fall 2019- AP taught by MARIE-MICHELE BEAUCHESNE, Barry University from Aug 2019 to Feb 2020. The red-haired woman said she tried to buy “socially responsible†products, and a young man agreed it was important to “give back to a cause. Alejandra smiled. “See, I told you mission matters,†she said, forgetting the directive she’d given moments before. “Maybe we’ve found a winner.†“Not so fast,†Soledad warned.
“That was just the first one.†Ricardo was only too happy to jump back into the conversation. “Unfortunately, Saira has already staked out that territory,†he said. “Yes, but it’s our territory too,†Alejandra replied. “I founded this company to give Peruvians stable, well-paying jobs and to help develop a new class of entrepreneurs.†“You don’t have to convince me that what we do is more effective and important than what Saira does,†Ricardo said. “They hand out donations; we create employment and develop economies.
But they sold their social mission first and better. We can’t compete. We’d look like copycats—ones with a much more complicated message.†“You could ride in their marketing tailwind,†said Soledad. “A lot of small companies have grown by attaching their sails to the biggest ship.†As if on cue, the man who had mentioned their rival did so again. “I’d bet doing good is why Saira has become so big in the UK,†he said.
“When you buy a poncho for yourself, you’re helping someone else. It’s easy to understand. I guess I care about helping weavers and Peru’s economy. But putting warm clothes on a child’s back? That just feels good.†Ricardo gave Alejandra an “I told you so—look.
Authenticity The facilitator turned to the next concept, the one positioning Tela as a maker of “authentic Peruvian ponchos†with an emphasis on tradition and back- to-the-land craftsmanship. When she finished reading the taglines, a young woman spoke up. “I don’t understand the distinction. I know the knockoffs in Tesco aren’t made in Peru. But Saira’s are, right?†“Wrong!†Ricardo shouted.
The facilitator explained the differences between the two companies’ supply chains, and Ricardo got excited. “I’m telling you, this is Saira’s Achilles’ heel,†he said. “The people buying these ponchos want to know they’re getting the real thing, and my old colleagues are shaking in their boots, worried that someone will expose their product as the fraud it is.†Miguel shook his head. “You really think they spend time worrying about us? They’re too focused on world domination. And what are you suggesting—that we go on the attack? Accuse Saira of cultural misappropriation? Not only would that diminish our brand, it would be like a flea kicking an elephant’s toe!†Alejandra shushed them. The Saira fan