...AND THEY FOUND A SMART CONNECT

In 2007, Nokia’s market share had slipped in the face of hungry rivals. But the handset giant used the slowdown as an opportunity to stage a comeback...

Okay, so the slowdown in India has not bothered the telecom players much. Yet, enhancing your market share by a whopping 10% (as per the 2009 Voice&Data Gold Book) within the year – and that too in the face of mean and hungry rivals – is no mean feat. And that’s precisely what Nokia India is going to town about.

“We have been committed to develop the market for mobile telephony and deliver the best ‘value mobile experience’ to customers across the nation’s geography,” Vineet Taneja, Marketing Director, Nokia India told 4Ps B&M. Taneja says that the handset major had realised early that the global meltdown would have little impact on the lower rung of the market. With the result that Nokia strategised accordingly and continued to focus heavily on their rural strategy by packing in features relevant to the customers in that segment.

For example, when a recent Nokia survey in emerging markets informed the company that ‘mobile phone sharing’ was a hot trend among existing and potential consumers, Nokia launched a slew of entry level phones with multiple phonebooks to make it easier for the users to share their mobile phones. The move turned out to be a key ‘wow factor’, particularly for India’s price sensitive joint families and sales are following suit. To deal with erratic power supply in far flung areas, some entry level phones even came with the ‘power saver mode’, allowing consumers to extend their talk time without running out of battery.

Not that they ignored their primary urban and semi-urban markets though. They have spiced up the smart phone market with a slew of launches over the last year, including the QWERTY-keyboard laced E75 and the stylish touchphone N97. The year also saw the Finish giant make a conscious effort to reposition itself as a service and solutions provider rather than a plain vanilla handset company. The more visible effects of the same have been the launch of Ovi services (on the lines of Apple’s App store) in the Nokia N97 and other forthcoming high end models that would enable the users to download a host of applications and customise their mobiles phones as per their individual preferences. In line with their new rural focus, Nokia has big plans for India’s hinterlands even in the service space. They’ve launched a service called Nokia Life Tools solution which offers agriculture related news, daily weather updates, apart from routine advice and tips to subscribers. For a slightly higher cost, subscribers can even monitor the closest market prices of three chosen crops.

Of course, reams have been written about how consumers turn to trusted brands during a slowdown and perhaps Nokia’s increased market share is simply a reiteration of its long standing reputation in the Indian market. Whatever the reason, gaining ground in these troubled times, especially when many other players have been losing market share, is worth an ovation. Do we hear some claps?

Surbhi Chawla

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Fun for you, but they mean business

With over 90,000 members MHRIL is set for big move, but the road ahead is bumpy, says Neha Saraiya. Nevertheless, you enjoy your holidays, that’s all they want...

“Yes, the land is under litigation. But we are staying crucial financially. As we think we have a very strong case in Munnar property and above all we are proud of our resort as it is the first resort that we had set up,” gushes an effervescent Ramesh Ramanathan, MD, Mahindra Holidays and Resorts India Ltd (MHRIL). (For those who don’t know much about the whole episode, on July 3, 2007 an order was passed by the Sub-Collector, District of Devikulam canceling the assignment of the Munnar land to the company stating “it as an agricultural land.”)

But then the days have changed, today MHRIL has a rock solid number of members, 91,997 (as on May 31, 2009), and the list is growing at a CAGR of 32%. What’s more interesting is that the same Munnar resort now contributes around 2.17% to the overall revenues of the company (FY ‘09).

However, what has done a wonder for this holidaying arm of the Anand Mahindra Group is its unique business model. The company has an integrated model, which takes care of all its operations – marketing, acquisition of land, servicing of clients, providing value added services, and resort operation et al – under one entity. Thus this mixed business model not only enables the company to tone down the cost of operations considerably, but also provides an edge when it comes to adoption of a change. Probably that’s the reason for which the recent downturn that left all major hospitality players in despair, could not dent MHRIL much.


Ramanathan avers, “We are a company that is totally focused on domestic tourism. That is why we are in a way safe from global recession. Although we lost in the third quarter of last year, we covered it in the fourth quarter by focusing on customers, who have not been affected much by the slowdown like doctors, lawyers et al.” This can be well substantiated from the fact that almost all resorts of the company witnessed an occupancy rate of around 75% last year (69% members and 6% by non members). The company even successfully rolled out is Initial Public offer (IPO) last month for the expansion of some of its resorts and setting up of new projects to support its expansion strategy.

So is it all so good with MHRIL? Well, not exactly. There are few issues encompassing the credibility of the company. And the first one comes from its membership agreement. It is a long service obligation on part of both the company and its customers as the membership duration lasts for as long as 25 years where in the admission fee (60% of the total cost) and the entitlement fee (remaining 40%) needs to be paid on EMI basis. This is not only a burden on the part of the consumers for a quite elongated period, but also an obligation on the company to maintain its resorts for that stated time. The second problem for the company comes from the issue of demand seasonality and dependence on travel industry. Explains an industry analyst from Angel Broking, “The company relies on discretionary spending by consumers, which is a lot vulnerable to economic cycles.”

Meanwhile, in order to expand their portfolio now they are even looking at branding of their Spas, ‘Swastha’, so that it can be extended to cities as well. But how will that be possible when the company does not even have a pan India presence? Well, Ramnathan answers, “Currently we have around 23 resorts, but we have bought land in many parts of the country. Our focus will be to grow in India.” Presently MHRIL has resorts in the west and northern India only. Thus the challenges are humongous, but then that does not stop Ramanathan from dreaming big for his company, at least not at a time when the travel and tourism industry is set to contribute 8% to the Indian GDP.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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AGRARIAN DREAMS

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Another area where the Mittal brothers are hunting for jewels is agri-business. Under full charge of the eldest in the trio, Rakesh Mittal, Bharti Del Monte is engaged in exporting fresh fruits and vegetables via the FieldFresh brand. Besides being the largest exporter of fresh baby corn in India, FieldFresh supplies fresh fruits and vegetables to modern retailers like Big Apple and its own retail venture, Easyday. The JV is now also flexing its muscles in the domestic market, with the recently launched Del Monte range of processed foods and beverages - including packaged fruits, ketchups, fruit drinks and range of Italian products. The Indian processed food market stands at a whopping $65 billion and is poised to grow at an annual rate of 12-15%. Translated for the Bharti Del Monte JV this promises a huge growth potential. So could the agri-business be Bharti’s next big leap?

“I don’t think so,” says Shushmul Maheshwari, CEO, RNCOS. His reasoning is based on the lack of a masses strategy so far in the business. Airtel has largely succeeded on the back of strong reach, accessibility and affordability. It reaches high end to low class consumer segments. Del Monte’s range of products, on the other hand, have a premium pricing as they are importing their entire range. He believes that Bharti’s premium pricing is to avoid the present cost pressures.

Perhaps Rakesh Mittal has a similar inkling. He plans to invest Rs.100 crore over the next year to set up a food processing facility at Hosur in Tamil Nadu. Bharti Del Monte would be able to churn out processed foods and beverages from here by 2010. That perhaps could be the Mittal ticket for a masses-led strategy and eventually market dominance. But even then, the road does not promise to be smooth. Bharti does need to deal with the intrinsic challenges of agri-business beyond its control like variations in quality of produce, APMC regulations, lack of standardisation, small land holdings, poor storage and transport infrastructure, et al. So that’s perhaps another cross!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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No snoring please...

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Brand: Tata Tea
Agency: Lowe

Tata Tea’s Jaago Re! campaign was launched in association with Janaagraha (an NGO) to encourage Indians, especially the youth, to exercise their voting right. The effort has paid off as Tata’s have gathered a billion registrations on their website – www.jaagore.com. And registrations mean valued consumer data :-)

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Akai (flat-screen)

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Agency: McCann
What Nano is to the auto market today; Akai was to the CTV market in late 90s. It changed the landscape with its low-price CTVs. Akai’s Deserves to be seen campaign hit bull’s eye...

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Neha Saraiya analyses in this delightful report on how Sony India reached a fantastical 25% growth... and on what ‘Sonus’ means!

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The acronym Sony has been derived from Sonus, the Greek goddess of sound. It just seems that this Fortune 500 company might just require all the godly help in the coming quarters given the latest financial projections that Sony has churned up! The company is all set to post an operating loss of $2.9 billion. In the current era where there’re innumerable companies posting losses year after year, does this come as a surprise? Umm, yes, if you look at this from the perspective that this is Sony’s first reported yearly operating loss in a huge 14 years. Add to that the gift of a lack lustre business environment and various other factors like intensification of price competition, restructuring charges and deterioration in equity in net income of affiliated companies, and you have the acerbic daughter of miseries ready to take you out on a date. But really, this story is not about Sony globally, but about Sony India, and how their date is lined up with the miseries of economies.

The scenario for Sony in India, one has to accept, is quite contrary to global conditions. Firstly, because the slowdown in India – though seemingly persistent – is finally simply a slowdown and not a recession. And secondly, if you thought that summer is the time for only cola majors to introduce cheeky, new ‘models’ and drinks, then you have no idea what Sony India is up to. Sample this and pop your eyes out. While Sony India saw a thundering growth rate between 20-25% (averaged across various product segments) in the year 2008-09, despite the slowdown their forecasts predict that growth rate will more or less continue to range between the super levels of 15-20% for this coming season. But Masaru Tamagawa, Managing Director of Sony India, is devastatingly honest, “Sony is analysing trends category-wise rather than simply looking at the overall growth. Thus, in FY09, the categories that will continue to grow or shrink will become more obvious.”

But isn’t this akin to painting a glorious Neroistic picture when Rome all around seems to be burning? For starters, what about segments like the consumer audio visual segment, which overall seems to have taken the biggest hit across the industry? Tamagawa reticently accepts and shares detail with us, “Yes, market growth in the segment, which had been approximately 10% in the past few years, might slowdown further.”

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An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Banks charge for every service they provide under the ‘free-service’ banner leaving the onus on customers to keep themselves informed says Gyanendra K

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Read your bank statement carefully (incase you haven’t for the last couple of months–thanks to the chaos in the financial market), and you could find yourself worthy of few surprises. And all of a sudden you will realise that the big statements such as, “Highly competitive interest rates with flexible tenors and no hidden costs...” popping on the silver screen everyday have very easily deceived you.

For a decade now the banks have been free to levy their own charges and this has thrown up a host of hidden costs which many of us are not aware of till date. If you discuss with Mr. Raghavan, (a well-paid marketing manager who never laid an eye on his bank statements earlier) you would get to know your own folly in case you happen to be one who does not believe in regular updates. “Air-conditioned expanse, well lit ambience, blurring dubious and highly questionable work practices designed to hoodwink trusting customers and unsuspecting loan seekers,” that’s how he, in his sanity, describes banks today. Well, you may not necessarily agree with his views, but nevertheless his views are not entirely unfounded.

If you have not been aware of the various charges – which could range between Rs.25 to Rs.1,000 – levied by banks, then in all probability your dear banker (entrusted with your trust and banking on trust of millions of customers like you) must have burnt a hole in your pocket by now. Things can’t get worse especially in times of financial uncertainty, downsizing, cost-cutting and when you want to cut on those extravaganzas. Picture this: Axis Bank increased the charges for not maintaining minimum balances to Rs.500 from Rs.200 without informing its customers in a proper manner. Anil Paul, former professor of Economics, Darjeeling Government College (who maintains multiple accounts), alleges that the bank (Axis Bank) without any prior information increased the levy on non-maintenance of minimum balance. So, his valuable piece of advice to all multiple account holders is, maintain the minimum balance at any cost and earn 3.5% yearly interest on the same, rather than paying the penalty along with added transaction charges (as levied in some cases) for non-maintenance of minimum balance.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Why Coke Prefers Knight Riders Over Hrithik Roshan?

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And it’s not just Coke! Arch rival Pepsi, which has recently dropped Shahrukh Khan as its brand ambassador, has signed a deal with Chennai Super Kings (CSK) to launch co-branded cans to cash in on the IPL frenzy. GlaxoSmithKline India’s (GSK) Boost was just a brand partner of Rajasthan Royals’ (RR – the winner of IPL’s inaugural season) in the last season of IPL, but now it has entered a licensing deal with CSK to develop a special co-branded drink with the formula developed by John Gloster, the physiotherapist of RR. Again, if you glance back at Boost’s advertising over the last few months, it is easy to notice how Sachin Tendulkar and Virender Sehwag (who were endorsing the brand earlier) have been missing from action. Though, Sehwag is still associated with the brand, the company is now focusing more on RR to gain popularity among the Indian masses.

And why not? From a health drink brand’s perspective it makes more sense to associate the brand with the winner of IPL’s inaugural season, rather than just spending money on big ticket celebs, pitching for sales. Through such a licensing agreement Boost’s branding becomes associated with a pack of fit men on a winning streak. And being the winner of the last season, RR surely has a competitive edge over other teams when it comes to attracting more companies to associate with it. RR is cashing in on this opportunity in a smart way. In fact, the team plans to come up with a music video featuring Shilpa Shetty and the brands in RR’s pavilion will be embedded as a part of the video. The company’s officials, however, chose not to comment at this point.

This trend is equally popular with marketers, irrespective of the segment in which their brand is present. Sony Ericsson has tied up with DD as its official mobile partner. The handset manufacturer will be launching special co-branded handsets for this reason. Even garment major Peter England is not far behind as it will be launching a new collection of formal and semi-formal clothes under the CSKP range (CSK-Peter England range). Wrigley, the chewing gum brand, has tied up with CSK and DD to develop co-branded chewing gums. Well, apart from performance, it is important to note here that the players in the team also matter for the brands associating with them. A classic example is Indian captain M. S. Dhoni, who’s helping CSK in getting lots of associations.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Focus on your competition

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Relegated to an after-ran amidst the Hero Honda’s and Bajaj’s of the Indian market, Yamaha was hell-bent on completing its India comeback before its rivals had a chance to recover from the slowdown effect. In between cat calls of a global recession in July last year, the Japanese auto major launched its YZF-R15 in the Indian market; then when the US investment banking giant Lehman was breathing its last in September, Yamaha bravely launched its FZ-16 performance bike in India. And last week when the Indian Yamaha announced that it was in talks with vendors to provide spare parts for its cult bikes like RX100 and RD350, wowing old Yamaha loyalists in the process. The bid is to “win back the confidence of Yamaha customers,” says Yukimine Tsuji, Managing Director & CEO, Yamaha India.


Now consider if Yamaha had made its comeback with 100cc bikes (remember the RX100 that was once legendary in India?). Would the bike-maker have flourished? Possibly not, considering that the segment is now dominated by the world’s largest two-wheeler maker Hero Honda, which itself had been pretty aggressive all across 2008 in its marketing endeavours. Stunning market watchers, when the auto industry was just going on its slowdown hiatus, Hero Honda even came up with a 3-minute television spot, with the who’s who of celeb endorsers. Wisely therefore, Yamaha decided to focus on the weak link in the bike market – Bajaj – and decided to upset their premium segment apple cart instead. Guess marketers at Yamaha just thought differently and needless to say smartly...

The results are already showing. Between April–December 2008, Yamaha had won some of its own back in the premium bikes segment, registering a staggering 220% growth in the category, while rival Bechara Bajaj took a heavy beating. Not one to rest on past laurels on its blazing comeback trail, Yamaha is now busy expanding its dealer network, with plans to invest a cool Rs.240 crore in 2010-11 to develop India-specific models. And the focus on Indian market is clearly visible as Tsuiji states, “India is the first priority market for Yamaha Corporation...” Even Hero Honda’s marketing overtures in 2008 are paying off. To beat sluggish demand, it even launched three refurbished variants of Glamour, Glamour FI and CD Deluxe in December last year, notching up standalone net profit of Rs.300.42 crore versus Rs.275.01 crore on y-o-y basis. Hero Honda too is winning the heated war against the painful slowdown effect in the economy.

Bajaj too is reacting now, though a little too less and a little too late… Honcho Rajiv Bajaj is now promising to launch six two-wheeler models within the next nine months. In an interview with 4Ps B&M, S. Sridhar, CEO, two-wheelers, Bajaj Auto, blamed Bajaj’s aggressive strategy for the falling sales graph (huh!) and elaborated further on their plan. “Three of the six bikes will be in the value segment, one will be the Ninja 250cc and another will be a 750cc bike. This will ensure that by the time recession ends, we will be in a very strong position,” he promises.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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“Pursue your goals even in the face of difficulties, and convert adversities into opportunities.”

Dhirubhai Hirachand Ambani

Go to the home page of Reliance ADAG Group and these words of wisdom hit you gently. There is little doubt that the younger son of the legendary Dhirubhai Ambani must be mulling over these words of wisdom. Well and truly, after he split with elder brother Mukesh Ambani in 2005 and launched his own BIG dreams, Anil Ambani is finding the going tough. Almost all his BIG dreams in telecom, energy, entertainment, infrastructure and healthcare need huge investments. And the money is needed at a time when lenders and investors are holding on to money like a virgin holds on to her chastity. Sure, the man and his group will never be in serious trouble the way many other Indian entrepreneurs are. He sure has the chutzpah to overcome such hurdles. But there is no doubt that the year 2008 – that started so spectacularly well for him – has wounded him quite deeply. Says T. Jagganathan, Equity Head at SMC Capitals, “The year 2008 was a completely forgettable year for Anil Ambani. As far as 2009 is concerned, there are no hopes whatsoever from the economy point of view as well as the capital markets point of view. The performance of Reliance group is closely benchmarked against their capital market performance.”

That has an uncomfortable ring of truth. For instance, there has been an almost 75% decline in the personal net worth of Anil Ambani to just about $30 billion (just see the use of words ‘just’ to describe $30 billion – that’s how one benchmarks the Ambanis!). In early 2008, the price of a Reliance Communications share was about Rs.800 while that of rival Bharti was about Rs.1,000. The gap was a mere Rs.200 a share and Anil Ambani was closing in. Then the script changes. By December 2008, the Reliance scrip has crashed to about Rs.200 while that of Bharti has tumbled to Rs.600. The gap has now widened to Rs.400; something that must be hurting the younger Ambani who is fiercely competitive and numbers driven. What must be hurting even more is the yawning gap between the number of subscribers corralled by Reliance and Bharti (Airtel). In January 2008, RCOM had about 37 million mobile subscribers while Bharti had about 52 million. By December 2008, the RCOM numbers had shot up to about 52 million while Bharti’s numbers had zoomed to about 85 million.

But it is the Reliance Power fiasco that has caused the maximum damage to the group. In early 2008, the RPower IPO to raise Rs.11,500 odd crores was hailed as the most successful IPO in Indian stock markets. Investors were delighted at the prospect of such manna from heaven. But the euphoria was short lived and the Great Expectations ended up in greater disappointment. The scrip listed on the stock exchange at Rs.547 in February, 2008. On January 15, 2009, the scrip was available for about Rs.98. Sure, you can say that the markets have tanked and shares of all business houses and entrepreneurs have suffered. But the fact of the matter is that RPower shares crashed by more than 74%, while that of rival Tata Power tumbled by a much smaller 54%. This hurts! Says Jagganathan of SMC capital, “Unfortunately, many people not very familiar with the markets still associate the crash of 2008 to the Reliance Power IPO itself!”

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Exclusively designed ballrooms, well-lit bedrooms, imported chandeliers, supremely planned restaurants...

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Exclusively designed ballrooms, well-lit bedrooms, imported chandeliers, supremely planned restaurants... the five-star lot in India is still finding buyers. And though times are not easy, why is it that all, except the bar-tender, smile? Does he hide a secret? Neha Saraiya narrates a tale of success (and the secretive oncoming storm)...

Yes, you read the heading right – really ‘cold’ times, and that’s exactly what is ripping the comfort jackets off the global tourism and hospitality industry... Cut to India, for the common street walker, events that unfolded of late (the terrorist attacks in five-star mansions... and blah... blah...) too make him wonder whether we really are that economy that is growing much better as compared to global counterparts. Imagine – a 6-7% projected growth rate for the next year, and at a time when even George Bush (or was it Obama?) admits to incessant headaches and blurred vision (thanks to the recessionary migrane)! And of all the macroeconomic excuses that we can boast about, here is a look at how (and why) those well-dressed ladies are still smiling their way into the ballroom of the 5-star hamlet, just a few miles away from where you presently stand!

Yes, at a time when all we can talk about the global hospitality industry is ‘gloom’, India continues to ‘shine’. In a close-finish race, the Indian hospitality industry nearly outdid even the diversified GDP growth, and closed the calendar year 2008, having grown y-o-y by 6%, with 5.37 million foreign tourist arrivals (and forex earnings of Rs.50,700 crore) being recorded! But at a time when every inch of the economy can feel the heat of the slowdown, the hotel industry is also rowing on lukewarm waters, both on the consumer and supplier end. Undoubtedly the ongoing economic crisis has dampened discretionary spending on both the corporate & personal levels, thus eroding pricing power of hotels and reduce demands for rooms, restaurants and banquets halls. Secondly, the prevalent dearth of easy debt is making new development and upgradation plans difficult to materialise for hoteliers (their working capital woes to meet just operating expenses, being a long tale for another day). Keshav Baljee, VP-Corporate Affairs, Royal Orchid Hotels Ltd, sums up demand and cost worries of the industry as, “The major cost has been that of lost business during the peak season. However, there are some ‘one-time’ costs associated with purchase of additional security equipment and some recurring costs with respect to that of additional staffing and screening. And the insurance costs are likely to rise as well!”

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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We can buy pizzas too!

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McDonald’s had become India’s darling because of its value for money pricing; Domino’s encashed on this and launched its budget pizzas at Rs.35 only. The bid was to attract economy consumers and also kids, making pizzas within reach of their pockets. For the first time, Domino’s shed its ‘Hungry kya?’ tagline and launched an ad that played on compassion rather than humour. The tagline – ‘Khushiyon ki Home Delivery’; the aim – to expand their customer base in one go. Now that’s what we call a smart marketing move.

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An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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It’s high time to revisit retail, says 4Ps B&M’s Savreen Gadhoke…

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In fact, retailers have now realised that having too many stores was perhaps not the right strategy to increase sales, as now handling rising operating expenses is beginning to get difficult for retailers. Moreover, rising manpower costs and sky-rocketing rentals too are adding to their dilemma. So, most of the retailers are now either merging their different retail formats or are relocating and resizing. They are even shutting down stores. This is certainly a natural move on retailers part, however, what is intriguing is that how did such a situation rise, especially when the Indian retail boasts of some of the biggest names of India Inc.?

Answers Vasal, “The reason for some retailers closing down stores is the general slowdown & fault in the strategies of the retail players. Some players entered the market during boom and hence the calculations weren’t done adequately.” Recently Videocon-owned consumer electronics store Next revisited its strategies and announced the closure of 20 outlets in prime cities. However, K. S. Raman, Director, Next Retail has a different reason for the same. “We now want to consolidate our presence in the interiors of the country and North East,” he argues. Similarly, Spencer’s Retail, too has shut down 56 stores (out of a total of 400 stores) purely on account of non-performance. Exclaims Goenka of Spencer’s Retail, “It is not an alarming news but a sensible decision.” Reasons cited by Goenka for non-performance of his stores were that in certain places, rents were too high and did not commensurate with the revenues, while in certain other places revenues just didn’t pick up. “You have to see what product(s) you are selling and then choose on a location. In few cases, this was done in a reverse manner,” he adds.

Apart from closing down stores, retailers are also considering to merge different retail formats they opened during the process. Reliance Retail is expected to merge its hypermarkets, supermarkets and convenience store formats. Certainly a merged management will help Reliance save on man-power, operational and recurring expenses. Kishore Biyani-owned Pantaloon Retail has also shelved its plans to hive off Big Bazaar as a separate entity and therefore cut on the costs that were expected to rise with the formation of a new company.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The Colour of Retail

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Another way in which retailer’s are getting returns from their ‘green’ investments is the last 5 seconds of any marketing programme - We refer to the fourth P viz. Packaging. For instance, bags used by green retailers are reusable and recyclable and employees are trained to add more items per bag, reducing overall packaging cost. Mark & Spencer, made a bold move earlier this year by becoming the first major retailer to launch a nationwide carrier bag charging programme. To their dismay, however, there was a huge protest from consumers across UK . But, though there may have been some teething problems around customer inconvenience, “carrier bag usage is down by 80%,” explains Berg. Moreover, retail specialists claims that in regions like Europe where private labels command an equal if not bigger market share than big brands, most in-store labels are promoted as eco-friendly brands and the unique positioning helps retailers steal the show from big brands. No wonder Carrefour Eco Planète (a ‘natural’ tagged private label from Carrefour) is one of the most popular brand’s in its category and Carrefour holds the distinction of being France’s largest organic products retailer. Carrefour also is a propounder of recyclable bags. Even German super value store Aldi promotes its store brands with eco-friendly paper bags.

In tune, the global organic and eco-friendly market is growing by 39%, a mouth-watering delight for retailers in UK and USA. “In concentrated markets like Switzerland, USA and UK, supermarkets play a much greater role in community and that’s why these players are successful is promoting organic food,” explains Jonathan Banks, Business Insight Director, The Nielsen Company, UK.

About a year ago, when Lee Scott unveiled Sustainability 360 for engaging Wal-Mart’s associates, suppliers and customers in his ‘green’ campaign, altruism was far from his mind. He was indeed thinking about the great business sense it makes to reduce waste (of energy and packaging) on the one hand, and make money by selling environmentally friendly products, on the other. Sustainablity is vital for profitability, at least for retailers, it seems. Long Road Out of Eden gift-wrapped in sustainable paper, anyone?

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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BIG TV's teaser before the war cry

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The second round of DTH war is on and ADA's BIG TV has made its war cry by slashing its prices heavily and offering the connection at a 43% lower price compared to the existing players' offer. Earlier this month, BIG TV created a big buzz when it ambushed Airtel Digital's teaser campaign and made it its own. What else, they patted themselves by sending a detailed press note on exactly how they did it! Well keeping in mind the DNA of ADA group, it's not surprising. In fact, with festive season 'round the corner, such fireworks were expected and anticipated from the BIG men. Just to raise some eyebrows: BIG TV has already grabbed 500,000 subscribers within 50 days of its launch & expects to touch five million in the first year of its operations. Too ambitious?

Pallavi Srivastava

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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It’s a long drawn story

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Marketers constantly try new gimmicks to attract consumers; the latest being long TV commercials. But will the strategy work? surbhi chawla finds out

A tense stadium anxiously watches an Indian cricketer batting on 99. In this nail biting anxiety comes a new ball and the batsman hits a splendid six! His fiancée, who is sitting in the audience gets up, dodges security personnel to enter the field and breaks into a carefree dance. And with her, the entire nation sings ‘Kya swaad hai zindagi main.’ This long duration ad and the jingle from Cadbury Dairy Milk was etched in the mind of the audience for a very long time. At a time when marketing budgets were not high and marketers had to watch each penny they spent, coming up with long ads was not considered to be sensible. However, over the years, duration of ads has almost tripled and so have their advertising budgets. So, what is the real reason behind marketers ditching short & crispy ads in favour of long & audacious ad campaigns.

Priti Nair, Managing Partner, BBH India, opines, “With so much clutter around, the idea behind these long ads is primarily to break the clutter and get the ad noticed.” Earlier the trend was to rope in big celebs to draw attention, but now with so many celebrities trying to sell everything from a toothbrush to a car, marketers want to try something different to grab the attention of the Indian consuming masses. Hero Honda to celebrate its 25th anniversary in the Indian market has recently come out with a foot thumping 180 seconds commercial. And it is not just the sheer length of the ad that comes as a surprise, but also the presence of as many as eight celebrities swamping all over the television channels that make one wonder that does it makes sense to have such a lavish ad budget? “It is not just the length of the ad that would hook the customer, but the ad should also provide the watchers with entertainment value,” avers Sanjay Sharma, CD, Draft FCB Ulka (the man behind the Hero Honda commercial). Marketers are now working harder on a storyboard that is interesting and hooks the customer till the end of the ad.

“The size and scale of the ad also helps the brand in creating a statement about itself,” informs Rajeev Raja, Ex. CD, Bates David Enterprise. Little wonder that BIG TV, Happy Dent, Bajaj Pulsar, et al, have made ads that are longer than the normal 30-45 seconds ads. There would be ad-men who would be quick to point out that there has never been a cap on the ad length and even in the past there have been ads of various lengths that have been made from time to time. As a matter of fact, it was not so long ago when Nike came out with its gully cricket ad that clocked almost two minutes. What’s more? Although the Nike ad boasts of a few celebrities, the entire show is run by faces that are lesser known.

So does it always pay to make something grand as attempted by these ad gurus? Not really, and the biggest example is the Pepsi Bubbly campaign. The ad had Big B, SRK & Preity Zinta giving company to Sachin, Dravid, Irfan, Yuvraj, Zaheer & Kaif. The company also launched a remix video with Kareena Kapoor. However, the ad campaign did not click with the audiences. The reason was very simply – with so many stars, brand Pepsi got lost somewhere. Although people do remember the bubbly song yet the association with Pepsi is not that easily to make. The trick here is not to create a long ad, but to ensure that each dime that the marketer spends gives him good solid returns.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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HEY, BE OUR GUEST!

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According to consulting major Deloitte, international tourism expenditure in India in 2006 was about $8.7 billion and is expected to rise to over $10 billion by the end of 2008. According to them, there were an estimated 105,000 hotel rooms in India as of July 2007 and with these new concepts, this is bound to increase. Avers Amol Rao, Hospitality analyst, PINC research, “If players don’t start now, they will lose market share, as discretionary spending in India is increasing at a fast pace.” Market watchers agree that the growing demand for hotels rooms is stimulating innovations. There are innovations like underground resorts, totally cut off from the outside world. There are even restaurant run by housewives, especially designed for NRI clients. Located in Bangalore, the restaurant has housewives from Bijapur and Dharba cook and serve regional food, just as they would in their own homes.

There is even a military resort in Bangalore called ‘The prestige’. It’s a getaway where corporates send their core teams for training in team-building in typical soldier style. “Corporates like change, so we are trying to innovate and explore new opportunities,” asserts Venu Rao, Director, Aabana Hospitality, the brains behind the underground resort. Adds Amol Rao, “Moreover, products or services of any hotel cannot be in a vertical line as they have to be in a pyramid in order to grow. Indeed alternative tourism in India is a big concept, but in a nascent stage.”

Recently, even Mahindra Holidays and Resorts India (MHRIL) launched a new holidaying concept called Mahindra Homestays, wherein the company partners with home owners for accommodating visiting international tourists for a fee. The intention is to give foreign travellers a unique local experience. Justifies Ramesh Ramanathan, MD, MHRIL: “With shortage of hotel rooms in tourist destinations, it was imperative for us to grab the opportunity for authentic hospitality.” Four Seasons is also developing a destination resort in Puthenkayal (Kerala) which will have 75 villas and also 20 branded, luxury private residences. On similar lines, the Leela Group is investing in a property in Gurgaon which will have 90 apartments called ‘The Residence’.

Interestingly, alternative hospitality is luring even non-hoteliers. Real estate player DLF is building India’s first residential hotel in Goa in collaboration with Hilton Group, with an investment of $2 billion. Likewise, even as you read this, Puducherry-based leather accessories maker Hidesign and Bangalore-headquartered liquor firms, Khoday Group and John Distilleries are busy firming up their alternative hospitality plans. A recent Ma Foi report asserts that an estimated $11.41 billion is expected to flow into the Indian hospitality sector over the next two years. We don’t doubt it. Do you?

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Now it’s Brand-policing

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Zaheer Khan,
Chairman, Enforcers of Intellectual Property Rights

Now it’s Brand-policing

The Indian counterfeit market share has gone up significantly over the last five years due to increasing brand awareness. Large sums of money being spent on advertising and promotional activities is increasing the scope for counterfeiters to cash in on the well-known brands. The mushrooming of counterfeit and gray market is encouraged by the fact that the margins involved in counterfeiting are high and penalty for counterfeiting is not that serious. People find it an easy avenue to make quick money. India and China constitute the largest counterfeiting problem that the world faces. Both have a very large user population as well. Not only do we churn out a lot of counterfeit for exports for use in different countries, we also use a lot of counterfeits that we make.

Actually we are the biggest market for counterfeiting. Though there is no one study which can quantify the amount of counterfeiting yet, it is safe to say that in every industry now the rate of counterfeits are alarming. Counterfeiting always happens in the most popular, most advertised and most publicised brands. They are the easiest brands to cash in on because they are the ones who spend most money in building these brands. The downturn and misgiving are by the buckets of counterfeiting, first being the huge revenue loss.

And of course, then there is loss of customer and brand value. If a customer buys a substandard counterfeit product and has a bad experience, he may not return to the same product thereby causing brand value loss and product loyalty loss.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Now IIPM's World-Class Education... for everybody!!
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
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When IIPM comes to education, never compromise
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