Saturday, June 30, 2007

Two Important Marketing events

I couldn’t resist the temptation of writing on the two important marketing events across the world. First, the launch of iphone by Apple yesterday, and the launch of the seventh and the last book in the Harry potter series. Both of these events are I would say the most hyped events of the last few months. For the i-phone, Apple and Steve Jobs have done a fantastic job creating buzz in the blog world and there are many reviews on the internet. The phone itself would take time some to reach India, though the grey market is promising unlocked phones in a matter of few weeks.

The second event - the launch of the seventh Harry potter book would happen simultaneously in India and many of the country’s prominent book retailer are preparing for a gala launch for the book. The retailers expect the sale of the book to be good, but an article in Business week points out that the book is no longer profitable for the retailer in the US and UK , as most of the retailers are selling the book below cost. They are using the book a loss-leader to attract millions of consumers into their shops by offering heavy discount on the Potter book. Even the shares of the original publisher Bloomsbury also plummeted by three-quarters as revenues fell during the period the author was busy writing the book. If J K Rowling’s does end up killing the Harry in her seventh book, one can only guess what would happen to the shares of company. Though the consumer is not complaining about the discounts that they would getting in the new book .....

Friday, June 29, 2007

Odd Sizes in Trousers and Shoes

Have you every thought why we don't get trousers in odd sizes,33,35,37 and so on, even in shirts one would find only 39" in only some brands. The only option left for a person with a waist size of 35 is to either wear a 34 or 36 or else go for tailor-made trousers. The companies at their end are interested in reducing the number of SKUs that it would be carrying; let’s say if an apparel company introduces 5 new shades for the summer and it also wants to introduce odd sizes, then its inventories would double. This strategy made sense when the ready made trousers and shirt industry was in a nascent stage, today I think the size of the industry is big enough for the companies to offer this choice to their customers, but I think the companies have taken the easier route of not offering more choice, or maybe it is just till one company starts offering it …………..

Similarly in the case of shoes, one does not find 8 ½, 9 ½,and so on , as if feet size would be according to what the shoe companies decide.

At least in shoes abroad one is able to get the 8½’s , but in shirts and trousers?

Thursday, June 28, 2007

Changing Market Dynamics Contd.....

Just a small note on something which i had written in an earlier blog on how retaining the number one position in a market place has become much more difficult. Yesterday Nintendo overtook Sony in market capitalization and reached the top-ten companies in Japan in terms of market-capitalization. Nintendo's Wii has outsold PS3 1 to 5 in the Japaneses market.

Ads targeted at Children- Ethical Issues

The recent trend by major multinational companies of stop advertsining to chilldren must have been noticed. This issue has come into limelight in the recent years against the rise of child-obesity in the developed countries. Kellogg’s is the latest to join the band wagon, with its voluntary initiative to restrict ads aimed at kids for products that don't meet certain nutritional standards. The voluntary nature of the action is suspect as it is under pressure from health activists and many law suits, but anyway the move is a step in the right direction. Restrictions are also planned in schools in the US on the availability of junk food in schools, and allow only water, milk and juice-based drinks in vending machines and regulate the size and nutritional composition of foods sold. In India also in many states the sale of colas has been restricted in schools. Initiative of the cola majors to broaden their portfolio to include products other than the colas and gradually moving into juices and other healthier alternatives is a reflection of this changing trend.

The ethical question to be raised here is that the companies would have always known that they were advertising unhealthy products to children who would not understand the significance and force their parents to buy the product. We are not talking about small companies , most of these companies are in the top-rung of the fortune 500 list?????

Tuesday, June 26, 2007

Convenience Driven market place ?

A few years back the use of packed atta , pickles, ginger garlic paste was used to be looked down upon in the Indian household. It was considered a part of the duties of the "Bhahu" to make all these things in house and the skills of preparing these items were passed on from one generation to another mother or mother-in-law to daughter. Times have changes in many of the families the house has also started working and thus leading to the shortage in the availability of free time and the working women have taken to these packaged mixes and preparations with great enthusiasm. The guilt associated with the inability of preparing these things on their own has also given way to the pleasure of being able to save time. Even the demand for frozen peas has grown and they are being stocked in fresh vegetable shops in the country and the consumer is asking for the frozen peas as he would buy a kilo of potato. Another example which come to my mind is that of "Tomato Puree" when Godrej introduced it in the late 90s , they could sell it only in months when the prices of fresh tomatoes were very high, but today the consumers purchase the puree because of the convenience involved in using the product and the cooking time it would save.....

Thursday, June 21, 2007

Branded Petrol and Disel, from Commodity to Brand

The other day while traveling in Bhuwaneswar, I saw the auto-rikswas purchasing the branded diesel, which is priced at a premium versus the normal diesel. And these auto guys run on ‘share-basis’ wherein they keep collecting customers on the way and dropping them to their destinations. They run on even thinner margins compared to the usual meter auto guys. I spoke to a few them to find out if they were actually getting mileage and performance out of the Branded diesel, for which the answer was in positive. I felt that was a vindication of the performance of the branded Diesel and felt this should be highlighted in the communication adopted by the petrol companies.

It was in the last few years that we have seen the launch of branded Petrol and Diesel by the major oil PSUs in the country along with the attempt to improve the petrol pumps itself. The Trigger was the imminent entry of private players into petrol and diesel retailing in the country. The secondary reason was an attempt to convert a commodity into a brand. A commodity is a product which cannot be differentiated and price becomes the only differentiating point and in a controlled economy situation where price would be same across different petrol pumps, the petroleum majors never had any incentive to either improve customer service or try to brand their products. But entry of competition has changed all that. The positive results of the introduction and adoption by vehicle drivers was mentioned in the newspapers a few months back and the example in the beginning reinforces the fact that the segment of branded petrol and Diesel would only grow in the near future.

Sunday, June 10, 2007

A retail market for "ICE"

The other day I was getting my vehicle repaired in a road-side shop. It was mid-afternoon and the heat was unbearable, at 45-46 C. The mechanic was taking a long time for the minor repair and I had nothing to do but to wait. The area in which the repair shop was located would have one of the least prosperous areas of the city; one could call it a slum. In the area I observed one thing that was selling briskly was "ICE". There were some four-five make-shift shops which were selling ice to customers who would buy the ice and carry it home in small polyethylene packets. The customers in the mid-afternoon were women who after their normal grocery purchase were on their way back home. Each of the shop had at least 8-9 blocks of ice in stock which they would probably have to sell off by the end of the day and for five rupees they were selling a 6"X6" piece of ice which was pretty costly. This market of ice I though was a very good example of the market for low-income consumers. As has been said by people like CK Prahalad in BOP marketing and others, the low income consumers also need products and services which we would normally associate with an urban up-market consumer, here we are talking about the product "cold water" or "cold lemon drink”. Though the purchasing capacity is low, but if one provides these consumers with smaller quantities they are willing to buy and even at higher prices.

There are many examples of the purchasing capacity and preferences of low-income consumers........

Saturday, June 9, 2007

Decision-Making and intuition

What is the linkage between managerial Decision-making and intuition? Most of us would like to believe that management is a perfect science, and one can afford to rely totally on facts and analysis. That is why time and again we come up formulas and prescriptions on achieving success in the market place. The problem of accepting that intuition could have an important role to play in Decision-making is discomforting because it takes away a lot of control over things which we are comfortable with and can be verified upon. By going away from analysis we are accepting that there are things which are not in our control, or maybe driven by the gut-feel of an executive, reinforces the fact that maybe what was achieved yesterday using ‘n’ variables would not lead to the same result tomorrow even with the same input, so we are accepting is that managerial decision making is closer to cooking than a precise science?

The book "The case of the Bonsai Manager" written by R Goplakrishnan, dwells upon the importance of intuition and how managers should consciously try to develop it. In the book he has used many of his personal experiences, which are drawn from his experiences in HLL and Tata’s and analogies from the animal world to elaborate his views. For me who has been a regular follower of his column in Economic times the book was a one stop source of his ideas, and I would recommend it highly to any one with interest in management and especially younger people....

Monday, June 4, 2007

India is Interesting...................

Eureka Forbes
ITC Echoupal
HLL Project Shakti
Arvind Eye Hospital
Narayana Hrudayalaya

What is common in the companies which have been listed? .....On all of these cases have been written by professors at the Harvard business school. One might say so what is so special about cases being written by these Professors on Indian companies, they saw something interesting and wrote a case. right? Wrong, because these cases are being written because there are students and executives across the world who are interested in knowing what is happening in India today and thus these cases are helping them get a feel of these markets.

Interest in India is not restricted to the business, comic books based on Indian Mythology are also selling very well in the US. Ramyan Reborn series a 30-part series on Ramyan has sold over 2 lakh copies in just four months since it's launch,and so is a series called "Sadhu". The Ramyan Reborn series is being promoted by the New York based Virgin Comics, developed by the spiritual guru Deepak Chopra.

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