Friday, August 31, 2007
The advantage of these smart cards according to back is that it would eliminate the need to have ATMs and branches, one more attempt to find ways out of the heavy cost of servicing the village consumers.
Thursday, August 30, 2007
A country like ours offers many unique challenges to a marketer. The diversity of the country in terms of geography, culture, customs and traditions can be seen as a problem and as well as an opportunity. Anyone who has traveled around the country would be appreciate the fact that the food, dialect if not the language, dressing, change very 500 hundred kilometers that one travels, even within a states. For a marketer to able to generalize and make marketing plans at the level of even at the state is quite difficult. For example for people familiar with the state of Karnataka would agree with me that within the state the culture language and eating habits and even the festivals celebrated or given more importance would be very different in North Karnataka , Coastal Karnataka, Dharward belt , Mysore, Bangalore. Similar is the status in many states in the country.
This diversity as such is not something new and has been there for ages and we as Indians are proud of this diversity, but as marketers it puts more demands on us….. One set of marketing companies which I have seen have reacted well to these diversity are the consumer durable companies which actually run promotions according to the state. Like in Kerala, Onnam is the most important festival of the year, and companies know that most of their TV sales would happen during that period and the companies have design a special promotion during Onnam in Kerala, and not Diwali.
In one of my recent visits to Bhuvaneshwar, I was there during their local festival ‘Rraja Sankranti’ which in the state is a major one. In the market I found the local shopkeepers - the Kirana stores and Cloth stores were all decked up for the festival, but the Local Big Bazaar didn’t have the same level of preparation for the festival. All they had was a few promotions running; maybe they will improve in the years to come. But local responsiveness in the times when we are talking about micro-individualized marketing effort is missing. The least we can and should expect is a regionalized marketing effort. The thinking has evolved from talking about a global standardized product all over the world to local responsiveness.
In India most of the companies have rushed forward to embrace the Valentines day, father’s day and so on……. to cash in consumer sentiments, Though I am not against that , but before trying to introduce new events we should ask the question have we actually capitalized on what we have following for ages…..
Tuesday, August 28, 2007
Some time back when we were walking through a Big Bazzar "They have made all brands into commodities" was the comment made by the senior marketing professor who was with me. He said only differentiating point is the price. Which to a large extend is true in the large format retail stores which are coming up across the country. One would have read the news that reliance retail is going to sell or rather is selling jeans at 199/- but has anyone wondered which brand ???? or 199/- the price point itself is sufficient....
We are entering an era in which store / private brands would play a significant role. The Private/Store brands are brands owned and promoted by retail chains. And recent data shows that from 2003-2005 global private-label market share grew by a staggering 13%. Though the phenomena is yet to catch up in
In the latest issue of Harvard Business Review an article "If Brands are built over years, why are they managed over Quarters" speaks about the impact of promotions on long term brand image. There are two contrasting examples in the article on handling pressure from bigger organized retailers, In the first case Vlasic a 50 year old brand of Pickles in the US had to file for bankruptcy after it tied-up with Wal-Mart on a special deal which sold it's products at a very low cost, leading to cannibalization of it's sale in other channels, and subsequent decline in margins. Second is the case of Nike. Here when a major footwear retailer Foot Locker cut Nike's orders by $200 million to protest the terms Nike had placed on prices and selection, Nike reacted by cutting its allocation of shoes to Foot Locker by $400 million. Customers frustrated because they couldn’t find shoes they wanted stopped shopping at Foot Locker. Sales at a competitor, Finish Line, increased. In the end, Foot locker acceded to Nike's terms.
The authors say the difference between the two cases is in the strategic perspective that both the brands held. Vlasic used a short-term sales strategy, focusing on a single, large channel partner and discounting its products to attract consumer and in addition the company also reduced the advertisement budget. In contrast Nike positioned itself for the long term. It maintained a strong relationship with a variety of retailer’s and kept investing in brand equity setting its eyes on a distant horizon. It continued to own its customers and its brand, where as Vilasic ceded both to the channel.
These examples should provide leads on how Indian manufactures can tackle the organized retail when they become powerful......
Saturday, August 25, 2007
Some time back one of my friends’ picked up an alto, and he choose the pearl silver color. According to him he simply picked up the color because he liked it, logic being his mobile was also of the same color so …... But, then over the next few days, we noticed that the color which he had chosen was infact the most popular color for new cars in the city. Which made us think on the choice of colors that a consumer would make when he makes a purchase, whether he or she would follow though inadvertently, a market trend or get influenced by a new color in the market---sort of getting influenced by the choice of crowds or, sort of wisdom of crowds maybe. Questions about whether color and a product category have some linkage and similarly is there a regional variation in the color choice????
Infact ,brand guru Al Ries recommends that a brand should try and associate itself with a color early in it's life and own that color. The example given by him is that of red and coke. In the initial days Pepsi was not tied-up with any color but now it is closely associated with Blue. He has written an interesting post in his blog on the linkage and he goes on to emphasize that name and color are two of the most important decisions in marketing and should not be taken lightly.
In certain categories color would have a more important role to play say in durables versus FMCG. Though, there is the switch that Kit Kat has made in Japan from Red to blue and the ritual that students follow of eating it before exams…. Anyway back to durables, If you have bought a durable in the recent times chances are that you would have to shell out close to 500-1000 /- more for a specific color , as is happening with my fridge purchase, there was a 1ooo/- premium for certain color and the sales person himself made it very clear that the premium is just for the color and obviously there are consumer who wouldn’t mind paying a premium for color though I am was not one of them.
There is a interesting new item in Business standard on consumer color choice. The article says that color infact could be an additional differentiating point in the market place where technology alone might not be sufficient. It make one wonder if technology can be copied how long will it take a competitor to come up with a similar or infact an even better color range. The case of Scooty has also been highlighted where in a total of 99 shades are in offer for the consumers, thus choice for the Indian consumer is increasing rapidly from the days when one had to not only wait for a Bajaj scooter, he had to take home whichever was given , even if it was a bright yellow color ......
Wednesday, August 22, 2007
Banking service is an among the essential services needed by rural consumers. Traditionally it is the village money lender who has been fulfilling this role . The interest rate charged by the money lender would be very high leading to chronic indebtedness of villagers. Credit at reasonable rates of interest is essential for the village economy to grow and enable them to join the Indian growth story. Farmers have their specific credit needs which are tied-up with their farming cycle and festivals and functions.
Over the years many initiatives have been started by banks and other institution's in which Micro Credit has been one which has received a lot of public attention.This post would not focus on micro finance , but would rather focus on the initiatives taken by public sector and private banks in mainstream banking. One initiative which created a lot of news a few years back was the introduction of low cost ATMs, but it's scaling-up is taking more time than anticipated. Both IITB and IIT M had developed their prototypes, with the idea of providing connectivity through existing ICT initiative replacing cards by using biometric identification. Maybe the idea needs time before it can be scaled up.
One of the initiatives is considered to be a success is the Kisan Credit Card launched in 1998-99. In the initial five years of the programme itself the close to 435 million cards were issued with credit disbursals of Rs 1,11,459 Crore.The main feature of KCC that it was initially meant for timely short term credit needs of farmers and the credit delivery mechanism was simplified and made flexible . The farmers were provided crop loan, later on the scope was extended to term loans for agriculture and allied activities and a reasonable component to meet the consumption needs. Though the KCC has the word card in it, but it was essentially a passbook given to the villagers like as is the case with normal bank accounts.
The latest in rural banking is the smart cards.........
Monday, August 20, 2007
Water Purifiers as a segment has seen a lot of activity in the last few yeas. It has seen the entry of many new players like HUL with it's Pureit brand, Kent RO and even Philips has entered into this business, apart from the old horse Eureka Forbes . The reason why the segment has attracted so many new players is the growth potential that the segment has shown with increasing awareness among the consumers about waterborne diseases and increasing health and hygiene consciousness.
Traditionally the water purifiers were sold through the direct sales route, where the sales man would make direct sales calls to the consumers and sell the product. Infact at one point in time Eureka Forbes use to be seen as a training ground for budding sales professionals, but now it is said that companies might move out of the direct sales model. Direct selling is a time tested way of selling and one wonders why should that be changed, I could think of a few reasons,
First , could be the increased awareness on the part of the consumers in terms of water purifier as a category. In the initial days the selling process also required educating the consumer in terms of waterborne diseases and product benefits, which may not be that essential part of the sales process today. The consumers might find it far more easier and convenient to go and purchase from a retailer than a direct sales person coming to his/her home
Second, the emergence of competition has also lead to change in the dynamics of the industry. Both HUL and Philips have strong distribution networks for their products and thus for them the direct sales model would actually mean adding an additional channel of distribution. And last but not least would the emergence and growth of organized retail in the country, which provides the water purifiers with a right contact point to reach its consumers
It remains to be seen if Eureka Forbes would stick to its direct sales model or change in response to the changing preferences of its consumer and competition.
Thursday, August 16, 2007
"We had a couple of quality issues. So we were tested pretty quickly as to how we were going to deal with warranty and recalls. We went beyond what any other car manufacturer and dealer had ever done, and we set a new benchmark. We took back every car. In some cases we went to the customer's home. We checked the whole car and gave the car back, we washed it and filled the tank. Minor things, maybe. But they blew people away, and they motivated tremendous word of mouth. Lexus owners were boasting about us and our service to their friends, 'You know, they just don't talk about standing up for their product- they actually back up their comments.'"
-Steve Strum, Toyota's Vice President Marketing
No wonder Lexus went on to become the best selling luxury car in the US, selling 2.7 times all the three models of Merc together. Lexus has been topping the JD power ranking for years.
The problems mainly is with the trade and the channel partners who would be involved in the recall process. The channels are designed for pushing products out and not for taking them back from customers and there is resistance from the trade to get involved in the process atleast in the Indian context. This is despite the incentives provided for the recall.
I remember two cases of product recall where the customer experince was not good. In 1996-7 there was a problem with steering component of Maruti800 and the company offered to replace it free of cost to the customers provided they came to the dealer where they had purchased the car. Though might look very logical and simple but the fact was that we stayed a good 500 kms from the nearest dealer made the ordeal quite painful. The second experince was with that of pens, though one the face of it replacing a pen (Parker) should have been easier, but the hassles involved with the retailer and the company's attitude left a bitter taste in the customer mouth. The company was Luxar Writing Instruments.the Indian parnter of Parker.
Infact, I feel that the problem of recall if handled carefully can become one more opportunity to reinforce the image of the company as being a customer-oriented . A touch-point which if handled properly can lead to more long-term relationship with the customers...
Wednesday, August 15, 2007
After decades of slow growth we have entered into a phase of near double digit growth in the economy which has had obvious implications for companies both within and outside the country, the domestic companies which had been tied down in the pre liberalization days are all out acquiring companies abroad and trying to make up for the lost time. In his book Managing Radical Change, late Sumantra Ghoshal lamented the fact that in 60-70's when LG was manufacturing plastic combs, Indian companies like Tatas were into steel manufacturing , but later on the LG grew into a corporation much bigger than the Tatas. Maybe in the next few decades would see that change.
What are the implications of a very young population for marketers? First, would be that the young population would have lesser baggage with them when they enter the market. They are a population which would be more open to new ideas and more confident about their future, which is reflected in the rise of consumer loans and use of credit cards, though the rise of "spend now pay later" culture might not be appreciated by everyone. These consumers would also be more and more demanding in termsthe quality and product features they want and after sales service being provided to them . With their changing pattern of consumption and life style they would demand unique products and services which earlier generations would have never imagined, and the marketer who seizes the opportunity first, would ride the wave. The media habits of this sub-25 population is also very different from the older population, spending more time on social networking, internet and less and less on TV, would have implications for media planners across the country. Many more challenges lie ahead for catering to the young population of the country, the list can be endless, maybe reader can add to the list in their comments and also share their opinions on the issue.....
Tuesday, August 14, 2007
"Asok is brilliant, but as an intern he is immensely naive about the cruelties and politics of the business world. His name is a common one in
For a related link in BBC on Asok.
The second character Raj Patel is again from a comic - Archies comics. He has just made his debut in the magazine and according to the publishers, Raj has just moved into Riverdale High and likes sci-fi movies, building models and making films.
The presence of these Indian characters in these comics and cartoon strips symbolize the global presence of Indians. Asok and his presence in the Scott Adams strip is an acknowledgment of the impact that
Wednesday, August 8, 2007
Yesterday, I had the opportunity of listening to Vikram Bakshi Managing director and Joint Venture partner of McDonald’s India . Long back when it had just entered
I will briefly share some of the insights which he shared on the evolving Indian consumer and Indian retail scenario. He was upbeat about the Indian market looking at the fact the population of the country is young and one with a lot of disposable income. But 'time' is one of the commodities which is becoming more and more scarce, which has implications for the fast food business. According to him, owing to the paucity of time, the consumer is looking at 'convergence', i.e., he is looking at combing many of his activities, like, ‘shopping + entertainment + food’, and which means their restaurants have to be present in places where this kind of convergence is taking place.
He discussed various initiatives taken by Mc Donald’s India which were unique , like the a separate veg and non-veg kitchen which is done only in India, introduction of local menu with burgers like the Mc Aloo Tikki burger which has become the largest selling burger for the chain in the country, the home delivery model and the various supply chain initiatives in the country. Though the chain adheres to all the basic principles (Like QSC&V) set by McDonalds globally, it has adapted many things in
On a query related to the growing heath concerns, he emphasized that the consumer gets what he wants in McDonald's chain, by which he meant that though people might claim to be health conscious but the moment they step out of their house they don't want bland salads to be served to them. Though as a chain they were trying to address the issue, by reducing fat content in many of their products.
He also took us through an interesting exercise wherein all of us were asked to closed our eyes and open them exactly after one minute and check the time. Most of us opened out eyes well before one minute. His managers were facing the problem of customer being unhappy with the time taken for the delivery of their orders, inspite of the reduction in the time from ‘order to delivery’ from 68 to 55. Mr Bakshi through the exercise demonstrated that the consumer’s one minute is actually close to 50 seconds, so what is important is the perceived time and not the actual time. And in the service industry it was important to match the expectations of the consumers to be at the top of the game.....
Monday, August 6, 2007
The earlier post spoke about the demand from the government to increase the base of the study to evaluate the impact of organized retail on smaller mom-n-pop stores. The suspicion that the report was not coming out with negative news was confirmed in a news item in the business standard which says that the interim report was pointing towards benefit to farmers and not much impact on the smaller shops. The benefit for farmer’s because of organized retail can be seen from the price which Kellogg’s is supposed to be paying to farmers for wheat in MP. The minimum support price (msp) of wheat is 850/- per quintal and Kellogg’s is believed to be paying upto 2700/- per quintal in the face of competition from Reliance fresh in the wheat procurement.
Sunday, August 5, 2007
The issue which the entry of organized retail ( at a real big scale) is raising is, will the small mom-n-pop (or Kirana) store disappear from the landscape of Indian retail and would be dominated by Wal-Mart- Bharti's , Reliance and Bigbazzars? If this were to happen, which I feel is highly unlikely, it would have wide-spread implications for the Indian society as a whole. I say it wouldn’t happen because I have immense faith in the entrepreneurial spirit of the small entrepreneurs in the country; they will find ways and means of surviving the onslaught of the Wal-Mart’s and Reliance and would find themselves profitable niches to operate in. Yes, but the structure of the retail in the country would change for sure as the proportion of organized retail increases it would lead to reduction in the number of smaller shops. And these small mom-n-pop stores wouldn’t mind a helping hand from the government which would have to play a more proactive role in working out schemes and be ready to face the fall out of the impact of organized retail in smaller retailer.
Do share your opinion on the issue......
Friday, August 3, 2007
In their book Origin of Brands (2004), AL & LAURA RIES apply Darwin's theories of evolution to the branding process. Though the book has its share of idiosyncrasies as with most of the books written by the AL Ries earlier, it also has a load of good examples on branding initiatives and mistakes by major companies. One which I thought was worth sharing was on the mistakes done Coca-Cola, the number one brand in the interbrand 2007 rankings !!!!!!
- Coca-Cola missed the caffeinated, carbonated citrus category (pioneered by Mountain Dew), so they tried to get into the game with Mello Yello. That didn't work, so they tried Surge, which didn't work either.
- Coca-Cola missed the spicy cola category (pioneered by Dr Pepper), so they tried to get into the game with Mr Pibb. That didn't work either.
- Coca-Cola missed the natural beverages category (pioneered by Snapple), so they tried to get into the game with Fruitopia which never went anywhere.
- Coca-Cola missed the energy drink category (pioneered by Red Bull), so they tried to get into the game with KMX. Not only was KMX fourteen years too late, but it's also saddled with a weak name. (Red Bull connotes energy by conjuring up the image of waving a red flag in front of a charging bull, KMX sounds like an additive for a motor oil.)
- Coca-Cola missed the sports drink category (pioneered by Gatorade), so they tried to get into the game with Powerade, which hangs in there as a weak No.2 brand.
It shows the power of a brand once it is established, inspite of all these Coca-Cola is still the No. 1 brand in the world
Wednesday, August 1, 2007
The 2007 Interbrand and Business Week ranking of the best global brands by value have been released. The full report is accessible at their website
1. Coca Cola valued at $ 65.32 Billion
2. Microsoft at $58.70 Billion
3. IBM at $57.09 Billion
4. GE at $51.56 Billion
5. Nokia, has climbed one position $ 33.69 Billion
7. Intel a drop of two positions $ 30.95 Billion
8. McDonald's a jump of one postion $ 29.39 Billion
9. Disney drop by one $ 29.21 Billion
10.Mercedes $ 23.56 Billion
In the top ten 7 are from US, One from