Kisan Seva Kendra : Rural Retail Initiative of IOC -I

Apart from urban retail one can see a lot of activity on the rural front too. A host of companies have started their rural retail/procurement initiatives in the last few years. ITC's echoupal initiative is one which has received a lot of media coverage and recognition. echoupal was initially conceptualized as a procurement model, but with the addition of Choupal Sagars ( Rural Malls) they are also planned to be used as a reverse supply chain to supply back to villages.

Retail and Petroleum Companies

Apart from various corporate houses which have ventured into the rural retail scenario, some of the oil PSUs have also started their retail ventures in villages. In the urban areas many oil comapnies have started leveraging their real estate advantage to set-up retail outlets. Like Bharat Petroleums In&Out.

KSK

IOC the fortune 500 oil PSU has started a rural retail venture in 2005. They have started their rural petrol pump cum retail stores in many villages. The idea is to become a one-stop shop for the needs of a villager, and provide him with quality products including fuel. Earlier the consumers in villages had to rely on either the unauthorized petrol diesel dealer in the village or travel for 10-15 Kms to buy fuel for his tractors or the pump sets. With the setting up of pumps in villages you are able to reach the customer at his door-step.

Today there are more than 2000 of these rural retail outlets in rural areas across the country and a lot of recognition has also come for the intiative. In September 2007 the initiative was awarded the ‘Most Admired Retailer of the Year’ Award in the category of Rural Retailing, by the India Retail Forum (IRF), and the ‘Retailer of the year- Rural Impact Award’ given by the Asia Retail Congress (ARC).

Model

The rural retail outlet is a low investment model for IOC, wherein it looks at a investment of 6-9 lakh rupees vs an investment of 1-1.5 crores for a dealership in urban areas, with a quick pay back of 3-4 years. The dealer has to sell not only fuel but non fuel items like, seeds, fertilizers, and FMCG products. This revenue from non-fuel sales is expected to supplement the income of the dealer.

The models has been rolled out rapidly across the country, but there are certain bottlenecks which are coming up , .......

Online Book on Marketing in India

The initial idea behind writing the blog was to specifically look at issues which are relevant to marketing in India and act as an window to current issues of importance in Indian markets. I have personally believed that Marketing is context specific and one needs to be able to specify the context well enough to actually make sense. Though the basic conceptual issues might remain the same.

I have decided to take the next logical step of trying to write a online book on Marketing in India, as there are very few of them written specifically for Indian market . The idea is to write regular posts which would go into the book.

The advantage of using this forum would be it can incorporate feedback and insights from people interested in marketing and can be kept updated on a continuous basis as should happen with any book on marketing..

I would like to invite suggestions on my proposed list of topics which should be covered in a online book on marketing in India...

1. Understanding the Heterogeneity of Indian market.
- Urban and Rural India
- Regional Differences
- Differences based on Religion , Caste and other
- Demographic Changes and linked differences
.........................................
2. Indian Consumer
- The cultural moorings of the Indian consumer and impact on buying
- Influences of festivals and other religious events
- Value system of Indian consumers
...................................................
3. Retail Structure and Challenges
- Traditional Mass and Wholesale Retail Versus Mass Retail
- Emergence of Organized retail
- Rural Retail

4. Search for the Right Price Value Equation
- To understand pricing in terms of VFM philosophy
- Trading up and Down among Indian Consumers

5. Sales and Distribution Management in India
- Sales force management issues
- Channel partners selection retention and growth
- Strong presence of wholesale

6. Changes in the Indian Economy
- High growth market
- Increasing penetration of internet and other technologies
- Influence of globalization
............................................

This is the first idea of the kind of topics which should be covered in the book, and look forward to more suggestions ....................

New Books

Another addition to the series of books related to marketing which I have been posting

Some traveling, searching and ordering new books make this post on books a interesting collection of old and new ...

1. "Treasure Hunt- Inside the mind of the new consumer", A book which has been spoken and written about a lot. A last could get a copy ....

The book is about how middle-class consumers are trading down to low-priced products and services. trading up to premium ones, and avoiding the middle...

2. Stopwatch Marketing , while going thru the book at times one gets a feeling that nothing new is coming out but then....as one goes thru the book the value addition is there for the taking, For Ex - One of the models proposed in the book measures consumption on two axes: the disposition to spend time shopping and the net margin for a particular product or service. The output is a 2X2 matrix with four kinds classifications, impatient, painstaking, reluctant and recreational....

3. The Mind of the Market By Michael Shermer, A Book on the hidden psychology and biology that shape the way we think about money..

4 Design of Future things by Donald Norman , the new book from him where in he is looks into the future and the related design issues. The other two books of the author which i thought were related and useful were Emotional Design and Design of Everyday things - which is a classic and must read....

5 The Halo Effect By Phil Rosenzweig, I was attracted to this book as it talks about the errors of logic and flawed judgments that distort the understanding of the real reasons for a company's performance. The book is sort of against the genre of books like In search of Excellence, Built to last and Good to great............


6 Value Merchants By James Anderson, Nirmalya Kumar and James Narus. Book on customer value management........

7 Here Comes Everybody By Clay Shirky, is a book which looks at how consumers are coming together to create thins like wikipedia, he tries to document how internet, blogs are changing the world we know...

8 CKP along with M S Krishnan come out with their new book, The New Age of Innovation, a sort of sequel to the earlier books future of competition and Fortune at the bottom of the pyramid ....written by CKP.

9. A Whole New mind, Daniel Pink. This is a book which has been recommended by many people ...Tom Peters, Seth godin. In fact Tom Peters has hailed him as the modern economy Copernicus ....

10. Presentation Zen , again a book which i had been after for a long time..............Started following the blog written by the author and ultimately bought the book, though most of his ideas are on his blog the book still helps. Has many insights on making effective presentations. A typical book shop has many books on making presentations, but this one is class apart and can be of much use to people who make presentations day in and day out....

For for details visit the author's blog , www.presentationzen.com

Link to my earlier posts on books, Link

Indian Railways a Marketing Organization!!!!!!

In the last few years, we have seen many Public Sector organizations in the country become more market oriented and customer friendly. One of the main reasons have been increased competition from both domestic companies and MNCs. But the example which I will talk about today is not an organization which faces much of direct competition for its business (passenger).

Indian Railways has been in the news recently because of the turn around it has achieved in the last few years with profits in excess of 20000 crores to show. On the face of it if some one were propose it as an organization which is becoming more customer savvy, it would be difficult to accept. But I will list some of the initiatives by Indian Railways and it is for the readers to judge..

The first is the e-ticketing facility that has been extended to travelers, today the site, irctc.com does more than 1 lakh transactions per day and is the largest in south Asia with a customer satisfaction levels of 99.99%. And for a regular traveler this facility is boon, the tickets can be booked sitting in his office without having to go and buy the tickets at the counters. The facility is being extended to ATMs and outside agents also..

Auto upgradation is also a good initiative, on which i have written earlier also. It is a win-win situation for both the Railways as well as the customers. Because by upgrading the consumers get to experince the higher priced next level of travel at a no extra cost and the railways are able to accommodate more people and ensure that the train runs full..

And the Tatkal facility has also been a hit among travelers .

The other initiatives include Rail Tourism wherein a traveler can use the site to book a complete travel package which would include his stay, site seeing and travel from home to the station and so on... A good example of solution selling..

The journey for Indian Railways to become a totally customer oriented organization has just started...

Online Marketing needs more Marketing

We have seen the B-C ecom business grow in India, but most of the growth is driven by the online travel industry and very less has come as growth in the pure-play e commerce sites. The reasons are cited are many from the reluctance of people to use their credit cards online, the low penetration of computers and credit cards.....

But one of my recent experiences tell me a different story. The other day I wanted to send bunch of flowers to a friend in Bangalore, and being 2500 kms away decided to google companies which would deliver roses in Bangalore. I got one company and then placed an order around 48 hrs before the delivery date and the started to wait.....

On the day of the delivery till afternoon there was no news, i checked the website it said order pending. I tried calling the number given in the contact us , but I was directed to a voice mail....I thought that my money has gone down the drain and then I got all a call from the recipient to tell me that the flowers had reached...I was relieved

But then late in the night I thought of just checking whether the order status has changed, but to my surprise it still said 'Pending". The online agency did everything right, in terms of delivering the flowers on the said date, but then just because its back end operations are not in place it is not able to capitalize on its good service. Now this may seem as a minor issue but then It may even lead to customer disatisfaction , especially if the customer is based in some other country, for he would not even know that the gift has been delivered and he might not like to call up and find out. And when he checks the website it shows his order is still pendng and the date has gone, though eventually he might come to know but till then damage would have been done....

We have know the importance of back-end operations and how the lack of it lead to the collapse of the initial dotcoms but this case is the other way round...

Sales Vs Marketing

Many of us use the word 'marketing' and 'sales' interchangeably, you ask any sales executive what does he does for a living he would say he is in marketing. One can forgive those who do not the differnce , but then there is a section which actually feels uncomfortable to say that they are sales people so they use the word marketing to glorify their jobs and designations...

A few weeks back I had watched this video by Tom Peters where he emphasized that every one is sales, thought of sharing it


Tom Peters on Yes! You Are in Sales! from Tom Peters on Vimeo.

Market Update 14.07.08

A weekly sum-up of what has been happening in the Indian market thru newspapers..

Brand Equity, has one story on the Indian consumer which was highlighted in the previous post

Prof John Philip Jones on internet as a medium of advertising Link

BS Strategist , the cover story was on the purchase of spice, Link

and then the interview with Mr Ratan tata, Link

Hindu Catalyst had its share of articles which might interest the reader, Link

The interest companies are taking in below-the-line ads, which basically is non-media advertising, particularly sales promotions, reduced price offers and interactive sponsorship activities which are more personalised. The article reports that the industry has jumped from Rs 300-400 crore, a few years back, to as high as Rs 1,000 crore today. Link

In-game Advertising is catching on India, Link

The 2010 commonwealth games and the linked promo, link

Ad code violation by companies like Hyundai, Dabur... Link

An article which shares how the focus of food advertising is slowly shifting away from children to parents, Link

Poor TV ratings for the two previous 50 over tournaments mean the dead of 50 over cricket? Link

After all the bad news about inflation and slowing down of growth there is a news item on how the consumer have not actually slowed down their purchases of either the FMCG products or the Durables, Link

Another story on inflation , and the measure the retailers are taking to hedge themselves against its adverse impact, Link

For the launch of Tata Nano , Tatas are planning to use websites, Link

Changing Indian Consumer

There were two news items which had come in the Et which I thought gave a very good insight into the consumption habits of the Indian Consumer,

One is how even though non-vegetarians outnumber the vegetarians, in marketing strategies of FMCG companies or the pizza chains one would find veg getting more attention, which is driven by the quantum of business one gets thru the veg business. Link

Another article in Brand equity is on the changing mindset of Indian Consumers. According to Mr Sinha who has authored the report there are five cultural codes which are manifesting itself,

Activate your destiny
Currency to extrinsic values
Criticality of the last lap
Finding Extraordinariness
Making use of tradition

For the full article , Link

I thought these two articles provide a lot of food for thought for marketers on how Indian Consumers are evolving.

Sacin Losing Endorsements !!!!!

I have never been a great fan of brand endorsements as a way of brand building . For me it seems like a short-cut to grabbing customer attention, rather than going the long hard way of brand building. And with the number of brands which a famous celebrity endorses in India, it is very hard for the consumer to remember the product being advertised....

But this post is not about the negatives of celebrity endorsements , but infact it highlights the brands which are opting not to continue with Sachin . Pepsi is the latest in the list which has a lot of media attention, with captions like - "Gaya Re" being given.

The other companies which decided against continuing with Sachin are

Fiat
TVS
Airtel

Though Pepsi has a some justification of why it is dropping Sachin after a 10 year long association, as the current positioning of the brand is towards youth and Sachin would not actually the bill. The high endorsement fees is also said to be another issue..

But then in the past we have seen many of these celebrities shift from Coke to Pepsi and the other way , without getting noticed by the consumers

One celebrity whom I consider a little choosy about the brands he endorses is Aamir Khan, but even he seems to going the mass way with the recent addition of Samsung Mobiles, Parle and Tata Sky to his existing list. But then he still has some exclusivity attached to him, though it might be a personal bias....

But the question is that has Sacihn lost out because of his age , or things can change if reduces his endorsement fees?? And on top of this is the fact that Dhoni Seems to be getting ready to take over from Sachin...

News paper items which are linked to this :

Pepsi ousts Sachin as brand ambassador

Off-field hit: Companies shun Brand Sachin

Private Labels in India

If one walks into any of the newly sprung retail chains we can see various products which are being sold under their own name or a name owned by the retailer himself. In Big Bazaar one can see various ready to eat snacks under the brand name 'Tasty Treat" , salt and other commodities being packed under the Big Bazaar name itself, and then if you were to go into their consumer durables section you can see "Koryo"range of AC and other appliances.

This phenomenon of retailers using their own brands are more prominent today in the garment retail chains. In westside you would find them selling most of the brands which are owned by westside.

Though in terms of its share of market it is minuscule, but in the coming days going by the trend in other countries private labels, are going to become a force to reckon with. Infact Nirmalya Kumar of LBS, an authority on this area predicts that in the next twenty years private labels would easily account for over 50 percent of retail sales in the country....

The retailer has many advantages from the use of private labels , he would most of the times make more profits by selling private labels than the brands of organized players, and also use it to reduce the bargaining power of the suppliers. In the long run he can actually use the private labels to attract customers to his outlet.....

The consumer also gains as he gets products which are as good as the manufactured ones albeit at a lower cost, only party worried with this development would be the manufacturers ...

Inflation, Recession and the return of sachets.........

A few days back I had written on how consumers tend to down-trade when they feel the pinch of economic slow-down. The situation wherein a consumer shifts from a premium and more recognized brands to cheaper brands or private labels.


In the last few months in Indian retail the focus is supposedly back on smaller pack sizes on the back of rising inflation and fears of a slow down. The expectation is that consumers than buying the bigger packs would shift to smaller packs of their favorite brands. This actually seems to make sense in the Indian context as the availability of private brands is very low, so the options for down trading for a consumer is also limited..

Like as with the case of Henkel which has just introduced a new 400 gm pack of Henko washing powder at Rs 40 and withdrawn the 500 gm pack that used to sell for Rs 46. It has re-introduced Pril liquid for Rs 50 (425 gm bottle), down from Rs 55 (500 gm). For more on this , link

This is sharp contrast a few months back when many had started predicting the dead of small packs with the organized retail focusing more on the bigger packs..............

Market Update 03.07.08

Trying to link up the various news items on marketing issues in India across various newspapers in the last few weeks

Recession and Inflation are hogging the news headlines through out, even brand equity's cover story is on how bad is the impact and the question of will the ad spend go down in the coming days, with tell tale signs of empty hoardings across the streets the prognosis is not good, the coming festive season would provide the litmus test on the consumer sentiment, Link

A small item on how bubble gum is struggling to keep up with changing times, consumer habits , link and the write-up on how far should marketers go to promote their brands, or are willing to move above the clutter in the market, link

And the most obvious coverage has been on the record haul of 23 Lions in Cannes 2008 . The Best ever performance with 23 awards, including one Grand Prix, one Integrated Lion and four gold Lions, catapulting Indian advertising onto the world stage. Link

Strategist, in it's campaign logic section dissects the new Aamir Khan Samsung mobile ad, link.
The link for the ad on youtube for some one who might not have seen the ad, Link

Changes at Spencer's Retail, Link

Slightly older news, but talks about the changing focus of the Indian FMCG major , Dabur, Link

Catalyst has a very interesting story on the growth of breakfast cereals, with the category almost doubling in size from 2003-07, to 250 crores, the reasons is increasing health consciousness and awareness, but even at the current market size it is a very very very small part of the overall market. Link

The Cannes Story is also covered here, link
Last edition was full of Cannes, Link