Subhiksha Retail - Indian Brand in trouble?

In my quest to document Indian brands I had made a list of those which i would like to write about and there were quite a few retail brands in that (one of the reasons could be that retail is not still open fully to foreign players). Kishore Biyani's - Pantaloons and Big Bazaar are on top of the list.  They have contributed to Indian retail by being pioneers and reshaping the retail landscape in the country by adapting to conditions in the country. But the post is not about BigBazzar, which would deserve a separate post but on Subhiksha, largest retailer in the country. But unfortunately the post was triggered by the news that the retail slow down is forcing them to close down half of their 1600 outlets. More about that later, first on what Subhiska offers to the Indian consumer.

Subhiskha evolved a model of retail which is unique to India or as Mr R Subramanian would like to put it the  'Indian Format of Retailing'. They did not try and ape the international retail model, of having larger stores  with air conditioning and other extra frills. Their typical shops are much smaller in size and in a prime localities in a city with no air conditioning and fancy shelves and designer lights.

The value proposition that Subhiskha offers to the typical India consumers is load and clear, first convenience - by locating them in key locations within the city they are actually more accessible than there larger cousins , so no need to drive and reach them. And the consumer can afford to buy in smaller quantities and more frequently. The second value to the customer was in terms of savings , most of the products sold in Subshikha would be sold on discount . As any one who would have bought at Subhiska would have observed the clear price advantage that they would get.

Only thing which went against them that was that one could not be  get all brands that they wanted in their outlets; essentially the choice was limited. It could have been driven by strategy of stocking a few brands on which they were able to get a good offer from the manufactures or supply chain bottlenecks. So there would be many consumers who would come and buy a few products from them and go on to buy the others from another retailer.

The Subhiska story has been highlighted in the media as a success, link  . Story of R Subramanian of Subhiskha is one which inspires many of us, a first generation entrepreneur who went on to build the largest retail chain in India. More can be read about him in the book 'Stay hungry and Foolish' which documents the stories of 25 entrepreneurs from IIMA. 

Coming back to the current crisis which they are supposedly going through, could be the  result of a multitude of factors; the overall slow down in retail sales, the rapid expansion that they have done in the last year or so, which would be leading to operational issues. My opinion is that Subhishka is not new to difficult times and in the past gone through them successfully and come out stronger , hopefully this around also the story would be same, though the current issues seem more challenging....

Thumps Up the No 1 Cola Brand in India

Whenever I ask the question which is the No 1 cola brand in the country, many people assume it is either Pepsi or Coca Cola, but it is Thums Up. Though it was sold off by the Chauhan brothers to Coca Cola in 1993 , I would still classify it as an Indian brand which has been around since 1977. Initially when the Chauhan's sold it off for $60 million, many analysts thought that it was a good deal because many believed that the brand would anyway disappear in a short time, but the story was not supposed to be so simple.

Coca Cola bought the brand and with it the access to the its bottling and distribution network, which they saw as a effective way of countering Pepsi which has a few years of head start in the country. Initially Coca Cola wanted wanted to kill the brand slowly , as they were sure that most of the consumers would shift over to to Coca Cola , so they decided to stop all promo support of the brand and waited for it to die, but it took them some years to realise that the brand was not going to die and was infact doing well in spite of almost zero support from the company. It was then that they realised that they would have to actually manage two brands in the country. 

Then the company moved to the second level of trying to use it as a flanker brand against Pepsi. They started using Thums Up to attack Pepsi openly by challenging them on a blind taste challenge and so on. Obviously they have slowly realised that they are under utilising the brand as just a flanker and there was more value which could be extracted out of the brand and thus today brand Thums Up accounts for the largest share of its promotional budget and gets the attention it deserves as a separate brand. 

The case of Thums Up highlights the myopic view with which many multinational companies operate in the country, they assume that brands which have a a very strong following in their home grounds would have similar following in India, which is not necessarily true. Though Coke has learnt through their experiences and are adapting and changing their branding strategies according to the needs of the local market. 

In fact even with the lemon based drink Limca there is a similar story in India. The brand has its own set of loyal customers in the marketplace, and they still prefer it over many other lemons based offerings in the market.  I have heard that coca cola has to struggle with its bottlers to free up lines for other brands in summers when they want to use it for Limca.

More on Private lables in India

I had written earlier about the phenomenon of private labels in India, Link. But it was some time back and after that I have done some work in that area so thought will share it my readers.

Currently the way many of the organized retailers are conceptualising their private label strategy is very different from the way it is seen in countries where organized retail is very strong. If one sees the plans of Future Group, which owns Pantaloons and Big Bazaar retail stores, they are planning to an investment of Rs 200 crore into the private label business and target reaching a turnover of Rs 10,000 crore by 2012.

Among the organized retailer's the Future's group is the one which seems of a well thought out strategy, with the presence of private labels in most categories, with tasty treat and Fresh 'n' Pure in the groceries, Care Mate for home care, and Kroyo and Sensei in Consumer Durables.

The growth which Futures is planning would be achieved not only through the sales through its own retail stores but also by selling it to retailers outside its own network. which in essence goes against the traditional definition of private labels. One of the possible reasons why they are looking at this idea is that they know that getting economies of scale only through their selling in their own retailers stores might not be easy and the reality that mom-n-pop stores are going to be part of the retail reality of Indian market for a long time to come.

But one thing which I felt has been left out in the overall scheme of ideas is trying to understand the psyche of the Indian consumer and his response towards private labels. How is he perceiving them? why does he buy them and what are his expectations from a private label, because ultimate success of the private labels would depend on how willing are they to try and use these brands. One recent new paper article highlighted the fact that consumers were going back to mom-n-pop stores because they are not happy with offers or deals on private labels, and they are able to get similar offers on the manufacturer's brands from their regular corner grocery store, this is a worrying trend which should be watched out for. For more of the consumer response to organized retail check out the article link.

In my next posting I will share a few of my own observations on private labels at two of the prominent retailers in the country.

Nimbu Pani by Coca Cola and Pepsi - Unorganized to branded !!!

A week back we had the news that coke has drawn out plans to introduce Nimbu Panni(lemonade) in the coming summer. Now if Coke is planning on some thing can Pepsi be too far behind, so a couple of days back the news that Pepsi is also planning a similar offering in the market is out.

At a generic level the competition of soft drinks companies is not from each other but from the large untapped unorganized players like the local juice guy who serves fresh juice, or the lemonade made in homes or the road-side vendor. The aim is to convert these consumer who are presently being served by the unorganized market into branded consumers. This was what being attempted till now in the juice market but this attempt to tap the Nimbu Pani market is something new.

One of the main advantages of Nimbu panni served at the roadside vendor, is 'freshness' because the vendor would cut the lemon in front of the customers and then prepare the drink. Second plus would be the price at which the drink is being served. But there are many doubts which would be there in the consumer's mind, in terms of the quality of water or ice being used apart from the general hygiene and cleanliness. Though these would be taken care off  if the same is prepared at home.

The  new packaged nimbu pani from the stable of Coca Cola and Pepsi would have to handle the twin challenge of freshness and price, the one front in which it would score high would be the hygiene. But freshness would be a difficult issue because as soon as some thing is  offered in a packaged form the concept of freshness goes out of the window in spite of all assurances from the company that they will ensure freshness. On the second dimension of pricing, both coke and Pepsi plan to price is quite low, but how low will they be able to sell the drink, looking at the distribution and other marketing costs involved....

If one were to look at earlier examples of trying to introduce packaged drinks like tender coconut the experiences have not been something to write home about in spite of the use of appropriate technology. The reasons attributed to the failure include the fact that for a consumer drinking a fresh coconut water from a vendor is not just a product , but a total experience, when he selects the tender coconut, and it is open in front of him and then he drinks it , versus imagine the opening the cap of a plastic bottle or a a tetra pack....

Will it 'Nimbu Panni' be a success in India ?.....

Segments in Indian Market - Communication Perspective

Found a very interesting video of the changing realities in marketing and branding,

But when one sees  Indian market, we can bifurcate consumers into three segments (three to limit complexity)

Segment 1. is the segment which the video is talking about, people who have gone full hog and embraced new technologies and are 100% at ease with Internet , spend a disproportionate amount of time on it. Consumers in this segment would typically be either the upwardly mobile Sec A1 consumer or the techno geek sort of person, though demographically also this segment would be different as they would be much younger than the other segments.

Segment 2. would be one which is still stuck in the old paradigm of marketing , still spending a lot of time on the TV and slow on adopting new technology. These would be consumers in semi-urban and non-metro markets in the country. The choice for them though increasing is not as extensive as the segment 1 consumers. 

Segment 3. are the rural consumer, who by sheer numbers form a very large market, and are actually stuck at a level below even the consumers in segment 2, with many of them in media dark regions, and low literacy levels . They need to accessed through pre-mass media communication strategies, be in through the use of long infomercials run on vans, or the the use of demonstration and wall paintings in appropriate places.

Maybe we can try conceptualised these segments as a funnel, with the base being the rural consumers who need to be approached with no-frills basic communication, the center being those consumers who are still stuck in the mass communication days and the tip being the upwardly mobile consumer who has totally adapted to the new technology and cannot live with it. 

So for a marketer this increases the complexity of his job of reaching out to consumers, depending on the segment his approach has to to vary ......

Market Update 25.01.09

An attempt to collect interesting bits of information from newspapers and magazines in the last two weeks,

Starting with Business Standard, Strategist

Reliance Mobile third entry into mobile telephony, and associated strategies, link

Q & A with RamCharan on his new book Leadership in the Era of economic Uncertainty, Link

One more story on experience at Harvard Business School, this time from an executive training one though, link

Consumer Confidence survey puts India on top pf the heap, link 

Economic Times Brand Equity

The compartitive ads of complan versus horlicks, has kicked up a debate in the industry as to how far is too far, link

One more article on the issue of competitive ads, link

Impact of using a good creative , case of launch of Virgin Mobile in India, link 

Obama attracting the attention of brands as no other earlier president had ever done, link 

Satyam Crisis and Implications for Indian IT, link 

Interview with Ogilvy's new global CEO, Link 

Hindu Business Line, Catalyst stories

HUL's strategy for skin care brands, link

Collaboration between Funskool and IIT Bombay for Board Games, link 

Customer Interaction Models, link

Other links,

Santoor overtakes Lux in South, link

Rural growth fueling sales of companies, link 

Rural India and Internet, link 

Titan Story, link 

Seasons in Indian Market

Seasonality is an interesting dimension of Indian markets, as is the case with any large market. Each marketer defines seasons according to the product-market one operates in. A marketers of ready made snacks like Haldirams prefers to define the seasonality of the market on the festivals, which is similar to what a consumer durable marketer does. If you are in the jewelery business you would want to define seasonality according to the marriage season, which is driven by astrology. And for a soft drink marketer defining seasons is easier he would go by the simple bifurcation of summer and winter.

Marketing strategies of many of these companies would be driven by the changing seasons (as per their definitions), the off season sale of apparels, and planning for their summer collections begin with this change, similarly the cokes and Pepsi's also chalk out their plans for summers now itself....

Marketers also tend to struggle with seasons because at one end they would like to control seasonality by reducing the peaks and troughs in sales but then also want to capitalise in them to increase sales.....

Slumdog Millionaire and Brand India

The movie has created a lot of buzz, winning 4 Golden Globes and now 10 Oscar nominations. We would know how many they will manage to win on 22 February. This winning of the golden globes and Oscar nominations has created a lot of media buzz, one can see a number of debates and discussions happening on the movie.

At one end there are many people who are criticising the portrayal of poverty and the slums of Mumbai and at the other there is a lot of appreciation coming along for the movie.

I tend to take a rather negative view, I see the movie projecting a limited view of the reality called India. This is not say that we do not have urban poverty or it is a non issue, it is infact an issue which needs to be given highest priority, but movies like these in a way take us back to the era when India was seen as a nation of snake charmers.

A couple of decades back a movie like this would have added some value as it would have brought brand India back into memory of people but today i feel that we have moved beyond the awareness stage, we are infact in a stage where we have to build the right values that we want to promote. In the last few years the image of the country has changed to that of one with young white collar software workers, and the Indian growth story is slowly sinking in. We have been making conscious effort to project the country as an attractive investment destination. And that is where I feel slumdog millionaire would do more harm than good for image of the country.

Inspite of all this I wish that they win a lot of Oscars on 22nd....

Hoardings a Forgotten tool!!!!!

In this era of digital marketing most of tend to ignore the age old means of communicating, be it innovative POPs in retail stores or hoardings. We tend to exist in two states -  either of total denial, or total acceptance .Whenever we see something new coming up we want to ignore it till the last moment possible and then we jump to the next stage of going over-board with it. Maybe there is a middle path which we should try to follow.

Amul has been emphasising on hoardings from a very long time. I don't think there would be any one of us who at some point of time,  wouldn't have seen a Amul Hoarding and smiled at it.They continue to use it as they have been doing it, and with  the latest one they have again been right on target...

One of the positive fall outs of these contemporary hoardings is the positive PR it generates in media, this specific hoarding is generating a lot of buzz.....

Project Shakti Going Global

Project Shakti as a model of distribution has attracted a lot of attention both from the company as well as media. The model makes use of existing Self Help Groups working in villages and appoints them as sales persons called shakti amma to sell HUL products in villages. The idea is to be able to reach those villages which do not very good road connectivity and penetration of media is also poor. By appointing the lady as a distributor for the company is able to get a direct reach in villages where it had no presence earlier and the lady would be able to get additional source of revenue. A win-win situation if one were to describe it.

The lady- Shakti Amma would be supplied the at her door-step and she would be selling it to the nearby cluster of 3-6 villages. The initiative has three components, one being the distribution component, second being the use of lady for communicating health and hygiene messages in the villages. The third component is IT, wherein a kiosk - ishakti is set up in the village , which could be used as information kiosk in the village.

Though this is relatively an old initiative, started in 2001 in Andhra Pradesh, the news that the model is being taken global is what has brought it back to media attention. Acco

rding to the news item, "The project is being customised and adapted in other Unilever markets such as Sri Lanka, Vietnam and Bangladesh. It is being considered for other Latin American and African markets. In Bangladesh and Sri Lanka, it is being promoted as Joyeeta and Saubaghya, respectively. There is a similar initiative in Vietnam as well." For more on the article, link.

Though there are obvious positives in the project both for the company as well as the lady who takes up the business but there are many issues which need to be looked into. One of issues is the actual amount of benefit that the lady gets by in by engaging in the business for HUL, though the company claims that it almost doubles the household incomes, but  there variations in that. Similarly the Vani component of the initiatives which is one in which the company does not make any money is being expanded very slowly and the expansion of the project is not very uniform and even within a village also the project impacts only one lady. And when one interacts or sees the mileage that the company tends to derive out of the project it makes us vary of the claims and the actual benefits....

Though this models of leveraging the existing Self Help Groups in villages for distribution for products to rural areas is being seen by many as the next wave in the SHG movement..

For more details on the project visit, www.hllshakti.com

Apple and Steve Jobs

Many companies tend to be driven by vision of individuals, especially in their initial years. Akio Morita with Sony, Microsoft and Bill Gates, Larry Ellison and Oracle, though it tends to add a lot of value as the aura and charm of the individual rubs on to the company and the brand. But it  can also have some negative fall outs....... 

Actually in the list of company and individuals first name should have been that of ' Apple and Steve Jobs'. Today success apple is intrinsically linked to Steve Jobs, in fact the connection of the individual and the company fortunes is so strong that we can see the share prices of apple tumbling after the news that Steve Jobs has taken a six month medical leave. The reasons is that the series of successful products from apple stable i pod, i phone and the turn around of the company have been attributed so much to Steve Jobs that his absence is being taken as seen as a sure indicator that the company would not be able keep coming up with block-buster products at the same pace as it could do when Steve Jobs was around..

Whenever we have a talk about market-driving companies we cite the example of Steve Jobs, because of his ability to lead innovation in the market, and create product categories. People have asked me the utility of the typical new product development process which tries to capture the consumer exiting needs and develop products in the context of an individual driven process. My reasoning has been that if one is not able to institutionalise the process then we will come into issue of the process being associated with an individual that his absence would be seen as impacting the fortunes of the company....

Lot of blogger have aritten about this incident, link

Pooh and Dabur Honey

Dabur Honey has tied-up with Disney's Winnie the Pooh to feature on its Dabur Honey's eazee squeezee pack. I found it to be one of better endorsements deal of the year, if one may call it an endorsement :) A perfect fit, with regard to the fit with product , target segment and appeal. Good that they did not take Dhoni for endorsement which would not have surprised me looking at the risk appetite and informativeness we have seen till now....

But I have very little coverage on the issues, a small new item which is being repeated across all newspaper, the Link

Crisis Communication

In the last few years we have had incidences where companies had to encounter a crisis in the market. And it's interesting to see how the companies tried countering the issue, giving us insights which we can learn from. 

The first in the series is the incidence of worms in Cadbury's Dairy Milk Chocolate. The amount of negative publicity that the incident generated for Cadbury's India was enormous, with all the media channels highlighting the issue. The company worked on many fronts including the improvement in the product packaging, but the focus is that they used Amitabh Bachan for their ad campaign.

Similarly the issue of pesticides in Pepsi and Coke had a very adverse impact on the sales of both the companies. But both of them decided to use different ways to counter the threat. Pepsi decided to use its own MD in its ads to promote the fact that it was safe to drink and he himself drinks it. Coca Cola decided to go the celebrity way to promote the safety of its products.

Aamir Khan Ad -

Latest in the list if ICICI Bank which went through a lot of loss of consumer confidence when the rumours were spread against the liquidity position of the bank. Now one can see the latest ads with Sharuk Khan promoting bank...

Satyam Brand

I know the kind of coverage that the Satyam fiasco is creating across all media, be in the TV, Newspapers, blogs...Though there umpteen issues which are being discussed right from issues of corporate governance to the fate of the 50,000 plus employees, I have been thinking Brand Satyam. A few days back if some one were to try and assess the Brand equity of Satyam Brand, versus today. I as a marketer feel very sad that such a well respected brand is all but lost.

Even the loss of Deccan as a brand is also something which pains me, though the reasons there were totally different ....but it is a loss, Deccan or Satyam....

Harish Bijoor On Rural Marketing

Had an opportunity to sit through a session on rural marketing by Harish Bijoor. Was planning to write on some of the ideas which he shared with us. Found that varun has done it already, so a link to the post, link

Must read.....