Moving on to the Mc and Pizza Generation

I was watching a small kid , not more than three year sitting on a typical stool in a McDonald's restrurant, waiting paitently for the Happy Meal being brought by father. The photo above was taken there which shows that the place is almost full, and the fact is that a large number of these customers are young kids who are coming more and more regularly to these joints . With almost 20 years after the first reformist budget we can see the impact of opening up of the economy, for many of these players have done the waiting period and will plan for rapid expansion in the next decade.

But apart from the growth that these Macs and Pizzas vendors can would look forward to , I was thinking about what would that small kid prefer to eat when she grows up? My guess is that the generation would grow up on Burgers and Pizzas and continue to patronize it heavily, which is a very happy situation for these companies, especially within home markets either saturating or becoming more and more health conscious...

Photo Blogging - Malls getting decked up for Republic day

Co-Creation in Indian FMCG Domain

50 lakh prize money and 1% on the turnover , is the new promo campaign for anyone who comes up with a new flavor for lays, this is in essence the idea of co-creation wherein you are involving the consumer ( one of the stake holders) of your product into it's development. This is actually an extension of Frito-lay's effort to increase the involvement of the consumers, earlier they had the 'fight for the flavor' campaign where they wanted people to rate flavors ......

Incidentally when I was looking for more info on the topic I came across their blog, http://fritolayindia.blogspot.com/, which shares the happenings in their office here in India. It was good to see the blog and the posts , for ex- it had a post where the MD clarifies against the rumor which was floating around on the web, that if you were to burn Kurkure it would turn into plastic and therefore is harmful for health....

Coming back to the main issue of co-creation, it has also been used by Maggi noodles where they are asking consumers to share their experiences with the brand thru the website http://meandmeri.in/, out of which some of them are later converted into ads. I think the idea here again is to bring the brand closer to the users and tap into the feelings about the brand maggi, and because you make the users partners in the process you increase the authenticity of the brand experience.

When the idea of co creation was introduced around a decade back,very few of us could see the relevance and the wider application of the idea, the examples here are from plain fmcg products, if one were to look into the Internet domain then the number of examples are numerous....

Visit to a Desi Retail Store - Sarvanna Stores

Though I have named it as a Desi Store, it is considered as a pioneer in retailing in the country. I had heard about it quite a long time back and wanted to visit it. Though I had been to Chennai during my sales days and had food at the Sarvanna Bhawan , but had never taken time out to visit Sarvanna Stores. The interest in the stores was further piqued by it's mention by Kishore Biyani in his book "It Happened in India" as being the role model for Big Bazaar. So this time when I was in Chennai's T Nagar market I made it a point to visit one of the stores, Sarvana Selvarathnam, which was store exclusively focused on Textiles.

It is a huge store spread over seven floors including the basement and had a mind boggling variety of stuff which was on display. The target was value-conscious consumer, infact the taxi driver who dropped us to the shop said he was planning to shop for towels to be put as seat covers on his car at the store....

The layout of the shop was very simple, so were the billing and price tags on the products , no sophisticated bar codes - the prices were hand written. I could see what inspired Biyani , the store was competing for share from the middle and lower middle income consumer, and the competition was just a few steps from the store in the form of vendors on the streets ...

Overall the visit to the T-Nagar market was a eye-opener, the mass of people moving in and out from the various traditional shops made us realize the vibrancy of traditional retail and their strong hold on traditional segments like Sarees and Jewellery. It was also the Christmas eve so the rush , but I was told that market was crowded on most of the days...

Plastic usage in Everyday life - Marketing Implications

I thought I should start the new year by writing on something which would become a prime concern for marketers in the years to come - 'environment consciousness' . World over there is an increased concern on the role corporates/marketers play in maintaining the environment and accepting responsibility towards their actions and its impact on the society at large.

Though there is a lot of talk and discussion happening on global warming and climate change, many a times we tend to see these issues happening at the Macro level, something about which we as individuals cannot do much about. I will share a recent experience which made me realize how we as consumers add to these problems and perhaps have to think a way out of these issues.

The example is from our recent trip to Andaman, where the islands have a policy of zero plastic usage, if you walk into a general store you will not get a plastic bag and rather shown the policy (though some of the shopkeepers will give you a plastic bag, but then insist not to tell where u got it from!!!). There are notices in all beaches on don't use plastic and so on, the photo above should give you an idea of how well it is being followed...

Being a nature lover we have been consciously avoiding leaving plastic around , but this time around we thought we will be more strict in our plastic usage and try and monitor it. So we started the exercise of keeping all the plastic we used in a day in our back-pack and disposing it back in the dust-bin when we would be back to the main island after our trip. And we were surprised and guilty about the amount of plastic two of us were consuming every single day. We use plastic in everything.... whether we eat a pack of biscuit , drink water, eat chocolates, consume soft drinks, you name a product and inevitably it is packed in plastic....We were made aware of how much dependant we had become on plastic in our everyday life.

And future marketers need to look at this issue very seriously, because we need to find ways to break our dependence on plastic as the main source of packaging and move towards a more environment friendly material...

I just thought I will share this as a food for thought to start the new year, will look forward to more comments from you...

Wishing all of you a very Happy new year...

Last Mile Connectivity and Mahindra Gio

The last few years has seen quite a few attempts at breaking into the within the city transport segment, and Tata Ace has been the undisputed success story in the segment. Industry experts estimate that Ace has over 80% share of the 2,500crore small truck segment (one tonne capacity) and Ace can actually be credited with the creation of the segment. But this blog post is not about Ace, which I have written earlier, but about a new competitor which has entered the segment, Mahindra & Mahindra Gio, a 0.5 tonne small truck. The best part about the new launch is the price at which it is available Rs 1,67,000 which is at a slight premium versus the three wheelers and substantially lower than Ace which is around Rs 2,80,000. And in terms of carrying capacity Gio is able to take much higher load than the three wheelers. So in effect what Gio is also trying is create a new a segment for itself below Ace and just above the three-wheelers.

And over the next few years Gio will add to the credibility of India as a low cost automobile development center of the world.

In the company's official release Dr Pawan Goenka, President Automotive Sector says,

“With the launch of Mahindra Gio, we have created a new Compact Truck category in the commercial vehicle segment. The Mahindra Gio is the first of its kind entry level 4 wheel cargo vehicle, and is all set to change the dynamics of the small CV segment. As city limits gradually expand and distribution needs increase, the Mahindra Gio presents a high earning potential for customers who will benefit from its high mileage, low maintenance cost, optimum utilization of space and low acquisition cost,”

I think one element which both Ace and more recently Gio have been working on is to capture the pride associated with owning a three-wheeler versus a four-wheeler, and they have worked on that aspect by improving the driving comfort and styling in the driving cabin, with things like bucket seats, to give a feel-of-car, but then with Gio being priced so close to three wheelers one needs to see whether this would work for long.

But all in all I would rate Mahindra & Mahindra as one of those old economy companies which has responded very well to the opportunities brought out by opening up of the economy. The success it has had with Scorpio and Tractors in overseas market is something on which I deserves a separate post...

Hamara Bajaj

Some people may call it natural progression or evolution that the company which created the category in the country decides to stop producing scooters, and focus it's energies on motor bikes.

In fact in the pre-lib days it use to as part and parcel of the middle class house hold, even use to be integral part of the dowry ...and I am used to quoting it as an example of how long one had to wait to get a scooter versus the off-the shelf purchase in as many colours as you want today (99 for a scooty!!!!). But then when I read the news in the morning that Bajaj is exiting the scooters business, it brought a sense of nostalgia and sadness that after a few years we may not it plying on Indian roads ...

Bajaj says it wants to focus on making motorcycles, and maybe the decision was always around the corner after it stopped the production of Chetak a couple of years back , which was the largest selling scooter in the world at one point in time. But recently Mahindra and Mahindra made an entry into the category, all time rival Hero is also saying it is unable to keep up with the demand for its scooter brand 'Pleasure', sale of Honda 'Activa' has always been good, and TVS Motors is planning to add 110 cc Wego to its range.

With so much of activity in the category why is it that Bajaj wanting to stop making scooters, obviously it cannot keep making the same old scooter, but to leave a category??? The company says it wants to become the world's largest bike manufacturer and scooters limit it's focus?? somehow I am not convinced that it is the right decision, looking at the strong association of scooters and Bajaj.

Last few years have seen many strong brands in India getting lost , ( Deccan, Satyam..) maybe we will add it to the list. I look forward to comments from readers if they agree with me or not ...

Distribution Equity and the leverage it provides

The other day I had a discussion with one of my friend who has been both a manager and later on a distributor for one of the top food companies in India, and he spoke about the concept of "Distribution Equity"(DE) which he said is as strong as Brand equity if not stronger..

The concept of DE is one which has not been studied much, though at the operational level it is a very strong concept and distribution driven companies realise it's utility. As with brand equity, this equity also provides firm with a substantial edge in the marketplace, and the strength is by virtue of its distribution channels. The difference would be that brand equity is in a consumer's mind versus distribution equity is embedded in the marketplace. Both the equities talk about the benefits both in the present as well as in the future.

The current manifestation of the concept of DE in the field can be seen in the ease of launch of new products, because companies which have a very strong distribution channel find it much easier to launch new products,as they can piggy ride the existing well established products. It is logical for products in the same category, like a soft drink company leveraging its existing distribution to launch a new flavor of variant or pushing a new variant. But some companies have used their channel strength to even enter into totally new categories , like ITC which has leveraged its channels strength and equity to enter new markets like snacks, and even FMCG.

Companies like AMUL have been leveraging this strength for quite long to test launch new products , and based on the acceptance they decide to launch the product nationally with adequate marketing support. If not , the product is given a quiet burial. So their channel strength provides them a low risk option for trying out new products.

I think this concept of DE is more significant in markets like India, where the complexity in distribution channels is very high and your channel strength might be as critical for your success as your other marketing elements. And the concept deserves more attention than it has been receiving till now..

Experimentation Still 'ON' in Indian Retail

The last few quarters have been quite trying for the Indian Retail sector, and though the consumer demand and overall outlook has improved but certain fundamental issues still plague the industry. I will try and list a few of them,

First issue seems to be the one with regard to the right format for the Indian market, experience till now shows that just copying the international formats will not work, like initially the larger formats were thought to be the the best, as it made sense for the retailer in terms of economies of scale and operations, and internationally large size formats were more acceptable, but then does it suit Indian consumers. With the slowdown many of the large formats were closed down , but now they are back in fashion, with Aditya Birla Group starting 6 new hypermarts, and Shopperstop with its Hypercities. Related new link.

And not that the so called "Indian Formats" are succeeding in , failure of subhiksha being the case in point and now the news that Vishal Retail is also in a similar kind of situation, the problem seem similar across both of them, too much of borrowing to expand faster and then.... Hopefully we should be able to save Vishal..

Next is the aspect of trained manpower, initially seen as a sunrise industry it attracted many professionals across various industries, but then with the slowdown and the realities of retail operations hitting hard, many of these people have packed their bags and gone back to their older companies. And the problem manpower is even more acute at the junior levels where people with right skills and training is a huge challenge..

Last issue though might seem a little ticklish to an outsider is the fact that India has topped the ranking in retail theft, the shrinkage put at 3.2 per cent of sales. And in a industry which runs on wafer thin margins this is huge and sufficient to tank many a retailers. More on Indian retail theft link.

Though it might seem that all is negative but along with these challenges the potential is also enormous , which is why it is attracting so many players, and many more waiting for the change in FDI regulations to make an entry.

Big Bazaar Versus Kellogg's

I should start with an apology that I have not updated the blog for more than a month now, will try and be more regular from now on....

I observed this new item a few days back and thought about writing about it, the fight between Big Bazaar and Kellogg's , and it is not first of the kind that Big Bazaar is involved in , some time back it was with Cadbury’s and even before that it was Lay's. All the three were removed from the shelves of Big Bazaar, and reasons given were the differences Big Bazaar had with the margins that were being given.

Some people might see it as a normal routine affair, bargaining between two parties for better margins, but it is not. It is part of the larger plan which big Bazaar has and the reality which marketers are walking into, the world which will be dominated by Dealer owned labels. In the news you can also read about how Big Bazaar is not too worried about the fact that Kellogg’s would not be there on its shelves, it has it's own Brand Tasty Treat which would be there as an substitute.

Now the typical FMCG marketer in India is used to be on a enviable position, the retailer being small and unorganized and at the mercy of the Brand marketers, who could afford to play from the position of strength. But this all will change in the near future.

The other day I had an opportunity to listen to Mr Manish Tiwary, who heads the Modern trade Division at HUL. a the division which deal with the organized retailers like Big Bazaars, Spencer’s and he shared his concerns how the dealer brands increasingly put pressure on the brand marketers. He said that the time when you could keep getting more customers just on the basis of cosmetic improvements to your brand is more or less over, and only those brands which have a very strong proposition and value for the customers will be able to survive.

Though in India the proportion of organized trade itself is very small and the proportion of the business of dealer owned labels even smaller, but one can see these events giving us a preview of the future holds for brand marketers.....

I had written more on Dealer Owned Brands earlier also , Link1,
Link2