LOGOTHOUGHTS- Marketing perspectives

Apple versus Blackberry in the world's cheapest market

2011-10-04T10:00:00.002+05:30

So Apple manages 2.5% of the Indian smartphone market, BB does 15%, Nokia 45% (data picked up from the ET of 4 Oct, 11).

Should Apple be worried?

Nope. But Apple should not get greedy. Its a very expensive phone and it relies on high speed networks to show its prowess. Both money and high speed networks are hard to come by in India. In fact, Apple should not allow more than a few hundred units to be sold each month as the netowrk in the country builds up. Or, play at the lower price point with a phone that can dazzle on 2g (like the BB).

BB has reinvented itself like no other recent brand in the Indian market. From a corporate device, it has positioned itself as the device to have in the youth market.Its messenger is a cool application and the new touch and type is an innovation which is just right in the market.

At a sub 10k price point, its well positioned on price. While the local manufacturers (Micromax, Lava etc) are more aggressive on price and features where i have found them lacking is durability of device.

But BB in India has gained my respect - in understanding the youth and offering them a great product. Whether BB will continue its domination on the corporate front- i cant say. In the long run will it become the brand of choice for the youth? I cant say.

The youngest markets in the world are in Africa and India and BB has not yet got a design centre in these places. The day it does, i will buy some BB stock. BB has doen in India what it has not in most markets of the world. That should give it some confidence to go much further.

Nokia- the good was'nt as good....the bad certainly not as bad..

2011-10-04T09:58:00.001+05:30

I know Nokia got a lot of things wrong in the Indian market recently: they were late on the dual sim phone, qwerty keyboard....cheap 'smart phones'.

But when i saw a recent brand survey done by the economic times and saw Nokia slipping down 15 ranks in the SEC C segment (low income and education bracket), i was indeed surprised. Additionally, Nokia retains top spot among the SEC A (high income, education segment)- the segment which has coveted the smartphones- a segment where Nokia has also struggled in a big way globally.

So what explains this? The low end consumer who needs durable and rugged kicks Nokia for a dual sim (Nokia phones are without doubt better in robustness than any local brand) and the high end consumer embraces the brand that does not serve him well.

I must speak to friends at Nokia to understand their perception of the results.

My own assessment is that on quality the phone is tops. In terms of range, wide.
With its dual sim phones, the brand will capture the loyalty of its customers down the income strata. But unless its top end phones regain their mojo, loyalty at the top end will be lost shortly.

Lets wait and watch.
Venkat

Go on Pond’s … try being a parent....

2011-10-03T19:36:00.001+05:30

We are on youtube often entertaining our baby boy with nursery rhyme videos. We see a lot of advertising from Pond’s face was for women now precedes any video for the child.

It appears that some media manager and the brand manager (at Pond’s) has hit upon the insight that mothers accompany kids as they browse the internet for nursery rhymes and hence hitting the mothers with an advt upfront is a good idea to catch relevant eyeballs.

Bad idea Pond’s.

We are searching for these videos because our baby has a 30 minute window in which to get fed and these videos keep him engrossed and in one place. He gets on his seat eagerly awaiting Noddy and not a pretty model for Pond’s. When one video ends, he wants it replaced by another…again seeing a pretty face makes him very uncomfortable- he stops eating and that makes us uncomfortable. Remember that our baby has a 30 minute window tops after which he will not sit on his seat/ nor eat.

We spoke to a couple of mothers, and our experience on this matter seems to stand.

It’s a good suggestion that marketers target their advertisements to get maximum eyeballs. But ask the question- is the eyeball there really interesting in seeing my brand at that point of time.

Ritu and Venkat

success and failure

2011-09-01T22:08:00.002+05:30

Would you feel fortunate if you had neither of either or too many of both?(just a point to mull over, we dont have a point of view on it)

Ritu and I were speaking of Steve Jobs...the discussion went into a comparison with Bill Gates...Sabeer Bhatia (Hotmail)...and a few other names popped up including Edison.

Bill Gates hit gold on his first try- the result Microsoft and world domination.
The problem? No second wind- no more innovations.

Jobs- failed with the Mac; failed with Newton; failed with Next....and then came back to be daddy of all tech companies.

Sabeer Bhatia- hit with hotmail...and then?

Try a few more...

Small sample size, but what the heck- go ahead and fail a bit. Build a strong gut and then keep trusting it.

Ritu and Venkat

starbucks

2011-05-29T00:10:00.001+05:30

i quote thought gadgets
"What else do you think dropping the word "coffee" from its logo means?"

a simple one phrase analysis of a very powerful move.

men, women, advertising

2011-05-28T23:49:00.002+05:30

A brilliant campaign from Heineken. Click on title to goto the THoughtGadgets note on same.

Men, women.....advertising....does not need to always mean sex, sexy, naughty.

Axe deodorant pulls it off time and time again, others fall flat on their faces for their attempts at connecting to their audience through vulgarity.

Heineken - this particular campaign must inspire marketers to try and connect with their audience through decent and real human emotions.

Marketers have a role to influence society and the way we think and express ourselves. Sex sells...sure....but understanding consumers offers you more opportunities for connect.

i am a fan!
Venkat

advertiting television technology

2011-03-16T09:16:00.002+05:30

We've been seeing some interesting advertisements on selling new Direct to home technology and new TV technology.

The problem with advertising new resolution levels i sthat the viewer still sees the images on his current TV. Hence any claims about clarity are difficult to experience. 2 companies have come with interesting approaches:

Sony- Sony is using DHoni making some cricket plays as the base story. However, they are closing in to the images, running them in slow motion in order to emphasise the dew, the sweat runing down his face, the seam position on the ball etc. TO demonstrate that the level of detail that is visible on their new TVs are truly amazing. Point made. Hope the TVs are really that good.

Airtel - airtel is emphasising its internet TV as providing very cear images. The way they do this is to have two stories running concurrently on the screen- and its difficult to distinguish whats real and whats being played on TV, till the end of the ad. Again trying to show that so clear is their picture technology that reality and screen can get confused. Point made.

Well done.

Ritu and Venkat

Sep 2010, SEN-SEXY

2010-09-14T13:54:00.004+05:30

The BSE Sensex (Bombay Stock Exchange Index) hit 19000 yesterday.

Is this a bull run/ irrational exuberance? Foreign investor play??

Here is our take on it.

We looked at the evolution of the sensex since 2003, the time when the Indian economy really took off and in the period 2003-2011 has been growing at about 8% per year. (please use attached link to see how the sensex has evolved)

http://finance.yahoo.com/echarts?s=^BSESN#chart3:symbol=^bsesn;range=20021216,20100913;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off

Given that agriculture grew between 2-3 % in this period, it is safe to assume that the industrial sector grew in excess of 12% on average.

The companies listed on the SENSEX which are BLUE CHIP, therefore had to grow 20% in this period for the sensex to reach 19000 by the end (almost of 2010). Not so unrealistic after all.

We think that if we as Indians held on to our balls and stopped looking for external excuses (FIIs) to explain the rise of the sensex, we should simply congratulate a growing economy and its star companies for the stellar performance of the SENSEX.

We continue to invest in the stock market. India must grow at least 8% for the next 30 years to avoid a social revolution. We are betting on it.

And looking at the sensex reach 40-45000 levels by 2015.

Ritu and Venkat.

Mr. Nokia- Your enemy is my enemy, so we must be friends!

2010-09-11T06:28:00.003+05:30

There will be a lot written about the appointment of the new Nokia CEO. Here are our thoughts.

It appears MS and Nokia will now have a very strong alliance to develop an OS for Nokia phones that will stand up to the Android menace. We guess this would be a pretty important reason this recruitment happened from Microsoft.

MS will dedicate thousands of engineers to this, Nokia will offer its mind blowing market share of phones for this noble purpose.

Question- Nokia still has a hardware design problem, and its devices dont really have the wow factor. How will Nokia address this?

Question- Why does MS need Nokia for its engineers to get inspired and make the next level of portable OS?

Question- How will this counter the Chinese threat?

Sure, it appears Stephen Elop is more eloquent, understands the US market and technology.

Question- the US market is not the growth engine for the world. India and China are.

Question- Sure the Finns are reserved, but cant believe they dont understand technology.

Sure, Nokia it appears had become slow and bureaucratic- so a shake up of the culture is in order? Who better than a North American to get this happening fast.

Nokia is a great company and its mission of 'connecting people' has put phones in the hands of billions. And it is time for a change. A time to move from product to services. A time to give away killer apps 'free'- a time to make the Apple model of application stores, irrelevant. The focus has to be all phones, not just smart phones. Or a clear statement from Nokia saying, we will not shed tears if the Chinese reduce our market share at the bottom end to single digits.

Nokia, with its huge market share, has the potential to bring application based 'life changing experiences' across all price points. That, in our view is the real game. Will they play it? Or stay focused on the competition- Apple.

Will Nokia recreate the business landscape?

If Mr Elop is able to address this challenges effectively, it will be the most incredible business transformation. Good luck.

Else we will close with this quote from research firm Garter:
In spite of his experience, some focus Elop’s background at Microsoft and worry. Research firm Garter is in “two minds” about his appointment, with vice president Nick Jones pointing out that Microsoft “has many of the same problems as Nokia in terms of innovation, especially in the smart phone business.”

Ritu and Venkat.

fake IPL blogger- SICKO !!

2010-08-29T09:40:00.003+05:30

Hello Mr Anupam Mukerji, the fake IPL blogger. I think you are a sicko. Get help.
And while you are at it, please invite the people at the Times of India who gave you front page cover for revealing your identity. Not one apologetic word from you- you idiot. Just what are you??

I laughed hysterically at your coverage of the IPL2. Hysterically. I thought you were the funniest dude around. But you were anonymous. A fictitious character- making fun of other people, calling them names, abusing their families- mothers and sisters....and making a serious spectacle of cricket. It was never real. But i laughed (maybe i need help too?)

Now you come out into the open- you become a real person. One claiming public accolade for your abusive language. And you dont even apologise to those you have abused. What kind of people brought you up?

You are out of your mind.

But you do hold up a mirror on our society today- do we accept people that heap abuse on others? are we able to separate fact and fiction? is it really cool to make money laughing at others, instead of at ourselves? Does the Times of India not debate this at all before speaking to their readers?

F@$%, you make Chetan Bhagat appear a rock star.

I hope 'appam' sues you. And wins.

Venkat

the 'abcd' keyboard- simplifying life for your consumers.

2010-07-26T13:39:00.003+05:30

Lava, a mobile phone brand in India recently launched 'the world's first 'adcb' phone'. The 'abcd' phone as opposed to the 'Qwerty' key-board has the alphabet arranged linearly....a,b,c,d....

Its the first of its kind in the world.

Why did they do it? Well, in our view, its simple to do....is an interesting feature and for most Indians who buy a cellphone before they learn to type, its just logical to search for alphabets serially. And there is no pain of learning to type in a new way.

Our doubt is on why the keyboard was launched on a smart-phone and not an entry level phone. The smartphone is still likely to be bought by more affluent people ( and hence with exposure to and with a habit for qwerty typing)....although this hypothesis could be challenged.

The bigger question is 'why did nokia or samsung or LG not do this?' For all the consumer insight, if you are aware that the mobile is the earlier buy (compared to a PC) .....why would you not simplify the phone experience for these 'new comers'.

Wow. We learnt a heck of a lot from this product launch.

Ritu and Venkat

Nike Shoes and Services

2010-07-13T16:05:00.004+05:30

Click the title above to read this interesting note by Elie Ofek in the blog.HBR.org site that we frequent. What was particularly awesome was this passage:

For the current World Cup, Nike launched its Mercurial Vapor SuperFly II. But someone that buys a pair gets more than the enhanced acceleration the new shoes are designed to provide. The shoes come with a unique user code that, once entered online, unlocks a full training program. Its Nike Football+ program was developed in conjunction with the world's leading coaches and players, and offers a myriad of video training sessions, tips, and methods for improving one's play. Programs can also be downloaded through an app to an iPhone or to other mobile web-enabled handsets to take to the field. No longer are athletes being asked to pay upwards of $300 just to have a better physical shoe; they're also getting a service that helps them become better players.

I mean, this is it. We all know the great margins are in services - ask IBM and HP and all those companies that make money on product check ups and the sort.

Now Nike goes and applies this to shoes?? Wow! What a winner of an idea.

OK Adidas, so maybe you can make a shoe of similar style. But how about the fitness program that we have packaged with the shoe?

We only hope Nike is collecting data from its new shoe that allows it to see what kind of training the users are undergoing and then build more specific packages for them.

This is a classic marketing initiative. Well done Nike! We have always advocated that consumer products should build 'services' targeted at their consumers...this is a fabulous example.

By the way, http://www.facebook.com/nikefootball#!/nikefootball?v=wall
is also one heck of an online campaign. We dont enjoy the game, but we thoroughly enjoyed this site and what Nike is trying to do. Connectivity and Empowerment. Consumers want to belong to a network, but be able to express their individuality.....beautifully captured here.
Ritu and Venkat

Bureaucracy

2010-07-08T09:38:00.002+05:30

"I want to work someplace less bureaucratic" i said.

"Bureaucracy is not a bad thing", said my friend, "it ensures people follow standard operating procedures. That's not bad."

"Well", i reflected. "I measure bureaucracy not by how fast messages go down the organisation chart. I measure it by how fast messages go up the organisation chart".

We both agreed on that.

Venkat

EMIs- How and when to you use a monthly payment plan

2010-07-02T09:23:00.003+05:30

We are very sure about this so any views to the contrary will be appreciated.

A leading mobile phone company launched a campaign today allowing consumers to purchase its phones in 3 equal monthly installments.

This is a leading company under attack in India from low cost phones in the mass market as well as the 'smart phone' segments.

This campaign surprised Ritu and me immensely.

Installments plans , particularly in an emerging economy, should only be used to develop a product category. And when they are used, the installments should be such that they at least equal the current alternative.

We explain:

Eg: House-ownership: It is expensive and house ownership in urban India is very low. So an EMI from banks (over 10 or 20 years) allows people to enter this category and the size of the (monthly payment) EMI usually is equal to the monthly rent paid out anyway. So the offer of home ownership is very attractive.

For mobile phones, this does not work. India has 600 mn mobile phones (estimated). So the category exists.

For a premium brand to use 3 monthly installments to bring the cost (per month) to that of the full cost of a low price competitor - this is not logical. A premium player approaching its target audience on price is a sure sign of panic.

If i cannot afford a premium product in a single payment, very very unlikely i will be able to afford it in 3 payment plans....or very unlikely i will still not be distracted by a competitor model at one third the price- with mostly all comparable features.

The campaign needs to be re-looked asap.

Ritu and Venkat

Sab Miller- Haywards beer ad in India

2010-06-25T10:14:00.001+05:30

Exceptional.

Sab Miller has been a late entrant into the Indian beer market. The market leader Kingfisher has positioned itself as 'the king of good times' with its ads focusing on the young generation having a great time at parties and enjoying KF beer.

Now SabMiller has launched a TV ad for its Haywards beer. And i find it remarkable. Its about a typical day for a sales rep in India who earns little, depends on the very poor public transport network and often has to travel miles and miles to make his quota. The protagonist in this ad talks about his challenges, and his enthusiasm to rise again the next day, before the sun shines- and then to outshine the sun.

A remarkable way to capture the spirit of new India.

And as he returns weary after the day's work, he looks forward to his Haywards!

What a fabulous position for a beer- as an end of day way to relax! Really beats the pants off the party positioning of KF. Really classical marketing- STP- segment the market, target a segment and position yourself uniquely.

Brilliant. Really connects with me. ( I did the sales man grind!)

On another note, here is a link to a new campaign for Pepsodent toothpaste from Unilever in India. My only thought was, 'how the mighty have fallen'. Unimaginative- boring....and as appears to be the trend for Unilever in India, relying heavily and solely on the crutches of Bollywood superstar Shah Ruck Khan. The link is below.

http://www.dailymotion.com/video/xdflif_shahrukh-khan-in-pepsodent-ad-papa_shortfilms

Segmenting the coffee market

2010-06-18T21:06:00.002+05:30

Beyond Coffee is the maiden attempt by Hyderabad-based entrepreneurs who have created a boutique facility that blends the best of coffee seed brews and art in a tastefully done-up setting in the upmarket Jubilee Hills.

Its catchment area is the bustling IT hub of Hyderabad - the Hitec City and the neighbourhood. (Please click title to read more on this).

So what do you want? Premium pricing- or volume market share. I am really happy to see a new player segmenting the coffee drinking market and creating an outlet that caters to clearly a 'high end consumer'. Bravo.

Cafe Coffee Day/ Costa Coffee/ Barista- all started selling coffee in India on the Starbucks model- and now are all at each others throats- serving horrible coffee in joints that see no face-lifts for months on end....No wonder same outlets sales at these joints show little or no growth at all.

On a side note, we visited Caffe Pascucci in Bangalore and found the coffee truly exceptional ( well to our CCD and Barista destroyed taste buds!)

Its a critical but very basic step in marketing. STP- Segment the market, identify your target and position your brand. The brand that wants to be everything to everyone, ends up being nothing to anyone!

what brands would i buy into today?

2010-06-17T14:47:00.001+05:30

I enjoy reading. I enjoy learning about our world and about business- other companies and the way they do business. My fav magazines are BusinessWeek- Time- Fortune- Newsweek- Nat Geo- Forbes. (these were what my father read and brought home regularly).

The earliest brands that i was attracted towards were American ones or those trying to win in the American market- since i read about them in Time/ Newsweek and Nat Geo- magazines i read since i was 14 years old. Coke- Chevy- Buick- Honda.....even though these brands never sold in India, through the print ads built a lot of credibility for me.

I bought BATA shoes because my parents always bought that. I use only Colgate since my parents only used Colgate.

My first car was Maruti (an Indian brand) since choices were few in 1999. Since then I have bought 3 other cars- none of Indian make.

So most of my brand choices were governed:
1. By what advertisements appeared in well known magazines.
2. By my parents' choices
3. By what was available.

However over time, these preferred brands have reduced significantly.

In the last 10 years, the only brands I have gotten loyal to are:
1. MamiNova ( a very yum French brand)
2. Tropicana
3. Kelloggs

Brands educate their consumers. To me, this education should be centered around health and/or the environment. Clearly i have found very few brands building credibility by educating me.

Otherwise, my choices are determined from within a group of brands (usually 5-7 per category) depending upon my state of mind at the time of purchase.

I am intrigued by this. What role does habit/ choice and true credibility play in your brands market share?

HTC- and YOU

2010-06-04T12:22:00.000+05:30

http://www.youtube.com/watch?v=K-QhxjJFl7E
http://www.youtube.com/watch?v=5lUkF1vVudA

These links take you to two ads released by HTC (www.HTC.com), the smart phone design company. The ads were released in 2009, but we took a while to find them. HTC is not yet a big company in India.

We think the ads are brilliant and put so succintly the consumer at the centre of the smartphone. Not a monologue about the technically brilliant product, but a fast past set of images, where most consumers would be able to find themselves.

Nothing more re-assuring than this for a consumer. A company that understands how i use the product.

Does your company create ads that state clearly their interest in understanding their consumers?

The 'quietly brilliant' position of HTC is pretty mind numbing in our view. Cant get our heads around it.

ritu and venkat

PS: We dont own any HTC products or shares :-)

marketing as the core of all strategy

2010-05-16T14:18:00.000+05:30

Met a classmate from university at the airport. Exchanged notes and began to discuss marketing in the tech industry- Infosys/ Wipro/ TCS/ Satyam...

Here is what i think:

1. Indian companies do not do any marketing. No matter what industry- we simply do not do marketing. What we are very good at is setting up sales and distribution systems, and creating a lot of advertising (not necessarily good ones). We love market share and confuse our capitalistic ideas with pseudo socialistic desires.

2. Marketing begins with the consumer. Segmenting the market, identifying segments and choosing among the segments to target resources on those segments that promise growth and profits.

3. Indian companies love to target volumes.... make lots of product and sell them cheap so that lots of Indians buy them and even if we make 10cents per product, with volumes we hit god profits.

Very good. But this is the end of marketing.

The Indian IT industry has for the past 2 decades promised cheap and accurate offshore delivery. No matter which customer, the promise remains the same. Price is the key parameter. And all competitors race to the bottom of the pyramid. Unfortunately, CK Prahalad, this is not a very good idea unless well understood. Now being associated with 'low cost', they are all struggling in an industry downturn, with no 'value added' products with which to entice customers to pay more.

IBM, on the other hand, with its new focus on 'analytical' software is entering a new business area in a very aggressive way. I believe it will be successful....

Another example is the Indian mobile phone industry. Call rates are 1 paise per second or 15 cents per minute. New players offer rates of 7.5 cents per minute. Unheard of. All to gain quick market share.

And offer no differentiation to a consumer who bills USD 100 per month or one that bills USD 5 per month.

It is important that the corporate strategy is built by a team that includes a marketing professional. In contact with customers/ consumers and the market place, marketing can help align business ambitions with customer needs, provide options and direct a business to a 'life cycle' of opportunities:
a- where and when to enter a market (and for what objectives)
b- where and when to exit a market )and for what objectives)
c- Where to invest in the next 5-10 years and transition through steps a, b. How to create a unique identity and how to continue preserving this identity.

Innovation is the key for 'super normal' profits. New processes/ products/ services/ consumer segments.....but the challenge is to continue the innovation process. Only the paranoid do this with any degree of consistency. (Apple?)

Brands take decades to build- because their true test is the test of time, of changing consumers and emerging competitors.

Venkat

the mobile phone innovations in India

2010-04-19T13:12:00.000+05:30

The cricket season in India (Nov- April) also coincides with the biggest splurge in TV advertising. Since cricket is watched on TV in almost all households, it is a good way to reach out very quickly to millions of households.

This year, the advertising is being dominated by two categories:
- white goods (refrigerators/ air conditioners/ TVs)
- mobile phones.

The first category has all the usual suspetcs advertising- Videocon/ LG/ Samsung.

Its the second category that is very very interesting.

The usual suspects are all absent. Nokia- Sony Ericsson- LG- Samsung.

Instead we have a whole load of local players- Maxx, Karbonn, Spice that are shouting from the rooftops about their phones. And why not:

- they are launching models that have 2 SIMs ( a very useful feature in India where business is conducted 24/7 , 365 days a year and the phone is always on)

- a phone that serves as a remote control- again a very cool feature

What is interesting is that these phones boast all the features of a Nokia or a Samsung, and then go ahead by a few steps.

How have local manufacturers taken a step over global leaders like Nokia- LG and Samsung? Is it an issue of weak marketing, or of head-office in Finland not supporting these market needs?

Can't wait to see Karbonn and Maxx following up their current innovations with some new tricks! Well done!

open and closed social networks - where should a brand manager focus?

2010-03-31T08:20:00.000+05:30

Social networks mirror the real world. The real world is large an indifferent place with people running a race to better their lives and given the opportunity will 'free load'- i.e attempt to gain goods and services without having to pay for them.

The real world is mostly leisure and pleasure seeking.

Its true, for every 1 hard working 'i want to change the planet and am ready to lose my last dollar for this', you have a 1000 that want to save the planet but not really switch off the bathroom lights when they are finished.

We like gossip. Social networks mirror this.
We like to be part of the 'cool crowd'. Social networks mirror this.

The one reason marketers have been trying to embrace social networks is that they believe (as do we) that social networks are a good way of engaging consumers. Is this really true?

Yes and No.

'Engagement' is a two way street. It requires action, reaction, action.

Most consumers really just want to read, hear and be informed. Only 1 in a 1000 will react. So why try to reach the other 999? you're really trying to reach the 1 that writes what the other 999 read.

Why advertise on Youtube? Why have your brand twitter? Why create a facebook page for your brand?

Rather than reach out to networks, we advocate that companies and brands create networks and invite selectively 'engag-able' consumers. Then allow these consumers to inform their own networks. But these are the 'brand or category advocates' that interact with the brand.

These advocates must be allowed to touch, feel and influence the brand. What's tricky is how do we filter the engaged user versus the non engaged (who will invariably come to the community if it becomes cool to be part of it).

But the bigger question is, does the brand manager have the maturity to distinguish between these two groups and focus on the quality of the engagement rather than the quantity.

That's what should decide online advertising budgets. The possibility of creating interactive and engaged communities. It takes time and effort. Like a 'frequent flier program' that over time separates the truly loyal from the others. A brand website that tracks user participation will eventually pick out the true loyalists.

Ritu and Venkat.

The REAL 'So What' of functional advertising

2010-03-31T08:06:00.000+05:30

OK..so what's functional advertising....advertising that sells a product based on a functional benefit for its users. Unlike a Louis Vuitton bag that offers to satisfy mostly psychological needs. These products usually sell themselves on performance. Nike shoes. Sony. (When you lose your 'mojo' you drop from satisfying psychological needs to functional needs...its true, Sony.)

Now whats the REAL 'so what'?

The story of advertising usually ends with, buy me because i can do something better than the competition...or buy me because i can save you money or time.

This works when competition is weak. Once competition strengthens, and everyone offers a way to save money or time, whats the distinction?

And here is where the REAL 'So what?' becomes relevant. This is based on the core consumer need that saving money or time satisfies.

Brands need to understand this core need for its core segment. For example, a mother may like to save time so she spends more of it with her family...or on herself. Does your advertising capture this for the kind of mother you are targeting?

Or that a father would like to save money to buy a golf set or to put his children through a better college. Does your consumer understanding capture this about your target?

Nike does a fabulous job of understanding the 'so what'....we make great shoes, buts that not the reason you buy us. You buy us because we understand you want to compete and win...and mostly you are competing against yourself. We can help you raise the bar. That is what they help the consumers with.

Thats the real brand benefit that needs to be answered. The REAL 'so what'.

Ritu and Venkat

Why does young India regret its past?

2010-01-24T14:56:00.001+05:30

A couple of recent movies in India - "Rock On" in 2008 and "3 idiots" in 2009 have done very well at the box office. I enjoyed the two movies. But my level of connect was pretty low with both- the underlying theme being how successful young Indians look back at their lives and true passions (music, writing, photography) and find ways of going back to that. I am ok with that, but unhappy if school children get distracted by that message.

What i want to caution many of my fellow country men is this:

- India was a poor country 50 years ago, 20 years ago, today and will continue to be poor 50 years from today. (1 billion people will not get rich overnight)

- While many professions will open up, the competition for jobs will always be very very high.

- Applied professions (engineering, medicine, carpentry etc) will always be the best ways of making a living and getting the family out of poverty.

- Writing, painting and photography will keep you mostly poor.

So get to school and study, is my message to the youth. Looking back at the past from the very comfortable confines of a cinema is possible when you have used engineering to get a very good job and life.

"3 idiots" the biggest blockbuster of the last 10 years, was only watched by 10% of India's population in the cinema. The rest could not afford it.

There is a message in that.

reproduction- your best bet against fundamentalism?

2010-01-24T14:35:00.000+05:30

I was reading a note in the economist on how hindus- muslims integrate well into American society and do well for themselves. And avoid radicalism. It re-iterates what i have always believed- that economic growth is the best way to integrate people and cultures. A rich population has little blame to levy on its neighbors.

A very random thought...the declining population growth rate of western economies (christian faith), declining population growth rate in India, China. And conversely, where are population growth rates the highest? In parts of the world with least economic opportunity- arabic states in the gulf/ middle east...and Africa.

High population and low economic opportunities are fueling violent expressions of intolerance.

Fortunately, violent fundamentalists represent a very small fraction- but is it possible that as we leave unresolved issues confronting the muslim world to fester, that these numbers will grow?

For all the technology of the west - surveillance, preventive and predictive analytical techniques, large armies have often beaten back technologically superior ones.

While i dont predict doomsday, i ask whether developed countries should focus more on increasing their population? Not to prepare to fight wars, but to demonstrate very clearly that we love our way of life so much that we are bringing more people into it. Should that not be a good advertisement for progress? Why doesnt Obama make this a central piece of his administration?

And hopefully grandad will not have to learn to use a big gun! Just kidding! :-)

Venkat

If you didnt build it, and cant control it, dont try to sell it!

2010-01-24T13:21:00.000+05:30

Pretty poetic title, inspired by a report (click on title to read) on Nokia building in navigation software to boost sales in China.

Its a good service and like "life tools" in India aimed at building services into the phone proposition.

So far so good. But is this expected to help pricing or market share?

We think unlikely in the long run.

Why?

Because the open standards on these services will allow other companies to build, bundle and sell similar services.

But its all good for the consumer and we dont argue against that.

What we think should be optimised in companies, is the capacity to build proprietary technology and control of the distribution and access to that technology.

Everything else is tactical.

In a technology company, technological innovation must be at the core. Alliances and partnerships built on these proprietary technologies are to be valued.

ritu and venkat

go on, be a Nokia- core purpose or core business?

2010-01-24T13:02:00.000+05:30

By the title we dont ask you to adopt Nokia's business model. (we are far from convinced it is the right one). But we ask you to do what Nokia did in 1992, move away from its rubber, cable and non telecom businesses, to focus on telecom!

Wow!

Core purpose or core business? What should really matter to an investor?

India and China are huge markets with unmet needs across a wide range of goods.
TV penetration in India is 60%, but
- refrigerator penetration is less than 10% (among 220 million households)
- car penetration is less than 4%
- microwaves at 4%
and so on....

Mobile phone usage is still very low, with 90% of the penetration accomplished with "pre-paid" users shelling out 2 USD per month as revenue.

Value added services are 6% of phone bills, which on average are 4 USD per qtr.

Consumption is so low, the only restraint on an organisation's growth is imagination and ambition.

Now, here is some back of the envelope calculation:
If 20% of the families bought cars at USD 6000 each, this is a 250 Bn USD industry
If 60% bought refrigerators at USD 200, this is a 25 Bn USD industry
If we could get current mobile users to spend USD 5 per month on VAS, its a 30Bn USD business PER YEAR.

Ok, so your core business may not be in any of the above. But if you truly want to grow, why would that be an excuse?

Indian companies are not lacking for innovation. They lack for capital. Which is abundant in the west.

Why not acquire aggressively Indian companies, and bring in capital to "go to market" faster, stronger?

On another note, water purification and electricity generation will be interesting businesses to get into. At the household level. Technologies that dont depend on the government grid.

Stop worrying about your core "business". Worry about your core "purpose". Profitable growth!

Ritu and Venkat

TV programming, advt dollars , and the audience!

2010-01-12T11:19:00.000+05:30

The note below is taken from a site we visit regularly www.thoughtgadgets.com.
Insightful comments on happenings in the marketing world.

The authors argue "TV networks don't exist to serve content to audiences; they exist to serve *audiences* to advertisers."

http://www.thoughtgadgets.com/2010/01/syfy-wins-great-rebranding-debate.html

We agree. And explore deeper this idea in the case of an emerging country like India where there are no "content" dedicated TV channels, and no segmentation in the market. Each channel wants to grab the same eyeballs- so very little differentiation.

Over the past few years, Ritu and I saw that we were tuned out completely from prime time TV viewing, because the channels would only show drama and reality shows. How could Indian audiences (teens) for reality shows and drama (older aged) be relevant targets for advertisers? The 30-40 year old of our generation had disposable incomes, yet hardly getting any content on prime time TV.

All this changes with new technologies. We now watch recordings of programs that appear late at night. This is a very new technology in India unlike in the West.
And herein lies a new pot of gold for TV channels. This recording technology will allow advertisers to get in front of audiences irrespective of show times.

What then becomes prime time? Interesting thoughts that came out of our reading of thoughtgadgets.com today.

Ritu and venkat

pricing in India

2009-12-23T12:05:00.000+05:30

Some very random thoughts:

India is NOT a low price market.

Nokia phones, tires, computers and cars sell in India at the same price (almost) as the comparable offer sells in more developed markets of Europe and Asia.

India is not a low price market.

True, the higher the price, the lower the pentration of the product. But companies are under no obligation to sell European products at cheap prices in India.

India is a "value" centric market.

Nokia sells USD 20 phones in India and a 100 million consumers buy these.

But these phones are configurd for the Indian market with lesser features. Features that the Indian consumer values more than an Mp3 player. (a phone that doubles as a torchlight for example)

These phones sell at prices that most surely (and we cannot confirm this) offer NOkia lower margins compared to their most advanced devices. Selling 100s of millions of these phones will drag lower the margins of Nokia.

In the Indian market, companies need to choose very carefully between pricing for the mass market and pricing for large margins. Both are possible. But not simultaneously.

Companies with high legacy costs (pension plans to pay off, large health care benefits to take care off) should think long and hard about which segment of the market to enter. In the long run, it may be posible to innovate and hence design and manufacture products that are cheap but with very strong margins. But from here to there...... is a long time.

Ritu, Venkat

Tiger and the branding of personalities

2009-12-15T11:03:00.001+05:30

Ok- Tiger goofed up. But unlike most people, i am not worked up about it. I think his wife needs to handle the goof up, not me.

I am not a golfer, but i think Tiger is an outstanding athlete. A great brand, because apart from all other attributes, Tiger lasted (lasts) a long time- the true attribute of a great brand.

In maintaining a regular stream of "off the books" relationships however, Tiger seems to have suddenly turned from legend into a deplorable person overnight.

My two bits:
Tylenol was a bigger disaster- people died.
Firestone as well.
But the brands survived.

Why not Tiger?

Personality brands often highlight our own inadequacies. Tiger the perfect man- great golf game, great family....everyday men see Tiger on TV, they are reminded of their "average" existence. The wife drools over Tiger, the girlfriend fantasizes. It is the wide appeal of Tiger which will be lost forever. A tiger will now appeal only to a niche (like Paris Hilton- hopefully not to the same niche).

A moral fall is a great leveler. Suddenly our wives and girlfriends don't think much of Tiger. He has fallen, and by extension, i have risen. Do i want to see Tiger rise from this? Nope.

The brand Tiger is finished. Not zero, but nowhere close to where he was. He was on a pedestal, and now he is possible going to be held at the same level as a Paris Hilton.

If Tiger had been French, he would have been most likely forgiven by his countrymen. Not Americans, who still guard some "moral" values. (I am myself very uncomfortable with the word "moral" - how it is defined- by whom etc).

But America is the largest golf market in the world, and no matter what citizenship Tiger held, his worth in the US market would have fallen.

A very clear message for celebrity brands.

corporate strategy in India

2009-12-04T16:25:00.000+05:30

This may be very ambitious, but here it is.

Say you are selling a standalone product. A standalone product can be used by itself using fuel- without the aid of any other product.
Eg; A car is a standalone product. A tire is not (since you need a car to sell the tire!)

I believe, that for standalone products priced at 30$ per unit, a penetration of 30% of India's households is possible. Do the math to calculate the volumes.
If the economy grows at 9%, then at constant prices, 9% more people will enter this market. Pricing innovations (producing the same item for 20USD) will get disproportionate volume growth.

For products cheaper than this, penetration will off course increase- around 0.25 USD per item, 60% product penetration is possible. (Distribution becomes the challenge- how do you reach 60% of India's population?)

There still is 40% (in my opinion) of the population for whom buying a USD 1 product is a luxury to be avoided.

At 3000 USD, the penetration of the product will drop to 4%.

So here it is : In 2009 prices:
Price USD 3000 Penetration: 4%
Price USD 30 Penetration 30%
Price USD 1 Penetration 60%

So where do you want to position yourself?

The great waves of India and China

2009-12-04T16:03:00.000+05:30

If you have been living in India for a decade or so, or have been visiting often over the past ten years, you would agree with this observations.

There is a lot of change happening in India- social- economic and demographic. You see the increasing affluence around you, the cars- homes. Yet the sight of slums, beggars and abject poverty never goes away.

Why? We asked.

And we realised that the this is the case in India and possibly China- large and poor economies. The large size of the population means that the only entity that has the objective of moving forward the entire population,i.e. the government, has no chance of either reaching everyone nor has the resources to move the population upwards, together.

So economic activity will never be "equal" or socialist- no matter what the government says, tries or does.

In the meanwhile, people move to cities - the areas of maximum economic activity, to get rich the earliest. These go ahead to buy cars and homes.

As cities reach saturation levels, private enterprise goes further into smaller cities for newer markets. So on and so forth. At the same time, less affluent people are heading to the cities- the centres of activity.

When a countries population is 30 or 40 million, this change can be rapid.

When the population is 1 billion, this change takes place over time. India's affluence is concentrated in the top 10% of its population. This is the FIRST WAVE of people that benefited from their presence in cities to benefit from the first wave of economic investment.

The rest of the population is poorer, most fighting for basic needs, unconcerned about public hygiene, cleanliness or the environment. So for every person who becomes more conscious about the environment and decides not to litter, there is another who enters the city to make his fortune- but is absolutely unconcerned about civic duties. So the litter and filth continue.

The first wave will give rise to the next wave in 5-10 years. And then the next wave.

In this way, we see the entire population getter richer (per capital GDP of USD 30,000 for example) over 50-60 years.

In the meanwhile, one set of poor people will move on in life to be replaced by a slightly poorer set of people. Who will move on to be replaced by another set of less affluent.

The rich and the poor in this way will continue to cohabit for many many years. Maybe as the fifth wave takes over (in 30-40 years), the affluence will cover better the poverty....but for the next few decades, lets just accept the site of two India's all around us.

What does this mean for companies looking to invest in India?

Ritu, Venkat

Tirupati, Cricket and the changing Indian demography

2009-11-12T11:56:00.000+05:30

First Tirupati- which is a town in South India with a temple dedicated to Lord Venkateshwara, of the Hindu faith. What is impressive about the town is how well it is organized and maintained. Smoking is banned, littering is absolutely banned, Indians are not allowed to chew tobacco (and spit out the red stained saliva). And in the name of the Lord, all Indians that enter the town respect the rules.

It is in a way, a little Singapore. I had to walk bare-feet for a mile in the city and it was really clean. You cannot walk barefoot in any city in India. In Tirupati, you can.

That was the good news.

The bad news was the crowds. Hundreds of thousands of people have been visiting the temple each day. This has been the case for many many years. And yet, the capacity of the temple management to regulate crowds is inadequate. Each solution is outdated by the time it is implemented, and the pushing, jostling to catch a view of the statue of the lord (which is stationery) is unimaginable. And this is the richest temple in the country with donations pouring in. Why cant crowd management solutions be put in place and implemented?

As I stood in the temple however, I made however, another observation that i note here.

Indian demographics is changing the nature of the visitor to the temple. The temple management should take note of this and act now, else be overwhelmed by the surge in the number of devotees.

When I visited the temple as a child, the exercise of traveling to a far off city, finding accommodation etc was an expensive “holiday”. So much so that it was restricted to many in the “upper middle class”. My parents saved money to donate to the temple.

Now, with travel getting cheaper and the average income in India on the rise, there are many more visitors. But the profile of the visitor is predominantly rural/ semi urban and from the small towns. This is good news. But on the other hand, the donations (per person and adjusted for inflation) being put into the temple are likely to be much lower than in the past.

The temple is going to find itself with few resources per person to handle the bulging crowds.

The temple has also created specific slots for a more personal viewing of the Lord, very early in the morning. These cost USD 2000 for a 10 year pass (where you can have a more exclusive viewing for the family once a year). Ordinary viewing tickets are USD1 per person. These however are limited in number. And with time are getting more and more expensive- supply and demand at work. However a family paying USD 2000 would expect a certain level of service from the temple in order to continue making this contribution to the temple.

On this visit, in spite of the “exclusive” pass, I found myself having to cover 2 miles and search in three buildings to find the office where I could get the “prasad” for the prayer I attended. The rules and the offices change every 6 months, so devotees have not many options to learn beforehand of a procedure.

The two above points highlight a classical marketing problem called segmentation.
You have a mass market. There the challenge is to maximize revenues from a large base but low affluence consumer. Cost management is critical here.

And you have the “niche” segment consumers willing to pay more, but demanding extra services. These are high margin consumers.

Managing both ends simultaneously is always a challenge, especially in a country like India with its “socialist” beginnings.

But the Tirupati temple trust need to wake up to the evolving Indian demographics to ensure the town and the temple continues to bring in devotes who can pray in a comfortable way.

2. The second area where I see a huge change that is going to come about is the sport of Cricket. Wildly popular in India raking in millions of dollars for the administrators, media and players.

The popularity of cricket in India has risen along with the rise in affluence of the Indian middle class. Almost every Indian living in the large towns has played cricket in his childhood. It is cheap, and with the availability of a playground, easily accessible. Unlike hockey and football (which need specific ground sizes and proper grass to play on). Swimming, golf, tennis all remained very expensive for India.

The Indian middle class that played cricket in its younger days (and lives in its cities) is now the Indian upper middle class. We pay to see people play and we relive our childhood neighborhood games when we see the cricket.

Cricket was always a middle class- upper middle class sport and with few exceptions, all of our players came from these backgrounds.

That is changing. The cities have no place to play cricket and indeed the affluent kids are shifting to tennis/ squash and other sports. These sports will grow in the future.

Cricket meanwhile is being shifted to smaller towns and villages which seen the only places now with open grounds where kids can play and practice the sport.

Emerging players for the national team (in the next 5 years) will have very non urban backgrounds. They will have learnt the sport by observation rather than training. (In non urban centers, training and coaching facilities are non existent).

They will come in with unorthodox techniques. Not ideal physical conditioning.

They will suffer far higher burnout than current cricketers, thereby limiting their playing time and the capability of the Indian team. Cricket will not be the money maker it is in Indian life today. The cricket board, in my view, is totally blind to this.

My guess is that unless administrators of cricket in India focus more on developing training facilities in smaller towns and villages, the competence of the Indian cricket team will decline very sharply in the next 4-5 years.

Lets wait and watch how these two areas of Indian life are influenced by the changing Indian demographics.

Venkat

Nokia sues Apple

2009-10-23T08:44:00.000+05:30

A brief note today (you can click the title to read about Nokia's latest strategy).

We don't recall Apple using the court as its innovation lab.

Nokia, wake up- focus on the customer and not on Apple.

Ritu, Venkat

Apple, Nokia and CNN

2009-10-21T08:36:00.000+05:30

No, they have nothing in common.

Apple announced its sterling results recently. And Richard Quest on CNN was analysing last evening the same with the help of some tech correspondent in the US and UK.

Apple makes cool products.
Nokia stumbled in looking for volume market share- and has so badly lost its 'cool factor'.
And CNN, business report on these two companies was so pathetic, it made me angry.

Our strategy thumb rule states that no company has cconsistently gained volume market share and maintained premium pricing (high margins) at the same time. Period. It has never happened.

Mass markets and premium products require very very different execution skills. They cannot remain in the same company.

Lexus and Toyota is a striking example of how to make it work.

In 2007, we mentioned that Nokia was possibly making a very big mistake is running after market share numbers. Sure, in the short run "analysts" reward companies for their sales. More sales means more revenues. But that is short term.
(http://rituvenkat12.blogspot.com/2007/07/market-share-or-profitability.html)

A technology company with high margins needs high innovation and investment in technology. When it gets distracted with mass market products, its capacity to dedicate resources (money and people) to technological advances reduces.

Sony Ericsson, in the meanwhile has simply gone the other way and now focuses on VALUE market share. We believe they will benefit in terms of bottom line as well as strengthening of the brand.

Apple keeps making sexy products and charging sexy money. What i find interesting about Apple is that they don't produce anything for the mass market. As the technology becomes out-dated, they simply drop the price to allow more people to enter their product categories. This is interesting. Designing and selling "cheap products" is a costly proposition. Selling cheap older technology is a great way to bring in new consumers.

And CNN got all of this wrong. The tech correspondent from California says " Apple is able to read the consumers needs of tomorrow and make products around that". !!!! What????

Their UK correspondent says " Apple makes great products, but i don't expect them to challenge Nokia's market share for a long time." Wow! He still does not get it. The day Apple starts to chase global market share folks, sell its stock.

All Apple does is use technology to create easy user interfaces. Lets not make soothsayers out of them. They simply listen to their consumers and enhance user experience.

Strategy is about choices. The first one to make is, who is my consumer?
If we start out to satisfy everyone, sooner or later we will satisfy no-one.

Venkat, Ritu

animation in advertising

2009-10-12T11:49:00.000+05:30

I saw recently Michelin's (www.michelin.com) new TV advertisements on the tagline "the right tire changes everything". Click title to see ad on youtube.

Without going into a discussion on the content, the position , message etc i simply reflected on the use of animation.

Bibendum, the Michelin mascot cleraly works better in animation that in real life. Animation proposes modifications to Bibendum's expressions and actions that would be difficult to replicate with real life actors.

And since Bibendum 'humanises' the tire like nothing else, he does appear at the centre of all advertitisng. Is this a good idea in itself? A very thin line between using the Michelin man to help tires emote, verus overexposing him.

Coming back to animated ads. (Coke has started this as well).

Unfortunately for the advertising industry Pixar is setting the standards in the animation business. And i would believe that consumers that see animation advertisements are immediately comparing the work to Wall-E or Nemo. TBWA is not a Pixar and the production quality shows.

Animation works well when it creates an incredible world for its characters. Worlds with lights, colors, sounds that seem more real than real. That's the difference between animation and cartoons.

Animation works when it uses a great storyline and humanlike characters. With expressions, with an interaction that allows us to experience our own lives even while looking at a movie about monsters, fish or outdated robots. Great animation
re-creates life through unreal metaphors.

Average animation is "plasticy" and establishes a disconnect from its message. Average animation simply exaggerates the human existence while drowning out the human condition. The message for a real world becomes distant.

The real risk for companies using animation comes not from their product competitors but from companies that exploit the animation technique so well that anything less than extraordinary simple makes the execution of the ad very ordinary.

Venkat

Obama, the Nobel peace prize and bombarding the moon

2009-10-10T12:21:00.000+05:30

You guessed it. There will be a lot of debate on this.

Anyway, i read the two headlines together this morning and found the irony funny.

"NASA bombards the moon" ..and i thought to myself why they used the word 'bombard'to describe NASA's experiment. Heck- to think we are bombarding the moon as well.

And then "Obama wins the Nobel Peace Prize". Read immediately after the first headline i could not help thinking why the man who started bombarding the moon of all places deserved the peace prize.

To me his award signifies a couple of things:

Firstly, it appears no clear and obvious choice seems ot have existed. It seems no one really delivered a significant peace initiative last year.

The only 'stabilisation' seems to be in Iraq- so Bush should have won for that. Life in Afghanistan seems to have takes a turn for the worse.

African states embroiled in unrest continue. The Palestine problem is not solved. India and Pakistan continue thier uneasy peace.

Was the Nobel prize really needed this year?

Secondly, is that the only wasy we could get Obama to work concretely towards expanding peace in the world. Is this what we are saying about the most powerful man in the world. That his good intentions need a prize before he actually is motivated enough to do something about it?

I mean we could have as well given the prize to Sarkozy- it was after all the French that started confronting Somalian pirates off the African coast?

Its like tipping a waiter as you enter a fancy restaurant.

Horrible.

C'mon folks, Gandhi did not get a Nobel prize for peace. Imagine that. And now Obama gets it.

Venkat

Women power and the incremental 5 trillion USD

2009-09-17T14:19:00.000+05:30

The news-week in its Sep 21 issue talks of the ‘real emerging market’, the estimated 5 trillion USD of new female earned income that will be generated in the next 5 years. http://www.newsweek.com/id/215304

Men earn 20 Trillion USD today compared to women (10 Tn USD), but the growth in income will largely be driven by women in the next 5years.

This is a BCG study and I don’t have access to the methodology.

As a marketer this is very big news, and I tried to dissect this with Ritu to understand what the implications are:

1. In the developed world significant numbers of women are educated and employed. Younger women while replacing the older women will move onto more higher paying jobs but this will be an incremental.
2. So the onus on creating this incremental 5 Tn USD will lie on the women of the developing world. They are more in number and getting access to education and job opportunities in larger numbers.

The problem however is that much of the work coming into the developing world is low end manufacturing or service which does not pay as much but employs large numbers of women.

The 5 trillion will be distributed over many many women, most earning between USD 1000 and USD 4000 per year.

At this level of personal income or ‘incremental family income’, spending is still limited to achievement of ‘family dreams’- TV, fridge , washing machine, car or house, the children’s education.

The number of women who will indulge on themselves will remain a very small percentage.
We disagree with analysts who say that “companies like Visa, Wal-Mart, Nestle, Johnson & Johnson, and others that already have a strong leg up in the women's market stand to prosper further from the female consumer boom.”

Companies that serve the ‘family dream’ market of the millions of families that re beginning to enter the middle class will be the real winners.

buying jeans on monthly instalments plans

2009-08-20T12:35:00.000+05:30

Please click the title of the note to read Levi's pilot campaign in Bangalore (India). They are offering purchase of the brand on a 3 month installment plan.

This will stir up a lot of discussion. Its been done before - TVs- cars- houses- holidays- are all available on loan schemes. But Jeans? Interesting.

And if Jeans, what next?

Our opinion? Lets look at 2 issues first and then we will give our verdict:

- does this promotion serve the target audience of the Levi's brand in India? Given Levi's pricing, (4-5 times that of a 'local player', their target market would be the top 10% of India's population)

Is this person going to buy Levi's because of the instalment scheme? Maybe. But an instalment scheme cannot alter the price proposition of the brand- especially a 3 month instalment scheme. If it was a 12 month scheme, suddenly the equation changes. But that takes guts for the bank to execute. And it is expensive for the brand to implement.

- does this promotion increase consumption of the brand , or bring in more users?

Will the possibility of spreading my purchase cost over three months make me more inclined to buy Jeans (and T shirts) versus other Indian dresses- casual shirts- trousers? Unlikely.

A pair of jeans in India competes with other pairs of Jeans. In a market where a pair of Levi's costs 5 times the "private label", does this promotion really address the price issue?

Given that credit card penetration is very low in India, does this scheme actually enable to bring in more consumers?

Or is Levi's simply trying to get more share from the other brands such a Pepe/ Wrangler?

We think someone at Levi's India got really excited by the idea of selling jeans on credit. The bank charges restricted them to a 3 months scheme. And the marketing team just pushed ahead anyway.

Levi's may report a change in volumes and market share, but this is not going to expand the category. Sooner or later the other brands will launch the same offer, and the bar will be reset to zero.

Thumbs down! An installment scheme for Levi's cannot be a competitive advantage. But it makes for interesting news.

beware the naked man that offers you his shirt

2009-08-06T08:15:00.000+05:30

This note borrows its title from a book by Venkat's very first management guru, Harvey Mackay.

His lesson came to mind as we read this free book by Chris Anderson - FREE. Please click title to read.

Chris Anderson has written a well known book called "The long tail". He is a well known writer and his new book is on a concept that has been around in marketing for decades. (So we're glad its free, but still cost us our time).

Anyway its an interesting concept to summarise in a few lines. Marketing theory and practice has been using the idea of FREE for many many years. Among the 4Ps of marketing, 'FREE' falls under 'Promotions'.

Its various forms are:
- buy one get one free (increases volumes, the consumer gets one unit free.
- get X% more (same as above)
- Buy a set of razor blades, get a can of shaving gel free. (a company wanting to launch shaving cream will give free samples of this with every purchase of its razor blades.)
- 50ml of sunscreen lotion FREE on every purchase of body lotion.
- sampling - handing out trial packs of one time use to get people to buy more.

Once some years ago in India, we ran a very successful sales promotion giving away a micro wave free for every purchase of a Home PC. The logic was that Indians buy the PC when all other household purchases are done, so this offer was aimed at a two in one benefit for the family, accelerating the penetration of the first PC in the home.We made this possible by getting the marketing folks to buy microwave ovens instead of TV spots!

Free happens all around us. Has been for years. But its objective is to get us to pay for the stuff that makes money for companies.

Now what happens when ideas are shared for free? This is the interesting, but really no different from products being given free. Google gives away so much for free because it wants you to come back to its search engines where it makes money.

'Free' works if the free item was indeed valuable. Then folks come back for more, even if they need to pay.

'Free' works, if there is the probability of more 'free'. Even then folks will stick around for more.

But 'free' has to make money somewhere for the company. TO create something takes time and money- which costs. And the cost is always borne by the consumer.

In fact, the more 'free' stuff from a company, the more expensive its 'paid' content is.

Wonder why Mckinsey keeps putting out free industry reports?

Free and relevant insights build credibility and allow ideas to reach a wider section of people. And invite consumers to pay for more services if they so desire.

We like free. We blog to share our opinions for free. We think 'free' knowledge builds communities bigger and wider than any subscription service can. The problem with free is filtering. It makes it difficult for you to select your community. New technologies could help solve this problem, though.

FREE is a good idea to consider in any line of work. So what will you give away free today?

Venkat, Ritu

Beware the ghost of the BS art

2009-07-09T11:14:00.000+05:30

An interesting note by Clif Reichard (please click title to read it).

We are practitioners of sales and marketing and in our more limited experience (11 years) find that mostly sales persons today are being trained to fail.

We have been in the B 2 C space and deal with products that pass from the company to distributors and onto retailers before the consumer buys them.

The sales force is required to ensure the product is available at the distributor and then sold into the retailer by the distributor.

The distributor and retailer do not buy the product from the company for the reason that the end consumer does. The end consumer wants to feel beautiful. The distributor wants to feel rich.

In fast moving consumer goods (toothpastes etc), distributor gross margins in India are about 5%. Net margins are 2%. Unless his working capital rotates 12-15 times, the distributor is better off investing money in the stock market.

In this business, salesmen need to be trained in managing working capital and advising distributors and retailers in managing working capital. What stocks to order- how much- how to stock products-how to allocate costs to various products.

We have seem the same principles apply in the PC business and in the tire business. We believe it is universal. Simple xcel tools can help sales persons understand how their customers make money.

Yet few companies train their sales persons on anything more than product benefits. We are not surprised at all that the sales community is viewed with skepticism. They dont seem to speak a language relevant to their customers.

Most senior managers don't grasp the idea that the same principles that apply to their business, apply to their customers' business.

Ritu and Venkat

Asia Rising- Only half the story

2009-07-09T10:59:00.000+05:30

A recent blog entry in the Harvard Business web site (http://blogs.harvardbusiness.org) spoke of Asia rising as a key trend. Sure nothing wrong in that. But it did beg the question, is the West sleeping? and if so , why?

It is clear that India and China (and Africa as well) will grow fast...why not, they are the poorest parts of the world. Especially in the case of India, poor government policies of the first 50 years of independence condemned large parts of the population to stagnation.

Now, these two countries are trying to make up for lost time and opportunity. 1 billion people in these two countries are still poor...i.e. not even in the middle class. The per capita GDP in India is USD 1000 and in China about USD 2000. About 15 times lower than Western Europe.

But this is still half the story of the world. The slowdown in western europe and the US made me ask a question to my colleagues there.

At 30,000 USD of per capita GDP, have you achieved all that you want?
Is there really no further aspiration?
Why is it that space travel is still not affordable and aspired for by your country?
Have you reached the end of research into AIDS and cancer treatment?
Have you given up on green technologies- and alternate fuels?

The world has too many unsolved problems. India and China can solve a few, but only those that don't require expensive research.

Why the West gave up on the idea of "renewing and re-educating" itself, i cannot say. The world has more than enough room to grow at more than 4% over a very long period. It needs productive investments. Both in Asia and in the West. Our leaders fail us when they allow us to get complacent. Both business leaders and government leaders in the west are responsible for the slowdown there.

One day Asia and China may also begin to bask in the glow of "contentment"- to their own peril.

India was a very rich country 500 years ago, but the kings spent the money on luxury goods- building palaces and generally decorating themselves. Sounds familiar?

Ritu and Venkatesh

The Indian Budget 2009-2010

2009-07-07T09:21:00.000+05:30

There will now be numerous notes on the Indian Budget that was announced yesterday. (please click link above to read what the Economic Times has to say).

The budget disappointed those who wanted specific details on the disinvestment plan, on increased Foreign Direct Investment and on reducing the fiscal deficit.

But on the other hand, the government has spelt out clearly how it will focus expenditure on the rural economy, on building infrastructure and creating jobs for the weaker sections of society. The focus is clearly on strengthening the economically weaker sections of society- bridge the very huge gap between the rich and the poor in India.

Penetration of consumer goods in India (apart from TVs) is very low and enriching the weaker sections of society will drive consumption and hence purchase of goods and services. This should succeed in creating a trickle up effect.

We maintain that the huge salary growths of the middle and upper classes in the period 2003-2007 have raised income levels sufficiently and now the focus must be on delivering wealth more directly to the 60% of the population which is dependent on agriculture and is significantly poorer than the average family.

This is our belief. We support the budget.

Ritu and venkat

Brands that target niches- should this be news at all?

2009-07-06T10:41:00.000+05:30

The Financial Times (click on title) had this article on Mars (maker of M&M, Twix chocolates) is targeting women with a new brand of chocolates called "Fling" -(www.flingchocolate.com/about.htm).

The news item first had me cynical. Why is this?
A friend of mine tells an old tale to describe how his company (multinational in the foods/ home and personal care business) keeps going in circles. First cuts all local brands to focus on "key brands and innovations", then goes back to investing in local brands to "revive sales and market share on a country basis"....and goes through this loop every 5-7 years.

The tale is about an old woman with 4 sons. Someone asks her how the sons keep busy to which, after much coaxing she says..."do you see the carpet hanging there. Well, two of my sons unravel it every few days...and the two others then stitch it back."

To why is the creation of segments "which the FT very stylishly refers to as 'niches' ", news?

Creation of segments based on distinct and profitable needs is the basis of marketing.

What is annoying is how marketers seem to develop needs through brands that make a connect with consumers, and then in the interest of "shareholder value" and cost-cutting, kill brands overnight, transferring the brand's properties to a larger "mega brand".

This weakens brand management and over time erodes the "mega brand" as well.

Venkat

an essay on recent pricing trends in india

2009-07-05T09:18:00.000+05:30

Income growth estimates 2003-2007:

Given a lack of recent public statistics on income and income growth, we used newspaper reports and other estimates to paint a picture on the income segmentation in India in 2003 and its evolution in the period 2003-2007.

Table 1.1:

Number -------Annual inc(INR)----Average----Grth%(03-07)--Income 07----Inc grth% 08
of HH

4,000,000 ----->215,000 ---------215,000 -----25%---------524,902---------10%
90,000,000-----45,000-215,000----130,000 -----15%----------27,371----------8%
66,000,000------< 45,000----------22,000-- ----6%----------28,405----------6%

Table 1.2:

Average Inflation in the period 2003-2007 ----5%
Inflation 2008 -------------12%
Inflation 2009 -------------------1%

1 USD= 48 Indian Rupees (INR)

Given that the Indian economy grew between 7-9% in this period, these household income growths were not seen to be irregular. Income growths in the period 2003-2007 were significantly higher across all income segments, compared to inflation in the same period.
Note that salary growth rate fell in 2008 while inflation rose spectacularly (refer table 1.1)

Income growth in 2003-2007 must be seen in the context of supply and demand. While the Indian economy grew at break neck speed, the number of well educated graduates and competent managers was restrained by the lack of growth of high quality educational institutes. This resulted in high rates of turnover in companies, sky rocketing salaries and an overall increase in employment. In-fact this period also saw a large migration of people having very basic educational qualifications (grade 8 pass) moving from villages to cities where booming sectors such as retail were offering entry level jobs to people with modest education.

This means that apart from the 66 Mn households at the bottom of the pyramid, all other households were earning far more than inflation. This is a very big difference w.r.t. Western economies where salary increases are very closely tied to inflation. The savings rate in India increased from 27% in 2003 to 36% in 2008.

The period 2003-2007 was giving most Indian households real income growths in excess of 10%, taking into account inflation, and a lot of extra savings was being created

This is one of the reasons we wrote in 2008, that high inflation of 12% in 2008 was unlikely to impact the common man. Contrary to common opinion held in India that Indians would take to the streets to protest high prices, we maintained that “middle class” India had received a huge buffer in terms of salary increases since 2003 and would be able to withstand inflation of 12% in 2008. We maintained that if salaries rises were to reduce, the middle class would still be able to survive 12% inflation into 2009. But that inflation would need to fall in 2009 to 5% or lower.

The bottom most segment of 66 Mn households is agriculture dependent. This segment consumes what it produces and then sells to the market its excess. In a high inflation period, our understanding is that this segment is insulated from increasing prices of cereals and staples, since they themselves are the producers.

So, how did all this translate into pricing?

In the period 2003-2007, pricing went through the roof- particularly for the packaged goods and services sectors. From FMCG majors like Colgate and Unilever to airlines and everything in between, raised prices continuously between 2003 and 2007.

Capacity increases often take time and in the period where industry was constrained by capacity, prices increased sharply.

These packaged goods and services, do not have a significant impact on the calculation of inflation in India, official inflation continued at 5%. The less affluent families also did not see their basket of goods (mainly non processed food) becoming very expensive.

There was a complete “free for all” interms of pricing and companies reported huge profits in this period.

The year 2008:
In 2008, commodity prices started impacting India as well and the price of basket of goods that are used to calculate inflation, rose 12%. India also began to take note of the global slowdown, which through the fall in exports of products and services, hit home sometime in the second half of the calendar year 2008-2009.

Sentiment fell. We wrote at that stage that the large and untapped Indian market was reason enough for entrepreneurs to focus on satisfying domestic demand, and not worry about global sentiments. We added that as long as the companies representing “new India” - Infosys/ TCS/ WIpro did not lay off staff, there would not be any risk of mass layoffs and hence the economy would be able to continue growing, albeit at a lower pace of maybe 5-6%. On top of this, the government announced various incentives (farmer loan waivers/ infra investment/ pay scale revision of govt employees) all adding to almost 200 Bn USD. This is a big investment for a 1 trillion USD economy.

Companies reacted by initially holding prices steady and accepting declining volumes. A very bizarre approach in the mass market segments. Sure enough, worsening sentiment coupled with high prices (given salary increases were minimal in 2008), meant that the Indian shopper stayed home. Retail sales collapsed in the 3rd Qtr of 2008.

By the end of 2008 and in the early months of 2009, however, we have seen pricing sentiment and philosophy change significantly. Companies became more cost conscious and began to benefit from the worldwide fall in raw material prices. They started to reduce prices and most companies took a hit to margins as well. And companies looked to maximise capacity utilisation.

- FMCG majors such as Unilever dropped prices in the market.
- Promotions (cross promotions/ price discounts/ free volumes) on products have increased.
- Hotels have launched very sensible “all inclusive” packages taking care of food, non alcoholic beverages, laundry and sight-seeing for their guests.
- Low cost airlines became truly low cost opening a 30-40% differential versus full price.
- Capital goods manufacturers reduced prices as the government announced reduction in sales taxes.
- Real estate prices have fallen 10-30% depending on the location.

Over and above, companies have started looking at rural India as a viable business opportunity and have started to set up products and services targeted at rural masses (at suitable price points). The aggressive pricing has brought the Indian consumer back and Q4 of the financial year 2008-2009 recorded 6% growth for the Indian economy.

What happens going forward:
A new budget will be announced by the government early next week. We expect to see investments made to facilitate development of the less affluent, infrastructure development and privatisation of government companies (mostly to finance the budget deficit, but also to make them more competitive).

These will be good initiatives that will continue to increase domestic demand.

However, one concern is still agriculture- the monsoons are late. 60% of the employment sector is supported by agriculture and if the rains fail, this will impact the buying capacity of a significant segment of the population while diverting government resources from investments to direct support of the weaker sections of society.

Bottom-line on Pricing in India:

Our view is that India is a market where product availability and distribution are the most important factors for success. Marketing is very nascent and is limited to advertisements featuring prominent film celebrities. Marketing becomes important when people start having choices. In India, we are still many years behind that stage.

In our view, the capacity shortages of 2003-2007 which caused pricing to spiral out of control, have been corrected. A lot of investment went into infrastructure and manufacturing capacity in the period 2003-2007, and these will keep pressure on pricing. Investments in education, infrastructure are increasing and the supply-demand imbalance of talent should be mitigated significantly by the time the Indian economy returns again to its 9% trajectory.

Companies will find it hard to increase prices beyond “raw material increases” or the standard inflation rate (4-5%). While there is some segmentation in the market, penetrations for most product categories are less than 20% (micro waves/ washing machines/ computers/ vehicles). This means that driving penetration and hence gaining volumes and market shares in the market is the priority. The Indian consumer is price sensitive and hence value pricing and “penetration” pricing will continue to drive the pricing approach in India.

Ritu and Venkat
June 2009.

Brand Michael Jackson

2009-06-29T10:21:00.000+05:30

The title above leads to an article by John Quelch, a Harvard professor and renowned expert on marketing. This note from John, we felt was pretty badly written. One of the reasons we think, serious thinkers should avoid going pop.

Apart from the style of writing, we disagree with the content. MJ, for all his wonderful music, died a very poor brand. At the pinnacle of his fame (80s-mid 90s), he was a great brand, but we are not sure he will be remembered as one.

The last decade of his life, MJ did not create any entertainment or associate himself with any work that engaged , entertained or educated his fans. The 3 Es that all brands must continuously strive to deliver to remain consistent.

In fact, his actions took him into realms where even his staunchest fans could not but begin to suspect an unstable mind at work.

We loved his music and hold both "Off the Wall" and "Thriller" as masterpieces. We are saddened by his death, but we were equally saddened to see the brand already in decline from the mid 90s. We were hoping the brand would revive itself with the latest concert.

If anything (and with a heavy heart), we would present his life as a classic case in not only how great brands establish themselves, but how they fade away as well.
While we cannot offer any precise insights on what went on in his life, we think he started living in a virtual world filled with sycophants. Brand managers that get removed from their consumers should beware. It appeared as if, MJ felt he was above the rules of social living. Great brands reflect the society they live in and working from within, evolve social thinking.

Thanks for all the music and entertainment MJ. May your soul rest in peace.

Ritu, Venkat.

Apple's retail store success

2009-06-23T10:07:00.001+05:30

A very interesting note (click title) on the success of Apple's retail stores.

We believe brands must have control over all elements of their customer engagement, especially distribution. This works for every brand, in every category- if you see the brand as a "leader".

Controlling distribution is seen as expensive keeping in mind the cost of space, staff and inventory. But it is a customer facing activity.

Outsource manufacturing, finance, logistics. Set up metrices to control the delivery. A 1 in a 100 error may still be acceptable.

But control and master your customer facing moments.

Leadership cannot be outsourced. Nor can the 4Ps (pricing, product, distribution, promotions (communications).

Ritu and Venkat

Pontiac- this ad cuts through clutter...

2009-06-09T08:24:00.000+05:30

We are regular visitors to http://www.thoughtgadgets.com which reviews ads (in the US) on a regular basis. Its a great repository and worth a regular visit.

This Pontiac ad is pretty old, but worth a view. In our view, amazing.

Click title to view,

Ritu, Venkat.

And for lateral thinking in advertising, try this out:
http://www.thoughtgadgets.com/2007/12/sony-ericsson-tells-jesus-theyre-late.html

Great brands take every opportunity to educate their customers

2009-06-03T09:59:00.000+05:30

A very interesting note that arrived in our post. National Geographic gave us some tips on getting the most out of the time we spend reading the magazine.

Its a good way of making sure you get the most out of your investment.

After so many years, we still have not figured out all the features in Windows. MS does not care (it seems).

We cant figure out everything in my Nokia. We suppose they dont care either.

But Nat Geo cares. And we appreciate it. Take a moment to read the note. And remember , its always a good idea to educate consumers in any way you can.

Market leaders engage, educate and entertain.

Ritu and Venkat

Twitter for market research

2009-05-30T07:00:00.000+05:30

Twitter should get more intelligent (Wolfram Alpha?). If we are putting in a query from India, the results should be sorted so we get more relevant "Indian" results.

Anyway, we wrote a while back on how new media is allowing consumers to learn more about products and develop their own opinions. So that the role of a brand manager is likely to change in the future from an "instructor" to a "facilitator". http://rituvenkat12.blogspot.com/2007/10/age-of-brand-facilitator.html

We finaly got onto Twitter some weeks back and the first thing that struck us was :
- CHEAP MARKET RESEARCH! (Dip stick anyway).

We typed in a few brands...Nike/ Vodafone...and got a lot of twits that indicating what consumers were experiencing with each brand.

But most responses were "foreign" and we could not get an Indian feel to this. So we typed in a very well known Indian mobile services brand. And then things got very interesting.

People are twitting about its new services...its business plans etc. But mostly people are twitting about their experience of its products and services.

Mostly they are complaining. (we estimated 70% negative twits product/ services).

This is interesting, because the twitters are tech savvy, early adopters. They are passionate about technology and its usage. If they are complaining, its a good reason to look into why.

We are not sure if the brand manager at this company twits or even reads twitter. But he should.

But if Twitter could classify results relevant to the country of the twitter (India in our case), this would become a very interesting tool even for multinational marketing managers.

Ritu and Venkat

iPhone apps: Losing users within 30 days?

2009-05-30T06:51:00.000+05:30

A very interesting note we read on www.thoughtgadgets.com. (Please click title to read).

We are trying to conceptualise this but at this time, its just worth reading and digesting slowly.

Ritu - Venkat

From Spelling to Searching bee.

2009-05-30T06:48:00.000+05:30

We take the spelling bee as an example to highlight why it is necessary to give up some skills of the past to learn new skills that will enhance the future.

Why do we celebrate the “spelling bee”?
Our children today have spell check on email/ on word/ xcel/ google and powerpoint. They complete close to 95% of their written tasks on these softwares.

Why do we celebrate the spelling bee? I am not sure we capture our surprise (dismay) at this. Infact we are surprised by the continued emphasis a lot of exams place (especially in India) on memorisation of facts. Perhaps in a country with very limited (PC penetration is about 5%) access to internet search tools, memorisation of facts is important.

But in the US, with a far higher degree of online search available through the PC or mobile phone, what’s the fun in continuing with a spell bee? (Wikipedia suggests this concept perhaps started in the 1700s with the emergence of reading and writing skills in the West).

Why don’t we have a “search bee” contest now for school kids? We ask them the most difficult questions, and the kids have PCs and access to any search engine (s) that they choose to get the answer in 3 minutes.

We take the spelling bee as an example to highlight why it is necessary to give up some skills of the past to learn new skills that will enhance the future.

We argued recently with friends of ours why the government should not incentivise the learning of ancient dance forms such as Bhrathnatyam and Kuchipudi. They were shocked.
“How can we lose our tradition like this? This is so irresponsible”, they said.

Our reaction was this:

- In the past 10,000 years, we have no ideas exactly how many forms of communication were learnt and forgotten(modified) as mankind evolved the complexity of his communication needs.

- In fact dance and songs, In ancient times lacking widespread reading and writing skills were only one way of recording stories and transmitting them. Now we have books/ photos and videos to do this recording and transmission. Why dance?

- What we know now is simply because we recorded in paintings or written form these cultural elements from the past 2000 years.

- But recording a cultural element itself preserves it for the future. Why force it to be learnt through incentives that can be applied to other educational and cultural needs.

- Why not create a museum for fine arts that has DVDs of every known cultural expression and detailed instructions on how to learn it in case someone wants to.

- But diverting resources to preserve a past in a country that lacks basic resources is a crime.

Anyway, we came back to this thought when the winner of the 2009 spelling bee in the US was announced on TV recently.

We are patenting our “search bee” idea. Its more relevant for the future.

Ritu and Venkat

Bharti- MTN merger

2009-05-26T07:38:00.000+05:30

Why? And why now?

Bharti (India's largest mobile service company) has announced plans to pursue once again a merger with MTN of South Africa. (click title to read more on this).

Bharti is a phenomenally successful company. WIth 100 million subscribers in India, revenues of USD 8 Bn and profits of USD 1.7Bn, it is by far the leader in the Indian market.

I am proud of this company which has set new standard in the business. It was the first company to completely outsource its IT infrastructure and hence reduced hugely its costs. Thereby giving customers prices of Rs 1 per minute of talk time (2 cents per minute).

Now, It wants to expand globally, and is looking at emerging markets as a first step.

I wish the company every success, but i am not clear why they should want to do this.
India has 300 million subscribers and this is expected to rise to 600 million in another 5 years. Bharti can double its subscriber base in India itself. Why go out?

If costs need to be reduced, they can be done in India, as the size of the company's customer base doubles. If this is urgent, why not merge with AT&T?

Is it about management resources? I dont think Bharti needs to look out of the country to get that.

In addition, i dont think the company has exhausted all sources of growth in India. Value added services are still in nascent stages, customer segmentation and customer service can be improved, there are new businesses such as IPTV where Bharti is making a play.

Surely the company is confident it has the resources to handle the demands of the Indian market as it ventures abroad. This is a very interesting and exciting move. And i repeat i am proud of this company and its ambitions.

The Indian press this morning is full of stories of how the merger will be executed and what the final company will look like. But take a minute folks, and help me answer two basic questions:

Why? And why now?

Venkat

Titan FAST-TRACK Repulsive advertising

2009-05-20T10:20:00.000+05:30

Marketers must use their common sense and judgment as they try to connect with audiences.

Titan (a well known Indian brand of watches) has a collection targeted to the youth called FAST TRACK.

We saw an ad for this brand yesterday with the tag line being "move on". Here a young boy and girl meet, have a one night stand (suggested) and then, as the girl tries to build more intimacy, the guy runs off (very fast)... this it appears is a ploy from the girl to drive the boy away...as she wants to "move on".

Repulsive. This is the strongest critique we have done on this blog. But we are really offended by the treatment of young people (and if we may add, condoned) in the ad. Is this really what connects with our youth in India today? Or is this the best output an adman and brand manager keen to sensationalise in the name of connecting with youth.

We have not yet found the ad on the internet, but it appears that an add on the same "move on " concept has been aired before. An example can bee seen at http://rshuba.wordpress.com/2008/04/17/move-on/

Here we cringe at the casualness of the break-up. Is this what "moving on" means to the youth today? Is this what it should mean to youth today?

Coming back to the "one night stand ad", lets assume this is what market research is suggesting connects with the youth today. The girl chasing away the with whom she has spent an intimate few hours? So that she can find the next target. If this is the case, something is wrong with our society. But the point is that a marketer must use judgment to decide whether he wants to build on this insight or he wants to transform this insight.

Is this attitude of young people correct? Would the brand manager want his children behaving like this? Is the answer is yes, he should find help. If no, then the marketer must use his ability and resources to bring positive transformation.

Why cannot young people "move on" from failure or success to take on the next challenge? Is that not a reasonable condition to "move on" from? Lets face it - unplanned pregnancies/ multiple partners/ teenage sex...these are all trends on the decline in the West. Are we saying, the very "internationally aware" youth of urban India have not plugged into the declining rates of these trends?
Wake up Titan, multiple partners have been declared passe!

"Titan" is a reputed brand name that in our books has completely lost dignity with the Fast Track ads.

Ritu and Venkat

Indian Elelctions 2009 - Part 2

2009-05-17T07:35:00.000+05:30

India has learnt to reward performance in civil administration.

A great great job by the Indian government in organising safely and efficiently this massive democratic exercise. A 1 billion strong country voted, and the results announced yesterday give a clear direction of a stable government for the next 5 years.

1. We will be investing in the Indian stock market tomorrow.
2. The results surprise us a little, but give us so much more optimism.

At preliminary analysis, the three national level parties (The BJP/ COngress and the Left) have put together returned with the same number of votes as the last election. The left, although touted as a "national party" is strong in the states of W. Bengal an Kerala..with a few pockets of visibility across the country.

So the Indian middle class, which votes basically across these three parties kept to expected lines. There was s shift from the BJP and the Left towards the Congress which saw the Congress emerge as the single largest party with 201 seats, its best performance in 25 years.

The BJP's right wing agenda was rejected and the Left's left wing agenda was taken down. The Centrist Congress collected handsome riches.

The total victories of the regional parties remained the same as last year, but we see some interesting trends:

- In states such as Bihar (tradionally very backward, but making economic gains in the last 5 years), the voters have voted for the incumbent's track record of good governance and development. In Bihar, the incumbent has gained votes across caste and community lines. We believe this is also because (and we will try to get some more data) parties have fielded candidates that represent various caste/ community and religious sentiments.

In the past, political parties could also be defined by a community as the majority of its members belonged to a certain community. This gave advantages in terms of winning votes of a particular community, but being closed to others. Hence the rise of fractured politics in a number of areas in India. The recent elections have shown political parties including within their folds, greater representation of the diversity of the communities they govern.

This means that:
1. if governance has been good, it makes it easier for the population to vote for the party through a candidate it is comfortable with.

2. That if the governance has not been good, the local population can indeed find alternative political parties tat are fielding candidates that represent at the basic minimum, the community of the voter.

This allows us to rationalise what has happened in another "under-developed" state- Uttar Pradesh, which is a close neighbour of Bihar.

Here, it has been widely felt that the state government was corrupt and inefficient, but has been voted in the previous elections on the basis of the caste and commnity equations it had correctly identified.

Lack of development meant that people wanted to find an alternate political party.

Each of the alternatives that gained (including the Congress) clearly had learnt lessons from the past and fielded candidates that closely represented the communities from where they stood.

This voting on community lines is what we are afraid of. But in this election, this issue was SECONDARY. The fact is that, largely the Indian voter voted for good governance. Where the local party had been governing well and developing the state, the party was voted for.

This bodes very well for the future. re-election will depend on good governance. At city, state and country level.

India has learnt to reward performance in civil administration.

We are hopeful and optimistic for the future.

Our broker will be a happy man tomorrow morning.

Ritu and Venkat

Indian elections 2009

2009-05-16T06:40:00.001+05:30

Its the day the results will be declared. The 1 Bn strong jury will of course come out with a split decision. Today we will know exactly what.

There should be no surprises. India will once again be governed by a coalition. In a note we wrote after the Nov 11 attacks in Mumbai we argued that politics in India is multifaceted with "national level" issues having a limited impact on elections and hence creation of governments.

The outrage after the Nov attacks took maybe 80% of Air Time on all news channels, but move away 150Km from the big cities, and people were already too far from Mumbai.

We believe, India votes on three philosophies.

A. The rich, well educated "elite" is largely a cynic. These folks have perhaps the lowest turnout. They don't care (anymore). They believe that any government formed will be just as inefficient. They want business to thrive and their well paying jobs to be secure. "Government, get out of the way" is the motto.

India will not go the socialist way anymore. The performance of the finance and commerce ministries are extremely critical for any government to have a semblance of functioning. Hence, no matter who wins, governments ensure that the F and C ministers will be the best available candidates. That's all the "upwardly mobile" Indian expects from the govenrment. "Get out of my way, make F and C work". The real work will be done by the bureaucrats of the Indian Administrative Service, so most ministers do not matter.

B. Then there is the middle class, which was made of mostly employees of the government sector. These folks, we believe always voted for the Indian National Congress, but found a choice with the emerging right wing Bharatiya Janata Party (BJP). The middle class voter (the ones we have known all our lives) rarely ever change their voting habits. It took the BJP many many years to enter the national debate. We do not see a third "national party" anytime soon. So the choice is one or the other.

C. And then , the rural voter. Largely farmers, but more and more people involved in the manufacturing and rural service economy.

These folks, mostly, vote by familiarity. Familiarity of community. There are about 3000 communities in India. Each community is seeking its own voice and this is causing extreme fragmentation of the vote bank at the rural level.

Indeed the two main parties- Congress and the BJP have been facing this vote bank fragmentation not in the cities, but in the rural areas- where community based voting has found a very strong foothold. Promises of more subsidies and fair "representation" of community leaders takes predominance over national level issues.

Caste and community, being seen as easier ways to get elected, means that the current lot of rural politicians does not have to focus on development. Subsidies will do. Perhaps, the trickle down effect- and increasing awareness will change this equation. But it will take time. The "minorities" have only recently found voice (maybe in the past 4 elections), so they will want to cherish if for a while longer, before giving up their interests before broader national issues.

The last Indian government was a coalition of more than 20 parties. We would be surprised if today's results threw up a small coalition.

But if the past 5 years have been any indication, we (of the cynical "government should get out of the way" class) should look forward to some robust growth in the next 5 years.

Ritu and Venkat

the language of an organisation

2009-05-14T09:51:00.000+05:30

Blog post 100. Its a milestone for us. We don't write for a living, but we see enough around us that merits debate and discussion. And we make some time to put out our point of view.

100 ..and counting....we're grateful.

The language of an organisation is a simple concept. Each organisation uses vocabulary which is very specific. Some companies use "we" more than "I"..others use "suggest" more than "lets do this". Still others use "lets discuss this" while others stick with "you can do this...or you can't do this".

Its been a long time since either Ritu or I changed jobs, but a friend of ours changed jobs recently. Moved from consulting to industry. I noticed that as a consultant he used certain words very casually:
- home working
- connecting on sametime
- "deck" to refer to a set of powerpoint slides
- "play" to refer to participation in a market
- "billable" hours

We spoke after his third day on the job and he referred to a conversation he had at work earlier in the day. When asked for his advice on a new project, he listed out his approach with numerous instances of "i think we should do this"...." i think we cannot do that..." etc.

I understood from him that in a consulting organisation, he could be as direct with his own team members (not with his clients, of course) and he extended that to the new company, only to get some very shocked looks from across the table.

The language of the orgsanisation.

Sure, most organisations have English as the official language. But "I" and "we" are both English words. So are " i believe we could" and " i think we should".

When you change jobs, do you try to figure out what language your organisation speaks? Are they direct? Are they consensus driven? Are they comfortable working on sametime? Are they comfortable working across functional silos? How do they show respect? Is it to hierarchy or to capability?

How much senior management talent is from the outside rather than home grown? How old is the company?

Without an effective understanding and usage of the language of an organisation, it is impossible to integrate into it. No great ideas will ever pass through an organisation whose language one has not yet learnt.

I remember a relative once telling me (almost two decades ago) why he had taken so much trouble to learn the American accent, when he relocated to the US.
"They just don't understand our way of speaking English", he said to me. " So i learnt to speak their way".

I remembered that today. When i thought of how groups of people develop their own language. You move to a new neighborhood, you have a new language. New country- new language. New school- new language. New project- new language.

So new company? Better learn the new language.

Venkat

Advertising Jujitsu in India (Vodafone versus Airtel)

2009-05-13T08:25:00.000+05:30

The #1 (Airtel, 85 million subscribers) and #3 (Vodafone 60 million subscribers) are dominating the airwaves with their ads for value added services. (VAS).

The Indian Premier League (Cricket) is on and this gives advertisers plenty of eye balls to target. With the wireless service provider business still growing (adding 8 million new subscribers each month), its this industry that has dominated the ad spots.

None more than Airtel and Vodafone. And here is where we see some serious JIJITSU

Airtel has two actors as its brand ambassadors...Mahadevan and Vidya Balan. Their ads can be found at http://www.youtube.com/watch?v=tKD0L9tS-Zw

Vodafone, recently started using "egg headed" characters..in a puppet-animation format. They are called the Zoozoo ads
and can be seen at http://www.youtube.com/watch?v=moSBmKUm0pk

We think Vodafone has outmaneuvered Airtel.

1. Its "zoo zoo" ads come at no "celebrity" costs. They seem to be created at very low cost.
2. Animation allows the storyline to be exaggerating- creating better humor and shock content. (as opposed to Airtel which has been relying more on emotional appeal)
2. Low cost of production is implying that for 3 of Airtels' VAS story lines, Vodafone has launched more than 20.
4. In the Indian advertisement market (usually seen to be fixated on celebrity endorsements) Vodafone has moved the conversation to content.

It has stood out. It has created a new reference for advertisement development.

We insist however, that neither company's approach is really encouraging consumers to try value added services.

Both companies are describing their value added services to the consumer. But their story lines are not compelling enough for people to overcome the price and uncertainty barrier. Consequently VAS penetration is less than 1%. (estimated from the Indian Telecom department's qtrly review).

Given that there are more than 300 million subscribers and 100 million phones capable of accessing the internet, this low penetration of VAs is a problem.

Our solution is based on the fact that the Indian consumer is clearly interested in "bang for the buck", and in India, the buck is very hard to come by.

Building up a new category requires marketers to define the role and relevance of the category in the consumers life, at a particular price point.

Trials are very key to building new categories. Value added services must entice consumers to try them.

1. Mobile companies must allow a few hours of "free trial time" while consumers get used to a service.
2. A call center that takes consumers through every step and only activates charges when the consumer confirms his interest.
3.Killer content.

It comes back to great brands being built on the promise of "engage, educate, entertain".

Else these ad wars and karate-jujitsu will only make for entertaining viewing...and transfer of wealth from shareholders to advertising agencies.

Ritu and venkat

The workplace... silos or collaboration?

2009-05-04T12:56:00.000+05:30

We were reading a note on how engaging today's workplaces are for employees. It suggested that current work place structures are a turn off for the new generation of employees coming into the workforce.

The argument being that Gen Y employees, young, energetic, idealistic seem to look for more collaborative work places...technologically alive...and often get put off by silos and IT firewalls.

We thought about this and came up with a counter question... if all work places got re-designed for the Gen Y, what would happen to Gen X? Should we expect them to change? Should we help them to change? Or should we simply replace them? (not possible numerically, unless you are in India or China)

Should we simply ignore the Gen Y employee?

If you're working with a business unit that has been around 20 years or more, don't expect a dynamic flexible environment. Be ready to see around you a lot of folks that have been around 20 years. "If it ain't broke, don't fix it"....people have risen over time and doing a set of things that they expect will carry them another 20 years. Most of these units work in silos. With defined boundaries and control structures.

Find out when was the last time the organisation reworked its business process to keep in touch with its customers. Remember, you can do this before you join, and its your responsibility to do so.

Companies that are young, probably got created by young people who are more adaptable to "matrix" structures/ collaboration...or simply the lack of hierarchy.

But the surest sign of whether you fit in or not is to compare your work experience in years with the age of the business. If you've worked many years, be careful of joining a start up. If you're entering the workforce, be sure that established companies will work in established ways.

Re-organisations may lead you into silos/ or into collaborative environments. Unfortunately, what works for employee A, may not work for B. Be aware of this as you enter a workplace. Sure, you may want to change the DNA of your workplace. But the only way you will get to do that is to gain credibility by imbibing the current DNA.

Are you ready for that?

Ritu and Venkat

The power of an Apology

2009-04-28T11:22:00.000+05:30

Please click on the title to read this note by Peter BREGMAN that we came across on the Harvard business's blog site. A very nice note on the power and the need of an apology.

We thought Peter should have gone further. Giving an apology , in our view is only step one. Something more should follow.

We hear customer service reps now start the conversation with " i'm sorry this has happened, i will try to solve it". What we tell them is "this happened last month as well....and a few months before..."

How do you accept an apology that is automated and built into a response?

How do you distinguish between a sincere apology and "systematic" one?

What stops us, over time, from getting skeptical about apologies?

An apology must lead to a correction in behavior. If this does not happen. In fact, an apology is only relevant when the apologiser understands the error of his way and the better course of action. And then decides to implement that course of action.

It used to be said that it takes courage to apologise. That's no longer true.

It takes courage to apologise and ensure the mistake is never repeated again.

Ritu and Venkat

Building up a comprehensive theory of business

2009-04-23T06:39:00.000+05:30

After 3 days of debate, and at the cost of sounding pompous, we decided to go on with the title. Do read on.....

PART A: Why industries and companies exist
- All organisations are in the business of processing information. Be it the software business/ tire business/ pharma...industries rise from the ability to convert matter from one form to another.

- Industries differ in the type of information they process.

- Within industries, companies differ in how efficiently they process the information.

Effectively, all competition boils down to innovation, which is the application of creative and original thinking to business issues.

When innovation ends, businesses become commodities.

B. The role of organisation structure:
Within companies, organisational structures are created to maximise the efficiency of information exchange. Two critical drivers of structure are therefore:
- people
- information technology

Organisation structures inherently move in the direction that best aligns its people and its information technology. Organisation structures fail when this match of people and information flow is misaligned.

i.e.

A command and control system fails when the maturity and competency of people is high and they demand more "lateral" freedom. If the access to information within the organisation is also easy, rigid structures come in the way of development of people and ideas.

A matrix structure fails when the employees have not yet learned the benefits of collaboration. Furthermore, if information is not easily available, the "gate keepers of knowledge" inherently become the power centres. The matrix fails.

When processes and systems of an organisation are insufficient for information to flow freely (horizontally and vertically) in an organisation, "politics" becomes critical.

C. Organisational Politics

Politics in an organisation, like in all other fields, is the development of power "implicitly". Implicit power is necessary when:
- explicit power is not well defined.
- explicit power is not efficient (i.e. the processes prevent recognition of the value creation within the organisation).

"Perception management", an integral part of office politics, becomes important when an organisation lacks transparency - in structure (information flow is weak and hence the performers and non-performers are both invisible) and in its processes (definition of value adding activities is actually not clear so people don't know what is expected of them).

D. Talent management:
Given that (and this is true mostly of developing economies) the number of higher level educational institutes has not kept pace with economic growth, talent is indeed scarce.

Unless organisations invest to develop talent,
- the talent it already has will disappear, seeking more competent companies.
- the dissipating talent will be hard to replace
- insufficiently trained people will be elevated higher up the organisation.
All three are key reasons to why industries rise and fall over time.
Lack of talent means lack of innovation means lack of excitement means exodus of talent.

Industries commoditise for lack of ideas. Period.

Ritu and Venkat

Luxury Fashion Executive Domenico De Sole: 'Stay the Course with the Brand'

2009-04-16T15:34:00.000+05:30

(Click link to read the artical)
Published April 15, 2009 in Knowledge@Wharton, this is an interview with Domencio De Sole, the chairman of Tom Ford International, and the person believed responsible for the turnaround of Gucci in the 80s.

A fascinating discourse on brand management. Some excerpts.

Knowledge@Wharton: What kind of strategy would you suggest a luxury goods company follow?
De Sole: The strategy for all luxury goods -- and I think excellent managers understand this strategy -- should be the traditional set of managing for cash in difficult times. Watch your costs very aggressively. But, at the time same, stay the course with the brand. Discounting prices really doesn't make a lot of sense. At the end of the day, it is imperative for luxury companies to deliver good value. It doesn't mean the price has to be lower. Just make sure that whatever is delivered is a good value -- great quality, great fashion, great brand.... The savviest people know that the number one [strategy] is to stay the course.

Knowledge@Wharton: In what ways do you think that the financial downturn has changed consumers? You started out talking about this, about how consumers are now pushing back on price. They are much more sale and discount conscious. Will this be a long-term change or, as you touched on earlier, might they revert back to their old ways once the recession is over?

De Sole: Again, nobody knows the real answer. But my instinct tells me that this difficult time is going to last. It's not going to be fixed in a few months. I think that people obviously are very concerned. But my experience is that at the end of the day, the consumer forgets. People love luxury brands. Historically, if you think about it, during the Stone Age, people were buying bracelets and earrings made of stone. So it's something that's part of human nature. My sense is that things will get back to being good. The real issue is, that it's going to last some time. I think that it's going to be a year, or two, or three. But nobody knows.

ritu and venkat

Lessons for Indian retailers from Why we buy (Paco Underhill)

2009-04-15T10:38:00.000+05:30

Indian demographics tilted towards the youth (and reduced wealth in older age) makes for a phenomenally different shopping experience, compared to the West.

I went back to Paco's "Why we Buy" recently, after reading his book "Call of the Mall". I was disappointed with "Call of the Mall", and went back to Why we buy to understand what it was that i enjoyed about the book when i read it in 2000.

Paco's book in 2000 was a mix of social observation and science fiction. India had maybe 3 malls back then, so it was interesting to read what we believed would be the future of Indian retailing (the science fiction part). I have always believed that Indian retailing will not pick up till we have better road connectivity. Else malls would be located in the city center where high real estate prices and immense competition would severely limit their sustainability. (this has been the case to this day)

In 2009, as i re-read the book, i still felt a bit of "science fiction " to it.
But Paco makes an interesting point. Understand your customers and build the shopping experience around it.

This got be thinking about what the profile of the Indian mall shopper is today. Specifically, the grocery shopper in the new super(hyper) markets springing up around the country. Young family: Age 27-40; husband wife with zero, one or more kids.

No baby boomers!
No single male or female shopper (very very rare).

This is a very homogeneous profile.

The aged in India are financially less well off, and would often avoid driving on the manic roads to go to a super market 15 miles away. The mom and pop store in India is definitely continuing to thrive with home delivery options keeping his customers loyal to him.

Young men and women, who live with their parents, do not shop for grocery.
Independent men and women order home delivery or shop closer to home, thereby maximising leisure time on the weekends.

The literacy rate in India is low, and it implies that a number of couples in the 35-50 age group have only recently gained upward mobility. Their use of technology is limited. A stores have a lot of "help".
1. self check out counters are non existent.
2. store workers weigh and price all non-packaged goods (fruits and vegetables. This also helps to control pilferage.

Home and apartment sizes are very small, implying that households have to shop at least once a week. Since both the husband and wife work, shopping is then a chore that has to be done. The browse to buy ration ( amount of time browsing a category before buying a product) is very low. Decisions are made on brand recognition and price. Period.

(Interestingly, supermarkets have not yet begun to integrate play areas or eating areas within the store in an attempt to prolong the visit. The idea so far has been to maximise store space with as many products and brands as possible. Consumers in a rush want convenience, not choice. The Indian grocery shopper is always in a rush)

Given these characteristics, i am surprised that malls:
- do not package all goods, including fruits. I believe this comes from the belief that Indians like to feel everything before they buy. True of my parents generation, not of mine. (and my parent's generation does not visit the super market)

- have too many brands.... when the browse to buy rate is low, this is not a good idea.

- do not offer home delivery options (within a 5 km radius for example)

Why we buy continues to be a fascinating reading and extremely relevant for a market taking its first steps to becoming a consumption society.

venkat

Targeting your consumers through appropriate distribution

2009-04-14T08:14:00.001+05:30

I read this note a couple of days back (i am sure it was the businessweek online, but i am unable to trace a link to it and put it here for perusal) about HP (the computer guys) using different types of retail outlets to get closer to their customers.

Eg: a fashion/ clothes store for young women. HP places its products here- the ones that have fancy prints all over- and allows the women to use the hardware and software to try various outfits "virtually".

We think this is a wonderful idea. Ritu and I are not "mass market" marketers. We like to think about goods that cost upwards of USD50-75 a unit, hence cause consumers to think about their purchase. For brands that operate here, we recommend complete ownership of the distribution channel. i.e go online or have your own exclusive stores. Retailers take away control. If yours is a product that requires consumers to be educated, do it yourself. No retail.

What we like about HP's idea is that it allows you to be present in a wider range of stores, closer to the consumer that you want to reach. The consumr you want to reach.

Targeting your distribution. That's an exciting idea. We talk of targeting communication al lthe time....this is a step further.

And you're not keeping your entire range there. Just a relevant product that gets consumers excited about computers, feel at ease with them, and check out these new machines from HP.

What other applications can i think of? Sampling coffee in a high end retail store...where the lady (or gent) has to wait while the better half is getting the fitting correct.

Its an intresting line of thought and we will reflect more on this.

Ritu and venkat

marketing during an economic boom & disposable income sensitity tests

2009-04-13T09:25:00.000+05:30

Price sensitivity tests must be accompanied by disposable income sensitivity tests as marketing teams develop the business case for launching new products.

Ok, this comment may sound very eccentric. We can't put a fix on it, but we think the logic is correct. We will continue to work on it.

"Marketing in a recession. Sales in a recession. HR in a recession." We are reading these headlines everyday. Prominent management gurus giving their inputs on how to maximise shareholder value in a recession/ downturn when consumers and employees lack confidence. We dont dispute most of these writings, except the ones that advice management to "re-look" pricing and make pricing "more attractive" (read discounts/ bulk deals etc) in a downturn.

Our take is this. Marketers should be as careful of how they market in a "boom" as they are in a "bust". More so in a boom, because these phases of expansions set up expectations (over optimistic) of the success of a brand or marketing approach. Fundamentally, does economic health determine how good a product is functioning?

-Was a Porsche a better car in 2007 than today?
-Is my Axe effect any less now than last year?
- Are the Himalayas any less beautiful today than 2 years ago?

A brand is a promise of a product/ service experience. It is based on a product and its differentiation (or lack of it). If the promise is maintained and communicated/ delivered over time, the brand becomes a signal. Fine.

Why then do consumers opt in and opt out of products, often siting economic conditions as the key. We believe that the value proposition of these consumer changes. In a boom cycle, the consumer feels richer and freer to purchase certain products which seem "an indulgence" when money is tighter. These are risky consumers and marketers must identify them early. Hence price sensitivity must be in conjunction with disposable income sensitivity to a product.

These fickle consumers will cause sales to rise during an expansionary period and decline during a recessionary period. This means that factories produce more when demand is higher, and less when it is lower.

Profits will rise in a boom, and fall in a bust. The number of consumer rises in a boom, and falls in a bust. This should not be surprising to a company. But it often is.

In fact, if the marketing processes included a sensitivity simulation of the economy on future purchases, all of these swings would be built into the business model for a new product.

1. The marketing team must start with a definition of the "core consumer" set for a product. The people for whom the product is an essential part of life.

2.Then identify Identify how sensitive the customer to a change in his disposal income. Not price sensitivity. But income sensitivity. What happens when the consumers income falls be 15%, 30%, 50%. This is a critical lesson for us from the current business environment.

3. What this will mean is that the business has identified a "economy independent" set of consumers around which its business is to be built. any new consumers in a "boom" should be taken as a bonus, and these earnings set aside in a war chest.

Any decline of consumers in the "bust" should be offset not by lowering pricing and inflating demand, but by digging into the war chest to continue R&D and marketing expenses in a low volume environment. (A sort of "oil surplus fund" that Russia created some years ago, to put aside its oil surpluses for a rainy day.)

Why should a business not work that way?

Adjust production to changes in the "peripheral" consumer set that a brand has attracted, but be focused on the core group. Pricing has no significant role to play in a recession. At least no more significant than during an expansion.

if you care mr.ceo, show it

2009-04-03T14:14:00.000+05:30

For over a year i have struggled with the customer service approach of a large mobile service provider whose network carries my calls.

My monthly billing is very high (compared to Indian usage rates) and i should be easily among the top 5% of their customers in terms of revenue generated. And yet, i am treated with suspicion, and made to feel irrelevant.

A bill goes missing, i am told it will take 8 days. Since i have already paid the bill and only require a copy for official records, i ask why 8 days to send a bill by email. No reason...its policy. So i talk to the supervisor...." i will do it for you today (and only because its you)", he says. 24 hours later, nothing. So i call back, a new supervisor promises the same. 24 hours later nothing. By now i am feeling like they are taking me for a ride. No one seems to be interested in solving the problem...just closing the call.

So i call some friends working in the company and behold- the bill appears the next day.

And all this while, i am left with a feeling of helplessness. When i want to report the incident to the supervisor's manager, i am given an email id which says that i should get a response in 8 days. I want to be heard today. Not 8 days later.

I am bitter. I know that this company has perhaps the best network in the country, i cannot shift. So i must continue to suffer their indifference.
Bitterness, frustration are outcomes of a sense of helplessness. I felt the same way when i met the school bully! Till i threw my first punch at him.

What right does a company, that exists because i buy its services, have to make me bitter?

On a marketing blog, my own feelings are irrelevant. What's useful is that i have reflected now on what customer service processes should achieve:

- listen to the customer. Understand his problem.
- treat the customer as you would like to be treated. Dont mess with his time. And behave as you would if you were standing in front of him, and not in some undisclosed part of the world.
- empower the customer (and your front line staff to solve problems, not just pass on the buck). If you can, give the customer some alternatives and let him choose his solution.
- close the issue in the first call. Or stay with the customer and the issue till it is closed.

I do not spend time with people that do not respect me.

I had a vastly different customer service experience with the Taj group of hotels, just as recently. (www.tajsafaris.com). I had a problem with a policy, the lady at the desk said she could not sort it out. I asked to speak to her supervisor. She could not sort it out and suggested i email. When i said i would not email, she offered to connect me to her boss.

In an ideal world i would have liked her to sort out my problem. But i noticed that this was an organisation where senior management were not afraid to come in front of their customers. They did not hide behind emails. I got his mobile number and called.

The gentleman said he understood the problem, and would look into it and get back to me. If there was a reasonable chance of sorting it out in my favour, he would.

I dont care anymore that he does not sort out my problem. But by giving me his mobile number and direct email id, he showed that he trusted me. He heard me out.

Some organisations may be in the service business and some may be in the manufacturing. But all customer service departments are in the customer contact business. There can be no excuse for not respecting the one reason why a company is in business. The customer.

Venkat

Power Pricing

2009-04-02T16:15:00.000+05:30

...by Robert J. Dolan (Author), Hermann Simon (Author)

A very interesting book indeed, I would recommend it to managers looking to sensitise themselves to Pricing without getting into very technical treatment.

As a pricing manager myself for the Western European region, I had the opportunity to apply a lot of pricing concepts. And the application of pricing is a tremendous source of competitive advantage.

For example, elasticity. How much more or less do consumers buy given a price decrease (or increase). Now consider a company that sells through multiple channels….wholesalers/ retailers/ the internet.
How is channel elasticity different for each trade channel. How much saving does awareness of this fact, generate for a company.

Product elasctities. Consider than you have 50 SKUs of a single product. Elasticity for toothpastes may not be the same as the elasticity for a “tooth whitening” paste or a “breath freshening” paste.
Or that a 200g paste has a different elasticity than a 100g paste. Do you capture such variations?

Then the entire notion of price setting itself. Does a new product always have to be priced high. (Not if the product category is old and very competitive!)

What market place parameters influence pricing? In the auto industry, for example, the Original equipment Manufacturers are never keen to give more than 30% of the component business related to a particular model to one supplier. They create competition.
How about the fact that some consumers hang on to really outdated car models (not as old as antiques, but old enough). The tires on those cars could be a very old design. Yet, the “hockey Stick” concept suggests that as the product enters its “end of life” phase, it may present an opportunity to increase prices so as to milk the last sales from its die-hard customers. Wow.
Another interesting topic was the flow of goods between countries. A “price corridor” is now the recommended answer, suggesting that some countries increase prices and others decrease prices so that the differential between them is low enough to discourage price flows. It raises a very deep question: Do grey market flows happen because prices are out of equilibrium or that supply and demand are not synchronised in a particular market. Figure this out before you attack pricing, else even the smallest differentials are sufficient for some intermediaries to act.

Consumer goods in competitive markets represent very interesting pricing challenges. My request to any practitioner is to start with the questions:
- What does this product do for the consumer
- How does the consumer value this benefit from the product?

Most of us take the market prices as a given while position new entrants. Its simpler. But knowing what value products create in the lives of consumers, and maximising this is a very important goal of the marketing team.

Venkat

Backlash: How Early Adopters React When the Mass Market Embraces a New Brand

2009-03-24T11:55:00.000+05:30

A very interesting note that appeared in the Knowledge@Wharton site (click title to view). Written by Wharton marketing professors David Reibstein and John Zhang who explain that a company could experience a backlash as its early adopters move on to other new products because of the arrival of the "mass market" consumers.

We believe this to be true and have written elsewhere in this blog of the need for companies to make a choice. Value or volume market share?

http://rituvenkat12.blogspot.com/2007/07/market-share-or-profitability.html

In a globally competitive market, no company has simultaneously gained volume market share while maintaining premium pricing. we think Starbucks went wrong there. We think Apple is at risk- so is Nokia.

ritu and venkat

The Easiest Way to Change People's Behavior

2009-03-20T18:19:00.000+05:30

Peter Bregman writes this on the Harvard Business blog (click title to read).
We really liked the note. It says you can change behavior, and we buy the argument.

The reason we discussed it however is that we decided to view this note given the context of working in multinational corporations where people are all not speaking the same language...literally. Some speak English, some have French as mother tongue, others Chinese, German....and sitting folks from across the world in a meeting is a very interesting experience.

People are embarrassed to make mistakes in public. When its their language that is full of mistakes, its really hard on them. As well as on the people listening. Are people able to contribute best in a foreign language. Should all 100,000 employees undergo mandatory english language training? At what cost? (time and money). Is this compensated by better productivity? Will our competitors not leapfrog us with incremental improvements in the meanwhile? How do we measure all this?

The organisation should have a common language.

But it is not as easy to achieve this as we would like. And its a fascinating, humbling experience to bridge communication gaps in a multicultural world (or country- India).

Think about it.

Ritu and Venkat.

Disney features it's first black princess

2009-03-20T18:01:00.000+05:30

I think Disney announced this way back in 2007 (not sure), but i read the note today (click on title).

And i think its wonderful. Disney is reflecting the diversity of society in its film. And its great. Beacause kids will see this film in huge numbers.

And they will see a market leader (market educator) and massive entertainer reaffirming the social context that they find themselves in.

I hope kids will be also assured that beauty has no color... and yet it comes in every color.

I hope kids speak about why such and such character was black and not the other one. And i hope that their teachers and parents tell them that good and evil have no color codes. To remove bias/ to mold behavior...we need to begin early.

This is a wonderful step. I hope companies in India take on this kind of role.
Market leaders ENGAGE, EDUCATE and ENTERTAIN.

Not just make fancy ads using the latest technologies. But remind consumers of the world they live in and of the impact that their every choice has on the world.

Saving the environment is a message that can be built into every product and service. Yet it is not.

Conserving Energy. Recycling/ Reusing.... its up to large corporations to take the leading role in shaping how future generations think.

For too long corporations have motivated consumers to pamper themselves and satisfy their every need.

Lets find some corporations that talk to their consumers about appropriate levels of consumption. About personal responsibility. And this can be made fun.

It just needs some real leadership.

Onion offers

2009-03-17T09:03:00.000+05:30

We're getting hit everyday by offers that hide more than they show.

A case in point is the Emirates holidays offer (photo) where 2 nights in Dubai costs more than the 3 nights in the European destination. For someone traveling from India, this is really strange. I spent more time trying to figure this out (no luck!) than appreciating the value of the European holiday.

Jet airways (www.jetairways.com) sends me upgrade coupons for being a frequent flier.
One of them is a 50% off for your companion coupon. Which i tried to use yesterday. Bought my ticket (non refundable) for Rs 6000 and asked to use the coupon for Ritu's ticket.

The polite customer service representative tells me the 50% off voucher is only applicable on a ticket that costs 16,000. So even at a 50% discount, Ritu's ticket would cost more than the fare of Rs6000 that my ticket cost me. Go figure.

And finally, Kuoni (www.kuoni.com) advertised its holidays to Australia with a very enticing photo of a couple in very light evening dress on a boat off the Australian coast. Err.... It will soon be Winter in Australia. And the last time we were there in late spring, light evening wear was definitely insufficient.

Why would companies do this? Why would brands expose themselves to such customer cynicism? If a brand has no real value to offer, misleading consumers is not a solution.

Venkat

Jack of All Trades or Master of One?

2009-03-12T14:04:00.001+05:30

A very interesting note by a marketing professor at Kellogg (click on title to read), Prof Alexander Chernev talks of the Performance perceptions of multi-feature products.

If a product has multiple functions, what does its price vis-a vis another single purpose product denote about it?

Eg: do consumers find a multi purpose product less efficient compared to a "single benefit" product at the same price? How does it change if the multi product has a higher price?

We have written on this blog that miniaturisation of technology will not only bring more "multi purpose" device into the market, but like the iPhone ensure that it performs very well on each parameter.

The research suggests a toothpast with anti bacterial and tooth whitening should be priced higher than a pure play tooth whitening cream.

We think this may be the case since you cannot actually determine quantitatively tooth whitening. Hence pricing (with the correct communication) may signal that the multi purpose toothpaste does both functions equally well, and very well. So consumer pays for the benefit of two functionalities.

What happens when an iPhone is competing with a Canon? How can consumers compare these 2 goods?

We think:
1. a consumer that a multi purpose device should be priced in such a way that each of its functionalities is more expensive than a comparable pure play device.
That is, if an Iphone is at 250 USD and has a 3 megapixel camera, it should be more expensive than a 3 mega pixel camara. (by how much, we cannot say off hand).

2. However, if the Iphone has a 3 megapixel camera and the Canon is a 10 megapixel offer, then the basket of goods is not longer comparable.

Interesting topic. Makes you wonder what actually is the pricing / profitability benefit of converging so many goods into one?

Ritu and Venkat

the trickle-up effect...and the strength of India's rural economy

2009-03-07T10:22:00.000+05:30

A wonderful note in the Hindu today (please click title to read)... a must read for anyone interested in the Indian economy. We kid you not.

Its gives some interesting thoughts to mull over...and why we must now focus (apart from the IT sector) on the capacity of the Indian consumer- rural consumer to deliver economic growth.

To which we add are two bits:
Over the past 9 months, we have been emphasising the need for Indian industry to be optimistic for various reasons.

a. The US has a credit problem, sure..its based on predominantly, the unsustainable house price bubble. US banks took on too many toxic assets. Now the economy has to correct itself.

b. Europe has had limited exposure to this. The UK and Spain have had significant asset bubbles and will take longer to correct themselves.

c. Germany is affected because it is an exporting country (like China) and its major markets are the US and China.

d. France and Italy, we believe, have limited banking exposure to the toxic assets. There, it is clearly a sentiment issue. Layoffs announced by companies are opportunistic. Companies are using this crisis to cut out all the fat which govt regulations and strict labor laws prevent them from doing in normal times. Add to this, govts are giving away cheap money... what company will not use this opportunity to become more competitive? But the French and Italian economy is a predominantly a consumption based economy which depends on its people's optimism.

e. in India, our exposure to the US market is essentially through the IT sector. Infy/ Wipro and TCS have not laid off anyone. The lay offs in the news everyday are mostly from the American companies (which goes back to point 1). Organised retail is weak, but the insurance sector/ telecom continue to be strong. Reputed companies like the TATAs are reducing work hours rather than number of employees. This is important and needs to be amplified.

f. The Indian auto sector (exports) will be affected ...in a limited way since we do not export big numbers to the US. As the sentiment in Europe corrects itself, the auto sector in India will recover.

g. Now lets look at government expenditure. Farm loan waiver of 70,000 crore (14 Bn USD), Pay hike in the govt service, rural employment scheme of 30,000 (6 Bn USD) crore and new infrastructure investment of 70,000 crore. These are big numbers for the Indian economy....where the toxic asset problem is not a concern. Banks are fundamentally fine, the sentiment is awful.

This is a lot of public money which is slowly finding its way into the consumers hands.....but rather than a trickle down effect, govt expenditure targeted to the weaker economic class always causes a "tricke up effect". This will translate itself through purchases of mobile phone/ FMCG products (tooth paste etc) and basic white goods (TV, fridge)... then the 2Wheel segment starts to benefit. If you see, over the past 6-8 months, inspite of the economic slowdown, these industries have maintained robust growth. This rural/ semi urban sector (as pointed out in the note) does not invest in the stock market either, and have been untouched by the stock market crash.

h. It is true that as the foreign investor has withdrawn money from the India to pay off their loans and debts abroad, resulting in a crash in our stock market as well.
Companies have tried to collect as much cash as possible...lower manufacturing by TATA and Ashk Leyland , in our view, is an effort to reduce inventory levels and hence save cash.

If 14 Bn USD is being invested in infra, you need trucks to move things around.

So what am we asking? We are asking for optimism. It is irrational, this pessimism and it unfortunately feeds on itself and affects the lives of everyone.

We do not believe (if the govt continued to spend on infra and the rural scetor) , that the "slow down" in India will last much longer. We continue to invest in the market. This is our personal view.

thank you

Ritu and Venkat

Poor CRM (customer relationship management) is a waste of scarce management resources

2009-03-06T09:54:00.000+05:30

A large retailer sent a letter to my wife with coupons as reward for her belonging to its exclusive loyalty program.

On thick, high quality paper, the letter started….”Dear Member”….
Dear member?

Is that how important CRM is to this retailer that they can’t afford to do a basic mail merge and personalise the letter?

It gets worse.

Of the dozen coupons, there was not a single offer made was of interest to my wife. She simply does not buy those product categories. This is a horrible waste of money.

• The shop has been in business for 5 years or more.
• We have shopped there regularly for a year.
• We bought a lot of our household furniture from there when we moved back to Bangalore last year.
• Ritu is a member of their loyalty program, having shared information on her age, interests, occupation.

You would think this would be more than enough information for them to design some seriously useful offers. Each of their offers was for purchases of an “indulgence”. High end stereo, watches, jewelry, pens, make up. A terrible selection in a time when people are postponing purchases of everything but the most essential items.

Unfortunately as I criticize this initiative, I will not know how successful their contact program was. Perhaps my wife was just plain unlucky. But I think not.

What would we have preferred?
- Offers on savings on purchases of petrol.
- Clothes
- Service offers on household whitegoods/ furniture

I am sure the retailer is under pressure to build up sales of slow moving items. But what’s the point of throwing good money behind bad? A consumer, unsure of his next pay check, is not thinking of a high end home theater system.

This is the time to seriously connect with the consumer.

Why would I be excited about a “buy one watch, get a pen set free”, or “buy a watch and get a T Shirt free?” when I am doing everything possible to postpone the watch in the first place? What do I do with a pen set? Or a Reebok T Shirt. The cross promotions were not attractive.

The amount of discount required for a consumer to reconsider an indulgence purchase during an economic slowdown are simply too deep. Anything less, is useless.

Venkat

Discounting in a downturn

2009-03-05T19:21:00.000+05:30

Been reading a lot about retailers and brands discounting in this downturn in order to preserve sales.

Pricing is our favourite P, and all this talk of discounting motivated us to write this note.

In our view, any pricing action has to be preceded by a couple of questions:

a. are you a brand or are you a commodity?

A brand is able to distinguish itself from its competitors on the basis of being a unique and relevant differentiation. It hence charges a premium, and uses that premium to re-invest in itself and continue to strengthen its position. Michelin tires help to save you fuel, Duracell lasts longer, Ipods are sexy, Colgate gives you 12 hour protection etc.

If you have no unique distinctive characteristics that customers understand and value, you are a commodity. Go ahead and feel free to cut prices.

b. What do you want your customers to do?
Brands grow by getting in more customers or by getting its customers to consumer more. In a downturn both of these tasks will be difficult.

Brands have a core set of loyal customers and then those on the periphery that come and go. In a downturn, a brand manager must focus on keeping the core together. The core may down-trade or exit the category altogether. This must not be allowed to happen, in the long term interests of the brand.

A strong brand should however, temporarily alter the value proposition for its “core” customers to reflect the challenging financial situation. But a brand should never, never reduce prices.

We suggest to increase the value of the purchase by offering extra volumes for free. This costs less on the bottom line and has a positive impact on the consumer. At the same time, it sends out the message that because the economy is tough, does not mean the product is any worse. It signals that the brand understands the challenges of the economy, and takes the opportunity to thank its loyal consumer with the promise that it will whatever it takes to ensure that even in these challenging times, the consumer can enjoy the products he loves.

The key question is, how much is good enough? Should the brand offer 10% extra volume? Or 20%? Or 50%? There is not enough research on this ,but our understanding is that anything over 15% begins to devalue the brand.

A price reduction impacts the bottom line strongly- devalues the product, sets expectations of future bargains and limits ability to reinvest in the brand.

A 10% increase in volume (given free) has a far lesser impact that a 10% price reduction. (Please do the maths on this, its simple and very illustrative)

We do not recommend cross promotions either. Buy a HP laptop and get a printer free! Once again we apply the principle that the cost of “free gift” should not be more than 15% of the cost of the product.

On the other hand, there are premium brands like Louis Vuitton than simply never cut prices. No end season sales, no bulk discounts, nothing. These products however deal with customers exhibiting a completely different price elasticity and we shall not go into that here.

Brands take years to build, only hours to discount. We know what we wrote here may sound theoretical, but we are convinced price discounts are the surest way to kill your brands.

ritu and venkat

Lyrics deeper than Dylan!

2009-03-02T14:02:00.000+05:30

Ok. I am being sarcastic. But the text on the left if part of the wrapping on a bottle of water branded "HIMALAYAN" and sold by a TATA Group company. The TATA Group is one of the most prominent business groups in India.

"I look back on life, its funny how things turn out. You a connoisseur of fast food, now gaze on water that took years to make. And i, some of the purest water in the World, stand here, trapped in a bottle."

Folks, who wants to read this on a bottle of water? Who is Himalayan targeting?

Its kids 16 and below who, we believe, actually read labels regularly and with relish. We took this to our neighbors children who read it, and shrugged their shoulders, unable to connect with the text.

We don't know under what circumstances this text was approved. But surely this is not what you should be putting on a bottle of water. It does nothing to educate customers on the uniqueness of the product. The text is not engaging, the vocabulary is very unusual.

A lesson we draw from this is that marketers must have every element of the marketing mix (pricing included) tested with the target audience.

Brand managers must not try to create brands they love, but create brands that consumers can come to love.

Ritu and Venkat

The Fall and Rise of the CMO

2009-02-27T10:23:00.000+05:30

A very interesting article on the role of the Chief Marketing Officer by Gail McGivern and Jack Quelch.(click title to read)

I enjoy reading John Quelch, who is a professor of marketing at Harvard Business School.

I would have liked more emphasis on the need for the CMO to strenghten his understanding and execution of 4Ps. Thats the basis of marketing executions. (specificaly the Pricing P, from which most CMOs remain detached).

A very holistic read for students of marketing.

Venkat

Starbucks's Via

2009-02-27T08:18:00.002+05:30

So Starbucks has launched an instant coffee branded Via. (click story title to read) About one dollar per cup...you prepare it by adding hot (or cold ) water... where ever you want to drink it. You can only buy the Starbucks Via packets at Starbucks outlets.

Interesting. But we dont think its a useful idea.

Starbucks supposedly attributes this idea to ensuring consumers are in touch with it even in these challenging economic times, as well as drive penetration of its coffees.

We ask the question... why do folks drink at Starbucks?
1. We dont think its the coffee. Maybe a lot of folks think its the best coffee in the world, we believe its the ambiance. The experience of finding a "third place" away from home and office.

Starbucks Via encourages you to make your coffee where you want to drink it, cheap. Unless you really really love the coffee flavor, why would you spend 1$ to drink it in your office cubicle or on the couch?

2. Its participating in a brand. This is important...by drinking at a Starbucks or taking out a coffee in a Starbucks cup, you're participating in the brand. Connectivity with a sense of empowerment. (http://rituvenkat12.blogspot.com/2008/07/connectivity-and-empowerment.html)

Great brands do this. They allow you a duality of your personal space while giving you the freedom to connect to the wider community that uses the brand. think iPod/ Nike.... your iPod has your music...its personal...but when you carry your iPod around, you are making a statement to others.

Starbucks does this (did this?) with its coffee.

Drinking a Via in my IBM mug is not the same thing. We are not connecting with the brand anymore. We will not be able to justify the premium anymore.

Unless we really really think its great coffee. We dont.

If millions of people are drinking Starbucks for the great coffee flavor and really miss that, Via will work.
If not, we think this is a flawed idea. Great for short term sales, it will not work in the medium to long term.

If you wish to read more on this please head to link below.

http://blogs.harvardbusiness.org/quelch/2009/02/how_starbucks_via_helps_consum.html

Ritu and Venkat

What Luxury Brands Can Learn from the Oscars

2009-02-25T12:04:00.000+05:30

We picked up the above note on the Harvard blog. Wonderful note and very appropriately timed. We have been thinking about this for a while. In a challenging economic environment, what should a Louis Viutton do? The list from Lisa Burrell (click above note) lists some points, we added two more.

1. Luxury brands should reset their expectations in these times. Fewer consumers are in the market for luxury goods. But behavior patterns are set early in life and unless this recession lasts half a decade, folks will come back to buying luxury when it gets better.

Until then accept that there are fewer buyers out there and sales will fall.

This expectation is important becasue it prevents the brand from doing something silly to "buy" artificial sales. Do not lose focus on segmentation- targeting- positioning. You lose this and your consumers will never be able to find their way back to you in the good times.

2. Stay close to consumers that want to buy. Marketing is about getting new consumers and/or getting current consuers to buy more. If you're not finding the new ones, stay very close to the existing consumers. Be relevant to them, keep them excited in new products (dont cut investment in R&D and marketing) and make them feel exta special (if you have not cut down your customer facing emplyees already).

We suppose there are enough luxury goods CEOs that would have seen several of these cycles...and wouldn't be in a panic yet. We would be interested to know what they're thinking about.

In any case, we would not count on finding bargains in the luxury segment anytime soon.

Ritu and Venkat

flagship stores.... your brand's playground for its consumers

2009-02-23T14:37:00.000+05:30

Ok, so this thought came to us at a Pizza Hut restaurant in Bangalore.
But thats the point.

A flagship store goes beyond categories/ products. Its a MUST DO for a company trying to establish/ differentiate and most definitely educate itself in the eyes of the consumer.

The Cunningham Road Pizza Hut opened almost 10 years ago. It was back then a luxury / fine dining experience. Exotic food and pretty steep prices. Cunningham Road is also one of the chic streets in Bangalore, so Pizza Hut opening there was appropriate and exciting. The store was modern...sleek design and furniture and clearly consistent with an international brand.

We went to lunch there yesterday. The pizzas were great, service wonderful, but the store itself so run down. It was sad.

This is a product category still to establish itself. A flagship store for Pizza Hut would have been a great brand builder.

- weekend activities ...design a pizza (and the best pizza gets put on the menu for one month)

- An exotic flavored Pizza..only for the weekend.

- Learn to make a pizza with our chef!

- Pizza making contest among our chefs (see it in the see through kitchen)

So much excitement can be built around a pizza/ or a coffee shop (Starbucks/ Coffee day?).... and it cant always be replicated at all stores..which is why we have the concept of a flagship store.

In how many ways can your brand engage/ entertain/ educate your consumer?

A flagship is a microcosm...a small world you can create for consumers to see the possibilities with your brand.

Go do it.

Ritu and Venkat

dont despair marketers, sometimes life stands still....

2009-02-23T09:44:00.000+05:30

It happened with me twice.

I was stood still in front on an elevator for the umpteenth time in my life. But this was in a mall in Bangalore was different.
The elevator was fully painted with an advertisement for a property developer. In the 3 minutes i waited, i lernt of the various properties this developer had built in Bangalore, his upcoming projects and contact details.

Ritu and I were impressed by the use of my time.

Then, during an interval at the movies, i went to the rest room. Very clean (for a change). And just above the urinals, i saw more ads. In the two minutes i was stood there, i learnt about upcoming movies, thier plots and key actors.

And i asked myself why i would not advertise more products in this space. Especially products that were looking to educate consumers with information. I would have their undivided attention.

Ritu and I believe, if marketing managers need to find places where life stands absolutely still and they have their consumers undivided attention, lifts and well maintained toilets are not bad options.

Anything else comes to mind?

Venkat and Ritu

Microsoft Retail Stores

2009-02-19T09:51:00.000+05:30

(click on title)
Attaboy!

Way to go MS.

Control over distribution is a very very important element in marketing sophisticated products.

Zune/ X Box/ Windows.

Are these sophisticated?

Perhaps not. But MS can definitely make them.
Ritu and I use maybe 5% of Window's capabilities. We are not alone. An MS store is a great way to link with consumers who want to learn more about a product. (even if it is not their first choice, but then most of us are forced to use MS anyway)
MS can use the retail environment to educate consumers.

How about X Box. A retail environment is a good place to bring in the enthusiasts. Demo some new concepts...capabilities...have some expert gamers show their moves. It engages consumers.

And the Zune. Like the Xbox, its also a great platform to get closer to consumers. Entertain with its capabilities/ song options.

MS can definitely use a retail environment to build a community of users. This move is long overdue. Good luck!

Ritu and Venkat

No Way- No How- Not Here

2009-02-19T09:40:00.001+05:30

Click on title to read.

We find the International Herald Tribune a wonderful place for interesting and well written opinions.

This note by Thomas L. Friedman is on the sentiment among Indian muslims post the attach in Mumbai.

We are very proud of how India has risen against the attack. All Indians. The muslims who condemned it immediately and strongly and every other religion that stood up together against the enemy.

For once, Indians did not point fingers at other Indians.

Why did this not happen before? When the bombs went off in Delhi/ Hyderabad/ Bangalore... or at the time of the Babri Masjid incident?

Anyway, at long last, we seem to have found our voice as a nation. Lets not lose it.

The Shopper Of Tomorrow- Trading Down

2009-02-19T09:18:00.000+05:30

(click on title to read) While the article is very provocatively titled, it does debate the issue with multiple perspectives.

The note poses a couple of interesting questions:

-Given the strength of the recession in Western markets, will the shopper of tomorrow really trade down?
- How do you define "tomorrow"? The next 6 months...the 2 years following a recovery?

Our stand on the debate is this:

Consumer buying habits, we believe, are established by the time he (she) is 18.
By that age, prpensity to shop/ save/ take risks are pretty well established. Only deep and sever (long term) shocks can then impact or change habits. We describe long term as not less than 5-6 years. This is our judgement.

Consumers in Western Europe and America have lived through a number of boom-bust cycles. No one in a boom cycle holds back expecting a recession. And pretty soon after a recovery, people return to their "natural state".

For example (and we pick this from the article) air travel and consumer spending pretty much rebounded after the dot com bust and the shock post 9/11.

Most people we have spoken to have decided to "postpone" purchase of the watch/ home or car they were planning. No one has yet spoken of downtrading to a motor cycle yet.

We believe marketers that plan for an economy to downtrade will be rather unprepared for the upswing.

On the other hand, and this should be interesting to observe, young people of the age of 12-16 in the US and Europe today will possibly behave very differenetly as consumers through their lifetimes.

"Marketers", notes the article, "do not ignite consumerism, but respond to the urge that comes from within. That comes from the interplay of society and the values and norms of the culture."

The great depression was long enough and severe enough for several generations to be impacted and be conscious of keep savings and consuming habits in balance.

In the absence of such a deep depression, we do not see tectonic shifts in consumer behavior.

Ritu and Venkat

A parallel note of interest: (Financial decisions are influenced by early experiences) http://www.economist.com/finance/displaystory.cfm?story_id=12903074&fsrc=rss

The Pope Said Nothing- By Mario Kaiser Published: February 11, 2009 in the IHT

2009-02-12T11:11:00.000+05:30

PLease click the title to read this very well written note.

Ritu and Venkat

Dido's news album- Meru Cabs and a lost marketing opportunity

2009-02-12T09:48:00.000+05:30

Ritu received a complementary CD of Dido's new release Safe Trip Home.

This CD was sent by Meru Cabs... a taxi service in India.

We thought it was a brilliant idea for a taxi company to send a CD titled "Safe Trip Home" to its women customers, given that the security of lone women passengers in India is such a concern.

But here is the problem.

The lyrics dont really tie in with Meru's idea of linking the CD to a safe trip home in a Meru taxi.
What the package missed was some communication around safety for women when traveling alone.

- some tips before you get into a taxi...
- a help line to call in case of an emergency....
- some emergency self defence ideas....

By tying in concern for women passengers and demonstrating what it was doing to make their journey safe, Meru could have taken a very strong postion.

Sony BMG's cross promotional team did a great job in roping in Meru taxis for the launch. But Meru goofed up in not maximising this opportunity.

Great brands engage, educate, entertain.

Meru truly engaged and entertained us by sending this appropriately titled CD. An opportunity to educate the consumer was lost. A pity.

Ritu and Venkat

The Kindle 2

2009-02-11T10:16:00.001+05:30

We're impressed with the thinking behind the new Kindle that was released on Feb 9.

Its an electronic reader...so you get to read books/ magazines/ blogs on a hand held device. You have access to over 200,000 books at 9.99 $ (its available in the US at this time, on Amazon).

Now what makes this unique? It has a wireless connectivity that allows you to subscribe to newspapers/ blogs/ magazines... and have all fresh content directly uploaded to your machine.

We read a lot on the move, think this feature is wonderful.
Wireless service integration into a device.

So from an electronic reader, the kindle is moving into an information service for the owner.

What business are we in? (What is the problem our consumer wants solved?

Fundamental question that creates opportunity.

Ritu and Venkat

Superbowl ad review (click title to see the slideshow)

2009-02-11T10:05:00.000+05:30

Got around to seeing the ads...17 in all.

Here is what we think:
- If these are the best ads that were created for the Super Bowl, some folks in the communication and advertising business should find other professions.

- perhaps, we were very critical because these were made for an American audience and maybe we did not get the humor. Possible. But the ads sucked big time.

We list the three that stood out-

7. Cheetos - interesting idea, not sure how it supports the brand.
http://images.businessweek.com/ss/09/02/0201_superbowl_ads/7.htm

8. Coke - very creative execution - thats all
http://images.businessweek.com/ss/09/02/0201_superbowl_ads/8.htm

13. Pepsi Max- interesting concept
http://images.businessweek.com/ss/09/02/0201_superbowl_ads/13.htm

Nothing stood out as "Wow". Perhaps the creative folks are moving away from TV advertising?

Point to ponder.

Ritu and Venkat

The interview question you should ask

2009-02-03T10:27:00.000+05:30

http://blogs.harvardbusiness.org/cs/2009/01/the_interview_question_you_sho.html
this note is built on the above note by Peter Bregman (in the Harvard Business Conversation Starter.)

An interesting write up which ties in with the 10,000 hour rule given in Malcolm Gladwell’s book ‘Outliers’. (tks for poiting that out Surya JVS)

What Peter is saying is that if you are passionate about what you do, you end up finding ways to pursue that passion outside work. The activites during and out of office hours then re-inforce each other to help you gain more expertise in your chosen field.

For example and I quote: "In Captain Sullenberger's case (he landed a pretty big plane on the Hudon river recently), the first clue that he would become Captain Sullenberger the hero is that, in his teens, when most of his friends were getting their driver's licenses, he got his pilot's license. What did he do for fun? He flew glider planes. Which is basically what he did when he landed in the Hudson River with no engines"

Peter indicates a few more examples to say that what we do in our leisure could (and he says COULD) tell us of our commitment to our chosen field and hence a good question to ask is what you do in your leisure time.

We're writers on Marketing and Sales. We meet a lot of people in this line of work. The truly outstanding ones do sales and marketing in their spare time. They're not at work 24/7. But they're working on their blogs...their favourite charities...helping friends in start-ups...participating in lectures on marketing and sales.... they practice their craft in different ways. Thats the beauty about them.

Sure, they dont have great stamp collections, or may not Salsa very well...but they're happy with a passion...its not their fault they are paid for what they are passionate about. And they are the best at what they do. Know the trends, know the new ideas, critique them...

We think its a good question to ask, and you have shown the relevance of the question beyond what we understood.

thanks
Venkat

Uneasy lies the head.... a short story

2009-02-01T09:31:00.000+05:30

Uneasy lies the head that wears the crown.

He knocked gently on the door, but got no response.

‘Son’, said the father softly first and then more firmly. ‘Open the door. Please.’

‘Go away !’ , said a feeble voice from inside. ‘I don’t want to see anybody.’

‘But you must let me come in. We must speak about this.’

‘No !,’ shouted back the voice. And switched on the stereo. The volume made his intentions very clear.

Aggravated, the father turned the door knob and found the door opening readily.

‘Son’, he said again, ‘be sensible. Let me help you.’ His son now reached for his headsets.

The father shot out his hand, grabbed the headsets away. Then, in a fit of rage slapped the stereo shut.

The son was taken aback. His father had seldom reacted this way.

Perhaps the father should have been more liberal with the stick. Now, his son, stubborn, was used to having his way with people around him and did not handle adverse opinions very well.

‘Son’, said the father again, bringing his rage under control and feeling very sorry he had not controlled himself better. He wanted to be seen as a good role model and it would not do to lose self restraint when dealing with his son.

‘Your mother said you poured milk over your jacket so you wouldn’t have anything to wear to school. You are making a new excuse everyday to miss school. Yesterday you hid your clothes away so we couldn’t find them. Today this. On Monday you said school had been closed due to the snow. All lies. It cannot go on like this. Be brave. You must go to school son’, said the father.

‘I will not’, was the immediate reply. ‘They all hate me. All the other boys and girls make fun of me. Nobody loves me.’

‘They do’, said the father, scratching his forehead thoughtfully, slowly. ‘They do. Everybody loves you.’

‘No’, was once the stubborn response. ‘Only you think so. Yesterday, I saw on the desk one of the boys had scribbled a drawing of me. With no front teeth, a geek hat, and pot belly. They make fun of me for my height. The call me Stiffy because I don’t smile and walk erect. I feel so different. I will never go back.’

The father nodded as in agreement. His son had been saying that for many days now, but always ended up going. This week things had taken a turn for the worse. He would need professional help soon. The attitude was not positive. The father felt frustrated at his inability to do anything.

‘Son,’ he said. ‘We are different. So is everyone else. Isn’t that the beauty of life ? You should be so happy to be with different people. You are so special. I am special. Be proud of that and share that feeling.’

‘Why should I be happy ?’, was the prompt retort. ‘I am not special. You keep telling me that. Tell me why I am special.’ He crossed his arms and sulked, staring angrily out of his window. There was a soft snow falling, but the ice in his bitter heart was harsh.

The father felt sad for his son. And tried to encourage him. ‘Remember’, he said, ‘of the time you set up the computer for me. I simply had no idea how to do it. And it was you who got mummy and me to use the cell phone. And DVD player. You are so intelligent. And you teach us so much at your age.’

The son looked up. His father saw he was making progress. There was good in everyone. Always enough to be proud of. He would help his son make it through this.

‘But’, continued the son in his attempt to hear more about himself, ‘that doesn’t impress people at school. They want to know if I can tell jokes, sing and dance and get drunk at the parties’.

‘Maybe you should do that’, said his father. ‘I mean, tell a few jokes, sing some songs, dance…It can’t be so difficult can it ? But keep away from the smoke and drinks. It is a bad habit.’

‘Ok…go on’, taunted the son, ‘tell me a joke. Let me see how well you do.’

The father winced. He was no good at this. Young Stiffy was a chip off the ol’ block. But he racked his brain to come up with something. ‘Well’, he began, ‘you could tell them that your father says your mother is an avid writer. She writes cheques all day long ! ! !’ He grinned feebly, hoping the son could see the funny side to his pathetic attempt.

Their eyes did not meet for a while. The father twiddled his thumbs restlessly. There must be a better way he thought.

He tried again. ‘I heard yesterday that there are national weeks celebrated in your school. Have you tried to participating those ? They must be so much fun.’

‘No’, said the son, ‘its only for the larger countries. Like the Indian students, the French, British and the American students. The rest of us just watch and enjoy the show. ‘

‘Isnt that good enough ?’
‘No.’

‘But I am sure you are learning so much. I hope you are associating with the Indian boys.’

‘What ? ? They are a nightmare. The dumbest bunch I have ever seen. I think they will all fail and the school will be held to some conspiracy theory for failing Indians. People worry about brain drain…..this bunch is a great example of drained brains. Please, don’t speak about them.’

The father bit his lip. Surely , he thought, there must be a silver lining to this dark cloud called school.

‘Ok’, he ventured again, ‘ but what about the French ?’

‘Je ne comprend pas ! ! ! ! Je ne sais pas ! ! ! ! Its all ‘n’est pas’ with them’, he said , his face contorted mockingly . ‘And most of them stop working half way through the day anyway…..supposedly some law that says they need work only 35 hours a week.

‘Ask me again papa, why I don’t want to go to school.’

‘Son’, said the father, ‘you must try and participate. You must cooperate. Every school has its challenges. You cant run away from them. I know how you feel.’

‘No you don’t ! You cannot even begin to imagine the exclusion I face everyday from the other kids. ‘

‘Surely you have met some challenging students here ?’, asked the father.

‘They’re all challenged’, came the irreverent reply.

The father gritted his teeth trying to kill the sudden bursts of anger this pointless conversation was building in him.

‘It seems my closest friends are Venkatesh, Devesh and Avijit. Much as I like them, it is so unnerving. Everyone now and then, these guys find empty seats near me and promptly sit there talking about themselves. All their worries. That’s all that matters to them. I nearly fell asleep on Dev’s shoulder last week. It is painful. I have had an overdoze of them. And no one else wants to talk to me.’

The father tried to change the subject of discussion.

‘What about the teachers ? I am sure they find you to be a hard working intelligent person.’

‘No. They hate me as well. The way they look at me, you would think they all think I am the cause of all their troubles. They ask me the most difficult questions and sometimes I think they ask me all their questions. One of them brings these post-it notes full of questions, tough ones.

Another ponders his questions rubbing his long grey beard. Looks at me like he can see into me and has decided I have a troubled childhood or something. Keeps saying I should meet him in his office after school hours. The other day, he was encouraging some students to drop eggs from the first floor windows. And one of the students looked at me in such a menacing way. I was scared father. The egg was going to become his weapon. Really scared.

The worst is the day after the teachers receive their pay checks. All I get is glares and snide remarks when I get the answers all muddled up. They act as if I am the cause of all their grief. What did I do?’

‘Maybe’, said father, ‘you should make friends with the security guards. Surely someone will talk to you on your level.’ That wasn’t a very bright thing for father dear to say. The son looked at him with a pained look.

‘How about the girls ? Are you interested in anyone ?’

The boy drooped his head further into his shoulders.

‘I could talk to Mansi if she stopped dancing. But I’m not very good at it you know. ‘

The father was aghast to hear him speak this way.

‘But you are learning are you not ?’

‘Maybe I should have joined the army. Should I look to become a priest father, he asked ?
Show me he way.’

With that he fell into his father’s arms.

The father gently patted his boy’s head. ‘I know things look bad. But they always work out. Happened to me when I was at school. But I slowly made friends. I just had to keep trying. I was stiff too. But I just being nice and helped when I could…..and finally I was accepted.

Then when I thought all was well my schooling years ended and I enrolled at university. It was the same struggle all over again. Only more painful because I had to move away from home.

It was always the same, young man. Be good and be helpful, and you will find your place in the sun. Why, I met your mother at university and never felt luckier in life.

Just be brave and do your best. You are a lovable chap.’

The son brushed away his tears and kissed his father. ‘Ok dad’, he said, ‘but not today. Just give me one more day and tomorrow I will be ready to go again. I promise.’

The father smiled feebly, knowing he could do no more than hope for a better beginning the next day.

‘Ok son’, he said, ‘I believe you will be ready tomorrow.’

He stepped out of the room as he saw his son reach for the Game Boy console. MTV, Game Boy, texting……maybe these toys were all encouraging solitude.

The father walked to the kitchen. Mother, unfortunately was not too happy to see him come alone. She guessed the mission had been unsuccessful and to show her indignation, slapped his breakfast before him.

‘I tried you know’, he said.’He will be ready tomorrow’.

‘It cannot go on like this forever. He must learn to look after himself’, said mother.

The father poked at his scrambled eggs in a curious way, perhaps hoping that the eggs would give him the answer.

The phone rang and woke him from his stupor. He guessed it would be the school and prepared himself for the interrogation. ‘I’m just the father you know !’, he wanted to shout. ‘Ozzy Osbourne has more influence on my son than I. Call Ozzy, don’t call me !’

‘Hello’, he said into the phone.

‘Yes’, he replied to a comment on the other end.
‘I understand’, he continued, ‘you are concerned, and thank you very much for your support.
I have just checked in his room …….Yes…….. Yes, he will definitely be in tomorrow. No……a medical examination will not be required.’

Slowly, the conversation came to an end.

‘Yes Isabelle’, he lied firmly and finally,

‘Dean Pekka is still suffering from a stomach bug. But I’m sure he will be in school tomorrow.’

The old man hung onto the phone for a few minutes before returning to his cold and scrambled eggs.

venkat, 2004.
Insead, the coolest plot on the planet. No hard feelings, dean.

SLEIGHT... avery short story (?)

2009-02-01T09:26:00.000+05:30

SLEIGHT

If I stared at it long enough and hard enough, I could write a story about it. Or maybe fill a page describing it.

I could conjure its history. I could give it a life. A form- an entity- all imagined.

I could make it soar in the sky. Swim in shallow waters. Sing to its sweetheart. March onwards tirelessly. Row a boat gently over meandering waters. Blush. Savor the first rays of the rising sun. Reap a harvest. Devour mangoes. Play in the fields.

I could make it rest in its mother’s lap. Chat with its father. Be Superman. Tend cattle. I could show through it, the history of man. The futility of war. The grace of dolphins. Scavenging vultures.

Sailing boats. Screeching gulls.

The warmth of friendship. True love. Anger, jealousy, suspicion.

Truth and deceit. Valor and cowardice. Joy and tears.

If I tried hard enough, I could do it. And you would never know I was only describing a portrait of a steam train.

18th October, 2000.
In compartment C2 of the Shatabdi Express to Chandigarh.
Venkat

what's your idea of protection? The National Insurance Company (India)

2009-02-01T09:08:00.000+05:30

This ad in the newspapers caught our attention for two reasons.

1. it plays on a very Indian concept. Astrology/ numerology and such perspectives play a key role in how Indians plan for life/ marriage/ child birth/ careers.

Usually a "not so benign" planet in the horoscope casting an unfavourable influence is put right by a particular gem (precious stone) that seeks to mitigate the bad effect. Traditionally, this has been the notion of insurance in India.

The ad plays on this concept asking whether a life insurance policy will not cover a number of risks all at once. Our congratulations to the advertising/ marketing agency that identified and developed a creative around this.

2. The second reason was that while Ritu looked at the "thoda simple socho" (think simple) and "is this idea of protection" to make the connection to an insurance plan, i looked at all the precious stones on the fingers and believed this to be an ad for a jewellery shop.

Both of us agree that the execution of the idea could have been bolder, especially a stronger tag line and more immediate focus on the National Insurance Company.

Still a great idea. And follows the principle of my marketing professor Mithileshwar Jha, that products for the masses must be built bottom up. So a product like insurance must be built upon how the common man looks at his current insurance needs and solutions, rather than look at what a good solution is and start explaining the same. (although both should lead to the same end result, the former approach faces lower perception barriers)

ritu and venkat

Great leaders have great teams- Stefan Stern, FT

2009-01-30T16:21:00.000+05:30

Leaders cannot do everything on their own. Leadership has to be “distributed” around the organisation, through delegation and the development of future leaders.

We thought this was very interesting, on leadership...reproducing it here with permission. (Published: January 12 2009 20:33 | Last updated: January 12 2009 20:33
"Copyright the Financial Times Limited 2009".

“The history of the world is but the biography of great men,” said Thomas Carlyle, the 19th century writer. The business world feels much the same way about the supreme importance of the leader. Chief executives are scrutinised endlessly, the work done by their colleagues much less so. Big mistake.

Steve Jobs is unwell. This fact has created great anxiety for Apple’s customers and shareholders. Could the company survive his departure? The question is being asked in all seriousness.

Mr Jobs attempted to calm nerves by issuing a statement ahead of last week’s Macworld conference in San Francisco, giving an explanation for his non-attendance this year. He was suffering, he explained in a brief open letter, from a hormonal imbalance that was causing him to lose weight rather dramatically. He had been successfully diagnosed and would be better soon. Unfortunately, this statement, while it may have cleared up the medical uncertainty, did nothing to puncture the cult of personality that surrounds the Apple boss. If anything, it gave it another boost.

“I’ve decided to share something very personal with the Apple community,” Mr Jobs wrote in his letter. Then came the medical bulletin. But the best was saved till the end. “I have given more than my all to Apple for the past 11 years now,” Mr Jobs said, in an unconscious reference to the Financial Times’ own “Mr 165 per cent” Martin Lukes. “I hope the Apple community will support me in my recovery and know that I will always put what is best for Apple first.”

Finally, there was a Greta Garbo-style sign-off: “So now I’ve said more than I wanted to say, and all that I am going to say, about this.” With a puff of smoke he was gone. (I’m a PC, by the way, not a Mac. Could you tell?)

I am delighted that Mr Jobs is not seriously ill and is receiving the correct treatment. It is the health of his company that concerns me more – indeed, the health of any company that hangs on the latest words, thoughts or actions of a single great man. The newspapers are full of the names of formerly great men who have now fallen to earth. Bernard Madoff was an investment hero, a one-time chairman of the Nasdaq exchange, favoured by distinguished clients such as HSBC and Banco Santander, as well as by charitable foundations supported by the newspaper proprietor Mort Zuckerman, the film-maker Steven Spielberg and the humanitarian campaigner Elie Wiesel.

B. Ramalinga Raju, founder and former chairman of Satyam Computer Services, India’s fourth-largest software company, was until last week one of the world’s most highly regarded businessmen. He won Ernst & Young’s India “entrepreneur of the year” award in 2007. He has now confessed to falsifying his company’s accounts over an extended period.

The Royal Bank of Scotland had been seen during the past few years as an all-conquering giant, and its former chief executive, Sir Fred “the shred” Goodwin, as a minor genius. Nothing criminal has gone on here, of course. But the €71bn acquisition in 2007 of ABN Amro has now been exposed as Sir Fred’s final folly.
Journalists, who have provided much of the running commentary on these and other stories, are not innocent bystanders. We have helped to build the reputations of those we now seek to destroy. But “news is people”, as the great newspaperman Sir Harold Evans has said. We are bound to describe complicated businesses through the personality of their leaders. We can overdo it a bit, though.

It should go without saying – but it doesn’t, quite – that leaders cannot do everything on their own. Leadership has to be “distributed” around the organisation, through delegation and the development of future leaders. No one should ever be truly indispensable.
Teams matter as well as brilliant individuals, as the England and Wales cricket board has just been reminded. Its superstar former captain, Kevin Pietersen, lasted only five months in the job before an unhappy dressing room forced him out last week.
Of course we need great leaders. Perhaps we are about to get one. Expectations could not be any higher for US president-elect Barack Obama, who will be sworn in to office a week from today. But it might not be a bad idea if, at the inauguration, someone were to read out these lines from Bertolt Brecht, the German poet, in which he questions how great some of the great men of history really were:

The young Alexander conquered India.
On his own?

Caesar defeated the Gauls.
Did he not even have a cook with him?

Philip of Spain wept when his Armada
Went down. Did no-one else weep?

Frederick the Great won the Seven Years’ War.
Who else won it?

On every page a victory.
Who cooked the celebratory feast?

Every ten years a great man.
Who paid for him?

So many stories.
So many questions.
----------------------------------------------------------

Our thanks to Stefan for allowing us to reproduce his note.

IFB targets the young working woman

2009-01-29T11:34:00.000+05:30

We came across this ad by IFB (appliance maker) in a magazine yesterday.
What struck us was the target. Young/ working woman. The message stands out from the clutter in the home appliances market.

Traditionally the Indian white goods market has targeted the housewife- or a woman in a "household" situation...planning for parties or worrying about her kids playing in the mud and dirtying their clothes.

The theme has been of keeping the family well fed/ or the kids clean/ or the husband promoted.

IFB targets the woman in her office. And the fact that she can fully concentrate at work knowing that the IFB appliances back home will keep her in command on the domestic front as well.

We have not seen this execution in other media. And we think it is unfortunate.

A large number of young women are entering the work force in India today. Their segmentation- targeting and positioning seems spot on.

Hopefully they will build on this and ensure the message is well communicated.

The concept stood out amidst the clutter.

Ritu and Venkat

Some pricing notes

2009-01-22T15:33:00.000+05:30

We visit an interesting blog called Pricing for profit. www.pricingforprofit.com

Two notes that i wanted to link here are :
1. Foru pricing strategies in a recessionary environment. Our caution to this is simply that this would apply to a wide range of products, we would not advice premium brands to follow any of these suggestions.

Rebates/ volume discounts/ free gifts etc work to increase volumes without lowering the value proposition for most mass market goods. But anything given free once sets up the expectation of future offers.

In a mass market product, the frequency of purchase and the price of the product help to mitigate these expectations. Not so for premium products.

Beware

http://www.pricingforprofit.com/blog/blog-view.php/blogid/162

2. The second note is on a bit of research that "A Beautiful Woman Can Affect Men's Pricing Decisions"

http://www.pricingforprofit.com/blog/blog-view.php/blogid/176

This has interesting applications especially for the personal loan business. But perhaps would not apply as well in markets with more easily available information.

ritu and venkat

when young india learns to keep its b#lls

2009-01-18T09:39:00.000+05:30

This sentiment may have appeared before, but we felt it is worth recapturing again. While a lot of companies in India have gone into cost cutting mode, many others continue to see growth and are investing in new ventures. We hail these companies.

And ask young India to not lose self confidence. Our size matters. And our poor population needs many more products and solutions. We have our own markets to satisfy....growth is only limited by our imagination.

The stock market tanked from 20,000 levels in 2007 to 8000 in sep 2008.

In this period, India continued to have 1.2 billion people and approximately 200 million households.

India has 8 cars per thousand of population (this is closer to 400 cars per thousand in developed economie).

Penetration of color TVs at 32%. Penetration of washing machines at 8-9%.

Penetration for microwaves in the kitchen is at 1%.

With such a huge unmet demand for every imaginable product category, growth in the economy is limited only by our self confidence and imagination.

Companies like Nokia and Airtel (Bharti) have grown and will continue to grow at break neck speeds. Because they are designing value for the millions of indians who have an average per capital income of USD 1000. A phone call in India costs 3 cents.
A Nokia phone costs 35 USD.

At 25%, India's penetration of mobile telephony is far ahead of any other household equipment category.

Why dont we se more innovation in TVs/ Fridges/ Washing machines that take these products to more households? Why does not the NANO inspire us further?

Why is is that foreign investors shatter the dreams of the common man by pulling our billions of dollars overnight and crushing the stock market by half? (and hence the investments of the common man?)

Why have we not yet learnt to bring in the millions of Indians living in villages and small cities into the "investor" fold? What innovations need to happen so that even a Rs 100 investment per month (4% of per capita monthly income) can be sucked up by financial institutions?

Why must we continue to look to the west for our economy's growth?

India understand's its markets and its people best.

Why should we not think of satisfying India's needs rather than worry about how deep the American recession will be?

Should not each employee in each company in India today ask what he has done to ensure that one new household has come closer to buying his product?

Ritu and Venkat

Your ipod, my Polaroid- Convergence and Miniaturisation

2009-01-13T10:03:00.000+05:30

Thats the title of an article by Elsa Dorfman that i cam eacross on the Internation Herald Tribune.

Elsa laments the decline of Polaroid and its decision to no longer make instant film. She compares Polaroid in the 60s and 70s to the iPod of today.

But the most beautiful question she asks is why the legions of MBAs generated in the US could not save the instant film business.

I know little about the Polaroid to respond to her. But i would like to assure her that it will not be the last time an iconic brand gives up its traditional (original) line of business.

Nokia. They have a phone/ music player/ torchlight / radio all built into one. No one in rural India buys a torch anymore. Nor a radio player.

Apple went a step further and built style into the above mix.

The day is not far that my Apple iPhone will be the size of a wristwatch. What then will happen to Casio, Swatch or these guys in the wrist watch business?

The world will seek convenience. And it will continue to search for the one device that rules them all. Technology will make it possible to dream smaller more powerful devices. Companies that stop seing convergence and miniaturisation of their businesses will go the Polaroid way. Sony would vouch for that.

Convergence and Miniaturisation.

Ritu and Venkat

Goldman Sachs and what i always suspected about Marketing

2009-01-12T08:56:00.000+05:30

Marketing is dead. So dead in fact that folks are begining to confuse "communication" with marketing.

GS is looking for a marketer with “15-20 years of experience creating…multinational marketing programs” who will, in the first year on the job, “actively participate, collaborate, and shape a messaging and brand strategy reflects today’s dynamics and the firm’s leadership role in helping to define it.”

Marketing is the act of Segmenting the market/ targeting a consumer and positiong a product/ service.
It rests on Product/ Pricing/ Place (distribution) and Promotions (as necessary).

A CMO must have control over each of the above elements. Most importantly, a CMO must control product pricing. Whatever be the product/ service.

Pricing is the most definitive proof of the marketing team's success.

Take any pof the Ps away form the marketing team, and you kill it.

When a CMO role is defined as loosely as GS has done, all they are asking for is communication people. That's all right, but communication does not marketing make.

Stephen Baker's "the numerati"

2009-01-12T08:36:00.000+05:30

Just finished reading the book..a few months behind schedule!

Its a great read. One of the few that has no inherant "functional barriers"....from IT- to Fin to Marketing...whatever your calling in life, this book makes a great read.

What is it about... the fact that powerful computers and great analytics software will allow us to understand more about ourselves, how we are evolving...and enable companies around the world to design better more useful products and services. Thats our take.

The book talks of the power of analysing data. Sure we are aware of how credit card companies use our data to predict our future purchases and send us "offers" for the same. But how about using the same data to understand our poilitical preferences and how to "influence them". How to target messages at us better...how to identify potential criminals earlier and identify the onset of debilitating disceases before traditional medical practices can spot them.

On the other hand, how much of our privacy do we lose in all this?

The author poses the question, but in all fairness refuses to go further into the debate. We believe as these technologies evolve and offer more obvious benefits, we may begin to see the benfits of giving up on some of that privacy.

The book is a great collection of case studies across fields as diverse as medicine/ employee efficiency/ medicine/ love/ work/ politics/ health care....and it is this diversity of content that makes it very fascinating.

The possibilities of using computing power with analytical models are simply limitless. No business will be isolated from this.

A point maybe a lot of us understand, but always worth repeating.

Ritu and Venkat

Marketers identify consumer needs. Markets satisfy them.

2008-12-18T10:32:00.000+05:30

On a recent visit to the grocer’s, we observed the following. A number of companies have branded rice, salt and wheat flour, but none of these companies sold branded sugar.

Given the concern today on healthy diets, low cholesterol and sugar diets have become much talked about. But while companies have worked to reduce the harmful effects of edible oils, not much work has been done on sugar. We are expected to take to sugar substitutes and the aim is to develop substitutes that taste as well, without the harmful effects.

(Not the same thing. Anyway, this reflection requires some more research.)

However the thought raised another question. That in the commodities business (wheat/ salt/ rice/ sugar etc), there is a trend towards “de-commoditisation”. In something as basic as these elements, companies in India are trying to find “value add” opportunities to create a differentiation. (We have not observed this in more advanced markets; and perhaps that’s why this stood out).

The role of the marketer is to define “segments” on which relevant ( to the consumer) and profitable/ sustainable differentiation can be built. Create markets.

Not all markets start as commodities, but a large number of industries based on processing naturally available raw materials start there.

Then the markets follow four stages.

Stage 1: Commodity: Sugar/ iron ore/ cooking oil/ petrol/ salt etc. These are extracted and then sold. While the market volume indeed is large, the number of consumers who would pay for a brand that adds no value to the commodity is likely to be very low. Companies should not be spending money in mass consumer communication here. The “above normal” profits would not be available.

Stage 2: Companies identify the possibility to add value on these materials to satisfy an apparent or non obvious need. For example, in India the health benefits of adding iodine to salt developed the salt market in an entirely new way.

The role of marketing media here is to connect to the end consumer to explain the benefit of the new innovation. Education is the key. Above the line drives the speed of this education.(in the consumer goods space).

A late entrant in this stage usually plays the role of “spoiler” and will drive down prices to gain market share. In essence, over time this category will step down to stage 1 commodity level.

Late entrants usually have to invest in their brand, as they category has been well established already. A good research question would be what is the maximum number of players that can profitably battle for the stage 2 market? (Our guess is that starting from the arrival of the 4th player, returns in this business start decreasing)

Hence innovating companies move to stage 3. Brands that establish themselves in stage 2, have the advantage in stage 3.

Stage 3: Segmentation, where higher order benefits are discussed. In this we look at the market for mobile phones. Where once the basic idea has been established, companies are defining phones for different users (business/ consumer), different geographies etc. again to create markets.

Media and the marketing message are continuing to educate consumers, however they are equally concerned about reaching specific segments. Market research becomes critical so as to identify large segments of consumers. Again, wider media options would be ideal here, optimized to the size of each segment being targeted.

For the early innovators, high brand salience requires less communication on the brand level but more on demonstrating the relevance of the new segment.

For late comers, that have not played in stage 2, developing the brand is critical in stage 3. At the same time they must also do one of the two:
1. Define a new sub-segment, build its relevance and hence the brands salience to the consumer.
2. Or demonstrate objective performance superiority in a new sub-segment.

Hence marketing investments have to be on two fronts.

Nokia would be an example of a brand that defined a category (stage 2) and then has continued to differentiate it in stage 3.

Another example, a brand like Tata salt that has established itself in the “iodized salt” category should have found it easier to then define “vitamin enriched salt” for the next stage. (It has not done so).

Stage 4: Super niche categories evolve with inherent high entry barriers as well as high profits. Technology and consumer expectations are very high. Here, we enter super-niches. Mass market communication tools are sub-optimal as the size (volume) of the segment decreases.

New entrants in the market must understand where their offerings would fall in the stage-wise evolution of markets. Without this understanding defining of the marketing mix is risky and inefficient.

Ritu and Venkat.

Losing control at the car mechanic’s!

2008-12-04T16:09:00.000+05:30

Companies that want to gain market leadership understand when consumers want to be in control of their purchase decision process and facilitate this.

We write this as a reaction to two recent purchases. Car tires and a car battery. For the first time in 10 years, we had to do this. It was not pretty; the average car workshop in India is very very ugly. It was not easy; we have little interest in cars, and so know very little about the products we were going to purchase.

It was a very suspicious process; the folks selling to us seemed to know no better than us.

We parted with a lot of money that we cannot justify beyond assuming that the seller knew better.

And in return, along with some tires, we were left with a question. Why do we know so little about this product? And why do we allow a complete stranger to decide how I will spend $250 ?

We thought of our purchase process for various products. Toothpaste, computers, apartment, car, tires….and concluded that our involvement in purchase decisions depended on :
1. inherent interest in a category,
2. the hardship from a bad purchase and
3. The cost of the purchase.

When we bought stationary or light bulbs, we simply accept the dealer’s recommendation. (As long as he offered the low energy technology on the bulbs). This is interesting, bulb makers make us aware that new energy efficient technologies are now replacing traditional bulbs. Did you know that energy efficient tires exist as well?

Why is it that the bulb maker does not leave this to the dealer to explain to me ,but the tire maker does?

Some purchases such as toothpaste/ shampoos/ light bulbs happen very frequently. A consumer shops for these types of products almost every month. (Unless he is a bulk buyer). Consequently, we are open to information about these products.
An advertisement is likely to influence choice (and be remembered) at least till the next purchase which may be a few months away.

For a car tire or battery, however, the purchase cycle if often in years. 3- 4 years sometimes. An advertisement may not necessarily stay with the consumer till his next purchase.

On the other hand, since the need for new tires is not usually evident in advance, the mind is not usually receptive to any information. And it is only when we are engaged that we seek information.

A number of purchases are made on the basis of “habit”. Here the familiarity with a product category has been built up over time. A toothpaste is bought once a month. Only a very critical piece of research or a very poor product experience can change this habit. Having used both Pepsodent and Colgate, we personally choose Colgate because of its smoother mouth feel. What marketing message talks of this?

(We buy toothpaste for its medical value no doubt, and advertisements continue to emphasise this. But having realized that this benefit is now assured in every tube, we have moved onto other differentiators. A toothpaste manufacturer however is limited by the fact that he must continue to emphasise this medical benefit, less his competitor gets perceived as being better on this parameter.)

Being exposed to Colgate and Pepsodent advertisements on dental hygiene reassures me that my choice is OK.

With a light-bulb, which is less difficult to differentiate, we are more open to a dealer’s recommendation. As long as the “industry standard” technology is being respected. We don’t need to be in control. Again the key parameters:

1. inherent interest in a category,
2. the hardship from a bad purchase and
3. The cost of the purchase.

When the value of good increases, the risk from a bad purchase magnify. Then we ourselves seek for information.

Take clothes. We have some brands in mind as we begin the shopping process and then select based on prices/ designs / sizes. Seldom do we respond to the dealer’s recommendation.
At the same time, with little product differentiation, most companies work on the “qualitative” elements of the brand. The cost of a bad purchase is high and obvious very quickly.

A consumer is evaluating for himself, which category of products he wants information on. And then his level of “education” depends on the interest in the category and the information available.

However, successful companies have helped consumers re-prioritise. Think Intel.

If the information in the “public” domain is limited, the consumer depends on the dealer. When this product is a high value purchase (monetary or emotional), frustration is likely, since the consumer perceives a loss of control on the decision.

Usually, consumers do not invest time in learning about product categories which are cheap (per unit), last only a short duration (and any error can be corrected very quickly at low cost) and do not have a very damaging effect. (Our observation is that women take more time to choose between skin creams than between toothpastes).

So why dont we think about our tires and car batteries?

And hence we are perturbed, and surprised by how little control consumers have on their purchases of tires/ car batteries. There is not much “authoritative” information on these products. The need for them arises at very short notice, so a consumer that has not already made up his mind, often finds himself with not time to do so at the dealer point.

Then, the dealer becomes the decision maker.

Obviously, incentivising dealers to push their brands was cheaper and easier to control as compared to a direct engagement with consumers. More so that in a product seen as a highly technical, the role of the dealer was perceived to be the one of “experienced educator”.

But a dealer incentivised to maximize his gain, may not necessarily give the consumer the best possible advice. Not being in control in this purchase decision, does not amuse us. It’s a lot of money to give away on the advice of strangers. And clearly, in the tire business, we don’t (as consumers) perceive any clear market leader in India.

As in the pharmaceutical industry, it is necessary that companies invest in educating the consumer. If the computer industry has taught me to identify differences in hardware, why cannot the tire industry. It will be expensive, and the industry is not known to be a big cash generator, but then this is a Catch 22 situation. Consumers will pay premiums when they understand the benefits. Only through creating “demand” for their brands will true market leaders emerge. Those that will gain above normal margins. Otherwise this industry will be held captive by intermediaries (dealers) whose interest is not in product innovation and category advancement.

There is no justification any more for why companies will not spend money educating their consumers, if they expect these consumers to remain loyal and discerning. There is no short cut to this. No amount of dealer incentives or original equipment (OEM) recommendations will justify the loss of control that consumers face in these product categories.

Companies that want to gain market leadership, understand when consumers want to be in control and facilitate this.