The "TIME" variable in data analytics and personalization

Ritu and I are now serious online shoppers. Last month we started buying vegetables and fruits online and with this, almost 90% of our monthly needs are shopped online. Very thrilling.

And with our own “desi” portals giving world class online shopping experience, we should be thrilled. Right?


Well, almost.


6 months ago, we re-started to play tennis. Ritu and I. And we used to buy a set of 3 balls every month. The recommendation engine on FLipkart and Amazon were identical. Suggesting other brands of balls. And telling me that people who had bought tennis balls, also bought racquets etc etc. Ok. Thank you.


But its been 6 months now and Ritu and I now buy a set of 3 balls every 10 days.


What should Amazon have figured from this? That we play frequently, and we are getting better at the game. And possibly play longer. So the recommendation engine should have started to give me energy drinks/ hand towels/ shoes/ maybe some books on tennis……Nope. Nothing like that. It still gives me the same other brands of balls etc.


This is not “personlisation” that big data analytics was supposed to do. This is the same small data analytics extrapolated to big data. And this happens on every category. Kids diapers….my kids gradualed from diapers to kids underwear. BAM! That should have told FLipkart something. Start suggesting books- other interesting stuff for 3 year olds. The change in product signals a big shift – it’s a counter that allows Amazon or FLipkart to estimate when my kids will be 5/6/7/15 or 30. And plan to seed me and my kids. Dont recommend basis what 1 million other dad bought when their kids moved from diapers to underwear. Mine did it in 3 years, some one else's may do it in 4. The kids are different.


Netflix i believe does a lot of reasearch on consumers and is very kicked about its recommendation engines. I was curious and looked at the analytics they do. Lots of cross tabs...etc.


But lets look at this case: Ritu Venkatesh (my wife’s name) has lived in 3 cities in the last 5 years. She was watching movies like “Marley and me” till 4 years ago when she switched to Snowhite and the dwarfs. Then last year, she also added “Frozen” and “Toy Story” for my eldest who turned 4…


So Net flix should know that this is a female customer, North Indian (Ritu), married to a South Indian (Venkatesh) on a transferable job; watching kids movies of different genres (have multiple kids)… while they have a lot of recommendations..i realised they were losing marketing or cross promotional opportunities basis what more they can put together on the customer.


They could be cross selling Ritu massage treatments/ nanny recommendations / governesses/ early development kids games etc…


Really excited as I write this. Recommendation engines use millions of data points to predict what I should need. But forgetting the rate at which I migrate from one category to another. This we believe would be different from user to user and adds a layer to the modeling exercise that today we dont see at some large retailers. Will keep busy think of the applications of this approach in consumer marketing.



The TIME variable in data analytics and personalization.

Ritu and Venkat

Go on Pond’s … try being a parent....

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

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

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.

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

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

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

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

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

marketing as the core of all strategy

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

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

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

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

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

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?

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!

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

Tiger and the branding of personalities

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

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

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

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

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

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

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

buying jeans on monthly instalments plans

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.