More on Brands which are Similar.

More thoughts on what happens when a customer confronts a purchase decision that involves making a choice between brands which are perceived to be similar. I think if it is a high purchase decision like a consumer durable, and the consumer has some time at his disposal, he will wait till he has a chance to interact with the brand outside the buying context. Say in an exhibition or some other place and this contact with the brand helps him in deciding for or against the brand.

In the same context because the brands seem comparable the consumer falls back on non-rational means of decision-making, like may be look into things like country-of-origin of the brands and other issues which he would not normally look into, if he the brands are clearly differentiated in his mind.

Used Vehicles-Opportunities For Manufactures and Consumers.

The pursuit of growth is forcing companies’ to capitalize on the value which lies hidden in the value chain of the business. Companies like Maruti & Automart India Ltd.were the early birds to fly in to a totally newer concept i.e. used car sales through their “True Value” chains, and now in many cities the true value dealership is as good as that of the new car dealership. Now Ashokleyland is entering into the used truck market. For the consumer it is win-win situation, because he can rely on the companies to provide warranty and assurance on the quality of the car or truck he or she is purchasing and the company gains by gaining an entry into hitherto unorganized market. The process of entering into the sales of used cars also helps push the resale value of the company’s vehicles. The objective is to squeeze out as much value as possible from the value chain and inturn also provide value to the customer. Companies like Porsche claim that 2/3 of the cars ever manufactured by the company are still on the road, maybe one of these days Maruti’s might also come up with such a claim.

Decision-Making and Intution.

What is the linkage between managerial Decision-making and intuition? Most of us would like to believe that management is a perfect science, and one can afford to rely totally on facts and analysis. That is why time and again we come up formulas and prescriptions on achieving success in the market place. The problem of accepting that intuition could have an important role to play in Decision-making is discomforting because it takes away a lot of control over things which we are comfortable with and can be verified upon. By going away from analysis we are accepting that there are things which are not in our control, or maybe driven by the gut-feel of an executive, reinforces the fact that maybe what was achieved yesterday using ‘n’ variables would not lead to the same result tomorrow even with the same input, so we are accepting is that managerial decision making is closer to cooking than a precise science?

The book "The case of the Bonsai Manager" written by R Goplakrishnan, dwells upon the importance of intuition and how managers should consciously try to develop it. In the book he has used many of his personal experiences, which are drawn from his experiences in HLL and Tata’s and analogies from the animal world to elaborate his views. For me who has been a regular follower of his column in Economic times the book was a one stop source of his ideas, and I would recommend it highly to any one with interest in management and especially younger people....

Branded Petrol and Disel,from commodity to Brand.

The other day while traveling in Bhubaneswar, I saw the auto-rikswas purchasing the branded diesel, which is priced at a premium versus the normal diesel. And these auto guys run on ‘share-basis’ wherein they keep collecting customers on the way and dropping them to their destinations. They run on even thinner margins compared to the usual meter auto guys. I spoke to a few them to find out if they were actually getting mileage and performance out of the Branded diesel, for which the answer was in positive. I felt that was a vindication of the performance of the branded Diesel and felt this should be highlighted in the communication adopted by the petrol companies.
It was in the last few years that we have seen the launch of branded Petrol and Diesel by the major oil PSUs in the country along with the attempt to improve the petrol pumps itself. The Trigger was the imminent entry of private players into petrol and diesel retailing in the country. The secondary reason was an attempt to convert a commodity into a brand. A commodity is a product which cannot be differentiated and price becomes the only differentiating point and in a controlled economy situation where price would be same across different petrol pumps, the petroleum majors never had any incentive to either improve customer service or try to brand their products. But entry of competition has changed all that. The positive results of the introduction and adoption by vehicle drivers was mentioned in the newspapers a few months back and the example in the beginning reinforces the fact that the segment of branded petrol and Diesel would only grow in the near future.

Convenience Driven Market Place ?

A few years back the use of packed atta , pickles, ginger garlic paste was used to be looked down upon in the Indian household. It was considered a part of the duties of the "Bhahu" to make all these things in house and the skills of preparing these items were passed on from one generation to another mother or mother-in-law to daughter. Times have changes in many of the families the house has also started working and thus leading to the shortage in the availability of free time and the working women have taken to these packaged mixes and preparations with great enthusiasm. The guilt associated with the inability of preparing these things on their own has also given way to the pleasure of being able to save time. Even the demand for frozen peas has grown and they are being stocked in fresh vegetable shops in the country and the consumer is asking for the frozen peas as he would buy a kilo of potato. Another example which come to my mind is that of "Tomato Puree" when Godrej introduced it in the late 90s , they could sell it only in months when the prices of fresh tomatoes were very high, but today the consumers purchase the puree because of the convenience involved in using the product and the cooking time it would save.....

Rural Hypermarket - ITC's "Choupal saagar"

Rural Hypermarts - ITC’s 'Choupal Saagar'
In the previous blog I had touched upon most of the options that would be available for retailing in villages, but I did leave out a new format being tried out by ITC. ITC is coming up with rural hypermarts, called 'Choupal Saagar'. The Choupla saagrs are aimed to become a multiple service provider for the villager, a single point where he can sell his produce and purchase consumables, insurance, farm inputs, and so on.

The first of these Malls has come up in Sehore MP. The number has gone up to 10 with another 9 in the pipe line according to http://www.itcportal.com. The estimated cost of setting up each choupal is around 5 crores with each mall spread across 5 acres. And the company has plans to open 700 such hypermarts across the country in the next ten years. The plan is to create a linkage between the echoupal and choupal saagar , and the same catchment of farmers who are engaged with the company for the sale of their products should also become the first customers of the choupal sagaar.
The obvious reality is that these malls have come up in the more prosperous areas of the rural country side, not in the far flung and isolated areas of the country. It is an experiment which many companies are watching with great interest and infact many of them have tied up with ITC to provide their services to farmers who shop at the hypermart.

It is said that the point where the farmer collects his money for the sale of his produce is located at the back of the hypermart. Designed such that the farmer has to walk through the mall, and thus break any hesitation that he might have and also see the products up for sale and perhaps on his way back also make some purchases.

Impact of IT in Rural Marketing.

Impact of IT on Rural Marketing:

Information Technology has an overwhelming influence on all the spheres of life; here we will try to look at the influence of IT on rural marketing in general and distribution in particular. Two examples have been discussed; one would be the use of GIS (Geographic Information System) and second would be emergence of rural kiosks.
First the application of GIS. The software is facilitating distribution in villages. Satellite images have been used to identify clusters of villages, their distance from the town and roads. Using this data decisions on where to set up distribution points, setting up distribution routes and which clusters to cover can be decided much easily.
In the last five years many companies like ITC, Parry’s, HLL have come up with rural kiosks, which is basically a net-enabled PC installed in a village. Though the main objective of setting up the kiosk is not distribution, like ITC's e-choupal is there as a procurement point and HLL i-shakti is an extension of its shakti scheme in rural areas. But once the infrastructure is in place, it will be and is being leveraged by these companies to sell their products and non-competing products from other companies.

Rural Retail Options.

With retailing in a boom in urban India, it maybe is the right time to discuss about retailing alternative in villages of India. There is misconception that there are limited options when one comes to rural retail. Infact in terms of sheer variety the options that a rural consumer may have may not be bad in comparison to the urban consumer. Though the options in urban areas have increased a lot in the last few years. Coming back to the main issue, rural retail, here an attempt has been made to list out the various alternative retail options for a rural marketer and strategy there of.
There are basically five different options for a manufacturer to reach the consumers in villages first is the omnipresent grocery shops which exist in the rural areas, and there are close to forty lakh such shops spread across the six and half lakh villages. These grocery shops are not homogenous; they vary in their sizes, structure and buying preferences. And though generalized as grocery shops, in bigger do have specialised shops. No company planning to succeed in rural markets can do without planning for these shops.
The second retailing option is the one which has been studied and researched more than any other aspect of rural retailing that is Haats and Melas. The number of these Haats and Melas across the country has been put to be more than seventy to eighty thousand across the country. And there have been studies, which suggest that the villagers prefer these Haats to make their purchases to the village retailers.
The third retail alternative is the shops in the nearest small town. The village consumer tends to visit the small town or the district headquarters on a regular basis. The visits linked to his sale of agricultural produce or could be to purchase farm inputs and he combines his FMCG and durables purchase with this. So even if a company has a good direct coverage plan in place, it shouldn’t ignore the wholesale markets, and in certain categories like durables restrict their presence to the small towns itself.
The next alterative is the prevalence of mobile retailers in the villages. This is an area where there is paucity of reliable data. They are small retailers who move from village to village on cycles or on foot selling their goods to households. In certain categories like cosmetics and bangles they have a strong presence. The last option for retailing is a combination of various new and old outlets which have been set up for different purposes put to use to distribute products. The examples of these include ration shops, post offices, petrol retail shops and the newer formats like echoupal and other kiosk based options.
To develop a complete retail strategy in villages, one should plan to address most of these alternatives; he should have plans to tackle the wholesalers in the small towns, and the retailers in the villages and should have plans to accommodate the major Haats and Melas which occur in the area.

Indian Market-Is the Elephant Running???

The first blog on marketing in India is driven by fact and figures which I have been reading in the newspapers lately. We are in the middle of the festive season, which begins in September with Ganesh Chaturthi and other festivals and runs till end Jan including Christmas and New Year. This is the time where most of the promos, new product launches are packed in and sales people across the country keep their figures crossed to reach their sale targets. But this October we have seen phenomenal sales figures, though the monthly figures are still trickling in , a sample of the sales of few brands and comapnies,

Nokia sold 4 lakh handsets on 19th October, which is it's highest record sales that the company has achieved anywhere in the world. In total all mobile companies put together have added over 6.6 million subscribers in October, compared with a total 1.6 million subscribers in 2000.
Coming to another brand, ALTO of Maruti sold 22,294 units in October, which is a record sales for any model and make in India. The overall industry growth was also very good the mini and compact cars grew by over 19%, vis-à-vis the same period last year,

In the two wheeler segment , most of the motorcycle manufactures have seen good growth in October , most of them have seen a growth of more than 20%. Hero Honda alone has sold over half a million two-wheelers in October, which is record even for the world's No.1 two-wheeler company.
I can go on and on for different brands and segments, but the point is that we are entering a phase of unprecedented growth and challenges for Indian Marketers. The blog will try to bring the readers updated with the latest development and changes in the Indian market place.

Packaging The 5ft P Of marketing.

Packaging though not part of the original 4 Ps , it sure deserves a place in the Indian marketers product mix. Though it is probably in the developing markets that it holds more importance than in the developed markets of the west. In India companies like CavinKare have achieved success in the shampoo markets through the introduction of sachets in the early 1980s, and in fact ushered in the sachet revolution in the country with most the FMCG majors following up with their own sachets. Today one can find anything from coconut oil to tea powder in sachets.

The advantage for the consumer is he gets to use a product at a lowered per use cost and easy of trail. There was a time 5-6 years back when the prices of the sachets when combined were cheaper than the bigger packs offered by the same company, now that anomaly has been removed. In my recent train travels I was given pickles by the pantry in sachets, worth 50pcs each, the brand was 'Chinni' again from CavinKare.More details on Cavinkare at www.cavinkare.com

Rail innovations--Nokia Train.

After Kurkure Express Now we have Nokia trains. The corporate world is trying innovative ways of reaching consumers and Railways is willing to partner with them. After the pilot run of summer special trains in South , now telecom major Nokia taking a train across the nation to promote its products. The idea is to use trains as concept stores where in the passengers can widow shop and try out various handsets of Nokia. Plans are also afoot to run a non-passenger train across the country which will stop at small stations across the country displaying Nokia products.

With a Tab of approximately Rs 35-45 lakh for a round trip, it looks like an attractive option. This is one more addition to the long list of unconventional methods of reaching out to the far flung consumers in the country , breaking through the media clutter and improve brand awareness . It is also to be noted that the initiative comes from a player which is clear market leader with close to 70% of market share the mobile handset market which shows that they are not looking at the current market share but invest in the future as the penetration would increase. and want to ensure that the brand retains its market share as the category grows.

Changing Dynamics In Marketing.

Marketing was easier twenty years back. Have one successful product in the portfolio and the company and the manager could sit back and relax. But the scenarios today is a lot different increased pressure from competition, more demanding consumers and impact of technology is forcing the marketers to be on his toes, they cannot afford to relax. It is like pedaling a cycle uphill if you stop pedaling you will go down. One classic case which comes to my mind is that of Sony Playstation, When PS-I came into the market it was an out and out success, responsible for a major part of Sony’s profits at that time. But the current third version PS-III is not doing as well as was anticipated. In a period of 12-14 years the situation for Sony has changed. Old competitors Ninentodo's Wii and newer ones like Microsoft’s XBox is doing better in the market.The reasons attributed PSIII below par performance has been supply chain glitches and pricing issues. But the stark reality for a marketer is that he or she cannot be complacent and hope that the earlier successes would be enough to get him the sales day after day. The competition responds at a far greater speed than what used to be in the earlier days and consumers want newer features and versions every year and if you don't provide them the competitor would. Though it is truer in the case of technology-driven companies, it also applies to the old economy companies, but the rate of change is much slower....

ITC Bingo...Tough Fighting With Kurkure.

ITC in March launched it's ready-to-eat snacks 'Bingo' to mark it's entry into the Rs 2,000 crore fast-moving branded snacks market. As usual the company has backed the launch by a well designed ad campaign and the taste and variants of the product are based on extensive research on tastes of consumers . The launch of Bingo represents ITC Foods' fifth major line of foods business after Staples, Biscuits, Ready-to-Eat and Confectionery businesses. The launch represents the attempt made by the company to reduce the dependence on tobacco in it's total turnover.

Though the success of otherwise of 'Bingo' would be decided in the market one thing which I have not been comfortable with is the number of variants that the product has been launched with. There are a total of sixteen variants. The intended strategy would be try and cater to the tasted of the as many consumers as possible, but total number of variants seem a little too high, especially for a new launch.

The impact of too many variants would be on three participants . First is the the channel, here the advantage of having more variants that it would enable the sales force to push more stocks into the channel during the launch. This initial push would give the sales force some thing to cheer about. The distributor would have to take minimum quantities of all the variants which would eventually force him to carry more stocks, with him having no idea of what would sell. The retailer normally would have a limited budget for the category and when confronted with this many variants he would either have to select a few or take smaller quantities of all, both of the strategies would be risky for a new launch.

The consumers would be the second set of people who would also be troubled by the number of variants. He has to try the new tastes one by one to decide which one would be best. Though the comapny would want to claim that the pricing at 5 and 10 rupees should make trials easy. And if he is not happy with the first variant he tries he might not go on to try the other variants in offer.

Lastly the production people would also behappy if lesser variants are introduced to start with, because they would not know what is moving off the shelfs and the consumer acceptance of the variety in the offerings.

So all in all though the impact of many variants would look good in the short run, it may not turn out to be the best strategy in the long run.......

Bidi-Skull & Cross Warning !!

How much would a pictorial representation of a warning have an impact on the consumption of a product? The pictorial representation I am talking about is the 'skull and crosses' symbol that is being proposed to be put on tobacco products in the country. The fear expressed by manufacturers is that the sales of tobacco products would drop leading to large-scale unemployment in the Bidi industry. The assertion is that it would lead to a drop in the sales of tobacco products. Though most of the tobacco products do have some sort of warning written on them as in the case of cigarettes and packed tobacco, the warning has not been put on Bidis. The legislation is a step in the right direction, as written warning may not be of much use as the fact is that Bidi is consumed by people who are illiterate ( may a gross generalization) .

And when the symbolic picture is in place it would communicate that consumption of tobacco products is harmful. I am not sure about the impact that it would have on the old -seasoned tobacco consumers, but might have an impact on the new-user. The government has been deferring the implementation of the order under the pressure of powerful lobby of Bidi manufacturers in the country.

Cult Brands!!

There is a good article on "Iconic Brands" and whether India can have "Cult brands" in this week's strategist. Questions on what is a "Cult Brand" and how one is built are detailed out. Most of the people interviewed for the article are of the opinion that it would be difficult for India to build iconic brands, apart from the LG chief and Prof Jha. The reasons given are that the country is so diverse that it would be very difficult to for a single brand to have a very loyal and emotional following, which they say is a prerequisite for cultivating a cult brand. Another reason quoted is the culture differences among the countries like US and Europe which have cult brands, versus India, according to Shripad Nadkarni, in India as a child we are encouraged to "Fit-in" rather than "stand-out". This has a bearing on 'Cult Brands" as they tend to have loyal following from consumers who prefer to go against the main stream. One point which I think has been missed out is that brand building and customer orientation in the country is just a decade and half old, before than in the regulated economy no one actually cared for the consumer. Building iconic or cult a brand is a long term work, as can be seen from the examples, Harley Davidson is a 101 year old brand, and Nike is also a very old brand.

We also have much younger examples like that of iPod, but then the brand piggy-backed on the apple brand. In essence what I am saying is give more time for the marketing in India to mature and we also would be able to produce iconic or cult brands in the country.

Pricing Of Low Fat Milk.

I have been thinking how should one price a product like low fat milk.To start with one needs to know who would be consuming it? Probably consumers who are health and weight conscious. Basically a very small but growing segment of the effluent class of the Indian consumer. The consumer would be willing to pay a premium for the product, right?

But how does pricing of milk work at the dairy level, high fat milk is priced higher as the dairy is not able to extract by-products out of it so the price is higher. As the fat percentage gets lower the prices reduce. So the 99.9% fat free Amul should be priced low, because the dairy has extracted value out of the milk.

From a marketer's point-of-view if once should price a product keeping the target consumer in mind and not the production considerations...... though the slim milk is priced at 2 rupees higer than their "taaza" but is the pricing right?

Titan Into Prescription Glasses- Unorganised Becoming Organised.

The other day I was talking to one of my friends who owns a traditional pop-and-mom clothes show room. He was sharing with me his worries about how the emerging retail business would eventually wipe out the small retailers, and was counting out the areas in which maybe the traditional small retailers might survive. But I think in the long run that list of areas where the small retailer would survive because the bigger retailer is not interested would keep becoming smaller with the urge for growth pushing the organized retail into the unorganized market.

As can be seen from the recent entry of Titan Industries, into the largely unorganized prescription eye wear business.The company plans to open first ten `Titan Eye+' (Eye Plus) standalone retail stores in Bangalore, Chennai and Nagpur with first to be opened here. Titan plans to open 150 such stores within five years, including franchised outlets.

This is a growing trend in companies entering into her tho unorganized markets so that they are able to extract more value out of the business. Titan ha also made an entry into the small town jewelery market.

To survive the smaller retailer will have to innovate and identify niches where he can survive profitably.

Kurkure Train.

The latest initiative of Indian branding trains has hit the headlines recently. Kurkure, a pepsi brand of snacks has won the bid to co-name three summer trains. Now these trains would be referred as kurkure express. It is a three-month contract to brand three summer special trains plying on the Bangalore-Nagarcoil, Bangalore-Chennai and Bangalore-Hubli routes. The trains have been named Kurkure Express.Other companies which had bid for the initiative were Tata Indicom and Airtel.

The initiative will ensure that certain areas of the train would be branded, tickets and the reservation charts will have the brand name printed on them for these three months. The destination name plates, the panels above and below the windows, the beginning and end of the trains, and even internal facilities such as the bed rolls and coach numbers will bear the Kurkure brand name.

The question which comes to my mind is that how would such an initiative of three months duration help in building the brand kurkure? The sources from the companies end say that kurkure is associated with family enjoyment and getting the brand associated with train journeys during the summer holidays would help strengthen the brand association with consumers. At Rs 7.5 lakhs cost the effort looks worth-while, as it would create enough word-of-mouth to justify the investment. But brand building being a long-term initiative how would the company ensure that it is able to associate itself with similar initiatives elsewhere.

Brand similarity !!

Most of our efforts in marketing are directed towards creating and building a brand, through which our customers are able to recognize us and patronize us. And over a period of time we hope to be able to capitalize on the equity we have created through brand extensions. But this was all very true some ten years back, today things are changing very fast, in terms of the media, technology, new product development, competitive initiatives, which are all leading to a scenario of 'brand similarity'.

When with in a product category brands become similar, there is nothing on which a consumer can differentiate them, part from price. I was thinking about the categories in which brands have become similar, but initially found it very difficult, as a marketer it was difficult to for me to believe that brands could be similar, sort of an oxymoron.

But after some thinking i did come up with some examples , but more of them were in the commodity nature,,,,,the context of brand similarity or dissimilarity is the impact that sales promotion would have one the long-terms sales of a brand. In a category were brand dissimilarity exists promotions might have an longer-term impact than in categories where brands are more similar.

Then on a single day i got two good examples, and one from personal experience and other one from the newspaper. First the personal example, I have been planning to purchase a 240 liter two door fridge for quite some time now. And after many days of procrastinating i walked into a consumer durables shop near-by and started my inquiry. A very good salesman from the shop came and showed the various models which were available. Hew showed me three brands Godrej, LG, and some of brand. I asked him the price he said 12990/- for all the three brands. If I wanted a metallic finish i had to pay 1000/- more. I took some literature and came back to the office. I wanted to buy a fridge but was not sure of which brand, all the brand were similar to my mind. I am yet to decide on which one to buy. I read a similar experience of a business standard columnist in choosing between a WagonR and Zen Estilo....

Life for the average marketer is only going to become tougher...............

Cosmetic Changes In A Product.

Direct consumer contact through setting-up small exclusive stalls in front of malls is an idea which is picking up in the country. In the last few months I have seen many of them in front of the various malls which i have visited across the country. Yesterday I did decide to go into a stall/ exhibition organized by Godrej for the home appliances division. Actually this was my second visit in the first visit none of the people in the stall had any interest in speaking to me , but this time atleast on of the sales guys came up to me to show the appliances. The exhibition as specifically to promote the "Eon" range of home appliances. I was shown all the variety which was there, my interest was in the "Eon" fridge range. My first question - as would be of any consumer was 'what is new in this fridge versus the old versions you have?'. I was told that it had more vents than the older fridge so provided better cooling, for second advantage was i was shown some clips which were put on the freezer, and was told that they could be used to hang poly-packs. The third was that in the frisge there was more space for bottles and one could store 2.5 liter bottles. The seperators were made of plastic and warranty and other stuff. I was expeting the saleman to come up with some thing more about the product, when he brought out a book and asked me to give my name and address.I gave hime my card and went on to watch the movie which was about to start.

But later on reflecting on the experience two things struck me as odd, one was a minor one, on the use of having such stalls in the first place, when you don't have staff or have staff which is inadequately trained to explain the benefits of a new product to a consumer.I though with all the money going in for creating a sub-brand Godrej must be having some thing up its sleeve to corner more market share, I decided to a Google to find out about the product features, and all the information I could get was what the salesman had told me at the stall.I went to the company website to find out more about the new range , but there also couldn't get any additional information. This brings us to the second and more important point, do companies like Godrej expect to attract customers through such cosmetic changes to a product. For me as a consumer I couldn't see even a single compelling reason why I should go and buy the 'Eon" range.

PS: When i opened one of the refrigerators in the stall i found it was stuffed with promotional material, of which i was not given any. How much would it cost for the company to keep the fridge running during the time the stall, runs, and give a chance to the consumer to experience the product in its running condition.

Private Brands In retail Chains.

The issue, which I want to discuss today, is the role of private brands in retailing. Private brands are brands owned by the retailer and are available only at the retail chain to which it belongs. This phenomenon is quite old and established in the developed markets, because of the fact that organized retailing itself has been present in these countries for a longer period. The private brand phenomenon is in its infancy in India but maybe because of that it would be the right time to discuss it. Before getting into the details of private branding lets look at some stats from the marketing research agency A C Nielsen.

According A C Nielsen’s worldwide figures private brand are already a big trend, they have 17 percent of share of he consumer market and in developing markets they have grown by 11 percent, with close to 6 percent share. These figures give us some idea of how if private brands are in the developed markets and they would be as big if not bigger in markets like India.
There are many benefits for the retailer from promoting his or her own private brands, the first is that they are able to target a captive group of consumers who have walked into the shop with an intention of making a purchase and most of the times, hey are priced lower than the nearest competing brand from a company. They are able to give it prime shelf-space and organize promotions for their own brands. The question is why should the company promote it's own brands at the cost of the much bigger recognized brands.
There are two basic reasons for his, first is margins that they are able to get out of private brands, as they don't spend on advertising them, and no intermediaries in place, usually a no-frills product they are able to both price it lower and gain more margins than the what they would be able to get if they sell the organized brands. Second, reason is that by having their own brands provides the retailers with a lot of bargaining power while dealing with the branded manufactures. They are able to negotiate better deals because they have an alternative. This is all from the manufacturer and the retailers perspective, where does he consumer figure in the whole equation, what does he gain out of all this. Firstly he able to get a good quality product at a lower price .I am using the word good quality because in many cases the retailer ties with organised manufactures to use their spare capacity to produce the private brands, so in effect the consumer is getting a product perhaps as good as a branded one. Secondly when he walks into to make his purchase also has more choice , which is what should happen when the consumer is the king, and he is also reasonably assured of the brand as it does belong to the retailer who has stakes in maintaining quality and see the consumer comes back into his shop.

Now coming to India, though retail industry is booming, close to 95 percent of it still in the unorganised sector. But this is bound to change in the coming years. The private brands are being promoted by established players like Food world, but currently are limited to cereals and food grains, which is more of grading and packing. They also have brands in laundry called Clean made. The latest is the news that reliance retail is planning to come with private brand cola, and also has plans to come up with private brands in categories like Tea, biscuit and cosmetics. So the growth of retailing will see the growth of private brands across categories and the dynamics of the industry will change.

Impact of Shopping Malls On the Older Shopping areas in a city.

Impact of Shopping Malls on the older shopping areas in a city

New shopping Malls in a city influence the flow of consumers. The consumer are attracted to the new shopping Malls and slowly the flow of consumers reduces in the older areas of the city. If one were to take the example of Banglore, and ask any old-timer about the best shopping area in the country he would vouch for areas like commercial street and brigade road, but when the same question is put to the younger generation the answer would be the Forum, Garuda or Sigma, the new shopping malls in the city. The older shopping areas like commercial street , Safina plaza have witnessed a drop in sales or are not growing at the expected rates after the emergence of the Malls in the city.

Why is this happening? is it just a fad and will the novelty of the concept fade with time. There are certain distinct benefits that the consumer gets when he decides to make his purchases in a shopping Mall, first is the hassle free parking that these Malls are providing to consumers. Even ten years back owners would ask their drivers not to park but to keep going round and round till they finish their purchases in Brigade road. Today finding parking for a two-wheeler has become difficult. Though one might find it odd that I have decided to give this as the first reason, for a hard-core banglorean the traffic has increased many fold in the last ten years and for him comfortable parking would definitely act as a major plus to his shopping experience. And that should be true for most of the bigger cities in the country today.

Second is the more obvious reason, or more choice that a purchaser would get when he walks into a Mall. Like if one were planning to purchase a pair of branded shoes and goes into the Mall, then he will have probably find most of the popular brands under the same roof, which makes his life easier. He will also assured of better stocks when he goes to the Mall vis-à-vis a single brand shop in the older shopping area of the city.

Third benefit, which he would be getting, is the combined package that the Mall owners try to provide for the consumer. The combination of shopping, entertainment and food makes it a complete family experience for the shopper. It becomes a weekend destination for the consumer to which he can come with his family in the morning, spend some time shopping, watch a movie, and have a dinner and go back to his house in the evening. The family is able to spend the whole day in the Mall and the owner’s benefit from the extra wallet share that they have gained from the combination of shopping, entertainment and food. And then there is also the benefit of spill-over, a consumer coming in to watch movie ends up buying some clothes influenced by the promotions and so on.

One of the other benefits which is quite relevant to the colder countries is that these closed shopping malls would also protect the consumers from the weather outside while shopping, which would not be possible when the shoppers are there out in the older shopping areas. It might not be very relevant in the context of India, but still can be counted as one of the benefits.
Looking at all the benefits it is quite clear that it would be very difficult for the older shopping areas to compete with Malls on these issues. Does that mean that the emergence of Malls is a death kneel to the older shopping areas. This need not be true, in his book "Call of the Mall" Paco Underhill has described how shopping Malls are in a decline in the developed countries. What the author has to say will the topic for another blog some other time.

Are Kirana Stores Dead??

Kirana Stores have been news for some time now. They constitute the bulk of retailers in the country today. And the worry is that with the advent of organized retail these mom and pop shops would close and lead to unemployment problems. This is the main argument behind stopping FDI from coming into organized retail.
The blog is not about the pros and cons of letting FDI in retail it is about how both the parties in the game, the organized retailers and manufactures are trying to collaborated with them.

The branded manufacturers have had a comfortable run in the Indian markets till now owing to the unorganized and fragmented nature of retailing in the country. They were all powerful and could dictate their won terms to the retailers, but this is changing slowly with the advent of organized retail. Companies like HLL have been forced to change their terms, and conditions and margins that they have been providing to the bigger organized retailers, they have even started appointing exclusive managers to handle these large accounts. To counter the power HLL has started some thing called `Super Value Store' programme, where the kirana stores are being refashioned to look like modern retails shops, the company buys shelf space, give retailers an additional three percent discount and provide retail training and solutions to retailers. The company claims it is a win-win situation for both the parties. The retailer gets more business and HLL more visibility,. The company is targeting close to 15-20000 shops for the programme.

The organized retailer is also looking at leveraging the kirana stores to their advantage. Reiance is said to be planning to supply it's own private brands to the local retailers in around its retail outlets. This acknowledging the fact that kirana retail as a phenomenon is not going to disappear and secondly by selling their private brands, they will have increased turnover, and the retailer would also gain from having more margins. This is also done with an aim to counteract the power of the branded manufacturers.

Thus though people would like to claim that Kirana stores will die, all the major players want to partner with them in the retail revolution that is sweeping the country.

Small Retailer - Co-opted by both the Organized Retail and Companies .

Coming back to the issue of how the small retailer is getting influenced by the impact of the emergence of large organized retail. As I had written earlier retailers like Reliance want to become a supplier to the small mom-and-pop stores in the vicinity of their retail shop. The main aim would be to achieve economies-of-scale in their operations sooner than it would be possible by selling to the final end consumer. The secondary aim would be find a bigger market for their own private brands.
The second initiative which has been taken from the manufacturers like HLL is the concept of Super Value Stores (SVS), wherein prominent and bigger of the mom and pop stores have being identified by HLL and the company is providing them with special promotional schemes and offers and merchandising support. HLL wants to co-opt these bigger retailer who contribute close to 70 percent of retail sales in an given area.
Added to these initiatives in the brand equity there was an article on how companies are targeting the chemist’s shops for more focused selling of their health related products. P&G is coming with a special campaign for their Vicks range; HLL is trying to buy shelf space in the chemist’s shops to put up special counters for their health related products. Even the small pan shops in a city are being exclusively targeted by many companies and at one point in time companies like Cadburys had appointed exclusive distributors for their low-priced products, who would be servicing these pan shops and other smaller retailers.
Cooperatives like Amul are going into retailing in their own way; they are aggressively starting 'Amul Parlors'. The aim is to have a substantial part of their turnover from these parlors so that in the future they are able to off-set the problems of increasing bargaining power of the organized retailers.
With the demand for reality market and the key locations being vied by every retailer, some of the smaller shops have actually opted to sell-off their property to these the bigger organized retailers. Which actually might turn out to be a good strategy in the short run as it will sometime before the industry stabilizes, in terms of number of players and competition.
Thus with the rapidly changing scenario I personally am bullish on the survival of the small retail shops , though they will have to respond to the challenges posed by the organized retail by becoming more responsive in service and innovate their age old way of doing business.

Ads Targeted at Children - Ethical Issue.???

The recent trend by major multinational companies of stop advertsining to chilldren must have been noticed. This issue has come into limelight in the recent years against the rise of child-obesity in the developed countries. Kellogg’s is the latest to join the band wagon, with its voluntary initiative to restrict ads aimed at kids for products that don't meet certain nutritional standards. The voluntary nature of the action is suspect as it is under pressure from health activists and many law suits, but anyway the move is a step in the right direction. Restrictions are also planned in schools in the US on the availability of junk food in schools, and allow only water, milk and juice-based drinks in vending machines and regulate the size and nutritional composition of foods sold. In India also in many states the sale of colas has been restricted in schools. Initiative of the cola majors to broaden their portfolio to include products other than the colas and gradually moving into juices and other healthier alternatives is a reflection of this changing trend.
The ethical question to be raised here is that the companies would have always known that they were advertising unhealthy products to children who would not understand the significance and force their parents to buy the product. We are not talking about small companies , most of these companies are in the top-rung of the fortune 500 list?????

Odd Sizes In Shirts and Shoes.

Have you every thought why we don't get trousers in odd sizes,33,35,37 and so on, even in shirts one would find only 39" in only some brands. The only option left for a person with a waist size of 35 is to either wear a 34 or 36 or else go for tailor-made trousers. The companies at their end are interested in reducing the number of SKUs that it would be carrying; let’s say if an apparel company introduces 5 new shades for the summer and it also wants to introduce odd sizes, then its inventories would double. This strategy made sense when the ready made trousers and shirt industry was in a nascent stage, today I think the size of the industry is big enough for the companies to offer this choice to their customers, but I think the companies have taken the easier route of not offering more choice, or maybe it is just till one company starts offering it …………..

Similarly in the case of shoes, one does not find 8 ½, 9 ½,and so on , as if feet size would be according to what the shoe companies decide.

At least in shoes abroad one is able to get the 8½’s , but in shirts and trousers?

Corporate Social Responsibility.

Today 'Corporate Social Responsibility' is a concept which is in vogue in the corporate world and it is not because it is suddenly that the corporate world has realized it's responsibility towards the society or that the current government is working towards a more “inclusive” growth. Most corporate houses have their own CSR initiatives and many of them are very well received and appreciated by the community, but today what I will talk about is how the concept is being mis-used by many corporate. The first company is Hindustan UniLever Limited (HUL).The FMCG major is a company known for its marketing prowess and brands in the country, but if one were to read the latest AGM speech given by the chairman Harish Manwani, on would get a feeling as if we are reading the activities done by an NGO not a corporate.

I for one believe that the corporate world has to come forward and take the burden off the government in promoting social issues in the country and that is being done by many companies in India and abroad, but saying that they are selling soaps to sell hygiene or to promote women empowerment they have launched project Shakti initiative is stretching the idea a little too far. The case seems to be one of claiming more than their fair share in terms of media attention and credit than they deserve. Similarly Coca Cola has come has entered into a tie-up with WWF to support freshwater conservation and freshwater bio-diversity around the world. And they have announced a $2.05 million fund for the same, which according to analysts is pocket money compared to the turnover of the company and the expenses it would incur on normal product launches and promotions. The publicity and benefits that company would like to draw out of it would be much much higher, which in itself is not a bad thing but if done with the right intentions. I also had an opportunity to listen to one of the senior executives of coke in India making a presentation on the various rural initiatives like Jalsa, Chaufaulla, ‘Thums Up Rural Games’ in villages across the country. It was as if each of these initiatives was directed at promoting the local culture and events and it was only incidental that the entry to events was only to people who purchased Thums Up....

Customer Feed Back.

A few days back I purchased a sandwich maker from one of the leading brands of electrical appliance makers in the country. The product had a two year warranty and my earlier experience with the brand had been good so readily gave the premium for the brand. After the very first use the lights which indicate whether the sandwich is ready stopped working!!!!!!!!!!!!! I took it back to the dealer and he sent it for repair. I got it back in a couple of days with the problem sorted out. But thing which struck me was I was treated as any customer who would have any repair problems with his product within the two year time period of the product, the fact that I was more frustrated because it was a new product was not getting reflected anywhere and I doubt if the information ever got captured at the company's end. Maybe they would have noted the purchase date at the service centre but is that information being passed on to the manufacturing people in the company is doubtful. The damage to the brand is more when the customer experiences problems with the new product.

In his book ‘Pour You Heart into it- How Starbucks Built a Company One Cup at a Time’, the CEO & Chairman of Starbucks Howard Schultz cites many instances wherein the customer comments written in the feedback form were used to improve service and introduce new products. The importance to the comments given by the customers can be seen from the fact that Howard himself would read many of the comments personally. When would we have our Desi companies reach that level of customer responsiveness?

Out Sourcing Marketing?? Lenovo's Marketing Hub in Bangalore.

When the Chinese PC giant lenovo acquired IBM's PC business for $1.75 billion in cash, stock and debt in one stroke, it vaulted from being the world's eighth-largest PC maker to the third-largest, after Dell and Hewlett-Packard. The brand Lenovo chalked out a five-year transition to switch to a Lenovo-only brand -- it has a five-year brand licensing agreement with IBM to use its brand. The branding initiatives of the company have been criticized by many marketing experts like Ries& Ries.

The latest development in the marketing front involves making Bangalore the global marketing hub from where it would drive all the marketing initiatives of the company. The hub is expected to formulate marketing strategies and create marketing deliverables for print and online. It will also track the effectiveness of the marketing campaigns launched by the company around the world.

There are many reasons for the choice of India as a Hub for its global marketing activities, some as stated by the company; Indian marketing and creative team is currently its best and has the experience of building brands from scratch. Others include the fact that they want to route all their marketing deliverables including advertisements and brouchers through the hub and thus avoid duplication and the obvious advantages of reduced costs of having it done in India.

Another reason part from the talent and cost savings by shifting operations to India is that by doing so they would be closer to a market which they consider to be one of the most important one in their future growth plans, but the question is outsourcing Marketing activities to India the same as outsourcing your call center activities or maybe your pay roll processing? Is it not going back to the centralized system, where the marketing people would be too far from the markets in which they operate???

Rural Marketing Case-1, Maruti in Overdrive Mode In Rural India.

MUL has started targeting the rural markets aggressively, with an ambitious rural marketing drive. It has tie-ups with Regional Rural Banks for car finance. The campaign which started early this year , has started showing results. The rural sales figure stands at 2,700 cars and generated about 20,000 inquiries through its rural scheme. The break-up for the cars shows 50% of the cares sold were Alto and 20 % Maruti 800. The success is attributed to the increased focus on these markets and the appointment of Rural Sales Executives by dealers. The number of Rural Sales Executives is at 1500 and many more will added according to the company sources. These Rural Sales Executives belong to the same area and are stationed there itself. Through this the company is aiming at improved interaction and more conversion and improved comfort level with the sales personnel.

Apart from the dealer network the company has been an active particpant in the major Melas in the rural areas. Last one year has seen the presence of Maruti in rural melas like the Kisan Mela (Ludhiana), Sonpur Mela (Bihar), the Kila Raipur Sports Mela (Punjab) and Pushkar Mela (Rajasthan). The Melas provide both a platform for demonstration and improving product awareness, but also to book cars. One the schemes offered in the Melas included booking a car for only Rs 500 (plus three silver coins given free per booking).

Thus in this case the company is using both it's established dealer network and also Melas where it can meet many people who cannot be reached by its dealer network. Through this the company is able to address the 'accessibility' issue of rural markets, and by employing local sales people it is trying to address the 'acceptability' issues.

Does Market Leadership Makes One Complacent??

Have you ever observed or thought, why is it that market leaders in a particular product category are not able to carry-on with their leadership when the product category moves into the level technologically? The best example which I can recall is the case of mosquito repellants, initially it started with the "Tortoise brand" of mosquito repellants which were coil based and one had to burn them to smoke away mosquitoes. The next jump in the technology came with the introduction of mats, and it was a set of smaller unknown companies which came with the mat-based repellants , some of whom were later taken over . The next round of improvement in the product offerings came with the introduction of vaporizers and ‘Good Knight’ was the one which captured the market leadership position.

The pattern thrown up is that the market leader is not the first one to spot the change in the technology and capitalize on it, leading to the loss of market leadership position in the product category. The question is why does this happen? does the company become too obsessed with the fact that it is the market leader and losses touch with its customers, or that the company is so busy selling the product that in the process it looses focus on the customer 'needs' it is serving. I feel a similar trend can be seen emerging in the water purification business, Eureka Forbes has been the market leader in the segment for a long time, but with the next round of technologies coming in like the Reverse Osmosis machines, the edge is with other companies like Kent RO and others ,,,,,,are we again seeing the cycle repeat as in the mosquito repellant industry....there are many more examples of this phenomenon in the marketing world.

Two Important Marketing Events .

I couldn’t resist the temptation of writing on the two important marketing events across the world. First, the launch of iphone by Apple yesterday, and the launch of the seventh and the last book in the Harry potter series. Both of these events are I would say the most hyped events of the last few months. For the i-phone, Apple and Steve Jobs have done a fantastic job creating buzz in the blog world and there are many reviews on the internet. The phone itself would take time some to reach India, though the grey market is promising unlocked phones in a matter of few weeks.
The second event - the launch of the seventh Harry potter book would happen simultaneously in India and many of the country’s prominent book retailer are preparing for a gala launch for the book. The retailers expect the sale of the book to be good, but an article in Business week points out that the book is no longer profitable for the retailer in the US and UK , as most of the retailers are selling the book below cost. They are using the book a loss-leader to attract millions of consumers into their shops by offering heavy discount on the Potter book.

Even the shares of the original publisher Bloomsbury also plummeted by three-quarters as revenues fell during the period the author was busy writing the book. If J K Rowling’s does end up killing the Harry in her seventh book, one can only guess what would happen to the shares of company. Though the consumer is not complaining about the discounts that they would getting in the new book .....

Car For " Bottom Of The Pyramid" Customers.

A car for one lakh rupees. This is what many automobile companies are trying to build. Our home grown Tata Motors and the infamous Singur small car plant is supposed to be working full-time to launch the car by mid of next year. The Forbes magazine calls it the next people's car after Ford's Model T, Volkswagen’s Beetle and the British Motor Corp's Mini. Apart from Tatas the companies which have expressed their interest in building the ultra lost car includes Nissan along with Mahindra and Mahindra, Honda motors, Hero group of Munjals and Bajaj Motors. The question is what is so special in rupees1 lakh car? Accepted that pricing itself is one big selling point.

I think it at this time it is worth while to remember the pioneer of low-cost cars , Henry Ford. People consider him to be a production genius who introduced the assembly line manufacturing system to the world, but marketers believe his true genius was in the fact that he calculated the price which would make a car affordable to most people in the US and working backwards he came up with a manufacturing design which we know as assembly line manufacturing. The initiative to come up with a rupees one lakh rupee car is an initiative in the same direction, at the price of one lakh the a car would become affordable to many Indians who travel in two wheelers and public transport.

The appeal of the low-priced car would not be limited only to India but would be in demand in most emerging countries, China, Brazil and so on. With the car markets in the US and developed world getting saturated it is these markets which would be able provide the growth for the automobile manufactures. The Forbes article claims that the one lakh rupee car from Tata Motors would represent a victory for those who advocate making cheap goods for potential customers at the 'Bottom of the pyramid".

The Market Definition Challange.

As a marketer one needs to "define" the market for the product or service which he is trying to sell. The way you define the market would decide the remaining mrketing variables and the competition which you are facing.And that in turn would decide the various marketing strategies which you would adopt.

Define it too broadly and the focus might be lost and too narrowly you might end up losing the next big opportunity in your own market. The seminal article ‘Marketing Myopia” by the marketing guru Theodore Levitt in the 1960's emphasized the importance of moving beyond the product and defining the market on the need it is serving.
A few examples, which would help illustrate the concept.

The first one was when M S Banga was heading HLL he insisted on defining the market for soaps as a factor of people taking bath and calculate the market share from there on. So even though the company might have a market leadership position in the soaps markets but if the share were to be calculated on the share in the bathing, it would be much smaller because the market defined itself is bigger. Second was the how Jagdish Kattar looks at the markets for MUL products, he says the potential market is the people traveling on two-wheelers and how can the company make products which would be able to break into that market. In the case of MUL, cheaper auto loans did help it tap into the two wheeler market.

Similar attempts to break-into other product categories can be seen chocolate manufactures positioning their product as ‘”Snacks”-Nestle Munch, or as a “Energy Bar” – Cadburys Five star. This increases the product usage opportunities, and the market definition is broadened to include other product categories