Anghsuman Paul writes about the challenges that food entrepreneurs in India are facing,

especially when it comes to creating and sustaining their brands

“India produces the largest number of fruits and vegetables and there is a huge market for such agri-products globally. So we really don’t know why there’s no Indian brand in this category yet!” That was Holly Higgins, Agricultural Minister–Counsellor, US Embassy, replying to our query whether Indian business can ever create a global food brand. His words are almost prophetic if you simply analyse available data in a country where even today arguably 74% people are still dependent on agriculture for their daily income. In the backdrop of this lush-green poster, not being able to boast of a single Indian food brand that has a global presence comes as a real dampener!

While India has failed to create and sustain a captive food brand, American brands like Kellogg’s and global food giants like Nestle and Heinz have not only stamped their footprint across the country, but are also growing furiously at about 10% year on year. Sure Indian players like Dabur and Parle have succeeded in creating successful food brands within the country, but even they have failed to create waves on the global stage. So here’s the pertinent question – what have the Indian food giants missed out on when it comes to creating a niche for themselves in the global food market?

First, let’s talk quality - the quintessential ingredient for any food brand. Elisabeth M. Kein, Former President, American Society for Quality feels that entrepreneurs in India find it a tad difficult to adhere to the stringent international standards on this front. She explains that “most global food brands have created their corporate credibility through their high standards” and that most are happily encashing this credible corporate image by launching numerous brand extensions. Be that as it may, one cannot deny the fact that given a conducive environment, Indian players have it in them to establish powerful brands that can be a force to reckon with in the global market. For instance, according to FICCI’s export data, there are 40 small and middle-scale companies who are exporting fruits, vegetables, spices and pulses to Europe, USA and Africa, but all of them prefer to merely export to big retailers globally, rather than take on the headache to invest in their own brand building. Simply look at the foreign operations of an Indian player like Kohinoor Foods Ltd., and you find that over the past two decades, 90% of its production volumes have been exported to global retailers like Walmart and others. The sad part of the tale is that Kohinoor has never stopped to ponder otherwise. So, what really is holding Kohinoor back? “If they create a brand, a global retailer like Walmart will never buy from them,” explains Elizabeth.

Besides, creating a brand takes time and most entrepreneurs in the business don’t possess the deep pockets to be able to afford the long break-even periods involved. So instead, these players have gone the Chinese ‘export’ way (by hedging the aforesaid investment and brand-building risks) and therefore kept themselves at a safe distance when it comes to investment risks.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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A face to sell the tall car

Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎

The Indian automotive industry has been associated with Bollywood for a long time now. While Shahrukh Khan has been able to wave his magical wand around Hyundai, Aamir played to perfection the role of a sweet boy next door driving in the family car Innova. What’s more, within four years of its launch, Santro became the second largest selling car in India, convincingly displacing Maruti’s Zen. Now that’s what we call effective use of celeb to multiply brand promise. However, the market leader Maruti, except for a few occasions has steered clear of roping in a brand ambassador. So the million dollar question remains why Maruti has roped in Madhavan now and why for a best seller like WagonR? Does Maruti Suzuki actually need a brand ambassador to endorse its products when many believe that its brand equity is strong enough to pull volumes straight away?

With a steady stream of launches, innovative schemes, attractive finance options, Maruti has been able to keep competition at bay. And more recently with the launch of Swift, A-Star, SX4 and Ritz, the company has made a definite attempt to change its position from a people’s car maker to a more radical and technologically advanced carmaker in the consumer’s mind. However, barring A-Star the rest were bereft of any brand ambassador. “Brand ambassadors are required to create a new category, as, with them being associated to a particular brand; chances are that the product will gain initial volumes easily. We did the same with A-Star, as it was aiming to create a new category in the hatchback market,” clarifies Srivastava. But then, one can always put a question on Maruti’s move to rope in Madhavan for WagonR as it is almost a decade old brand in the country. “Madhavan is very famous in the southern region of the country and as the company is focusing on this region/belt to garner high volumes, Madhavan surely fits the bill,” avers Srivastava. In fact, the company is also planning out aggressive BTL activities in the southern parts of the country to bank more volumes and if experts are to be believed then these attempts will only make the market leader much stronger in the southern domestic market.

Maruti, however, has no plans to rope in a brand ambassador for the launch of every new product. Rather, the automaker plans to follow its clearly designed approach of using a brand ambassador in case of creating a new category in the industry. “Maruti enjoys a very high brand recall and has equally good amount of brand equity but after a certain extent the brand is not good enough alone to pull volumes and that’s where an association with a known face comes into picture,” affirms Srivastava. And now the grapevine is abuzz with the news of Maruti roping in a brand face for the refreshed SX4, simply because the power packed sedan is trailing behind the segment leader Honda City. The marketing honchos at Maruti feel that with a brand endorser coming in the picture, it may bring SX4 at the top of the C+ segment. Although the company did not confirm, in all likelihood hunk John Abraham will be the face for the new SX4 as his machismo personality matches the all male SX4. The appeal of John and the tag line, ‘Men are Back’ are in complete sync.

Be that as it may, it will be interesting to see how the sales figure of WagonR and SX4 behave in the coming months as a lot of it will reflect in the marketing strategy of the upcoming Maruti brands.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Get ready for the kill!

‘Marketing database’ is increasingly becoming a strategic weapon for firms to win over their competitors in an overcrowded marketplace...

It’s said that the role of marketing is to “create customer”. By identifying the right need, right prospects for that need, creating the right solution for the need, and then communicating the value of the solution to the prospect, marketing can indeed create a customer. In fact, moving from mass marketing ‘then’ to targeted marketing ‘now’ has definitely added to the ability of marketing to create a customer.

Further, the use of technology for marketing and connecting to the customer is gaining salience. Kevin J. Clancy and Robert L. Shulman in their book – The Marketing Revolution – write “With enough computing power, you have got a marketing department in a box”. That’s a powerful statement, but then, that’s the reality. Your marketing database can provide you with the strategic weaponry to win in the market place. It can even change your ability and effectiveness to communicate with the customer.

Rob Jackson and Paul Wang, in their book – Strategic Database Marketing – write, “The efforts of some database marketers have provided momentum for a fundamental change in the use of a database as a communications management tool”. Jackson and Paul go on to say “Customer contact marketing has three fundamental principles. The first principle is, view the customer as your primary asset. The second is, create an outside-in marketing philosophy. The third is, manage the communications process.” Clearly, if you believe that customer is your primary asset and not your product or service, marketing database about your customers and prospects becomes your primary and strategic asset. Further, if you were to put a monetary value to your marketing database, it may come as a surprise. For instance, a typical average cost of getting a new contact is $20 and even if there are just 25,000 contacts in marketing database of a small business, it means the database can be directly valued at $500,000.

Marketing database is key to success in the marketplace – whether it’s to get new business from new customers or expand business with existing customers, or even in the event of crisis management. The advent of customer relationship management (CRM) systems and implementation of such systems in many large organisations did improve the marketing database quality somewhat, as many operational computerised systems started interfacing with CRM system, which necessitated that the CRM database is accurate. However, the penetration of CRM systems is still far from satisfactory and smaller firms are yet to automate their sales and marketing operations covered by CRM systems.

While the task of creating a central marketing database is not trivial, the real key to ongoing success is the maintenance of the data to keep it current because of the speed of change in customer and prospect organisations. Business data degrades at the rate of 3% to 6% per month. This may mean, one third of your information on business buyers and prospects may be inaccurate and ineffectual for sales and marketing use by the end of each year.

In fact, a search study by Sirius Decisions found that from 10- 25% of B2B marketing database contacts contain critical errors – ranging from incorrect demographic data to lack of information concerning current status in the buying cycle. Ardath Albee, CEO of Marketing Interactions and author of the upcoming book ‘E-Marketing Strategies for the Complex Sale’, says “You can lift revenues by 70% by cleaning dirty B2B data. And yes, that 70% lift is true for strong organisations utilising clean data.”

Thus, targeting contacts with relevant messages from an accurate database is the key. But, without clean, complete and accurate data, this is not possible. Marketing departments need to provide increased attention, effort and budgets to create, expand, update and utilise marketing database, which is increasingly becoming a strategic resource in ‘creating customers’ for the business.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Shashi Sinha, CEO, Lodestar Universal

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4Ps: So how much business have you added to your portfolio in the last year?
SS: I can say Rs.300 crore, but such numbers are false. I mezan there was this big brouhaha about a telecom player recently, which has still not launched its services. And that how their multi-crore campaign has gone to this agency or that agency. But in our business, it’s only the work you have really done finally. We at Lodestar have done some great campaigns in the last year, including Xylo, Tata Nano, Mahindra two-wheelers...

4Ps: Chennai too has added some new businesses...
ND: Yes. Chennai has been busy. We’ve picked up big ticket wins like Indian Terrain, Scholl, Style Spa and Inbisco.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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A deal that was never meant to be

Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri

It was a marriage that would have pleased many, but the courtship period turned out to be too long and too demanding. So, there was no option left, but to scrap the thought! Though the two could-be-partners, Bharti Airtel and MTN, may have lost big time in terms of business opportunity, but in terms of share prices they have gained generously. On the day the exclusive talks were dissolved Bharti saw its share prices rise up to Rs.435 (4% increase) and the MTN shares rose up to 657 rand. Says a report by Ambit Securities, the rise has been because it finally did away with the uncertainty involved with the two companies. While the move does open a roadblock for Bharti, which is now looking for new partners; the same doesn’t hold true for MTN. It has been the third time, within a year that MTN has called off a deal. First it was Bharti; then it was Reliance Communications and then again Bharti. While some say that the fault lies with the companies, some say that it’s a shrewd step by the South African government (who passed on the buck to Indian government saying it didn’t agreed to the dual listing of the new entity). Whatever, the case may be, but calling off the deal certainly put a question mark on brand MTN as a reliable partner. And now that it’s looking for a new partner, companies will be skeptical in joining hands with it. Even if it does find itself a new partner there is no guarantee that the deal will fructify. Some people always remain single, they say!

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Riding high on optimism...

Despite tough market conditions and drop in consumer spendings, Sony India maintained 20% growth in FY08. And the optimism is flying high this year around too as Takakiyo Fujita, GM-Marketing, Sony India, discusses its growth plans for the current year...

4Ps B&M: Given the current market scenario and the up-coming festive season, what are the key focus areas for Sony India?
TF: Currently, we are focussing on product innovation, technology and investment in marketing communication across all our product categories especially BRAVIA LCDs, VAIO Notebooks, Cyber-shot Digital Still Cameras and Walkman MP3 Players.

4Ps B&M: What kind of growth are you hoping to achieve in the current fiscal?
TF: We’ve set different growth targets for our various product categories and therefore have different strategies, initiatives and plans for the key segments. We aim to become the No.1 player in the LCD category in FY09 with 30% market share and for this, we are targeting a sale of 4,00,000 units in FY09. For cameras and camcorders, we plan to achieve a significant lead with 42% market share in Still Camera market with expected sales of 5,00,00 camera units in FY09. In the Walkman category too, we plan to capture 30% market share by 2010. We expect sales of 1,80,000 units in FY09 and target sales of 3,00,00 by 2010.

4Ps B&M: And how do you plan to achieve the sales targets for these product categories?
TF: By offering unique products to our customers coupled with innovative technology, channel expansion and increasing marketing investments. The growth forecast is based on Sony India’s three pillar strategy of ‘Brand Enhancement’ by focussing on strategic marketing investment on growth categories, ‘ Channel Development’ that will effectively strengthen the wide distribution network and ‘Local Talent Development’ that aims at successfully nurturing employees to become high-quality local leaders thus improving the business infrastructure

4Ps B&M: Talking about channel expansion, how do you plan to go about it?
TF: With 4,000 dealers and distributors, Sony has its footprints across all major towns and cities in the Indian market. We have 240 exclusive Sony outlets across 72 cities and our current plans are to consolidate these channels stores.

4Ps B&M: Given the intense competition in the consumer electronic sphere, advertising and marketing becomes imperative. How much budget has Sony India earmarked for the same?
TF: We’ve planned aggressive advertising and marketing strategy for our key categories. We’ve designed an integrated 360-degree marketing strategy and our product campaigns include ATL and BTL activities involving print and electronic media, online, outdoor and shop-front. Our total marketing budget for FY09-10 is Rs.200 crore.

4Ps B&M: Why is that Sony India has never signed a celebrity to endorse its products, despite being in India for a long time?
TF: Globally, we have a brand ambassador. But in India, we think that we don’t need a brand ambassador for our products because we have always let our quality speak about our credentials. Moreover, this is our strategy to differentiate from others.

Neha Saraiya

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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MEET THE GURU NO. 2

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The number two crown in the handset mart is a slippery devil. But for now, it seems that incumbent (albeit distant) Samsung Mobile may be here to stay for the long haul!

Markets, like life, are unpredictable and often unforgiving. A couple of years ago American handset maker Motorola was basking in the reflected glory of its successful model RAZR. After Nokia, it was a clear number two in India’s cluttered handset mart. But the picture changed fast and in just the next ten months, Sony Ericsson found itself sitting tight on the number two throne. Unlike Moto, Sony Ericsson’s claim to fame did not begin and end with one blockbuster model. The company had gained prominence in an entire segment viz. the mid-end market (between Rs.6,000 – Rs.12,000) through its powerful Walkman series and had Hrithik Roshan tapping sinuously to their thumping tones. But, the Sony Ericsson euphoria was short lived and lasted for just about a quarter. Last year, Korean giant Samsung Mobile swooped in to snatch away the crown.

Compared to Motorola and Sony Ericsson, Samsung Mobile’s stability at the number two spotlight seems more lasting, largely because of its two fold game plan. First, the company has made a great impact in the low end market through its Guru series of handsets. Secondly, its effectively priced touch offerings have made it the strongest handset maker in the mid-end category. Apart from effective marketing and robust distribution, to succeed in the Indian handset industry, critical touch points include having an efficient component sourcing, low cost product manufacturing and low cost engineering design. And Samsung has been getting all these right in recent years. Already a strong player in terms of manufacturing and component sourcing, Samsung also seems to have got its distribution strategy in place now. The missing link has come into place in their latest lifestyle positioning with Aamir Khan as brand ambassador. Given that Shah Rukh Khan was endorsing Nokia, Bachchan Junior was professing his love for Motorola and Hrithik Roshan’s loyalties were enmeshed with Sony Ericsson, Samsung too needed a powerful face to promote the brand. And with Aamir they seem to have found just that.
“Another factor that helped Samsung in marketing of its low-end portfolio is that the company offers a wide variety of feature rich phones at competitive prices,” offers an industry analyst. Factor this: Samsung is currently offering as many as 15 products in the entry level portfolio as opposed to 13 being offered by market leader Nokia. Though the difference here might be insignificant, but the distinguishing factor for Samsung’s entire portfolio comes from design. This is unlike Nokia’s strategy, wherein most of its entry level phones look almost similar. Samsung through its communication for the Guru series has also focused on highlighting features like loud sound, flashlight, et al, which are relevant to Tier II and III consumers. And that’s apart from loading these phones with features like mobile phone tracker and fake call activation, normally associated with mid or high-end phones. The fact that these phones are moving off the shelf fast is also delighting distributors and vendors alike. Unfortunately, this is where the good news ends. Samsung’s share in the category is under 10%, whereas Nokia commands a whopping 58% of the market. Besides, smaller and nimbler players like Fly, Intex, Spice and Micromax are a clear and present threat. With Nokia on top and these players below, Samsung Mobile’s No. two position is literally being squeezed from both ends. To counter competition, the Korean major is planning to launch about six to nine new handsets at under $100 to boost its portfolio.

In a bid to woo the well-heeled consumers, Samsung also entered the high end touch-screen category last year with the OMNIA and has kept the excitement going with the subsequent Pixon, Beat DJ, Star, Jet and the latest Android powered Samsung Galaxy. Says Asim Warsi, GM-Marketing at Samsung India Electronics Ltd., “In India, we are currently offering about 11 touch screen devices and would be looking at launching many more in the times to come including some more Android devices in this year itself.” Given that Samsung Mobile expects the market for touch screen phones to double this year and has enhanced its product offerings accordingly, they estimate that touch screen phones will contribute “around 10% of (their) total mobile volumes this year,” says Ruchika Batra, spokesperson, Samsung Mobile.

“Most companies offer top end products to balance their product portfolio and the same strategy applies to Samsung. They have a decent line up which they would soon enhance with more Android devices,” shares the CEO of an organised mobile retailer. The only stumbling block in Samsung’s smartphone journey could be the unavailability of applications and softwares. To deal with that eventuality, the company would be soon offering its own application store (like the Apple App Store or Nokia’s Ovi) that would offer free and paid content for most of their portfolio.
But climbing and winning the handset market mountain in India is a distant dream for Samsung Mobile. For now, the biggest challenge it faces is to maintain its current momentum through aggressive marketing and fine tuning of its distribution line-up. With local and smaller brands becoming more aggressive and Chinese price-warriors like ZTE and Yulong (in partnership with Reliance Communications) jumping into the fray, Samsung will have to ensure that it keeps its costs in check. It’s well known that manufacturing costs in Korea are 25% more than China, but the success of Samsung’s latest Star series has proved that this Korean has learnt the fine art of value pricing for the Indian consumer. Perhaps that learning alone is enough to help them warm the number two seat for much longer than some of its worthy peers. Maybe!?

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Lusting for eyeballs!!!

Roadies’ success made reality shows staple fare on GECs. They too wanted more than just housewives...

It was a real shocker when Rakhi Sawant’s mom Jaya walked the red carpet at the much hyped premiere of Big Boss 3. To live upto the high benchmarks of the drama dose set by her daughter, Jaya started her action packed, tear-jerking theatrics even before entering the Big Boss house. But poor Jaya is simply a part of the larger strategy of GECs to grab eyeballs. After the death of Kitchen politics on TV, sleazy wars between real people resulting in real drama and real tears (almost real) is the lethal weapon that channels are stacking up for TRP wars.

The positive side of the story is that channels are exploring various sub-genres within reality, giving a break to the audience from the overdose of music and dance shows. So you have shows on adventure and fear, on in house celeb politics, on wrestling , on parenting someone else’ kid et al. Moreover, reality shows that started as a weekend change fare now served as a daily staple on GECs. Star Plus leads the pack with two reality shows Aap ki kachehri and Perfect bride. Colors currently has Big Boss 3 on air after Khatron ka Khiladi 2 concluded recently. Sony has just launched Dance Premiere League. Imagine has the controversial Pati Patni aur Wo. “It’s all about making the drama real! With real tears of real people! Most of these shows are an exaggerated version of the fiction show”, says Sukesh Motwani, Creative Head, Zee TV.

This increased focus on reality content is because GECs are looking beyond housewives. And why not? When around 60% of the country’s population is below 30 years of age! And 93% of young India watches TV. The age group of 15–24 SEC AB spendS 2.5 hrs/day on TV, which makes them the highest TV consuming audience. Sunil Lulla, Director, Real Broadcasting says, “I think this is the time when channels have started looking at TV viewing habits from the demographic perspective too.” This strategy is paying well for the channels. Sach Ka saamna, the boldest show on TV, got impressive opening of 4.59. The finale of Rakhi ka Swayamvar on Imagine got 6.3 TRPs, highest in the channels’ history. Imagine quickly pick the clue and has already announced the second season of the Swayamvar with Rahul Mahajan. Also, the channel has another highly controversial show Pati Patni Aur Wo. Quiz the channel’s captain Sameer Nair about his deliberate strategy of roping in controversial celebs for eyeballs and he sheepishly admits, “People will watch the show only if the celebs are interesting.” Surprisingly, Zee doesn’t have any such shows. Motwani says, “We are not shying away from them. We will be exploring the space soon.”

So what if Big B’s charismatic presence failed to boost the TRPs of Big Boss, the channel is still hopeful that wanna-bees like KRK, Jaya, Sherlin Chopra, Shamita Shetty et al. will bring those eyeballs to the show which Big B failed to! Didn’t someone say everything is fair in love and war! Or Should we say in love for war!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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“I miss the M from MTV...”

Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine

Cyrus Oshidar, who nurtured MTV for over a decade, reminisces the old days.

I still remember the early days at MTV. The days when I use to work on the wooden table hired from the chor bazaar of Mumbai, which was Bombay in those times. Those were the days when we were trying to bring the local flavour to MTV. And in that process we aired songs like Jawaani Diwani. “Oh my God! It’s so down market” is how the channel’s management reacted at first. I didn’t really think I had a job after that but luckily the audience really loved the channel in its new avataar and we never looked back after that. In those days, everything about the channel was small be it TRPs, budgets or show formats. Cheap and cheerful was the core mantra at that time and shows like Bakra, Filmi Funda, Fully Faltoo, One tight slap became the soul of the channel. It was all about being raw and edgy. We didn’t even bothered about ratings in those days but slowly things started changing. Music was dead on television and so M from MTV died. But that was the need of the hour. Since music was no more the exclusivity, we had to explore new terrains. In all that madness, we even tried fiction. That was a blunder. And then Roadies happened! I brought the show to the channel but slowly I started missing the soul of MTV and that’s when I decided to call it quits. I feel that in the last three years everything on the channel has become big: be it ratings, budgets or the show formats. That is absolutely the right direction and that’s what the global trend has been. But personally, I miss the old DNA of music and masti. That’s why I have not watched the channel for a long time but that probably shows that they are on the right track. After all I am 45 years old. I am not their target audience!

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
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Now let’s get on to the branded war!

ZTE came out of nowhere to shake the global handset industry by offering ultra low cost handsets. It now plans to offer its own brand lineage in India, Surbhi Chawla finds out if it will be able to make the idea click amongst the Nokias and Samsungs of the world?

“One fine day our Chairman Hou Weigui woke up from the wrong side of the bed and announced that the company would now be entering the handset domain,” D. K. Ghosh, Chairman and MD of ZTE India amusingly informs 4Ps B&M. Well, that’s how ZTE Corp., which kicked off its operations in 1985 and was dealing in telecom equipments and infrastructure, decided (in 1990) that they would be entering the handset industry (though there were no real synergies). However, its biggest strength when it started off was the cost advantage (don’t forget it’s a Chinese company) that it could offer and ZTE made optimum use of the same to establish itself as the Ultra low Cost handsets company. For starters, it’s already the sixth largest handset player in the world and inching closer towards displacing Sony Ericsson.

Even in India ZTE is the fourth largest handset player with 5.6% market share. The company has been offering service operator branded handsets in the country for over 15 years now and has already sold more than 25 million handset through its clients Reliance Communications, Tata Teleservices, Vodafone, Virgin Mobile, Spice mobile, et al. Interestingly, this Chinese player had clocked in revenues to the tunes of $1 billion from its Indian operations in the last fiscal and claims that 50% of these revenues were from its handset business. Having learnt some tricks of the trade now this company is even planning to have its own brand of handsets in the Indian market. But the big question is – will ZTE able to make a mark of its own given that there are already many established players in the country. And not to forget that it’s one of the late entrants to get on the bandwagon, which is already cluttered? “The Indian telecom market is growing at burgeoning pace and there is great demand from both, the first time users as well as consumers seeking replacement. ZTE is primarily seen as the phone for the low rung of the consumer, which till now has been dominated by Nokia. Even Micromax and Samsung have started to take some share out of this market. So it would be difficult for ZTE to make its mark,” avers a handset expert.

ZTE too on its parts realises that the task to sell handset in its own name would surely not be a cake walk with distribution being one of the critical aspect. Therefore, it has tied up with Overseas Mobiles as its national distributor for mobile handsets. “This is a field that is completely new to us and the distribution channel for handsets is much like FMCG. Had we entered it directly it would have been a disaster so we got an expert to do it for us,” reasons Ghosh.

In fact, with the help of this partnership, the company has already started to offer the first few handsets models in the eastern parts of the country including Kolkata and it plans to make a national presence before Diwali. The company is also looking at making a large outlay in terms of marketing in the form of 360 degree advertising campaign that would be well supported by BTL activities like road shows to make ZTE a mass brand. The company is so confident with regards to its marketing initiatives that it claims that by March-April 2010, it would be one of the most recognised handset brand in the country and would have sold about 1.5 to 2 million ZTE branded phone by that time.

But then, the question that pops in the mind is that will it continue to offer operator branded handsets now that it is planning to launch its own lineage as well? To this Ghosh answers, “Both operator branded phones and our own brand of phones would be important to us going forward”. He also states that the features that one needs to add in operator branded handsets are directed separately by each operator, but through its own brand it would be packing in features that it feels are relevant for its target market.

Though ZTE is currently looked at by the service operators to offer low end phones, but under its own brand it would be offering an entire range of products to be relevant to all aspects of the market with a special focus on the low end phones in the rural market and mid-end market in the urban pockets. Looks like this company has done its homework well and given the price differentiation it seeks to offer, but then it shouldn’t forget that the Nokias and Samsungs of the world are there to give it good run for its money. Hope you wake up from the right side of the bed next time, Mr. Weigui!

Surbhi Chawla

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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“In india, for india...”

B&E: How did you started off in India?

VR: GE Healthcare came to India in the year 1990 through a joint venture with Wipro Corporation. We obviously started at the bottom of the table as most of the big players had established business in India. GE Healthcare was represented through a GE business unit called IGE, which had some presence in the X-ray imaging business. Thus, our immediate vision was to establish ourselves as a top-of-the-line medical equipment supplier and a preferred partner for Indian healthcare practitioners.

B&E: So, how has been your journey till date?

VR: The biggest challenge we faced was do get business from the government. As we were a new entrant in the market therefore we could not grab a good mind share and were able manage only a meager percentage of its business. It took us time to educate them on our technology and service capabilities. However, today, with our investments in technologies, resources, education, et al, we are getting a good chunk of government business as well. Other learning was to bring in more local products and solutions for the local market. We believe we could have accelerated with “In India, for India” solution a lot earlier.

B&E: What is your advice to a MNC that plans to enter the Indian market in the near future?

VR: India is a huge market, but it’s a unique market. On one hand, it has an urban market, which is at par with the developed world, on the other it has a huge under-developed market that is crying for basic necessities. I would say that the key to growth in India to get a deep understanding of the Indian consumer. One should be patient enough to play a long innings and should bring out products/solutions that are aligned to Indian consumer needs.

B&E: What, according to you, are the factors that must be taken care of by the government?

VR: Infrastructure is a big issue here, whether it is road, electricity or healthcare, it really needs to be improved. However, government seems committed to growth and is willing to invest in infrastructure. It’s a very good sign.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Fastrack grow as an independent superbrand

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To support new launches and to connect more with its target audience, the company is looking for a 360-degree mass market and integrated marketing promotion across many media vehicles (with a huge focus on radio broadcast). But there are challenges too. Today, the brand is facing an issue regarding distribution channels. For instance, in case of watches, except for Titan exclusive showrooms, neither are the other retailers stocking the full range of Fastrack watches, nor are they offering many of the new products launched by Fastrack.

However, to counter such bottlenecks, the company is planning to establish its own Exclusive Buying Outlets (EBOs) on a pan-India basis. To quote a number, it plans to open 50 such EBOs across tier II cities, as well as in metros by 2010. But at the same time, the surging real estate costs may pose a huge challenge to opening up new outlets. So is investing such amounts worth the risk? A confident Bhasin defensively argues, “Till now we have eight stores and most of them have reached break-even within just a year. We also know that even our most recent investments would generate good returns soon.” Not a hollow boast as its store in Pune can get loud about 50-70 footfalls per day. With the sales conversion rate falling in the range of 50-55%, reaching break even within 11 months of its opening appears real. The reason for reaching break even so early can also be attributed to the geographical positioning of these stores, as most of them are located in the youth catchment areas, such as near colleges, et al (to cite an example, the store in Bangalore is located in Bel Road, next to Ramaya college).

Today, 25% of Titan’s revenues come from sales of Fastrack watches. And what’s better, to further fuel and support the growth of these stores, the company has plans to roll out more merchandise categories and is planning to promote such products online. However, for now, the company has no plans of manufacturing the products in-house, and therefore plans to outsource all its requirements.

Talati may have been worried when Timex broke its ties with Titan, but for sure, Fastrack has burnt past tracks in time for Titan to be rest assured that they have another winner of a brand in their pockets. While on one hand competition is pouring over all kinds of blueprints to slice through Fastrack’s growing charisma; Talati and his youthful team on the other hand are optimistic that core attributes like ‘fashionable’ and ‘affordable pricing’ will attract more young consumers toward Fastrack; after all, that alone has helped its metamorphosis into a complete accessory brand that it is today.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Quagmire TV: LIVE!

While DTH players are trying to gain subscribers in the face of challenges by peers and Cable TV operators, they are wondering – “How do we do it?” arun roy transmits the direct-to-home ‘service’ solution.

“Not only are cable frustrated customers switching over to DTH, but many Non-Cable and Satellite (C&S) homes/cable-dark areas are turning to the service for home entertainment...” These are the words of Sugato Banerji, Chief Marketing Officer – DTH, Bharti Airtel, which explain how the DTH business is growing from a niche delivery mechanism into a mainstream business in India. The industry has seen significant growth over the past few years, with the number of subscribers increasing from a 1.5 million subscribers in 2004 to over 16.9 million as of August 2009. So how big is this number slated to grow to? Talking about the future of the DTH growth, an optimistic Banerji opines, “The DTH market has tremendous growth opportunities with the count of subscribers expected to reach 45 million by 2013 from the current 13.5 million.” The industry till date has been growing at a CAGR of 35% and is further forecasted to grow at around 30% over the next three years! Though the current number of DTH subscribers constitutes only a meagre proportion of the total number of over 130 million TV households, superior digital quality of video and sound along with interactive services and real-time recording and increasing number of value added services (VAS) are particularly enticing the Indian consumers to try their hands on DTH services.

The India DTH market is currently served by six private players – Dish TV, Tata Sky, Sun Direct, Big TV, Airtel Digital TV and the most recent entrant Videocon. Six providers, indeed, but the issue here is in differentiation of content, for each offering appears a twin-sibling of the others! As far as the consumers are concerned, their final choice of operator is not made on clear distinction of services.

The channel black outs by local operators and frequent pay-channel hikes by broadcasters had led to the demand for the introduction of ‘addressable system CAS’ by consumer protection groups in 2003. The scheme was rolled out in the three metros of Mumbai, Delhi and Kolkata. However, there were not many success stories to write about them as Shushmul Maheshawari, Chief Executive, RNCOS E-Services Pvt. Ltd, agreeingly elucidates, “Mandating CAS or DTH in some parts of the country haven’t brought fruitful results to the DTH industry... 25% of the subscribers subscribed to pay channels, while the remaining were content with the Free to Air (FTA) channels.” Of course, that calls for a very poor proportion of what was expected when the estimations were made public before the rollout happened. The main reason for low response to the scheme was the high cost of the set-top box. Keeping in mind this past experience, TRAI stepped-in by framing conducive rules to ensure the success of CAS and implemented CAS in certain notified areas of the three metros in January, 2007.

Though local cable providers have lost some market control, they still enjoy significant market shares in the bigger cities. Reason: first mover advantage. Even if you analyse various First World satellite TV markets, the first to market has always exercised excessive control over the market. To mention a few, in US, Cable TV rules the roost while in Europe it is Dish TV. The deciding factor for them too is who entered the market first. Cable TV entered the Indian market long before the DTH and has achieved significant penetration. Even today, DTH has a long distance to cover before it can compare its penetration to that of Cable TV in India.

And the near future will not get any easier for the DTH army as the Set top box armed Cable TV providers are working towards improving the audio-video quality of transmission, which for long has remained the differentiator between DTH and Cable TV services. So the fight will ultimately boil down to VAS feature, provided by the respective service providers. “Today the discerning Indian customer is very conscious about the service, and is sensitive to price as well. The winning DTH or Cable TV service will be one that offers superior content and interactivity to its viewers,” asserts Banerji.

Then comes the question about rural India, which is still vastly untapped by the DTH and Cable TV players, and presents a greater potential for growth. Question is – who will convince them first. In the areas where Cable TV network has not reached yet, DTH has an advantage. The reason being that unlike Cable TV network, DTH does not require the setting-up of ‘headends’ and laying of cables to the viewers home. This will allow DTH to reach these untapped areas faster than Cable TV. With sufficient marketing efforts, DTH can capture a large viewership base in these areas. Secondly, as it stands today, the Cable TV/CAS vendors are not putting in substantial efforts to increase their competitive superiority. As the switching cost to DTH reduces further and word-of-mouth marketing increases, more households would migrate onto the DTH platform. Then there is the IPTV launch (as planned by BSNL & MTNL) threat to the DTH business, which can be ignored for now at least as Maheshwari confirms, “Competition is big for DTH players to get into a market which is dominated by Cable TV. As far as IPTV is concerned, I don’t see any significant impact of this technology because it is still in its nascent stage...”

The Indian DTH market is currently worth Rs.30-35 billion, but is known to be plagued by huge losses. So financially, the operators are under huge pressure. To combat this, DTH players are pushing forward marketing efforts to gain volumes in the market. For example, Airtel Digital TV is offering the latest in technology while many others are banking on a widespread distribution network or on out-of-the-box packaging or programming. Tata Sky is leveraging the Tata brand equity to win hearts, while Sun Direct is playing on the price front.

Truly speaking, though it is a highly competitive market, price will not be the ultimate deciding factor that decides the winner; it’s the service (both in terms of customer service and quality of content) which matters, as an industry analyst puts it, “Customer service will be the key driver for customer retention.” Keeping in mind the same, operators have started offering a number of VAS such as ‘movie-on-demand’, live recordings of TV content, job searches, loan activities, matrimonial match-making, et al. “In India, value-added-services are features that give DTH operators the edge. Each operator looks at ways of monetising these services by offering enhanced services to customers, which help retain or add new subscribers”, says Banerji.

So there you are Mr. DTH provider, simply leveraging your brand power won’t be enough this time! It has to be service-led this time!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Zen-Next. No more!

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Dropping a successful 17 year-old brand isn’t an easy task... Pawan Chabra questions whether Maruti is doing the right thing by killing the Zen!

“Zen is a brand which I have grown up with and it is more than a car to me,” asserts Ankush Kohli who drove the ‘Jellybean’ Zen for a decade, and has been associated with the Maruti Zen brand since then. (He even purchased the ‘Teardrop’ Zen Estilo for his wife in 2008.) But then, only change is evitable; for many like Kohli today, the fact is that the Zen brand no longer remains ‘the’ banner brand for Maruti Suzuki (even he drives a Maruti Swift today). And as far as the management was concerned, it was all made clear with the launch of the new Estilo in August 2009, during which, Maruti declared that the company would now promote the Estilo brand and Zen will only be engraved accompanying the Estilo tag – in other words, reduced to a ‘dormant’ brand!

There is no questioning the fact that the Zen has been one of the cash cows for Maruti in the Indian market. The company sold a mind-boggling 7,60,000 units of the ‘Jellybean’ Zen in 14 years (before it was replaced with the ‘Teardrop’ Zen Estilo in 2006) – no mean feat by any standards. But it was perhaps after the advent of the ‘Johnny-come-lately’s’ that the Zen took a beating. The launch of the tall boyish Hyundai Santro and WagonR pushed back the sales of the Zen, which had started to fall faster than anticipated by most critics. That set all minds at Maruti working towards a replacement model. In fact, the nation’s largest automaker also spent a considerable time in building-up the WagonR brand in the Indian automotive market, all at a time when the Zen was being cannibalised, witnessing falling sales, quarter after quarter. But the new ‘Teardrop’ version of the Zen was able to somehow successfully make a mark for itself in the Indian market as Shashank Srivastava, Chief General Manager – Marketing, Maruti Suzuki affirms, “It was selling on an average of 3,000 units per month, which was more than GM’s Spark sales which accounts for its 80% of GM’s sales in the country...” One can always argue that it is still lower than the standards set by the entry level Alto and the youthful A-star, but the numbers are credible when it comes to reviving the brand and the product Zen, especially when it had almost reached the plateau of the Brand Life Cycle. Today, the automaker, which replaced the Maruti logo with a Suzuki logo some time back (to give its customers the feel of its ‘realigned superior technology and radical design’ focus), is quite pleased with the performance of the Zen Estilo during the initial months of its introduction. All said and done, the question remains – does it make sense to phase out over time (which is a definite possibility) a brand (Zen), which is today amongst the most recalled brands in the automotive sphere and has had a splendid run in the Indian market?

To establish Estilo brand in the Indian automotive market, the company is using the brand alone in its 360 degree integrated marketing campaign. “It was a part of the long-term plan to establish the Estilo brand first in the Indian market with the launch of the Zen Estilo and eventually take the Zen brand out of the umbrella,” explains Mayank Pareek, Managing Executive – Sales & Marketing, Maruti Suzuki. But ask Srivastava and you’ll see the management philosophy being shot in another direction as he claims, “The Zen Estilo was totally different from the old Zen, and is therefore today one of the most interesting marketing case studies as the Zen Estilo didn’t match the Zen brand one bit.” However, Srivastava takes no time in further disclosing that the seeds for phasing out the Zen brand was sown on the basis of customer feedback and the confusion in positioning of the vehicle ignited the fire. “We initially planned to position Zen Estilo as a synonym for style but with the use of a female model in our communication and some feminine colours, the Zen Estilo was perceived a vehicle made for girls and hence we missed out on many consumers,” he said. However, as mentioned earlier, for now, the company has no intentions to kill the Zen brand completely; of course, they don’t mind its dormancy...as “the Zen brand is one of the most reputed and recalled in the industry, and has a huge set of loyal consumers for whom Zen is more than a car,” adds Srivastava.

Yes, critics argue that eight products in the A2 (hatchback) category may just create cannibalism within the Maruti umbrella, but the management discards all such fears; one of whom is Shinzo Nakanishi, Managing Director, Maruti Suzuki, who avers, “Maruti Suzuki has been very successful in drawing segments within the A2 segment and this is the way the industry will drive the growth forward taking it to the other segments as well.” Well, the management seems very clear on the positioning there... But just a thought – what if the A-star had that Zen tag on it? Wouldn’t it have worked just fine? “Values of the Zen brand were matching more with the A-Star but we had just launched the Zen Estilo around 4-5 months earlier. So the A-star became an altogether different brand. But you never know, it may have repeated the success if the Zen brand had been used with the A-star,” opines an optimistic Srivastava.

Optimistic indeed, but isn’t it also a fact that the Indian consumers seem to lap up everything that bears the ‘Maruti’ tag? Pray, don’t drop that...

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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