Marketing Perspectives

Private Labels : From Cheap Substitues to Serious Competition

2010-02-15T16:35:00.000-08:00

Here's the full version of an article of mine that got published in the February Issue of Markathon - Marketing Magazine of IIM Shillong.
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For quite long, executives have dismissed private labels as inferior products and focused exclusively on the competing manufacturer brands. Most of the manufacturers, for a fact, benchmarked only against other manufacturer brands, and not against private labels. It seems that it didn’t occur to them that they compete with private labels too!
The following article talks about the growth of private labels in developed retail markets, their impact on the Indian organized retail segment over last few years and the resulting implications for the Indian retail marketers.

Private labels are brands owned, merchandised and sold by retailers themselves. These can be categorized into store brands, store sub-brands &Umbrella brands. They are also called in-store or own brands. Private labels are unique to a particular retailer and they can be divided into a number of categories where the retailer’s name is evident on packaging. From apparel, healthcare products and furnishings to consumer items, they are making their presence felt in a variety of retail items in the country.
Globally, private labels contribute 17% of retail sales with a growth of 5% per annum. International retailers like Wal-Mart of USA and Tesco of UK have 40% and 55% own label brands representation in their stores, respectively. Private label penetration in the United Kingdom is close to 37 per cent currently, and is forecast to exceed 40 per cent by 2011. In Germany private label has shot up from 12 per cent of sales to 34 per cent over the last decade. And apart from the multi-brand retail stores, a category of retailers like Ikea, Toys ‘R’ Us, Zara has also been created who sell only private label brands.

Growth in India
And now, the role of private labels is gaining significance in the developing markets too. In India there is a growing trend towards acceptance of private label brands and thus their penetration is on the rise especially in the apparel, consumer durables, home care and FMCG segments. India is still an under-branded country and in each category there is still a lot of scope for growth, this is where the private label comes in and the story is looking good so far. For instance, Future Group has already tasted the success with its Tasty Treat brand which is just behind Frito Lay in the potato chips segment. Its Care Mate in the baby diaper segment has left behind Huggies in the in-store sales. At Spencers, diapers and agarbattis sell more than market leaders across the store chain.
Experts comment that when it comes to local tastes and preferences, private label brands have an advantage over national brands and this reflects in the increasing percentage share of these goods in Indian retail chains. As the figure 1 shows, among the major Indian players, the degree of private label penetration is the highest in Trent with 90 per cent, followed by Reliance Retail (80 per cent) & Pantaloon (75 per cent).

Commercial Objectives behind launching Private Labels
There are certain objectives that a retailer has in mind before getting into private label goods. Figure 2 lists the benefits that a retailer expects from the in-store brands.

Higher Margins
Private label goods are cheaper to produce than branded goods. Besides, due to the lack of advertising and marketing expenses they provide double advantage to the retailer when it comes to the profit margins. While majority of branded goods provide margins in the range of 6-12%, private label goods can offer margins up to 40% . Not only they give a higher margin to the retailers, private labels have also changed the balance of power between brand manufacturers and retailers, giving the latter a decided advantage when negotiating terms with the brand manufacturers.

Stronger Customer Loyalty
As the private label offerings increase and the quality is assured, a high sense of loyalty is cultivated among its customer base. This customer loyalty is the result of an affinity with the retailer brand which implies that the development of private label brands can tangibly enhance the retailer’s brand itself. So in the long run, the private labels become an important tool for the retailer to establish its positioning and strategically attract the target customers to its outlet. Numerous studies have also shown that private label buyers are more store-loyal and not as easily influenced as brand buyers.

Differentiation
Through private labels, retailers get a chance to bring in unique products in their supply chains that have not been branded before. So if a retailer can cater to the local tastes and preferences of the consumers well by top quality private labels then they can differentiate themselves from other stores and become destination stores. In effect, it’s a win-win situation even for the producers who get a chance to display their produce.

Freedom with Pricing Strategy
A retailer promoting a private label has the added benefit of greater freedom to play with pricing strategies, as a result of which these are overall cheaper than brand leaders. For instance, in USA, some private labels are 25 percent cheaper than leading brands . In addition, since it is an own private label, the retailer has the freedom to create its own marketing strategy and have more control over its stock inventory. This command of all the stages that a product goes through, gives the retailer high flexibility in pricing.

Positioning during economic downturns
The growth of private labels is likely to continue in the current financial environment as cash-strapped consumers' perception of the products as a cheaper option changes. The price advantage of private labels leads to the belief that these score in times of economic meltdown, and further that this newly-acquired market share is maintained even as the recession swings out. Even after the economy bounces back, consumers will naturally gravitate towards products marked at lower prices yet offering the same quality, especially where the retail name is a trusted national or regional player.

Private Label Maturity Curve
The share of private labels is related to the level of retailer sophistication and concentration in the country. In economies where retail is more consolidated, private label shares are both higher and expected to grow faster. However, the Indian retail industry is highly fragmented at the moment and organized retail is in its nascent phase presently with contribution of about 5% to the whole market . In this stage, the private labels that are launched play mostly the price game to compete with the branded products. At this stage, most private labels which have acceptance are at the bottom of the pyramid of retail products. However, as the retailers mature and gain experience they want to move up the pyramid where realizations are higher. As figure 3 depicts, over a period of time as the market matures, the retailers shift their focus from price to product quality which leads them to a stage where they can launch their own brands in the premium category expecting to capture the brand equity and the customer loyalty built over years of good service. The consumers too, at this point, have enough trust and confidence to accept premium products from the retailer.

Implications for Indian Retail Marketers

Identify the needs of your customer base
The private label should provide the required functional as well as emotional attributes and benefits. Keeping in mind that it already has a price advantage, this ensures that it takes into account needs that are important to consumers and hence, offers a reliable point of difference from other category players. By offering a differentiated value proposition, a private label utilizes the approach that national brands use to arrive at a holistic benefit proposition rather than the specific positioning they use. This furthers its promise that has been already informed by the competition, confirming its category membership, but is clearly not a me-too expression. It is also successful as it demonstrates a commitment to offer consumers multiple choices and varieties with distinct attributes, benefits and price points.

Leverage the Consumer Connection
A successful private label has the ability to own the consumer connection and has the capacity to strike a chord with consumers in multiple categories of products. Unlike national brands, private labels are offered exclusively through a specific retailer and can easily surpass specific categories because they have a consumer focus rather than a product focus as their brand foundation. These brands instigate trustworthiness and allegiance from their loyal consumers that the parent store becomes their conscious and obvious retail source for certain categories. Moreover, these categories may be the reason that consumers are initially drawn into the store, but once they get there, the store also has the prospect of encouraging them to spend more on impulse purchases. Therefore, the private labels not only reinforce enduring loyalty and positive feelings for the retail brand, they also enable the retailer to capture a more significant share of the consumers’ heart, wallet, mind space and lifestyle than a national brand.

Communicate at the Point Of Sale
Retailers need to be more cognizant of the significance of the communication with the consumer at the point of sale. They own the canvas consumers shop on and thus, through store environments, in-store messaging (like signage), merchandising systems, and packaging as well as external messaging like circulars, catalogs and advertising in a congruent manner, the retailer is able to create a lasting impression in-store, at shelf, at the time of purchase and during usage. Retailers need to make sure that they send out the right message at these interaction points. Moreover, many of these messages do not require revolutionary change for extended periods of time, so they perpetuate a persuasive branded voice and don’t require constant investment from the retailer.

Collaborative category management
Category management is instrumental for a retailer to realize its own-brand goals and aspirations. To maximize the efficiencies of product flow throughout the distribution system, a retailer must be aligned with the supplier. The relationship between the retailer and trade should become increasingly about cooperation and lesser about the retailer negotiating with the manufacturer or supplier on price. By joining hands, they can strengthen their trade relationships and ensure that the category as a whole remains profitable and emotionally appealing to the customer resulting in both private label and branded goods as winners. They can collaborate in understanding and deciding how to optimize the product lines and Stock Keeping Units (SKUs) that will progress the category definition as a whole and determine planograms and shelf allocations to rally the greatest degree of category interest and excitement from consumers.

Manage Brand Architecture the right way
Brand architecture is a critical consideration for private label marketing. Once the brand proposition solidifies, the brand architecture strategy enables decision makers to promote this promise at the store level in order to stimulate a sense of familiarity, recognition and trust. Also, private labels have broader set of aisles than national brands. Because of this, it becomes more and more important to differentiate its attributes and benefits on an aisle, category and product basis. So the implication for the retailer is to strike the right balance of similarities and differences with brand messaging and portfolio offerings.

Conclusion

The growth of private labels in the Indian retail industry is inevitable but retailers do need to keep a few things in mind. Promotion of own label and allocation of large shelf space at the expense of well-marketed national brands can depress the overall size and value of the category while on the other hand, joining hands with them and following principles of category management can create a win-win situations for both. Retailers need to realize the importance of consistent brand message and should ensure that the product quality backs it well. Moreover, when used as an umbrella brand, the brand portfolio should be managed properly as to avoid any negative impact on the store brand. To conclude it is quite evident that as the Indian retail industry consolidates over next decade, retailers will look to differentiate among themselves and private labels will form a highly significant part of their strategies.

Change Management

2009-10-23T08:22:00.000-07:00

Read my post on Change Management on XLRI's blog

http://xlrisapphire.wordpress.com/2009/10/21/the-role-of-hr-in-mergers-and-acquisitions/

I did not put the post in this blog as it is all about Marketing Perspectives only :)...

Same Book, Different Authors!

2009-10-06T02:47:00.000-07:00

“Ask a finance person what NPV is and how to calculate it and you'll likely get the same answer just about anywhere you go in the world, but if you ask a marketer to define a segment, however, you'll get a thousand different answers!”

As I read this comment in an article, I was reminded of a piece of advice someone gave me a few years back-‘ Marketing is subjective and if you have the conviction don’t bother about what others think because there are hundred ways of doing things, just that you should know what you’re doing!’

The article mentioned something which all of us would have felt at some point in time during a conversation with other marketers- you get the sense that even though you are talking about marketing, sometimes you aren't on the same page about how marketing should work, be implemented or the direction it's headed?

During my internship, I had a chat with lot of members from the marketing team, for whom marketing was still a shot in the dark. Some had worked before in firms that never made a marketing plan. But, then I checked with other people from P&G etc and found that the bigger firms were more conscious of things like ROIs and depended a lot on facts and figures. And I think that such practices come from experience. The same holds true even for marketing professionals. I believe that when most of us will start out, we won’t have much of an idea about how things work. But, over a period we’ll develop ideas, patterns, opinions of our own that will shape our definition of the marketing profession. We tend to believe everything of what we hear or read from our first influencers, the professors, and the subsequent ones like books, blogs et al but we would surely find a disconnect during our first job as the requirements and the variables change!

Another aspect of this discussion would be to see it from the eyes of people who see marketing as an art vs the ones for whom it’s a science. And I think that is where the marketing is an ‘art’ contingent wins as if it were to be an exact science, we would see the same things over and over again! The ‘artist’ within a marketer is, I think, the reason why developing a common ground for marketing is tough.

What do you guys think of this? And also what all can be done to address the issue of marketers not being on the same page!

Bundle offers: New Mantra of success

2009-09-08T07:26:00.000-07:00

Just visit any retail shop and try to observe a change in the offerings of the FMCG players. I am talking about bundle offers. Invariably every FMCG company is giving these kinds of offers. Let’s look at some of the bundle offers.

· Emami’s schemes include Emami Pure Skin worth Rs 22 free with Boroplus

Advanced Moisturizing Lotion worth Rs 98

· Five pieces of Sardija Cough drops worth Rs 5 free with 100 ml of

Sardija Cough Syrup worth Rs 50

· ITC is offering Vivel Di Wills shampoo (200 ml) free with its 75 gm

bathing soap for Rs 89

· Fiama Di Wills and Lux are offering free lufa with their body washes

· Sunfeast is giving 4 packs of variety of its biscuits for Rs 25

· Kurkure (Frito-Lay) is offering 3 different flavors for reduced price

· Meswak is giving toothpaste and tooth brushes together

in a nice cylindrical box

· Dettol has a bundle offer of its soap and liquid

These offers operate on logic of “Buy more to save more”. In these hard times this tactical measure can provide companies with more revenues (though profit may decrease), better cash flows. At the same time these offers help the companies to increase the trial of the new and upcoming variants/flavors which are often bundled with their best sellers. These offers also give them more shelf space and eyeballs in the retail chain. Consumers may not buy them immediately but atleast will pick up the bundle, look at the price point (I also did the same) and may decide to buy one in future.

Let’s look at how these offers work from the company’s perspective.

Because of the lower price point the total value perceived by the customer goes up and customer is tempted to buy the bundle product. He would not have bought the unbundled standalone product. Also these bundle offers create one more price point for the customer. Some customers buy the product at the new price point.

This strategy sometimes proves perilous for the company In the long run as the customer may get used to lower price point and may not be willing to shell extra money once the offer is withdrawn. This sometimes happens with Soaps which can often bundled in a pack of three and are price substantially lower.

From the customer’s perspective these offers are often tempting. Great packaging adds fuel to this temptation. In case new flavors/variants are bundled with existing flavors/variants bundling provides him the incentive to try. It also provides him with the incentive to buy more and pay less which he always strives for.

I am sure that someone amongst us will surely be tempted by one such offer…Soon…

Vikas

Next Post --> “Positioning of great Indians companies”

Loss Leaders @ Big Bazaar

2009-09-06T01:35:00.000-07:00

The concept of ‘Loss Leaders’ might sound crazy at first but for a fact it has been in use in many industries for many years to pull in more customers, create brand awareness and in some cases to clear stocks as well. Let’s first see what exactly a loss leader is. As Wikipedia defines it ‘A loss leader is a product sold at a low price (at cost or below cost) to stimulate other, profitable sales. It is a kind of sales promotion, in other words marketing concentrating on a pricing strategy. The price can even be so low that the product is sold at a loss. ‘

Well, the practice of pricing popular items like milk, sugar and eggs attractively and situating them at the other end of the store, so that shoppers go through other items too and end up buying one, has been in use for long. But what stores like Big Bazaar have done is use the concept of loss leaders quite astutely to create a price perception in the mind of the shopper. So for example if most shoppers buy potatoes & cereals from the store and base their perception of the store on prices of these items, the store will offer them at low price and simultaneously hike the prices of the items bought along with these items like tomatoes and rice thus, making profit overall. So while earlier you knew that you are getting a deal or discount on the popular items, now you are made to think that the store on the whole is the cheapest and the best! The fact is that only 4-5% of the items are cheapest as compared to other stores around you but since these are the popular or frequently bought ones, you tend to think that you are getting a good deal on other products as well.

The retailer’s strategy can go wrong if shoppers start piling up such items leading to losses for the retailer. But this glitch can be handled by a) choosing perishable goods as loss leaders and b) keeping less SKUs of such items. This becomes essential since, if customers pile up the stocks then they won’t come back to purchase the items again and thus, the idea that the sales of other items are pushed every time a loss leader is purchased, won’t work.

Just read through the following excerpt from a piece in Mint,
‘Balasubramanian usually does her grocery shopping at Big Bazaar on the first Sunday of the month, after her banker husband draws his pay. On this particular weekend, she bought items ranging from toothpaste to tea and her total bill that day was for Rs3, 410.
Mint tried to compare rates for the items Balasubramanian purchased at Big Bazaar from a small grocery store located a few hundred metres from the hypermarket. For a start, only 30 items were available at Grover Store at Atta Market in Noida against the 48 items on the Big Bazaar bill that Balasubramanian showed Mint.
Mint then attempted to find out the total bill of only the comparable items at both the mom-and-pop store and the hypermarket. The total bill for the 30 like-to-like items, including staples from sugar to sunflower oil, at Big Bazaar was Rs1,812 compared with Grover Store’s Rs1,723—a saving of Rs89 at the neighbourhood grocery store.’

Of course the kirana store stands nowhere in front of air-conditioned aisles at the supermarket and secondly, the big bazaars win by far when it comes to the number of SKUs. Thus, if we keep on increasing the basket size, the super and hyper markets will always come out trumps.

And as I was about to publish this post, I saw an ad by Reliance Fresh @ Amritsar offering cheapest rates on 70% items. Possibly, the fundaa of loss leaders is evolving too and retailers are using it to differentiate among themselves. But it's too early to say that. So for the timebeing, let's keep our eyes open and also try not to get fooled by the false perceptions created by these stores.

What's next for modern retail?

2009-08-25T06:41:00.000-07:00

I have come across the modern retail industry a lot in the last half a year and I thought it’ll be best to start my contribution to this blog by sharing a few perceptions on it. I’ll talk about the two issues that I think, plague the industry and will come to the forefront in a short time.

We all have witnessed the growth of modern retail over the last half decade. The shift has been enormous from a time when our parents visited the weekly Mandi to this day when the neighborhood store from ABG/Reliance or Mr. Biyani has become the obvious choice. Leaving apart the hypermarkets, let’s see what the supermarkets have tried to do. These stores try to capture the market in the radius of 5km, from the kirana/general stores by offering same/cheaper prices in a better environment and also giving the shopper an opportunity to assess the products on the shelf unlike a kirana store. The only two areas where a kirana store had an upper hand were a) the provision of credit & b) the benefits coming from the fact that you dealt with the same guy every time (bargaining/he knows what you buy etc).

While the credit issue was well handled through tie-ups with banks and offering credit cards that earned you reward points, the second factor was and is still troubling the stores. This, in my opinion is the first issue that will impede the ascent of the industry (let’s forget about the real estate and funding issues for a moment). The management sitting in a board room planned as to how they will tackle the issue and voila, came the solutions like well-trained staff & attractive uniforms. But, such initiatives have to be implemented effectively at the grounds rather than being discussed in the boardrooms. If you haven’t noticed it yet, next time you visit one of the stores please do try to see how helpful and aware the employees are and you might figure out what I mean. For a fact, I have seen the staff of Reliance Retail beating up a group of 3-4 customers over a petty issue and I’ll leave it at just that.

The second area that needs attention is the use of business intelligence in this industry. It’s not very difficult to understand that this is a very data oriented industry with every transaction of every consumer being recorded. The SKU type & the category type data have to be put in and then there are daily/weekly/monthly price discounts or bundled offers. We have done well in recording all this information but where Indian retail players need to gear up is using analytics efficiently by embedding them into their day to day decision making. I worked on one such project this term for my course – ‘Business Analytics & Intelligence’ where we created a market basket for a retail store based on the transactions over a period of two and a half months. We started out with the goal to find out ‘associations’ across all the transactions. What this meant was looking for a combination of products in a particular bill that was bought repeatedly. This task introduced my project group to two tools (both are add-ins for MS-Excel) namely, XLMiner and Microsoft’s Shopper Basket Analysis Tool. Both require different kind of input but the first add-in has a limitation. The free demo version can handle only 600 rows of the excel file. Considering that you have lakhs of transactions, that’s a limitation that cannot be dealt with. On the other hand, MS’s tool is a blessing for any category manager or a retail store manager. Its output gives you the percentage of lift that a product gets because of another product(s) and that is how you know that bundling product X with product Y or placing the category A adjacent to category B would result in higher value for the store.

Use of analytics in online retailing by players in the developed markets is a case in point that the stores can achieve a much better level of efficiency through employing tools that help in unlocking the door to understanding the consumer behavior. Many analytics firms like Manthan Systems have realised the potential of this opportunity and are catering to the BI needs of retailers across the geographies.

Let me conclude this post by saying that to succeed, the modern retailers need to excel at both the qualitative and the quantitative aspects of the business and the two concerns that I've mentioned are exactly at the extremes of these.

Just read through the comments at the following link that I picked and you’ll know what magic analytics can do. Happy Reading!

https://www.insightcommunity.com/case.php?iid=1188

Bedi.

P.S. - Next up: "Loss Leaders @ Big Bazaar" & "Growth of Private Labels"

Attacking the leader

2009-08-18T01:10:00.000-07:00

Almost every company strives to be number 1 company in its area. Everybody wants the bigger share of the pie. GE had a company policy to be number 1 or number 2 in every business area they operate in or exit that business. In this article we will discuss the approach company should adopt to attack the market leader and garner market share. There are broadly three strategies to attack market leader and companies can adopt anyone or combination of these.

Strategies

1. Open War: In open war strength of the market leader is attacked. There are ample examples of this kind of warfare. Some companies were able to succeed and some failed by adopting this strategy.

Virgin cola: Virgin openly attacked Cola giants by entering in their segment. Visuals shown make the strategy of Virgin loud and clear. This open war proved to be futile as Virgin cola was only able to reap 1% of the market share in fizzy drink segments even after 5 years of its launch.

Nirma: HUL left some gaps in the product line of washing powder by not having any product at the entry level. This innocuous folly was exploited by Nirma to the maximum which took the giant head on by launching detergent on national scale.

Ujalla: Ujalla was able to dislodge Robin blue from its market leader position in whitener segment by launching a better liquid version of the product. Robin blue reacted by launching liquid version but by then the damaged had been done.

Microsoft Xbox: Microsoft launched its Xbox against market leader play station Sony. It was priced lower than the Sony and Nintendo. This strategy to garner more market share by lowering price proved hazardous for all players in the market. Neither was Microsoft able to garner high market share and nor it was able to profit from this venture. At the same time Sony and Nintendo margins were also badly hit.

IE Explorer: Microsoft virtually cannibalized Netscape after launching its own browser, apparently by resorting to unfair practices. This is a classic case of a bog giant taking lesser mortal head on and finishing it.

Bingo: ITC launched its potato chip in a segment dominated by Pepsi’s lays. Through some innovative advertisement bingo was able to gain 15% market share in less than 3 years of its launch. In this case two giants confronted each other and eventually settled by sharing the pie with each other. ITC is also challenging big FMCG by launching products that directly compete with products of these MNCs.

2. Focus on Niche Areas: Instead of taking the market leader head on the company may decided to go the territories that are still unexplored. Market leader’s focus on these territories is low and risk on being swallowed by market leader is relatively less.

Red Bull: Instead of taking the cola giants head on Red Bull decided to focus on energy drink segment. By the time coke realized the potential of this segment and launched Vault against Red bull, it was already a big brand and market leader worldwide in this category. According to estimates Red Bull has more than 50% share in the energy drink market.

One important difference was also the way Red Bull went about its promotions. Instead of TVC it relied more on unconventional routes of advertisement like Bars, events etc. This strategy made sure that it is not attracting attention of big cola giants.

Skype: Skype is also into telephony like Vodafone and MTN, but it works on completely different technology. Due to this it virtually faced no competition from these big giants and carved a niche area for itself. It was acquired by Cisco for whopping amount.

3. Indirect attack (Guerilla warfare): This ploy was adopted by Ujalla to hold on to its share in the cloth whitener market. Jyoti laboratories figured out that Mortein is the cash cow of Reckitt & Benckiser. They hit them by launching low cost mosquito repellant products and reduced their focus on whitener market.

Choice of Strategy

Choice of strategy is a big question with no clear answer as it depends a lot on the management of the company and risk they can afford to take. Based on the examples given in the previous section following are broad parameters which can be looked upon by companies before taking decision.

1. Direct attack

a. Companies with deep pockets and good cash flow from other product lines can take the leader head on. For e.g. Reliance due to its sheer resources was able to make inroads in the mobile service market in India. It is a number 3 operator by number of user now.

b. Better product/huge price differentiation: The companies having product which gives much more value to the customer than the existing products at equal or lesser price can make an attempt to attack the leader head on. But these companies must keep one thing in mind that their offering cannot be imitated by market leader easily. Because if market leader is able to copy the offering than it the beat the small competitor because of its distribution network and brand equity. Nirma was able to challenge HUL on the basis of huge price differentiation.

2. Niche areas

a. Middle and small size companies: These companies do not have the deep pocket to compete with market leader unless they have much better offering than the existing offerings. These companies should look for new territories instead of taking on the leaders head on. Economies of scale are not too important in these areas as small companies will seldom achieve them.

b. Patented technology: Small companies with unique product offering can take the market leader head on. The unique product must be perceived by customer as something which adds more value as compared to existing products. This happens in Pharma space where even small companies because of the patented technology are able to compete with biggies and even beat them in their own turf.

3. Guerilla warfare: It basically involves hitting the enemy at some unanticipated area. This strategy can be adopted by any company depending on the object it wants to achieve.

Caveat: It is very important to anticipate the reaction of the market leader while adopting any of these strategies.

Review: Strategic Windows by Derek F.Abell

2009-08-13T00:53:00.000-07:00

Every business model or strategy has a shelf life. That winning idea on which the companies are banking on for the last many years will not remain a winning idea forever. There is a time window during which company will be able to mobilize its resources to meet the market requirement. Author has referred to this window as STRATEGIC WINDOW. This window is open till the time there is a good fit between the market requirements and company’s competencies. Once the window closes down the competitive advantage is lost. For e.g. Dell for the last 10 years has been banking on direct selling model. Model was working beautifully until last 2 years, when it began to lose its steam. Now Dell is also working on retail model to push its products. One can say that every business model/strategy has a shelf life.

Now companies are able to make incremental changes to tune themselves to the changing business environment. But sometimes they are unable to envisage the magnitude of the change happening in the market and hence become incapable of coping with it.

Author has give four possible reasons for this change. One reason is “New Primary Demand”, which essentially means that even though a company might be a pioneer in a particular market, it might not be able to cash on the new opportunities offered by the same market. Other companies which entered late might be able to serve those opportunities better. It may be called as second mover advantage. For e.g. though 3M has been pioneer in developing new markets, Unilever has been to better understand the market created by 3M and deliver better value proposition to the customers than 3M.

Second reason could be “New competing technologies”. Eveready continued to manufacture non rechargeable batteries, when the market was moving to the chargeable batteries fast and eventually lost the market share. This is a classic case of new technology making older technology obsolete. Same may happen to Moser Baer if they don’t move to new DVD format in the coming time.

Third reason is “Market Redefinition”. Under this one case is where customer prefer end to end solution rather that going for piece meal approach. Niche players sometimes loose to big players on this front. Fourth reason is “Channel Change”, which happens due to changing customer requirement s and market dynamics. For e.g. with internet becoming house hold phenomenon in Tier 1 and Tier 2 cities, Travel agents are facing a hard time. Due to internet means of deliver has changed and travel agents are no longer handy.

Apart for these four reasons there could be plenty of other reasons which might lead to change in the market requirements. Some of them are changing demographics, Globalization, rising income levels and many more.

The concept of strategic window comes in handy for both existing business and new entrants. Using this concept they can better time their decision to mobilize or demobilize the resources.

Existing businesses can find out if they are capable to mobilize the required by the changing market or should they exit the business. New entrants can find out the right time to enter the market. It should be the time when market requirements and companies competencies are in sync with each other.

Two Great Marketing Propositions

2009-08-03T10:47:00.000-07:00

In marketing every day one comes across new fundas and jargon. I believe that some of this gyaan is able to strike a chord with your heart. Today I will be talking of two such things which struck a chord with my marketing perspectives. One of the revered marketing gurus delivered a lecture on these on Ted.com, which is a legendary platform where masters of different genres share their own perspectives.
We also know about product diffusion curve. We have innovators, early adopters, early majority, late majority, laggards. As a marketer one tries to get the attention of all these categories. It was argued that we infact don’t need to spend our money and time to attract members of every category. We can achieve our purpose if we are able to target innovators, early adopters. Now this may sound trivial, in the sense that everyone knows about it. But have you ever wondered how many marketing managers actually implement this? My hypothesis is, “very few”. There are difficulties involved in identifying true adopters and innovators but as they say nothing comes for free. One has to spend time and money to find these people and market your product to them. There are few things like innovative product high on differentiation which is taken for granted here. If we can identify these people and market our product only to them, they will make sure that the product is propagated to other categories because of their innate characteristics which compel them to preach about the stuff they own and like.
Now imagine a situation where laggards adopt the product before early adopters and innovators. This is invariably lead early adopters and innovators to shun the products as they are the leaders when it comes to embracing new products and ideas. They can’t see others taking their coveted position.
These two propositions were somehow able to convince me to the core. Your thoughts are invited.

Why MBA

2009-07-03T00:07:00.000-07:00

In my previous posts I have always criticized Masters of Business Administration course and its usefulness. This post will be a welcome break.

During any MBA interview "Why MBA" is always asked. Lesser mortals like us have limited foresight of the future and we end my giving cliché answers. Few top answers are

1. I want to be an entrepreneur

2. I am a Manager in the Making

3. I want to expertise in Finance, so on and so forth.

I will present my perspective on this Legendary Question. I would like to start by squashing myths about Entrepreneurship and MBA. MBA can never inculcate entrepreneurial traits in anybody. Though, it can easily take them away. It is because of the inherit structure of the whole MBA course. You will learn Marketing, Finance, HR, Ops, Systems but not entrepreneurship. Best route to be an entrepreneurship is to become one. Nothing else matters.

MBA for me is about following things.

1. Change of Perspectives: As an undergraduate or working in the technical arena the way we look at things is different. For example 3 years back when I used to see an aircraft I used to think about the great engineering effort that must have gone into building it. Formula 1 was the mother of my imagination. But now Formula 1 is more of a brand to me rather than anything else. WWF now is a legendary because of the way they market themselves rather than anything else. You are able to appreciate a TVC commercial, in a new manner.

2. Environment: I have always believed that the culture and environment around you changes you as much as you change it. When you are among bunch of smart people, who talk about MBA fundas all day night, they way you perceive things also change. The Environment helps in transition of Technology oriented mind to business oriented mind, which is an important goal of MBA. One is better able to appreciate important terms like Positioning, Market risk, Prime lending rate…

3. Meeting Business leaders: Meeting and listening to top business leaders can influence your thought process more than anything else. As a part of MBA program one gets ample opportunities to meet these great thinkers. It is also about the self realization that happens after meeting these people. You tend to get overwhelmed by the vision they have. In the process seeds of great traits of these leaders are also sown in your heart, ready to bear fruits in the coming years.

4. Professors: These angels can change the course of your life, literally. They don't influence your thought process but in fact make it. Everyone must have had overwhelming moments listening to these great academicians. They introduce you to the world of Business. They hold your hand and walk you through complex jargons of MBA.

Ideas/criticisms are welcome, as always.

Experience Management and Leadership @ “The Apprentice”

2009-06-20T00:07:00.001-07:00

I would like to start with a brief introduction to “The apprentice” for all of you who do not know about it. It is reality based TV show in which 15 candidates compete for one job for 15 weeks. All the candidates have impressive credentials, with some leading their companies and some with best education in the world from the likes of Harvard, Boston, and Cambridge et al. Some are street smart high school dropouts as well. The Job is to run one of the companies of Mr. Donald Trump who is a biggest real estate developer of New York City and owns more than 100 companies. Mr. Donald trump is a great leader and is highly respected for everyone in USA. He enjoys a true celebrity status.
All of what has been said by me would not be making any sense if I miss this word, which is the spirit of the whole show, Leadership. There is a great emphasis of leadership qualities and the respect a leader should command from the team.
As management students we have read a lot about Leadership. We have tried our best to define it, understand the spirit of it and lots more. But personally I was not able to appreciate it, until now. I had a vague idea of what leadership is. Also we read about “Type A” personalities, different types of leaders which some with dictator like qualities and some who believe in engaging their team and lot more terms which have started to sound more like a cliché by now.
Now here is one TV show which has got everything into it, which can enable anybody to understand and experience all the jargon they come across or have read text books of management. Prima facie it may look like any other TV show where people come together, compete and somebody wins. Its Business orientation differentiates it from all other shows. The tasks of the teams are complete related to business and nothing else. For all of the tasks along with business sense one should have knowledge of demand supply principle, pricing, consumer behavior, marketing, advertisement, sales, value proposition to the customer and lot more. The judges for all these tasks are top executives from HUL, Pepsi, P&G, Levis jeans, depending on the nature of the task.
I will give you the glimpse of few tasks that teams undertook:
Design and new bottle of new flavor of Pepsi, Design a new advertisement campaign for Levis, Market and sell new burger from burger king, Develop a piece of real estate, Set up a restaurant and get the best user review
All these tasks need great leadership skills from the team leader, which is chosen for every task by the team. Now lots of time leader has to operate in the background and sometimes he/she has come in the front. Sometimes if someone is not doing a good job you have to decide whether to go for a change as time is crucial in every task. There is lots of back stabbing, maligning, strategy, creativity involved in every task. One should know how to manage “Type A” personalities, which perhaps is as tough as anything could be.
I have had many overwhelming moments while watching this reality show. I am sure that what I have learnt from this show is much more than what I learnt from the management text books for the last one year. Watching this TV show has again made me wonder, if we really need a management degree to be successful in business of it’s the practical experience which matters more.

Business @ “Smoking points”, “Drinking places” & “Golf courses”

2009-06-14T03:30:00.000-07:00

One day one of our distinguished Professors said that Business (B2B) is all about managing authenticity and building trust. I liked that statement but was never able to appreciate it. I used to think that business is about making great presentations, excellent communication skills, strategies, jargons, business suits et al. It’s about big conclaves, meets where people meet, know each other and do business with each other.

The moment of truth came few backs weeks when even after working (internship) for a big MNC I realized that ground realities are totally different. Real business is about everything but whatever I have mentioned earlier. It’s all about building trust and managing authenticity.

Now the logic is very simple and goes like this. If I have to buy something from you, which can be anything product or a service, I will have to put my money on you. I will have to rely on you to deliver. In short I will have a strong dependency on you. I you fail I am also bound to fail. So you have to win my trust and confidence in order to convince me to put on money on you.

One thing is for sure that one can’t win the trust only by making great presentations and speaking flawlessly in a posh boardroom. You have make connection with that person. You will have to come across as someone who is real and serious about the whole affair. You have to tell him that even your stakes are quite high in this whole affair.

At middle management level I have observed few platforms where people really connect like anything, though I don’t endorse any of these platforms. First one is “smoking points” outside the offices. This is a place where a sales person and his prospective client will fag together and discuss the things openly in non threating environment. If sales person is able to make connection he will win the deal and probability of making connection increases many folds at places like this. Until few weeks back I never believed in this but now I am convinced about it.

Second is “Drinking places”. These are the places where real business happens. Under a bit of influence of alcohol one is able to trust each other better. Also the mask people wear becomes somewhat transparent which facilitates making connection with the other person. This place is a real ice breaker.

I think these are the two places outside board room where people test each other and decide if they want to do business with each other. Now these are the points where business involving small to medium amount of money happens. There is one more place where big deals happen, the “Golf course”. According to one survey 20% business happens on golf courses. I have no personal experience in this as yet but I will share my perspective. On a golf course big industry honchos come together and discuss things in a relaxing environment. They try to understand each other. They test each other’s game and see the kind of energy and passion other person has. Then they decide if they befit for each other or not.

I would like to conclude by saying that few other things like your culture; integrity; values etc do help in managing authenticity and building trust but they rather are the things which one ought to have if he/she wants to be a successful businessman.

Where is the Disconnect between Sales and Marketing in B2B Business?

2009-05-29T03:48:00.000-07:00

Marketing and sales look like siblings working in tandem. Marketing creates opportunities and Sales in enchases those opportunities. Together they make a rosy picture.

Having worked for few weeks in a B2B sales profile I can say that when it comes to B2B business, Sales and Marketing behaves like distant cousins. They no longer work in tandem and there is a huge disconnect between them.

I will try to explore where and why this disconnect? Why it should not be there?

B2B business is driven by motivated sales team rather than Marketing evangelists. Marketing people do play a role but it is at the very high level. They have very less clue of what is exactly happening on the ground level. On the other hand sales people think that they are the ones who are putting up all the hard work on the ground. They are the ones who are actually connecting with channel partners, promoting the brand and bringing in the numbers. They pay special focus on developing a channel through channel partners as most of the business is done through them only in most of the cases. Mostly sales force relies on their contacts to build and expand this channel. They will use pricing, products differentiation and every trick in the book to build channel. But they forget one important aspect in this whole picture, “Branding”. But this is not their prerogative; marketing people should be doing it!!!

In B2B scenario one can say that Marketing team has fewer stakes as they don’t have to reach to individual customers. Their target audience is greatly reduced. Marketing people think that it’s responsibility of Sales team to develop the channel and they spend virtually no effort in marketing the company to the channel partners. The whole focus is on customers who do not interact with the company directly, but through the channel partners. What an irony!!!
Hence the disconnect lies in sales and marketing teams approach towards channel partners. Both of these teams have individual plan in isolation and seldom seem to work in tandem to tap these channel partners.

One solution to this issue is to have a marketing team dedicated to market the company to the channel partners. Their effort should be in sync with the effort of marketing team focusing on brand building and marketing to customers. This marketing team should work on branding collaterals, special programs, promotional schemes focused on channel partners. At the same time Sales people should work closely with this team to make them aware about their requirements.

Common sense should prevail…Soon…

Marketing: A rocket science??

2009-05-13T21:27:00.001-07:00

Marketing is considered proprietary to Pepsi colas and HULs. It is considered as something done inside the glass ceilings. But have even experienced marketing tactics (if not strategy) adopted by smart businessmen running small showrooms.

Marketing and Small showrooms may sound like a oxymoron but believe me effective marketing strategies are adopted at these place at virtually no cost. Let’s dwell it into a bit more.

Making connection with customer is what every marketer strives for. Look at Airtel ads, they are really able to make that connection, but at a stupendous cost. Recently I visited a small apparel showroom. The way the shop keeper was able to connect with my family was overwhelming. The moment we entered we got acknowledgment of familiarity from his side. Then he started to connect with me by talking about his relatives doing MBA and working with blue chips companies. At the same time he talked about apparel choices of young people. With my family he connected by talking about my marriage.

I think me must have read some book on physiology. Something likes “Iceberg”. Nonetheless that worked wonders for him and he was successfully able to convert our visit into sales. He did a great job in marketing plus sales. Marketing by conveying functional benefits the product offers, building authenticity by sharing that he himself uses the brand, boasting about reputation of his showroom etc. At the same time he successfully performed the sales by felicitating customer to make an intelligent choice.

Without ATL, above the line (phew!!!) advertisement he conveyed information about product once customer arrives. He just relies on word of mouth which further depends on how well he markets/serves to his existing customers. So he just has those 30 minutes to market as well as perform sales. The real moment of truth…So even without iota of knowledge about marketing /sales fundamentals shopkeepers often do wonders in their businesses.

This was just one side of the coin. Now look at the other side.

Do you really think big empires like P&G, Coke, Adidas can do the same thing? Because of their sheer size their distance from customers is huge. So they need to have number of channels to get sensitized about customer needs and to connect with customer. At the same time they sell their products through resellers and not directly (mostly). This makes it even more difficult for them to reach customers. So they need marketing plans, advertisement plans, and what not to sell the products.

All this makes me wonder if marketing is just about common sense or hi-fi strategy docs. Do I really need to study marketing courses or I will learn through experience. I am still figuring it out…

Give up the control and flourish

2009-05-01T05:08:00.000-07:00

Visiting big retail chain and watching thousands of products displayed elegantly has always been an exhilarating experience for me. One hundred types of Soups, great variety of organic food, stimulating collection of sausages has always given the kick to gourmet like me. But never in my life had I tried to explore the reason, why retail chains emphasize so much on display of products. Marketing aficionados told me that the reason is obvious, not even worth discussing. More product display means better exposure, which further coerce customers to buy, which otherwise they would not have bought. For the good marketing student which I am, I took the logic and convinced myself that the use of million square feet of floor space to display products is to stimulate latent customer needs and in process fuel sale.

But one day something happened which impelled me to question this fundamental, which for me was nothing less than a gospel. I was buying toffee from small mom and pop store. The shopkeeper took the money, signaled me to take anything I want for the sum I paid and turned his face away. Now I had the choice to pick any thing I want to. I don’t have to wait for shopkeeper to handover the things to me. I felt liberated, literally. I felt like a free bird. Like a true iconoclast I wasted no time to frame perspective of my own about the whole situation.

Displaying items alone can’t make customer buy anything. But the display of products in retails is meant to give control in the hands of customers. It makes them feel liberated. He thinks that he has been emancipated. This emancipation is manifested in his purchase behavior. He ends up buying bizarre products, which otherwise he would not have bought.

Given an option to choose between two restaurants, one would tend to choose the restaurant with more choices, even though he may always order the same things. This happens because more options mean more control. More control aggravates his latent needs.

This perspective can be extended to plenty of other areas also.

Business model of Dell for mass customization, millions of tariff plans by telecom service providers, elaborated menu all put the control in the hand of customer and lets him decide his fate.

So if you want to boost those falling sales curve go ahead and give the control in the hands of the customer. He will for sure pay you back, generously.

Convergence of external and internal Positioning makes all the difference!!!

2009-04-09T11:08:00.000-07:00

Mesmerizing TVC (Television Commercials) of Vodafone, erstwhile Hutch positions it as a brand which believes in breaking stereotypes. This external positioning is in sync with the young Indian population, oozing with confidence and ready to take off. This refreshing positioning of Vodafone is reflected in its every aspect like brochures, Vodafone shops, customer care executives.

Now consider a scenario where internally employees (including prospective) perceives Vodafone as a company which uses obsolete systems and processes, with poorly trained staff, confused objectives and what not. Then do you think it will be able to hold to its external positioning of a young and cool company?

Employees and prospective employees are company’s internal customers, hence positioning for the internal employees should be on the dot, as well.

We all know the kind of image Google has in the eyes of the employees. Do you think it’s by fate Google achieved this? Certainly not! It was a vision of Google’s founders to brand their company to the employees in a way which also communicates what they are best at, Breaking stereotypes. They introduced the measures like work for one day for your own ideas, offices like play grounds and many more. As a result it’s a dream company of every software evangelist. The speed at which its new innovative products are coming justifies Google’s positioning, both internal and external. Even more, Apple has positioned its company in a way that has attracted the best talent of the industry, which has clearly translated into its artistic products.

I want to emphasize that two seeming different positioning, external and internal are infact not different. And if they are, then brand is bound to suffer. Take State Banks, they are trying their level best to change their external positioning but are taking too long to bring about the change. The reason is that internally they are still the same. Their employees are still the same and take their banks in the same old way. Hence despite flashy posters, big advertisement, core banking softwares people still take them as old shabby organizations.

Hence convergence of internal and external positioning is must to leverage the synergy between the two and to take the organisation from Good to Great.

Why are we still a third world country in SERVICE MARKETING?

2009-03-30T02:20:00.000-07:00

I resisted for long to write on this topic but in the last few weeks so many things have shaped and prejudiced my thought process, so here I am with one more perspective.

Prima facie Service Marketing is such an innocuous term. Every college student dreams of opening a dhaba or restaurant, without even knowing what Service means. Almost all of us have had horrifying experiences with one or the other service. Movie halls, Bus ticket vendors, Restaurants, Banks, Telecom service provider, everyone has brazenly and blatantly swindled the customers in one or the other grotesque (literally) act. In India despite the presence of legendary companies the service levels have been pathetic.

Vision Statement of India’s leading telecom service provider: "To provide global telecom services and delight customers."

With customer care call waiting time that could even run into days, one has every right to mock at these statements. These statements and company actions are so paradoxical in nature, that one wonders what is a need of these empty bunch of words tied together with loose thread of hypocrisy . We deceitfully preach “atithi devo bhavah” but we barely follow the spirit lying underneath these words.

Let’s try to explore where and why the, disconnect lies.

CXOs may come up with fancy customer focused statements sitting in their AC and sound proof chambers (to customer’s voice) but they will not be able to translate it into customer satisfaction until they make efforts to sync goals and actions of every function (Marketing, Operations, HR etc) with the Mission Vision statements. Focus should be on removing the huge disconnection between the people framing the policies and people on the ground.

The most important “P” of service marketing is “People”, undoubtedly. Service marketing is all about people on the ground. They are the ones who will either make it or break it. But with most of the companies outsourcing their recruitment process in parts or fully, how can they expect to hire people befitting their needs.

In service industry one needs to “Hire for attitude, train for skills” (statement: courtesy Guru PVR) but companies are trying to do exactly the opposite. They are hiring based on certain facts on CVs and trying inculcating attitude. One may argue on the feasibility of hiring for attitude but great companies know how to do this also. Take Singapore airlines or Hilton hotel, they have mastered the process of screening and hiring people for attitude. They know Training can only act as reinforcement and nothing more.

So next time while you are standing in front of huge BSNL advertisement, your call gets disconnected due to network congestion, press redial and call again. You literally have no alternative. We still are and will remain a third world country in Service Marketing at least for the coming decade.

E Campaigning @ Lok Sabha Polls 2009

2009-03-28T09:57:00.000-07:00

If some US politician would have made a Face book profile for election campaign nobody would have given it a damn. Or let’s say if some EU politician would have given banner ads on internet then also nobody would have given it a damn.

Now take this…

Some Indian politicians (Parties) have hired a team of internet marketing evangelists and bloggers and to campaigning for upcoming LS elections. Guys few of them even don’t know what Internet is and how to use it. Call it an e-blitz or “Obama Effect” but it is definitely capturing the balls of lots of people.

Parties like BJP are particularly very active on internet communities these days. One can see Mr. Advani everywhere starting from Blogs, websites, YouTube, Orkut. You name it and he will be there. In fact BJP has reserved 10% of the total budget for e-campaigning which is 9% higher than the previous e-campaigning budget. I came across these interesting urls

Advani's Blog has 6586 members, 2940 topics, and 9354 posts and has blogs in Hindi also!!!

Advani @ Campus First of its kind of initiative to mobilize College goers!!!

BJP is relying on e campaigning more than congress. This can be attributed to the fact that Congress has Rahul Gandhi to charm the younger generation so ball is in BJP’s court to make the cut.

Let’s look from the marketing angle to find out why all this makes sense:

You might have read this umpteen times that we are a young country with 500 million plus youngsters but now even political parties seems to understand this well. They have got their Segmentation, Targeting, Positioning on the dot. This e campaign is precisely targeting this young generation who seem to live their life in their inboxes.

E campaigns are 360 degree campaigns where perspective voters can freely e interact with the candidates. This provides an opportunity to the political parties to tilt the inclination of voter in their favor.

Now let’s look at the other side of the coin:

India has around 40 million direct internet users from all the age groups. One can add another 60 million who access internet from cyber cafes or from their college labs. 100 million is definitely a big number and can make that difference. But having said that one must realize that the attitude of, this 100 million and growing tribe is indifferent towards politics. Lots of them care a damn about what BJP or Congress can do to them. They are busy writing their destiny with their own hands. Though the campaigns like Jaago Re have been launched to address this very issue but their effectiveness is questionable.

Also with heavily skewed population distribution in favor of small towns and villages, reach of this e campaign is very limited.

Hence this e blitz may not translate into votes at all.

“Much can be said on either side”.

Let’s enjoy the ambiguity till May 2009 and then during post mortem I will present one more perspective on effectiveness of the e campaigns in politics in a truly political manner ;)

Sell Yourself…Sine die!!!

2009-03-23T10:50:00.000-07:00

Few months back Barack Obama was everywhere on web starting from magazines, newspapers, media, blogs, websites, face book, twitter and what not. It was one of biggest publicity blitz ever. No one could have sold himself better than what Obama did.
It is not difficult to imagine how big he is or how big he has become. The crucial question is – How? That’s the power of Marketing.
Modern marketing concept caters mostly to the products and / or services. You can find books, blogs, websites dedicated for marketing on the same. But Self Marketing (SM)? How to do that?
SM is for people who want to make it big on their own. They want to enhance their visibility. They have something that can add value for the customer. This blog is not a guide, but just a perspective on how to go about SM.
The basics are simple. First, you need a person who has done something in life (no clichés please). Accomplishment should be good enough to showcase e.g. MBA from IIM or B.Tech from IIT, a rank in some national/international event, work ex with some big company etc. Secondly, create a self identity. This means writing about yourself (not the Arindam Choudhary does). Can you describe yourself with some key attributes and skills that befit the kind of role you are offering (It is really difficult – try and you will know)? Now use the power of advertising tools. If you want to market yourself locally – put an advert in the local magazine or newspaper. Do not describe what you do, but what you have achieved and what you can do for others so they can also achieve something tangible. Write a one liner that describes you. Marketing Guru? Consulting Expert? Vocabulary Master? Guitar Maestro? Thought Catalyst!!!(All these look cliché, don’t they?). If you have the money, go for a professional manager (all big stars have). Make sure to pursue something in your own line so that you can bolster the success story. Also, create an atmosphere of dependency. Make sure that whoever comes to you can’t go back (many big MNCs do this). For PM, these means two things – if you offer something that gets over in a limited time frame then ensure that word of mouth is generated (Do you know of Mr. X who gives GD/PI classes in South Delhi. He is brilliant!!!) And secondly if it is a long term relationship, create hard dependency. Don’t allow anyone to leave. (IBM does that)
Finally you can use the power of web for large scale marketing. Create your own site or a blog. Showcase yourself there. Or put adverts on the sites if you want. (Most stars have their own blog as you might know). Connect with people – create a charm that bewilders people – move ahead with authority.
This blog entry is not about marketing of the rich and the famous. They can always do other things (controversies are best tools!!!). If you are a small time teacher in a remote locality or a painting expert in a small city, use this as a perspective. At least you can have more and better …

Book Review: Built to Last

2009-03-17T07:40:00.000-07:00

“Built to last” by Jim Collins and Jerry Porras is about identifying patterns based on qualitative and quantitative research on existence of legendary organizations. Jim Collins in particular has been associated with this kind of research for more than two decades. He has written some unforgettable HBR articles like “Level 5 leadership”, “Built to Flip” and best seller books like “Good to Great” which consisted of research on more than 1400 companies. Phew!!! More on Jim Collins: www.jimcollins.com

Patters consist of financial data, vision statements, and business strategies of the companies for the past 100 years. As the name suggests Authors have tried to find out why some companies are ageless and seem to exist forever?

The most fascinating aspect of this book is the depth of the qualitative research. Mission, vision statements, strategies and philosophies of the companies like Morris Philip (Marlboro), Boeing, and HP have been studied in depth and essence has been brought out in true sense. Authors have tried to filter the values with will remain intact even after 100 years of existence of company, audacious goals which company will strive to achieve for many years (Wal-Mart target of $125 billion revenue), cult cultures which run deep inside the organisations (free cigarette boxes with pay cheque to Morris Philip employee), actions consistent with vision statements and core values, band of leaders eligible as successors (GE) and many more insights.

A diligent comparative study backed by the huge research effort has been done to bring out in light the gravity of differences between legendary and not so legendary companies.

Sometimes while going through this research work it seems as if you are reading some boring history book full of facts and qualitative data. So you need to be patient enough. It’s more imperative to grasp underlying message than the details of the example given.

I think this book will particularly be helpful to budding entrepreneurs who want to build companies to last forever and not to flip.

Gandhigiri or PR gimmick?

2009-03-09T22:18:00.000-07:00

Few days’ back Mr. Vijay Malaya brought belongings of our Father of Nation, Mahatma Gandhi back for a whopping sum of $1.8 million. Government failed to prevent the items from going under the hammer, in its everlasting fire fighting mode claimed that Mr. Malaya was the joker of their pack and they made him do the trick. On the contrary Mr. Malaya claimed that he has acted in the most sovereign way and has brought everything back on his own to the country, as it brought him peace…”THE PEACE”
Was it Gandhigiri or a PR gimmick? Let’s look at this potential soap opera from a cynical Marketing viewpoint.
Kingfisher Airlines is bleeding and desperately trying to maintain cash flows to meet its working capital needs. On the other hand UBG with 40% share in Indian Beer market seems to be doing fine with around 20% growth in its bottom line in 2008.
Having said that, let’s agree that by buying Gandhi’s belonging Mr. Malaya will not be able to induce people to fly or drink more beer. He knows other ways to achieve the same (Kingfisher calendar) ;). So there must be something else which could have propelled him in this grand philanthropy.
Hey do you know that Mr. P Chidambaram has assured full security for the coming IPL season, despite the fact that a week back he was advocating change of schedule of IPL as it was (is) clashing with Lok Sabha polls?
Few facts…IPL means big moolah!!! Mr. Malaya owns Royal Challengers Bangalore, one of the IPL team which did badly the last IPL season.
IPL franchisee Team earns from title sponsorship, selling merchandise and selling tickets apart from the share in TV advertisement.
“Revenue stream from Merchandise can be a big money spinner if the franchisee is able to build a huge fan following and city loyalty. From a small income of $1 million in the first year, it is estimated that this can go up to $ 15 million in the tenth year.”
-Times of India
Here comes the crunch point. These three revenue streams depend heavily on the popularity of the team and its owners. What is better than almost free PR for the Brand Malaya and hence Brand Royal Challenger?
Vijay Malaya is India’s Richard branson, expert in hitting the headlines because of everything else but business. All these activities help in garner the power of PR (drumming of unbiased message through third person- Kotler).
Timing of these innocuous events may be sheer serendipity and Mr. Vijay Malaya act might truly be philanthropic as he has done a similar deed in the past by bringing back Tipu Sultans sword to India.
Bottom line remains that “it’s all about bottom lines”

Marketing Perspectives

2009-03-09T22:16:00.001-07:00

The primary purpose to start this blog is to share the perspectives on various aspects of Marketing. Influence wielded by our mentors on our thinking process would be difficult to subdue, though utter care would be taken to avoid plagiarism.

Let’s start with the core questions. What is marketing?

I would like to quote one of our Prof who perhaps has provided with the oversimplified yet unassailable definition. It goes like this

Marketing is:

Reason to Try

Strong reason to Buy

Compelling reason to Stay

I will not do the anatomy of these legendary lines but would rather like to add that Marketing is about what you think is right and should be done to sustain and grow your business. It is about having perspectives, ideas and believing in them. It is about making yourself comfortable with uncertainties, conflicting idea, areas of grey. But at the same time it is just not about options it is about compulsions. I must add that one can have more than one compulsion to pursue at the same time.

Lots of work has been done in the field of Marketing. Every second there is a new survey on every possible topic and claims what not. It is good to learn from the existing knowledge base but one should not be obsessive about them. No doubt, adding a Mackinsey survey in your report adds substance to it but one should rely more on his observation rather than anything else.

Without iota of doubt one can make out that I have done lots of preaching in the last paragraph. But I told you… it’s about perspectives ;)…