High Tech Computer Corp. ever heard about it?

Moving on, apart from the HTC Magic, the company is currently offering 11 handset devices (10 GSM and 1 CDMA) that fall in the price range of Rs.10,000 to Rs.42,000 and is now looking to move beyond just touchscreens. “HTC has already become synonymous with touch phones and large screens in the Indian market and from now on our focus would be to go beyond the same,” explains Ajay Sharma, Country Manager, HTC India. As far as the company’s belief runs, it is only through provision of some differentiating and interesting factor (like a feature which enables the user to switch off the phone’s ringer by just turning the phone upside down) that consumers in the country can actually be attracted; ‘differentiation’ is the word here!

Innovation lies at the heart of HTC, and as company officials claim, 25% of the total workforce is engaged in R&D. Though the company has managed to capture a sizeable presence in India, yet in terms of brand power, it has to make bigger and better marketing efforts, especially when the market has other well-established brands that had moved in much earlier than HTC. Another hurdle for HTC is that, given the fact that it operates in the price points above Rs.10,000, it is clearly gunning the upper crust of the market. Today, the only other player that operates in just the plus Rs.10,000 segment is Blackberry, but its brand is much more recognised and has thus already created a cult following amongst its target group. As Rajeev Makhani, a mobile handset expert and host of Gadget guru at NDTV states, “Blackberry has been widely accepted in the corporate circle, who have actually started a culture of Blackberries. In comparison to that HTC is still small in India.”

Another problem that occured with HTC in the recent past (read: the year 2008) is that, it had made a huge splash by marketing the fact that it has launched the cheapest touch phone, but then the global economic crisis followed and the company suddenly found itself faced against the wall. So where did it go wrong? “What happened with HTC was that it had not hedged against the dollar and was impacted quite adversely and because of that they were unable to launch any new handsets in the Indian market and hence could not keep up the excitement that they had earlier created,” says Ram Makhijani, a telecom analyst. Certainly, any keen observer would have noted the fact that today, HTC only offers 11 products, unlike during 2007, when it had as many as 17! But Sharma dismisses this as the truth as he proclaims, “We are evolving as a company, and what we were doing at that time was right then and what we are doing now is what the time demands from us now.” Defending its claims, HTC also points out that it grew by a whopping 300% during FY‘09 as compared to FY‘08. What’s more, the company plans to sell 1 million units by 2010!

HTC also claims that in its short span there have been a few learnings for them, which they are now applying to the market and is expecting to get good results out of the same. One such learning is that when a person is looking at buying a touch phone especially at such price bands, he/she prefers to get a feel of the same before paying for it and hence, just a dummy may not work. So, HTC has put in place a demo zone at high-end retail outlets to encourage experiential buying.

So, the question remains – will the HTC brand receive more favour in the eyes of Indian consumers? Well, going by Sharma’s confident approach, there is no need to worry for those 25% in HTC’s R&D labs; for the rest (75%) are doing their ‘smart’ selling & branding bit on the field. By the way, I guess HTC could start by disclosing what HTC stands for, as an acronym.

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Source : IIPM Editorial, 2009

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

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All roads lead to... !

Education too, has seen PPPs mushrooming up. The latest plans of Education Minister Kapil Sibal to make vocational training more accessible indicate a bright future for PPP based ventures in up-gradation of ITIs. Till now 171 ITIs have already been identified by the government for upgradation under PPP basis. If implemented in a proper manner it has the potential to transform the education system in the country.

But then, PPPs don’t come without hiccups. While PPPs are proving to be a good means of turning out quality projects, there are long-term troubles attached to the model. The first and foremost is the time. While the tenders are given with a time-frame attached to them, the projects, most of the times, don’t end up on time. Raison d’être: the regulatory loopholes. Price too contributes heavily at times to such conflicts.

For instance, even with PPPs in line, power is one sector that has seen conflicts between the parties, both at the cost and price front. In fact, coming to a fair price agreement is the biggest hurdle in effective use of PPP model. “For augmenting investment, it is critically important to move from fixed rates to market determined rates,” agrees T. N. Thakur, Chairman, Power Trading Corporation.

Moreover, the number of PPPs on the social infrastructure front is also too small at present. In fact, it’s the current policy environment in the country that is discouraging private players from lending in their hands to the government for such projects. Further, wherever a PPP model exists, it’s mostly an Indian company doing the Tango with the government. The contribution from foreign players’ is almost missing.

“Decentralisation of power and quick decision making is what will make the PPP model click in India. Further, it’s important that empowered monitoring mechanisms are put in place so that all such projects are implemented in a time bound and phased manner,” Satish Bagrodia, President, PHDCCI tries to suggest a solution to the problem.

No doubt, in order to make the elephant dance, both private and public players have to dance together too. After all, it takes two to tango, they say! But then, the harmony somehow seems missing as of now and that is certainly not a good sign. If you don’t believe us, ask a dance instructor!

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Source : IIPM Editorial, 2009

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

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Many argue that the success of Airtel is largely because of Bharti’s first mover advantage. In contrast, in all their other (relatively new) businesses, they probably have somewhat of a last mover disadvantage. But a word about SBM, the ‘new age entrepreneur’ is perhaps in order here. Simply surviving (minus the deep pockets of the other biggies in the business mind you), let alone profiteering, in the cat-eat-cat world of capital-intensive big business takes vision, guts and above all, a killer instinct. Sunil had the vision to apply for a telecom licence at the right time and long before the biggies jumped in, he was selling mobile connections – when the price of a handset was Rs.40,000 and calls used to cost a whopping Rs.32 per minute.

When the next set of telecom licences were handed out, large industrial houses jumped in with big bucks. Unfazed, Mittal continued to lay the roadmap for Airtel. He deftly manipulated bureaucratic speed-breakers, competitive sharp turns and raised enough capital to build his infrastructure to achieve the targets he had set for himself. Next, when the entire industry was busy guarding their individual infrastructures, in 2004, SBM went ahead and boldly outsourced Bharti’s cellular network operations to its equipment vendors - Nokia, Ericsson and Siemens. His logic: telecom is a people’s business and so he must focus on customer service. Competition sniggered once again, only to recognise the intelligence of the move later. Two years down, other telcos also began hiving off their tower businesses. His model worked. Airtel recently was the first Indian service provider to cross the 100 million subscribers mark, growing by about three million new additions every month.

Now yeh Bharti maange more! But given the aura, success and grandeur of brand Airtel, can Sunil extract the same value from his other businesses? It should be noted that whenever a well entrenched player in a particular sector has forayed into other sunrise sectors, the path has not been easy. Take the shining example of India’s business monarch, Mukesh Ambani, who deviated from his core competence in the petro-chemical business and ventured into retail; only to falter. Ratan Tata’s ventures into telecom and retail have not really acquired the stature they could have given his deep pockets, huge manpower resource and influence. So what is in store from the next leap of the Mittal brothers? But before, we examine their options, here’s the caveat. Airtel’s m-Cap of Rs.1.52 trillion is a difficult mountain to scale for any of Mittal’s new businesses – at least in the medium term. The analysis of all Bharti Enterprise’s diversifications merely gauges their potential and whether they can ever become the cash cow that Airtel already is!

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

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There’s a method even to the cables madness!

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Brand: Havells Cables
Agency: Lowe

Step 1: compromise on margins

Step 2: aggressively sell its switches, energy meters, cables, bath fittings, fans, CFLs, et al and acquire a decent market share in every category

Step 3: focus on brand through large advertising spends. Enhanced brand image would enable higher bargaining power and improve margins.

Havells India did exactly that. It’s high decibel, emotive campaign moved with lightening speed to push the brand up in consumer mind space and Havells moved in for the kill. It’s operating margin went up to 10.05% in June quarter of 2008 from 9.2% in the previous year.

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

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Getting greedy, are you?

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Brand: Alpenliebe
Agency: McCann
So you thought Kajol and the Croc display the ultimate creativity for Albenliebe? Well, think again. Their most attractive promos came in 2000-01 adding a tinge of wit, a pinch of humour and a whole lot of greed to the candy. Jee lalchaye raha na jaye positioned Alpenliebe both for kids as well as adults. In 2006, among sugar confectioneries, Alpenliebe emerged as the single largest brand in India. Howzzat for effectiveness?

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

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Rise of the Third Front

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The unprecedented, heartrending combined loss of Rs.10,000 crore pocketed by the existing high flyers of the Indian sky in the last fiscal has failed to deter these greenhorns from taking a splurge. The ongoing turmoil has shaken the roots of even the established giants. Reeling under the twin phenomenon of declining passenger numbers and mounting operational costs, Vijay Mallya’s Kingfisher Airlines has lost Rs.6.26 billion and Naresh Goyal’s Jet Airways has registered a loss of Rs.2.14 billion for Q3, FY 2008-09. Such has been the dire market situation that even their alliance is unable to grapple with the situation. “Our Star A viation will shine in this industry with its prudent policies chalked out by experts in the airline industry, backed up by an effective business plan. We are optimistic that the aviation sector would bounce back and there are already signs of the passenger graph going up, though at a slow pace,” counters T. S. Shankar, Head – Corporate Media, Star Aviation to 4Ps B&M.


But looking at the volatility and uncertainties related with the air fare, travellers have switched loyalties towards relatively affordable air-conditioned bogies of the trains in this period of persistent financial crunch. The fact has been testified with the evident decline in the Indian air traffic by 4% for the period of April to November with a corresponding increase of 18.33% in passengers travelling by trains. Moreover, under the directives of the Airport Authority of India, 10% extra fees in the form of aeronautical fees and airport charges will now be levied on air travellers from 84 state-owned airports across the country, which will make it more unviable for the new players.

The fall in the Aviation Turbine Fuel (ATF) prices by 55% since August 2008 might seems to be a breather, as it accounts for more than 45% of an airline’s operating costs. But in reality, the fall in ATF prices has been easily negated by falling demand and plummeting revenues. Adding to the woes is the implementation of removal of fuel surcharges from airfares, thus further hurting the revenue generation. “The fall in ATF prices is definitely a relief but with new players coming into the market, an air fare war is likely to begin again; the travellers would definitely benefit from this, but with lower air fare the players’ revenue generation would take a beating for sure,” supports Hatim Broachwala, KSL. Fueling the fear of airfare war Zavery confirms, “Our basic strategy is to provide cheaper private air travel for the business or leisure traveller.”

Given that the International Air Transport Association (IATA) has revised the losses for the sector to go up to $4.7 billion (from the earlier $2.5 billion) in the current fiscal, the worst is yet to come. The revision emphasises that air traffic is likely to further contract by 5.7% in the coming year. “Demand has deteriorated rapidly amidst the slowdown. Combined with an industry debt of $170 billion, the pressure on the industry balance sheet is extreme,” testifies Giovanni Bisignani, Director General & CEO, IATA. In the current scenario, this ‘third front’ will have to ready itself for some seriously difficult times. And seeing the fate of some of their predecessors, extreme caution is advised!

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Source : IIPM Editorial, 2009

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

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The ‘Fear Factor’ in Politics

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On the face of it, the message being sent out by the President of BJP is quite purposeful and positive. Who wouldn’t want an India that doesn’t vote on the basis of religion? But then, when it comes to the foot soldiers of the party who actually ‘contact’ the consumer in the field during elections, the gospel of equal distance between religions somehow gets transformed into an invocation of the lurking ‘fear of the other’. Just look at what Varun Gandhi, grandson of Indira Gandhi and great grandson of Jawharlal Nehru had to say while campaigning in his constituency in Pilibhit in Uttar Pradesh. If nothing else, it was a clear assertion that you can’t trust Muslims and that a vote for Varun Gandhi will mean the protection of Pilibhit Hindus from Pilibhit Muslims. Much has been said and written about the ethics and morals of the now notorious Varun Gandhi speech. But beyond the rhetoric, the brutal fact remains that the ‘fear factor’ will once again be decisive if Varun wins and turns out to be a smart marketing strategist.

In fact, the rise and rise of BJP and its prime ministerial candidate L. K. Advani can be clearly linked with the power of the ‘fear factor’. It was the Shah Bano controversy during the mid 1980s that created genuine misgivings amongst millions of moderate Hindus about the alleged appeasement of Muslims. BJP successfully parlayed this apprehension into a powerful marketing strategy. So successful was the strategy adopted by L. K. Advani and his team of strategists that the BJP actually emerged as a ‘national’ rival to the Congress.

The Left too has its own version of fear factor to play around with. Says, CPI leader D. Raja, “Our line of campaign is entirely different… We speak for the poor people, we fight for the interest of the people, for sovereignty, for secular values.” The message outwardly is positive. But at the ground level, much of the real message is visceral distrust and dislike of the United States of America. The Left still thinks that Uncle Sam is a malevolent imperial power and that the people of India would be scared enough of Uncle Sam to vote Left. No wonder, their appeal has dwindled over successive elections, except the unexpected bonanza in the 2004 General Elections.

And what of the Congress? The party was clearly the pioneer of the ‘fear factor’, using it dramatically & successfully back in the 1984 elections when Rajiv Gandhi won a historic mandate. But those glory days are well and truly gone and Congress represents a tired national brand whose market share is being constantly nibbled away by aggressive regional players. In state after state, the core competence of Brand Congress has been hijacked by regional parties and it has not been able to retaliate. In that sense, Brand Congress is like Brand Bajaj. Till the 1980s, both the Congress and Bajaj completely ruled the market. Their ‘hegemony’ was virtually unchallenged. To buy a Bajaj was to be an Indian. Contrast that with the situation today where Bajaj has become the No.3 two wheeler company of India. Can both Congress and Bajaj reinvent themselves and find a new positioning strategy?

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

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You may fly no more!

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

Current economic conditions are threatening survival for many aviation players. Tremendous scaling back is needed to avoid bankruptcy, says Ratan Lal Bhagat of 4Ps B&M

“Students open your textbooks to page number nine, chapter 11,” stoutly commanded the elderly professor. The students, who dreaded calculus, knew that their worst nightmare had just begun.

Players in the aviation sector dread Chapter 11 too, but not for the reasons that the students do. This is the chapter that airlines have to open when their flawed business models throw their business calculus (read profits, revenues) into complete disarray. They now have to look into the ever dreaded Chapter 11 (bankruptcy) despite loathing it from the bottom of their hearts.

According to a report by Centre for Asia Pacific Aviation (CAPA) more than 30 airlines the world over, like Frontier, Skybus et al, have been forced to shut ‘hangar’ and file for bankruptcy in the past 12 months. Many others like Continental Airlines, US Airways, Southwest Airlines, Alaska Airlines, et al are all passing through bad times and are on the verge of being grounded.

“The revenue outlook is not encouraging, but we remain competitively well-positioned. We are seeing declining revenues on international routes, but these are still good markets for us,” explains Larry Kellner, Chairman & CEO, Continental Airlines to 4Ps B&M. Delta Airlines and Northwest Airlines, wich have already swallowed the bitter pills of bankruptcy (in 2005) have come together to avoid a round two of the heart shattering episode. “Given the difficult economic environment we face, the flexibility in the system is even more crucial and we are moving quickly to create a flight schedule for 2009 that optimises the profitability of every route,” professes Jimmy Eichelgruen, Regional Director Sales, India, Middle East and Africa, Delta Air Lines exclusively to 4Ps B&M.

Many of the players who had dialed the frightful number in 2008 were hard hit by the sharp surge in fuel prices. However, while the economy was relatively strong, many airlines found that they were able to pass on these cost increases to passengers in the form of fuel surcharges, which added to the already high fares. The global economic slump is perhaps a more challenging situation than high fuel because airlines have limited ability to maintain demand and yields in a softening economic environment. “The current economic downturn is extremely challenging for the airline industry. There has been a particularly pronounced fall in premium class and cargo revenue. In December 2008, premium class traffic in Asia declined 24% year-on-year. Not only are airlines finding that fewer passengers are flying, yields too are declining,” explains Binit Somaia, Regional Director, CAPA. And it is evident that the current economic mayhem might prove to be the culprit bird that could get sucked into the propellers of these airlines, forcing them to crash land.

The accumulated loss for airlines was a whopping $5 billion loss in 2008. All these have been fuelled by the global international cargo traffic, plummeting by 22.6% in December compared to December 2007. Whereas a similar comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%. Moreover, throughout 2008, international cargo traffic was down 4%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%. All the aforesaid factors, along with the gradual decline in the cash reserves of these players over a period of time, seems to only add pace to their fall and force them to file for bankruptcy.

Furthermore, the International Airport Transport Association (IATA) forecasts a further loss of $2.5 billion based on a fuel price of $60 per barrel in 2009. It further states that there would be a decline of 3% in passenger volumes, 5% in cargo traffic and yield deterioration of 3%. Moreover, industry revenues are expected to contract by $35 billion yoy to reach $501 billion in 2009. “2009 is shaping up to be one of the toughest years ever for international aviation. Keep your seatbelts fastened and prepare for a bumpy ride and a hard landing,” said Giovanni Bisignani, Director General and CEO, IATA. Somaia straight-facedly sums it up, “It is likely that we will see more carriers enter bankruptcy in 2009.”

The only way out is through controlling costs, cutting down on fleet size and maintaining a sustainable cash reserve. “In an environment of declining demand, the most effective solution is to reduce capacity, which would mean grounding aircraft,” explains Somaia. The Delta-Northwest joint collaboration is already applying such measures. Testifying to the fact, Eichelgruen of Delta explains, “We are cutting international capacity by 3-5%.... We are watching each route very carefully to ensure we are matching capacity to demand.” Surely, Delta has set its priorities right. A lot of such cuts in operations will be needed before the players get their business calculus right in order to avoid turning to the dreaded chapter 11!

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Source : IIPM Editorial, 2009

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

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Feeling good in bad times

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Recounting McDonald’s and Horlicks’ experiences is not simply to indulge in back-slapping about past successes in the troubled economic times that we face today. The idea is to see what they did to deal with their version of ‘bad times’. While the Horlicks’ positioning ‘win’ is merely a tale of a brand combating the phenomena of its cyclical sales; and McDonald’s was only trying to tide over a global health sentiment; this time the crisis is of global confidence. Globally, as in India, brands in the auto, financial services, FMCG and consumer durables sectors particularly are reeling under the liquidity crisis that the global economy is facing. Sure, America, Japan and Europe are in more trouble than India and China. But hey, remember the bright guy who coined the smartass phrase about the world catching a cold when America so much as stifles a sneeze? Well, so here is India, suffering from the global meltdown, despite a 6-7% projected growth rate, a 300 million strong consuming class in its infancy and more than 40 million government employees having just got tonnes of money thanks to the 6th Pay Commission. But banks are refusing to lend, so consumers have less to spend; some are getting the sack, so others are holding back (from loosening their purse strings that is!); there’s too much negativity in the air, but is it all fair?

Not really! Because the slowdown is temporary and brands that play their cards well will emerge stronger when the tide subsides. Globally, recessions and slowdowns have a knack for either making or breaking a brand. Take the 1930s depression. Unlike its rival dry cereal brand Post in the US market, Kellogg’s maintained its marketing spends. Kellogg went on to dominate the dry cereal market for the next 50 years. Beer company Miller almost doubled its ad spends during the late 70s recession. Seeing them, close competitor Schlitz also increased its spend. But it was a little too late. Schlitz was a virtual nobody when markets returned to normal, while Miller had gained considerable mind and market share.

But this is not merely about ‘abnormally’ increasing advertising spends. It’s about thinking out-of-the-box and daring to dream beyond the clichés of traditional business prototypes… It’s about fresh imaginations and beliefs… and it’s about your marketing programme in its entirety, from product development, to market penetration, to new markets, to your positioning (so that your brand is in sync with the ‘bad’ times). The good news is that a connected world has ensured marketers in India are not just prepared but are already devising and implementing exigency antidotes to deal with this ‘crisis of confidence’. Sure, the dampening last quarter results did cast a gloomy shadow over Corporate India, but for some, their creative – and not necessarily expensive – marketing tactics have begun to pay off, and handsomely at that! The fighter brands seem to have taken a leaf out of Millward Brown’s Survival Tactics for Marketing during Recession – a note published and widely circulated in May 2008.

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Cashing in on optimism!

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Want to improve sales in adverse conditions? Positive tag-lines should do the trick...

Crashing stock markets with evaporating values, increasing inflation with rising prices and tight liquidity with the dreaded pink slip issuance; the world is in doldrums. The populace has been engulfed in pessimism as the financial downturn creates an unprecedented hole in its pocket. As a result, purchasing power for even daily goods has been curtailed, hurting the bottom lines of many companies. In this bleak outlook when consumer confidence is at an all time low, corporations need to think out of the box. Vulnerable, major players have come out with ‘feel good’ taglines to hold on to their audiences.

In its bid to actuate things in a positive direction, Coca-Cola has decided to replace the ‘Coke side of life,’ the company’s tag-line of the past three years, with ‘Open happiness.’ Pepsi on the other hand has come up with its new campaign, ‘Every generation refreshes the world,’ while CK has launched the ‘We are one’ campaign. Showing its innovative side, Dunkin’ Donuts has come out with the tagline “You kin’ do it”. Not staying far behind, traditional players like IKEA and Mercy too have unveiled their new feel good campaigns, ‘Embrace change’ and ‘Believe’ respectively. Players claim that the current campaigns are meant to offer encouragement and a spirit of fun during these challenging times. “‘Open Happiness,’ embraces a positive outlook. It is an invitation to open ourselves to the positive aspects, to happiness, and to the potential for a better tomorrow,” explains a Coca-Cola, India Spokesperson to 4Ps B&M.

Before coming to a point, it must be understood that whatever marketing strategies corporations adopt, the sole motive is always boosting sales. Moreover, in the current market situation players cannot afford to lose their current customer base by not being innovative. “There is plenty of evidence suggesting that the tagline when used concurrently with other aspects of the brand such as the logo, colours and other auditory & aural stimulus, is likely to impact sales,” supports Stephen Byrne, Director (Strategy), DIFFUSION. These players are technically betting big on positive psychology in order to persuade audiences. A good and positive tagline increases the brand recall, leading to prompt purchases. “All this is part of a global movement towards more emotive and less functional taglines,” adds Byrne.

Interestingly, most of these ‘feel happy’ taglines are a response to competition’s calls rather than a perceptual favour to consumers. Evidently, the customer was of course always the king, but then it’s the corporations that laugh all the way to their banks!

Ratan Lal Bhagat

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CELEB ADS IN BIG TROUBLE?!

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Just-exited-from-Ogilvy, Creative Director, Titus Upputuru offers his take. “There are advocates in India whose daily job is to pick up stuff that they deem to be incorrect of offensive. I remember I did this ad when I was with TBWA. It was against marble excavation. I wrote a headline that said ‘Somebody please stop this guy from hitting his mother on the head repeatedly with the hammer.’ Now that was supposed to be in the context of mother earth and stuff. But a huge hullabaloo was created saying we are encouraging violence against mothers. Now isn’t that crazy? And we had no option but to stop the next lot of releases. I guess there should be a body that has better representation from the industry who have the discernment to check if the ad is really misleading.”

Ujjal Sinha, CEO of the Kolkata-based ad agency, Genesis, believes that it is more posturing than the real thing. “I would like to see who or which body has the guts to throw Big B, SRK or Sachin Tendulkar in the cooler! Does every promise that they dish out through their endorsements to attract the desired response, resonate with solid facts that can be proved? Highly unlikely.” That at least something (at long last) has been done in this “surreal area” seems to please school teacher Radha Iyer. The 30-year-old believes that it could well work as a ‘warning’ to both companies and celeb endorsers, forever doing their bindaas, irresponsible number in this space. “Hopefully, they will look before they leap,” she adds.

Are they? Will they?

As this goes into print, Sani Fresh has signed on TV star, Saakshi Tanwar as their brand ambassador; Bollywood’s new sensation, Asin [Ghajini] has been scooped up by Tata Sky and Shahid Kapur has signed the dotted line for VIP travel gear brand. Is there a brand-fit between product profile and celeb profile? Will the consumer product promise really deliver the goods… or will misleading claims, riding on red-hot celeb-endorsers, continue to blaze away? Authoritative and high profile voices have lauded this move and are of the belief that it would definitely create “transparency between all parties involved as also encourage ad agencies to get genuine clients. It would also work as an effective filter and weed out irresponsible hustlers, while protecting consumers, ad agencies, companies and celeb endorsers from getting duped.”

Rhetoric or resolve? Only time will tell… in the meantime stand by for a fresh slew of celeb endorsements with mobile number pay cheque fees! Oh, also take a close look at prisons in your friendly neighbourhood lock-up for a whole new and starry version of Jailhouse Rock!

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Source : IIPM Editorial, 2009

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

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Doling up for the ‘big boys’!

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2008 saw a flurry of old-school public sector banks rid themselves of their staid persona and adopt a nimbler, stylish image to compete with the private and foreign players in the segment. To be fair, it all began with the largest public sector bank – State Bank of India’s conscious effort to shed its sarkari image in 2006, but the trend caught real steam in 2008 when a series of other banks joined the fray, in preparation for the introduction of BASEL II norms in early 2009. And all this to fight the big boys in the race. Campaigns that led this makeover bug were that of Canara Bank, Union Bank, IDBI and Indian Overseas Bank, among many. Canara Bank and Union Bank, in particular, did not just sport a new tagline, but also went in for a change in logo. Canara Bank’s comunication (devised by O&M) tried to drill home the message that they had changed and that too for the people they love (read: consumers). Union Bank adopted a similar strategy, yet decided to retain its brand promise – ‘Good People to Bank With.’ IDBI, however, did not change its logo, but tried to aggressively position itself in the market place to get the idea across to its consumers that it was one bank that was not just for the big boys! All in all, a year that saw PSU banks doling out crores of rupees to position themselves efficiently!

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Source : IIPM Editorial, 2008

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

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Veritell or Allzon?

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Short term challenges apart, the Verizon-Alltel merger, seems worth the wait; By Savreen Gadhoke

Honchos at Verizon Communications and Alltel Wireless could now spare some time contemplating as to what name is best suited for the entity formed by their merger. The duo earned a breather when the proposed merger, worth a sterling $28.1 billion, which was until now held back by Department of Justice (DoJ) and the Federal Communications Commission (FCC), finally got a total clearance on November 4. The deal was struggling to get past the regulatory nod since June 2008 (when Verizon made its first attempt to acquire Alltel). But was the wait worth it?

DoJ and FCC had raised objections regarding the existing roaming contracts in rural areas. Explains Declan Lonergan, VP, Consumer Research, Yankee Group, “The merger may bring down competition and raise prices in future as it will reduce the number of roaming partners, which the local carriers can tie-up with.” And therefore, FCC has granted approval to the merger only on the basis of a commitment from Verizon that it will not play around with the roaming rates in the next four years. In addition, FCC has also demanded that Verizon divests its services in as many as 100 markets that overlap with the services of Alltel, to which again Verizon has happily agreed. And why not, as post-merger, Verizon will win over the 15 million plus subscriber base of Alltel, in addition to some 70 million of its own; hence leaving behind AT&T, with a subscriber base of approximately 75 million. Adds Lonergan, “Since both carriers are CDMA-based, combining the technical infrastructure should be hassle-free.”

Certainly the wait was worth the effort as Verizon has been catapulted to the first position in the US wireless carrier space, leaving behind arch-rival and seemingly irreplaceable AT&T Wireless at the first runners up position. Not only has Verizon tremendously increased its customer base, the merger will also make it one of the top US ad spenders. Now that the deal has finally got the green signal, what takes priority with Verizon is aggressive advertising and promotion to announce to the world that Alltel is now officially a part of Verizon. Camilla Armstrong of Brand Finance says, “Verizon will have to make an extra effort to reach out to the rural areas and explain to local roaming carriers why the merger is a good business opportunity for them.”

Objections raised by FCC may have left the local carriers unhappy with the deal. Industry experts peg the entire rebranding campaign to be worth $100 million, which could last for over six months; which makes it more challenging when coupled with the 4-year clause. So in essence, the ‘breather’ isn’t going to stay for long!

Savreen Gadhoke

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Source : IIPM Editorial, 2008

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

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Carbon ‘Black Jack’ Traders!

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As mentioned earlier, India (with a 6% market share and 930 projects in pipeline) is next only to China and contributes to about one third of the total CDM (Clean Development Mechanism, which accounts for 16.5% of the market) project base registered with UNFCCC (United Nation Framework Convention on Climate Change). In 2007, Indian companies reportedly earned $300 million by selling CERs (equivalent to one tonne of carbon dioxide) and this earning is all set to touch $3.6 billion by 2012. The carbon trading market has grown phenomenally. The global carbon market was just $11 billion in 2005; went up to $31 billion in 2006; touched $64 billion in 2007; and is thundering upwards at $96 billion as per current figures. It is in reality expected to be a trillion dollar institution by 2020.

Corporate players across the globe foresee a huge demand in the future and hence are developing environmentally conservative technologies. This will not only help them cash in on millions of dollars of future demand but will also portray them as responsible corporates. Speaking exclusively to 4Ps B&M, Tom Johnstone, President & CEO of the $8 billion behemoth SKF (the world’s largest ball bearing manufacturer), said, “Carbon credits enhance both the company’s image as well as profits,” and further added that it’s a win-win situation for both the company and the consumer.

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Source : IIPM Editorial, 2008

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

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Building dreams & real(i)ty!!!

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4ps b&m talks to the man behind the omaxe dream about his perception and his growth strategies...

4Ps B&M: How do you see the current financial dynamics affecting the real estate industry?
Rohtas Goel (RG): The Real Estate market is experiencing some ups and downs. The situation for the sector looks very strained because of a combined pressure from rising input costs, escalation in inflation and rise in interest rates. However, the long-term forecasts for the sector continue to be good.

4Ps B&M: Do you think there can be more correction in the prices in times to come and why?
RG: The forces of demand and supply are the factors responsible for price correction. The clusters of small developers that have entered the industry very recently have substantially increased the supply level. However factors like inflation and costly home loans have given a setback to the demand. Hence the market has to reach an equilibrium which is only possible through a correction. But, the changes in prices wouldn’t be much because of the increasing increase in the input costs.

4Ps B&M: What are the key challenges for the industry and how can one address them?
RG: The Indian Real estate sector has emerged as one of the most dynamic sectors over the last couple of years with sustained growth. The price correction of inputs is the basic correction which will impact the overall cost of projects. Also a reduction in interest rates and check on inflation will give more purchasing power to consumers which can be diverted to the sector. Though inflation will put pressures on the purchasing power of the people, yet the high level of disposable incomes, easy availability of housing finance, and also the need for a housing unit for an individual will always remain high on priority. As a result of economic buoyancy, the developers will continue to offer projects to cater to the ever-growing demand for quality residential space.

4Ps B&M: In the recent past, formats of developments have undergone a complete change. How do you see the real estate market shaping up in the future?
RG: From our recent offerings of affordable housing and high end luxury projects, Omaxe foresees a good demand ahead. We have created a niche market for ourselves. But, the way forward is consolidation & innovation in products which can help a developer sustain himself in such dynamic market conditions. We believe that the real estate business will continue to remain a good medium for long-term investment. We are also coming up with a lot of luxurious projects in addition to existing 54 residential & commercial projects consisting of a Hotel, 24 Group Housing projects, 16 integrated townships, 14 shopping malls & commercial complexes. Nobody wants to compromise on issues related to lifestyle and housing.

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Source : IIPM Editorial, 2008

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

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The Gurus... on how they cracked the Big Idea!

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Up next is the great Leo Burnett. While he totally endorsed Bernbach’s view on “saturating oneself with product knowledge,” he took it further. “I believe in solid, in-depth interviews of people I am trying to sell to. I try to get a picture in my mind of the kind of people they are, how they plan to use the product, what motivates their purchase-pattern and triggers their interest-area?”

Burnett then moves on to reveal a fascinating secret that even intrigued the likes of David Ogilvy… a great big folder tucked away in the lower left-hand corner of his work-desk, called the corny language dossier! “It’s like this. Whenever I hear a phrase in conversation – or any place – which strikes me as being particularly apt in colourfully expressing an idea, bringing it to life or accentuating the smell of it, I quickly scribble it down and shove it in the folder. Then, about 3 or 4 times in the year, I run through all the stuff, chuck out a lot of it and retain those that seem relevant to the kind of work we’re doing. I write a memo to inform the creative group and staff about this. So my ear is always tuned for putting usual things in unusual settings/relationships that – both – get attention and aptly communicate the big, core idea. I also have another bulging file. I call it ads worth saving and it’s an on-going thing, been with me for some 25 years! I go through them too. Extremely rejuvenating, both …”

Who better to round-off this amazing tell-all discourse than the legendary David Ogilvy. What did he do to make his stuff rock? “I try and loosen up if I’ve got to write some ad or get some ideas, otherwise there is a likelihood of feeling sterile and un-inventive. Many people – and I am one of them – are more productive and fertile when they’ve had a little to drink. I find if I drink 2 or 3 Brandies or a good bottle of Claret, I am far better able to write. I’ve also found the Oxford Dictionary of Quotations, a useful start-up for ideas.”

He then warms up to present a fascinating insight. “The posture that I take when I finally close the door and have to write an ad is this: I always pretend that I am sitting beside a woman at a dinner party and she ask me for advice about which product she should buy, why and where she should buy it. So then, I write down what I would say to her! I try to make it interesting, engaging and personal – I don’t write for the crowd; rather from one human being to another in the second person, singular. And I try not to bore the woman to death by trying to make it as real and personal as possible. Incidentally, I have a theory that the best ads come from personal experience. My best ones certainly have. They have a sense of conviction, passion, validity and power of persuasion that is unquestionable…”

Right guys, got it? Thus spake the legendary gurus. Now, suitably inspired, get back to work. What? Starting problems? Oh God!

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Source : IIPM Editorial, 2008

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

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They say fall of Wall Street giants will not have a bigger impact on Indian markets.

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They say fall of Wall Street giants will not have a bigger impact on Indian markets. But with a sectorial review things may sound different, says Sunanda Roy

A humorous Internet one liner says, “Evening news is where they begin with ‘Good evening’, and then proceed to tell you why it isn’t”. Well, see any edition of any business news these days and you would get to know how true it is. Moreover, down on its knees the global financial market is providing them more than enough events to further validate the hypothesis mentioned above. Back home in India the domestic stock market too is leaving no stones unturned to help the news channels. But then, blame the modern era of highly integrated financial markets for this, which have ensured a negative impact of the US turmoil on the Indian stock market. Fall of the Wall Street giants, Lehman Brothers, Merrill Lynch and AIG – as if they are exemplifying what the ‘Domino effect’ is all about – quashed whatever little confidence investors were left with after the mayhem that they witnessed earlier this year. But the million dollar question is, did it actually impact India enough to draw a prolonged red line on the Dalal Street? Perhaps, that’s the priceless answer all investors are looking for at the moment.

So far, the overall reaction is quite soft – nobody has predicted any long term harassment on the Indian capital markets. Going by the words of Sandeep Nayak, Senior VP & Head – PCG dealing, Kotak Securities, “The Indian stock market will suffer from the contagion effect of the global crisis and move in tandem with the American markets for the short term.”

But then, how can one forget that the Indian stock market is still a slave to Foreign Institutional Investors (FIIs). They have always reacted to FII movements, be it when they have pumped in money or when they have sucked out. And currently, the global financial crisis has made them take a flight back from risky emerging assets (equities and commodities) to safe havens like the US treasuries and bullions. Pankaj Pandey, Head of Equity Research, ICICIdirect.com avers, “As Indian markets are too FII sensitive, this pullout, as already seen, will continue to suck out liquidity from the Indian stock markets. This year itself, FIIs have pulled out close to $8 billion from the equity markets and since then the Sensex has corrected by 30%. Hence, one can asses the impact of FII liquidly in the markets.” FII pull out will not only keep the downward pressure intact on the bourses, it will also keep them volatile. Chances of volatility being persistent also increases manifold owing to relatively low volumes, bad market depth and breadth and distress selling by retail investors. It’s simply for the fact that absence of foreign money will see the market trade range bound along with some nibbling done by the domestic insurance and asset management companies.

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Source : IIPM Editorial, 2008

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

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It is not easy...

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Mahesh Chauhan,
President, Rediffusion

“It is not easy...”

“It’s not easy for a client to change his agency. He makes a certain investment in an agency and change means that he’d have to invest all over again in a new agency. It’s not easy. So, unless there is a strong cause for a change, led by maybe non-delivery or non-performance, the client will not change his agency. But on the other hand, the CMO is no longer under 1-5 year time cycles. He is virtually evaluated on a 1-3 months performance. The pressure is humongous. If an agency partner is not up to that speed then the CMO has no option but to look at other more promising agencies.

If you were to flip this argument and look at it from an agency point of view, I genuinely believe that the agency game hasn’t really evolved here. We have virtually become vendors of the creative product which is mainstream, traditional and not really hi-tech. Clients come to me for TV, print, radio, outdoor and go to somebody else for digital solutions. This de-bundling and media fragmentation, led to fragmentation of agency products too, which led to a lowering of the agency value, from a client point of view. So if the client is not ascribing so much of importance to you, as compared to a holistic communication consultant (as in the past), the threshold is lowered - agencies themselves have lowered it. Therefore you see that there are more pitches happening today than ever before, from a purely statistical point of view. But, the savvy marketer still believes in – and maintains a longer term perspective of his relationship with the agency.“

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Source : IIPM Editorial, 2008

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

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