Airtel’s Magic Mirror Parlay

Airtel’s Brand Identity Change seems to Indicate that The Company is Readying itself for Change.  

Every old-fashioned Indian amusement fair houses a “magic mirror” fun house, which reflects exaggerated features of any individual. While one mirror makes your neck and legs look longer than a giraffe’s, another can make even an elephant proud of its curves. And if you occupy the right spot on the floor, the infinite distortions will make your reflection unrecognisable. Today, the Indian telecom service industry, with ARPU (Average Revenue Per User; which has fallen y-o-y by 33.9% as on September 30, 2010) and MOU (Minutes of Usage; a fall of 11%) falling forever, is a lot that has become India Inc.’s fun-house. And no one is looking stranger than the very players who once boasted about well-charted out investment plans and endless earning possibilities in the wireless market.

As recently as two years back (September 2008), the country had 166 million mobile subscribers. Today (October 2010), it has 671 million! Prosperity it should have meant for the players. But the yoghurt turned sour. New licences, new players, and the once-dominant names grew weaker. The worst hit has been Bharti Airtel, which despite being the largest in the country still, has seen its grip loosen in the recent quarters gone by. While the #2 Reliance and the #3 Vodafone have witnessed a reduction in market shares of 1.9% and 1.7% respectively over the past 12 months, Airtel has lost 3.2%! The situation is thus – from a convenient command of over 25% of the domestic wireless market about two years back, the companying commands only 20.81% today. Worse, if you look at the mobile subscriber base addition in percentage terms during the past 12 months, Bharti has tasted least success, managing a growth of just 33.5%. The figures for others were: Vodafone – 42.66%, Reliance – 39.2%, BSNL – 33.72%, Tata Indicom – 95.4%, Idea – 46.29% and Aircel – 91.2%. [During this time, the total market size grew by 48.8% – implying an addition of 208.3 million.] So is Airtel, which has covered miles since it long began its services voyage a decade and a half back with a presence in just one circle (New Delhi), succumbing to competitive pressure? Actually, no! To retain the top spot for years, in this dog-eat-dog telecom services market, calls for pay-offs from well-chosen bets. And the CEOs & Marketing Heads in charge of brand Airtel, have never been indecisive about this.

Many took to Airtel’s global desires as a simple dream to stretch its wings. From what can be observed today, it actually had plans to fly. The first measure to revitalise itself was to brand itself a truly “global player”. This called for acquisitions in foreign lands. Soon, Bangladesh, Sri Lanka and South Africa happened (the $10.7 billion Zain buyout in June 2010, gave it access to 17 countries in the African continent making it the second-largest operator in Africa after MTN). Most would have stopped there. Airtel didn’t.

Becoming the fifth-largest telecom operator in the world requires hard work. It calls for brains too. And the latest gig from Airtel comes in the form of a revamp of its brand identity. The company has decided to give itself a fresh look, to keep in sync with developments that have occurred in the recent past. 3G is the next leap for Indian telecom, and who else but the market leader would desire to become the first one to stretch-out the welcome carpet. The metamorphosis happened through adoption of a new corporate identity – a new logo and a fresh signature tune, composed by the Oscar awardee A. R. Rehman. The company proclaims that the new identity showcases the willingness of the operator to offer new products and services. Red, the color of energy and dynamism, was retained by Bharti and the new additional curve, as the company claims, will ensure instant recognition of the brand across all markets. “This new brand identity reinforces our promise to deliver innovative services and a superior brand experience to our 200 million customers across Asia and Africa” says Sunil Bharti Mittal, CMD, Bharti Airtel. The man, who will hereon spearhead the rebranding effort, Mohit Beotra, Head – Brand & Media, Bharti Airtel, after a reality check, tells 4Ps B&M, “Our strategic decision of moving from primarily voice-based services to applications-based services, called for a need to communicate though a change in brand identity as well. The logo change therefore represents a strategic shift to project Airtel more as a youthful, dynamic and vibrant brand.”

But there are also many who say this might not have been required. Some more who believe that a change in corporate identity should be necessarily followed by a change in offerings or/and change in management. Ramanujam Sridhar, CEO, Brand-comm says, “Airtel’s investment in the new brand logo and the signature tune is unnecessary. Today, quality of service (QoS) is the key issue with any of the telecom operators. A customer will be happier if the QoS improves.”

Others criticise the very option of a new logo. Many claim that the new logo is not very different from that of the #2 in the Indian telecom space – Vodafone Essar. Text underlining both logos are in lower caps and have the same brand color (red). Therefore, differentiation lacks. Then there are some who question the very fact that the new logo is rather casual in appearance and appeal. “Airtel’s new logo does not give the look and feel of a serious player in the space. A more serious look would have been more appreciated,” says brand expert Harish Bijoor.

To this however, Abrain Miller, Chief Creative Officer, JWT, the man who masterminded the new creation, has an answer. He justifies logically to 4Ps B&M, “With the new brand identity, we are positioning Airtel as an enabler of technology, from being a purely tech-based company. People no longer care just about technology. They are interested in how it will help them. We are positioning the brand on similar lines, wherein Bharti Airtel can help its subscribers to connect to their loved ones while on the move, by being an enabler of technology.”

Arguments aside, Bharti Airtel has made promises in the past, and has lived up to its claims. Only this time, consumers across two continents expect a sea-change. Will Airtel continue to appear “strange” before the “magic mirrors”? Or will it strike gold investing all its winnings on the changed look? Too early to call, but you can bet on the #1; at least, it has deep pockets!

What’s In A Place?

Isn’t there Anything ITC is Losing Out on by being Headquartered at Kolkata? 

These days, company transformations are no more a breaking news. Almost everybody is doing something to stay ahead in the race. But it used to be the talk of the corporate town in the early 70s when the 1910 born Imperial Tobacco Company changed its name to Indian Tobacco Company in order to shed its British image and establish the much-needed Indian connect; and when it changed it again to ITC to venture into the non-tobacco businesses. But, despite all these transformations, one thing remained the same. ITC has tenaciously remained headquartered at Kolkata (which is insanely popular for its rich cultural heritage, but perhaps not so much for its corporate activity) for the last 100 years!

No doubt, there is a big list of companies that were initially based out of Kolkata. In fact, companies like Brooke Bond, ICI, Lipton, et al, are some cases in point. But then, they all soon decided to shift base to either Delhi or the financial capital, Mumbai, even Chennai or Bangalore. The equation was, if you wish to get counted amongst India’s best, you need to be centered around the fastest growing regions. That done, analysts have bene flummoxed – and more so recently – on what exactly makes ITC stick to the City of ‘Joy’? Clearly, it must be losing out on much on the strategic front. We did our bit to work out the foxy conundrum.

“There are three important elements to marketing – location, location and location! In this time starved, digitally activated world, this is even more relevant. People are not just demanding convenience they are expecting it,” says Crispin Reed, MD, Brand House, UK. If you were to analyse ‘bricks & mortar’ retailing, success sometimes comes down to a matter of metres. The difference between profit & loss can come down to which side of a street a store is located on. Retailers have been aware of this for a long time and whilst software has long been available to track traffic flow to identify optimal locations, the best individual retailers are those that know intuitively where to establish their presence.

But then, ITC doesn’t necessarily face this issue because they are more into manufacturing than retailing. And for a manufacturing concern, the ecosystem need not necessarily be that big because the integral processes like manufacturing and warehousing can be done wherever you want.

Y. C. Deveshwar, Chairman & CEO, ITC Group shares with 4Ps B&M, “There is no disadvantage in being in Kolkata because we are a national company.” He believes that it is more important to understand what the consumer wants or doesn’t want and then deliver accordingly rather than to focus on the location of the headquarter.

Underlying Deveshwar’s premise is another strong logic. Considering the inflating cost of setting up offices in Mumbai, Delhi or Bangalore, and with technology coming up the better day by day, there is inherent cost wisdom to stay put in Kolkata – one reason why companies like Parry’s and TVS are still based out of Chennai. Atul Tandon, Director, JL Morison adds more to the point of view with an additional logistics angle, “It’s difficult for ITC to move out because it has agricultural linkages to that place. It started tea plantation in that area and the entire genesis of the business has happened there. It’s more to do with the passion of a business model it had created.”

Further, with regional offices across the country, perhaps ‘headquarters’ as a concept doesn’t have that much of the significance left anymore, unless one is an IT company, because then the Bangalore/Silicon Valley persona adds to the brand perception.

Certainly, it’s factually less about the company’s location and far more about how effective are its channels of distribution. And no doubt, ITC has used this ‘P’ of marketing very effectively to its advantage. With initiatives like e-Choupal it has not only created a strong direct marketing & distribution channel for its products, but has also been able to eliminate unnecessary intermediation and multiple handling, hence bringing the transaction costs down to almost negligible.

Since its inception in 2000, ITC has had 6500 e-Choupal installations in 40,000 villages across nine different states of the country, empowering four million farmers in the process. By 2012, ITC aims at 20,000 e-Choupal installations in 100,000 villages across the nation, covering 15 states altogether and thus empowering 10 million farmers. In fact, ITC’s e-Choupal is a perfect example of how an innovative and inclusive distribution strategy can work wonders for a company. It’s such strategic choices made over the years that has transformed ITC from a company with a gross income of Rs.51.88 billion and a market capitalisation of Rs.55.71 billion (in 1996) to a conglomerate that boasts of revenues to the tune of Rs.260 billion and a market capitalisation that today exceeds Rs.1.3 trillion (2010).

All this has been possible because of ITC’s strong supply chain model that comprises of a large number of small scale partners and its distribution philosophy that makes it use different sales force to cater to different channels like convenience outlets, grocers and supermarkets. Adding to the bonanza are ITC’s e-Choupals and storage hubs that has strategically been placed in across states, functioning as centres through which ITC can directly market its products. In fact, the company has, for years, used ‘paanwallas’ to strengthen the local network for its products. This makes for an approximate network of 4-5 million local retailers and distributors. Certainly, the company shouldn’t be having any qualms about a head office in Kolkata when the distribution is this efficient. And it all shows in their turnovers. ITC has noted a 13.5% increase in its gross turnover in the last one year and a 27% hike in the exports turnover in the same period. All this couldn’t have been possible without a strong distribution network.

And as mentioned earlier, with audio-visual communication combined with technology advancements building a stronger and cheaper geographic grip in the corporate world, concepts like video conferences, live streaming, email on the move, have facilitated many a thing that wasn’t possible earlier – even annual general meetings. All in all, if one were to revisit the protagonist question, why Kolkata, the answer could well be, “Why not?”

What’s Next for PVR?

It started as a Dream Way Back in 1997 and Redefined the Entire Industry. With Competition Increasing, PVR is all set for a Strategic shift as it Moves Towards becoming an Integrated Retail Entertainment Co.

How many people would you know who can boast of coming up with a business idea during their honeymoon? Ajay Bijli, Chairman & Managing Director, PVR Ltd. is one man who can joke pretty easily how he was busier thinking about movies than romanticizing the moments during his honeymoon. The man, credited with revolutionising the modern cinema landscape in India, chanced upon the whole idea during his honeymoon trip to Orlando, Florida in 1990. Hailing from a country that consumes Bollywood with an unmatched frenzy and having grown up watching movies in single screen theatres with a trademarked damp, dirty and smelly environment, Bijli was more than surprised when he went to watch a movie in a US theatre. For the first time, he realised that watching movies can be such an inviting experience if packaged appropriately The rest as they say is multiplex history.

Cut to the present, the governing equations of the cinema exhibition business have completely changed and PVR Ltd has emerged as one of the leading players. But the habit of coming up with something fresh and interesting has not changed a bit. And perhaps, that has been a saviour for the company even during the worst of times. How can one forget the 381% year-on-year decline in PVR’s bottom-line during the first quarter of financial year 2009-10, when, owing to the gridlock between movie producers and multiplex owners, the group posted a quarterly net loss of Rs.109.2 million as compared to a profit of Rs.38.8 million in the year-ago period. But few actually know that in absence of Blu-O (PVR’s lifestyle entertainment venture), the losses could have been much bigger in that quarter. The venture, which started in collaboration with the Thailand-based Major Cineplex Group, achieved break even in its first operational quarter clocking revenues of Rs.39.6 million with a 32% profit margin for PVR.

Undoubtedly, the diversification now stands for a better and sustained profitability for PVR and the brains out there are all set to make it large by opening up the country’s first entertainment city spread across a total area of 150,000 square feet. Discloses Pramod Arora, Group President, PVR, “Through this retail entertainment city, we plan to leverage the synergies of our various brands in order to expand into the space of retail entertainment. The success of PVR Blu-O has acted as a catalyst for us to doggedly pursue this format.” The company has some real big plans like 15-screen state of the art multiplex, a 24 to 28-lane bowling alley, Olympic size ice skating rink and microbrewery based Beer Island and food kiosks. PVR, we’re told by the top management, wants to fulfill its dream of becoming an integrated entertainment company. As Ajay Bijli, CMD, PVR, puts it, “The Entertainment City will be a mecca of entertainment in the NCR region as we will house all our formats under one roof. This is a huge step forward for us to realise our dream.”

However, apart from diversification, PVR’s rapid and aggressive expansion has been very instrumental in making its business model fundamentally strong. The group, which only had 51 screens at the end of FY2005-06, now has 142 screens in 31 multiplexes across the country drawing 5.5 million footfalls every quarter (Q2 FY2011) and generating a revenue of Rs.1.05 billion. But then, considering what Bijli has in mind this might just be the beginning. This is because the officials of PVR were quoted in media earlier this year that the group wants to increase its screen count to 500 by 2016. If achieved, PVR then would command a huge share in the Indian film exhibition industry.

However, increasing the number of screens alone will not serve the purpose for PVR. And the group knows it very well. Competitors have spruced up their packaging to world class standards too. To that extent, PVR is continuously putting in effort to be reckoned for the quality of service it provides. Moreover, to attract higher footfall, it has been introducing innovative concepts like the exclusive prepaid gift cards (which can be redeemed against purchase of tickets, food & beverages at the PVR cinemas across the country) that they came up with during this festive season.

With the commitment to build PVR Pictures as a full scale distribution and production company, PVR now intends to gear up its movie production to at least 4 to 5 a year, and also aims to get hold of as many rights as possible for distribution of international movies in India. Besides, it also has plans to get into the distribution of regional movies clearly indicating that now it has made up its mind to diversify and grow in order to become the country’s largest entertainment conglomerate. For that matter, the game plan is ready and it is much bigger than what Bijli thought of during his honeymoon trip. And... action!

Will an Expensive Car Work to Maruti’s Advantage?

Maruti Suzuki is Embarking on a New Strategy. This time, it’s a Rare Ritual. The Company calls it the “Kizashi”. We call it “The Newest Shot at Growth”

When all competitors around Maruti Suzuki have seemingly started taking its dominance in the compact car segment to heart (the A2 segment, where the Indo-Jap carmaker enjoys a market share of 55.03%, having sold 369,466 units during Q1 & Q2, FY2010-11), the Indo-Jap has begun doing the right thing – take a peep into their world too! Call it a sign of great things to come or simply a fanatic anti-competitive rhetoric, but this fierce advocate of Indian consumerism has decided to take the plunge to ensure that its 50% market share doesn’t go anywhere. Many even view this decision by Maruti as a visceral fear of change, but left it was with little choice. Despite flooding the domestic market with offerings at the lower to mid-price points in the A2 & A3 segments (with brands like Alto, Wagon R, Estillo, Swift, A-Star in the A2 and SX4 and Dzire in the A3 segment), its passenger car market share fell below the 50% mark (touching a low of 45.7% during Q1 & Q2, 2010) for the first time since it started dominating the market with its 800 magic more than two-and-a-half decades back. Reason – competitive pressures, with everyone from the mighty truck-making General Motors and Fords to the premium sedan-rich Nissans and Skodas taking an elephant ride on Maruti’s hunting ground. Even the number of offerings in the A2 and A3 segments have increased by 24 in just the past two years, to 46 (as of date)! Given the circumstance, trying its hand at the A4 segment remains the hope that can help Maruti salvage lost pride. Kizashi is at that hope’s vanguard.

Yet, one hesitates to read too much into this Maruti dream, which is fuelled by the Indian consumers’ desires to grow fast on the social scale. Yes, the 350 million middle-class (that is, if you were to define the typically quasi-rich classes as the middle class; as India in reality has no true middle class) still believe that Maruti as a brand stands for the power of delivering a value-for-money Jap engine, a well-in-place architecture and an extremely affordable and readily available service (centres). But is the Kizashi what this Indian consumer class is waiting for? Mayank Pareek, the Marketing Chief at Maruti Suzuki believes the answer is yes, and tells 4Ps B&M, “The new age Indian consumer has evolved. Today, they demand more, and we are starting to deliver what they are demanding...” Says Alex Mathews, Research Head, Geojit BNP Paribas to 4Ps B&M, “The market for premium sedans is growing at a slow pace in India, but the (future) opportunities in this segment are strong. This is because Indian households with annual disposable incomes of $5000 -$15,000 as a percentage of total households, is expected to reach 41.1% in our country by 2020 as compared to 14.6% in 2010.”

For the compact-car loving Indian (who stands impressed by the Bolly star Ranbir Kapoor’s Nissan Micra claims or by Yuvraj Singh’s off-the-pitch Fiat Punto promise), Rs.12 lakh+ (on-road) A4 segment offerings have not fit the bill historically. But truly, history need not repeat itself in the current times, as consumer perception could well be changing. Yet, the Kizashi has respectable and much dreaded competition in its category. Especially the lower-priced Honda Civic or a GM Cruze or even a Skoda Laura. Add to all this another factor – the danger that the Maruti tag remains associated with the premise of being “affordable” – and you have the making of a very interesting marketing conundrum.

Maruti Suzuki has been here and done that. In the sense, they have some valuable experience in this segment. The Grand Vitara had made for a case for Maruti Suzuki’s premium dreams in the past. But currently, after five years of the SUV’s existence in the Indian market, it commands a share of 0.06% in its (the SUV) segment (Q1 & Q2, FY2010-11). The Indian consumers bought 307 units of the “all-petrol” Honda CR-V during the two quarters ending September 2010 (a y-o-y rise of 184.26%), while the Suzuki Vitara, which is also available in the diesel version, sold 49 units during the same period (a y-o-y decline of 20.5%!). The underlying perception complication could also be that while Suzuki and Maruti Suzuki are two different companies in reality (with common holding), for the masses, Suzuki is­ Maruti, and any product, by either name, would be seen against the checklist of value-for-money (read, ‘is it cheap?’). And Grand Vitara particularly so, did not qualify on that basis. Says auto expert Murad Ali Baig, “When it comes to luxury cars, somehow, Maruti Suzuki is considered low-priced. It is the same reason why Volkswagen & Fiat sell the Audi and Ferrari respectively as premium brands – rather than the Volkswagen Audi and Fiat Ferrari. For that matter, not many call the Lexus a Toyota Lexus!”

Irrespective of this, if the Kizashi were expectably successful, would it be able to change the overall auto market share percentages of Maruti Suzuki? The answer is a no because of the sheer low volume of sales in the A4 segment. Even if Maruti’s new launch were to capture 100% of the existing volumes in the A4 category – which is a highly unlikely situation when you are talking about one of the world’s largest selling sedans ever (Toyota Corolla) and the most attractive launches in the past four years (Honda Civic and Chevrolet Cruze) as category competitors – it would only be able to increase its overall passenger market share by 2.84% (estiamtion based on sales figures for Q1 & Q2, FY2010-11).

For the sake of ensuring a diverse range of offerings, Maruti does need to exist in every possible segment. Considering that argument, the Rs.12 lakh+ priced and 2.4 litre petrol-driven Kizashi does carry some weight. But it will need quite some marketing gumption to make its presence felt. In 1999, when Maruti Suzuki’s Baleno tried to make some space in the A3 segment, it failed the test. Seven years later, the product had to be replaced with the now-successful SX4. Today, along with the Dzire, the A3 market share of Maruti stands at 36.14%, while the closest followers (Tata Motors and Honda) with 26.23% and 14.04% market shares respectively, are still some yards behind Maruti’s tyre marks. If history repeats itself, and even if Kizashi gets moderate success, it will read well for Maruti, most importantly because the Kizashi – which looks fantastic and has post-modern designs one would kill to own – can influence a multiplier effect on the other segments’ sales of Maruti’s cars and also on the overall image positioning of the firm. As for us, we’ll keep watching!

PUSSY CATS TO HUNGRY TIGERS?

Through the frosted glasses in Daizo Ito’s swanky office in Gurgaon, one can clearly see the growth and chaos bustling in and around Gurgaon. But an unconcerned Ito is focused on only one thing: how to convert the Japanese behemoth’s missed chance in India into an opportunity to make Panasonic a trusted household name in the country.

The thrilling World Baseball Classic (WBC) finals held at Los Angeles’ Dodger Stadium earlier this year saw Japan and Korea slug it out for the title, with underdog Japan winning the championship on the back of the team’s super pitching form. Some commentators believe that the photo finish WBC event irrevocably established that baseball was no longer just an American game. But for some others like Daizo Ito, Panasonic India’s Chief Executive, it signified much more than that viz. the curious case of the Indian consumer durables market where Koreans monopolise the segment at the cost of global Japanese heavyweights like Panasonic. Japan beat favourites Korea in the WBC finals, and Ito now has a plan, if not to beat, then at least, join the ranks of the Korean biggies in India’s Rs.26,000-crore durables market.

“We are no longer pussy cats, but hungry tigers,” Ito avers, with a roar, his towering personality almost dwarfing his swank cabin in Panasonic India’s premises at Gurgaon. For those who came in late, Panasonic was one of the first consumer durable companies to have spotted the India opportunity way back in the 90s, much before LG and Samsung soared into the limelight. In Ito’s own words, when he was sent by Chairman Nakamura to take charge of Panasonic’s India operations 18 months ago, he was “shocked” to see Panasonic languishing near the bottom, at 16th position in brand awareness among all its rivals. “In most other Asian countries, we are at the number 1 or 2 positions competing with either Sony or Samsung,” he laments.

Not that the big guys at the company headquarters in Japan were caught napping. Instead, all these years, Panasonic had been merely looking at China as their big growth engine. With the result that today, China contributes almost 8% to Panasonic’s global turnover; while India’s share stands at an embarrassing less than 1% of the behemoth’s global revenues. Ito however is in town to challenge status quo. Reputed somewhat as a turnaround man within Panasonic, the man has, to his credit, turned around the fortunes of Panasonic UK and has also taken his company to the number one position in Thailand over the last few years. Now his eyes are fixed on India. “Panasonic’s 100th anniversary is in 2018 and my gift to our headquarters on that occasion will be to make Panasonic India a stark success,” he avers smilingly. Ito has already got off to a good start. The last year has seen Panasonic jump from relative obscurity to right under the floodlights, courtesy a big budget marketing blitz with a host of ambassadors, including the new heartthrob Ranbir Kapoor and even the Bachchan father-son duo for their ECO initiative.

Sabiha Kidwai, General Manager (Marketing), Panasonic India has particularly huge hopes from Panasonic’s ECO range of environmentally friendly products, which are backed with a big budget media plan. “Our rivals also have energy saving models in their line up, but at Panasonic we are going a step further by sharing eco awareness with consumers,” says Sabiha, referring to Panasonic’s celeb laced campaign – ‘I’m doing my bit. How about you?’

The ambition within Panasonic’s Gurgaon headquarters is to double the company’s revenues from Rs.2,200 crore in the last fiscal and the marketing team says that plans are on track to achieve the doubling of turnover by March 2011. Explains Ito, “Despite slowdown, we have grown 200% over 2009 so far,” adding that the company hopes to finish FY10 with a robust 270% growth. The efforts by Ito and his core team are by no means restricted to just advertising communication. The change is reflected simultaneously in the company’s product, pricing and distribution strategies. At the product level, for starters, Panasonic has now begun designing its products within the country (as opposed to importing made in US or Japan products) to leverage on the unique requirements of the Indian consumers. By 2011, there is also a huge investment planned for setting up a production facility within India for ACs, plasmas/ LCDs and refrigerators. Of the $300 million set aside for the Indian market, about $100 million will go into setting up of the proposed plant. Not surprising, given that going purely by sales, Plasmas/ LCDs and air conditioners are the fastest growing product lines at Panasonic India these days. Also on the cards is an extension of Panasonic’s existing PDA technology into India to take advantage of the 3G regime, a move that would once again propel Panasonic in the lucrative Indian handset market (from which it had exited in 2006 after it failed to woo customers) where its biggest rivals LG and Samsung already boast a big presence.

Pricing is the next frontier that Panasonic hopes to conquer successfully. “There is an ongoing debate in the Indian market as to when LCDs will become a commodity as has happened with CRTs. We have already started commoditising the LCD with our 2009 festival offer of a 32 inches LCD at Rs.29,990 only,” continues Sabiha. In fact, next in their line up – to be launched early next year – are the Volume Zone products in every category, which will entail giving the Indian consumer better quality at lower prices.

Distribution however is one area where success still eludes. After all, in a cut throat competitive market where rivals LG and Samsung are virtually falling over each other to buttress their mostly common dealer network, distribution is certainly a tough nut for Panasonic. But undeterred, this Buddhist from Japan is counting on his 3Ps of product, positioning and people to deliver the goods. “Panasonic India is limited compared to our global operations, which makes even small components. Now that the Panasonic management has renewed its commitment to the Indian market, my dream is to get our global range to consumers here,” he says, signing off. After UK and Japan, will this turnaround man manage to give a new lease of life to Panasonic in India? We don’t know yet, but wish him luck anyway!

Alive and trying to kick their real (e)state of mind!

Real estate companies in India have failed to understand the magic of branding...  

So what’s a brand? Well, if you ask the renowned business innovator and author Stephen Sapiro, he’d probably shoot back – “No, it is not Nike’s ‘swoosh’. It is not McDonald’s ‘I’m Lovin’ It’ jingle. It is not Accenture’s Tiger Woods ads. It is not the design of my website or my ‘Unconventional Thinking’ tag line.” Well, he’d perhaps speak every word in the dictionary explaining what a brand isn’t, but does that answer your original question? Not really! Now to talk about Erik Hansen, Tom Peters’ brand manager. As he says, “[A brand is] what your customers say it is...” Well, that pretty much sums up our argument here – what the customers say it is... But there’s one community of traders that don’t appear very convinced by the power of the judgmental customers – the Indian realtors, whose lot needs to understand why branding in itself is critical to their existence. And if there are a few who do, they just don’t get the fact that one must use branding as a tool to ‘sell’ products, rather than waste resources in demonstrating that they’re still alive and trying to kick!

Loaded with attitude and being part of a market which is still largely unorganised, the real estate companies have failed to understand the true value of branding. What else could be expected from a sector where a majority of players do not believe in marketing themselves through means other than just word-of-mouth.

The basic problem is these players actually lack the foresight to understand the strong benefits associated with advertising. Well, of course we are not arguing about their lack of the microeconomics here (read ‘Advertising Elasticity of Demand’) but any sensible management rule defines marketing as an act that pronounces merits galore! Especially, at a time when global realty market is reeling under the weight of the financial slowdown, the large players should understand that branding is of utmost importance, especially when there are negative sentiments floating in the market; and thus their falling sales! Earlier dependent on just print media and supplements, thankfully some big names have started using media vehicles like sponsorship in cricket to build up on their lost images. DLF for example, has sponsored the DLF Indian Premier League T20, Tri Series and the UAE Cup and Emaar MGF tied-up with international cricketing events.

But despite the fact that of late, a few like DLF, Omaxe, Parsvnath, Unitech et al, have switched over to other non-traditional means of marketing, the basic problem lives on – i.e., customers even today find a mismatch in their branding promises and the products they deliver. Worse, the Indian reality market still can boast of numerous other players, who have failed to even recognise this fact. Even premium property sellers are not relying much on branding as a means to reach their costumers. Says Samarth Bedi, V-P, O&M,  “Brands and branding do matter in whichever industry you go. And real estate is no exception. But the brand should communicate values and ethics behind it and marketing should not be used as a means to just talk about discounts (which most real estate companies actually do).” The importance of branding increases even more during the current crisis. Real estate has been badly hit by the slowdown. Reports suggest that the worst is yet to come for the sector as demand is expected to fall further. Fitch ratings predicts that the real estate market in India will continue to remain in the negative outlook zone for the whole of 2009, and only in the first part of 2010 would we see some recovery. Prices have already fallen and with supply exceeding demand by miles, housing prices will only get better for the consumers (the mid-segment has already seen a 10-15% fall while the upper segment has seen as much as 80% fall). In such a scenario, branding becomes even more significant. Says Pradeep Kumar Jain, Executive Chairman, Parsvanth Builders, “Branding helps reinstate customers’ confidence in real estate developers, more so in times of recession, when customers are skeptical in parking huge money.”

All said and done, it becomes clear that branding is important and does help improve sales. But the problem with real estate companies in India is that they are small in size and marketing is still at a very nascent stage. Unlike their Western counterparts, Indian companies don’t talk about any core value. Says Bedi, “There is no clear message that realty companies communicate to consumers through their ads.” For now, the realtors are showing real symptoms of ‘ambiguous marketing’, something that is as fatal as jumping off the 9th level of one of their tall structures. So there’s our verdict, – they’re alive, and they’re trying to kick, but how long...?!

It’s my concept!

With concept stores, organised retail players are taking brand wars in the segment to the next level. Will their endeavors bear fruit? 

For Raj and Anita, who had just bought their dream house, doing the interiors was an uphill task. “We could not decide what we wanted, and that’s because we didn’t know what we really wanted for our most precious purchase,” confesses Anita, until a friend suggested that the couple must visit Asian Paints ‘Colour’ concept store.

Having gone through everything under the sun, the couple decided to walk into the store as well and that seemed to be the end of their problems. Unique to its kind, the store claims to offer an inimitable experience to those who seek right colour combination integrated with inspiring home décor. Full of interactive as well as educative features, the store also displays various room styles (contemporary, modern, traditional, et al). While colour consultants answer visitors’ queries, Asian Paints Home Solutions assist visitors in executing their plans. The entire experience was so overwhelming for Raj and Anita that once out, they were crystal clear on how they should do the interiors of their house.

Harold Geneen, an American businessman, once said, “The business world has two coins – cash and experience. Give the experience first, the cash will come later.” Following this mantra, a lot of companies are (in the name of experiential marketing) giving coveted experience to their customers by way of Concept Stores. Different from traditional company outlets, these stores claim to give customers an experience of the company’s product or service offerings by allowing them to touch and feel the product before taking the final purchase decision. And interestingly, these stores do not sell! They are only committed to give a life-like experience to the customer.

So be it Hindware, which through its Concept Store Hindware Lacasa, showcases the entire range of Hindware brands including sanitary ware, kitchen appliances and wellness products; mobile handset retailer UniverCell’s concept store UniverCell Live, which allows customers to touch-and-feel the products; Canon’s Image Lounge, which displays Canon’s entire range of digital cameras for both personal as well as professional use – all are playing upon the sole mantra of giving a unique experience to the customers.

Says Ramesh Barath, Vice President, UniverCell, “The idea behind a Concept store is to give customers live, hands-on experience while buying a mobile. It allows them to touch, feel, experience a real live wire mobile and enjoy its many features. It enables customers to get a feel of the mobile.” Not only do the concept stores give a first-hand experience of the product to the customer; they are also an extension of the brand building exercise of the company. For instance, Hindware, whose products are already available at various dealers and distributor shops as well as company-owned retail outlets called EVOK, also has its concept stores – Hindware Lacasa (launched in Kochi first and then in Mumbai) – only to give its customers a feel of its niche products and to take the brand more closer to its customers. “For various product categories, which are sold through dealers and distributors, showcasing products in a concept store is a very good opportunity for companies to make their brands register in the minds of the consumers, especially when dealers push more than one brand to the customer,” explains Neeta Walia, Director, Brand Talk.

The phenomenon of concept stores as an effective experiential marketing tool is not only viable for B2C, but also for B2B customers, case in point being Canon BIS (Business Imaging Solutions) Lounge. While Canon Image Lounge caters to the B2C model; Canon BIS Lounge is committed to the enterprise segment, which is a very strong business vertical for Canon. The first of its kind in India, Canon BIS Lounge accommodates huge laser printers, digital printers and photocopy machines for big companies besides showcasing copiers, fax machines and printers for SOHOs as well. “We also organise demos, training sessions, visits, et al, for our B2B customers so that they can gain experience of our products. Since most of the enterprise products are high-involvement products, it is imperative that the customer is sure of his purchase,” says Pooja Gogia, Asst. Manager, Direct Marketing, Canon BIS Division. The most expensive machine accommodated in Canon BIS Lounge located in Gurgaon costs a whopping Rs.80 lakhs and therefore the whole idea of experiencing such expensive products before purchasing them has made Canon a strategic partner of its enterprise customers.

Well, moving on to the other side of the coin (read cash), while providing experience to the customer is surely an effective experiential marketing tool, it is of no good if the experience is unable to translate itself into sales. However, as companies divulge, concept stores have scored well in sales terms as well. While Barath of UniverCell reveals that the concept stores have been successful with 80% conversion rate of footfalls into sales; Canon Image Lounge is able to generate sales of 8% out of the total footfalls in the store, which varies from 300-400 footfalls during weekdays and around 1,000 during weekends. Canon BIS Lounge too has been successful in retaining enterprise customers since the store was launched two years back. “Almost 70% of the people who come to our concept stores finally end up buying the product,” avers Puneet Datta, Sr. Marketing Manager, Canon BIS Division.

So, if the effectiveness of any marketing gimmick were to be evaluated purely on the basis of monies that it brings back into company coffers, concept stores surely scores high.